Document:

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

Exhibit 10.20  

Wind River License Number:                

WIND RIVER SYSTEMS, INC.

SOURCE CODE LICENSE AND DISTRIBUTION AGREEMENT

(Source-Code Only Products)  

        THIS SOURCE CODE LICENSE AND DISTRIBUTION AGREEMENT ("Agreement") is made and entered into as of
January 30, 2002 (the "Effective Date") by and between WIND RIVER SYSTEMS, INC., a Delaware corporation having a principal place of
business at 500 Wind River Way, Alameda, CA 94501 ("Wind River"), and EQUALLOGIC, INC., a Delaware corporation having a principal place of
business at 9 Townsend West, Nashua NH 03063 ("Customer"). The parties agree as follows: 

1.     DEFINITIONS.  

        1.1   "Approved Host CPU" means the host computer on which Customer is authorized to use the Software
pursuant to the terms and conditions of this Agreement, as specified in Exhibit A. 

        1.2   "Approved Target CPU" means the microprocessor(s) on which Customer is authorized to use the
Software pursuant to the terms and conditions of this Agreement, as specified in an Exhibit A. 

        1.3   "Authorized Site" means the specific address of Customer's facility consisting of a single
building or multiple buildings on a contiguous campus where the Approved Host CPU is physically located, as specified in Exhibit A. 

        1.4   "Back-up Site" means the specific address of the facility where Customer retains
copies of the Software (a) as archive copies in accordance with the terms and conditions of this Agreement and Customer's standard archive policy or (b) for support and maintenance of
End Users. 

        1.5   "Confidential Information" means: (i) the Software Source Code; (ii) the
technology, ideas, know how, documentation, processes, algorithms and trade secrets embodied in the Software; (iii) any software keys related to the Software; and (iv) any other
information, whether disclosed orally or in written or magnetic media, that is identified as "confidential," "proprietary" or with a similar legend at the time of such disclosure. Confidential
Information shall not include any information which is: (a) published or otherwise available to the public other than by breach of this Agreement by Customer; (b) rightfully received by
Customer from a third party without confidential limitations; (c) independently developed by Customer as evidenced by appropriate records; (d) known to Customer prior to its first
receipt of same from Wind River as evidenced by appropriate records; (e) hereinafter disclosed by Wind River to a third party without restriction on disclosure; or (f) approved for
public release by written authorization of Wind River. If any Confidential Information must be disclosed to any third party by reason of legal, accounting or regulatory requirements beyond the
reasonable control of Customer, Customer shall promptly notify Wind River of the order or request and permit Wind River (at its own expense) to seek an appropriate protective order. 

        1.6   "End User" means any entity to which Customer provides a Target Application for further
distribution or such entity's own use, pursuant to an End User License Agreement. 

        1.7   "End User License Agreement" means a written license agreement in a commercially reasonable form
(including, without limitation, "shrink-wrap" or "click-wrap" license agreements) containing the restrictions specified in Section 3.2, pursuant to which Customer may
sublicense to End Users the Run-Time Module that is incorporated into a Target Application. 

 

        1.8   "Intellectual Property Rights" means all copyrights, trademarks, trade secrets, patents, mask
works and other intellectual property rights recognized in any jurisdiction worldwide, including all applications and registrations with respect thereto. 

        1.9   "Object Code" means computer programming code in a form not readily perceivable by humans and
suitable for machine execution without the intervening steps of interpretation or compilation. 

        1.10 "Permitted Modifications" means (i) without limitation, any adaptations, modifications,
improvements, enhancements, revisions or interface elements created from the Software (whether such modifications are in Object Code or Source Code) in any form or medium whatsoever; and
(ii) any "derivative" work of the Software as defined in the Copyright Law of the United States of America, 17 U.S.C. §101 et seq. Customer's added software programming that merely
utilizes the programmatic calls described in the documentation to the Software is not a Permitted Modification. 

        1.11 "Project" means a concerted undertaking by an identified Customer development team to design or
produce a Target Application that uses a specific target microprocessor and that has a specified scope of functionality, as specified in Exhibit A. 

        1.12 "Run-Time Module" means the machine-executable object code derived from compiling
the Software, any Permitted Modifications thereto, or any portion thereof, to be incorporated into a Target Application as inseparably embedded code. 

        1.13 "Software" means (i) the computer programming code and accompanying documentation,
including updates (if any), provided by Wind River under this Agreement, and (ii) all Permitted Modifications thereto and full or partial copies thereof, whether such Permitted Modifications or
copies are provided by Wind River or made by Customer as permitted under this Agreement. 

        1.14 "Source Code" means computer programming code in human readable form that is not suitable for
machine execution without the intervening steps of interpretation or compilation. 

        1.15 "Target Application" means an item, device or system developed by Customer pursuant to a Project
that does not contain any Software development functionality and that contains a Run-Time Module, or any portion thereof. 

2.     LICENSE.  

        2.1    Development License.    Subject to Customer's compliance with the terms and conditions of this Agreement and
payment of any applicable fees, Wind River hereby grants to Customer a non-sublicensable (except as otherwise expressly permitted in Section 3.1.4), non-transferable,
non-exclusive, internal-use only license: (i) to use the Software Source Code, solely at the Authorized Site, on the Approved Host CPU, or as otherwise permitted by
Section 3.1.2 of this Agreement, in connection with the Project; (ii) to reproduce the Software Source Code for archive purposes, consistent with Customer's standard archive procedures;
(iii) to create Permitted Modifications of the Software Source Code, solely to the extent necessary to support the development of the Target Application; and (iv) to compile the Software
Source Code and any Permitted Modifications into a Run-Time Module. 

        2.2    Distribution License.    Subject to Customer's compliance with the terms and conditions of this Agreement and
payment of any applicable royalties hereunder, Wind River hereby grants to Customer a non-transferable, non-exclusive, royalty-bearing license: (i) to reproduce the
number of copies of the Run-Time Module authorized in Exhibit A, solely in machine-executable object code form, at the Authorized Site or Back-up Site; and
(ii) to distribute such copies of the Run-Time Module to End Users worldwide, solely as inseparably embedded code in the Target Application, subject to an End User License Agreement
(as defined in Section 3.2). 

2

 

3.     LICENSE RESTRICTIONS.  

        3.1    Customer Restrictions.    

        3.1.1     Customer shall reproduce and include any and all copyright notices and proprietary rights legends, as
such notices and legends appear in the original Software, on any copies of the Software, including any Permitted Modifications and any Run-Time Modules. 

        3.1.2     The Software Source Code and all Permitted Modifications in Source Code shall be handled, used and stored
solely at the Authorized Site or Back-up Site, each as identified in Exhibit A. The Software Source Code may be used either from a single machine or a server; there shall be no
external access to such code (i.e., by any computers or terminals not located at the Authorized Site. Notwithstanding the foregoing, Customer's Qualified Employees and Qualified Subcontractors (as
defined below) may access the Software Source Code from remote locations by dialing in to a secure server located at the Authorized Site, provided, however, that: (i) any external network
access shall take place over a secure VPN or equivalent secure network; (ii) access shall be limited to Qualified Employees and Qualified Subcontractors who are based at the Authorized Site;
and (iii) when not in use by a Qualified Employee or Qualified Contractor over the network, the Software Source Code shall remain at all times on a secure server located at the Authorized Site.
In addition, Customer may, for periods of less than five (5) business days, temporarily reproduce the Software Source Code from the Authorized Site to other locations in connection with
industry events to which Customer transports copies of its own proprietary source code ("Interoperability Events"). In such event, Customer shall employ the same measure to ensure the confidentiality
of the Software Source Code as Customer uses with respect to its own proprietary software Source Code, but in no event less than all commercially reasonable precautions. 

        3.1.3     Other than as set forth in Sections 3.1.2 or 3.1.4 of this Agreement, Customer shall not sell,
sublicense, license, transfer, market, distribute, rent, lease, timeshare, loan or otherwise make available the Software Source Code or any Permitted Modifications in Source Code to any third party. 

        3.1.4     Access to the Software Source Code and the ability to rebuild software containing the Software Source
Code shall be limited to [**] employees of Customer (which includes up to [**] independent contractors) who (i) require access to the Software
Source Code for the purposes authorized by this Agreement, and (ii) have signed an agreement in which such person agrees to protect third party confidential information with terms no less
stringent than those set forth herein ("Qualified Employees" and "Qualified Subcontractors," respectively). Customer agrees that any breach by any person of its obligations under such confidentiality
agreements shall also constitute a breach by Customer hereunder. The ability to exercise all additional license rights granted to Customer under this Agreement shall be further limited to
[**] Qualified Employees or Qualified Independent Contractors. Customer shall maintain and, upon Wind River's reasonable request, provide to Wind River, the names of all
persons who have had access to the Software Source Code. Wind River shall not use any list of names provided by Customer pursuant to the foregoing obligation to solicit any Qualified Employee or
Qualified Subcontractor or to seek to induce any such person to leave his or her employment with Customer. The limitations of this Section 3.1.4 shall not apply to any employees or contractors
of Icon Laboratories, Inc., or any other third party with whom Wind River has a current license agreement allowing such third party to access the Software Source Code, as evidenced by a writing
signed by Wind River. 

        3.1.5     Customer shall use commercially reasonable efforts to protect the Software Source Code from unauthorized
access, reproduction, disclosure or use. In the event Customer becomes aware of any unauthorized use or disclosure of the Software Source Code, Customer shall notify Wind River immediately in writing
and shall give full cooperation, at Customer's expense, to 

3

 

minimize
the effects of such unauthorized use or disclosure. Customer will not use the Software in such a way as to subject to Software to any open source license, including the GNU General Public
License. Wind River has not used the Software in such a way as to make Customer's added software programming subject to an open source license, such as the GNU General Public License. 

        3.1.6     UPON ANY UNAUTHORIZED TRANSFER OF ANY COPY OF THE SOFTWARE IN SOURCE CODE TO ANOTHER PARTY, THIS LICENSE
WILL AUTOMATICALLY TERMINATE. IN THE PARTIES AGREE THAT A TRANSFER OF THE SOURCE CODE TO ICON LABORATORIES, INC. OR TO ANY OTHER THIRD PARTY WITH WHOM WIND RIVER HAS A CURRENT LICENSE AGREEMENT
ALLOWING SUCH THIRD PARTY TO ACCESS THE SOFTWARE SOURCE CODE (AS EVIDENCED BY A WRITING SIGNED BY WIND RIVER) SHALL NOT BE A BREACH OF THIS AGREEMENT. 

        3.2    End User Restrictions.    Customer shall take all steps necessary to protect Wind River's and its licensors'
proprietary rights in the Run-Time Module and to ensure that each Run-Time Module distributed by Customer will be accompanied by a localized copy of an End User License
Agreement. Such End User License Agreement shall prohibit the End User from: (i) copying the Run-Time Module, except for archive purposes consistent with the End User's archive
procedures; (ii) transferring the Run-Time Module to a third party apart from the Target Application; (iii) modifying, decompiling, disassembly, reverse engineering or
otherwise attempting to derive the Source Code of the Run-Time Module; (iv) exporting the Run-Time Module or underlying technology in contravention of applicable U.S.
and foreign export laws and regulations; and (v) using the Run-Time Module other than in connection with operation of the Target Application. In addition, the End User License
Agreement shall (i) state that the Run-Time Module is licensed, not sold and that Customer and its licensors retain ownership of all copies of the Run-Time Module;
(ii) expressly disclaim all implied warranties including, without limitation, the implied warranties of merchantability, fitness for a particular purpose, title and
non-infringement; and (iii) exclude liability for any special, indirect, punitive, incidental and consequential damages. The End User License Agreement shall also state that, with
respect to the Run-Time Module, Wind River and its licensors are third party beneficiaries of the End User License Agreement and that the provisions related to the Run-Time
Module are made expressly for the benefit of, and are enforceable by, Wind River and its licensors. 

 4.    CONFIDENTIAL INFORMATION.    Neither party shall use or disclose any Confidential
Information, except as expressly authorized by this Agreement, and shall protect all such Confidential Information using the same degree of care which such party uses with respect to its own
proprietary information, but in no event with safeguards less than a reasonably prudent business would exercise under similar circumstances. Each party's obligations regarding the protection of
Confidential Information shall
survive any expiration or termination of the Agreement. Each party shall take prompt and appropriate action to prevent unauthorized use or disclosure of the Confidential Information. 

 5.    OWNERSHIP.    Customer shall not have any obligation to provide or disclose to Wind
River any Permitted Modifications. Notwithstanding the foregoing, Wind River and its licensors shall retain exclusive ownership of all worldwide Intellectual Property Rights in and to the Software.
Customer hereby assigns to Wind River any such rights Customer may have or obtain in and to the foregoing. All rights in and to the Software not expressly granted to Customer in this Agreement are
expressly reserved for Wind River and its licensors. 

6.     DELIVERY; FEES; RECORDS AND AUDITS.  

        6.1    Delivery and License Fees.    Promptly following the Effective Date, Wind River shall deliver the Software
Source Code to Customer. Such Software shall be deemed irrevocably accepted upon shipment. Wind River will invoice and Customer shall pay the applicable Software license fees set forth 

4

 

in
[**], in addition to any applicable royalty fees for distribution of Run-Time Modules. All payment terms herein are subject to prior credit approval by Wind
River. Payment of all amounts shall be due [**] days after receipt of invoice or, for royalty payments, within [**] days of the end of each calendar
quarter. Interest on any late payments shall accrue at the rate of [**] percent ([**]%) per month, or the highest rate permitted by law, from the date
such amount is due until finally paid. Any failure of Customer to make timely payment of any invoice may, at Wind River's discretion, be deemed a material breach of this Agreement. 

        6.2    Records, Distribution Reports.    Customer shall maintain complete, current and accurate records documenting
all Run-Time Module copies made and distributed by or for Customer in Target Applications, the location of the Software (in all forms) in Customer's, its distributors' and its
manufacturers' possession, and the names of all persons who have had access to the Software Source Code. Within [**] days of the end of each calendar quarter, Customer shall
submit to Wind River a written report which shall set forth the number of Target Applications distributed by Customer and such other information as Wind River may reasonably request (herein, the
"Target Report"). Wind River may provide, from time to time, a form of Target Report that Customer agrees to follow with respect to carrying out the foregoing obligations. If no Target Applications
were distributed within a given quarter, Customer shall provide to Wind River a statement so certifying. Except where Customer is reporting Target Applications for which Customer has
pre-paid Wind River its applicable per copy license fees, Customer shall enclose with the Target Report, Wind River's stipulated per copy royalty for the activity reported. Customer's
failure to submit an accurate Target Report and any applicable payments may, at Wind River's discretion, be deemed a material breach of this Agreement. 

        6.3    Audits.    To ensure compliance with the terms of this Agreement and the payment of any royalties due
hereunder, Wind River or its authorized designee shall have the right to inspect and audit all the records and distribution reports referenced in Section 6.2 above, and all relevant accounting
and sales books and records of Customer, to obtain true and correct photocopies of such records, and to obtain such other information as necessary to determine Customer's compliance with this
Agreement. At Wind River's request, Customer shall provide reasonable assistance to Wind River in conducting such inspection and audit. Such audit shall be conducted during regular business hours at
Customer's offices and in such a manner as not to interfere unreasonably with Customer's normal business activities. In no event shall such audits be conducted hereunder more frequently than
[**] every [**] months. If such audit should disclose any underpayment of royalty fees, Customer shall promptly pay Wind River such underpaid amount,
together with interest thereon at a rate of [**] percent ([**]%) per month or partial month during which such amount was owed and unpaid, or the highest
rate allowed by law, from the date such amount became due until finally paid. If the audit reveals that Customer has underpaid Wind River by [**] percent
([**]%) or more of the amount paid, then Customer shall immediately [**] Wind River [**]. 

 7.    TAXES.    All payments and amounts due hereunder shall be paid without deduction,
set-off or counter claim, free and clear of any restrictions or conditions, and without deduction for any taxes, levies, imposts, duties, fees, deductions, withholdings or other
governmental charges. If any deduction is required to be made by law, Customer shall pay in the manner and at the same time such additional amounts as will result in receipt by Wind River of such
amount as would have been received by Wind River had no such amount been required to be deducted. If Customer is claiming sales or use tax exemption, a certified Tax Exempt Certificate must be
attached to this Agreement or applicable purchase order submitted by Customer. 

 8.    TERM AND TERMINATION.    This Agreement shall commence upon the Effective Date and
continue until terminated as set forth in this Agreement. Customer shall have the right to terminate this Agreement for any reason or no reason with thirty (30) days prior notice to Wind River;
provided, however, that no such termination shall relieve Customer of any payment obligation existing as of the date of termination. 

5

 

        This
Agreement will immediately terminate upon Customer's material breach of this Agreement, unless such material breach is curable and is cured by Customer within fifteen
(15) business days after notice of such breach is provided by Wind River. Upon termination, Customer agrees: (i) not to use the
Software for any purpose whatsoever; (ii) to destroy the Software and any copy then in Customer's possession; and (iii) to certify to Wind River that such destruction has taken place.
Notwithstanding the foregoing, if the Agreement is terminated other than for Customer's nonpayment of fees or royalties due to Wind River or for a breach of Section 4 (Confidential
Information), Customer may retain one (1) copy of the Software for a period of one (1) year following termination and use such copy solely to provide support to End Users who have
sublicensed the Run Time Module as of the date of termination. Subject to the foregoing, upon termination Wind River may repossess all copies of the Software then in Customer's possession or control.
Termination of this Agreement shall not affect any End User sublicenses previously granted by Customer pursuant to Section 2.2. These remedies shall be cumulative and in addition to any other
remedies available to Wind River. The following Sections shall survive any termination of this Agreement: Sections 1, 4, 5, 6, 7, 8, 10.2, 12, 13 and 14. 

        In
the event that any of the following events occur: (i) Wind River discontinues its line of business related to the Project, (ii) voluntary institution by Wind River of
insolvency, receivership, bankruptcy, or any other proceedings for the settlement of its debts, (iii) involuntary institution by Wind River of receivership, bankruptcy, or any other proceedings
for the settlement of the other party's debt, which proceedings are not resolved within thirty (30) days, (iv) the making of a general assignment by Wind River for the benefit of its
creditors, (v) dissolution of Wind River, by merger or otherwise, then in any such event, Customer shall have a period of ninety (90) days from the date of such event to purchase from
Wind River or its successors or assigns a perpetual license to such Software on commercially reasonable terms mutually agreeable to the parties. 

 9.    KEYS AND ACCESS.    Wind River agrees to provide to Customer those Software keys which
are reasonably necessary to permit Customer to gain access to the Software contained on media shipped to Customer and which Software has been properly licensed to Customer pursuant to a license
agreement. All such keys shall be considered the Confidential Information of Wind River. Notwithstanding anything to the contrary in this Agreement, Customer hereby acknowledges that Customer shall
have no right or license to any software shipped to Customer on media as provided above which software is not properly licensed pursuant to a license agreement, that any such software is included
therein solely as a matter of administrative convenience, and Customer further agrees not to attempt to gain access to, or permit any third party to attempt to gain access to, such software. Customer
shall not disclose the Software keys to any third party. 

10.   WARRANTY.  

        10.1    Limited Warranty.    Wind River warrants (i) that the media on which the Software is delivered will be
free from defects in materials or workmanship for a period of [**] days from the date Wind River ships the media to Customer ("Media Warranty Period") and the Software will
perform substantially in compliance with the applicable documentation for a period of [**] days from the date Wind River ships the Software to Customer ("Specifications
Warranty Period"). If during the Media Warranty Period, the media on which Software is delivered proves to be defective, Wind River will either repair or replace such media, at Wind River's option and
as Customer's sole remedy for any breach of the media warranty. If during the Specifications Warranty Period, Customer notifies Wind River that the Software fails to substantially conform to
applicable documentation, then at Wind River's option and as Customer's sole remedy, Wind River will repair or replace such Software so that it substantially complies with the applicable
documentation, or Wind River shall refund all amounts paid by Customer under this Agreement for the Software which exhibits such failure. Customer assumes full responsibility for: (i) the
selection of the Software; (ii) verifying the results obtained from the use of the Software; and (iii) taking appropriate measures to prevent loss of data. Wind River does 

6

 

not
warrant that the operation of the Software will meet Customer's requirements or that Customer will be able to achieve any particular results from use or modification of the Software or that the
Software will operate free from error. 

        10.2    Warranty Disclaimer.    EXCEPT AS EXPRESSLY SET FORTH IN SECTION 10, WIND RIVER AND ITS LICENSORS DISCLAIM ALL
WARRANTIES, EXPRESS, IMPLIED AND STATUTORY INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT OF THIRD PARTY RIGHTS.
NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY WIND RIVER, ITS DEALERS, DISTRIBUTORS, AGENTS OR EMPLOYEES SHALL IN ANY WAY INCREASE THE SCOPE OF THIS WARRANTY. 

 11.    SUPPORT.    The Software license fees do not include support, installation or training.
Installation and training services, to the extent offered by Wind River, may be separately purchased at Wind River's then-current rates. 

12.   INDEMNIFICATION.  

        12.1    Wind River's Indemnity.    Wind River will indemnify, defend and hold harmless Customer, its shareholders,
directors, officers, employees and agents from and against any losses, costs, or damages (including reasonable attorneys' fees) resulting from or in connection with any claims by third parties that
the Software violates any U.S. patent, copyright, trade secret or trademark, provided that Wind
River is notified promptly of such claim and at its expense is given full and complete authority (including settlement authority), information and assistance by Customer for such defense. In the event
that the Software is held in any such claim to infringe such a right and its use is enjoined, or if in the opinion of Wind River the Software is likely to become the subject of such a claim, Wind
River at its own election and expense will either (i) procure for Customer the right to continue using the Software, or (ii) modify or replace the Software so that it becomes
non-infringing while giving substantially equivalent performance. In the event that (i) or (ii) above are not, in Wind River's sole determination, obtainable using reasonable
commercial efforts, then Wind River may terminate this Agreement and refund amount Customer paid Wind River under this Agreement for the Software which is the subject of such claim, less a reasonable
charge for Customer's past beneficial use based on depreciation of the Software on a straight line basis over a period of [**] years from the Effective Date. The
indemnification obligation shall not apply to actions or claims to the extent that such actions or claims are based on or result from: (i) modifications made to the Software by a party other
than Wind River; (ii) the combination of the Software with items not supplied by Wind River; and (iii) Customer's failure to use the most recent version of the Software provided by Wind
River to Customer within a reasonable time period after such version is provided;; in each case above, but for which modification, combination, or failure to use (respectively), no such alleged
infringement would have occurred. THIS SECTION STATES CUSTOMER'S EXCLUSIVE REMEDY AND WIND RIVER'S ENTIRE LIABILITY FOR ANY CLAIM OF INFRINGEMENT. 

        12.2    Customer's Indemnity.    Customer agrees to indemnify, defend and hold harmless Wind River, its shareholders,
directors, officers, employees, agents and affiliated companies from and against any losses, costs, or damages (including reasonable attorneys' fees) resulting from or in connection with any claims by
third parties resulting from or in connection with the use, manufacture, or distribution of Target Applications by Customer and Customer's direct and indirect End Users in any country, worldwide,
provided that Wind River gives Customer prompt written notice of any such claim, tenders to Customer the defense or settlement of any such claim at Customer's expense, and cooperates with Customer, at
Customer's expense, in defending or settling such claim. This indemnification obligation shall not apply to infringement actions or claims if such actions or claims are based solely on the use of the
Wind River software in the form provided by Wind River. Nothing in the foregoing sentence is 

7

 

intended
to limit any indemnification Customer may obtain from a party other than Wind River, such as Icon Laboratories, Inc. 

 13.    LIMITATION OF LIABILITY.    EXCEPT FOR DAMAGES ARISING UNDER SECTION 12
(INDEMNIFICATION) OR SECTION 4 (CONFIDENTIAL INFORMATION), NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND (INCLUDING
DAMAGES FOR INTERRUPTION OF BUSINESS, PROCUREMENT OF SUBSTITUTE GOODS, LOSS OF PROFITS, OR THE LIKE) REGARDLESS OF THE FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT
LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL WIND RIVER'S AGGREGATE CUMULATIVE LIABILITY FOR ANY CLAIMS ARISING OUT OF OR
RELATED TO THIS AGREEMENT EXCEED THE AMOUNTS PAID TO WIND RIVER BY CUSTOMER PURSUANT TO THIS AGREEMENT. 

THE
LIMITED WARRANTY, LIMITED REMEDIES, WARRANTY DISCLAIMER AND LIMITED LIABILITY ARE FUNDAMENTAL ELEMENTS OF THE BASIS OF THE BARGAIN BETWEEN WIND RIVER AND CUSTOMER. WIND RIVER WOULD NOT BE ABLE TO
PROVIDE THE SOFTWARE WITHOUT SUCH LIMITATIONS. 

14.   GENERAL.  

        14.1    Governing Law and Forum.    This Agreement shall be governed in all respects by the laws of the United States
of America and the State of Delaware without regard to conflicts of law principles. Other than for breaches of Section 4 (Confidential Information), prior to instituting any legal proceedings
for claims, disputes, or controversies arising under, out of, or in connection with this Agreement, the parties shall negotiate in good faith for a period of thirty (30) days in an attempt to
resolve such claim, dispute or controversy. 

        14.2    Attorneys' Fees.    In the event any proceeding or lawsuit is brought by Wind River or Customer in connection
with this Agreement, the prevailing party in such proceeding shall be entitled to receive its costs, expert witness fees and reasonable attorneys' fees, including costs and fees on appeal. 

        14.3    Injunctive Relief.    It is understood and agreed that, notwithstanding any other provisions of this
Agreement, a material breach of the provisions of this Agreement by Customer will cause Wind River irreparable damage for which recovery of money damages would be inadequate, and that Wind River shall
therefore be entitled to obtain timely injunctive relief to protect Wind River's rights under this Agreement in addition to any and all remedies available at law. 

        14.4    Notices.    All notices or reports permitted or required under this Agreement shall be in writing and mailed
or delivered to the applicable party at the addresses in Exhibit A or such other address as either party may designate for itself in writing. If the notice is to Wind River, a copy shall also
be sent to the attention of its Vice President, Intellectual Property and Legal Affairs at the Wind River address specified in Exhibit A. All such notices, reports and other communications
shall be deemed given upon personal delivery or when mailed (which mailing must be accomplished by first class mail, postage prepaid; express overnight carrier service; or registered mail, return
receipt requested) five (5) days after deposit in the mail. 

        14.5    No Agency.    Nothing contained herein shall be construed as creating any agency, employment relationship,
partnership, principal-agent or other form of joint enterprise between the parties. 

8

 

        14.6    Force Majeure.    Neither party shall be liable hereunder by reason of any failure or delay in the performance
of its obligations hereunder (except for the payment of money) on account of strikes, shortages, riots, insurrection, fires, flood, storm, explosions, acts of God, war, governmental action, labor
conditions, earthquakes, material shortages or any other cause which is beyond the reasonable control of such party. 

        14.7    Waiver.    The failure of either party to require performance by the other party of any provision hereof shall
not affect the full right to require such performance at any time thereafter; nor shall the waiver by either party of a breach of any provision hereof be taken or held to be a waiver of the provision
itself. 

        14.8    Severability.    In the event that any provision of this Agreement shall be unenforceable or invalid under any
applicable law or be so held by applicable court decision, such unenforceability or invalidity shall not render this Agreement unenforceable or invalid as a whole, and, in such event, such provision
shall be changed and interpreted so as to best accomplish the objectives of such unenforceable or invalid provision within the limits of applicable law or applicable court decisions. 

        14.9    Use of Customer's Name.    Customer agrees that, upon Customer's public announcement of product designed with
or containing Wind River products or services, Wind River may (i) publicly disclose the nature of the Wind River involvement in said product and (ii) use Customer's name and may disclose
that Customer is a licensee of Wind River products or services in Wind River advertising, press, promotion and similar public disclosures with respect to the Software and professional services;
provided, however, that such advertising, promotions or similar public disclosures shall not indicate that Customer in any way endorses any Wind River products, without prior written permission from
Customer. 

        14.10    Headings.    The section headings appearing in this Agreement are inserted only as a matter of convenience
and in no way define, limit, construe, or describe the scope or extent of such section or in any way affect this Agreement. 

        14.11    Government End Users.    The Software is a "commercial item" as that term is defined in 48 C.F.R. 2.101,
consisting of "commercial computer software" and "commercial computer software documentation" as such terms are used in 48 C.F.R. 12.212. Consistent with 48 C.F.R. 12.212 and 48
C.F.R 227.7202-1 through 227.7202-4, Customer will provide the Software to U.S. Government End Users only pursuant to the terms and conditions therein. 

        14.12    Assignment.    Customer may not assign its rights or delegate its obligations hereunder, either in whole or
in part, whether voluntarily, by operation of law or otherwise, without the prior written consent of Wind River, such consent not to be unreasonably withheld. Wind River's prior consent shall not be
required for an assignment of this Agreement by Customer resulting from a merger, reorganization, re-incorporation, or acquisition of the stock or assets of a party (an "Acquisition"),
provided that any such merger, sale or other combination is not with or to a then-existing direct competitor of Wind River, provided that: (i) Customer provides Wind River with
notice within thirty (30) days of the closing of such Acquisition; (ii) Customer is current with all reports and payments required under the Agreement and not in breach of any material
obligation, and, (iii) the assignee provides Wind River a written certification that this Agreement shall apply only to (1) the use of the Software on the same Project described in
Exhibit A that Customer had been authorized to use the Software for prior to the Acquisition and (2) Run-Time Modules may only be integrated and distributed in the same
Target Applications in which Customer had been authorized to integrated and distribute Run-Time Modules prior to the Acquisition. Wind River may assign this Agreement, and its rights and
obligations hereunder, in its sole discretion. 

9

 

        14.13    Counterparts.    This Agreement may be executed simultaneously in two or more counterparts, each of which
will be considered an original, but all of which together will constitute one and the same instrument. 

        14.14    Export Control.    All Software and technical information delivered under this Agreement are subject to U.S.
export control laws and may be subject to export or import regulations in other countries. Customer agrees to strictly comply with all such laws and regulations. 

        14.15    Language.    This Agreement is in the English language only, which language shall be controlling in all
respects, and all versions of this Agreement in any other language shall be for accommodation only and shall not be binding on the parties to this Agreement. All communications and notices made or
given pursuant to this Agreement, and all documentation and support to be provided, unless otherwise noted, shall be in the English language. 

        14.16    Entire Agreement; Modification.    This Agreement constitutes the entire agreement between Customer and Wind
River and supersedes in their entirety any and all oral or written agreements previously existing between Customer and Wind River with respect to the subject matter hereof. Except as provided in
Exhibit A, the terms and conditions of any purchase order or other instrument issued by Customer in connection with this Agreement shall be of no force or effect. This Agreement may only
be amended or supplemented by a writing that refers explicitly to this Agreement and that is signed by duly authorized representatives of Customer and Wind River. 

IN WITNESS WHEREOF, the parties' authorized representatives have executed this Agreement as of the Effective Date. 

	WIND RIVER	 	EQUALLOGIC, INC.
	
WIND RIVER SYSTEMS, INC.	
 	

/s/  PETER C. HAYDEN      

	

By:	

/s/  DIANE HARVEY      
	
 	

By:	

    PETER C. HAYDEN

	Title:	    Inside Sales Manager
	 	Title:	    President/CEO

	Date:	    30 January 2002
	 	Date:	    1/30/02

10

 
Wind River License Number:                 

EXHIBIT A

WIND RIVER SYSTEMS, INC.

SOURCE CODE LICENSE AND DISTRIBUTION AGREEMENT  

        Notwithstanding anything contrary in the Agreement, the parties acknowledge and agree that once Customer has executed this Exhibit A for a designated
Project, Customer shall not be required to execute an additional Exhibit if Customer wishes to obtain rights to distribute additional Run-Time Modules under the same Project. At Customer's
option, Customer may issue a form Purchase Order in lieu of executing an additional Exhibit provided that (i) any Run-Time Modules licensed are for use under the same Project,
(ii) Customer provides the required information on this Exhibit A in any such Purchase Order, and (iii) the terms and conditions on such purchase order which in any way conflict
or differ with the terms and conditions of the Agreement shall have no effect. 

Project:
EqualLogic Storage System (only product under development as of Jan 2002). Customer can modify the Project description (i) so long as the Project continues to be storage related and
(ii) for a period of one year from the Effective Date of this Agreement, or until the first shipment of a Run-Time Module by Customer, whichever occurs first; provided, however,
that if the Agreement is assigned or transferred by Customer, this right shall terminate immediate upon such transfer or assignment. New releases of the same Project shall not be deemed a new Project. 

Source
Code Product(s) by Name: Rapid Control Suite (includes Mibway for Rapid Control, Rapid Control for Applets, Rapid Control for Cli and Rapid Control for Web), SNMP v1/v2, SNMP v3 

Approved
Host CPU: Windows, Linux and NetBSD 

Target
Application: MIPS based storage system with disk drives and redundant controller on the embedded NetBSD/EqualLogic OS.
                                       

Run-Time
Module: Rapid Control Suite, SNMP v1/v2/v3
                                       

Approved
Target CPU:       MIPS TBD. By providing notice to Wind River, Customer can change Approved Target CPU for a period of one year from the
Effective Date of this Agreement or until the first shipment of a Run-Time Module by Customer, whichever occurs first. 

License Fees:  

Development License "Bands":  

	 
	 	Band A
	 	Band B
	 	Band C
	 	Band D
	 	Band E
	 	Band F

	 
	 	 
	 	($)
	 	From:

($)
	 	To:

($)
	 	From:

($)
	 	To:

($)
	 	From:

($)
	 	To:

($)
	 	From:

($)
	 	To:

($)
	 	From:

($)
	 	To:

($)

	License Fee Range	 	to	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]

11

 

Option 1—Per-Unit Block Purchasing  

	Quantity
 
	 	Band A

($)
	 	Band B

($)
	 	Band C

($)
	 	Band D

($)
	 	Band E

($)
	 	Band F

($)

	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]

Option 1—Per-Unit Cumulative Purchasing  

	Quantity
 
	 	Band A

($)
	 	Band B

($)
	 	Band C

($)
	 	Band D

($)
	 	Band E

($)
	 	Band F

($)

	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]
	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]	 	[**]

Notes:

	1.
	There
is a minimum order size of [**] target licenses.

	2.
	Customer
may elect to "buy-in" farther down on the schedule by pre-purchasing the minimum number of target licenses to qualify for a certain quantity price
break level. Example: Customer issues purchase order for $[**] = [**] target licenses for a protocol in Band B at $[**].
The next [**] target licenses will also be at $[**] each, the next [**] licenses will cost $[**] each,
and so on.

	3.
	Follow-on
pricing based on initial purchase and cumulative quantity purchased. Cumulative pricing is in effect for the mutually agreed upon life of the project or
[**] years by default. 

Authorized
Number of Run-Time Module Copies: TBD                

Per
Copy Royalty/Pricing Schedule: Annual, unlimited & option to go to grids. Customer shall choose a pricing structure by one year from the Effective Date of this Agreement or prior to the
first shipment of a Run-Time Module by Customer, whichever occurs first. Equal Logic will have the option to purchase project unlimited usage of the bundle including the Rapid Control
Suite, SNMP v1/v2 and SNMP v3 for $[**] before first product shipment or one year from the Effective Date of this Agreement, whichever occurs first. Alternatively, Equal Logic
may purchase a one year unlimited usage for the same products and timeframes for $[**], renewable annually. Under the one year unlimited use, once [**]
consecutive years have been purchased by EqualLogic, this will become an unlimited project 

12

 

usage.
In addition, if mutually agreed, Equal Logic and Wind River can negotiate per unit fees at any time. The following are excluded from per unit royalty fee calculations: 

	•
	Non-revenue
producing units, up to [**] per year, for field testing, marketing, evaluations or demonstrations.

	•
	Internal-use
units for development, testing, training, etc.

	•
	Software
updates, upgrades and patches distributed by Customer to its customers.

	•
	Redundant
controller configurations shall count as a single royalty unit, provided that there is no possibility that multiple copies of the Run-Time Module may
be used at the same time in such redundant controlled configurations. 

Authorized
Site (address and building identification): 9 Townsend West, Nashua, NH (or current engineering location of EqualLogic) 

Back-up
Site: One other site TBD by Customer (and can be changed by Customer at any time when used for archival purposes, consistent with Customer's standard
archive policy). Customer shall provide Wind River with notice of the address of the Back-up Site and any change thereto. 

Additional
Terms: None. 

Sample
Form of Target Report: 

Customer Name

Quarterly Shipment Report

Quarter Ended 3/31/00 

	Month
 
	 	Revenue Units
	 	Total Units Shipped

	January	 	[**]	 	 	[**]
	February	 	[**]	 	 	[**]
	March	 	[**]	 	 	[**]
	Total	 	[**]	 	 	[**]
	 	 	 	 	$	[**] per unit
	Target Application Royalty Fees Payable	 	$	[**]
	Total Units Shipped to Date	 	 	[**]

	Customer Technical Contact (name, telephone and fax number):	 	Paula Long

(603) 579-9762 x202

(F)(603) 579-6910

Address for notices:  

	To Wind River

Wind River Systems, Inc.

500 Wind River Way

Alameda, CA 94501

Attn: Vice President, Intellectual Property and Legal Affairs	 	To Customer

EqualLogic, Inc.

9 Townsend West

Nashua, NH 03063

Attn: Peter Hayden

13

 

IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be executed by their duly authorized representatives. 

	AGREED TO:	 	 	 
	
WIND RIVER SYSTEMS, INC.	
 	
EQUALLOGIC, INC.
	

By:	

/s/  DIANE HARVEY      
	
 	

By:	

/s/  PETER C. HAYDEN      

	Title:	    Inside Sales Manager
	 	Title:	    President/CEO

	Date:	    30 January 2002
	 	Date:	    1/30/02

Form must be completed fully to ensure prompt shipment of order.  

14Exhibit 4.1

 

EXECUTION COPY

 

 

 

PIH
ACQUISITION CO.,

 

to be ultimately merged with and into

 

PANOLAM INDUSTRIES INTERNATIONAL, INC.

 

as Issuer

 

and

 

The GUARANTORS named herein

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Trustee

 

 

10 3/4% SENIOR SUBORDINATED NOTES DUE 2013

 

 

INDENTURE

 

Dated as of September 30, 2005

 

 

 

 

 

Table of Contents

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  1           DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
  SECTION 1.01.

  	
  Definitions

  	
  1

  
	
   

  	
  SECTION 1.02.

  	
  Other Definitions

  	
  27

  
	
   

  	
  SECTION 1.03.

  	
  Incorporation by Reference
  of Trust Indenture Act

  	
  28

  
	
   

  	
  SECTION 1.04.

  	
  Rules of Construction

  	
  29

  
	
  ARTICLE
  2         THE NOTES

  	
  29

  
	
   

  	
  SECTION 2.01.

  	
  Amount of Notes

  	
  29

  
	
   

  	
  SECTION 2.02.

  	
  Form and Dating

  	
  30

  
	
   

  	
  SECTION 2.03.

  	
  Execution and Authentication

  	
  31

  
	
   

  	
  SECTION 2.04.

  	
  Registrar and Paying Agent

  	
  32

  
	
   

  	
  SECTION 2.05.

  	
  Paying Agent to Hold Money in Trust

  	
  32

  
	
   

  	
  SECTION 2.06.

  	
  Holder Lists

  	
  33

  
	
   

  	
  SECTION 2.07.

  	
  Transfer and Exchange

  	
  33

  
	
   

  	
  SECTION 2.08.

  	
  Replacement Notes

  	
  33

  
	
   

  	
  SECTION 2.09.

  	
  Outstanding Notes

  	
  34

  
	
   

  	
  SECTION 2.10.

  	
  Temporary Notes

  	
  34

  
	
   

  	
  SECTION 2.11.

  	
  Cancellation

  	
  34

  
	
   

  	
  SECTION 2.12.

  	
  Defaulted Interest

  	
  35

  
	
   

  	
  SECTION 2.13.

  	
  CUSIP Numbers, ISINs, etc

  	
  35

  
	
   

  	
  SECTION 2.14.

  	
  Calculation of Principal Amount of Notes

  	
  35

  
	
  ARTICLE 3         REDEMPTION

  	
  35

  
	
   

  	
  SECTION 3.01.

  	
  Redemption

  	
  35

  
	
   

  	
  SECTION 3.02.

  	
  Applicability of Article

  	
  36

  
	
   

  	
  SECTION 3.03.

  	
  Notices to Trustee

  	
  36

  
	
   

  	
  SECTION 3.04.

  	
  Selection of Notes to Be Redeemed

  	
  36

  
	
   

  	
  SECTION 3.05.

  	
  Notice of Optional Redemption

  	
  36

  
	
   

  	
  SECTION 3.06.

  	
  Effect of Notice of Redemption

  	
  37

  
	
   

  	
  SECTION 3.07.

  	
  Deposit of Redemption Price

  	
  37

  
	
   

  	
  SECTION 3.08.

  	
  Notes Redeemed in Part

  	
  37

  
	
   

  	
  SECTION 3.09.

  	
  Repurchase Upon Change of Control Offer

  	
  37

  
	
   

  	
  SECTION 3.10.

  	
  Repurchase Upon Application of Net Proceeds

  	
  39

  
	
  ARTICLE 4         COVENANTS

  	
  41

  
								

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.01.

  	
  Payment of Notes

  	
  41

  
	
   

  	
  SECTION 4.02.

  	
  Reports and Other Information

  	
  41

  
	
   

  	
  SECTION 4.03.

  	
  Limitation on Incurrence of Indebtedness and
  Issuance of Preferred Stock

  	
  42

  
	
   

  	
  SECTION 4.04.

  	
  Limitation on Restricted Payments

  	
  46

  
	
   

  	
  SECTION 4.05.

  	
  Dividend and Other Payment Restrictions Affecting
  Subsidiaries

  	
  51

  
	
   

  	
  SECTION 4.06.

  	
  Asset Sales

  	
  53

  
	
   

  	
  SECTION 4.07.

  	
  Transactions with Affiliates

  	
  55

  
	
   

  	
  SECTION 4.08.

  	
  Change of Control

  	
  57

  
	
   

  	
  SECTION 4.09.

  	
  Compliance Certificate

  	
  57

  
	
   

  	
  SECTION 4.10.

  	
  Further Instruments and Acts

  	
  57

  
	
   

  	
  SECTION 4.1l.

  	
  Future Guarantors

  	
  58

  
	
   

  	
  SECTION 4.12.

  	
  Liens

  	
  58

  
	
   

  	
  SECTION 4.13.

  	
  Maintenance of Office or Agency

  	
  58

  
	
   

  	
  SECTION 4.14.

  	
  Limitation on Layering

  	
  59

  
	
   

  	
  SECTION 4.15.

  	
  Business Activities

  	
  59

  
	
   

  	
  SECTION 4.16.

  	
  Payments for Consent

  	
  59

  
	
   

  	
  SECTION 4.17.

  	
  Corporate Existence

  	
  59

  
	
   

  	
  SECTION 4.18.

  	
  Payment of Taxes and Other Claims

  	
  59

  
	
   

  	
  SECTION 4.19.

  	
  Maintenance of Properties and Insurance

  	
  60

  
	
   

  	
  SECTION 4.20.

  	
  Compliance with Laws

  	
  60

  
	
   

  	
  SECTION 4.21.

  	
  Waiver of Stay, Extension or Usury Laws

  	
  61

  
	
  ARTICLE 5         MERGER,
  CONSOLIDATION OR SALE OF ASSETS

  	
  61

  
	
   

  	
  SECTION 5.01.

  	
  Merger, Consolidation or Sale of Assets

  	
  61

  
	
  ARTICLE 6         DEFAULTS
  AND REMEDIES

  	
  62

  
	
   

  	
  SECTION 6.01.

  	
  Events of Default

  	
  62

  
	
   

  	
  SECTION 6.02.

  	
  Acceleration

  	
  64

  
	
   

  	
  SECTION 6.03.

  	
  Other Remedies

  	
  65

  
	
   

  	
  SECTION 6.04.

  	
  Waiver of Past Defaults

  	
  65

  
	
   

  	
  SECTION 6.05.

  	
  Control by Majority

  	
  66

  
	
   

  	
  SECTION 6.06.

  	
  Limitation on Suits

  	
  66

  
	
   

  	
  SECTION 6.07.

  	
  Rights of the Holders to Receive Payment

  	
  66

  
						

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.08.

  	
  Collection Suit by Trustee

  	
  66

  
	
   

  	
  SECTION 6.09.

  	
  Trustee May File Proofs of Claim

  	
  67

  
	
   

  	
  SECTION 6.10.

  	
  Priorities

  	
  67

  
	
   

  	
  SECTION 6.11.

  	
  Undertaking for Costs

  	
  67

  
	
   

  	
  SECTION 6.12.

  	
  Waiver of Stay or Extension Laws

  	
  67

  
	
  ARTICLE 7         TRUSTEE

  	
  68

  
	
   

  	
  SECTION 7.01.

  	
  Duties of Trustee

  	
  68

  
	
   

  	
  SECTION 7.02.

  	
  Rights of Trustee

  	
  69

  
	
   

  	
  SECTION 7.03.

  	
  Individual Rights of Trustee

  	
  70

  
	
   

  	
  SECTION 7.04.

  	
  Trustee’s Disclaimer

  	
  70

  
	
   

  	
  SECTION 7.05.

  	
  Notice of Defaults

  	
  70

  
	
   

  	
  SECTION 7.06.

  	
  Reports by Trustee to the Holders

  	
  70

  
	
   

  	
  SECTION 7.07.

  	
  Compensation and Indemnity

  	
  70

  
	
   

  	
  SECTION 7.08.

  	
  Replacement of Trustee

  	
  71

  
	
   

  	
  SECTION 7.09.

  	
  Successor Trustee by Merger

  	
  72

  
	
   

  	
  SECTION 7.10.

  	
  Eligibility; Disqualification

  	
  73

  
	
   

  	
  SECTION 7.11.

  	
  Preferential Collection of Claims Against Company

  	
  73

  
	
  ARTICLE 8         DISCHARGE
  OF INDENTURE; DEFEASANCE

  	
  73

  
	
   

  	
  SECTION 8.01.

  	
  Discharge of Liability on Notes; Defeasance

  	
  73

  
	
   

  	
  SECTION 8.02.

  	
  Conditions to Defeasance

  	
  74

  
	
   

  	
  SECTION 8.03.

  	
  Application of Trust Money

  	
  76

  
	
   

  	
  SECTION 8.04.

  	
  Repayment to the Company

  	
  76

  
	
   

  	
  SECTION 8.05.

  	
  Indemnity for U.S. Government Securities

  	
  76

  
	
   

  	
  SECTION 8.06.

  	
  Reinstatement

  	
  76

  
	
  ARTICLE 9         AMENDMENTS
  AND WAIVERS

  	
  77

  
	
   

  	
  SECTION 9.01.

  	
  Without Consent of the Holders

  	
  77

  
	
   

  	
  SECTION 9.02.

  	
  With Consent of the Holders

  	
  77

  
	
   

  	
  SECTION 9.03.

  	
  Compliance with Trust Indenture Act

  	
  79

  
	
   

  	
  SECTION 9.04.

  	
  Revocation and Effect of Consents and Waivers

  	
  79

  
	
   

  	
  SECTION 9.05.

  	
  Notation on or Exchange of Notes

  	
  79

  
	
   

  	
  SECTION 9.06.

  	
  Trustee to Sign Amendments

  	
  79

  
	
   

  	
  SECTION 9.07.

  	
  Payment for Consent

  	
  80

  
	
  ARTICLE 10         GUARANTEES

  	
  80

  

 

iii

 

CROSS-REFERENCE
TABLE

 

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  310

  	
  (a)(l)

  	
  7.10

  
	
   

  	
  (a)(2)

  	
  7.10

  
	
   

  	
  (a)(3)

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
  N.A.

  
	
   

  	
  (b)

  	
  7.08; 7.10

  
	
   

  	
  (c)

  	
  N.A.

  
	
  311

  	
  (a)

  	
  7.11

  
	
   

  	
  (b)

  	
  7.11

  
	
   

  	
  (c)

  	
  N.A.

  
	
  312

  	
  (a)

  	
  2.06

  
	
   

  	
  (b)

  	
  1303

  
	
   

  	
  (c)

  	
  13.03

  
	
  313

  	
  (a)

  	
  7.06

  
	
   

  	
  (b)(l)

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
  7.06

  
	
   

  	
  (c)

  	
  7.06

  
	
   

  	
  (d)

  	
  7.06

  
	
  314

  	
  (a)

  	
  4.02; 4.09

  
	
   

  	
  (b)

  	
  N.A.

  
	
   

  	
  (c)(l)

  	
  13.04

  
	
   

  	
  (c)(2)

  	
  13.04

  
	
   

  	
  (c)(3)

  	
  N.A.

  
	
   

  	
  (d)

  	
  N.A.

  
	
   

  	
  (e)

  	
  13.05

  
	
   

  	
  (f)

  	
  4.10

  
	
  315

  	
  (a)

  	
  7.01

  
	
   

  	
  (b)

  	
  7.05

  
	
   

  	
  (c)

  	
  7.01

  
	
   

  	
  (d)

  	
  7.01

  
	
   

  	
  (e)

  	
  6.11

  
	
  316

  	
  (a) (last sentence)

  	
  13.06

  
	
   

  	
  (a)(1)(A)

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
  6.04

  
	
   

  	
  (a)(2)

  	
  N.A.

  
	
   

  	
  (b)

  	
  6.07

  
	
  317

  	
  (a)(l)

  	
  6.08

  
	
   

  	
  (a)(2)

  	
  6.09

  
	
   

  	
  (b)

  	
  2.05

  
	
  318

  	
  (a)

  	
  13.01

  

 

N.A. Means Not
Applicable.

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

 

iv

 

INDENTURE dated as of September 30, 2005 among PIH Acquisition Co.
(“PIH”) Panolam Industries International, Inc., (“Panolam”), the Guarantors (as
defined herein), and Wells Fargo Bank, National Association, as trustee (the
“Trustee”).

 

RECITALS

 

PIH has duly authorized the issuance of its 10 3/4% Senior Subordinated
Notes due 2013 (the “Notes”) and the execution and delivery of this Indenture.

 

Pursuant to that certain Agreement and Plan of Merger, dated as of July
16, 2005 (the “Merger Agreement”), by and among GS Holdings Co., PIH, Panolam
Industries Holdings, Inc. (“Panolam Holdings”) and TC Group, L.L.C., PIH will
merge (the “Acquisition”) with and into Panolam Holdings. On the Issue Date (as
defined herein) through a series of mergers (collectively, the “Mergers”),
Panolam Holdings will ultimately be merged with and into Panolam. Upon
consummation of the Acquisition and the Mergers, Panolam, by operation of law,
will assume all of PIH’s obligations under this Indenture, and Panolam will be
the successor issuer of the Notes and shall cause the Guarantors to issue the
Guarantees. References in this Indenture to the “Company” means Panolam and its
subsidiaries after giving pro forma effect to the Acquisition and the Mergers.

 

Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of Notes issued under this
Indenture.

 

ARTICLE 1

 

DEFINITIONS AND INCORPORATION BY
REFERENCE

 

SECTION 1.01. Definitions.

 

“Acquired Debt” means, with respect to any specified Person:

 

(1)       Indebtedness of any other
Person existing at the time such other Person is merged with or into or became
a Restricted Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, or to provide all or any
portion of the funds or credit support utilized in connection with, such other
Person merging with or into, or becoming a Restricted Subsidiary of, such
specified Person; and

 

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

 

“Additional Notes” means 10 3/4% Senior Subordinated Notes due 2013
issued under the terms of this Indenture subsequent to the Issue Date.

 

“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.

 

“Applicable Premium” means, with respect to any Note on any applicable
redemption date, the greater of:

 

(1)       1.0% of the then
outstanding principal amount of the Note; and

 

(2)       the excess of:

 

(a)       the present
value at such redemption date of (i) the redemption price of the Note at
October 1, 2009 (such redemption price being set forth in the table appearing
in Section 5 of Appendix A) plus (ii) all required interest payments due on the
Note, through October 1, 2009 (excluding accrued but unpaid interest), computed
using a discount rate equal to the Treasury Rate as of such redemption date
plus 50 basis points; over

 

(b)       the then
outstanding principal amount of the Note.

 

“Asset Sale” means (i) the sale, conveyance, transfer, lease or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and leaseback)
of the Company or any Restricted Subsidiary (each referred to in this
definition as a “disposition”) or (ii) the issuance or sale of Equity Interests
of any Restricted Subsidiary other than directors’ qualifying shares or shares
required to be held by Foreign Subsidiaries (whether in a single transaction or
a series of related transactions), in each case, other than:

 

(1)       a disposition of Cash
Equivalents or obsolete or worn out property or equipment in the ordinary
course of business or inventory (or other assets) held for sale in the ordinary
course of business and dispositions of property no longer used or useful in the
conduct of the business of the Company and its Restricted Subsidiaries;

 

(2)       the disposition of all or
substantially all of the assets of the Company in a manner permitted pursuant
to Section 5.01 or any disposition that constitutes a Change of Control;

 

(3)       the making of any
Restricted Payment or Permitted Investment that is permitted to be made, and is
made, pursuant to Section 4.04 or the granting of a Lien permitted by Section
4.12;

 

(4)       any disposition of assets
or issuance or sale of Equity Interests of any Restricted Subsidiary in any
transaction or series of transactions with an aggregate Fair Market Value of
less than $2.5 million;

 

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

 

2

 

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

 

(7)       foreclosures on assets;

 

(8)       disposition of an account
receivable in connection with the collection or compromise thereof; and

 

(9)       the grant in the ordinary
course of business of any licenses of patents, trademarks, know-how and any
other intellectual property.

 

“Bank Indebtedness” means all Obligations pursuant to the Credit
Agreement.

 

“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal,
state or foreign law for the reorganization or relief of debtors, including
laws providing for any plan of compromise or arrangement or other corporate
proceeding involving or affecting creditors.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular “person” (as that term is used in
Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have
beneficial ownership of all securities that such “person” has the right to
acquire by conversion or exercise of other securities, whether such right is
currently exercisable or is exercisable only upon the occurrence of a
subsequent condition. The terms “Beneficially Owns,” “Beneficially Owned” and
“Beneficial Ownership” have a corresponding meaning.

 

“Board of Directors” means

 

(1)       with respect to a
corporation, the board of directors of the corporation;

 

(2)       with respect to a
partnership, the board of directors of the general partner of the partnership;
and

 

(3)       with respect to any other
Person, the board or committee of such Person serving a similar function.

 

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

 

“Capital Stock” means:

 

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

 

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

 

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

 

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

 

3

 

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

 

“Cash Equivalents” means:

 

(1)       U.S. dollars or, in the
case of any Foreign Subsidiary, such local currencies held by it from time to
time in the ordinary course of business;

 

(2)       securities issued or
directly and fully and unconditionally guaranteed or insured by the government
or any agency or instrumentality of the United States and backed by the full
faith and credit of the United States or, in the case of Panolam Industries,
Ltd., securities issued or directly and fully and unconditionally guaranteed or
insured by the government or any agency or instrumentality of Canada and backed
by the full faith and credit of Canada;

 

(3)       certificates of deposit,
time deposits 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 Credit Agreement or with any commercial bank having capital and
surplus in excess of $250 million;

 

(4)       repurchase obligations for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;

 

(5)       commercial paper maturing
within 12 months after the date of acquisition and having a rating of at least
A-2 from Moody’s or P-2 from S&P;

 

(6)       readily marketable direct
obligations issued by any state of the United States or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody’s or S&P with maturities of 12 months or less from the date of
acquisition; and

 

(7)       investment in funds which
invest substantially all of their assets in Cash Equivalents of the kinds
described in clauses (1) through (6) of this definition.

 

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

 

(1)       the sale, lease, transfer
or other conveyance, in one or a series of related transactions, of all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to any
Person other than to a Permitted Holder;

 

(2)       the acquisition by any
Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, or any successor provision), including any group acting for
the purpose of acquiring, holding or disposing of securities (within the
meaning of Rule 13d-5(b)(l) under the Exchange Act), other than the Permitted
Holders, in a single transaction or in a related series of transactions, by way
of merger, consolidation or other

 

4

 

business
combination or purchase of Beneficial Ownership, directly or indirectly, of 50%
or more of the total voting power of the Voting Stock of the Company or any of
its direct or indirect parent entities;

 

(3)       the approval by the holders
of Capital Stock of the Company or any of its direct or indirect parent
entities of any plan or proposal for the liquidation, winding up or dissolution
of the Company; or

 

(4)       the first day on which the
majority of the Board of Directors of the Company then in office shall cease to
consist of individuals who are Continuing Directors.

 

“Code” means the United States Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect on the
Issue Date, and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted herefor.

 

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

 

“Consolidated Depreciation and Amortization Expense” means with respect
to any Person for any period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees and other
noncash charges (excluding any noncash item that represents an accrual or
reserve for a cash expenditure for a future period) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis and otherwise
determined in accordance with GAAP.

 

“Consolidated Interest Expense” means, with respect to any Person for
any period, the sum, without duplication, of: (a) consolidated interest expense
of such Person and its Restricted Subsidiaries for such period (including
amortization of original issue discount, noncash interest payments,
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing, the interest component of Capitalized
Lease Obligations and net payments (if any) pursuant to interest rate Hedging
Obligations), and (b) consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, less (c)
interest income actually received in cash for such period.

 

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

 

(1)       any net after-tax gains or
losses from Asset Sales and extraordinary gains or losses will be excluded;

 

(2)       any net after-tax effect of
expenses relating to the Transactions will be excluded to the extent Net Income
was reduced thereby in such period;

 

(3)       the net income (but not
loss) of any Subsidiary of the Company (other than a Guarantor) to the extent
that the declaration of dividends or similar distributions by that Subsidiary
of that income is restricted by a contract, operation of law or otherwise will
be excluded;

 

5

 

(4)       the net income (but not
loss) of any Person, other than the Company or a Subsidiary, will be excluded,
except to the extent of cash dividends or distributions paid to the Company or
to a Restricted Subsidiary by such Person;

 

(5)       any restoration to income
of any material contingency reserve will be excluded, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date;

 

(6)       income or loss attributable
to discontinued operations (including, without limitation, operations disposed
of during such period whether or not such operations were classified as
discontinued) will be excluded;

 

(7)       all gains realized on or
because of the purchase or other acquisition by the Company or any of its
Restricted Subsidiaries of any securities of such Person or any of its
Restricted Subsidiaries will be excluded;

 

(8)       the cumulative effect of a
change in accounting principles will be excluded; and

 

(9)       in the case of a successor
to the Company by consolidation or merger or as a transferee of the Company’s
assets, any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets will be excluded.

 

“Consolidated Tangible Assets” means, as of any date of determination,
the sum of the amounts that would appear on a consolidated balance sheet of the
Company and its Restricted Subsidiaries, excluding goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense, organization
expense and any other assets properly classified as intangible assets in
accordance with GAAP, determined in accordance with GAAP.

 

“Contingent Obligations” means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security herefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or
(iii) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation against loss in respect
thereof.

 

“Continuing Directors” means, with respect to any Person and as of any
date of determination, any member of the Board of Directors of such Person who:

 

(1)       was a member of such Board
of Directors on the Issue Date; or

 

6

 

(2)       was nominated for election
or elected to such Board of Directors by any of the Permitted Holders or with
the approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.

 

“Credit Agreement” means (i) the credit agreement dated as of September
30, 2005, as amended, restated, supplemented, waived, replaced (whether or not
upon termination, and whether with the original lenders or otherwise),
restructured, repaid, refunded, refinanced or otherwise modified from time to
time, including any agreement or indenture extending the maturity thereof,
refinancing, replacing or otherwise restructuring all or any portion of the
Indebtedness under such agreement or agreements or indenture or indentures or
any successor or replacement agreement or agreements or indenture or indentures
or increasing the amount loaned or issued thereunder or altering the maturity
thereof, among PIH, the Company, Holdings, the financial institutions named
therein and Credit Suisse Cayman Islands Branch, as Administrative Agent,
Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Jefferies Babson
Finance LLC, an affiliate of Jefferies & Company, Inc., as Joint Lead
Arranger and Joint Bookrunner and Jefferies & Company, Inc., as Syndication
Agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), or any agreement
extending the maturity of, refinancing, replacing, refunding, restating or
otherwise restructuring (whether upon or at any time or from time to time after
termination or otherwise restructuring (whether upon or at any time or from
time to time after termination or otherwise) all or any portion of the
Indebtedness under such agreement or document or any successor or replacement
agreement or document and whether by the same or any other agent, lender or
group of lenders, or institutional investors, providing for revolving credit
loans, term loans, letters of credit or issuance of notes or any other debt, in
each of the above cases as such agreements may be amended, supplemented or
otherwise modified from time to time.

 

“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.

 

“Designated Noncash Consideration” means the Fair Market Value of
noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers’ Certificate setting
forth the basis of such valuation, less the amount of cash or Cash Equivalents
received in connection with a subsequent sale of such Designated Noncash
Consideration.

 

“Designated Senior Debt” means:

 

(1)       any Bank Indebtedness that
constitutes Senior Debt; and

 

(2)       any other Senior Debt
permitted hereunder the principal amount of which is $25.0 million or more and
that has been designated by the Company in the instrument evidencing that
Senior Debt as “Designated Senior Debt.”

 

“Disqualified Stock” means, with respect to any Person, any Capital
Stock of such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is putable or exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable (other than as
a result of a change of control or asset sale), pursuant to a sinking fund

 

7

 

obligation or
otherwise, or is redeemable at the option of the holder thereof (other than as
a result of a change of control or asset sale), in whole or in part, in each
case prior to the earlier of the final maturity date of the Notes or the date
the Notes are no longer outstanding; provided, however, that (i) if such
Capital Stock is issued to any plan for the benefit of employees of the Company
or any of its Subsidiaries or by any such plan to such employees, such Capital
Stock shall not constitute Disqualified Stock solely because it may be required
to be repurchased by the Company or any of its Subsidiaries in order to satisfy
applicable statutory or regulatory obligations, (ii) only the portion of
Capital Stock that so matures or is mandatorily redeemable, is so convertible
or exchangeable or is so redeemable at the option of the holder thereof prior
to such date shall be deemed to be Disqualified Stock and (iii) any class of
Capital Stock of the Company that by its terms authorizes the Company to
satisfy its obligations thereunder by delivery of Capital Stock of the Company
that is not Disqualified Stock shall not be deemed to be Disqualified Stock.

 

“Domestic Subsidiary” means any direct or indirect Subsidiary that was
formed under the laws of the United States, any state of the United States, the
District of Columbia or any territory of the United States.

 

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

 

(1)       the provision for taxes
based on income or profits, plus franchise or similar taxes, of such Person for
such period deducted in computing Consolidated Net Income, plus

 

(2)       Consolidated Interest
Expense of such Person for such period to the extent the same was deducted in
calculating such Consolidated Net Income, plus

 

(3)       Consolidated Depreciation
and Amortization Expense of such Person for such period to the extent such
depreciation and amortization were deducted in computing Consolidated Net
Income, plus

 

(4)       customary fees and expenses
of the Company payable in connection with the Transactions, plus

 

(5)       any non-cash goodwill or
other asset impairment charges incurred subsequent to the date hereof resulting
from the application of Statement of Financial Accounting Standards Nos. 142 and
144 and the amortization of intangibles arising pursuant to No. 141, plus

 

(6)       any other non-cash charges
(including any impairment charges and the impact of purchase accounting,
including, but not limited to, the amortization of inventory step-up) reducing
Consolidated Net Income for such period (excluding any such charge that
represents an accrual or reserve for a cash expenditure for a future period),
plus

 

(7)       any reasonable expenses or
charges related to any Equity Offering, Permitted Investment, acquisition,
recapitalization or Indebtedness permitted to be incurred

 

8

 

hereunder (in each
case whether or not consummated), in each case, deducted in such period in
computing Consolidated Net Income, plus

 

(8)       the amount of any
restructuring charges or reserves (which, for the avoidance of doubt, shall
include non-cash retention, severance, systems establishment cost, excess
pension charges, contract termination costs including future lease commitments,
and costs to consolidate facilities and relocate employees) deducted in such
period in computing Consolidated Net Income, plus

 

(9)       the amount of management,
monitoring, consulting, advisory fees, termination payments and related
expenses (or any accruals relating to such fees and related expenses) during
such period pursuant to the Management Agreement, plus

 

(10)     the amount of any noncash
compensation charges, including any such charges arising from stock options,
restricted stock grants or other equity-incentive programs deducted in such
period in computing Consolidated Net Income, plus

 

(11)     the amount of any net
after-tax gains or losses (less all fees and expenses or charges relating
thereto) attributable to the early extinguishment of Indebtedness deducted in
such period in computing Consolidated Net Income, plus

 

(12)     any non-cash foreign exchange
gains or losses related to a U.S. denominated intercompany note in favor of
Panolam Industries International, Inc. from Panolam Industries Ltd., plus

 

(13)     any net gain or loss
resulting from Hedging Obligations, less

 

non-cash items
increasing Consolidated Net Income of such Person for such period (excluding
any items which represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges made in any prior period).

 

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

 

“Equity Contribution” means the investment of $80 million by the
Sponsors and certain members of the Company’s management team made in
connection with the Transactions.

 

“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).

 

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

 

9

 

“Exchange Notes” means the debt securities of the Company issued
pursuant to this Indenture in exchange for, and in an aggregate principal
amount equal to, the Initial Notes and the Additional Notes, if applicable, in
compliance with the terms of the Registration Rights Agreement or a
registration rights agreement related to any such Additional Notes, including
any Private Exchange Notes.

 

“Excluded Contribution” means net cash proceeds or marketable
securities, in each case received by the Company and its Restricted
Subsidiaries from:

 

(1)       contributions to its common
equity capital; and

 

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

 

in each case
designated as Excluded Contributions pursuant to an Officers’ Certificate on
the date such capital contributions are made or the date such Equity Interests
are sold, as the case may be, which are excluded from the calculation set forth
in clause (3) of Section 4.04(a).

 

“Existing Indebtedness” means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date hereof.

 

“Fair Market Value” means, with respect to any asset or property, the
price that could be negotiated in an arm’s-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction.

 

“Fixed Charge Coverage Ratio” means the ratio of EBITDA during the four
consecutive full fiscal quarters (the “Four Quarter Period”) most recently
ending on or prior to the date of the transaction or event giving rise to the
need to calculate the Fixed Charge Coverage Ratio for which internal financial
statements are available (the “Transaction Date”) to Fixed Charges for the Four
Quarter Period.

 

For purposes of this definition, “EBITDA” and “Fixed Charges” shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to:

 

(1)       the incurrence or repayment
of any Indebtedness of the Company or any of its Restricted Subsidiaries (and
the application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such incurrence or repayment, as the
case may be (and the application of the proceeds thereof), occurred on the
first day of the Four Quarter Period; and

 

(2)       any Asset Sale, acquisition
or Investment (including, without limitation, any acquisition or Investment
giving rise to the need to make such calculation as a result of the

 

10

 

Company or one of
its Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of any such acquisition) incurring, assuming or
otherwise being liable for Acquired Debt during the Four Quarter Period or at
any time subsequent to the last day of the Four Quarter Period and on or prior
to the Transaction Date), as if such Asset Sale, acquisition or Investment (including
the incurrence, assumption of liability for any such Indebtedness or Acquired
Debt and also including any EBITDA associated with such acquisition or
Investment) occurred on the first day of the Four Quarter Period.

 

If since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Investment, acquisition, disposition, merger or consolidation that would have
required adjustment pursuant to this definition, then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect thereto for such period as if
such Investment, acquisition, disposition, merger or consolidation had occurred
at the beginning of the applicable four-quarter period.

 

For purposes of this definition, whenever pro forma effect is to be
given to an Investment, acquisition, disposition, merger or consolidation
(including the Transactions) and the amount of income or earnings relating
thereto, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company and shall comply
with the requirements of Rule 11-02 of Regulation S-X promulgated by the
Commission, except that such pro forma calculations may include operating
expense reductions for such period resulting from the transaction that is being
given pro forma effect that (A) have been realized or (B) will be implemented
following such transaction and are supportable and quantifiable and, in each
case, including, but not limited to, (a) reduction in personnel expenses, (b)
reduction of costs related to administrative functions, (c) reduction of costs
related to leased or owned properties and (d) reductions from the consolidation
of operations and streamlining of corporate overhead, provided that, in either
case, such adjustments are set forth in an Officers’ Certificate signed by the
Company’s chief financial officer and another Officer that states (i) the
amount of such adjustment or adjustments, (ii) in the case of item (B) above,
that such adjustment or adjustments are based on the reasonable good faith
beliefs of the Officers executing such Officers’ Certificate at the time of
such execution and (iii) that any related incurrence of Indebtedness is
permitted pursuant hereto. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the Transaction Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness if the related hedge has a
remaining term in excess of twelve months).

 

Furthermore, in calculating “Fixed Charges” for purposes of determining
the denominator (but not the numerator) of the “Fixed Charge Coverage Ratio”:

 

(1)       interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date
(including Indebtedness actually incurred on the Transaction Date) and that
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; and

 

11

 

(2)       notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.

 

“Fixed Charges” means, with respect to any Person for any period, the
sum of, without duplication, (a) Consolidated Interest Expense (excluding
amortization or write-off of deferred financing costs) plus (b) the amount of
all dividend payments on any series of Preferred Stock of such Person (other
than dividends paid solely in Equity Interests (other than Disqualified Stock)
of the Company) paid, accrued or scheduled to be paid or accrued during such period.

 

“Foreign Subsidiary” means any Subsidiary of the Company that is not a
Domestic Subsidiary.

 

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

 

“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, through letters of
credit or reimbursement agreements in respect thereof, of all or any part of
any Indebtedness or other obligations. When used as a verb, “guarantee” shall
have a corresponding meaning.

 

“Guarantee” means any guarantee of the obligations of the Company
hereunder and the Notes by a Guarantor in accordance with the terms of this
Indenture. When used as a verb, “Guarantee” shall have a corresponding meaning,

 

“Guarantor” means any Person that incurs a Guarantee of the Notes;
provided, however, that upon the release and discharge of such Person from its
Guarantee in accordance with the terms of this Indenture, such Person shall
cease to be a Guarantor.

 

“Guarantor Senior Debt” means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed or allowable claim under applicable law) on any Indebtedness of such
Guarantor, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular obligation, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such obligation shall be subordinate or
pari passu in right of payment to the Guarantee of such Guarantor. Without
limiting the generality of the foregoing, “Guarantor Senior Debt” shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed or allowable claim under applicable law) on, and all
other amounts owing in respect of (including guarantees of the foregoing
obligations):

 

12

 

(1)       all monetary obligations of
every nature of such Guarantor under, or with respect to, the Credit Agreement,
including, without limitation, obligations to pay principal, premium and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities (and guarantees thereof); and

 

(2)       all Hedging Obligations
(and guarantees thereof), in each case whether outstanding on the Issue Date or
thereafter incurred.

 

Notwithstanding
the foregoing, “Guarantor Senior Debt” shall not include:

 

(1)       any Indebtedness of such
Guarantor to a Subsidiary of such Guarantor;

 

(2)       Indebtedness to, or
guaranteed on behalf of, any shareholder, director, officer or employee of such
Guarantor or any Subsidiary of such Guarantor (including, without limitation,
amounts owed for compensation), other than Indebtedness under the Credit
Agreement;

 

(3)       Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services (including guarantees thereof or instruments evidencing
such liabilities);

 

(4)       Indebtedness represented by
Capital Stock;

 

(5)       any liability for federal,
foreign, state, local or other taxes owed or owing by such Guarantor;

 

(6)       that portion of any
Indebtedness incurred in violation of any of the covenants contained in
Sections 4.03 or 4.14; provided, however, that if such Indebtedness has been
Incurred under the Credit Agreement, such Indebtedness shall be deemed Senior
Debt if the holders of such Indebtedness or their Representative received an
Officers’ Certificate at the time of such Incurrence to the effect that the
Incurrence of such Incurrence does not (or, in the case of revolving credit
facility thereunder, the Incurrence of the entire committed amount thereof at
the date on which the initial borrowing thereunder is made would not) violate
such covenant;

 

(7)       Indebtedness that, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to such Guarantor; and

 

(8)       any Indebtedness that is,
by its express terms, subordinated in right of payment to any other
Indebtedness of such Guarantor.

 

“Hedging Obligations” means, with respect to any Person, the
obligations of such Person under:

 

(1)       currency exchange, interest
rate or commodity swap agreements, currency exchange, interest rate or
commodity cap agreements and currency exchange, interest rate or commodity
collar agreements; and

 

13

 

(2)       other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange, interest rates or commodity prices.

 

“holder”, “Holder”, “noteholder” or “Noteholder” means the Person in
whose name a Note is registered on the Registrar’s books.

 

“Holdings” means Panolam Holdings II Co. and its successors or any
other direct or indirect parent of the Company.

 

“Immaterial Subsidiary” means any Subsidiary with total assets not
exceeding $100,000 as of the most recent financial quarter for which internal
financial statements are available.

 

“Indebtedness” means, with respect to any Person,

 

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

 

(i)        in respect of
borrowed money,

 

(ii)       evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or,
without duplication, reimbursement agreements in respect thereof),

 

(iii)      representing
the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except any such balance that
constitutes a trade payable or similar obligation to a trade creditor in each
case accrued in the ordinary course of business or

 

(iv)      representing
any Hedging Obligations,

 

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

 

(b)       Disqualified Stock of such
Person,

 

(c)       to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as
obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), and

 

(d)       to the extent not otherwise
included, Indebtedness of another Person secured by a Lien on any asset owned
by such Person (whether or not such Indebtedness is assumed by such Person);
provided, however, that the amount of such Indebtedness will be the lesser of:
(a) the Fair Market Value of such asset at such date of determination, and (b)
the amount of such Indebtedness of such other Person;

 

14

 

provided, however,
that notwithstanding the foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course of business and not
in respect of borrowed money; (b) prepaid revenues or (c) purchase price
holdbacks in respect of a portion of the purchase price of an asset to satisfy
warranty or other unperformed obligations of the respective seller.

 

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

 

“Initial Notes” means the Notes issued by the Company on the Issue
Date.

 

“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 (including by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others, but excluding accounts receivable, trade credit, advances to customers,
commission, travel and similar advances to officers and employees, in each case
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet (excluding the footnotes) of such Person in the same manner
as the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property.

 

For purposes of the definition of “Unrestricted Subsidiary” and Section
4.04, (i) “Investments” shall include the portion (proportionate to the
Company’s equity interest in such Subsidiary) of the Fair Market Value of the
net assets of a Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company’s “Investment”
in such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company’s equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Subsidiary at the time of such
redesignation; (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer, in each case as determined in good faith by its Board of Directors of
the Company and (iii) in any single transaction or series of related
transactions, any transfer of Capital Stock that results in an entity ceasing
to be a Restricted Subsidiary shall be deemed to be an Investment in an amount
equal to the Fair Market Value (as determined by the Board of Directors of the
Company in good faith as of the date of initial acquisition) of the Capital
Stock of such entity owned by the Company and the Restricted Subsidiaries
immediately after such transfer.

 

“Issue Date” means September 30, 2005.

 

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

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded

 

15

 

or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction; provided, however, that in no event
shall an operating lease be deemed to constitute a Lien.

 

“Management Agreement” means that certain Advisory Services Agreement
among Holdings and the Sponsors, as of on the Issue Date, and any replacement,
modification or amendment thereof, so long as such replacement modification or
amendment is not less advantageous to the holders of the Notes in any material
respect than the Management Agreement as in effect on the Issue Date.

 

“Merger Agreement” has the meaning set forth for such term in the
Recitals to this Indenture.

 

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

 

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

 

“Net Proceeds” means the aggregate cash proceeds received by the
Company or any Restricted Subsidiary in respect of any Asset Sale, in each case
net of legal, accounting and investment banking fees, and brokerage and sales
commissions, any relocation expenses and other direct costs incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), repayment of Indebtedness (including premiums and accrued
interest) that is secured by the property or assets that are the subject of
such Asset Sale and any deduction of appropriate amounts to be provided by the
Company as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by the Company
after such sale or other disposition thereof, including, without limitation,
pension and other post employment benefit liabilities and liabilities related
to environmental matters or against any indemnification obligations associated
with such transaction.

 

“Notes” means the Initial Notes and any Additional Notes and Exchange
Notes issued pursuant to this Indenture, in each case, in the forms set forth
in Appendix A.

 

“Obligations” means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit), damages and other liabilities,
and guarantees of payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities, payable under
the documentation governing any Indebtedness.

 

“Offering Circular” means the Offering Circular dated September 16,
2005, with respect to the Notes.

 

16

 

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

 

“Officers’ Certificate” means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom is the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Sections
13.04 and 13.05.

 

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

 

“Permitted Business” means the business and any services, activities or
businesses incidental or directly related or similar to, any line of business
engaged in by the Company and its Subsidiaries as of the Issue Date.

 

“Permitted Debt” is defined in Section 4.03.

 

“Permitted Holders” means (i) each of the Sponsors and their respective
Affiliates, but not including, however, any portfolio companies of any of the
Sponsors and (ii) any “group” (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor provision) of which any
of the foregoing are members, provided that in the case of such “group” and
without giving effect to the existence of such “group” or any other “group,”
such Sponsors and their respective Affiliates, collectively, have beneficial
ownership, directly or indirectly, of more than 50% of the total voting power
of the Voting Stock of the Company held by such “group.”

 

“Permitted Investments” means

 

(1)       any Investment by the
Company in any Restricted Subsidiary or by a Restricted Subsidiary in another
Restricted Subsidiary;

 

(2)       any Investment in cash and
Cash Equivalents;

 

(3)       any Investment by the
Company or any Restricted Subsidiary of the Company in a Person that is engaged
in a Permitted Business if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary or (B) such Person, in one transaction or a
series of related transactions, is merged, 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;

 

(4)       any Investment existing on
the Issue Date and any modification, replacement, renewal or extension thereof;
provided, however, that the amount of any such Investment may be increased (x)
as required by the terms of such Investment as in existence on the Issue Date
or (y) as otherwise permitted under the terms of this Indenture;

 

(5)       loans and advances to
employees, including for business-related travel expenses, moving expenses and other
similar expenses, and any guarantees made in the ordinary

 

17

 

course of business
consistent with past practices, but in any event not in excess of $1.5 million
in the aggregate outstanding at any one time;

 

(6)       any Investment acquired by
the Company or any Restricted Subsidiary (A) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization
or recapitalization of the issuer of such other Investment or accounts
receivable or (B) as a result of a foreclosure by the Company or any Restricted
Subsidiary with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default;

 

(7)       Hedging Obligations
permitted under clause (viii) of the definition of “Permitted Debt;”

 

(8)       any Investment by the
Company or a Restricted Subsidiary having an aggregate Fair Market Value, taken
together with all other Investments made pursuant to this clause (8), that are
at that time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash
and/or marketable securities), not to exceed $5.0 million;

 

(9)       Investments the payment for
which consists of Equity Interests of the Company or any of its direct or
indirect parent entities (exclusive of Disqualified Stock);

 

(10)     guarantees (including
Guarantees) of Indebtedness permitted under Section 4.03 and performance
guarantees in the ordinary course of business;

 

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

 

(12)     Investments consisting of
purchases and acquisitions of inventory, supplies, materials and equipment or
purchases of contract rights or licenses or leases of intellectual property, in
each case in the ordinary course of business;

 

(13)     Investments resulting from
the receipt of non-cash consideration in an Asset Sale received in compliance
with Section 4.06; and

 

(14)     Investments in the Notes and
the Exchange Notes; and

 

(15)     advances to suppliers,
distributors and customers in the ordinary course of business, consistent with
past practice.

 

“Permitted Junior Securities” means

 

(1)       Equity Interests in the
Company, any Guarantor or any direct or indirect parent of the Company issued
pursuant to a plan of reorganization or readjustment; or

 

(2)       unsecured debt securities
of the Company issued pursuant to a plan of reorganization or readjustment that
are subordinated to all Senior Debt or, as applicable, Guarantor Senior Debt of
the Company (and any debt securities issued in exchange for Senior

 

18

 

Debt or such
Guarantor Senior Debt) to substantially the same extent as, or to a greater
extent than, the Notes are subordinated to Senior Debt under this Indenture;

 

provided, however,
that to the extent that any Senior Debt or Guarantor Senior Debt, as the case
may be, outstanding on the date of consummation of any such plan of
reorganization or readjustment is not paid in full in cash on such date, the
holders of any such Senior Debt or Guarantor Senior Debt not so paid in full in
cash have consented to the terms of such plan of reorganization or
readjustment.

 

“Permitted Liens” means the following types of Liens:

 

(1)       deposits of cash or
government bonds made in the ordinary course of business to secure surety or
appeal bonds to which such Person is a party;

 

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

 

(3)       Liens on property or shares
of stock of a Person at the time such Person becomes a Subsidiary; provided,
however, that such Liens are not created or incurred in connection with, or in
contemplation of, or to provide all or any portion of the funds or credit
support utilized in connection with, such other Person becoming such a
Subsidiary; provided further, however, that such Liens may not extend to any
other property owned by the Company or any Restricted Subsidiary;

 

(4)       Liens on property at the
time the Company or a Restricted Subsidiary acquired the property, including
any acquisition by means of a merger or consolidation with or into the Company
or any Restricted Subsidiary; provided, however, that such Liens are not
created or incurred in connection with, or in contemplation of, or to provide
all or any portion of the funds or credit support utilized for, such acquisition;
provided further, however, that such Liens may not extend to any other property
owned by the Company or any Restricted Subsidiary;

 

(5)       Liens securing Hedging
Obligations; provided that in the case of Hedging Obligations relating to
interest rate risks, the related Indebtedness is permitted to be incurred under
this Indenture and is secured by a Lien on the same property securing such
Hedging Obligation;

 

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

 

(7)       Liens in favor of the
Company or any Restricted Subsidiary;

 

(8)       Liens to secure any
Indebtedness that is incurred to refinance any Indebtedness that has been
secured by a Lien existing on the Issue Date or referred to in clauses

 

19

 

(3) and (4) of
this definition; provided, however, that such Liens (x) are no less favorable
to the holders of the Notes, taken as a whole, and are not more favorable to
the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced; and (y) do not extend to or cover any property
or assets of the Company or any of its Restricted Subsidiaries not securing the
Indebtedness so refinanced;

 

(9)       Liens for taxes,
assessments or other governmental charges or levies not yet delinquent, or
which are being contested in good faith by appropriate proceedings or for
property taxes on property that the Company or one of its Subsidiaries has
determined to abandon if the sole recourse for such tax, assessment, charge,
levy or claim is to such property;

 

(10)     judgment liens in respect of
judgments that do not constitute an Event of Default so long as such Liens and
any appropriate legal proceedings that may have been duly initiated for the
review of such judgment have not been finally terminated or the period within
which such proceedings may be initiated has not expired;

 

(11)     pledges, deposits or security
under workmen’s compensation, unemployment insurance and other social security
laws or regulations, or deposits to secure the performance of bids, tenders,
contracts (other than for the payment of Indebtedness) or leases, or deposits
to secure public or statutory obligations, or deposits as security for
contested taxes or import or customs duties or for the payment of rent, or
deposits or other security securing liabilities to insurance carriers under
insurance or self-insurance arrangements, in each case incurred in the ordinary
course of business or consistent with past practice;

 

(12)     Liens imposed by law,
including carriers’, warehousemen’s materialmen’s, repairmen’s and mechanics’
Liens which are being contested in good faith by appropriate proceedings.

 

(13)     encumbrances, ground leases,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning, building codes or other restrictions (including, without
limitation, minor defects or irregularities in title and similar encumbrances)
as to the use of real properties or Liens incidental to the conduct of business
or to the ownership of properties that do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business;

 

(14)     leases, licenses, subleases
or sublicenses granted to others in the ordinary course of business that do not
(x) interfere in any material respect with the business of the Company or any
of its material Restricted Subsidiaries or (y) secure any Indebtedness;

 

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

 

(16)     banker’s Liens, rights of
set-off or similar rights and remedies as to deposit accounts or other funds
maintained with a depositary institution; provided, however, that (a) such
deposit account is not a dedicated cash collateral account and is not subject
to

 

20

 

restrictions
against access by the Company or any of its Subsidiaries in excess of those set
forth by regulations promulgated the Federal Reserve Board or other applicable
law and (b) such deposit account is not intended by the Company or any
Restricted Subsidiary to provide collateral to the depositary institution;

 

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

 

(18)     Liens (i) of a collection
bank arising under Section 4-210 of the Uniform Commercial Code on items in the
course of collection, (ii) attaching to commodity trading accounts or other
commodities brokerage accounts incurred in the ordinary course of business; and
(iii) in favor of a banking institution arising as a matter of law encumbering
deposits (including the right of set-off) and which are within the general
parameters customary in the banking industry;

 

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

 

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

 

(21)     Liens securing Indebtedness
incurred by Foreign Subsidiaries pursuant to Section 4.03;

 

(22)     Liens securing the Escrow
Amount as defined in and contemplated by the Merger Agreement; and

 

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

 

“Permitted Payments to Holdings” means without duplications as to
amount, (a) the payment of dividends to, or the making of loans to, Holdings,
required for Holdings to pay: (A) franchise taxes and other fees, taxes and
expenses required to maintain Holdings’ corporate existence; (B) customary
salary, bonus and other benefits payable to directors (including director fees
and reasonable expense reimbursements), officers and employees of Holdings to the
extent such salaries, bonuses and other benefits are attributable to the
ownership or operation of the Company and its Restricted Subsidiaries; and (C)
general corporate overhead expenses for Holdings to the extent such expenses
are attributable to the ownership or operation of the Company and its
Restricted Subsidiaries, and (b) payments of dividends to, or the making of
loans to, Holdings to enable Holdings to pay foreign, federal, state or local
tax liabilities (“Tax Payments”),

 

21

 

not to exceed the
amount of any tax liabilities that would be otherwise payable by the Company
and its Domestic Subsidiaries to the appropriate taxing authorities if they
filed separate tax returns, to the extent that Holdings has an obligation to
pay such tax liabilities relating to the operations, assets or capital of the
Company or its Domestic Subsidiaries; provided that (i) notwithstanding the
foregoing, in the case of determining the amount of a Tax Payment that is permitted
to be paid by the Company and any of its Domestic Subsidiaries in respect to
their Federal income tax liability, such payment shall be determined assuming
that the Company is the parent company of an affiliated group (the “Affiliated
Group”) filing a consolidated Federal income tax return and that Holdings and
each such Domestic Subsidiary is a member of the Affiliated Group and (ii) any
Tax Payments shall, within 90 days of Holdings’ receipt of such payment, either
be (a) used by Holdings to pay such tax liabilities or (b) refunded to the
payor.

 

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

 

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

 

“Public Equity Offering” means an underwritten primary public offering
of Capital Stock (other than Disqualified Stock) of Holdings or the Company
pursuant to an effective registration statement filed with the Commission in
accordance with the Securities Act (excluding registration statements filed on
Form S-8); provided that, in the
event of a Public Equity Offering by Holdings, Holdings contributes to the
capital of the Company the portion of the net cash proceeds of such Public
Equity Offering necessary to pay the aggregate redemption price (plus accrued
interest to the date of redemption) of the Notes to be redeemed pursuant to the
last paragraph of Section 5 of the Notes.

 

“Registration Rights Agreement” means the Registration Rights Agreement
dated as of the Issue Date among PIH, the Company, the Guarantors, Credit
Suisse First Boston LLC and Jefferies & Company, Inc.

 

“Representative” means the trustee, agent or representative (if any)
for an issue of Senior Debt; provided, however, that if, and for so long as,
any Designated Senior Debt lacks such a representative, then the Representative
for such Designated Senior Debt shall at all times constitute the holders of a
majority in outstanding principal amount of such Designated Senior Debt.

 

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

 

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

 

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

 

22

 

“Secured Indebtedness” means any Indebtedness secured by a Lien.

 

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

 

“Senior Debt” means the principal of, premium, if any, and interest
(including any interest accruing after the commencement of any bankruptcy
proceeding at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed or allowable claim under applicable
law) on any Indebtedness of the Company, whether outstanding on the Issue Date
or thereafter created, incurred or assumed, unless, in the case of any
particular obligation, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
obligation shall be subordinate or pari passu in right of payment to the Notes.
Without limiting the generality of the foregoing, “Senior Debt” shall also
include the principal of, premium, if any, interest (including any interest
accruing after the commencement of any bankruptcy proceeding at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed or allowable claim under applicable law) on, and all
other amounts owing in respect of (including guarantees of the foregoing
obligations):

 

(1)       all monetary obligations of
every nature of the Company under, or with respect to, the Credit Agreement,
including, without limitation, obligations to pay principal, premium and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities (and guarantees thereof); and

 

(2)       all Hedging Obligations
(and guarantees thereof),

 

in each case
whether outstanding on the Issue Date or thereafter incurred.

 

Notwithstanding the foregoing, “Senior Debt” shall not include:

 

(1)       any Indebtedness of the
Company to a Subsidiary of the Company;

 

(2)       Indebtedness to, or
guaranteed on behalf of, any shareholder, director, officer or employee of the
Company or any Subsidiary of the Company (including, without limitation,
amounts owed for compensation) other than Indebtedness under the Credit
Agreement;

 

(3)       Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services (including guarantees thereof or instruments evidencing
such liabilities);

 

(4)       Indebtedness represented by
Capital Stock;

 

(5)       any liability for federal,
foreign, state, local or other taxes owed or owing by the Company;

 

(6)       that portion of any
Indebtedness incurred in violation of Sections 4.03 or 4.14; provided, however,
that if such Indebtedness has been Incurred under the Credit

 

23

 

Agreement, such
Indebtedness shall be deemed Senior Debt if the holders of such Indebtedness or
their Representative received an Officers’ Certificate at the time of such
Incurrence to the effect that the Incurrence of such Indebtedness does not (or,
in the case of a revolving credit facility thereunder, the Incurrence of the
entire committed amount thereof at the date on which the initial borrowing
thereunder is made would not) violate such covenant;

 

(7)       Indebtedness that, when
incurred and without respect to any election under Section 111 l (b) of Title
11, United States Code, is without recourse to the Company; and

 

(8)       any Indebtedness that is,
by its express terms, subordinated in right of payment to any other
Indebtedness of the Company.

 

“Senior Subordinated Indebtedness” means the Notes (in the case of the
Company), a Guarantee (in the case of a Guarantor) and any other Indebtedness
of the Company or a Guarantor that specifically provides that such Indebtedness
is to rank pari passu with the Notes or such Guarantee, as the case may be, in
right of payment and is not subordinated by its terms in right of payment to
any Indebtedness or other obligation of the Company or such Guarantor which is
not Senior Debt (in the case of the Company) or Guarantor Senior Debt (in the
case of a Guarantor).

 

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

 

“Stockholders Agreement” means, collectively, that certain Stockholders
Agreement and Registration Rights Agreement among Holdings, the Sponsors,
Robert Muller and certain other members of the Company’s management, as in
effect on the Issue Date, and any replacement, modification or amendment
thereof, so long as such replacement, modification or amendment is not less
advantageous to the holders of the Notes in any material respect than the
Stockholders Agreement as in effect on the Issue Date.

 

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

 

“Sponsors” means Genstar Capital, L.P. and The Sterling Group, L.P. and
their respective Affiliates.

 

“Subordinated Indebtedness” means (a) with respect to the Company, any
Indebtedness of the Company that is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantor of the Notes, any
Indebtedness of such Guarantor that is by its terms subordinated in right of
payment to its Guarantee of the Notes.

 

“Subsidiary” means, with respect to any specified Person:

 

24

 

(1)       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) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and

 

(2)       any partnership, joint
venture, limited liability company or similar entity of which (x) more than 50%
of the capital accounts, distribution rights, total equity and voting interests
or general or limited partnership interests, as applicable, are owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof whether in the form of
membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a
controlling general partner or otherwise controls such entity.

 

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

 

‘Transactions” means the transactions contemplated by (i) the
Acquisition, (ii) the entering into of and initial borrowings under the Credit
Agreement, (iii) the Equity Contribution, (iv) the Mergers and (v) the offering
of the Notes.

 

“Treasury Rate” means, as of the applicable redemption date, the yield
to maturity as of such redemption date of United States Treasury securities
with a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H. 15 (519) that has become publicly available at
least two Business Days prior to 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 October 1, 2009;
provided, however, that if the period from such redemption date to October 1, 2009
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year will be
used.

 

“Trust Officer” means:

 

(1)       any officer within the
corporate trust department of the Trustee, including any vice president,
assistant vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of such person’s knowledge of and familiarity with the particular
subject, and

 

(2)       who shall have direct
responsibility for the administration of this Indenture.

 

“Unrestricted Subsidiary” means (i) any Subsidiary of the Company that
at the time of determination is an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any existing Subsidiary
and any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary

 

25

 

unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness
of, or owns or holds any Lien on, any property of, the Company or any
Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so
designated); provided, however, that (a) any Unrestricted Subsidiary must be an
entity of which shares of the Capital Stock or other equity interests
(including partnership interests) entitled to cast at least a majority of the
votes that may be cast by all shares or equity interests having ordinary voting
power for the election of directors or other governing body are owned, directly
or indirectly, by the Company, (b) such designation complies with Section 4.04
and (c) each of (I) the Subsidiary to be so designated and (II) its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any Restricted Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that, immediately after giving effect
to such designation, no Default or Event of Default shall have occurred and the
Company could incur $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test described under Section 4.03(a). Any such
designation by the Board of Directors shall be notified by the Company to the
Trustee by promptly filing with the Trustee a copy of the board resolution
giving effect to such designation and an Officers’ Certificate certifying that
such designation complied with the foregoing provisions.

 

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

 

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

 

“U.S. Government Securities” means securities that are

 

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

 

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

 

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

 

26

 

law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the U.S. Government Securities or the specific payment of
principal of or interest on the U.S. Government Securities evidenced by such
depository receipt.

 

“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:

 

(1)       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

 

(2)       the then outstanding
principal amount of such Indebtedness.

 

“Wholly Owned Restricted Subsidiary” is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.

 

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

 

SECTION 1.02. Other Definitions.

 

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Acceleration Notice”

  	
  6.02

  
	
  “Affiliate Transaction”

  	
  4.07

  
	
  “additional interest”

  	
  Appendix A

  
	
  “Asset Sale Amount”

  	
  4.06(d)

  
	
  “Asset Sale Offer”

  	
  4.06(d)

  
	
  “Bankruptcy Law”

  	
  6.01

  
	
  “Change of Control Offer”

  	
  4.08(a)

  
	
  “Change of Control Offer Period”

  	
  3.09(b)

  
	
  “Change of Control Payment Date”

  	
  3.09(b)

  
	
  “covenant defeasance option”

  	
  8.01(b)

  
	
  “Definitive Note”

  	
  Appendix A

  
	
  “Depository”

  	
  Appendix A

  
	
  “Event of Default”

  	
  6.01

  
	
  “Excess Proceeds”

  	
  4.06(c)

  
	
  “Global Note”

  	
  Appendix A

  

 

27

 

	
  “Global Notes Legend”

  	
  Appendix A

  
	
  “Guaranteed Obligations”

  	
  10.01(a)

  
	
  “IAI”

  	
  Appendix A

  
	
  “incorporated provision”

  	
  11.01

  
	
  “incur”

  	
  4.03

  
	
  “Initial Lien”

  	
  4.12

  
	
  “Initial Purchasers”

  	
  Appendix A

  
	
  “legal defeasance option”

  	
  8.01(b)

  
	
  “Notes Custodian”

  	
  Appendix A

  
	
  “Paying Agent”

  	
  2.04

  
	
  “Payment Blockage Notice”

  	
  11.02(a)

  
	
  “protected purchaser”

  	
  2.08

  
	
  “Purchase Agreement”

  	
  Appendix A

  
	
  “Purchase Date”

  	
  3.10(b)

  
	
  “Purchase Price”

  	
  4.06(d)

  
	
  “Private Exchange”

  	
  Appendix A

  
	
  “Private Exchange Note”

  	
  Appendix A

  
	
  “QIB”

  	
  Appendix A

  
	
  “Refinancing Indebtedness”

  	
  4.03(b)

  
	
  “Refunding Capital Stock”

  	
  4.04(b)

  
	
  “Registered Exchange Offer”

  	
  Appendix A

  
	
  “Registrar”

  	
  2.04

  
	
  “Regulation S”

  	
  Appendix A

  
	
  “Regulation S Global Note”

  	
  Appendix A

  
	
  “Restricted Notes Legend”

  	
  Appendix A

  
	
  “Restricted Payment”

  	
  4.04(a)

  
	
  “Retired Capital Stock”

  	
  4.04(b)

  
	
  “Rule 144A”

  	
  Appendix A

  
	
  “Rule 144A Global Note”

  	
  Appendix A

  
	
  “Shelf Registration Statement”

  	
  Appendix A

  
	
  “Successor Company”

  	
  5.01 (a)

  
	
  “Transfer Restricted Notes”

  	
  Appendix A

  
	
  “Trigger Event”

  	
  4.06(d)

  

 

SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture incorporates by reference certain provisions of the TIA. The
following TIA terms have the following meanings:

 

“Commission” means the Securities and Exchange Commission;

 

“indenture securities” means the Notes and the Guarantees;

 

“indenture security holder” means a Holder;

 

“indenture to be qualified” means this Indenture;

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

(c)       “or” is not exclusive;

 

(d)       “including” means including
without limitation;

 

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

 

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

 

(g)       unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required
to be delivered hereunder shall be prepared in accordance with GAAP; and

 

(h)       whenever in this Indenture
there is mentioned, in any context, principal, interest or any other amount
payable under or with respect to any Notes, such mention shall be deemed to
include mention of the payment of additional interest, to the extent that, in
such context, additional interest is, was, or would be payable in respect
thereof.

 

ARTICLE 2

 

THE NOTES

 

SECTION 2.01. Amount of Notes. The aggregate principal amount of
Notes that may be authenticated and delivered under this Indenture on the Issue
Date is $151,000,000. The Initial Notes, any Additional Notes and any Exchange
Notes will be treated as a single series of Notes for purposes of this
Indenture.

 

The Company may from time to time after the Issue Date issue Additional
Notes under this Indenture in an unlimited principal amount, so long as (i) the
Incurrence of the Indebtedness represented by such Additional Notes is at such
time permitted by Section 4.03 and (ii) such Additional Notes are issued in
compliance with the other applicable provisions of this Indenture. Additional
Notes shall have identical terms as the Initial Notes issued on the Issue

 

29

 

Date, other than
with respect to the date of issuance and issue price and as contemplated by
clause (iv) below. With respect to any Additional Notes issued after the Issue
Date (except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Sections 2.07, 2.08, 2.09, 2.10, 3.06, 4.06(g), 4.08(c) or Appendix A), there
shall be (a) established in or pursuant to a resolution of the Board of
Directors of the Company and (b) (i) set forth or determined in the manner
provided in an Officers’ Certificate or (ii) established in one or more
indentures supplemental hereto, prior to the issuance of such Additional Notes:

 

(i)        the aggregate
principal amount of such Additional Notes that may be authenticated and
delivered under this Indenture,

 

(ii)       the issue
price and issuance date of such Additional Notes, including the date from which
interest on such Additional Notes will accrue;

 

(iii)      if
applicable, that such Additional Notes shall be issuable in whole or in part in
the form of one or more Global Notes and, in such case, the respective
depositaries for such Global Notes, the form of any legend or legends which
shall be borne by such Global Notes in addition to or in lieu of those set
forth in Appendix A hereto and any circumstances in addition to or in lieu of
those set forth in Section 2.3 of Appendix A in which any such Global Note may
be exchanged in whole or in part for Additional Notes registered, or any
transfer of such Global Note in whole or in part may be registered, in the name
or names of Persons other than the depositary for such Global Note or a nominee
thereof; and

 

(iv)      if applicable,
that such Additional Notes that are not Transfer Restricted Notes shall not be
issued in the form of Initial Notes as set forth in Appendix A, but shall be
issued in the form of Exchange Notes as set forth in Appendix A.

 

If any of the terms of any Additional Notes are established by action
taken pursuant to a resolution of the Board of Directors of the Company, a copy
of an appropriate record of such action shall be certified by the Secretary or
any Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers’ Certificate or the indenture supplemental
hereto setting forth the terms of the Additional Notes.

 

SECTION 2.02. Form and Dating. Provisions relating to the Notes
are set forth in Appendix A, which is hereby incorporated in and expressly made
a part of this Indenture. The (i) Initial Notes and the Trustee’s certificate
of authentication and (ii) any Additional Notes (if issued as Transfer
Restricted Notes) and the Trustee’s certificate of authentication shall each be
substantially in the form set forth in Appendix A. The (i) Exchange Notes and
the Trustee’s certificate of authentication and (ii) any Additional Exchange
Notes issued other than as Transfer Restricted Notes and the Trustee’s
certificate of authentication shall each be substantially in the form set forth
in Appendix A. The Notes may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company or any Guarantor
is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Note shall be dated
the date of its authentication. The Notes shall be

 

30

 

issuable only in
registered form without interest coupons and only in denominations of $1,000
and any integral multiples thereof.

 

SECTION 2.03. Execution and Authentication.

 

(a)       On the Issue Date, the
Trustee shall authenticate and make available for delivery upon a written order
of PIH signed by one Officer Notes for original issue on the date hereof in an
aggregate principal amount of $ 151,000,000.

 

(b)       Upon consummation of the
Acquisition and Mergers, the Company shall surrender to the Trustee for
cancellation, in accordance with the terms of this Indenture, the $151,000,000
aggregate principal amount of Notes executed pursuant to Section 2.03(a), and
in lieu thereof, upon execution of the Indenture by the Company and Guarantors,
an Officer of the Company shall sign replacement Notes of a like tenor and
principal amount for the Company.

 

(c)       The Trustee shall
authenticate and make available for delivery upon a written order of the
Company signed by one Officer (i) replacement Notes for original issue on the
date hereof in an aggregate principal amount of $151,000,000, (ii) subject to
the terms of this Indenture, Additional Notes in an aggregate principal amount
to be determined at the time of issuance and specified therein and (iii) the
Exchange Notes for issue in a Registered Exchange Offer or Private Exchange
pursuant to a Registration Rights Agreement for a like principal amount of
Initial Notes and, if applicable, any Additional Notes. Such order shall specify
the amount of the Notes to be authenticated, the date on which the original
issue of Notes is to be authenticated and whether the Notes are to be Initial
Notes, Additional Notes or Exchange Notes. Notwithstanding anything to the
contrary in this Indenture or Appendix A, any issuance of Additional Notes
after the Issue Date shall be in a principal amount of at least $1,000.

 

(d)       One Officer shall sign the
Notes for PIH and the Company by manual or facsimile signature.

 

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

 

(f)        A Note shall not be valid
and shall not be entitled to any benefit under this Indenture until an
authorized signatory of the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive evidence that the
Note has been duly and validly authenticated issued and delivered under this
Indenture.

 

(g)       The Trustee may appoint one
or more authenticating agents reasonably acceptable to the Company to
authenticate the Notes. Any such appointment shall be evidenced by an
instrument signed by a Trust Officer, a copy of which shall be furnished to the
Company. Unless limited by the terms of such appointment, an authenticating
agent may authenticate Notes whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any Registrar, Paying
Agent or agent for service of notices and demands.

 

31

 

(h)       The Trustee is hereby
authorized to enter into a letter of representations with the Depository in the
form provided by the Company and to act in accordance with such letter.

 

SECTION 2.04. 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 (the “Registrar”), and (ii) an office or agency where
Notes may be presented for payment (the “Paying Agent”). The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company
may have one or more co-registrars and one or more additional paying agents.
The term “Registrar” includes any co-registrars. The Company initially appoints
the Trustee as (i) Registrar and Paying Agent in connection with the Notes and
(ii) the Custodian with respect to the Global Notes.

 

(b)       The Company shall enter
into an appropriate agency agreement with any Registrar or Paying Agent not a
party to this Indenture, which shall incorporate the terms of the TIA. The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07. The Company or any of its Restricted
Subsidiaries may act as Paying Agent or Registrar (except with respect to
Articles 3 and 8 and Sections 4.06 and 4.08).

 

(c)       The Company may remove any
Registrar or Paying Agent upon written notice to such Registrar or Paying Agent
and to the Trustee; provided, however, that no such removal shall become
effective until (i) if applicable, acceptance of an appointment by a successor
as evidenced by an appropriate agreement entered into by the Company and such
successor Registrar or Paying Agent, as the case may be, and delivered to the
Trustee or (ii) notification to the Trustee that the Trustee shall serve as
Registrar or Paying Agent until the appointment of a successor in accordance
with clause (i) above. The Registrar or Paying Agent may resign at any time
upon written notice to the Company and the Trustee; provided, however, that the
Trustee may resign as Paying Agent or Registrar only if the Trustee also
resigns as Trustee in accordance with Section 7.08.

 

SECTION 2.05. Paying Agent to Hold Money in Trust. Prior to each
due date of the principal of and interest on any Note, the Company shall
deposit with each Paying Agent (or if the Company or one of its Restricted
Subsidiaries is acting as Paying Agent segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that a Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all money held by a Paying
Agent for the payment of principal of and interest on the Notes, and shall
notify the Trustee of any default by the Company in making any such payment. If
the Company or one of its Restricted Subsidiaries acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it in trust for the
benefit of the Persons entitled thereto. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by such Paying Agent. Upon complying with

 

32

 

this Section 2.05,
a Paying Agent shall have no further liability for the money delivered to the
Trustee.

 

SECTION 2.06. 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 Holders. If the Trustee is not the Registrar,
the Company shall furnish, or cause the Registrar to furnish, to the Trustee,
in writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Holders.

 

SECTION 2.07. Transfer and Exchange.

 

(a)       The Notes shall be issued
in registered form and shall be transferable only upon the surrender of a Note
for registration of transfer and in compliance with Appendix A. When a Note is
presented to the Registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if its requirements therefor are met.
When Notes are presented to the Registrar with a request to exchange them for
an equal principal amount of Notes of the same series of other denominations,
the Registrar shall make the exchange as requested if the same requirements are
met. To permit registration of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Notes at the Registrar’s request.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section 2.07. The Company shall not be required to
make, and the Registrar need not register, transfers or exchanges of Notes
selected for redemption (except, in the case of Notes to be redeemed in part,
the portion thereof not to be redeemed) or of any Notes for a period of 15 days
before a selection of Notes to be redeemed.

 

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

 

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

 

SECTION 2.08. Replacement Notes.

 

(a)       If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note claims that the Note
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note of the same series if the
requirements of Section 8-405 of the Uniform Commercial Code are met, such that
the Holder (a) satisfies the Company or the Trustee within a reasonable time
after such Holder has notice of such loss, destruction or wrongful taking and
the Registrar does not register a transfer prior to receiving such notification,
(b) makes such request to the Company or the Trustee prior to the Note being
acquired by a protected purchaser as defined in Section 8-303 of the Uniform
Commercial Code

 

33

 

(a “protected
purchaser”) and (c) satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Trustee to protect the
Company, the Trustee, a Paying Agent and the Registrar from any loss that any
of them may suffer if a Note is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Note (including attorneys’
fees and disbursements in replacing such Note). In the event any such mutilated,
lost, destroyed or wrongfully taken Note has become or is about to become due
and payable, the Company in its discretion may pay such Note instead of issuing
a new Note in replacement thereof.

 

(b)       Every replacement Note is
an additional obligation of the Company and the Guarantors.

 

(c)       The provisions of this
Section 2.08 are exclusive and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement or payment of mutilated,
lost, destroyed or wrongfully taken Notes.

 

SECTION 2.09. Outstanding Notes.

 

(a)       Notes outstanding at any
time are all Notes authenticated by the Trustee except for those canceled by
it, those delivered to it for cancellation, those redeemed pursuant to Article
3 and those described in this Section 2.09 as not outstanding. Subject to
Section 13.06, a Note does not cease to be outstanding because the Company, a
Guarantor or an Affiliate of the Company or a Guarantor holds the Note.

 

(b)       If a Note is replaced
pursuant to Section 2.08 (other than a mutilated Note surrendered for
replacement), it ceases to be outstanding unless the Trustee and the Company
receive proof satisfactory to them that the replaced Note is held by a
protected purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.08.

 

(c)       If a Paying Agent
segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Notes (or portions thereof)
to be redeemed or maturing, as the case may be, then on and after that date
such Notes (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.

 

SECTION 2.10. Temporary Notes. In the event that Definitive
Notes are to be issued under the terms of this Indenture, until such Definitive
Notes are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of Definitive Notes but may have variations that the Company consider
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Notes and make them
available for delivery in exchange for temporary Notes upon surrender of such
temporary Notes at the office or agency of the Company, without charge to the
Holder. Until such exchange, temporary Notes shall be entitled to the same
rights, benefits and privileges as Definitive Notes.

 

SECTION 2.11. Cancellation. The Company at any time may deliver
Notes to the Trustee for cancellation. The Registrar and each Paying Agent
shall forward to the Trustee

 

34

 

any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment or cancellation and shall dispose of canceled Notes
in accordance with its customary procedures or deliver canceled Notes to the
Company pursuant to written direction by an Officer. The Company may not issue
new Notes to replace Notes it has redeemed, paid or delivered to the Trustee
for cancellation. The Trustee shall not authenticate Notes in place of canceled
Notes other than pursuant to the terms of this Indenture.

 

SECTION 2.12. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, the Company shall pay the defaulted interest
then borne by the Notes, as the case may be (plus interest on such defaulted
interest to the extent lawful), in any lawful manner. The Company may pay the
defaulted interest to the Persons who are Holders on a subsequent special
record date. The Company shall fix or cause to be fixed any such special record
date and payment date to the reasonable satisfaction of the Trustee and shall
promptly mail or cause to be mailed to each affected Holder a notice that
states the special record date, the payment date and the amount of defaulted interest
to be paid.

 

SECTION 2.13. CUSIP Numbers, ISINs, etc. The Company in issuing
the Notes may use CUSIP numbers, ISINs and “Common Code” numbers (if then
generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and
“Common Code” numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is
made as to the correctness of such numbers, either as printed on the Notes or
as contained in any notice of a redemption, that reliance may be placed only on
the other identification numbers printed on the Notes and that any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company shall advise the Trustee of any change in the CUSIP numbers, ISINs
and “Common Code” numbers.

 

SECTION 2.14. Calculation of Principal Amount of Notes. The
aggregate principal amount of the Notes, at any date of determination, shall be
the principal amount of the Notes outstanding at such date of determination.
With respect to any matter requiring consent, waiver, approval or other action
of the Holders of a specified percentage of the principal amount of all the
Notes then outstanding, such percentage shall be calculated, on the relevant
date of determination, by dividing (a) the principal amount, as of such date of
determination, of Notes, the Holders of which have so consented by (b) the
aggregate principal amount, as of such date of determination, of the Notes then
outstanding, in each case, as determined in accordance with the preceding
sentence, Section 2.09 and Section 13.06 of this Indenture. Any such
calculation made pursuant to this Section 2.14 shall be made by the Company and
delivered to the Trustee pursuant to an Officers’ Certificate.

 

ARTICLE 3

 

REDEMPTION

 

SECTION 3.01. Redemption. The Notes may be redeemed, in whole,
or from time to time in part, subject to the conditions and at the redemption
prices set forth in Paragraph 5 of the form of Notes set forth in Appendix A,
together with accrued and unpaid interest, if any, to the redemption date.

 

35

 

SECTION 3.02. Applicability of Article. Redemption of Notes
at the election of the Company or otherwise, as permitted or required by the
Notes or any provision of this Indenture, shall be made in accordance with the
Notes, such provision and this Article 3.

 

SECTION 3.03. Notices to Trustee. If the Company elects to
redeem Notes pursuant to the optional redemption provisions of Paragraph 5 of
the Notes, it shall notify the Trustee in writing of (i) the section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price. The Company shall give notice to the Trustee provided for in
this paragraph at least 30 days but not more than 60 days before a redemption
date if the redemption is pursuant to Paragraph 5 of the Notes. Such notice
shall be accompanied by an Officers’ Certificate and Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein. If fewer than all the Notes are to be redeemed, the record date
relating to such redemption shall be selected by the Company prior to the
mailing of the notice of redemption and given to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.

 

SECTION 3.04. Selection of Notes to Be Redeemed. In the case of
any partial redemption of the Notes, selection of the Notes for redemption will
be made by the Trustee on a pro rata basis to the extent practicable; provided,
however, that no Notes of $ 1,000 or less shall be redeemed in part. The
Trustee shall make the selection from outstanding Notes not previously called
for redemption. The Trustee may select for redemption portions of the principal
of Notes that have denominations larger than $1,000 and portions of them the
Trustee selects shall be in amounts of $1,000 or a multiple of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Company promptly of the Notes or portions of Notes to be redeemed.

 

SECTION 3.05. Notice of Optional Redemption.

 

(a)       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 at its
registered address whose Notes are to be redeemed; provided, however, that a
redemption notice 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. Notices of redemption may not be
conditional.

 

Any such notice shall identify the Notes to be redeemed and shall
state:

 

(i)        the redemption date;

 

(ii)       the redemption
price and the amount of accrued interest to the redemption date;

 

(iii)      the
name and address of a Paying Agent;

 

(iv)      that Notes
called for redemption must be surrendered to a Paying Agent to collect the
redemption price, plus accrued interest;

 

36

 

(v)       if fewer than
all the outstanding Notes are to be redeemed, the certificate numbers and
principal amounts of the particular Notes to be redeemed, the aggregate
principal amount of Notes of a series to be redeemed and the aggregate
principal amount of Notes of a series to be outstanding after such partial
redemption;

 

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

 

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

 

(viii)    the
applicable provision in this Indenture or the Notes pursuant to which the
Company is redeeming such Notes.

 

(b)       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 (or such shorter period allowed by the Trustee)
prior to the redemption date, an Officer’s Certificate requesting that the
Trustee give such notice. In such event, the Company shall provide the Trustee
with the information required by this Section 3.05.

 

SECTION 3.06. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.05, Notes called for
redemption become due and payable on the redemption date and at the redemption
price stated in the notice. Upon surrender to any Paying Agent, such Notes
shall be paid at the redemption price stated in the notice, plus accrued
interest to the redemption date; provided, however, that if the redemption date
is after a regular record date and on or prior to the interest payment date,
the accrued interest shall be payable to the Holder of the redeemed Notes
registered on the relevant record date. Failure to give notice or any defect in
the notice to any Holder shall not affect the validity of the notice to any
other Holder.

 

SECTION 3.07. Deposit of Redemption Price. With respect to any
Notes, prior to 10:00 a.m., New York City time, on the redemption date, the
Company shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes or portions thereof to be
redeemed on that date other than Notes or portions of Notes called for
redemption that have been delivered by the Company to the Trustee for
cancellation. On and after the redemption date, interest shall cease to accrue
on Notes or portions thereof called for redemption so long as the Company has
deposited with the Paying Agent funds sufficient to pay the principal of, plus
accrued and unpaid interest on, the Notes to be redeemed.

 

SECTION 3.08. Notes Redeemed in Part. Upon surrender of a Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company’s expense) a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.

 

37

 

SECTION 3.09. Repurchase Upon Change of Control Offer.

 

(a)       In the event that, pursuant
to Section 4.08, the Company shall be required to commence a Change of Control
Offer, it shall follow the procedures specified in this Section 3.09.

 

(b)       The Change of Control Offer
shall remain open for a period from the date of the mailing of the notice of
the Change of Control Offer described in paragraph (c) until a date determined
by the Company that is at least 30 but no more than 60 days from the date of
mailing of such notice and no longer, except to the extent that a longer period
is required by applicable law (the “Change of Control Offer Period”). On the
payment date, which shall be no later than the last day of the Change of
Control Offer Period, (the “Change of Control Payment Date”), the Company shall
purchase the principal amount of Notes properly tendered in response to the
Change of Control Offer. Payment for any Notes so purchased shall be made in
the same manner as interest payments are made.

 

(c)       Within 30 days following
any Change of Control, unless the Company at such time has given notice of
redemption under the second or third paragraph of Section 5 in Appendix A, the
Company shall send, by first class mail, a notice to the Trustee and each of
the Holders. The notice shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Change of Control Offer.
The Change of Control Offer shall be made to all Holders. The notice, which
shall govern the terms of the Change of Control Offer, shall state:

 

(i)        the
transaction or transactions that constitute the Change of Control, providing
material information, to the extent publicly available, regarding the Person or
Persons acquiring control, and stating that the Change of Control Offer is
being made pursuant to this Section 3.09 and Section 4.08 and that, to the
extent lawful, all Notes properly tendered will be accepted for payment;

 

(ii)       the Change of
Control Payment, the last day of the Change of Control Offer Period, and the
Change of Control Payment Date;

 

(iii)      that
any Note not properly tendered or otherwise not accepted for repurchase will
continue to accrue interest and additional interest, if any;

 

(iv)      that, unless
the Company defaults in the payment of the amount due on the Change of Control
Payment Date, all Notes or portions thereof accepted for repurchase pursuant to
the Change of Control Offer shall cease to accrue interest and additional
interest, if any, on or after the Change of Control Payment Date;

 

(v)       that Holders
electing to have any Notes purchased pursuant to the Change of Control Offer
will be required to tender the Notes, with the form entitled Option of Holder
to Elect Purchase on the reverse of the Notes completed, or transfer by
book-entry transfer, to the Company, a Depositary, if appointed by the Company,
or a Paying Agent at the address specified in the notice not later than the
close of business on the third Business Day preceding the Change of Control
Payment Date;

 

(vi)      that Holders
will be entitled to withdraw their election if the Company, the Depositary or
the Paying Agent, as the case may be, receives, not later than the expiration

 

38

 

of the Change of
Control Offer Period, a telegram, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for
repurchase, and a statement that such Holder is withdrawing his election to
have the Notes redeemed in whole or in part; and

 

(vii)     that
Holders whose Notes are being repurchased only in part will be issued new Notes
equal in principal amount to the portion of the Notes tendered (or transferred
by book-entry transfer) that is not to be repurchased, which portion must be
equal to $1,000 in principal amount or an integral multiple thereof.

 

(d)       On or before 10:00 A.M. New
York City time on the Change of Control Payment Date, the Company shall to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment, together with accrued
and unpaid interest and additional interest, if any, thereon to the Change of
Control Payment Date in respect of all Notes or portions thereof so tendered
and accepted for repurchase and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers’ Certificate stating
the aggregate principal amount of Notes or portions thereof being repurchased
by the Company. The Paying Agent shall promptly (but in any case not later than
five days after the Change of Control Purchase Date) mail to each Holder of
Notes so repurchased the amount due in connection with such Notes, and the
Company shall promptly issue a new Note, and the Trustee, upon written request
from the Company in the form of an Officers’ Certificate shall authenticate and
mail or deliver (or cause to transfer by book entry) to each relevant Holder a
new Note, in a principal amount equal to any unpurchased portion of the Notes
surrendered to the Holder thereof; provided that each such new Note shall be in
a principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

 

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

 

SECTION 3.10. Repurchase Upon Application of Net Proceeds.

 

(a)       In the event that, pursuant
to Section 4.06, the Company shall be required to commence an Asset Sale Offer,
it shall follow the procedures specified in this Section 3.10.

 

(b)       The notice of an Asset Sale
Offer shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. Each Asset Sale
Notice will be mailed to all Holders as shown on the register of Holders within
25 days following the Trigger Event, with a copy to the Trustee, and shall
comply with the procedures set forth in this Indenture. Upon receiving notice
of the Asset Sale Offer, Holders may elect to tender their Notes in whole or in
part in integral multiples of $1,000 in exchange for cash. An Asset Sale Offer
shall remain open for a period of 20 Business Days or such longer period as may
be required by law. Upon the expiration of that period, the Company shall

 

39

 

promptly (but in
any event within three Business Days following such expiration) (the “Purchase
Date”) purchase the Notes and any such other pari passu Indebtedness properly
tendered in accordance with this Section 3.10 and Section 4.06. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:

 

(i)        that the
Asset Sale Offer is being made pursuant to this Section 3.10 and Section 4.06;

 

(ii)       the Asset Sale
Amount, the Purchase Price and the Purchase Date;

 

(iii)      that
any Note not properly tendered or otherwise not accepted for repurchase shall
continue to accrue interest and additional interest, if any;

 

(iv)      that, unless
the Company defaults in the payment of the amount due on the Purchase Date, all
Notes or portions thereof accepted for repurchase pursuant to the Asset Sale
Offer shall cease to accrue interest and additional interest, if any, on or
after the Purchase Date;

 

(v)       that Holders
electing to have any Notes repurchased pursuant to any Asset Sale Offer shall
be required to tender the Notes, with the form entitled Option of Holder to
Elect Purchase on the reverse of the Notes completed, or transfer by book-entry
transfer, to the Company, a Depositary, if appointed by the Company, or a
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;

 

(vi)      that Holders will
be entitled to withdraw their election if the Company, the Depositary or the
Paying Agent, as the case may be, receives, not later than the Purchase Date, a
telegram, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes delivered for repurchase and a
statement that such Holder is withdrawing his election to have such Notes
repurchased in whole or in part; and

 

(vii)     that,
to the extent Holders properly tender Notes (along with any other pari passu
Indebtedness of the Company properly tendered) in an amount exceeding the Asset
Sale Amount, the tendered Notes will be purchased pro rata based on the
aggregate amounts of Notes and other pari passu Indebtedness of the Company
properly tendered (and the Trustee shall select the tendered Notes of tendering
Holders pro rata based on the amount of Notes and other pari passu Indebtedness
of the Company properly tendered).

 

(c)       On or before 10:00 A.M. New
York City time on the Purchase Date, the Company shall to the extent lawful,
(i) accept for payment, pro rata in accordance with this Indenture to the
extent necessary, the Asset Sale Amount of Notes or portions thereof properly
tendered pursuant to the Asset Sale Offer (along with any other pari passu
Indebtedness of the Company properly tendered), or if less than the Asset Sale
Amount has been tendered, all Notes properly tendered, (ii) deposit with the
Paying Agent an amount equal to the Purchase Price, plus accrued and unpaid
interest and additional interest, if any, thereon to the Purchase Date in
respect of all Notes or portions thereof so tendered and accepted for
repurchase and (iii) deliver or cause to be delivered to the Trustee the Notes
so accepted together with an Officers’

 

40

 

Certificate
stating the aggregate principal amount of Notes or portions thereof being
repurchased by the Company. The Paying Agent shall promptly (but in any case
not later than five days after the Purchase Date) mail to each Holder of Notes
so repurchased the amount due in connection with such Notes, and the Company
shall promptly issue a new Note, and the Trustee, upon written request from the
Company in the form of an Officers’ Certificate shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion to the Holder thereof; provided that each such new Note
shall be in a principal amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce the results of the Asset Sale Offer on or as
soon as practicable after the Purchase Date.

 

(d)       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 and additional interest, if any, in each
case to the Purchase Date, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders to the Asset Sale Offer.

 

ARTICLE 4

 

COVENANTS

 

SECTION 4.01. Payment of Notes.

 

(a)       The Company shall pay the
principal of (and premium, if any) and interest, on the Notes on the dates and
in the manner provided in the Notes and in this Indenture. An installment of
principal of or interest on the Notes shall be considered paid on the date it
is due if on such date the Trustee or any Paying Agent (if other than the
Company or a Restricted Subsidiary) holds in accordance with this Indenture
money sufficient to pay all principal and interest then due.

 

(b)       The Company shall pay
interest on overdue principal at the rate specified therefor in the Notes and
shall pay interest on overdue installments of interest at the same rate borne
by the Notes to the extent lawful.

 

SECTION 4.02. Reports and Other Information.

 

(a)       Whether or not required by
the Commission, so long as the Notes are outstanding, the Company will furnish
to the Trustee and, upon request to the holders of Notes, within the time
periods specified in the Commission’s rules and regulations:

 

(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 (or Form 20-F if the Company
is a “foreign private issuer” as such term is defined under the rules and
regulations of the Commission), including a “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and, with respect to
the annual information only, a report on the annual financial statements by the
Company’s certified independent accountants; and

 

41

 

 

(ii)       all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports.

 

Notwithstanding
the foregoing, the Company shall not be required to furnish any information,
certifications or reports required by Items 307 or 308 of Regulation S-K prior
to the effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (each as defined in the Registration Rights Agreement).

 

(b)       Whether
or not required by the Commission, after the consummation of the Exchange Offer
or the effectiveness of the Shelf Registration Statement, the Company will file
a copy of all of the information and reports referred to in clauses (i) and
(ii) above with the Commission for public availability within the time periods
specified in the Commission’s rules and regulations (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.

 

(c)       For
so long as any Notes remain outstanding, the Company will furnish to the
holders of the Notes 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.

 

(d)       In
the event that any direct or indirect parent company of the Company is or
becomes a Guarantor of the Notes, the Company may satisfy its obligations in
this Section 4.02 by furnishing financial information relating to such direct
or indirect parent company; provided, however, that the same is accompanied by
consolidating information that explains in reasonable detail the differences
between the information relating to such direct or indirect parent company and
any of its Subsidiaries other than the Company and its Subsidiaries, on the one
hand, and the information relating to the Company, the Guarantors and the other
Subsidiaries of the Company on a standalone basis, on the other hand.

 

SECTION 4.03.   Limitation
on Incurrence of Indebtedness and Issuance of Preferred Stock.

 

(a)       The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively “incur”) any Indebtedness (including Acquired Debt) and will
not permit any of its Restricted Subsidiaries to issue any shares of Preferred
Stock; provided, however, that the Company or any Restricted Subsidiary that is
a Guarantor may incur Indebtedness (including Acquired Debt) and any Restricted
Subsidiary that is a Guarantor may issue Preferred Stock if the Fixed Charge
Coverage Ratio of the Company for its 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
Preferred Stock is issued would have been at least 2.0 to 1 determined on a pro
forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred or the Preferred Stock had
been issued, as the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period.

 

42

 

(b)       The
first paragraph of this covenant will not prohibit the incurrence of any of the
following (collectively, “Permitted Debt”):

 

(i)        the
incurrence of Indebtedness under the Credit Agreement in a aggregate principal
amount not to exceed $155.0 million as such amount may be reduced from time to
time as a result of mandatory principal payment and permanent reductions of
such borrowings with Net Proceeds from Asset Sales;

 

(ii)       the
incurrence by the Company and the Guarantors of Indebtedness represented by the
Notes (including any Guarantee thereof) issued on the Issue Date and the
incurrence by the Company and the Guarantors of Indebtedness represented by the
Exchange Notes issued in exchange for the Notes issued on the Issue Date
(including any Guarantee thereof) and the incurrence by the Guarantors of any
Guarantee in respect of any Additional Notes and any Exchange Notes issued in
exchange therefor;

 

(iii)      Existing
Indebtedness (other than Indebtedness described in clauses (i) and (ii));

 

(iv)      Indebtedness
(including Capitalized Lease Obligations) incurred by the Company or any
Restricted Subsidiary to finance the purchase, lease or improvement of property
(real or personal) or equipment that is used or useful in a Permitted Business
(whether through the direct purchase of assets or the Capital Stock of any
Person owning such assets) in an aggregate principal amount that, when
aggregated with the principal amount of all other Indebtedness then outstanding
and incurred pursuant to this clause (iv), does not exceed $1.0 million;

 

(v)       Indebtedness
incurred by the Company or any Restricted Subsidiary constituting reimbursement
obligations with respect to letters of credit issued in the ordinary course of
business, including without limitation letters of credit in respect of workers’
compensation claims, health, disability or other employee benefits or property,
casualty or liability insurance or self-insurance or other Indebtedness with
respect to reimbursement-type obligations regarding workers’ compensation
claims; provided, however, that upon the drawing of such letters of credit or
the incurrence of such Indebtedness, such obligations are reimbursed within 30
days following such drawing or incurrence;

 

(vi)      Indebtedness
arising from agreements of the Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the acquisition or disposition of
any business, assets or a Subsidiary, other than guarantees of Indebtedness
incurred by any Person acquiring all or any portion of such disposed business,
assets or a Subsidiary for the purpose of financing such acquisition; provided,
however, that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the Fair Market Value of such noncash proceeds being measured at the
time received and without giving effect to any subsequent changes in value) actually
received by the Company and any Restricted Subsidiaries in connection with such
disposition;

 

43

 

(vii)     Indebtedness
of the Company owed to and held by any Restricted Subsidiary or Indebtedness of
a Restricted Subsidiary owed to and held by the Company or any other Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or transfer of
any Capital Stock or any other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of
any such Indebtedness (except to the Company or a Restricted Subsidiary) shall
be deemed, in each case, to constitute the incurrence of such Indebtedness by
the issuer thereof and (B) if the Company or a Guarantor is the obligor on such
Indebtedness and the obligee thereunder is not the Company or a Guarantor, such
Indebtedness is expressly subordinated in right of payment to all obligations
of the Company or such Guarantor with respect to the Notes;

 

(viii)    Hedging
Obligations of the Company or any Restricted Subsidiary (excluding Hedging
Obligations entered into for speculative purposes) for the purpose of limiting
(A) interest rate risk with respect to any Indebtedness that is permitted by
the terms of this Indenture to be outstanding, (B) exchange rate risk with
respect to any currency exchange or (C) commodity price risk;

 

(ix)       obligations
in respect of performance, bid and surety bonds and performance and completion
guarantees provided by the Company or any Restricted Subsidiary or obligations
in respect of letters of credit related thereto, in each case in the ordinary
course of business or consistent with past practice;

 

(x)        Indebtedness
of the Company or Indebtedness or Preferred Stock of any Restricted Subsidiary
not otherwise permitted hereunder in an aggregate principal amount or
liquidation preference that, when aggregated with the principal amount and
liquidation preference of all other Indebtedness and Preferred Stock then
outstanding and incurred pursuant to this clause (x), does not at any one time
outstanding exceed $25.0 million; provided, however, that any amounts incurred
under this clause (x) by Foreign Subsidiaries of the Company may not at any one
time outstanding exceed $10.0 million;

 

(xi)       (1)
any guarantee by the Company or a Guarantor of Indebtedness or other
obligations of any Restricted Subsidiary so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary is permitted under the
terms of this Indenture; provided, however, that if such Indebtedness is by its
express terms subordinated in right of payment to the Notes or the Guarantee of
such Restricted Subsidiary, any such guarantee of such Guarantor with respect
to such Indebtedness shall be subordinated in right of payment to such
Guarantor’s Guarantee with respect to the Notes substantially to the same
extent as such Indebtedness is subordinated to the Notes or the Guarantee of
such Restricted Subsidiary, as applicable, (2) any guarantee by a Restricted
Subsidiary that is not a Guarantor of Indebtedness of another Restricted
Subsidiary that is not a Guarantor incurred in accordance with the terms of
this Indenture and (3) any guarantee by a Guarantor of Indebtedness of the
Company incurred in accordance with the terms of this Indenture;

 

(xii)      the
incurrence by the Company or any Restricted Subsidiary of Indebtedness or
Preferred Stock that serves to refund, refinance, defease or discharge any

 

44

 

Indebtedness incurred as
permitted under paragraph(a) of this covenant and clauses (ii), (iii) and (iv)
above and this clause (xii) or any Indebtedness issued to so refund or
refinance such Indebtedness including additional Indebtedness incurred to pay
premiums and fees in connection therewith (the “Refinancing Indebtedness”)
prior to its respective maturity; provided, however, that such Refinancing
Indebtedness (A) has a Weighted Average Life to Maturity at the time such
Refinancing Indebtedness is incurred that is not less than the remaining
Weighted Average Life to Maturity of the Indebtedness being refunded or
refinanced, (B) to the extent such Refinancing Indebtedness refinances
Indebtedness subordinated or pari passu to the Notes or the Guarantees, such
Refinancing Indebtedness is subordinated or pari passu to the Notes or the
Guarantees at least to the same extent as the Indebtedness being refinanced or
refunded, (C) shall not include (x) Indebtedness or Preferred Stock of a
Subsidiary that is not a Guarantor that refinances Indebtedness or Preferred
Stock of the Company or a Guarantor or (y) Indebtedness or Preferred Stock of
the Company or a Restricted Subsidiary that refinances Indebtedness or
Preferred Stock of an Unrestricted Subsidiary, (D) shall not be in a principal
amount in excess of the principal amount of, premium, if any, accrued interest
on, and related fees and expenses of, the Indebtedness being refunded or
refinanced and (E) shall have a stated maturity date equal or later to the
Stated Maturity of the Notes or the Indebtedness being refunded or refinanced;
and provided further, however, that subclauses (A), (B) and (E) of this clause
(xii) will not apply to any refunding or refinancing of any Senior Debt;

 

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

 

(xiv)    Indebtedness
of the Company or any of its Restricted Subsidiaries supported by a letter of
credit issued pursuant to the Credit Agreement in a principal amount not in
excess of the stated amount of such letter of credit;

 

(xv)     Indebtedness
consisting of promissory notes issued by the Company or any Guarantor to
current or former officers, directors and employees, their respective estates,
spouses or former spouses to finance the purchase or redemption of Equity
Interests of the Company or Holdings permitted under Section 4.04; and

 

(xvi)    Indebtedness
incurred to redeem, discharge or defease the Notes in full in accordance with
the applicable provisions of this Indenture.

 

For purposes of
determining compliance with this Section 4.03, in the event that the proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (i) through (xvi) above, or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company will be
permitted to classify and later reclassify such item of Indebtedness in any
manner that complies with this covenant, and such item of Indebtedness will be
treated as having been incurred pursuant to such reclassified categories.
Accrual of interest, the accretion of accreted value and the payment of
interest or dividends in the form of additional Indebtedness or shares of
Capital Stock, as applicable, will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant. Notwithstanding the

 

45

 

foregoing,
Indebtedness under the Credit Agreement outstanding on the Issue Date will be
deemed to have been incurred on such date in reliance on the exception provided
by Section 4.03(b)(i) and the Company shall not be permitted to reclassify all
or any portion of such Indebtedness.

 

In addition, for purposes of determining compliance with this Section
4.03, a change in GAAP that results in an obligation of a Person that exists at
such time, and is not therefore classified as Indebtedness, becoming
Indebtedness, shall not be deemed in incurrence of such Indebtedness.

 

For purposes of determining compliance with any U.S. dollar restriction
on the incurrence of Indebtedness where the Indebtedness incurred is
denominated in a different currency, the amount of such Indebtedness will be
the U.S. Dollar Equivalent determined on the date of the incurrence of such
Indebtedness; provided, however, that
if any such Indebtedness denominated in a different currency is subject to a
currency agreement with respect to U.S. dollars covering all principal,
premium, if any, and interest payable on such Indebtedness, the amount of such
Indebtedness expressed in U.S. dollars will be as provided in such currency
agreement. The principal amount of any refinancing Indebtedness incurred in the
same currency as the Indebtedness being refinanced will be the U.S. Dollar
Equivalent of the Indebtedness being refinanced, except to the extent that (1)
such U.S. Dollar Equivalent was determined based on a currency agreement, in
which case the refinancing Indebtedness will be determined in accordance with
the preceding sentence, and (2) the principal amount of the refinancing
Indebtedness exceeds the principal amount of the Indebtedness being refinanced,
in which case the U.S. Dollar Equivalent of such excess will be determined on
the date such refinancing Indebtedness is incurred. The maximum amount of
Indebtedness that the Company and its Restricted Subsidiaries may incur
pursuant to this covenant shall not be deemed to be exceeded, with respect to
any outstanding Indebtedness, solely as a result of fluctuations in the
exchange rate of currencies.

 

SECTION 4.04.   Limitation on Restricted Payments.

 

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

 

(i)        declare or pay any dividend or make any other
distribution on account of the Company’s or any of its Restricted Subsidiaries’
Equity Interests, including any dividend or distribution payable in connection
with any merger or consolidation (other than (A) dividends or distributions by
the Company payable in Equity Interests (other than Disqualified Stock) of the
Company or in options, warrants or other rights to purchase such Equity
Interests (other than Disqualified Stock), (B) dividends or distributions by a
Restricted Subsidiary payable solely to the Company or any other Restricted
Subsidiary or (C) in the case of any dividend or distribution payable on or in
respect of any class or series of securities issued by a Restricted Subsidiary
other than a Wholly Owned Subsidiary, pro rata dividends or distributions to
minority stockholders of such Restricted Subsidiary (or owners of an equivalent
interest in the case of a Subsidiary that is an entity other than a corporation;
provided, that the Company or a Restricted

 

46

 

Subsidiary
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of securities);

 

(ii)       purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company or any direct or indirect
parent entity of the Company held by any Person (other than by a Restricted
Subsidiary), including in connection with any merger or consolidation;

 

(iii)      make any principal payment on, or redeem,
repurchase, defease or otherwise acquire or retire for value, in each case
prior to any scheduled repayment, sinking fund payment or maturity, any
Subordinated Indebtedness (other than (x) Indebtedness permitted under clause
(xii) of the definition of “Permitted Debt” or (y) the purchase, repurchase or
other acquisition or retirement of Subordinated Indebtedness purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of purchase,
repurchase or other acquisition); or

 

(iv)      make any Restricted Investment (all such
payments and other actions set forth in these clauses (i) through (iv) being
collectively referred to as “Restricted Payments”),

 

unless, at the time of and after giving effect to such Restricted
Payment:

 

(1)       no Default has occurred and is continuing or
would occur as a consequence of such Restricted Payment;

 

(2)       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 Section 4.03(a); and

 

(3)       such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and the
Restricted Subsidiaries after the Issue Date (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (x), (xi),
(xii), (xiii) and (xiv) of the next succeeding paragraph), is less than the
sum, without duplication, of

 

(A)      50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from October 1, 2005 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,
in the case such Consolidated Net Income for such period is a deficit, minus
100% of such deficit), plus

 

(B)       100% of the aggregate net cash proceeds and
the Fair Market Value, as determined in good faith by the Board of Directors of
the Company, of property and marketable securities received by the Company
after the Issue Date from the issue or sale (other than to a Restricted
Subsidiary) of (x) Equity

 

47

 

Interests of the
Company but excluding (i) cash proceeds received from the sale of Equity
Interests of the Company and, to the extent actually contributed to the
Company, Equity Interests of the Company’s direct or indirect parent entities
to members of management, directors or consultants of the Company, any direct
or indirect parent entity of the Company and the Subsidiaries of the Company
after the Issue Date to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (iv) of the next succeeding paragraph,
(ii) cash proceeds received from the sale of Refunding Capital Stock (as defined
below) to the extent such amounts have been applied to Restricted Payments made
in accordance with clause (ii) of the next succeeding paragraph and (iii)
Disqualified Stock or (y) debt securities of the Company that have been
converted into such Equity Interests of the Company (other than Refunding
Capital Stock or Equity Interests or convertible debt securities of the Company
sold to a Restricted Subsidiary or the Company, as the case may be, and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus

 

(C)       100%
of the aggregate amount of cash and the Fair Market Value, as determined in
good faith by the Board of Directors of the Company, of property and marketable
securities contributed to the capital of the Company after the Issue Date
(other than (i) by a Restricted Subsidiary, (ii) any Disqualified Stock, (iii)
any Refunding Capital Stock, (iv) any Excluded Contributions and (v) cash
proceeds applied to Restricted Payments made in accordance with clause (iv) of
the next succeeding paragraph), plus

 

(D)      without
duplication of any amounts included in clause (iv) of the paragraph below and
to the extent not already included in Consolidated Net Income, 100% of the
aggregate amount received in cash and the Fair Market Value, as determined in
good faith by the Board of Directors of the Company, of property and marketable
securities received after the Issue Date by means of (A) the sale or other
disposition (other than to the Company or a Restricted Subsidiary) of
Restricted Investments made by the Company or its Restricted Subsidiaries and
repurchases and redemptions of such Restricted Investments from the Company or
its Restricted Subsidiaries and repayments of loans or advances that constitute
Restricted Investments of the Company or its Restricted Subsidiaries or (B) the
sale (other than to the Company or a Restricted Subsidiary) of the Capital
Stock of an Unrestricted Subsidiary or a distribution from an Unrestricted
Subsidiary (other than in each case to the extent such Investment constituted a
Permitted Investment) or a dividend from an Unrestricted Subsidiary, plus

 

(E)       in
the case of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary or the merger or consolidation of an Unrestricted Subsidiary into
the Company or a Restricted Subsidiary or the transfer of assets of an
Unrestricted Subsidiary to the Company or a Restricted Subsidiary, the Fair
Market Value of the Investment in such Unrestricted Subsidiary, as determined
by the Board of Directors of the Company in good faith at the time of the

 

48

 

redesignation of such
Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such
merger, consolidation or transfer of assets (other than an Unrestricted
Subsidiary to the extent such Investment constituted a Permitted Investment).

 

(b)       The
preceding provisions will not prohibit:

 

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

 

(ii)       (A)
the redemption, repurchase, retirement or other acquisition of any Equity
Interests of the Company or any direct or indirect parent entity of the Company
(“Retired Capital Stock”) or Subordinated Indebtedness in exchange for or out
of the net cash proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary or the Company or an employee stock ownership plan or
trust established by the Company or any of its Subsidiaries) of Equity
Interests of the Company or contributions to the equity capital of the Company
(in each case, other than Disqualified Stock) (“Refunding Capital Stock”) and
(B) the declaration and payment of dividends on the Retired Capital Stock out
of the net cash proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company or to an employee stock ownership plan or any trust
established by the Company or any of its Subsidiaries) of Refunding Capital Stock;

 

(iii)      the
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness made by exchange for, or out of the proceeds of the substantially
concurrent sale of, new Indebtedness of the borrower thereof, the Company or a
Guarantor that is incurred in compliance with Section 4.03 so long as (A) the
principal amount of such new Indebtedness does not exceed the principal amount
of the Subordinated Indebtedness to the Notes being so redeemed, repurchased,
acquired or retired for value plus related fees and expenses and the amount of
any reasonable premium required to be paid under the terms of the instrument
governing the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired, (B) such new Indebtedness is subordinated to the Notes and
any Guarantees thereof at least to the same extent as such Subordinated
Indebtedness so redeemed, repurchased, acquired or retired, (C) such new
Indebtedness has a final scheduled maturity date equal to or later than the
Notes or the final scheduled maturity date of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired and (D) such new
Indebtedness has a Weighted Average Life to Maturity equal to or greater than
the remaining Weighted Average Life to Maturity of the Notes or the
Subordinated Indebtedness being so redeemed, repurchased, acquired or retired;

 

(iv)      a
Restricted Payment to pay for the repurchase, retirement or other acquisition
or retirement for value of common Equity Interests of the Company or any of its
direct or indirect parent entities held by any future, present or former
employee, director or consultant of the Company, any of its Subsidiaries or any
of its direct or indirect parent entities (or their permitted transferees,
assigns, estates or heirs) pursuant to any management equity plan or stock
option plan or any other management or employee

 

49

 

benefit plan or other
similar agreement or arrangement; provided, however, that the aggregate amount
of Restricted Payments made under this clause (iv) does not exceed $2.5 million
in any calendar year (with unused amounts in any calendar year not to exceed
$1.0 million being carried over to the next succeeding calendar year); and
provided further, however, that such amount in any calendar year may be
increased by an amount not to exceed (A) the cash proceeds from the sale of
Equity Interests (other than Disqualified Stock) of the Company and, to the
extent contributed to the Company, Equity Interests of any of its direct or
indirect parent entities, in each case to members of management, directors or
consultants of the Company, any of its Subsidiaries or any of its direct or
indirect parent entities that occurs after the Issue Date plus (B) the cash proceeds
of “key man” life insurance policies received by the Company or its Restricted
Subsidiaries after the Issue Date (provided, however, that the Company may
elect to apply all or any portion of the aggregate increase contemplated by
clauses (A) and (B) above in any calendar year) less (C) the amount of any
Restricted Payments previously made pursuant to clauses (A) and (B) of this
clause (iv);

 

(v)       the
declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Company or any Restricted Subsidiary issued or
incurred in accordance with this covenant to the extent such dividends are
included in the definition of Fixed Charges for such entity;

 

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

 

(vii)     the
payment of dividends on the Company’s common stock following the first public
offering of the Company’s common stock or the common stock of any of its direct
or indirect parent entities after the Issue Date, of up to 6.0% per annum of
the net cash proceeds received by or contributed to the Company after the Issue
Date in any such public offering, other than public offerings with respect to
the Company’s common stock registered on Form S-4 or Form S-8 and other than a
public sale constituting an Excluded Contribution;

 

(viii)    other
Restricted Payments in an aggregate amount not to exceed $10.0 million;

 

(ix)       cash
dividends or other distributions on the Company’s or any Restricted Subsidiary’s
Capital Stock used to, or the making of loans, the proceeds of which will be
used to, fund the payment of fees and expenses, including purchase price
adjustments, incurred in connection with the Transactions to the extent
permitted (to the extent applicable) by Section 4.07;

 

(x)        the
repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to provisions similar to those described in
Sections 4.06 and 4.08; provided, however, that a Change of Control Offer or
Asset Sale Offer, as applicable, has been made and all Notes tendered by
holders of the Notes in

 

50

 

connection with a Change
of Control Offer or Asset Sale Offer, as applicable, have been repurchased,
redeemed or acquired for value;

 

(xi)       cash
payments in lieu of the issuance of fractional shares in connection with the
exercise of warrants, options or other securities convertible or exchangeable
for Capital Stock of the Company;

 

(xii)      Permitted
Payments to Holdings;

 

(xiii)     the
payment of annual management fees in an amount not to exceed $1.5 million in
any calendar year and the reimbursement of expenses pursuant to the Management
Agreement (or distributions to Holdings to enable Holdings to make such
payment); or

 

(xiv)    Investments
made with Excluded Contributions.

 

provided,
however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iv), (v), (vii), (viii), (x),
(xiii) and (xiv) above, no Default shall have occurred and be continuing or
would occur as a consequence thereof.

 

(c)       The
amount of all Restricted Payments (other than cash) will be the Fair Market
Value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued by the Company or such 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 this Section 4.04 will
be determined in good faith by the Board of Directors of the Company.

 

SECTION 4.05.   Dividend
and Other Payment Restrictions Affecting Subsidiaries.

 

(a)       The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to:

 

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

 

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

 

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

 

(b)       The
preceding restrictions will not apply to encumbrances or restrictions existing
under or by reason of:

 

51

 

(1)       contractual
encumbrances or restrictions in effect (x) pursuant to the Credit Agreement or
related documents or (y) on the Issue Date, including, without limitation,
pursuant to Existing Indebtedness and related documentation;

 

(2)       this
Indenture, the Notes and the Guarantees (including any Exchange Notes with
respect to the Notes and related Guarantees);

 

(3)       purchase
money obligations or other obligations described in Section 4.03(b)(iv) (but
not subject to the dollar limit in Section 4.03(b)(iv)) for property acquired
in the ordinary course of business that in each case impose restrictions of the
nature discussed in clause (a)(iii) of this Section 4.03 on the property so
acquired;

 

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

 

(5)       any
agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in connection therewith or in contemplation thereof or to provide all
or a portion of the funds or credit support utilized to consummate such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired;

 

(6)       customary
restrictions pursuant to an agreement that has been entered into for the sale
or disposition of assets, including Capital Stock of a Subsidiary otherwise
permitted under this Indenture;

 

(7)       Secured
Indebtedness otherwise permitted to be incurred pursuant to Sections 4.03 and
4.12 that limits the right of the debtor to dispose of the assets securing such
Indebtedness;

 

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

 

(9)       customary
provisions in joint venture agreements and other similar agreements entered
into in the ordinary course of business;

 

(10)     customary
provisions contained in leases, subleases, licenses or asset sale agreements
and other agreements;

 

(11)     customary
restrictions pursuant to agreements governing Indebtedness incurred by any
Foreign Subsidiary of the Company pursuant to Section 4.03; and

 

(12)     any
encumbrances or restrictions of the type referred to in Section 4.05(a) imposed
by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (11) of this
Section 4.05(b); provided, however, that the encumbrances or restrictions
imposed by such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the Company’s Board of Directors, not

 

52

 

materially less favorable
to the holders of the Notes than encumbrances and restrictions contained in
such predecessor agreements.

 

SECTION 4.06.   Asset
Sales.

 

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

 

(i)        the
Company (or such 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 or Cash Equivalents.

 

For purposes of Section
4.06(a)(ii), the amount of (i) any liabilities (as shown on the Company’s or
the applicable Restricted Subsidiary’s most recent balance sheet or in the
notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or the
Guarantees) that are assumed by the transferee of any such assets and from
which the Company and all Restricted Subsidiaries have been validly released by
all creditors in writing, (ii) any securities received by the Company or such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the
cash or cash equivalents received) within 180 days following the closing of
such Asset Sale and (iii) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in such Asset Sale having an
aggregate Fair Market Value (as determined in good faith by the Board of
Directors of the Company), taken together with all other Designated Noncash
Consideration received pursuant to this clause (iii) that is at that time
outstanding, not to exceed the greater (x) $7.5 million and (y) 3.5% of
Consolidated Tangible Assets of the Company as of the end of the most recent
fiscal quarter for which internal financial statements are available (with the
Fair Market Value of each item of Designated Noncash Consideration being
measured at the time received without giving effect to subsequent changes in
value), shall be deemed cash for the purposes of this paragraph only.

 

(b)       Within
360 days after the receipt of any Net Proceeds from an Asset Sale, the Company
may apply those Net Proceeds at its option:

 

(i)        to
permanently repay Obligations under Senior Debt or Guarantor Senior Debt (and
to correspondingly reduce commitments with respect thereto) or Indebtedness
that ranks pari passu with the Notes or the Guarantees, as applicable
(provided, however, that if the Company shall so reduce Obligations under
Indebtedness that ranks pari passu with the Notes or the Guarantees, as
applicable, it will equally and ratably reduce Obligations under the Notes by
causing the Company to make an offer (in accordance with the procedures set
forth below for an Asset Sale Offer (as defined below)) to all holders of Notes
to purchase at a purchase price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest, if any, on the pro rata principal amount of
Notes), or Indebtedness of a Restricted Subsidiary that is not a Guarantor, in
each case other than Indebtedness owed to the Company or an Affiliate of the
Company;

 

53

 

(ii)       to
an investment in (A) any one or more businesses; provided, however, that such
investment in any business is in the form of the acquisition of Capital Stock
and results in the Company or a Restricted Subsidiary owning an amount of the
Capital Stock of such business such that such business constitutes a Restricted
Subsidiary, (B) capital expenditures or (C) other assets, in each of (A), (B)
and (C), used or useful in a Permitted Business; and/or

 

(iii)      to
an investment in (A) any one or more businesses; provided, however, that such
investment in any business is in the form of the acquisition of Capital Stock
and it results in the Company or a Restricted Subsidiary owning an amount of
the Capital Stock of such business such that such business constitutes a
Restricted Subsidiary, (B) properties or (C) assets that, in each of (A), (B)
and (C), replace the businesses, properties and assets that are the subject of
such Asset Sale.

 

(c)       Any
Net Proceeds from an Asset Sale not applied or invested in accordance with the
preceding paragraph within 360 days from the date of the receipt of such Net
Proceeds shall constitute “Excess Proceeds”; provided, however, that if during
such 360-day period the Company or a Restricted Subsidiary enters into a
definitive binding agreement committing it to apply such Net Proceeds in
accordance with the requirements of clause (ii) or (iii) of the immediately
preceding paragraph after such 360th day, such 360-day period will be extended
with respect to the amount of Net Proceeds so committed for a period not to
exceed 90 days until such Net Proceeds are required to be applied in accordance
with such agreement (or, if earlier, until termination of such agreement).

 

(d)       When
the aggregate amount of Excess Proceeds exceeds $10 million, (the “Trigger
Event”), the Company, or the applicable Restricted Subsidiary, will make an
offer (an “Asset Sale Offer”) to all holders of Notes and Indebtedness that
ranks pari passu with the Notes containing provisions similar to those set
forth in this Indenture with respect to offers to purchase with the proceeds of
sales of assets to purchase, on a pro rata basis, the maximum principal amount
of Notes and such other pari passu Indebtedness that may be purchased out of
the Excess Proceeds (the “Asset Sale Amount”). The offer price in any Asset
Sale Offer will be equal to 100% of principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, and will be payable in cash
(the “Purchase Price”).

 

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

 

(f)        If
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company, or the applicable Restricted Subsidiary of the Company, may use those
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If
the aggregate principal amount of Notes tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be
purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
Excess Proceeds which served as the basis for such Asset Sale Offer will be
reset at zero.

 

54

 

(g)       The
Company, or the applicable Restricted Subsidiary, will comply with the
requirements of Rule 14e-l under the Exchange Act and any other securities laws
and regulations thereunder to the extent those 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 Asset Sale provisions of this Indenture, the
Company, or the applicable Restricted Subsidiary, will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Asset Sale provisions of this Indenture by
virtue of such conflict.

 

SECTION 4.07.   Transactions
with Affiliates.

 

(a)       The
Company will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, assign, 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 (each, an “Affiliate Transaction”), unless:

 

(i)        the
Affiliate Transaction is on terms that are no 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 $2.5 million, a
resolution of the Board of Directors of the Company stating that such Affiliate
Transaction complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members 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 $10.0 million, an
opinion as to the fairness to the Company or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
valuation, appraisal or investment banking firm of national standing.

 

(b)       The
following items will not be deemed to be Affiliate Transactions and, therefore,
will not be subject to the provisions of the prior paragraph:

 

(i)        Restricted
Payments and Permitted Investments (other than pursuant to clauses (3) and (8)
of the definition thereof) permitted by this Indenture;

 

(ii)       transactions
pursuant to the Management Agreement and the Stockholders Agreement;

 

55

 

(iii)      the
payment of reasonable and customary compensation and fees paid to, and
indemnities provided on behalf of (and entering into related agreements with)
officers, directors, employees or consultants of the Company, any of its direct
or indirect parent entities, or any Restricted Subsidiary, as determined in
good faith by the Board of Directors of the Company or senior management
thereof;

 

(iv)      payments
or loans (or cancellations of loans) to employees or consultants of the Company
or any of its direct or indirect parent entities or any Restricted Subsidiary
that are approved by the Board of Directors of the Company and that are
otherwise permitted under this Indenture, but in any event not to exceed $1.0
million in the aggregate outstanding at any one time;

 

(v)       payments
made or performance under any agreement as in effect on the Issue Date and
described in the Offering Circular (other than the Management Agreement and
Stockholders Agreement, but including, without limitation, each of the other
agreements entered into in connection with the Transactions) or any amendment
thereto (so long as any such amendment is not less advantageous to the holders
of the Notes in any material respect than the original agreement as in effect
on the Issue Date);

 

(vi)      the
Transactions and the payment of all transaction, underwriting, commitment and
other fees and expenses incurred in connection with the Transactions;

 

(vii)     transactions
with customers, clients, suppliers, or purchasers or sellers of goods or
services, in each case in the ordinary course of business and otherwise in
compliance with the terms of this Indenture that are fair to the Company or its
Restricted Subsidiaries, in the reasonable determination of the members of the
Board of Directors of the Company or the senior management thereof, or are on
terms at least as favorable as would reasonably have been entered into at such
time with an unaffiliated party;

 

(viii)    the
issuance of Equity Interests (other than Disqualified Stock) of the Company to
any Person;

 

(ix)       the
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
option and stock ownership plans or similar employee benefit plans approved by
the Board of Directors of the Company or any direct or indirect parent company
of the Company or a Restricted Subsidiary of the Company, as appropriate, in
good faith;

 

(x)        any
contribution to the capital of the Company;

 

(xi)       any
employment agreements entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; and

 

(xii)      any
transaction with the Company or a Restricted Subsidiary with a third party that
would constitute an Affiliate Transaction solely because the Company or a
Restricted Subsidiary owns a equity interest sufficient to technically render
such third party an Affiliate.

 

56

 

SECTION 4.08.   Change
of Control.

 

(a)       Upon
the occurrence of a Change of Control, unless the Company at such time has
given notice of redemption under the second or third paragraph of Section 5 in
Appendix A, each Holder will have the right to require that the Company
purchase all or a portion 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 principal amount thereof plus accrued and unpaid interest and
additional interest, if any, thereon to the Change of Control Payment Date.
Prior to complying with any of the provisions in Section 3.09 or this Section
4.08, but in any event within 90 days following a Change of Control, to the
extent required to permit the Company to comply with this Section 4.08, the
Company will either (i) repay all outstanding Senior Debt in full in cash or
Cash Equivalents or (ii) obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt. The Company’s failure to comply
with the covenant described in the second preceding sentence will prohibit the
Company from purchasing Notes in a Change of Control, which after appropriate
notice and lapse of time would result in an Event of Default under Section 6.01
(a) and (d), which would in turn constitute a default under the Credit
Agreement.

 

(b)       The
Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer. A Change of Control Offer may be made in advance of a Change of
Control or conditional upon the occurrence of a Change of Control, if a
definitive agreement is in place for the Change of Control at the time the
Change of Control Offer is made.

 

(c)       The
Company will comply with the requirements of Rule 14e-l 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 this Section 4.08 or Section
3.09, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.08 or Section 3.09 by virtue of such conflict.

 

SECTION 4.09.   Compliance
Certificate. The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers’ Certificate stating
that in the course of the performance by the signers of their duties as
Officers of the Company they would normally have knowledge of any Default and
whether or not the signers know of any Default that occurred during such period.
If they do, the certificate shall describe the Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with Section 314(a)(4) of the TIA.

 

SECTION 4.10.   Further
Instruments and Acts. Upon request of the Trustee, the Company shall
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out the purpose of this Indenture.

 

57

 

SECTION 4.1l.   Future
Guarantors. If the Company or any of its Restricted Subsidiaries acquires
or creates another Domestic Subsidiary after the date hereof that is not
designated as an Unrestricted Subsidiary in accordance with Section 4.04, then
that newly acquired or created Domestic Subsidiary will become a Guarantor and
execute a supplemental indenture in the form of Appendix B and deliver an
Opinion of Counsel satisfactory to the Trustee within 10 Business Days of the
date on which it was acquired or created; provided that any Domestic Subsidiary
that constitutes an Immaterial Subsidiary need not become a Guarantor until
such time as it ceases to be an Immaterial Subsidiary.

 

SECTION 4.12.   Liens.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
that secures obligations under any Indebtedness ranking pari passu with or
subordinated in right of payment to the Notes or a related Guarantee on any
asset or property of the Company or any Restricted Subsidiary, or any income or
profits therefrom, or assign or convey any right to receive income therefrom,
unless:

 

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

 

(b)       in
all other cases, the Notes and any related Guarantees are equally and ratably
secured, except that the foregoing shall not apply to:

 

(c)       Liens
existing on the Issue Date to the extent and in the manner such Liens are in
effect on the Issue Date;

 

(d)       Liens
securing the Notes and the related Guarantees and the Exchange Notes (including
Exchange Notes issued in exchange for Additional Notes issued and secured by a
Lien in each case in accordance with the terms of this Indenture) and the
related Guarantees;

 

(e)       Liens
securing Senior Debt or Guarantor Senior Debt and the related guarantees of
such Senior Debt or Guarantor Senior Debt; and

 

(f)        Permitted
Liens.

 

SECTION 4.13.   Maintenance
of Office or Agency.

 

(a)       The
Company shall maintain 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 as set forth in Section 13.02.

 

58

 

(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. 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 corporate trust office of the Trustee or its
Agent as such office or agency of the Company in accordance with Section 2.04.

 

SECTION 4.14.   Limitation
on Layering. The Company will not, and will not permit any Restricted
Subsidiary that is a Guarantor to, directly or indirectly, incur any
Indebtedness that is contractually subordinated or junior in right of payment
to any Senior Debt (including Acquired Debt) or Guarantor Senior Debt (including
Acquired Debt) of the Company or such other Guarantor, as the case may be,
unless such Indebtedness is either:

 

(a)       Senior
Subordinated Indebtedness; or

 

(b)       subordinate
in right of payment to the Notes or the Guarantees, as the case may be.

 

SECTION 4.15.   Business
Activities. The Company will not, and will 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 Subsidiaries taken
as a whole.

 

SECTION 4.16.   Payments for Consent. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to or for the benefit of any holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes thereunder unless such consideration
is offered to be paid and is paid to all holders of the Notes that so consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.

 

SECTION 4.17.   Corporate
Existence. Except as otherwise permitted by Article Five, 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 of each Restricted Subsidiary and the
rights (charter and statutory) and material franchises of the Company and each
of its Restricted Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right or franchise, or the corporate existence
of any Restricted Subsidiary, if the Board of Directors of the Company shall
determine in good faith that the preservation of such existence is no longer
necessary or desirable in the conduct of the business of the Company, and that
the loss thereof is not, and will not be, disadvantageous in any material
respect to the Holders.

 

SECTION 4.18.   Payment
of Taxes and Other Claims. The Company shall pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges levied or imposed upon it
or any of its Subsidiaries or upon the income, profits or property of it or any
of its Subsidiaries and (ii) all

 

59

 

lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material liability or Lien upon the property of it or any of its Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge
or cause to be paid or discharged any such
tax, assessment, charge or claim (i) whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which
appropriate provision has been made or (ii) where the failure to effect such
payment or discharge is not adverse in any material respect to the
Holders.

 

SECTION 4.19.   Maintenance of Properties and Insurance.

 

(a)       The
Company shall cause all material properties owned by or leased by it or any of
its Restricted Subsidiaries useful and necessary to the conduct of its business
or the business of any of its Restricted Subsidiaries, taken as a whole, to be
maintained and kept in normal condition,
repair and working order (subject to ordinary wear and tear) and shall cause to
be made all repairs, renewals, replacements and betterments thereof, all
as in its judgment may be necessary, so
that the business carried on in connection therewith may be properly conducted at
all times; provided, however, that nothing in this Section 4.19 shall prevent
the Company or any of its Restricted
Subsidiaries from discontinuing the use, operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or
disposal is in the ordinary course of business or, in the judgment of
the Board of Directors of the Company or any Restricted Subsidiary of the
Company concerned, or of an officer (or other agent employed by the Company or
of any of its Subsidiaries) of the Company or any of its Restricted
Subsidiaries having managerial responsibility for any such property, desirable
in the conduct of the business of the Company or any Restricted Subsidiary of
the Company, and if such discontinuance or disposal is not adverse in any
material respect to the Holders; provided further, that nothing in this Section
4.19 shall prevent the Company or any of its Restricted Subsidiaries from
discontinuing or disposing of any of its properties to the extent otherwise
permitted by this Indenture.

 

(b)       The Company shall maintain, and shall cause its
Restricted Subsidiaries to maintain, insurance with responsible carriers
against such risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions, as are customarily carried by
similar businesses of similar size, including property and casualty loss, workers’ compensation and interruption of
business insurance, unless, in the good faith judgment of the Board of
Directors of the Company, the failure to provide such insurance would not be
adverse in any material respect to the Holders.

 

SECTION 4.20.   Compliance with Laws. The Company shall
comply, and shall cause each of its Subsidiaries to comply, with all
applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries taken as a
whole.

 

60

 

SECTION 4.21.   Waiver
of Stay, Extension or Usury Laws. The Company covenants (to the extent permitted by applicable law) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Notes as contemplated
herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance
of this Indenture, and (to the extent permitted by applicable law) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.

 

ARTICLE 5

 

MERGER, CONSOLIDATION OR SALE OF
ASSETS

 

SECTION 5.01.   Merger,
Consolidation or Sale of Assets.

 

(a)       The
Company will not, directly or indirectly: (x) consolidate or merge with or into
another Person (whether or not the Company is the surviving corporation); or
(y) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially
all of the properties or assets of the
Company and its Subsidiaries, taken as a whole, in one or more related transactions,
to another Person; unless:

 

(i)        either:
(A) the Company is the surviving corporation or (B) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
conveyance, lease or other disposition has been made is, in the case of the
Company, a corporation organized or existing under the laws of the United
States, any state of the United States or the District of Columbia (the Company or such Person, including the Person to
which such sale, assignment, transfer, conveyance, lease or other
disposition has been made, as the case may be, being herein called the “Successor
Company”);

 

(ii)       the
Successor Company (if other than the Company) assumes all the obligations of the Company under the Notes, this
Indenture and the Registration Rights Agreement pursuant to agreements
reasonably satisfactory to the Trustee;

 

(iii)      immediately after such transaction no Default or
Event of Default exists; and

 

(iv)      immediately
after giving pro forma effect to such transaction and any related financing
transactions, as if the same had occurred at the beginning of the applicable
four-quarter period, either (a) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 4.03(a) or (b) the Fixed Charge Coverage Ratio for the
Successor Company and its Restricted Subsidiaries would be greater than such
ratio for the Company and its Restricted Subsidiaries immediately prior
to such transaction.

 

61

 

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

 

(c)       The predecessor company will be released from its
obligations under this Indenture and the Successor Company will succeed to, and
be substituted for, and may exercise every right and power of, the Company
under this Indenture, but, in the case of a lease of all or substantially
all its assets, the predecessor will not be released from the obligation to pay
the principal of and interest on the Notes.

 

(d)       This Section
5.01 will not apply to a sale, assignment, transfer, conveyance, lease or other
disposition of assets between or among the Company and its Restricted
Subsidiaries. Notwithstanding the foregoing, clauses (iii) and (iv) will not be
applicable to (a) any Restricted Subsidiary
consolidating with, merging into or selling, assigning, transferring,
conveying, leasing or otherwise disposing of all or part of its properties and
assets to the Company or to another Restricted Subsidiary and (b) the Company
merging with an Affiliate solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction so long as the amount of
Indebtedness of the Company and its Restricted Subsidiaries is not increased
thereby.

 

ARTICLE 6

 

DEFAULTS AND REMEDIES

 

SECTION 6.01.   Events
of Default. An “Event of Default” with respect to all of the Notes occurs
if:

 

(a)       the Company defaults in payment when due and
payable, upon redemption, acceleration or otherwise, of principal of, or
premium, if any, on the Notes, whether or not such payment is prohibited
by Article 11;

 

(b)       the Company defaults in the payment when due of
interest on or with respect to the Notes and such default continues for a
period of 30 days, whether or not such payment is prohibited by Article
11;

 

(c)       the Company defaults in the performance of or
breaches the covenants in Sections 4.03, 4.04 and 5.01 and such default
or breach continues for a period of 30 days after the notice specified below;

 

(d)       the Company
defaults in the performance of, or breaches any covenant, warranty or other agreement contained in, this
Indenture (other than a default in the performance or breach of a covenant,
warranty or agreement that is specifically dealt with in clauses (a), (b) or (c)
above) and such default or breach continues for a period of 60 days after the
notice specified below;

 

62

 

(e)       a
default under any mortgage, indenture or instrument under which there is issued
or by which there is secured or evidenced any Indebtedness for money borrowed
by the Company or any Restricted Subsidiary or the payment of which is
guaranteed by the Company or any Restricted Subsidiary (other than Indebtedness
owed to the Company or a Restricted Subsidiary), whether such Indebtedness or
guarantee now exists or is created after the Issue Date, if (A) such default either
(1) results from the failure to pay any such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or (2) relates
to an obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or holders
of such Indebtedness causing such Indebtedness to become due prior to its
stated maturity and (B) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for failure
to pay principal at stated final maturity (after giving effect to any
applicable grace periods), or the maturity of which has been so accelerated,
aggregate $10.0 million (or its foreign currency equivalent) or more at any one
time outstanding;

 

(f)        the
Company or any Significant Subsidiary of the Company:

 

(i)        commences
a voluntary case under any Bankruptcy Law seeking (A) to adjudicate itself
bankrupt or insolvent or (B) the liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any Bankruptcy Law;

 

(ii)       consents
to the entry of an order for relief against it in an involuntary case under any
Bankruptcy Law;

 

(iii)      consents
to the appointment of a custodian, receiver, trustee or similar official of it
or for all or substantially all of its property;

 

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

 

(v)       admits
in writing its inability to pay its debts as they become due; or

 

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

 

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

 

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

 

(ii)       appoints
a custodian, receiver, trustee or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property of any
of the foregoing; or

 

(iii)      orders
the liquidation of the Company or any of its Significant Subsidiaries;

 

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

 

63

 

(h)       the
failure by the Company or any Significant Subsidiary to pay final judgments aggregating
in excess of $10.0 million (excluding any amounts as to which a provider of
insurance has assumed responsibility in writing), which final judgments remain
unpaid, undischarged and unstayed for a period of more than 60 days after the
applicable judgment becomes final, and, with respect to any such judgments
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed; or

 

(i)        the
Guarantee of a Significant Subsidiary or any group of Subsidiaries that, taken
together as of the date of the most recent audited financial statements of the
Company, would constitute a Significant Subsidiary ceasing to be in full force
and effect (except as contemplated by the terms hereof) or any Guarantor denies
or disaffirms its obligations under this Indenture or any Guarantee, other than
by reason of the release of the Guarantee in accordance with the terms of this
Indenture.

 

SECTION 6.02.   Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01 (f) and (g) with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding may
declare the principal of, and accrued but unpaid interest on all the Notes to
be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a “notice of
acceleration” (the “Acceleration Notice”), and the same shall become
immediately due and payable upon the first to occur of an acceleration under
the Credit Agreement and five Business Days after receipt by the Company and
the Representative under the Credit Agreement of such Acceleration Notice but
only if such Event of Default is then continuing.

 

If an Event of
Default specified in Section 6.01(f) and (g) with respect to the Company
occurs, the principal of, premium, if any, and accrued and unpaid interest on
all the outstanding Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders.

 

The Holders of a
majority in principal amount of the Notes may rescind an acceleration and its
consequences:

 

(a)       if
the rescission would not conflict with any judgment or decree;

 

(b)       if
all existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration;

 

(c)       to
the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid;

 

(d)       if
the Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances; and

 

64

 

(e)       in
the event of the cure or waiver of an Event of Default of the type described in
clause (g) or (h) of Section 6.01, the Trustee shall have received an Officers’
Certificate and an Opinion of Counsel that such Event of Default has been cured
or waived.

 

No such rescission
shall affect any subsequent Default or impair any right consequent thereto.

 

The holders of a
majority in principal amount of the Notes issued and then outstanding may waive
any existing Default or Event of Default, and its consequences, except a
default in the payment of the principal of or interest on such Notes.

 

In the event of
any Event of Default specified in clause (e) above, such Event of Default and
all consequences thereof (excluding, however, any resulting payment default)
will be annulled, waived and rescinded, automatically and without any action by
the Trustee or the holders of the Notes, if within 30 days after such Event of
Default arose the Company delivers an Officers’ Certificate to the Trustee
stating that (x) the Indebtedness or guarantee that is the basis for such Event
of Default has been discharged or (y) the holders thereof have rescinded or
waived the acceleration, notice or action (as the case may be) giving rise to
such Event of Default or (z) the default that is the basis for such Event of
Default has been cured, it being understood that in no event shall an
acceleration of the principal amount of the Notes as described above be
annulled, waived or rescinded upon the happening of any such events.

 

Holders of the
Notes may not enforce this Indenture or the Notes except as provided herein and
under the Trust Indenture Act of 1939, as amended. Subject to the provisions
hereof relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers hereunder at the request,
order or direction of any of the holders of the Notes, unless such holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of this
Indenture and applicable law, the holders of a majority in aggregate principal
amount of the then outstanding Notes issued under this Indenture have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.

 

SECTION 6.03.   Other
Remedies. If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy at law or in equity to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

 

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

 

SECTION 6.04.   Waiver
of Past Defaults. When a Default is waived, it is deemed cured and the
Company, the Trustee and the Holders will be restored to their former positions
and rights under this Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.

 

65

 

SECTION 6.05.   Control
by Majority. The Holders of a majority in principal amount of the Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or, subject to Section 7.01, that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that
would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action under this
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.

 

SECTION 6.06.   Limitation
on Suits.

 

(a)       Except
to enforce the right to receive payment of principal, premium (if any) or
interest when due, no Holder may pursue any remedy with respect to this
Indenture or the Notes unless:

 

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

 

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

 

(iii)      such
Holder or Holders offer to the Trustee reasonable security or indemnity
satisfactory to it 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 of security or indemnity; and

 

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

 

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

 

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

 

SECTION 6.08.   Collection
Suit by Trustee. If an Event of Default specified in Section 6.01 (a) or
(b) occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company or any other obligor on
the Notes for the whole amount of principal and accrued interest that is due
and unpaid, (together with interest on overdue principal and, to the extent
that payment of such interest is lawful, at the rate provided for in the Notes
and the amounts provided for in Section 7.07.

 

66

 

SECTION 6.09.   Trustee
May File Proofs of Claim. The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for reasonable compensation,
expenses disbursements and advances of the Trustee (including counsel,
accountants, experts or such other professionals as the Trustee deems
necessary, advisable or appropriate)) and the Holders allowed in any judicial
proceedings relative to the Company or any Guarantor, their creditors or their
property, shall be entitled to participate as a member, voting or otherwise, of
any official committee of creditors appointed in such matters and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar
functions, and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and
its counsel, and any other amounts due the Trustee under Section 7.07.

 

SECTION 6.10.   Priorities.
Subject to the provisions of Article 11, if the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:

 

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

 

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

 

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

 

The Trustee may
fix a record date and payment date for any payment to the Holders pursuant to
this Section 6.10. At least 15 days before such record date, the Trustee shall
mail to each Holder and the Company a notice that states the record date, the
payment date and amount to be paid.

 

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

 

SECTION 6.12.   Waiver
of Stay or Extension Laws. Neither the Company nor any Guarantor (to the
extent it may lawfully do so) shall at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
and each Guarantor (to the extent that it may

 

67

 

lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.

 

ARTICLE 7

 

TRUSTEE

 

SECTION 7.01.   Duties
of Trustee.

 

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

 

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

 

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

 

(ii)       in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. However, in the case of certificates or
opinions required by any provision hereof to be provided to it, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.

 

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

 

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

 

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

 

(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; and

 

(iv)      no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers.

 

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

 

68

 

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

 

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

 

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

 

SECTION 7.02.   Rights
of Trustee.

 

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

 

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

 

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

 

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

 

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

 

(f)        The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of
not less than a majority in principal amount of the Notes at the time
outstanding, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, at the
expense of the Company and shall incur no liability of any kind by
reason of making or not making such inquiry or investigation.

 

(g)       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 pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity

 

69

 

satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.

 

(h)       The
rights, privileges, protections, immunities and benefits given to the Trustee,
including its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its
capacities hereunder, and each agent, custodian and other Person employed to
act hereunder.

 

SECTION 7.03.   Individual Rights of Trustee. The
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were
not Trustee. Any Paying Agent or Registrar may do the same with like
rights. However, the Trustee must comply with Sections
7.10 and 7.11.

 

SECTION 7.04.   Trustee’s Disclaimer. The Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, any Guarantee or the Notes, it shall not be
accountable for the Company’s use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Company or any Guarantor in this
Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee’s
certificate of authentication. The Trustee shall not be charged with knowledge
of any Default or Event of Default under
Sections 6.01(c) through (i) or of the identity of any Significant Subsidiary
unless either (a) a Trust Officer shall have actual knowledge thereof or (b) the
Trustee shall have received notice thereof in accordance with Section 13.02
hereof from the Company, any Guarantor or
any Holder.

 

SECTION 7.05.   Notice of Defaults. If a Default occurs
and is continuing and if it is actually known to the Trustee, the
Trustee shall mail to each Holder notice of the Default within the earlier of 60 days after it occurs or 30 days after it is
actually known to a Trust Officer or written notice of it is received by
the Trustee. Except in the case of a Default in the payment of principal of,
premium (if any) or interest on any Note, the Trustee may withhold the notice
if and so long as a committee of its Trust Officers in good faith determines
that withholding the notice is in the interests of the Holders.

 

SECTION 7.06.   Reports by
Trustee to the Holders. As promptly as practicable after each May 1
beginning with the May 1 following the date of this Indenture, the Trustee
shall mail to each Holder a brief report dated as of such May 1 that complies
with Section 313(a) of the TIA if and to the extent required thereby. The
Trustee shall also comply with Section 313(b) of the TIA.

 

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

 

SECTION 7.07.   Compensation
and Indemnity. The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee’s compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company

 

70

 

shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee’s agents, counsel, accountants and experts. The Company and each
Guarantor, jointly and severally shall
indemnify the Trustee against any and all loss, liability, claim, damage or
expense (including reasonable attorneys’ fees and expenses) incurred by or in
connection with the acceptance or administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture or Guarantee against the Company or a Guarantor
(including this Section 7.07) and defending itself against or investigating any
claim (whether asserted by the Company, any Guarantor, any Holder or any other
Person). The Trustee shall notify the Company of any claim for which it may
seek indemnity promptly upon obtaining actual knowledge thereof; provided,
however, that any failure so to notify the Company
shall not relieve the Company or any Guarantor of its indemnity obligations
hereunder. The Company shall defend the claim and the indemnified party
shall provide reasonable cooperation at the Company’s expense in the defense.
Such indemnified parties may have separate counsel and the Company and the
Guarantors, as applicable shall pay the fees and expenses of such counsel; provided, however, that the Company shall not
be required to pay such fees and expenses if it assumes such indemnified
parties’ defense and, in such indemnified parties’ reasonable judgment, there
is no conflict of interest between the Company and the Guarantors, as applicable, and such parties in connection with such
defense. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by an indemnified party through such
party’s own willful misconduct, negligence or bad faith.

 

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

 

The Company’s and the Guarantors’ payment obligations pursuant to this
Section shall survive the satisfaction or discharge of this Indenture,
any rejection or termination of this Indenture under any Bankruptcy Law or the
resignation or removal of the Trustee. Without prejudice to any other rights
available to the Trustee under applicable law, when the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(f) with respect to
the Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.

 

SECTION 7.08.   Replacement
of Trustee.

 

(a)       The Trustee may resign at any time by so
notifying the Company. The Holders of a majority in principal amount of
the Notes may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:

 

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

 

(ii)       the
Trustee is adjudged bankrupt or insolvent;

 

71

 

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

 

(iv)      the Trustee otherwise becomes incapable of acting.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

72

 

SECTION 7.10.   Eligibility; Disqualification. The
Trustee shall at all times satisfy the requirements of Section 310(a) of
the TIA. The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with
Section 310(b) of the TIA, subject to its right to apply for a stay of its duty
to resign under the penultimate paragraph of Section 310(b) of the TIA; provided, however, that there shall be excluded
from the operation of Section 310(b)(1) of the TIA any series of securities
issued under this Indenture and 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 Section 310(b)(l) of the TIA are
met.

 

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

 

ARTICLE 8

 

DISCHARGE OF INDENTURE;
DEFEASANCE

 

SECTION 8.01.   Discharge of Liability on Notes; Defeasance.

 

(a)       This
Indenture shall be discharged and shall cease to be of further effect (except as to surviving rights of registration of
transfer or exchange of Notes, as expressly provided for in this Indenture)
as to all outstanding Notes and the Company’s and Guarantors’ obligations under this Indenture with respect to
the Holders of the Notes when;

 

(i)        either (1) all Notes that have been authenticated,
except lost, stolen or destroyed Notes that have been replaced or paid
and Notes for whose payment money has been
deposited in trust and thereafter repaid to the Company, have been delivered to
the Trustee for cancellation; or (2) 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 will become due and payable
by reason of the mailing of a notice of redemption or otherwise within one year
and the Company has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust solely for the benefit of the holders of the
Notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a
combination thereof, in amounts as will 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
and additional interest, 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 or will occur as a result of the deposit (other than a Default
resulting from borrowing of funds to be applied to such deposit and the grant
of any Lien securing such borrowing) and the
deposit will not result in a breach or violation of, or constitute a

 

73

 

default under, any other
material debt instrument to which the Company is a party or by which the
Company is bound;

 

(iii)      the
Company 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 issued thereunder at maturity or the redemption
date, as the case may be.

 

In addition, the
Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge have been satisfied.

 

(b)       Subject to Sections 8.01(c) and 8.02, the Company
at any time may terminate (i) all of its obligations under the Notes and
this Indenture (“legal defeasance option”) or
(ii) its obligations under Sections 3.09, 3.10, 4.02 through 4.08, 4.11, 4.12,
4.14, 4.15 and 4.18 through 4.21 and the operation of Section 5.01(a)(iv) and
Sections 6.01(c) through 6.01(i) (“covenant defeasance option”). The Company
may exercise its legal defeasance option notwithstanding its prior exercise of
its covenant defeasance option. In the event that the Company terminates all of
its obligations under the Notes and this Indenture by exercising its legal
defeasance option or its covenant defeasance option, the obligations of each
Guarantor under its Guarantee shall be terminated simultaneously with the
termination of such obligations.

 

If the Company exercises its legal defeasance option, payment of the
Notes so defeased may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Notes
so defeased may not be accelerated because of an
Event of Default specified in Section 6.01(c) through 6.01(i) or because of the
failure of the Company to comply with Section 5.01(a)(iv).

 

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

 

(c)        Notwithstanding clauses (a) and (b) above, the
Company’s obligations in Sections 2.04 through 2.09 and 7.07, 7.08 and
this Article 8 shall survive until all the Notes have been paid in full. Thereafter, the Company’s obligations in Sections
7.07, 8.05 and 8.06 shall survive such satisfaction and discharge.

 

SECTION 8.02.   Conditions to Defeasance.

 

(a)       In
order for the Company to exercise its legal defeasance option or its covenant
defeasance option:

 

(i)        the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the holders of the Notes issued
thereunder, cash in U.S. dollars, non-callable U.S. Government Securities, or a
combination of cash in U.S. dollars and non-callable U.S. Government Securities, in amounts as will be sufficient, in the
opinion of a

 

74

 

nationally recognized
firm of independent public accountants, to pay the principal of, or interest
and premium and additional interest, if any, on the outstanding Notes issued
thereunder on the stated maturity or on the applicable redemption date, as the
case may be, and the Company must specify whether the Notes are being defeased
to maturity or to a particular redemption date;

 

(ii)       in
the case of Legal Defeasance, the Company has 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 date hereof, 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 will
confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;

 

(iii)      in the case of Covenant Defeasance, the Company
has delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that the holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;

 

(iv)      no
Default or Event of Default has occurred and is continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing
of funds to be applied to such deposit and
the grant of any Lien securing such borrowings) or insofar as Events of Default
resulting from the borrowing of funds or insolvency events are
concerned, at any time in the period ending on the 123rd day after the date of
deposit;

 

(v)       such
Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to
which the Company or any Guarantor is a party or by which the Company or
any Guarantor is bound;

 

(vi)      the Company must deliver to the Trustee an Opinion
of Counsel to the effect that: (A) the trust funds will not be subject
to any rights of holders of Senior Debt or
Guarantor Senior Debt, including, without limitation, those arising under this
Indenture; and (B) the trust funds will not be subject to the effect of the
preference provisions of Section 547 of the United States Federal
Bankruptcy Code;

 

(vii)     the Company must deliver to the Trustee an Officers’
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 or any Guarantor or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or any Guarantor or
others; and

 

75

 

(viii)    the
Company must deliver to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.

 

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

 

SECTION 8.03.   Application of Trust Money. The Trustee
shall hold in trust money or U.S.
Government Securities (including proceeds thereof) deposited with it pursuant
to this Article 8. It shall apply the
deposited money and the money from U.S. Government Securities through each
Paying Agent and in accordance with this Indenture to the payment of principal
of and interest on the Notes so discharged or defeased.

 

SECTION 8.04.   Repayment to
the Company. Each of the Trustee and each Paying Agent shall
promptly turn over to the Company upon request any money or U.S.  Government Securities held by it as
provided in this Article 8 which, in the written opinion of nationally
recognized firm of independent public accountants delivered to the Trustee
(which delivery shall only be required if U.S. Government Securities have been
so deposited), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
discharge or defeasance in accordance with this Article 8.

 

Subject to any
applicable abandoned property law, the Trustee and each Paying Agent shall pay
to the Company upon written request any money held by them for the payment of
principal or interest that remains unclaimed for two years, and, thereafter,
Holders entitled to the money must look to
the Company for payment as general creditors, and the Trustee and each Paying
Agent shall have no further liability with respect to such monies.

 

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

 

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

 

76

 

ARTICLE 9

 

AMENDMENTS AND WAIVERS

 

SECTION 9.01.   Without Consent of the Holders. The
Company, the Guarantors and the Trustee may amend this Indenture or the Notes,
without notice to or consent of any Holder:

 

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

 

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

 

(iii)      to
provide for the assumption by a Successor Company or a successor company of a Guarantor, as applicable, of the
Company’s or such Guarantor’s obligations under this Indenture;

 

(iv)      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 this
Indenture of any such holder;

 

(v)       to
secure the Notes;

 

(vi)      to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA;

 

(vii)     to add a Guarantee of the Notes;

 

(viii)    to
release a Guarantor upon its sale or designation as an Unrestricted Subsidiary or other permitted release from its
Guarantee; provided, however, that such sale, designation or release is
in accordance with the applicable provisions of this Indenture; or

 

(ix)       to conform the text of this Indenture, Notes or
Guarantees to any provision of the “Description of the Notes” in the Offering
Circular to the extent such provision of this “Description of the Notes”
was intended to be a verbatim recitation of a corresponding
provision of this Indenture, Notes or Guarantees.

 

After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such
amendment. The failure to give such notice to all Holders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.

 

SECTION 9.02.   With Consent of the Holders.

 

(a)       The
Company and the Trustee may amend this Indenture or the Notes with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange for the

 

77

 

Notes) and any existing
default or compliance with any provisions may be waived with the consent of the
holders of a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Notes). However, without the consent of each Holder of an outstanding Note
affected, an amendment may not:

 

(i)        reduce
the principal amount of Notes issued hereunder whose holders must consent to an
amendment, supplement or waiver of any provision of this Indenture or the
Notes;

 

(ii)       reduce
the principal of or change the fixed maturity of any Note or alter the
provisions with respect to the redemption of the Notes issued hereunder;

 

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

 

(iv)      waive
a Default or Event of Default in the payment of principal of, or interest or
premium, if any, on the Notes issued thereunder (except a rescission of
acceleration of the Notes issued thereunder by the holders of at least a
majority in aggregate principal amount of the Notes issued thereunder with
respect to a nonpayment default 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 the provisions of this Indenture relating to waivers of past
Defaults or the rights of holders of Notes to receive payments of principal of,
or interest or premium, if any, on the Notes issued hereunder or impair the
right of any holder of Notes to institute suit for the enforcement of any
payment on or with respect to such holder’s Notes;

 

(vii)     waive
a redemption payment with respect to any Note issued hereunder;

 

(viii)    make
any change in the ranking or priority of any Note that would adversely affect
the holders of the Notes;

 

(ix)       except
as expressly permitted by this Indenture, modify the Guarantees in any manner
adverse to the holders of the Notes; or

 

(x)        make
any change in the preceding amendment and waiver provisions;

 

It shall not be
necessary for the consent of the Holders under this Section 9.02 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.

 

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

 

78

 

SECTION 9.03.   Compliance with Trust Indenture Act.
From the date on which this Indenture is qualified under the TIA, every
amendment, waiver or supplement to this Indenture or the Notes shall comply
with the TIA as then in effect.

 

SECTION 9.04.   Revocation
and Effect of Consents and Waivers

 

(a)       A
consent to an amendment or a waiver by a Holder of a Note shall bind the Holder
and every subsequent Holder of that Note or portion of the Note that evidences
the same debt as the consenting Holder’s Note, even if notation of the consent
or waiver is not made on the Note. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder’s Note or portion of
the Note if the Trustee receives the notice of revocation before the date on
which the Trustee receives an Officers’ Certificate from the Company certifying
that the requisite principal amount of Notes have consented. After an amendment
or waiver becomes effective, it shall bind every Holder. An amendment or waiver
becomes effective upon the (i) receipt by the Company or the Trustee of
consents by the Holders of the requisite principal amount of securities, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by the
Company and the Trustee.

 

(b)       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 described above or required or permitted to be taken pursuant to this
Indenture. If a record date is fixed, then notwithstanding the immediately
preceding paragraph, those Persons who were 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 120 days after
such record date.

 

SECTION 9.05.   Notation
on or Exchange of Notes. If an amendment, supplement or waiver changes the
terms of a Note, the Company may require the Holder of the Note to deliver it
to the Trustee. The Trustee may place an appropriate notation on the Note
regarding the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Note
shall not affect the validity of such amendment, supplement or waiver.

 

SECTION 9.06.   Trustee to Sign Amendments. The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing such amendment, the Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and shall be provided with, and
(subject to Section 7.01) shall be fully protected in relying upon, an Officers’
Certificate and an Opinion of Counsel stating that such amendment, supplement
or waiver is authorized or permitted by this Indenture and that such amendment,
supplement or waiver is the legal, valid and binding obligation of the Company
and the Guarantors, enforceable against them in accordance with its terms,
subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03).

 

79

 

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

 

ARTICLE 10

 

GUARANTEES

 

SECTION 10.01.   Guarantees.

 

(a)       Subject
to the provisions of this Article 11, each Guarantor hereby jointly and
severally, irrevocably and unconditionally guarantees, as a primary obligor and
not merely as a surety on a senior basis, to each Holder and to the Trustee and
its successors and assigns (i) the full and punctual payment when due, whether
at Stated Maturity, by acceleration, by redemption or otherwise, of all
obligations of the Company under this Indenture (including obligations to the
Trustee) and the Notes, whether for payment of principal of, premium, if any,
or interest on in respect of the Notes and all other monetary obligations of
the Company under this Indenture and the Notes and (ii) the full and punctual
performance within applicable grace periods of all other obligations of the
Company whether for fees, expenses, indemnification or otherwise under this
Indenture and the Notes (all the foregoing being hereinafter collectively
called the “Guaranteed Obligations”). Each Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from each such Guarantor, and that each such Guarantor
shall remain bound under this Article 10 notwithstanding any extension or
renewal of any Guaranteed Obligation.

 

(b)       Each
Guarantor waives presentation to, demand of payment from and protest to the
Company of any of the Guaranteed Obligations and also waives notice of protest
for nonpayment. Each Guarantor waives notice of any default under the Notes or
the Guaranteed Obligations. The obligations of each Guarantor hereunder shall
not be affected by (i) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Notes or any other agreement or
otherwise; (ii) any extension or renewal of this Indenture, the Notes or any
other agreement; (iii) any rescission, waiver, amendment or modification of any
of the terms or provisions of this Indenture, the Notes or any other agreement;
(iv) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any Guarantor; (v) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor,
except as provided in Section 10.04(b).

 

(c)       Each
Guarantor hereby waives any right to which it may be entitled to have its
obligations hereunder divided among the Guarantors, such that such Guarantor’s
obligations would be less than the full amount claimed. Each Guarantor hereby
waives any right to which it may be entitled to have the assets of the Company
or any other Guarantor first be used and depleted as payment of the Company’s
or such Guarantor’s obligations hereunder prior

 

80

 

to any amounts being
claimed from or paid by such Guarantor hereunder. Each Guarantor hereby waives any right to which it may be
entitled to require that the Company be sued prior to an action being
initiated against such Guarantor.

 

(d)       Each Guarantor further agrees that its Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for
payment of the Guaranteed Obligations.

 

(e)       Except
as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder
or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Notes or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or
thing which may or might in any manner or to any extent vary the risk of any
Guarantor or would otherwise operate as a discharge of any Guarantor as
a matter of law or equity.

 

(f)        Each Guarantor agrees that its Guarantee shall
remain in full force and effect until payment in full of all the Guaranteed
Obligations. Each Guarantor further agrees that its Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.

 

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

 

(h)       Each Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Holders in
respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each
Guarantor further agrees that, as between it, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the Guaranteed
Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Guarantee
herein, notwithstanding any stay, injunction or other

 

81

 

prohibition
preventing such acceleration in respect of the Guaranteed Obligations
guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor for the purposes of this Section 10.01.

 

(i)        Each
Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by the Trustee or any Holder in enforcing any rights under
this Section 10.01.

 

(j)        Upon
request of the Trustee, each Guarantor shall execute and deliver such further instruments and do such further acts
as may be reasonably necessary or proper to carry out more effectively
the purpose of this Indenture.

 

SECTION 10.02.   Subordination
of Guarantee. The obligations of each Guarantor to the Holders and to the Trustee pursuant to the Guarantee
and this Indenture are expressly subordinate and subject in right of payment to
the prior payment in full in cash or Cash Equivalents of all applicable
Guarantor Senior Debt on the same basis as the Notes are junior and Subordinate
to Senior Debt of the Company, to the extent and in the manner provided in Article 12.

 

SECTION 10.03.   Severability. In case any provision of
this Guarantee shall be invalid, illegal or unenforceable in any respect for
any reason, the validity, legality, and enforceability
of any such provision in every other respect and of the remaining provisions
shall not in any way be affected or impaired thereby it being intended that all
of the provisions hereof shall be enforceable to the full extent
permitted by law.

 

SECTION 10.04.   Limitation on Liability.

 

(a)       Any term or provision of this Indenture to the
contrary notwithstanding, the maximum aggregate amount of the Guaranteed
Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum
amount that can be hereby guaranteed without rendering this Indenture, as it
relates to such Guarantor, voidable under applicable laws relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.

 

(b)       A Guarantee as to any Restricted Subsidiary shall
terminate and be of no further force or effect and such Guarantor shall
be deemed to be released from all obligations under
this Article 10 upon:

 

(i)        (A)
the sale, disposition or other transfer (including through merger or consolidation) of all of the Capital Stock
(including any sale, disposition or other transfer of Capital Stock
following which the applicable Guarantor is no longer a Restricted Subsidiary),
of all or substantially all the assets, of the applicable Guarantor if such
sale, disposition or other transfer is made in compliance with this Indenture
pursuant to Section 4.06, (b) such
Guarantor is released from its Indebtedness and guarantees, if any, of, and all
pledges and security, if any, granted in connection with, the Credit Agreement;

 

82

 

(ii)       the
Company designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the
provisions set forth under Section 4.04 and the definition of “Unrestricted
Subsidiary”;

 

(iii)      if the Company exercises its legal defeasance
option or its covenant defeasance option as described under Section
8.01; or

 

(iv)      if
the Company’s and Guarantors’ obligations under the Indenture are discharged in
accordance with the terms of this Indenture.

 

SECTION 10.05.   Successors and Assigns. This Article 10
shall be binding upon each Guarantor and its successors and assigns 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 conferred upon that party in
this Indenture and in the Notes shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.

 

SECTION 10.06.   No Waiver.
Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article 10 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the Trustee
and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Article 10 at law, in equity, by statute or otherwise.

 

SECTION 10.07.   Modification.
No modification, amendment or waiver of any provision of this Article 10, nor
the consent to any departure by any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Trustee, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which
given. No notice to or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in the same, similar
or other circumstances.

 

SECTION 10.08.   Execution of Supplemental Indenture for
Future Guarantors. Each Person which is required to become a Guarantor
after the Issue Date pursuant to Section 4.11 shall promptly execute and
deliver to the Trustee a supplemental indenture in the form of Appendix B
hereto pursuant to which such Person shall become a Guarantor under this Article 10 and shall guarantee the Guaranteed
Obligations. Concurrently with the execution and delivery of such supplemental
indenture, the Company shall deliver to the Trustee an Opinion of Counsel and
an Officers’ Certificate to the effect that such supplemental indenture has
been duly authorized, executed and delivered by such Person and that,
subject to the application of bankruptcy, insolvency, moratorium, fraudulent
conveyance or transfer and other similar laws relating to creditors’ rights
generally and to the principles of equity, whether considered in a proceeding
at law or in equity, the Guarantee of such Guarantor is a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms and/or to such other matters as the Trustee may
reasonably request.

 

83

 

ARTICLE 11

 

SUBORDINATION

 

SECTION 11.01.   Notes
Subordinated to Senior Debt. The Company covenants and agrees, and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article 11; and
the Trustee and each Person holding any Notes, whether upon original issue or
upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all Obligations on or with
respect to the Notes by the Company shall, to the extent and in the manner
herein set forth, be subordinated and junior in right of payment to the prior
payment in full when due, whether at stated
maturity, by acceleration or otherwise, in cash or Cash Equivalents of all
Obligations on or with respect to the
Senior Debt; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Debt, and that each holder of
Senior Debt whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Senior Debt in reliance upon the
covenants and provisions contained in this Indenture and the Notes.

 

SECTION 11.02.   No Payment on Notes in Certain
Circumstances.

 

(a)       If any default occurs and is continuing in the
payment when due, whether at
maturity, upon redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Designated Senior Debt beyond any applicable grace period, no payment
of any kind or character shall be made by, or on behalf of, the Company or any
other Person on its or their behalf with respect to any obligations on the
Notes, or to acquire any of the Notes for cash or property or otherwise. In
addition, if any other default occurs and is continuing with respect to any
series of Designated Senior Debt that permits holders of that series of
Designated Senior Debt to accelerate its maturity without further notice
(except such notice as may be required to effect such acceleration) and the
Trustee receives a notice of such default (a “Payment Blockage Notice”) from
the Representative of that series of Designated Senior Debt, then no payment of
any kind or character shall be made by, or on behalf of, the Company or any
other Person on its or their behalf with respect to any obligations on the
Notes, or to acquire any of the Notes for cash or property or otherwise.
Payment on the Notes may and will be resumed (i) in the case of a payment
default, upon the date on which such default is cured or waived and (ii) in the
case of a nonpayment default, upon the earliest of (x) the date on which such
nonpayment default is cured or waived, (y) 179 days after the date on which the
applicable Payment Blockage Notice is received
and (z) the date the Trustee receives notice from the Representative for such
Designated Senior Debt rescinding the
Payment Blockage Notice, unless the maturity of any Designated Senior Debt has
been accelerated. Notwithstanding anything herein to the contrary, the Notes
shall not be subject to more than one Payment Blockage Notice in any
consecutive 360-day period irrespective of the number of defaults with respect
to Designated Senior Debt during such period. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee will be, or be made, the basis for a subsequent Payment Blockage Notice
unless such default has been cured or waived for a period of not less than 90 days.

 

84

 

(b)       In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such
payment is prohibited by Section 11.02(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Debt (pro rata to such holders on the basis of the respective amount of
Senior Debt held by such holders) or their respective Representatives, as their
respective interests may appear. The
Trustee shall be entitled to rely on information regarding amounts then due and
owing on the Senior Debt, if any, received from the holders of Senior Debt (or
their Representatives) or, if such
information is not received from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the
holders of Senior Debt.

 

Nothing contained in this Article 11 shall limit the right of the
Trustee or the Holders of Notes to
take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder
(subject to the rights, if any, under this Article 11, of the holders of Senior
Debt in respect of cash or other property of the Company received upon the
exercise of such remedy); provided that all Senior Debt thereafter due or declared to be due shall first be paid in full in
cash or Cash Equivalents before the Holders are entitled to receive any payment
of any kind or character with respect to Obligations on or with respect to the Notes.

 

SECTION 11.03.   Payment Over of Proceeds upon Dissolution,
Etc.

 

(a)       Upon any payment or distribution of assets of the
Company of any kind or character,
whether in cash, property or securities (other than a payment in the form of
Permitted Junior Securities), to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors or
marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents before any payment or distribution of any kind or character (other than
a payment in the form of Permitted Junior Securities) is made on account of any
Obligations on or with respect to the Notes, or for the acquisition of any of
the Notes for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee
under this Indenture if received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the respective amounts of Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of Senior Debt remaining unpaid until all such
Senior Debt has been paid in full in cash or Cash Equivalents after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Senior Debt.

 

(b)       To the extent any payment of Senior Debt (whether
by or on behalf of the Company, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared

 

85

 

to
be fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then, if such payment is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Debt or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred. It is further agreed that any diminution (whether pursuant to court decree or otherwise, including,
without limitation, for any of the
reasons described in the preceding sentence) of the Company’s obligation to
make any distribution or payment
pursuant to any Senior Debt, except to the extent such diminution occurs by reason of the repayment (which has not been
disgorged or returned) of such Senior Debt in cash or Cash Equivalents, shall
have no force or effect for purposes of the subordination provisions contained
in this Article 11, with any turnover of payments as otherwise calculated pursuant to this Article 11 to be made as if no
such diminution has occurred.

 

(c)       In the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or
any Holder when such payment or distribution is prohibited by Section 11.03(a), such payment or distribution shall be
held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to
such holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt his been paid in full in cash or Cash Equivalents, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Debt.

 

(d)       The consolidation of the Company with, or the
merger of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the conveyance or
transfer of all or substantially all of its assets, to another corporation upon
the terms and conditions provided in
Article 5 and as long as permitted under the terms of the Senior Debt shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section if
such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company’s
obligations hereunder in accordance with Article 5.

 

SECTION 11.04.   Payments May Be Paid Prior to Dissolution.

 

Nothing contained in this Article 11 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in
Sections 11.02 and 11.03, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes, or from depositing
with the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
11.02 or 11.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of, and interest on, the
Notes to the Holders entitled thereto unless at least two Business Days prior
to the date upon which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in Section 11.02(a)
or in Section 11.07; provided that, notwithstanding the

 

86

 

foregoing, the
subordination of the Notes to Senior Debt shall not be affected and the Holders
receiving any payments made in contravention of Section 11.02 and/or Section
11.03 shall otherwise be subject to this
Article 11. The Company shall give prompt written notice to the Trustee
of any dissolution, winding-up, liquidation or reorganization of the Company,
although any delay or failure to give any
such notice shall have no effect on the subordination provisions of this
Article 11.

 

SECTION 11.05.   Subrogation.

 

Subject to the payment in full in cash or Cash Equivalents of all Senior
Debt, the Holders of the Notes shall be subrogated to the rights of the holders
of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the
Senior Debt by or on behalf of the Company or by or on behalf of the Holders by
virtue of this Article 11 which otherwise would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article 11
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior Debt,
on the other hand.

 

SECTION 11.06.   Obligations of
the Company Unconditional.

 

Nothing contained
in this Article 11 or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Debt, and the Holders,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders the principal of and any interest on the Notes as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Debt, nor shall anything herein or therein
prevent the Holder of any Notes or the Trustee on its behalf from exercising
all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of cash, property or
securities of the Company received upon the
exercise of any such remedy.

 

SECTION 11.07.   Notice to Trustee.

 

The Company shall
give prompt written notice to the Trustee of any fact known to the Company
which would prohibit the making of any payment to or by the Trustee in respect
of the Notes pursuant to the provisions of
this Article 11, although any delay or failure to give any such notice shall
have no effect on the subordination provisions of this Article 11. Regardless
of anything to the contrary contained in this Article 11 or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any default or event of default with respect to any Senior Debt or of
any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee
shall have received notice in writing from the Company, or from a holder of
Senior Debt or a Representative therefor, and, prior to the receipt of any such
written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist; provided
that, notwithstanding the foregoing,

 

87

 

the
Holders receiving any payments made in contravention of Section 11.02 and/or
Section 11.03 shall otherwise be
subject to the provisions of this Article 11.

 

In the event that
the Trustee determines in good faith that any evidence is required with respect
to the right of any Person as a holder of Senior Debt to participate in any
payment or distribution pursuant to this
Article 11, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 11, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such person to receive such payment.

 

SECTION 11.08.   Reliance
on Judicial Order or Certificate of Liquidating Agent.

 

Upon any payment or distribution of assets of the Company referred to in
this Article 11, the Trustee, subject to the provisions of Article 7, and the
Holders of the Notes shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making such payment
or distribution, delivered to the Trustee or the 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 11.

 

SECTION 11.09.   Trustee’s
Relation to Senior Debt.

 

The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article 11 with respect to any
Senior Debt which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior Debt and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.

 

With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of 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 Senior
Debt, and shall not be liable to any such holders if the Trustee shall pay over
or distribute to or on behalf of Securityholders or the Company or any other
person money or assets to which any holders of Senior Debt shall be entitled by
virtue of this Article 11, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.

 

Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.

 

88

 

SECTION 11.10.   Subordination
Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior
Debt.

 

No right of any
present or future holders of any Senior Debt to enforce subordination as
provided herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms of this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with.

 

Without in any way
limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders,
without incurring responsibility to the Trustee or the Holders of the Notes and without impairing or releasing the subordination
provided in this Article 11 or the obligations hereunder of the Holders of the
Notes to the holders of the Senior Debt, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt, or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the payment or collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and
any other Person.

 

SECTION 11.11.   Holders Authorize Trustee To Effectuate
Subordination of Notes.

 

Each Holder of Notes by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt and the
Holders of Notes, the subordination provided in this Article 11, and appoints
the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its Notes and
accrued interest in the form required in those proceedings.

 

If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Debt or
their Representative are or is hereby authorized to have the right to file and are or is hereby authorized to
file an appropriate claim for and on behalf of the Holders of said Notes.
Nothing herein contained shall be deemed to authorize the Trustee or the
holders of Senior Debt or their Representative to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Senior Debt or
their Representative to vote in respect of the claim of any Holder in any such proceeding.

 

89

 

SECTION 11.12.   This
Article 11 Not To Prevent Events of Default.

 

The failure to
make a payment on account of principal of or interest on the Notes by reason of
any provision of this Article 11 will not be construed as preventing the
occurrence of an Event of Default.

 

SECTION 11.13.   Trustee’s Compensation Not Prejudiced.

 

Nothing in this
Article 11 will apply to amounts due to the Trustee pursuant to other sections
in this Indenture.

 

ARTICLE 12

 

SUBORDINATION OF GUARANTEE OBLIGATIONS

 

SECTION 12.01.   Guaranteed
Obligations Subordinated to Senior Indebtedness.

 

Each Guarantor
covenants and agrees, and the Trustee and each Holder of the Notes, by its
acceptance thereof, likewise covenants and agrees, that all Guarantees shall be
issued subject to the provisions of this Article 12; and the Trustee and each
Person holding any Notes, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that the payment of the
Guaranteed Obligations by such Guarantor shall, to the extent and in the manner
herein set forth, be subordinated and junior in right of payment to the prior
payment in full when due, whether at stated maturity, by acceleration or
otherwise, in cash or Cash Equivalents of all Obligations on or with respect to
Guarantor Senior Debt; that the subordination is for the benefit of, and shall
be enforceable directly by, the holders of Guarantor Senior Debt, and that each
holder of Guarantor Senior Debt whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Guarantor
Senior Debt in reliance upon the covenants and provisions contained in this
Indenture and the Notes.

 

SECTION 12.02.   No Payment on Guaranteed Obligations in
Certain Circumstances.

 

(a)       If
any default occurs and is continuing in the payment when due, whether at
maturity, upon redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Guarantor Senior Debt, no payment
of any kind or character shall be made by, or on behalf of, any Guarantor or
any other Person on its or their behalf with respect to any Guaranteed
Obligations, or to acquire any of the Notes for cash or property or otherwise.
In addition, at any time any Blockage Period is in existence, neither any
Guarantor nor any Person on any Guarantor’s behalf (x) may make any payment of
any kind or character with respect to any Obligations on its Guarantee or (y)
acquire any of the Notes for cash, property or otherwise.

 

(b)       In
the event that, notwithstanding the foregoing, any payment shall be received by
the Trustee or any Holder when such payment is prohibited by Section 12.02(a),
such payment shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Debt (pro rata to such holders
on the basis of the respective amount

 

90

 

of Guarantor Senior Debt
held by such holders) or their respective Representatives, as their respective
interests may appear. The Trustee shall be entitled to rely on information
regarding amounts then due and owing on the Guarantor Senior Debt, if any,
received from the holders of Guarantor Senior Debt (or their Representatives)
or, if such information is not received from such holders or their
Representatives, from such Guarantor and only amounts included in the
information provided to the Trustee shall be paid to the holders of Guarantor
Senior Debt.

 

(c)       If
payment of the Notes or the Guarantees is accelerated because of an Event of
Default, the Guarantors or the Trustee shall promptly notify the holders of the
Guarantor Senior Debt or the Representative of such holders of the
acceleration; provided that any failure to give such notice shall have no
effect whatsoever on the subordination provisions contained in this Article 12.
If any Indebtedness is outstanding under the Senior Bank Facilities, such
acceleration will not be effective until the time specified in Section 6.02.

 

Nothing contained
in this Article 12 shall limit the right of the Trustee or the Holders of Notes
to take any action to accelerate the maturity of the Notes pursuant to Section
6.02 or to pursue any rights or remedies hereunder (subject to the rights, if
any, under this Article 12, of the holders of Guarantor Senior Debt in respect
of cash or other property of any Guarantor received upon the exercise of such
remedy); provided that all Guarantor Senior Debt thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to the Guaranteed Obligations.

 

SECTION 12.03.   Payment
Over of Proceeds upon Dissolution, Etc.

 

(a)       Upon
any payment or distribution of assets of any Guarantor of any kind or
character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to such Guarantor or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Guarantor Senior Debt
shall first be paid in full in cash or Cash Equivalents, before any payment or
distribution of any kind or character is made on account of any Guaranteed
Obligations, or for the acquisition of any of the Notes for cash or property or
otherwise. Upon any such dissolution, winding-up, liquidation, reorganization,
receivership or similar proceeding, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash, property or
securities, to which the Holders of the Notes or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them, directly to the
holders of Guarantor Senior Debt (pro rata to such holders on the basis of the
respective amounts of Guarantor Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of
Guarantor Senior Debt remaining unpaid until all such Guarantor Senior Debt has
been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Guarantor Senior Debt.

 

91

 

(b)       To the extent
any payment of Guarantor Senior Debt (whether by or on behalf of any Guarantor,
as proceeds of security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside or required to be paid to
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. It is further agreed that any diminution
(whether pursuant to court decree or otherwise, including, without limitation,
for any of the reasons described in the preceding sentence) of any Guarantor’s
obligation to make any distribution or payment pursuant to any Guarantor Senior
Debt, except to the extent such diminution occurs by reason of the repayment
(which has not been disgorged or returned) of such Guarantor Senior Debt in
cash or Cash Equivalents, shall have no force or effect for purposes of the
subordination provisions contained in this Article 12, with any turnover
of payments as otherwise calculated pursuant to this Article 12 to be made
as if no such diminution has occurred.

 

(c)       In the event
that, notwithstanding the foregoing, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or any Holder when such payment or
distribution is prohibited by Section 12.03(a), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Debt (pro rata to such holders
on the basis of the respective amount of Guarantor Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor Senior Debt may have
been issued, as their respective interests may appear, for application to
the payment of Guarantor Senior Debt remaining unpaid until all such Guarantor
Senior Debt has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Debt.

 

(d)       The
consolidation of any Guarantor with, or the merger of such Guarantor with or
into, another corporation or the liquidation or dissolution of such Guarantor
following the conveyance or transfer of all or substantially all of its assets,
to another corporation upon the terms and conditions provided in Article 5
and as long as permitted under the terms of the Guarantor Senior Debt shall not
be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, assume such Guarantor’s
obligations hereunder in accordance with Article 5.

 

SECTION 12.04. Payments May Be Paid Prior
to Dissolution.

 

Nothing contained in this Article 12 or elsewhere
in this Indenture shall prevent (i) any Subsidiary Guarantor, except under
the conditions described in Sections 12.02 and 12.03, from making payments at
any time for the purpose of making payments of principal of and interest on the
Notes, or from depositing with the Trustee any moneys for such payments, or (ii) in
the absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 12.02 or 12.03, the application by the Trustee of
any moneys deposited with it for the

 

92

 

purpose of making such payments of principal of, and interest on, the
Notes to the Holders entitled thereto unless at least one Business Day prior to
the date upon which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in Section 12.02(a) or
in Section 12.07; provided that, notwithstanding the foregoing, the
subordination of the Notes to Guarantor Senior Debt shall not be affected and
the Holders receiving any payments made in contravention of Section 12.02
and/or Section 12.03 shall otherwise be subject to this Article 12.
Each Subsidiary Guarantor shall give prompt written notice to the Trustee of
any dissolution, winding-up, liquidation or reorganization of such Subsidiary
Guarantor, although any delay or failure to give any such notice shall have no
effect on the subordination provisions of this Article 12.

 

SECTION 12.05. Subrogation.

 

Subject to the payment in full in cash or Cash
Equivalents of all Guarantor Senior Debt, the Holders of the Notes shall be
subrogated to the rights of the holders of Guarantor Senior Debt to receive
payments or distributions of cash, property or securities of such Guarantor
applicable to the Guarantor Senior Debt until the Notes shall be paid in full;
and, for the purposes of such subrogation, no such payments or distributions to
the holders of the Guarantor Senior Debt by or on behalf of any Guarantor or by
or on behalf of the Holders by virtue of this Article 12 which otherwise
would have been made to the Holders shall, as between such Guarantor and the
Holders of the Notes, be deemed to be a payment by such Guarantor to or on
account of the Guarantor Senior Debt, it being understood that the provisions
of this Article 12 are and are intended solely for the purpose of defining
the relative rights of the Holders of the Notes, on the one hand, and the
holders of the Guarantor Senior Debt, on the other hand.

 

SECTION 12.06. Obligations of Guarantors
Unconditional.

 

Nothing contained in this Article 12 or elsewhere
in this Indenture or in the Notes is intended to or shall impair, as among any
Guarantor, its creditors other than the holders of Guarantor Senior Debt, and
the Holders, the obligation of such Guarantor, which is absolute and
unconditional, to make payments in respect of its Guarantee as and when the
same shall become due and payable in accordance with the terms of the
Guarantee, or is intended to or shall affect the relative rights of the Holders
and creditors of such Guarantor other than the holders of the Guarantor Senior
Debt, nor shall anything herein or therein prevent the Holder of any Security
or the Trustee on its behalf from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, in respect of cash, property or securities of such Guarantor received upon
the exercise of any such remedy.

 

SECTION 12.07. Notice to Trustee.

 

Each Guarantor shall give prompt written notice to the
Trustee of any fact known to such Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article 12, although any delay or failure to give any
such notice shall have no effect on the subordination provisions contained
herein. Regardless of anything to the contrary contained in this Article 12
or elsewhere in this Indenture, the Trustee shall not be charged with knowledge
of the existence of any default or event of default with respect to any
Guarantor Senior Debt or of any other facts which would prohibit the

 

93

 

making of any payment to or by the Trustee unless and until the Trustee
shall have received notice in writing from such Guarantor, or from a holder of
Guarantor Senior Debt or a Representative therefor, and, prior to the receipt
of any such written notice, the Trustee shall be entitled to assume (in the
absence of actual knowledge to the contrary) that no such facts exist; provided
that, notwithstanding the foregoing, the Holders receiving any payments made in
contravention of Section 12.02 and/or Section 12.03 shall otherwise
be subject to the provisions of Article 12.

 

In the event that the Trustee determines in good faith
that any evidence is required with respect to the right of any Person as a
holder of Guarantor Senior Debt to participate in any payment or distribution
pursuant to this Article 12, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amounts of Guarantor Senior Debt held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 12, and if
such evidence is not furnished the Trustee may defer any payment to such
Person pending judicial determination as to the right of such person to receive
such payment.

 

SECTION 12.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.

 

Upon any payment or distribution of assets of any
Guarantor referred to in this Article 12, the Trustee, subject to the
provisions of Article 6, and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which bankruptcy, dissolution, winding-up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered to the Trustee or the Holders of the Notes, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Guarantor Senior Debt and other Indebtedness
of such Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this Article 12.

 

SECTION 12.09. Trustee’s Relation to Guarantor
Senior Debt.

 

The Trustee and any agent of any Guarantor or the
Trustee shall be entitled to all the rights set forth in this Article 12
with respect to any Guarantor Senior Debt which may at any time be held by
it in its individual or any other capacity to the same extent as any other
holder of Guarantor Senior Debt and nothing in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder.

 

With respect to the holders of Guarantor Senior Debt,
the Trustee undertakes to perform or to observe only such of its covenants
and obligations as are specifically set forth in this Article 12, and no
implied covenants or obligations with respect to the holders of Guarantor
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 Guarantor
Senior Debt, and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Securityholders or the Company or any
other person money or assets to which any holders of Guarantor Senior Debt
shall be entitled by virtue of this Article 12, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.

 

94

 

Whenever a distribution is to be made or a notice
given to holders or owners of Guarantor Senior Debt, the distribution may be
made and the notice may be given to their Representative, if any.

 

SECTION 12.10.  Subordination Rights Not Impaired by Acts
or Omissions of Guarantors or Holders of Guarantor Senior Debt.

 

No right of any present or future holders of any Guarantor
Senior Debt to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by such Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.

 

Without in any way limiting the generality of the
foregoing paragraph, the holders of Guarantor Senior Debt may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders, without incurring responsibility to the Trustee or the Holders of the
Notes and without impairing or releasing the subordination provided in this Article 12
or the obligation hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Guarantor Senior Debt; (iii) release any Person liable in any
manner for the payment or collection of Guarantor Senior Debt; and (iv) exercise
or refrain from exercising any rights against any Guarantor and any other
Person.

 

Holders Authorize Trustee To Effectuate Subordination
of Guarantee.

 

Each Holder of Notes by its acceptance of them
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate, as between the holders
of Guarantor Senior Debt and the Holders of Notes, the subordination provided
in this Article 12, and appoints the Trustee its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation
or reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its Notes and accrued interest in the form required in those
proceedings.

 

If the Trustee does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30 days before
the expiration of the time to file such claim or claims, then the holders of
the Guarantor Senior Debt or their Representative are or is hereby authorized
to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Notes. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Guarantor Senior Debt or their Representative to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment

 

95

 

or composition affecting the Notes or the rights of any Holder thereof,
or to authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.

 

ARTICLE 13

 

MISCELLANEOUS

 

SECTION 13.01.  TIA Controls. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provision (an “incorporated provision”) included in
this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such
imposed duties or incorporated provision shall control.

 

SECTION 13.02.  Notices.

 

(a)       Any notice or
communication required or permitted hereunder shall be in writing and delivered
in person, via facsimile or mailed by first-class mail addressed as
follows:

 

if to the Company or a Guarantor:

 

Panolam Industries International, Inc. 

20 Progress Drive 

Shelton, CT 06484

 

Attention of:  General
Counsel 

Facsimile: (203) 225-0050

 

with a copy to:

 

Weil, Gotshal & Manges LLP 

767 Fifth Avenue 

New York, NY 10153

 

Attention of: Matthew D. Bloch, Esq. 

Facsimile: (212) 310-8007

 

if to the Trustee:

 

Wells Fargo Bank, National Association 

Corporate Trust Services 

213 Court Street, Suite 703 

Middletown, CT 06457

 

Attention of: Joseph O’Donnell 

Facsimile: (860) 704-6219

 

96

 

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

 

(b)       Any notice or
communication mailed to a Holder shall be mailed, first class mail, to the
Holder at the Holder’s address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

 

(c)       Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it, except that notices to the Trustee are effective only if
received.

 

SECTION 13.03.  Communication by the Holders with Other
Holders. The Holders may communicate pursuant to Section 312(b) of
the TIA with other Holders with respect to their rights under this Indenture or
the Notes. The Company, the Trustee, the Registrar and other Persons shall have
the protection of Section 312(c) of the TIA.

 

SECTION 13.04.  Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee at the request of the Trustee:

 

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

 

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

 

SECTION 13.05.  Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:

 

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

 

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

 

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

 

(d)       a statement as
to whether or not, in the opinion of such individual, such covenant or
condition has been complied with; provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an Officers’ Certificate
or certificates of public officials.

 

97

 

SECTION 13.06.  When Notes Disregarded. 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, any Guarantor or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any Guarantor shall be
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which the Trustee knows are so owned
shall be so disregarded. Subject to the foregoing, only Notes outstanding at
the time shall be considered in any such determination.

 

SECTION 13.07.  Rules by Trustee, Paving Agent and
Registrar. The Trustee may make reasonable rules for action by or
a meeting of the Holders. The Registrar and a Paying Agent may make
reasonable rules for their functions.

 

SECTION 13.08.  Legal Holidays. If a payment date is
not a Business Day, payment shall be made on the next succeeding day that is a
Business Day, and no interest shall accrue on any amount that would have been
otherwise payable on such payment date if it were a Business Day for the
intervening period. If a regular record date is not a Business Day, the record
date shall not be affected.

 

SECTION 13.09.  GOVERNING LAW. THIS INDENTURE AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

SECTION 13.10.  No Recourse Against Others. No
affiliate, director, officer, employee, incorporator or holder of any equity
interests in the Company or of any Guarantor or any direct or indirect parent
corporation of the Company, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes or this Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation; provided, however, the foregoing will not affect or limit any
liability of any Guarantor under this Indenture or its Guarantee. Each Holder
of Notes by accepting a Note waives and releases all such liability.

 

SECTION 13.11.  Successors. All agreements of the
Company and each Guarantor in this Indenture and the Notes shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.

 

SECTION 13.12.  Multiple Originals. The parties may sign
any number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.

 

SECTION 13.13.  Table of Contents; Headings. The table
of contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.

 

SECTION 13.14.  Indenture Controls. If and to the
extent that any provision of the Notes limits, qualifies or conflicts with a
provision of this Indenture, such provision of this Indenture shall control.

 

98

 

SECTION 13.15.  Severability. In case any provision in
this Indenture shall be invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to
the extent of such invalidity, illegality or unenforceability, it being
intended that all of the provisions hereof shall be enforceable to the fullest
extent permitted by law.

 

99

 

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

 

	
   

  	
  PIH ACQUISITION CO.,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Darren J. Gold

  
	
   

  	
   

  	
  Name: Darren J. Gold

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Name: Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Name: Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PIONEER PLASTICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Name: Robert J. Muller, Jr.

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph P. O’Donnell

  
	
   

  	
   

  	
  Name: Joseph P. O’Donnell

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

 

 

APPENDIX A-Rule 144A/REGULATION S/IAI APPENDIX

 

PROVISIONS RELATING TO INITIAL NOTES,

PRIVATE EXCHANGE NOTES AND EXCHANGE NOTES

 

1. Definitions

 

1.1 Definitions

 

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

 

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

 

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

 

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

 

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

 

“Exchange Notes” means the Notes issued pursuant to
the Indenture in connection with the Registered Exchange Offer pursuant to the
Registration Rights Agreement.

 

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

 

“Initial Purchasers” means (a) with respect to
the Initial Notes issued on the Issue Date, Credit Suisse First Boston LLC and
Jefferies & Company, Inc. and (b) with respect to each
issuance of Additional Notes, the Persons purchasing or underwriting such
Additional Notes under the related Purchase Agreement.

 

“Initial Notes” means the initial $151,000,000 in
aggregate principal amount of Senior Subordinated Notes issued on the Issue
Date.

 

“Notes” means the Initial Notes, the Exchange Notes
and the Private Exchange Notes.

 

 

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

 

“Private Exchange” means, if, upon consummation of a
Registered Exchange Offer, an Initial Purchaser holds Initial Notes acquired by
it as part of the initial distribution, the Company shall, pursuant to the
Registration Rights Agreement and simultaneously with the delivery of the
Exchange Securities pursuant to the Registered Exchange Offer, issue and
deliver to each such Initial Purchaser, in exchange for the Initial Notes held
by such Initial Purchaser as part of the initial distribution of such
Initial Notes, a like principal amount of debt securities of the Company issued
under the Indenture and identical in all material respects to the Initial
Notes.

 

“Private Exchange Notes” means any Notes issued in
exchange for the Initial Notes in connection with a Private Exchange.

 

“Purchase Agreement” means (a) with respect to
the Initial Notes issued on the Issue Date, the Purchase Agreement dated September 16,
2005, among PIH Acquisition Co., the Company, the Guarantors and the Initial
Purchasers and (b) with respect to each issuance of Additional Notes, the
purchase agreement or underwriting agreement among the Company, the Guarantors
and the Persons purchasing or underwriting such Additional Notes.

 

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

 

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

 

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

 

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

 

“Senior Subordinated Notes” means the Company’s 10
3/4% Senior Subordinated Notes due 2013.

 

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

 

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

 

2

 

1.2 Other Definitions

 

	
  Term

  	
   

  	
  Defined
  in

  Section:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1(b)

  	
   

  
	
  “Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “IAI Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Permanent Regulation S
  Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Regulation S”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A Global
  Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Temporary Regulation S
  Global Note”

  	
   

  	
  2.1(a)

  	
   

  

 

2.         The Notes

 

2.1 (a) Form and Dating.  The Initial Notes will be offered and sold by
the Company pursuant to the Purchase Agreement. The Initial Notes will be
resold initially only to (i) QIBs in reliance on Rule 144A under the
Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons
(as defined in Regulation S) in reliance on Regulation S under the Securities
Act (“Regulation S”). Initial Notes may thereafter be transferred to,
among others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to
the restrictions on transfer set forth herein. Initial Notes initially resold
pursuant to Rule 144A shall be issued initially in the form of one or
more permanent global Notes in definitive, fully registered form (collectively,
the “Rule 144A Global Note”); Initial Notes initially resold to IAIs shall
be issued initially in the form of one or more permanent global Notes in
definitive, fully registered form (collectively, the “IAI Global Note”);
and Initial Notes initially resold pursuant to Regulation S shall be issued
initially in the form of one or more temporary global notes in fully
registered form (collectively, the “Temporary Regulation S Global Note”),
in each case without interest coupons and with the global notes legend and the
applicable restricted notes legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Notes represented
thereby with the Notes Custodian and registered in the name of the Depository
or a nominee of the Depository, duly executed by the Company and authenticated
by the Trustee as provided in this Indenture. Except as set forth in this Section 2.1(a),
beneficial ownership interests in the Temporary Regulation S Global Note will
not be exchangeable for interests in the Rule 144A Global Note, the IAI
Global Note, a permanent global note (the “Permanent Regulation S Global Note”,
and together with the Temporary Regulation S Global Note, the “Regulation S
Global Note”) or any other Note prior to the expiration of the Distribution
Compliance Period and then, after the expiration of the Distribution Compliance
Period, may be exchanged for interests in a Rule 144A Global Note, an
IAI Global Note or the Permanent Regulation S Global Note only upon
certification in form reasonably satisfactory to the Trustee that (i) beneficial
ownership interests in such Temporary Regulation S Global Note are owned either
by non-U.S. persons or U.S. persons who purchased such interests in a
transaction that did not require registration under the Securities Act and (ii) in
the case of an exchange for an IAI Global Note, certification that the interest
in the Temporary Regulation S Global

 

3

 

Note is being transferred to an institutional “accredited investor”
under the Securities Act that is an institutional accredited investor acquiring
the notes for its own account or for the account of an institutional accredited
investor.

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

2.2  Authentication

 

The Trustee shall authenticate and deliver: (1) on
the Issue Date an aggregate principal amount of $ 151,000,000 Notes executed by
one Officer of PIH, (2) upon consummation of the Acquisition and Mergers
and surrender to the Trustee for cancellation, in accordance with the terms of
this Indenture, the $151,000,000 aggregate principal amount of Notes issued
pursuant to subsection (1) above, an aggregate principal amount of
$151,000,000 replacement Notes executed by one Officer of the Company, (3) any
Additional Notes for an original issue in an aggregate principal amount
specified in the written order of the Company pursuant to Section 2.03 of
the Indenture and (4) Exchange Notes or Private Exchange Notes for issue
only in a Registered Exchange Offer or a Private Exchange, respectively,
pursuant to a Registration Rights Agreement, for a like principal amount of
Initial Notes, in each case upon a written order of the Company signed by one
Officer of the Company. Such 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 and, in the case of any issuance and Additional Notes pursuant to
Section 2.01 of the Indenture, shall certify that such issuance is in
compliance with Section 4.03 of the Indenture.

 

2.3  Transfer
and Exchange

 

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

 

5

 

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

 

(y)       to exchange
such Definitive Notes for an equal principal amount of Definitive Notes of
other authorized denominations,

 

the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Notes surrendered for transfer or
exchange:

 

(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or its attorney
duly authorized in writing; and

 

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

 

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

 

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

 

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

 

(b) Restrictions on Transfer of a Definitive
Note for a Beneficial Interest in a Global Note.  A Definitive Note may not be exchanged
for a beneficial interest in a Rule 144A Global Note, an IAI Global Note
or a Permanent Regulation S Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory
to the Trustee, together with:

 

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

 

6

 

Note in the form of a beneficial interest in the
Permanent Regulation S Global Note; and

 

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

 

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

 

(c) Transfer and Exchange of Global Notes.

 

(i) The transfer and exchange of Global Notes or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Depository therefor. A
transferor of a beneficial interest in a Global Note shall deliver to the
Registrar a written order given in accordance with the Depository’s procedures
containing information regarding the participant account of the Depository to
be credited with a beneficial interest in the Global Note. The Registrar shall,
in accordance with such instructions, instruct the Depository to credit to the
account of the Person specified in such instructions a beneficial interest in
the Global Note and to debit the account of the Person making the transfer the
beneficial interest in the Global Note being transferred.

 

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

 

7

 

reflect on its books and records the date and a
corresponding decrease in the principal amount of the Global Note from which
such interest is being transferred.

 

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

 

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

 

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

 

(e) Legend.

 

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

 

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

 

8

 

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) WITHIN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(II) TO AN INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(A)(l),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V), IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.

 

Each certificate evidencing a Note offered in reliance
on Regulation S shall, in lieu of the foregoing, bear a legend in substantially
the following form:

 

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

 

Each Definitive Note shall also bear the following
additional legend:

 

9

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

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

 

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

 

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

 

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

 

(f) Cancellation or Adjustment of Global Note.  At such time as all beneficial interests
in a Global Note have either been exchanged for Definitive Notes,

 

10

 

redeemed, purchased or canceled, such Global Note shall be returned to
the Depository for cancellation or retained and canceled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for certificated Notes, redeemed, purchased or canceled, the
principal amount of Notes represented by such Global Note shall be reduced and
an adjustment shall be made on the books and records of the Trustee (if it is
then the Notes Custodian for such Global Note) with respect to such Global
Note, by the Trustee or the Notes Custodian, to reflect such reduction.

 

(g) No Obligation of the Trustee.

 

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

 

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

 

2.4       Certificated
Notes

 

(a) A Global Note deposited with the Depository
or with the Trustee as Notes Custodian for the Depository pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of
Definitive Notes in an aggregate principal amount equal to the principal amount
of such Global Note, in exchange for such Global Note, only if such transfer
complies with Section 2.3 hereof and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such
Global Note and the Depository fails to appoint a successor depositary or if at
any time such Depository ceases to be a “clearing agency” registered under the
Exchange Act and,

 

11

 

in either case, a successor Depository is not appointed by the Company
within 90 days of such notice, or (ii) an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of Definitive Notes
under this Indenture.

 

(b) Any Global Note that is transferable to the
beneficial owners thereof pursuant to this Section 2.4 shall be
surrendered by the Depository to the Trustee located at its principal corporate
trust office to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Note, an equal aggregate principal
amount of Definitive Notes of authorized denominations. Any portion of a Global
Note transferred pursuant to this Section 2.4 shall be executed,
authenticated and delivered only in denominations of $1,000 principal amount
and any integral multiple thereof and registered in such names as the Depository
shall direct. Any Definitive Note delivered in exchange for an interest in the
Transfer Restricted Note shall, except as otherwise provided by Section 2.3(e) hereof,
bear the applicable restricted notes legend and definitive note legend set form in
Exhibit 1 hereto.

 

(c) Subject to the provisions of Section 2.4(b) hereof,
the registered Holder of a Global Note shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.

 

(d) In the event of the occurrence of one of the
events specified in Section 2.4(a) hereof, the Company shall promptly
make available to the Trustee a reasonable supply of Definitive Notes in
definitive, fully registered form without interest coupons. In the event
that such Definitive Notes are not issued, the Company expressly acknowledge,
with respect to the right of any Holder to pursue a remedy pursuant to Section 6.06
of this Indenture, the right of any beneficial owner of Notes to pursue such
remedy with respect to the portion of the Global Note that represents such
beneficial owner’s Notes as if such Definitive Notes had been issued.

 

12

 

EXHIBIT 1 to Rule 144A/REGULATION
S/IAI APPENDIX

 

[FORM OF FACE OF
INITIAL NOTE]

 

[Global Notes Legend]

 

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

 

TRANSFERS OF THIS GLOBAL NOTE 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
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

[[FOR REGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS
AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE
OF NOTES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES
ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF
SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A
THEREUNDER.]

 

[Restricted Notes Legend
for Notes Offered Otherwise than in Reliance on Regulation S]

 

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

 

 

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) WITHIN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(II) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(l),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.

 

[Restricted Notes Legend
for Notes Offered in Reliance on Regulation S.]

 

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

 

[Temporary Regulation S
Global Note Legend]

 

EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP
INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE WILL NOT BE EXCHANGEABLE
FOR INTERESTS IN THE PERMANENT REGULATION S GLOBAL NOTE OR ANY OTHER NOTE
REPRESENTING AN INTEREST IN THE NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A
LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY
DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING

 

2

 

OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT)
AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE
TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR
U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE
REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION
COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION
S GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY,
(II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE
WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED TO
ABOVE, IF THEN APPLICABLE.

 

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

 

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

 

3

 

CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.

 

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

 

[Definitive Notes Legend]

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

4

 

PANOLAM INDUSTRIES INTERNATIONAL, INC.

 

10 3/4% Senior Subordinated Notes due 2013

 

	
   

  	
  CUSIP
  No. [     ]

  
	
   

  	
  ISIN
  No. [     ]

  
	
  No.[     ]

  	
  $[     ]

  

 

PANOLAM INDUSTRIES INTERNATIONAL, INC., a
Delaware corporation promises to pay to [     ], or
its registered assigns, the principal sum of [     ]
Dollars ($[     ]) on October 1, 2013.

 

Interest Payment Dates: April 1 and October 1

 

Record Dates: March 15 and September 15

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

5

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.

 

Dated:

 

	
   

  	
  PANOLAM
  INDUSTRIES INTERNATIONAL, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

TRUSTEE’S
CERTIFICATE OF

AUTHENTICATION

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  as
  Trustee, certifies

  
	
   

  	
   

  	
  that
  this is one of

  the Notes referred

  to in the Indenture.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
              Authorized
  Signatory

  
							

 

6

 

[FORM OF REVERSE
SIDE OF INITIAL NOTE]

 

Senior Subordinated Notes
Due 2013

 

1.         Interest

 

Panolam Industries International, Inc., a
Delaware corporation (such Person, and its respective successors and assigns
under the Indenture hereinafter referred to, being herein called the “Company”)
promises to pay interest on the principal amount of this Note at a rate per
annum of 10 3/4%; provided, however, that if a Registration
Default (as defined in the Registration Rights Agreement) occurs, additional
interest will accrue on this Note at a rate of 0.25% per annum (increasing by
an additional 0.25% per annum after each consecutive 90-day period that occurs
after the date on which such Registration Default occurs up to a maximum additional
interest rate of 1.00%) from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. The Company will pay interest
semiannually in arrears to the holders of record of the Notes on April 1
and October 1 of each year, commencing April 1, 2006. Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the Issue Date. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. The Company will pay
interest on overdue principal at the rate borne by this Note plus 2.0% per
annum, and it will pay interest on overdue installments of interest at the same
rate to the extent lawful.

 

2.         Method of
Payment

 

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

 

7

 

3.         Paying
Agent and Registrar

 

Initially, Wells Fargo Bank, National Association (the
“Trustee”), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. Company
or any of its Restricted Subsidiaries may act as Paying Agent, Registrar
or co-registrar.

 

4.         Indenture

 

The Company issued the Notes under an Indenture dated
as of September 30, 2005 (the “Indenture”), among the Company, the
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “Act”).
Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the Act for a statement of those
terms.

 

The Notes are obligations of the Company. The
Indenture contains covenants that, among other things, limit the ability of the
Company and its Restricted Subsidiaries to incur additional indebtedness; pay
dividends or distributions on, or redeem or repurchase capital stock; make
investments; engage in transactions with affiliates; create liens on assets to
secure indebtedness; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries and consolidate, merge or transfer
all or substantially all of its assets. These covenants are subject to
important exceptions and qualifications contained in the Indenture.

 

5.         Optional
Redemption

 

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

 

On and after October 1, 2009, the Company shall
be entitled at its option on one or more occasions to redeem all or a portion
of the Senior Subordinated Notes upon not less than 30 nor more than 60 days’
notice, at the redemption prices (expressed in percentages of principal amount
on the redemption date), plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on October 1 of the years
set forth below:

 

8

 

	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  105.375

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  102.688

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2011 and thereafter

  	
   

  	
  100.00

  	
  %

  

 

In addition, prior to October 1, 2009, the
Company may redeem the Subordinated Rate Notes at its option, in whole at
any time or in part from time to time, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to each Holder’s
registered address, at a redemption price equal to 100% of the principal amount
of the Senior Subordinated Notes redeemed plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to the applicable redemption date (subject
to the right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date).

 

Notwithstanding the foregoing, prior to October 1,
2008, the Company shall upon not less than 30 nor more than 60 days’ notice, be
entitled at its option on one or more occasions to redeem Senior Subordinated
Notes (which includes Additional Notes) in an aggregate principal amount not to
exceed 35% of the original aggregate principal amount of the Senior
Subordinated Notes (which includes Additional Notes) originally issued at a
redemption price of 110.750% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), with the net cash proceeds from one or more Public
Equity Offerings; provided,  however, that (1) at least 65%
of such aggregate principal amount of Senior Subordinated Notes (which includes
Additional Notes) remains outstanding immediately after the occurrence of each
such redemption; and (2) each such redemption occurs within 90 days of the
date of closing of such Public Equity Offering.

 

6.         Mandatory
Redemption

 

Except as set forth in Paragraph 8 below with respect
to repurchases of the Senior Subordinated Notes in certain events, the Company
shall not be required to make mandatory redemption or repurchase payments with
respect to the Senior Subordinated Notes.

 

7.         Notice of
Redemption

 

Notice of redemption will be mailed by first-class mail
at least 30 days but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at his registered address. Notes in
denominations larger than $1,000 principal amount may be redeemed in part but
only in whole multiples of $1,000. If money sufficient to pay the redemption
price of and accrued interest on all Notes (or portions thereof) to be redeemed
on the redemption date is deposited with the Paying Agent on or

 

9

 

before the redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such Notes (or such
portions thereof) called for redemption.

 

8.         Repurchase
at Option of Holder

 

(a)       Change of
Control Offer. Upon the occurrence of a Change of Control (unless the Company
has exercised its right to redeem the Notes as described in paragraph 5 above
and in the Indenture), the Company shall be required to make an offer to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder’s Notes (a “Change of Control Offer”) at a purchase
price (“Change of Control Purchase Price”) in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest and additional
interest, if any, to the date of repurchase, in accordance with the procedures
set forth in the Indenture.

 

(b)       Asset Sale
Offer. If the Company consummates any Asset Sale, the Company may be
required to utilize a portion of the net proceeds received from such Asset Sale
to offer to repurchase Notes from the Holders at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase, in accordance with the provisions of the Indenture.

 

9.         Guarantee

 

The payment by the Company of the principal of, and
premium and interest on, the Notes is fully and unconditionally guaranteed on a
joint and several basis by each of the Guarantors to the extent set forth in
the Indenture.

 

10.       Subordination

 

The Notes are subordinated and junior in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full when due, whether at stated maturity, by acceleration or
otherwise, in cash or Cash Equivalents of all Senior Debt, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. The Guarantees in respect of the Notes are subordinated and junior
in right of payment, in the manner and to the extent set forth in the
Indenture, to the prior payment in full when due, whether at stated maturity,
by acceleration or otherwise, in cash or Cash Equivalents of all Guarantor
Senior Debt, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary or
appropriate to effectuate the subordination provided for in the Indenture and
appoints the Trustee his attorney-in-fact for such purposes.

 

11.       Denominations;
Transfer; Exchange

 

The Notes are in registered form without coupons
in denominations of $1,000 principal amount and whole multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder,

 

10

 

among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Notes selected for redemption (except, in the case of a Note to be redeemed in
part, the portion of the Note not to be redeemed) or any Notes for a period of
15 days before a selection of Notes to be redeemed or 15 days before an
interest payment date.

 

12.       Persons
Deemed Owners

 

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

 

13.       Unclaimed
Money

 

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

 

14.       Discharge
and Defeasance

 

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

 

15.       Amendment,
Waiver

 

Subject to certain exceptions set forth in the
Indenture, (a) the Indenture, and the Notes may be amended with the
consent of the Holders of at least a majority in principal amount outstanding
of the Notes and (b) any default or noncompliance with any provision may be
waived with the consent of the Holders of a majority in principal amount
outstanding of the Notes. Without the consent of any Noteholder, the Company,
the Guarantors and the Trustee shall be entitled to amend the Indenture, or the
Notes to cure any ambiguity, defect, mistake or inconsistency, or to provide
for uncertificated Notes in addition to or in place of certificated Notes,, or
to provide for the assumption by a Successor Company or a successor company of
a Guarantor, as applicable, of the Company’s or such Guarantor’s obligations
under the Indenture, or to comply with requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, or to release a Guarantor upon its sale or
designation as an Unrestricted Subsidiary or other permitted release from its
Guarantee; provided, however, that such sale, designation or release is in
accordance with the applicable provisions of the Indenture, or to conform the
text of the Indenture, Notes or Guarantees to any provision of this “Description
of the Notes” to the extent such provision of this “Description of the Notes”
was intended to be a verbatim recitation of a corresponding provision of the
Indenture, Notes or Guarantees.

 

11

 

16.       Defaults
and Remedies

 

Under the Indenture, Events of Default include (a) default
in payment when due and payable, upon redemption, acceleration or otherwise, of
principal of, or premium, if any, on the Notes, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (b) default
in the payment when due of interest on or with respect to the Notes and such
default continues for a period of 30 days, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (c) default
in the performance of or breach of the covenants described under Section 4.03,
4.04 and 5.01 of the Indenture and such default or breach continues for a
period of 30 days after the notice specified below; (d) default in the
performance of, or breach of any covenant, warranty or other agreement
contained in, the Indenture (other than a default in the performance or breach
of a covenant, warranty or agreement that is specifically dealt with in clauses
(a), (b) or (c) above) and such default or breach continues for a
period of 60 days after the notice specified below; (e) a default under any
mortgage, indenture or instrument under which there is issued or by which there
is secured or evidenced any Indebtedness for money borrowed by the Company or
any Restricted Subsidiary or the payment of which is guaranteed by the Company
or any Restricted Subsidiary (other than Indebtedness owed to the Company or a
Restricted Subsidiary), whether such Indebtedness or guarantee now exists or is
created after the Issue Date, if (1) such default either (A) results
from the failure to pay any such Indebtedness at its stated final maturity
(after giving effect to any applicable grace periods) or (B) relates to an
obligation other than the obligation to pay principal of any such Indebtedness
at its stated final maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and (2) the principal amount of such Indebtedness, together with
the principal amount of any other such Indebtedness in default for failure to
pay principal at stated final maturity (after giving effect to any applicable
grace periods), or the maturity of which has been so accelerated, aggregate
$10.0 million (or its foreign currency equivalent) or more at any one time
outstanding; (f) certain events of bankruptcy affecting the Company or any
Significant Subsidiary as set forth in the Indenture; (g) failure by the
Company or any Significant Subsidiary to pay final judgments aggregating in
excess of $10.0 million (excluding any amounts as to which a provider of
insurance has assumed responsibility in writing), which final judgments remain
unpaid, undischarged and unstayed for a period of more than 60 days after the
applicable judgment becomes final, and, with respect to any such judgments
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed or (h) the
Guarantee of a Significant Subsidiary or any group of Subsidiaries that, taken
together as of the date of the most recent audited financial statements of the
Company, would constitute a Significant Subsidiary ceasing to be in full force
and effect (except as contemplated by the terms hereof) or any Guarantor denies
or disaffirms its obligations under the Indenture or any Guarantee, other than by
reason of the release of the Guarantee in accordance with the terms of the
Indenture. If an Event of Default (other than an Event of Default specified in
clause (f) above with respect to the Company) shall occur and be
continuing, the Trustee or the holders of at least 25% in principal amount of
outstanding Notes under the Indenture may declare the principal of and
accrued interest on such Notes to be due and payable immediately in the manner
and with the effect

 

12

 

provided in the Indenture. If an Event of Default specified in clause (f) above
with respect to the Company occurs and is continuing, then all unpaid principal
of, and premium, if any, and accrued and unpaid interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of each Trustee or any
holder of the Notes.

 

Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture and under the Trust
Indenture Act of 1939, as amended. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the holders of the Notes, unless such holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the holders of a majority in aggregate principal
amount of the then outstanding Notes issued under such Indenture have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.

 

17.       Trustee Dealings with
the Company

 

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

 

18.       No Recourse Against
Others

 

No director, officer, employee, incorporates or
stockholder of the Company, any of its Subsidiaries or any of its direct or
indirect parent entities, as such, will have any liability for any obligations
of the Company or any Guarantor under the Notes, the Indenture, the 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, and it is the view of the
Commission that such waiver is against public policy.

 

19.       Authentication

 

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

 

20.       Abbreviations

 

Customary abbreviations may be used in the name
of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the

 

13

 

entireties), JT TEN (=joint tenants with rights of survivorship and not
as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).

 

21.       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 has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Noteholders. 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.

 

22.       Holders’ Compliance with
Registration Rights Agreement

 

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

 

23.       Governing Law

 

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

 

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

 

Panolam Industries International, Inc. 

20 Progress Drive 

Shelton, Connecticut 06484 

Attention: General Counsel

 

14

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s soc. sec. or tax I.D. No.)

 

and irrevocably appoint
                               agent
to transfer this 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 other side of this Note.

 

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

 

CHECK ONE BOX BELOW

 

o        to
the Company; or

 

	
  (1)

  	
   

  	
  o

  	
   

  	
  pursuant to an
  effective registration statement under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  o

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  o

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  o

  	
   

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

  

 

 

	
  (5)

  	
   

  	
  o

  	
   

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

  

 

Unless one of the boxes is checked, the Trustee will
refuse to register any of the Notes evidenced by this certificate in the name
of any person other than the registered holder thereof; provided,  however,
that if box (3), (4) or (5) is checked, the Trustee shall be entitled
to require, prior to registering any such transfer of the Notes, such legal
opinions, certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144 under
such Act.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature must be

  guaranteed

  	
   

  	
  Signature

  
							

 

Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.

 

2

 

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

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice:

  	
  To be executed by

  an executive officer

  
						

 

3

 

[TO BE ATTACHED TO GLOBAL NOTES]

 

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

  officer of Trustee or Notes

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

4

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If you want to elect to have this Note purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the
box:

 

o

 

If you want to elect to have only part of this
Note purchased by the Company pursuant to Section 4.06 or 4.08 of the
Indenture, state the amount in principal amount: $

 

	
  Dated:

  	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your
  name appears

  
	
   

  	
   

  	
  on the other side of
  this Note.)

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  	
   

  
						

 

Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.

 

5

 

EXHIBIT A

 

FORM OF FACE OF
EXCHANGE NOTE 

OR PRIVATE EXCHANGE NOTE*/**/

 

 

___________________

*/ If the Note is to be issued in
global form add the Global Notes Legend from Exhibit 1 to Appendix A
and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO
GLOBAL NOTES]—SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE”.

 

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

 

 

PANOLAM INDUSTRIES
INTERNATIONAL, INC.

 

10 3/4% Senior
Subordinated Notes due 2013

 

 

	
   

  	
  CUSIP No. [   ]

  
	
   

  	
  ISIN No. [   ]

  
	
            No. [   ]

  	
  $[   ]

  

 

PANOLAM INDUSTRIES INTERNATIONAL, INC., a
Delaware corporation promises to pay to [   ], or its registered
assigns, the principal sum of [   ] Dollars
($[   ]) on October 1, 2013.

 

Interest Payment Dates: April 1 and October 1

 

Record Dates: March 15 and September 15

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

2

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.

 

 

Dated:

 

	
   

  	
  PANOLAM
  INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

	
   

  	
  WELLS FARGO
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  as Trustee,
  certifies that this is one of the Notes referred to in the Indenture.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signatory

  

 

3

 

[FORM OF REVERSE SIDE OF EXCHANGE NOTE

OR PRIVATE EXCHANGE NOTE]

 

Senior Subordinated Notes
Due 2013

 

1.         Interest

 

Panolam Industries International, Inc., a
Delaware corporation (such Person, and its respective successors and assigns
under the Indenture hereinafter referred to, being herein called the “Company”)
promises to pay interest on the principal amount of this Note at a rate per
annum of 10 3⁄4%; provided, however,
that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Note at a rate of
0.25% per annum (increasing by an additional 0.25% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 1.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured.(1) The
Company will pay interest semiannually in arrears to the holders of record of
the Notes on April 1 and October 1 of each year, commencing April 1,
2006. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company will pay interest on overdue principal at the rate borne by
this Note plus 2.0% per annum, and it will pay interest on overdue installments
of interest at the same rate to the extent lawful.

 

2.         Method of
Payment

 

The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered holders of Notes at the
close of business on the March 15 or September 15 next preceding the
interest payment date even if Notes are canceled after the record date and on
or before the interest payment date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Notes represented by a Global Note (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by the Depository. The Company will make all payments in respect of a
certificated Note (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however,
that payments on a certificated Note will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately

 

(1) Insert if at the date of issuance of the
Exchange Note or Private Exchange Note (as the case may be) any
Registration Default has occurred with respect to the related Initial Notes
during the interest period in which such date of issuance occurs.

 

4

 

preceding the relevant due date for payment (or such other date as the
Trustee may accept in its discretion).

 

3.         Paying Agent and
Registrar

 

Initially, Wells Fargo Bank, National Association (the
“Trustee”), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. Company
or any of its Restricted Subsidiaries may act as Paying Agent, Registrar
or co-registrar.

 

4.         Indenture

 

The Company issued the Notes under an Indenture dated
as of September 30, 2005 (the “Indenture”), among the Company, the
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “Act”).
Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the Act for a statement of those
terms.

 

The Notes are obligations of the Company. The
Indenture contains covenants that, among other things, limit the ability of the
Company and its Restricted Subsidiaries to incur additional indebtedness; pay
dividends or distributions on, or redeem or repurchase capital stock; make
investments; engage in transactions with affiliates; create liens on assets to
secure indebtedness; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries and consolidate, merge or transfer
all or substantially all of its assets. These covenants are subject to
important exceptions and qualifications contained in the Indenture.

 

5.         Optional Redemption

 

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

 

On and after October 1, 2009, the Company shall
be entitled at its option on one or more occasions to redeem all or a portion
of the Senior Subordinated Notes upon not less than 30 nor more than 60 days’
notice, at the redemption prices (expressed in percentages of principal amount
on the redemption date), plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on October 1 of the years
set forth below:

 

	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  105.375

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  102.688

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2011 and thereafter

  	
   

  	
  100.00

  	
  %

  

 

5

 

In addition, prior to October 1,2009, the Company may redeem the
Subordinated Rate Notes at its option, in whole at any time or in part from
time to time, upon not less than 30 nor more than 60 days’ prior notice mailed
by first-class mail to each Holder’s registered address, at a redemption price
equal to 100% of the principal amount of the Senior Subordinated Notes redeemed
plus the Applicable Premium as of, and accrued and unpaid interest, if any, to
the applicable redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date).

 

Notwithstanding the foregoing, prior to October 1,2008, the Company
shall upon not less than 30 nor more than 60 days’ notice, be entitled at its
option on one or more occasions to redeem Senior Subordinated Notes (which
includes Additional Notes) in an aggregate principal amount not to exceed 35%
of the original aggregate principal amount of the Senior Subordinated Notes
(which includes Additional Notes) originally issued at a redemption price of
110.750% of the principal amount thereof, plus accrued and unpaid interest to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date),
with the net cash proceeds from one or more Public Equity Offerings; provided,
however, that (1) at least 65% of such aggregate principal amount of Senior
Subordinated Notes (which includes Additional Notes) remains outstanding
immediately after the occurrence of each such redemption; and (2) each such
redemption occurs within 90 days of the date of closing of such Public Equity
Offering.

 

6.         Mandatory
Redemption

 

Except as set forth in Paragraph 8 below with respect to repurchases of
the Senior Subordinated Notes in certain events, the Company shall not be
required to make mandatory redemption or repurchase payments with respect to
the Senior Subordinated Notes.

 

7.         Notice
of Redemption

 

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

 

8.         Repurchase
at Option of Holder

 

(a)       Change of Control Offer.
Upon the occurrence of a Change of Control (unless the Company has exercised
its right to redeem the Notes as described in paragraph 5 above and in the
Indenture), the Company shall be required to make an offer to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder’s
Notes (a “Change of Control Offer”) at a purchase price (“Change of Control
Purchase Price”) in cash equal to 101%

 

6

 

of the principal
amount thereof plus accrued and unpaid interest and additional interest, if
any, to the date of repurchase, in accordance with the procedures set forth in
the Indenture.

 

(b)       Asset Sale Offer. If the
Company consummates any Asset Sale, the Company may be required to utilize a
portion of the net proceeds received from such Asset Sale to offer to
repurchase Notes from the Holders at a price equal to 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase, in accordance with the provisions of the Indenture.

 

9.         Guarantee

 

The payment by the Company of the principal of, and premium and
interest on, the Notes is fully and unconditionally guaranteed on a joint and
several basis by each of the Guarantors to the extent set forth in the
Indenture.

 

10.       Subordination

 

The Notes are subordinated and junior in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full  when due, whether at stated
maturity, by acceleration or otherwise, in cash or Cash Equivalents of all
Senior Debt, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. The Guarantees in respect of the
Notes are subordinated and junior in right of payment, in the manner and to the
extent set forth in the Indenture, to the prior payment in full when due,
whether at stated maturity, by acceleration or otherwise, in cash or Cash
Equivalents of all Guarantor Senior Debt, whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed or guaranteed. Each
Holder by his acceptance hereof agrees to be bound by such provisions and
authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
provided for in the Indenture and appoints the Trustee his attorney-in-fact for
such purposes.

 

11.       Denominations:
Transfer: Exchange

 

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

 

12.       Persons
Deemed Owners

 

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

 

7

 

13.       Unclaimed
Money

 

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

 

14.       Discharge
and Defeasance

 

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

 

15.       Amendment,
Waiver

 

Subject to certain exceptions set forth in the Indenture, (a) the
Indenture, and the Notes may be amended with the consent of the Holders of at
least a majority in principal amount outstanding of the Notes and (b) any
default or noncompliance with any provision may be waived with the consent of
the Holders of a majority in principal amount outstanding of the Notes. Without
the consent of any Noteholder, the Company, the Guarantors and the Trustee
shall be entitled to amend the Indenture, or the Notes to cure any ambiguity,
defect, mistake or inconsistency, or to provide for uncertificated Notes in
addition to or in place of certificated Notes, , or to provide for the
assumption by a Successor Company or a successor company of a Guarantor, as
applicable, of the Company’s or such Guarantor’s obligations under the
Indenture, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act of
1939, as amended, or to release a Guarantor upon its sale or designation as an
Unrestricted Subsidiary or other permitted release from its Guarantee;
provided, however, that such sale, designation or release is in accordance with
the applicable provisions of the Indenture, or to conform the text of the Indenture,
Notes or Guarantees to any provision of this “Description of the Notes” to the
extent such provision of this “Description of the Notes” was intended to be a
verbatim recitation of a corresponding provision of the Indenture, Notes or
Guarantees.

 

16.       Defaults
and Remedies

 

Under the Indenture, Events of Default include (a) default in payment
when due and payable, upon redemption, acceleration or otherwise, of principal
of, or premium, if any, on the Notes, whether or not such payment is prohibited
by the subordination provisions of the Indenture; (b) default in the payment
when due of interest on or with respect to the Notes and such default continues
for a period of 30 days, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (c) default in the performance of or
breach of the covenants described under Section 4.03, 4.04 and 5.01 of the
Indenture and such default or breach continues for a period of 30 days after
the notice specified below; (d) default in the performance of, or breach of any
covenant, warranty or other agreement contained in, the Indenture (other than a
default in the performance or breach of a covenant, warranty or

 

8

 

agreement that is
specifically dealt with in clauses (a), (b) or (c) above) and such default or
breach continues for a period of 60 days after the notice specified below; (e)
a default under any mortgage, indenture or instrument under which there is
issued or by which there is secured or evidenced any Indebtedness for money
borrowed by the Company or any Restricted Subsidiary or the payment of which is
guaranteed by the Company or any Restricted Subsidiary (other than Indebtedness
owed to the Company or a Restricted Subsidiary), whether such Indebtedness or
guarantee now exists or is created after the Issue Date, if (1) such default
either (A) results from the failure to pay any such Indebtedness at its stated
final maturity (after giving effect to any applicable grace periods) or (B) relates
to an obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or holders
of such Indebtedness causing such Indebtedness to become due prior to its
stated maturity and (2) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for failure
to pay principal at stated final maturity (after giving effect to any
applicable grace periods), or the maturity of which has been so accelerated,
aggregate $10.0 million (or its foreign currency equivalent) or more at any one
time outstanding; (f) certain events of bankruptcy affecting the Company or any
Significant Subsidiary as set forth in the Indenture; (g) failure by the Company
or any Significant Subsidiary to pay final judgments aggregating in excess of
$10.0 million (excluding any amounts as to which a provider of insurance has
assumed responsibility in writing), which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days after the
applicable judgment becomes final, and, with respect to any such judgments
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed or (h) the
Guarantee of a Significant Subsidiary or any group of Subsidiaries that, taken
together as of the date of the most recent audited financial statements of the
Company, would constitute a Significant Subsidiary ceasing to be in full force
and effect (except as contemplated by the terms hereof) or any Guarantor denies
or disaffirms its obligations under the Indenture or any Guarantee, other than
by reason of the release of the Guarantee in accordance with the terms of the
Indenture. If an Event of Default (other than an Event of Default specified in
clause (f) above with respect to the Company) shall occur and be continuing,
the Trustee or the holders of at least 25% in principal amount of outstanding
Notes under the Indenture may declare the principal of and accrued interest on
such Notes to be due and payable immediately in the manner and with the effect
provided in the Indenture. If an Event of Default specified in clause (f) above
with respect to the Company occurs and is continuing, then all unpaid principal
of, and premium, if any, and accrued and unpaid interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of each Trustee or any holder
of the Notes.

 

Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture and under the Trust Indenture Act of 1939, as
amended. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee is under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
holders of the Notes, unless such holders have offered to the Trustee
reasonable indemnity. Subject to all provisions of the Indenture and applicable
law, the holders of a majority in aggregate principal amount of the then
outstanding Notes issued under such Indenture have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.

 

9

 

17.       Trustee
Dealings with the Company

 

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

 

18.       No
Recourse Against Others

 

No director, officer, employee, incorporator or stockholder of the
Company, any of its Subsidiaries or any of its direct or indirect parent
entities, as such, will have any liability for any obligations of the Company
or any Guarantor under the Notes, the Indenture, the 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, and it is the view of the Commission that such waiver
is against public policy.

 

19.       Authentication

 

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

 

20.       Abbreviations

 

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

 

21.       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 has directed the Trustee to use CUSIP numbers in notices
of redemption as a convenience to Noteholders. 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.

 

22.       Holders’
Compliance with Registration Rights Agreement

 

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

 

10

 

23.       Governing
Law

 

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

 

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

 

Panolam Industries
International, Inc. 

20 Progress Drive 

Shelton, Connecticut 06484 

Attention: General Counsel

 

11

 

EXHIBIT A

 

ASSIGNMENT FORM

 

To assign this
Note, fill in the form below:

 

I or we assign and
transfer this Note to

 

(Print or type assignee’s
name, address and zip code)

 

(Insert assignee’s
soc. sec. or tax I.D. No.)

 

and irrevocably
appoint                   agent
to transfer this 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 other side of this Note.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company
pursuant to Section 4.06 or 4.08 of the Indenture, check the box:

 

o

 

If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount in
principal amount: $

 

 

	
  Dated:

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name appears

  
	
   

  	
   

  	
   

  	
  on the other side of this Note.)

  

 

 

	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
        (Signature must be guaranteed)

  
				

 

Signatures must be
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Registrar, which requirements include membership or participation in the
Security Transfer Agent Medallion Program (“STAMP”) or such other “signature
guarantee program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.

 

2

 

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

 

Form of

Transferee Letter of Representation

 

Panolam Industries
International, Inc.

 

In care of

[          ]

[          ]

[          ]

 

Ladies and
Gentlemen:

 

This certificate is delivered to request a transfer of $[    ] principal amount of the 10 3/4% Senior
Subordinated Notes due 2013 (the “Notes”) of Panolam Industries International,
Inc., a Delaware corporation, (the “Company”).

 

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

 

 

	
  Name:

  	
   

  	
   

  	 

	
  Address:

  	
   

  	
   

  
	
  Taxpayer ID Number:

  	
   

  	
   

  	 

						

 

The undersigned
represents and warrants to you that:

 

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

 

2. We understand that the Notes have not been
registered under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on our own behalf and
on behalf of any investor account for which we are purchasing Notes to offer,
sell or otherwise transfer such Notes prior to the date that is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the “Resale Restriction Termination Date”) only (i) to the Company,
(ii) in the United States to a person whom the seller reasonably

 

 

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

 

 

	
   

  	
  TRANSFEREE:

  	
   

  	
  ,

  
	
   

  	
   

  	
  by:

  	
   

  	
   

  
							

 

 

APPENDIX B

 

[FORM OF SUPPLEMENTAL INDENTURE TO BE

DELIVERED BY ADDITIONAL SUBSIDIARY GUARANTORS]

 

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of [    ]
among [    ] (the “Additional Guarantor”), a [    ]
corporation and a [direct] [indirect] subsidiary of, a Delaware corporation
(the “Company”), and, Wells Fargo Bank, National Association as Trustee under
the Indenture (the “Trustee”).

 

W I T N E S S E T H :

 

WHEREAS the Company, and the Guarantors have heretofore executed and
delivered to the Trustee an Indenture (the “Indenture”), dated as of September
30, 2005, providing for the issuance of Senior Subordinated Notes (the “Notes”);

 

WHEREAS, Section 4.11 and Section 10.08 of the Indenture provide that
under certain circumstances the Company will cause the Additional Guarantor to
execute and deliver to the Trustee a guaranty agreement pursuant to which the
Additional Guarantor will Guarantee payment of the Notes on the same terms and
conditions as those set forth in Article 10 of the Indenture; and

 

WHEREAS, pursuant to Section 10.08 of the Indenture, the Trustee and
the Company are authorized to execute and deliver this Supplemental Indenture.

 

NOW THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the Additional Guarantor and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders of the Notes as follows:

 

SECTION 1. Capitalized Terms. Capitalized terms used herein but
not defined shall have the meanings assigned to them in the Indenture.

 

SECTION 2. Guarantees. The Additional Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company’s
obligations under the Notes on the terms and subject to the conditions set
forth in Article 10 of the Indenture and to be bound by all other applicable
provisions of the Indenture.

 

SECTION 3. Ratification of Indenture; Supplemental Indentures Part
of Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture
shall form a part of the Indenture for all purposes, and every holder of Notes
heretofore or hereafter authenticated and delivered shall be bound hereby.

 

SECTION 4. Governing Law.  THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

 

 

SECTION 5. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.

 

SECTION 6. 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.

 

SECTION 7. Effect of Headings. The Section headings herein are
for convenience only and shall not effect the construction of this Supplemental
Indenture.

 

 

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

 

	
   

  	
  PANOLAM
  INDUSTRIES INTERNATIONAL,

  INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Name:

  Title:

  

 

	
   

  	
  [ADDITIONAL
  SUBSIDIARY GUARANTOR],

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Name:

  Title:

  

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Name:

  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]