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EXHIBIT 10.8    
    

	

	

	

 
	

 
	REVOLVING CREDIT AGREEMENT
	

BETWEEN
	

PAWNMART, INC.

AND

XPONENTIAL, INC.
	

AND
	

COMERICA BANK
	

MAY 19, 2003
	

 
	

	

  
 

    REVOLVING CREDIT AGREEMENT    
    

        THIS REVOLVING CREDIT AGREEMENT made as of the 19th day of May, 2003, by and between  PAWNMART, INC. and XPONENTIAL, INC. (collectively, "Borrower") and  COMERICA BANK ("Bank").
 

WITNESSETH: 

        WHEREAS,
Borrower has requested the Bank to make certain loans and extensions of credit to Borrower, and 

        WHEREAS,
Bank is willing to do so, but only on the terms and conditions of this Agreement; 

        NOW,
THEREFORE, the Borrower and the Bank agree: 

	1.
	DEFINITIONS

        1.1    Defined Terms.    As used in this Agreement, the following terms shall have the following respective meanings: 

        "Account
Control Agreement" shall mean the Account Control Agreement executed by Comerica Securities, Inc., recognizing the Bank's security interest in the Time Deposit, in form
and substance satisfactory to the Bank. 

        "Accounts,"
"Chattel Paper," "Documents," "Equipment," "Fixtures," "General Intangibles," "Goods," "Instruments" and "Inventory" shall have the meanings assigned to them in the UCC. 

        "Accounts
Receivable" shall mean and include all Accounts, Chattel Paper and General Intangibles (including, but not limited to tax refunds, trade names, trade styles and goodwill, trade
marks, copyrights and patents, and applications therefor, trade and proprietary secrets, formulae, designs, blueprints and plans, customer lists, literary rights, licenses and permits, receivables,
insurance proceeds, beneficial interests in trusts and minute books and other books and records) now owned or hereafter acquired by Borrower. 

        "Advance"
shall mean a borrowing requested by Borrower and made by Bank. 

        "Affiliate"
shall mean, when used with respect to any person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such person.
For purposes of this definition, "control" (including the correlative meanings of the terms "controlled by" and "under common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by contract or otherwise. 

        "Agreement"
shall mean this Agreement as amended from time to time in accordance with the terms hereof. 

        "Applicable
Interest Rate" shall mean the Prime-based Rate as determined pursuant to the terms and conditions of this Agreement. 

        "Bank"
shall mean Comerica Bank, a Michigan banking corporation. 

        "Bankruptcy
Code" shall mean Title 11 of the United States Code, as amended, or any successor act or code. 

        "Bond
Issuance" shall mean those certain $20,000,000                        Limited Obligation Revenue Bonds, Series A. 

        "Borrowing
Base Amount" shall mean, as of any date, an amount equal to the sum of: 

        (a)   sixty
five percent (65%) of the cost of Eligible Principal Accounts; plus 

        (b)   forty
percent (40%) of the Eligible Inventory. 

 

        "Borrower"
shall mean PawnMart, Inc., a Nevada corporation, and Xponential, Inc., a Delaware corporation. 

        "Business
Day" shall mean any day on which Bank is open for business in Detroit. 

        "Capital
Expenditures" shall mean, for any period of determination thereof, the sum of all purchases and acquisition of capital or fixed assets made by Borrower during such period. 

        "Capital
Lease" shall mean any lease by Borrower of any property (whether real, personal or mixed) by Borrower as lessee that, in accordance with GAAP, either would be required to be
classified and accounted for as a capital lease on a balance sheet of Borrower or otherwise would be disclosed as such in a note to such balance sheet. 

        "Capital
Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance
sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such balance sheet. 

        "Collateral"
shall mean all property of the Borrower now or hereafter in the possession of the Bank or any Affiliate of the Bank (or as to which the Bank or any Affiliate of the Bank now
or hereafter controls possession by documents or otherwise), all amounts in all deposit or other accounts (including without limit the Time Deposit and an account evidenced by a certificate of
deposit) of the Borrower now or hereafter with the Bank or any Affiliate of the Bank and all of Borrower's Accounts, Chattel Paper, Documents, Equipment, Fixtures, General Intangibles, Goods,
Instruments and Inventory, wherever located and whether now owned or hereafter acquired, together with all replacements of any of the foregoing, substitutions therefor, accessions thereto, and all
proceeds and products of all the foregoing, and all additional property (real or personal) of the Borrower which is now or hereafter subject to a security interest, mortgage, lien, claim or other
encumbrance granted by the Borrower to, or in favor of, the Bank. 

        "Commitment
Amount" shall mean Four Million Five Hundred Thousand Dollars ($4,500,000), or such base amount to which it may be reduced pursuant to Section 2.12 hereof. 

        "Debt"
shall mean, as of any applicable date of determination, all funded indebtedness of a person, whether matured or unmatured, direct or indirect, joint or several, all determined in
accordance with GAAP. 

        "Default"
shall mean a condition or event which, with the giving of notice or the passage of time, or both, would become an Event of Default. 

        "Documents"
shall mean this Agreement, the Note, the Security Agreement, the Account Control Agreement, the Financing Statements and all other documents, agreements and instruments
delivered to Bank pursuant to this Agreement or any of the foregoing. 

        "EBITDA"
shall mean, for any applicable date of determination thereof, Net Income plus any amounts deducted in the calculation thereof with respect to interest expense, taxes,
depreciation and amortization, all determined in accordance with GAAP. 

        "Eligible
Account" shall mean outstanding amounts owing pursuant, and evidenced by, a Pawn Ticket arising in the ordinary course of Borrower's business which meets each of the following
requirements: 

        (a)   it
is not owing to Borrower later than the Business Day immediately following the ninetieth (90th) day after the date of the Pawn Ticket evidencing such
account; 

        (b)   it
is secured pursuant to the relevant Pawn Ticket by goods in the possession of Borrower or by a vehicle for which Borrower holds a title certificate duly endorsed for
transfer; 

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        (c)   the
Pawn Ticket evidencing such Eligible Account has been prominently marked "Collaterally Assigned to Comerica Bank"; 

        (d)   it
is a valid, legally enforceable obligation of the debtor thereunder, and is not subject to any offset, counterclaim or other defense on the part of such debtor or to
any claim on the part of such debtor denying liability thereunder in whole or in part; 

        (e)   it
is not subject to any sale of accounts, any rights of offset, assignment, lien or security interest whatsoever other than to Bank; 

        (f)    it
is not owing by any debtor which is not a natural person; 

        (g)   it
is not owing by a debtor for which Borrower has received a notice of: (i) the death or incompetence of the debtor (ii) the appointment of a receiver for
any part of the property of the debtor, or (iii) an assignment for the benefit of creditors, the filing of a petition under or the commencement of any proceeding under, any Bankruptcy Laws by
or against the debtor. 

        An
Account Receivable which is at any time an Eligible Account, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Account. 

        "Eligible
Other Account" shall mean, with respect to any Eligible Account, as of any date, the amounts accrued and owing to Borrower under the related Pawn Ticket for fees and interest. 

        "Eligible
Principal Account" shall mean, with respect to any Eligible Account, the portion thereof which represents the cash loan or advance made by Borrower to its customer evidenced by
the Pawn Ticket related thereto.2 

        "Eligible
Inventory" shall mean all of Borrower's Inventory which is in good and merchantable condition, excluding: 

        (a)   Inventory
which is not at a Location; 

        (b)   Inventory
covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including without limitation purchase
money security interests) other than those granted in favor of Bank or hereafter consented to by Bank; 

        (c)   Inventory
which is in repair, or on police hold; and 

        (d)   Inventory
which has been owned by Borrower in excess of eighteen (18) months. 

Inventory
shall be valued at of cost (which cost shall be deemed to be (i) in the case of items acquired pursuant to unpaid Pawn Tickets, the principal amount originally evidenced by such Pawn
Ticket and advanced to Borrower's customer with respect to such inventory, and (ii) in the case of any item on lay away, net of any deposits or lay away payments made on the item) and Inventory
which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory. 

        "ERISA"
shall mean the Employee Retirement Income Security Act of 1974 as amended, or any successor act or code. 

        "Event
of Default" shall mean any of those conditions or events listed in Section 7.1 of this Agreement. 

        "Financial
Statements" shall mean all historical balance sheets and earnings statements and other financial data which have been furnished to the Bank for the purposes of, or in
connection with, this Agreement and the transactions contemplated hereby, including without limit balance sheets, statements of income, retained earnings and cash flow, and all footnotes. 

3

 

        "Financing
Statement" shall mean UCC financing statement(s) describing the Bank as secured party and the Borrower as debtor covering the Collateral and otherwise in such form, for filing
in such jurisdictions and with such filing offices, as the Bank shall reasonably deem necessary or advisable. 

        "Fixed
Charge Coverage Ratio" shall mean, as of any applicable date of determination, the ratio of Borrower's (i) EBITDA for the four quarter period ending as of the date of such
determination, less any Capital Expenditures made by it during such period of determination to (ii) the sum of its current maturities on Debt, interest expense and tax liability during the
period of determination, and Capital Lease Obligations payable during such period of determination. 

        "GAAP"
shall mean, as of any applicable date of determination, generally accepted accounting principles consistently applied. 

        "Indebtedness"
shall mean all loans, advances, indebtedness, obligations and liabilities of the Borrower to the Bank under the Notes, this Agreement and the Documents, together with all
other indebtedness, obligations and liabilities whatsoever of the Borrower to the Bank, whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising. 

        "Legal
Rate" shall mean at the particular time in question the maximum rate of interest which, under applicable law, the Bank is then permitted to charge on the Indebtedness. If the
maximum rate of interest which, under applicable law, the Bank is permitted to charge on the Indebtedness shall change after the date hereof, the Legal Rate shall be automatically increased or
decreased, as the case may be, from time to time as of the effective time of each change in the Legal Rate without notice to the Borrower. 

        "Loan"
shall mean, individually and/or collectively as the context may require, the Advances evidenced by the Note. 

        "Location"
shall mean each of the Borrower's locations for transacting business listed on Exhibit "C" hereto. 

        "Maturity
Date" shall mean December 31, 2003. 

        "Net
Income" shall mean the net income (or loss) of a person for any period determined in accordance with GAAP. 

        "Net
Proceeds" shall mean, with respect to any sale or disposal of any assets of Borrower, the net proceeds of such event after reasonable expenses associated with such sale or disposal
(including reasonable commissions, legal and accounting fees and expenses). 

        "Net
Worth" shall mean, as of the date of any determination thereof, the sum of Borrower's shareholders' equity, determined in accordance with GAAP plus the principal amount of any
Subordinate Debt then outstanding, plus Borrower's Series A Preferred Stock. 

        "Note"
shall mean the promissory note executed and delivered by each Borrower to Bank pursuant to Section 2.3 of this Agreement in the form of Exhibit "A" to this Agreement. 

        "Pawn
Ticket" shall mean, for each Eligible Account, a duly executed and completed pawn ticket in the form of one of the pawn ticket formats attached as Exhibit "D" hereto. 

        "PBGC"
shall mean the Pension Benefit Guaranty Corporation or any person succeeding to the present powers and functions of the Pension Benefit Guaranty Corporation. 

        "Permitted
Liens" shall mean: 

        (a)   Liens
and encumbrances in favor of the Bank; 

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        (b)   Liens
for taxes, assessments or other governmental charges incurred in the ordinary course of business and for which no interest, late charge or penalty is attaching or
which is being contested in good faith by appropriate proceedings and, if requested by the Bank, bonded in an amount and manner satisfactory to the Bank; 

        (c)   Liens,
not delinquent, created by statute in connection with worker's compensation, unemployment insurance, social security and similar statutory obligations; 

        (d)   Liens
of mechanics, materialmen, carriers, warehousemen or other like statutory or common law liens securing obligations incurred in good faith in the ordinary course of
business that are not yet due and payable; and 

        (e)   Encumbrances
consisting of existing or future zoning restrictions, existing recorded rights-of-way, existing recorded easements, existing
recorded private restrictions or existing or future public restrictions on the use of real property, none of which materially impairs the use of such property in the operation of the business for
which it is used and none of which is violated in any material respect by any existing or proposed structure or land use; and 

        (f)    Purchase
money security interests securing indebtedness or lease obligations incurred in connection with Borrower's purchases or leases of fixed assets, to the extent
that the aggregate amount of such obligations at any time outstanding does not excess Five Hundred Thousand Dollars ($500,000). 

        "Person"
or "person" shall mean any individual, corporation, partnership, joint venture, association, trust, unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity. 

        "Prime-based
Loan" shall mean a Loan at any time during such Loan bears interest at a Prime-based Rate. 

        "Prime-based
Rate" shall mean the Prime Rate in effect from time to time plus two percent (2.0%). 

        "Prime
Rate" shall mean that annual rate of interest designated by the Bank as its prime rate, which rate may not be the lowest rate of interest charged by the Bank to any of its
customers, and which rate is changed by the Bank from time to time. 

        "Request
for Loan" shall mean a request for loan delivered by Borrower to Bank in the form of Exhibit "B" to this Agreement, pursuant to Section 2.2 of this Agreement. 

        "Revolving
Loan" or "Revolving Loans" shall mean the revolving credit loans to be advanced to Borrower pursuant to Section 2.2 hereof. 

        "Revolving
Maximum" shall mean, as of any date, the lesser of: (a) the Commitment Amount, or (b) the Borrowing Base Amount. 

        "Security
Agreements" shall mean the Security Agreement by Borrower pursuant to which each Borrower grants to the Bank a first priority security interest in all Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, the Time Deposit, Machinery and Equipment of each Borrower, wherever located and whether now owned or hereafter
acquired, together with all replacements thereof, substitutions therefor, accessions thereto and all proceeds and products of all the foregoing. 

        "Subordinate
Debt" shall mean indebtedness of Borrower payment of which, and any security for which, is made subordinate to Borrower's indebtedness to Bank and liens and security
interests granted to Bank pursuant to a written subordination agreement in form and context satisfactory to Bank. 

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        "Store
Contribution" shall mean for any Location, total store revenues generated at such Location less direct operating expenses for such Location determined in a manner consistent with
those used by Borrower in preparation of its Securities and Exchange Commission filings and press releases as of the date of this Agreement. 

        "Tangible
Net Worth" shall mean, as of the date of any determination thereof, (i) Borrower's Net Worth, minus (ii) the amount of all assets classified as intangible assets
(including goodwill, trade names, trade marks, patents, copyrights and unamortized debt discount and expense), all determined in accordance with GAAP. 

        "Time
Deposit" shall mean all of Xponential, Inc.'s right, title and interest in the time deposit account denominated as account no. BJX-169293 maintained at Comerica
Securities, Inc. and all cash, securities, bonds, investment property or financial assets now or hereafter deposited or maintained in, or credited to, such account, and any and all securities
accounts in substitution or replacement thereof 

        "UCC"
shall mean the Uniform Commercial Code in effect with respect to the jurisdictions of the various Locations. 

        1.2    Accounting Terms.    All accounting terms not specifically defined in this Agreement shall be construed in
accordance with GAAP. 

        1.3    Singular and Plural.    Where the context herein requires, the singular number shall be deemed to include the
plural, the masculine gender shall include the feminine and neuter genders, and vice versa. 

	2.
	COMMITMENT,
INTEREST AND FEES 

        2.1    Loans.    Subject to the terms and conditions of this Agreement, the Bank agrees to make Advances to the
Borrower from the date hereof until the Maturity Date, in aggregate principal amount at any time outstanding not to exceed the Revolving Maximum. 

        2.2    Requests for Loans.    Borrower may request an Advance by delivery to Bank of a Request for Loan executed by an
authorized officer Borrower and subject to the following: 

        (a)   each
such Request for Loan shall set forth the information required on the Request for Loan form; 

        (b)   each
such Request for Loan shall be delivered to Bank by 10:00 a.m. (Detroit time) on such proposed date; and 

        (c)   each
Request for Loan shall constitute a certification by the Borrower as of the date thereof that all of the conditions set forth in Article 3 hereof are
satisfied as of the date of such request and shall be satisfied as of the date such Advance is requested. 

        2.3    Note.    The Revolving Loan shall be evidenced by a Note in the form of Exhibit "A" hereto executed by
Borrower. 

        2.4    Payments of Principal.    The principal of the Note shall be payable (unless sooner accelerated pursuant to the
terms of this Agreement) on the Maturity Date, when the entire balance then outstanding and all accrued and unpaid interest thereon, shall be due and payable. 

        2.5    Interest.    The principal balance of each Advance from time to time outstanding under each Note shall bear
interest at the Applicable Interest Rate. Interest shall be payable on all Advances, monthly, on the first Business Day of each month, commencing on June 1, 2003. 

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        2.6    Preparation and Closing Fees.    Borrower shall pay to the Bank a Forty Five Thousand Dollars ($45,000) closing
fee, which fee shall be partially paid in the amount of Twenty Five Thousand Dollars ($25,000) at closing, with the remaining Twenty Thousand Dollars ($20,000) to be paid on or before
August 18, 2003 and shall not be refundable under any circumstance. Notwithstanding the foregoing, Bank agrees to waive payment of the Twenty Thousand Dollars closing fee in the event the
credit facility is fully terminated and the Loan together with interest, fees and all other obligations incurred hereunder or under the Documents are paid in full on or before August 18, 2003.
Borrower shall also pay to the Bank the amount of the expenses (including without limit reasonable attorneys' fees, whether of inside or outside counsel, and disbursements) incurred by the Bank in
connection with the preparation and closing of this Agreement and related instruments and/or making of advances hereunder, including but not limited to costs to conduct audits, monitoring and
appraisals. 

        2.7    Basis of Computation.    The amount of all interest and fees hereunder shall be computed for the actual number
of days elapsed on the basis of a year consisting of three hundred sixty (360) days. 

        2.8    Basis of Payments.    All sums payable by Borrower to the Bank under this Agreement or the other documents
contemplated hereby shall be paid directly to the Bank at its office set forth in Section 8.10 hereof in immediately available United States funds, without set off, deduction or counterclaim.
Borrower hereby authorizes and requests Bank to debit each Borrower's checking or deposit or other accounts with the Bank for all or a part of any such amounts when due, provided, however, that this
authorization shall not affect each Borrower's obligation to pay, when due, any Indebtedness whether or not account balances are sufficient to pay amounts due. 

        2.9    Receipt of Payments.    Any payment of the Indebtedness made by mail will be deemed tendered and received only
upon actual receipt by the Bank at the address designated for such payment, whether or not the Bank has authorized payment by mail or any other manner, and shall not be deemed to have been made in a
timely manner unless received on the date due for such payment, time being of the essence. Each Borrower expressly assumes all risks of loss or liability resulting from non-delivery or
delay of delivery of any item of payment transmitted by mail or in any other manner. Acceptance by the Bank of any payment in an amount less than the amount then due shall be deemed an acceptance on
account only. 

        2.10    Default Interest.    Notwithstanding anything herein to the contrary, in the event and so long as an Event of
Default shall exist, all principal outstanding under the Note shall bear interest, payable on demand, from the date of such Event of Default at a rate per annum equal to three percent (3%) above the
Prime-base Rate. 

        2.11    Collateral Monitoring Fee.    Borrower shall pay Bank monthly, on the first Business Day of each month, a
collateral monitoring fee equal to Five Hundred Dollars ($500) for each Revolving Loan. 

        2.12    Commitment Reduction.    Upon at least three (3)Business Days prior written notice to Bank, Borrower may
permanently reduce the Commitment Amount, in whole or part provided that: 

        (a)   each
partial reduction of the Commitment Amount shall be in an amount of One Million Dollars ($1,000,000) or a greater integral multiple thereof; and 

        (b)   the
Borrower shall prepay the Loan in the amount, if any, by which the aggregate amount of Loan then outstanding would otherwise exceed the Commitment Amount as reduced,
together with interest thereon to the date of prepayment. 

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        2.13    Use of Proceeds.    Proceeds of Advances under the Note shall be available for Borrower: (x) in initial
Advances to be made as of the date of this Agreement for the purpose of repaying amounts outstanding under the Revolving Note in the principal amount of $4,500,000 dated as of August 30, 2002
made by Xponential, Inc. (f/k/a Pawnmart, Inc., a Delaware Corporation) to Bank, (y) in subsequent Advances for the purpose of satisfying working capital and general corporate
needs of Borrower. 

	3.
	CONDITIONS
PRECEDENT TO OBLIGATIONS OF BANK 

        The
obligations of the Bank under this Agreement are subject to the satisfaction of each of the following conditions: 

        3.1    Documents Executed and Filed.    Borrower shall have executed (or caused to be executed) and delivered to the
Bank and, as appropriate, there shall have been filed or recorded with such filing or recording offices as the Bank shall deem appropriate, the following: 

        (a)   The
Note; 

        (b)   The
Security Agreement; 

        (c)   The
Account Control Agreement; 

        (d)   The
Financing Statement; and 

        (e)   Acknowledgements
of Borrower's landlords with respect to each Location, together with true copies of each Lease for such Locations. 

        3.2    Certified Resolutions.    Each Borrower shall have furnished to the Bank a copy of resolutions of the Board of
Directors of the relevant Borrower authorizing the execution, delivery and performance of this Agreement, the borrowing hereunder, the Note and the Documents to which each Borrower is a party, which
shall have been certified by the Secretary or Assistant Secretary of the relevant Borrower as being complete, accurate and in effect. 

        3.3    Certified Articles.    Each Borrower shall have furnished to the Bank a copy of the Articles of Incorporation
including all amendments thereto and restatements thereof, and all other charter documents of the relevant Borrower, which shall have been certified by the jurisdiction of organization of the
respective parties thereto. 

        3.4    Certified Bylaws.    Each Borrower shall have furnished to the Bank a copy of the Bylaws of the relevant
Borrower, including all amendments thereto and restatements thereof, which shall have been certified by the Secretary or Assistant Secretary of the relevant Borrower, as being complete, accurate and
in effect. 

        3.5    Certificate of Good Standing.    Each Borrower shall have furnished to the Bank a certificate of good standing
with respect to the relevant Borrower certified by the Secretary of State of the jurisdiction of its incorporation and any other jurisdiction in which the relevant Borrower transacts business. 

        3.6    Certificate of Incumbency.    Each Borrower shall have furnished to the Bank a certificate of the Secretary or
Assistant Secretary of the relevant Borrower, as to the incumbency and signatures of the officers of the relevant Borrower signing this Agreement, the Note and Documents. 

        3.7    UCC Lien Search.    The Bank shall have received UCC record and copy searches, evidencing the appropriate
filing and recording of the Financing Statement and disclosing no notice of any liens or encumbrances filed against any of the Collateral. 

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        3.8    Casualty Insurance.    Each Borrower shall have furnished to the Bank, in form, content and amounts and with
companies satisfactory to the Bank, casualty insurance policies with loss payable clauses in favor of the Bank, relating to the assets and properties (including, but not limited to, the Collateral) of
each Borrower. 

        3.9    Opinion of Counsel.    Each Borrower shall have caused its legal counsel to deliver to Bank a legal opinion
covering such matters as Bank shall require, and otherwise in form and content satisfactory to Bank. 

        3.10    Approval of Bank Counsel.    All actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all other related legal matters shall have been satisfactory to and approved by legal counsel for the Bank, and said counsel shall
have been furnished with such certified copies of actions and proceedings and such other instruments and documents as they shall have reasonably requested. 

        3.11    Remittance Basis Loans.    Each Borrower agrees that, with respect to indebtedness of Borrower in excess of
Five Thousand Dollars ($5,000) hereunder and under the Loans, it shall at its sole expense establish and maintain: (i) a United States Post Office lock box (the "Lock Box"), to which Bank shall
have exclusive access and control. Each Borrower expressly authorizes Bank, from time to time, to remove contents from the Lock Box, for disposition in accordance with this Agreement. Each Borrower
agrees to notify all account debtors and other parties obligated to each Borrower that all payments made to the relevant Borrower (other than payments by electronic funds transfer) shall be remitted,
for the credit of the relevant Borrower, to the Lock Box, and the relevant Borrower shall include a like statement on all invoices; and (ii) a non-interest bearing deposit account
with Bank which shall be titled as designated by Bank (the "Cash Collateral Account") to which Bank shall have exclusive access and control. Each Borrower agrees to notify all account debtors and
other parties
obligated to each Borrower that all payments made to the relevant Borrower by electronic funds transfer shall be remitted to the Cash Collateral Account, and each Borrower, at Bank's request, shall
include a like statement on all invoices. Each Borrower shall execute all documents and authorizations as required by Bank to establish and maintain the Lock Box and the Cash Collateral Account. Each
Borrower acknowledges that all items or amounts which are remitted to the Lock Box, to the Cash Collateral Account, or otherwise delivered by or for the benefit of the relevant Borrower to Bank on
account of partial or full payment of, or with respect to, any Collateral shall, at Bank's option, (i) be applied to the payment of the indebtedness of each Borrower hereunder after three days'
clearance, whether then due or not, in such order or at such time of application as Bank may determine in its sole discretion, or, (ii) be deposited to the Cash Collateral Account. 

        3.12    Bank Accounts.    Borrower shall have established with Bank, deposit accounts for all of its accounts and such
lock box, dominion of funds and cash collateral accounts or arrangements as required by Bank in order to establish and maintain the Loans on a "remittance basis" to which collection of each Borrower's
accounts receivable shall be automatically applied in reduction of the outstanding balances of the Loan and any fees or expenses payable hereunder. 

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	4.
	WARRANTIES
AND REPRESENTATIONS 

        On
a continuing basis from the date of this Agreement until the Indebtedness is paid in full and each Borrower has performed all of its other obligations hereunder, each Borrower
represents and warrants that: 

        4.1    Corporate Existence and Power.    (a) Each Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation; (b) it has the power and authority to own its properties and assets and to carry out its business as now being
conducted and is qualified to do business and in good standing in every jurisdiction wherein such qualification is necessary and (c) each Borrower has the power and authority to execute,
deliver and perform this Agreement, to borrow money in accordance with its terms, to execute, deliver and perform the Note and other Documents to which it is party and to grant to the Bank liens and
security interests in the Collateral as hereby contemplated and to do any and all other things required of it hereunder. 

        4.2    Authorization and Approvals.    The execution, delivery and performance of this Agreement, the borrowings
hereunder and the execution, delivery and performance of the Note, the other Documents: (a) have been duly authorized by all requisite corporate action of each Borrower (b) except for
the filing of the Financing Statement, do not require registration with or consent or approval of, or other action by, any federal, state or other governmental authority or regulatory body,
(c) will not violate any provision of law, any order of any court or other agency of government, the Certificate of Incorporation or Bylaws of any Borrower, any provision of any indenture,
note, agreement or other instrument to which any of them are a party, or by which any of their properties or assets are bound, (d) will not be in conflict with, result in a breach of or
constitute (with or without notice or passage of time) a default under any such indenture, note, agreement or other instrument, and (e) will not result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of any Borrower, other than in favor of the Bank and as contemplated hereby. 

        4.3    Valid and Binding Agreement.    This Agreement and the Documents will be, when delivered, valid and binding
obligations of each Borrower, in accordance with its respective terms except to the extent enforceability thereof may be limited under applicable bankruptcy, moratorium, insolvency, rearrangement,
reorganization or similar debtor relief laws affecting the rights of creditors generally from time to time in effect. 

        4.4    Actions, Suits or Proceedings.    There are no actions, suits or proceedings, at law or in equity, and no
proceedings before any arbitrator or by or before any governmental commission, board, bureau, or other administrative agency, pending, or, to the best knowledge of any Borrower, threatened against or
affecting a Borrower or any properties or rights of a Borrower which, if adversely determined, could materially impair the right of it to carry on its business substantially as now conducted or could
have a material adverse effect upon its financial condition. 

        4.5    No Liens, Pledges, Mortgage or Security Interests.    Except for Permitted Liens, none of the Borrower's assets
and properties, including without limit the Collateral, are subject to any mortgage, pledge, lien, security interest or other encumbrances of any kind or character other than in favor of Bank and the
Permitted Liens. 

10

 

        4.6    Accounting Principles.    All consolidated and consolidating balance sheets, earnings statements and other
historical financial data furnished to the Bank for the purposes of, or in connection with, this Agreement and the transactions contemplated by this Agreement, have been prepared in accordance with
GAAP, and do or will fairly present the financial condition of the relevant Borrower, as of the dates, and the results of its operations for the periods, for which the same are furnished to the Bank.
Without limiting the generality of the foregoing, the annual and quarterly Financial Statements have been prepared in accordance with GAAP (except as disclosed therein) and the monthly Financial
Statements have been prepared in a manner consistent with the calculations used in quarterly Financial Statements, and all of them fairly present the financial condition of each Borrower as of the
dates, and the results of its operations for the fiscal periods, for which the same are furnished to the Bank. Borrower has no material contingent obligations, liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, the Financial Statements. 

        4.7    Financial Condition.    Each Borrower is solvent, able to pay its respective debts as they mature, has capital
sufficient to carry on its business and has assets the fair market value of which exceed its liabilities, and a Borrower will not be rendered insolvent, under-capitalized or unable to pay maturing
debts by the execution or performance of this Agreement or the other documents contemplated hereby. There has been no material adverse change in the business, properties or condition (financial or
otherwise) of any Borrower since the date of the latest of the Financial Statements. 

        4.8    Taxes.    Each Borrower has filed by the due date therefor all federal, state and local tax returns and other
reports it is required by law to file, has paid or caused to be paid all taxes, assessments and other governmental charges that are shown to be due and payable under such returns, and has made
adequate provision for the payment of such taxes, assessments or other governmental charges which have accrued but are not yet payable except to the extent such taxes have been adequately reserved
against by a Borrower and the delay in payment thereof will not result in imposition of penalties in excess of Fifteen Thousand Dollars ($15,000). Borrower has no knowledge of any deficiency or
assessment in connection with any taxes, assessments or other governmental charges not adequately disclosed in the Financial Statements. 

        4.9    Compliance with Laws.    Each Borrower has complied with all applicable laws, to the extent that failure to
comply would materially interfere with the conduct of the business of a Borrower as presently conducted. 

        4.10    Indebtedness.    Except as permitted under Section 6.4  hereof, Borrower has no indebtedness for money borrowed or any
direct or indirect obligations under any leases (whether or not required to be capitalized under GAAP) or any
agreements of guarantee or surety except for the endorsement of negotiable instruments by a Borrower in the ordinary course of business for deposit or collection. 

        4.11    Material Agreements.    Except as disclosed on Schedule 4.11  attached hereto, Borrower has no material leases,
contracts or commitments of any kind (including, without limitation, employment agreements, collective bargaining agreements,
powers of attorney, distribution contracts, patent or trademark licenses, bonus, pension and retirement plans, or accrued vacation pay, insurance and welfare agreements); to the best knowledge of each
Borrower, all parties to such agreements have complied with the provisions of such leases, contracts or commitments; and to the best knowledge of each Borrower, no party to such agreements is in
default thereunder, nor has there occurred any event which with notice or the passage of time, or both, would constitute such a default. 

        4.12    Margin Stock.    Borrower is not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any Loan hereunder will be used, directly or indirectly, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. 

11

 

        4.13    Pension Funding.    Borrower has not incurred any accumulated funding deficiency within the meaning of ERISA
or incurred any liability to the PBGC in connection with any employee benefit plan established or maintained by a Borrower and no reportable event or prohibited transaction, as defined in ERISA, has
occurred with respect to such plans. 

        4.14    Misrepresentation.    No warranty or representation by a Borrower contained herein or in any certificate or
other document furnished by a Borrower pursuant hereto contains any untrue statement of material fact or omits to state a material fact necessary to make such warranty or representation not misleading
in light of the circumstances under which it was made. 

        4.15    Hazardous Materials Warranties, Representations and Covenants.    

        (a)   Borrower
is not party to any litigation or administrative proceeding, nor so far as is known by a Borrower, is any litigation or administrative proceeding threatened
against it, which in either case (a) asserts or alleges that a Borrower violated any federal, state or local laws, ordinances, statutes, rules, regulations or judgments governing the use,
storage, transportation, or disposal of Hazardous Materials ("Environmental Laws"), (b) asserts or alleges that a Borrower is required to clean up, remove, or take remedial or other response
action due to the disposal, depositing discharge, leaking or other release of any Hazardous Materials, (c) asserts or alleges that a Borrower is required to pay all or a portion of the cost of
any past, present, or future clean up, removal or remedial or other response action which arises out of or is related to the disposal, depositing, discharge, leaking or other release of any Hazardous
Material by any one of them. 

        (b)   To
the best knowledge of each Borrower, there are no conditions existing currently or likely to exist during the term of this Agreement which would subject a Borrower to
damages, penalties, injunctive relief or clean up costs under any Environmental Laws or which require or are likely to require clean up, removal, remedial action or other response pursuant to
Environmental Laws by a Borrower. 

        (c)   A
Borrower is not subject to any judgment, decree, order or citation related to or arising under the Environmental Laws and a Borrower has not received any notice
("Environmental Complaint") of any violations of Environmental Laws (and, within five days of receipt of any Environmental Complaint a Borrower shall deliver to the Bank a copy thereof), and to the
best of each Borrower's knowledge, there have been no actions commenced or threatened by any party for noncompliance with any Environmental Laws. 

        (d)   Each
Borrower has all permits, licenses, approvals and other authorizations required under the Environmental Laws. 

        (e)   Each
Borrower covenants and agrees that it shall not use, introduce or maintain Hazardous Materials in any premises which they may from time to time occupy other than in
strict accordance and compliance with Environmental Laws. 

        (f)    Each
Borrower agrees that it shall promptly notify Bank in writing as soon as a Borrower becomes aware of any condition or circumstance which makes the environmental
warranties, representations and covenants contained herein incomplete or inaccurate in any material respect as of any date. 

        (g)   In
the event of any condition or circumstance that makes any environmental representation, warranty or covenant incomplete or inaccurate in any material respect as of
any date, each Borrower shall, at the request of Bank, at the sole expense of Borrower, retain an environmental consultant acceptable to Bank, to conduct a thorough and complete environmental
assessment in respect of any environmental concerns of Bank arising from that changed condition or circumstance. A copy of said assessment will be addressed to Bank and promptly delivered to Bank,
Borrower upon completion. 

12

 

        (h)   In
the event of a violation of Environmental Laws, whether discovered pursuant to an environmental consultant's assessment or otherwise, each Borrower covenants and
agrees to complete all investigations, studies, sampling and testing, and all remedial, removal and other actions necessary to clean up and remove all Hazardous Materials on or affecting premises or
property occupied or used by a Borrower, whether caused by any Borrower or a third party, in accordance with Environmental Laws to the satisfaction of Bank, and in accordance with the directives of
all federal, state, and local governmental authorities. 

        (i)    At
any time a Borrower, directly or indirectly through any professional consultant or other representative, determines to undertake an environmental audit, assessment or
investigation, each Borrower shall promptly provide Bank with written notice of the initiation of the environmental audit/assessment, fully describing the purpose and intended scope of the said
audit/assessment. Upon receipt, each Borrower shall promptly provide Bank copies of all final findings and conclusions of any such environmental investigation. Preliminary findings and conclusions
shall be provided if final reports have not been completed and delivered to Bank within sixty days following completion of the preliminary findings and conclusions. 

        (j)    Each
Borrower hereby indemnifies, saves and holds Bank and any of its past, present and future officers, directors, shareholders, employees, representatives and
consultants harmless from any and all loss damages, suits, penalties, costs, liabilities and expenses (including, but not limited to reasonable investigation, environmental audit(s), and legal
expenses), arising out of any claim, loss or damages of any property, injuries to or death of persons, contamination of or adverse effects on the environment, or any violation of any Environmental
Laws, caused by or in any way related to the real property of a Borrower, or due to any acts of a Borrower or its officers, directors, shareholders, employees, consultants and/or representatives;
provided, however, that the foregoing indemnifications shall not be applicable when arising from events or conditions occurring while the Bank is in sole possession (subject to the rights of any
creditors of a Borrower) of the real property of a Borrower. In no event shall a Borrower be liable hereunder for any loss, damages, suits, penalties, costs, liabilities or expenses arising solely
from any act or willful misconduct or gross negligence of Bank or its agents or employees. It is expressly agreed and understood by each Borrower that the indemnifications granted herein are intended
to protect Bank, its past, present and future officers, directors, shareholders, employees, consultants and representatives from any claims that may arise by reason of any security interest, liens
and/or mortgages granted to Bank, or under any other document or agreement given to secure repayment of the Indebtedness, whether or not such claims arise before or after Bank has foreclosed upon
and/or otherwise becomes the owner of any such property, real or personal. All obligations of indemnity as provided hereunder shall be supported and secured by any Documents executed by a Borrower in
favor of Bank. The indemnifications contained herein extend to shareholders of Bank only, and nothing contained herein shall be construed to prevent Borrower from asserting any claim whatsoever
against any party or entity that occasions any adverse environmental effects or any violation of any Environmental Laws upon or in any way related to the real property of Borrower, whether or not such
party or entity is a shareholder of Bank. 

        (k)   In
the event any mortgage securing the Indebtedness is foreclosed or a Borrower tenders a deed in lieu of foreclosure, each Borrower shall deliver the premises to the
Bank free of any and all Hazardous Materials to the extent necessary so that the condition of the premises shall not be a violation of any Environmental Laws. 

        (l)    The
provisions of this section shall be in addition to any and all other obligations and liabilities each Borrower may have to the Bank at common law or pursuant to any
other agreement and shall survive (i) the repayment of the Indebtedness, (ii) the satisfaction of all of the other obligations of each Borrower hereunder and under the other Documents,
(iii) the discharge of the Mortgage, and (iv) the foreclosure of the Mortgages or acceptance of a deed in lieu thereof. 

13

 

        (m)  "Hazardous
Materials" includes, without limitation, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances
or related materials defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state or local governmental law, ordinance, rule, or regulation. 

	5.
	AFFIRMATIVE
COVENANTS 

        On
a continuing basis from the date of this Agreement until the Indebtedness is paid in full and each Borrower has performed all of its other obligations hereunder, each Borrower
covenants and agrees that it will: 

        5.1    Financial and Other Information.    

        5.1.1    Annual Financial Reports.    Furnish to the Bank, in form and reporting basis satisfactory to the Bank, not
later than one hundred twenty (120) days after the close of each fiscal year of each Borrower (commencing with the June 30, 2003 fiscal year end), on a consolidated and consolidating
basis, financial statements of the Borrower containing the balance sheet of each Borrower of the close of each such fiscal year, statements of income and retained earnings and a statement of cash
flows for each such fiscal year, and such other comments and financial details as are usually included in similar reports. Such reports shall be prepared in accordance with GAAP by independent
certified public accountants of recognized standing selected by a Borrower and acceptable to the Bank and shall contain unqualified opinions as to the fairness of the statements therein contained.
These statements shall be prepared on an audited basis. 

        5.1.2    Monthly Financial Statements.    Furnish to the Bank not later than forty five (45) days after the
close of each month of each fiscal year of the Borrower, unaudited financial statements on a consolidated and consolidating basis containing the balance sheet of each Borrower as of the end of each
such period, statements of income and retained earnings of each Borrower and a statement of cash flows of each Borrower for the portion of the fiscal year up to the end of such period, and such other
comments and financial details as are usually included in similar reports. The statements shall be in such detail as the Bank may reasonably require, and the accuracy of the statements shall be
certified by the chief executive or financial officer of each Borrower. 

        5.1.3    No Default Certificate.    Together with each delivery of the financial statements required by Sections 5.1.1
and 5.1.2 of this Agreement, furnish to the Bank a certificate of its chief executive or financial officer stating that no Event of Default or Default has occurred, or if any such Event of Default or
Default exists, stating the nature thereof, the period of existence thereof and what action each Borrower proposes to take with respect thereto. 

        5.1.4    Accounts.    Furnish to Bank not later than ten (10) days after and as of the end of each month,
agings of the Accounts and a schedule identifying each Eligible Account and identifying for each Eligible Account, the portions thereof which constitute Eligible Principal Accounts and Eligible Other
Accounts. Any such schedule, certificate or report shall be executed by a duly authorized officer of a Borrower and shall be in such form and detail as Bank may specify. 

        5.1.5    Inventory Reports.    Furnish to Bank not later than ten (10) days after and as of the end of each
month, reports as to the amount of Eligible Inventory. The report shall be executed by a duly authorized officer of a Borrower and shall be in such form and detail as Bank may specify. 

14

 

        5.1.6    Borrowing Base Report.    Furnish to the Bank not later than three (3) days after and as of the end of
each week, in form, content, and reporting basis satisfactory to the Bank, a Borrowing Base Amount report. 

        5.1.7    Reports Filed with the SEC.    Furnish to the Bank copies of all reports and information filings by each
Borrower required by the Securities and Exchange Commission ("SEC") on or before the statutory filing date. 

        5.1.8    Annual Financial Projections.    Furnish to the Bank, in form and reporting basis satisfactory to the Bank,
not later than thirty (30) days prior to the commencement of each fiscal year of each Borrower, projected financial statements of each Borrower containing the balance sheet of each Borrower of
the beginning of each such fiscal year, statements of income and retained earnings and a statement of cash flows for each such fiscal year, and such other comments and financial details as are usually
included in similar reports prepared by management of each Borrower utilizing their then current knowledge and reasonable expectations with respect to the periods covered thereby. 

        5.1.9    Adverse Events.    Promptly inform the Bank of the occurrence of any Event of Default or Default, or of any
other occurrence which has or could reasonably be expected to have a materially adverse effect upon each Borrower's business, properties, or financial condition or upon each Borrower's ability to
comply with its obligations under the Documents. 

        5.1.10    Other Information As Requested.    Promptly furnish to the Bank such other information regarding the
operations, business affairs and financial condition of each Borrower and its subsidiaries as the Bank may reasonably request from time to time and permit the Bank, its employees, attorneys and
agents, upon 72 hours prior notice (except in case of emergency or during the existence of an Event of Default) to inspect all of the books, records and properties of each Borrower and its
subsidiaries during normal business hours, including, WITHOUT LIMITATION (i) such CED audits, in form and content satisfactory to Bank at its sole discretion, as are required hereunder,
(ii) such other audits of Inventory and/or Accounts, in form and content satisfactory to Bank in its sole discretion, as Bank may require from time to time to be performed by or on Bank's
behalf, provided that prior to the occurrence of any Event of Default each Borrower shall be responsible for paying the costs of not more than four
(4) such audits of Inventory and/or Accounts per year, (iii) such appraisals and/or valuations of each Borrower's Inventory and/or Collateral, in form and content satisfactory to Bank in
its sole discretion, as Bank may require from time to time to be performed by or on Bank's behalf, with all costs and expenses incurred in connection with the foregoing to be borne solely by Borrower,
(iv) such physical inventory counts of each Borrower's Inventory, in form and content satisfactory to Bank in its sole discretion, as Bank may require from time to time to be performed by each
Borrower with evidence or other confirmation that an independent certified public accountant of recognized standing acceptable to Bank has no reason to dispute the results of such inventory count, and
(v) such other information with respect to the Collateral as Bank may require from time to time in its sole discretion. 

        5.2    Compliance with Borrowing Formula.    In the event that at any time, the aggregate principal amount of Advances
exceeds the Revolving Maximum, immediately pay to Bank for application against such Advances, an amount sufficient to eliminate such excess. 

        5.3    New Locations.    With respect to each Location hereafter acquired or opened by a Borrower, provide Bank with
such Financing Statements, Landlord acknowledgements and other documents as Bank shall require in connection therewith. 

15

 

        5.4    Insurance.    Keep its insurable properties (including but not limited to the Collateral) adequately insured
and maintain (a) insurance against fire and other risks customarily insured against under an "all-risk" policy and such additional risks customarily insured against by companies
engaged in the same or a similar business to that of each Borrower, (b) necessary worker's compensation insurance, (c) public liability and product liability insurance, and
(d) such other insurance as may be required by law or as may be reasonably required in writing by the Bank, all of which Insurance shall be in such amounts, containing such terms, in such form,
for such purposes, prepaid for such time period, and written by such companies as shall be satisfactory to the Bank. All such policies shall contain a provision whereby they may not be canceled or
amended except upon thirty (30) days' prior written notice to the Bank. Each Borrower will promptly deliver to the Bank, at the Bank's request, evidence satisfactory to the Bank that such
insurance has been so procured and, with respect to casualty insurance, made payable to the Bank. If a Borrower fails to maintain satisfactory insurance as herein provided, the Bank shall have the
option to do so, and each Borrower agrees to repay the Bank upon demand, with interest at the Prime-based Rate then in effect for the Revolving, all amounts so expended by the Bank. Each Borrower
hereby appoints the Bank or any employee or agent of the Bank as each Borrower's attorney-in-fact, which appointment is coupled with an interest and irrevocable, and authorizes
the Bank or any employee or agent of the Bank, on behalf of each Borrower, to adjust and compromise any loss under said insurance and to endorse any check or draft payable to a Borrower in connection
with returned or unearned premiums on said insurance or the proceeds of said insurance, and any amount so collected shall be applied toward repair and/or replacement of the Collateral to which such
casualty occurred or satisfaction of the Indebtedness in accordance in accordance with the provisions governing such application in the Documents pursuant to which Bank's Liens on such Collateral were
granted. 

        5.5    Taxes.    Pay in accordance with commercially reasonable practices and within the time that they can be paid
without late charge, penalty or interest all taxes, assessments and similar imposts and charges of every kind and nature lawfully levied, assessed or imposed upon each Borrower, and its property,
except to the extent being contested in good faith and, if requested by the Bank, bonded in an amount and manner satisfactory to the Bank. If a Borrower shall fail to pay such taxes and assessments
within the time they can be paid without penalty, late charge or interest the Bank shall have the option to do so, and each Borrower agrees to repay the Bank upon demand, with interest at the
Prime-based Rate from time to time in effect under the Revolving Note, all amounts so expended by the Bank. 

        5.6    Maintain Corporation and Business.    Do or cause to be done all things necessary to preserve and keep in full
force and effect each Borrower's corporate existence, and material rights and franchises and comply with all material respects with applicable laws, continue to conduct and operate its business
substantially as conducted and operated during the present and preceding calendar year, at all times maintain, preserve and protect all material franchises and trade names and property and keep the
same in good repair, working order and condition, and from time to time make, or cause to be made, all needed and proper repairs, renewals, replacements, betterments and improvements thereto so that
the business carried on in connection therewith may be properly and advantageously conducted at all times. 

16

 

        5.7    ERISA.    (a) At all times meet the minimum funding requirements of ERISA with respect to each
Borrower's employee benefit plans subject to ERISA, (b) promptly after each Borrower knows or has reason to know (i) of the occurrence of any event, which would constitute a reportable
event or prohibited transaction under ERISA, or (ii) that the PBGC or a Borrower has instituted or will institute proceedings to terminate an employee pension plan, deliver to the Bank a
certificate of the chief financial officer of the relevant Borrower setting forth details as to such event or proceedings and the action which the relevant Borrower proposes to take with respect
thereto, together with a copy of any notice of such event which may be required to be filed with the PBGC, and (c) furnish to the Bank (or cause the plan administrator to furnish the Bank) a
copy of the annual return (including all schedules and attachments) for each plan covered by ERISA, and filed with the Internal Revenue Service by the relevant Borrower not later than ten
(10) days after such report has been so filed. 

        5.8    Bond Issuance.    Apply the net proceeds received from the Bond Issuance to reduce the balance outstanding
under the Revolving Loan. 

	6.
	NEGATIVE
COVENANTS 

        On
a continuing basis from the date of this Agreement until the Indebtedness is paid in full and each Borrower has performed all of its other obligations hereunder, each Borrower
covenants and agrees that it will not, without the Bank's prior written consent: 

        6.1    Dividends.    Declare or pay any cash dividends on, or make any other cash distributions (whether by reduction
of capital or otherwise) with respect to any shares of its capital stock, other than dividends payable (a) on Xponential, Inc.'s Series A and B preferred stock which may be
declared and paid by Xponential, Inc. as and when required under Section 2.01 of the Certificate of Designations related thereto and (b) by Pawnmart, Inc. to
Xponential, Inc.; so long as, both at the time of the declaration thereof and after giving effect to the payment of such dividends, no Default or Event of Default shall be existing. 

        6.2    Stock Acquisition.    Purchase, redeem, retire or otherwise acquire any of the shares of its capital stock, or
make any commitment to do so other than purchases, redemptions and acquisitions for amounts not exceeding, (in aggregate) Five Hundred Thousand Dollars ($500,000) made during such times as no Default
or Event of Default is existing. 

        6.3    Liens and Encumbrances.    Create, incur, assume or suffer to exist any mortgage, pledge, encumbrance, security
interest, lien or charge of any kind upon any of its property or assets (including without limit any charge upon property purchased or acquired under a conditional sales or other title retaining
agreement or lease required to be capitalized under GAAP) whether now owned or hereafter acquired, other than: 

        (a)   to
Bank; 

        (b)   Permitted
Liens; and 

        (c)   a
pledge of the capital stock of Pawnmart, Inc. as security for the Bond Issuance. 

        6.4    Indebtedness.    Incur, create, assume or permit to exist any indebtedness or liability on account of deposits
or advances or any indebtedness or liability for borrowed money, or any other indebtedness or liability evidenced by notes, bonds, debentures or similar obligations, or any other indebtedness
whatsoever, except for: 

        (a)   the
Indebtedness; 

        (b)   existing
indebtedness to the extent set forth on attached Schedule 6.4 hereto; 

        (c)   Indebtedness
of Borrower under the Bond Issuance; 

        (d)   indebtedness
secured by Permitted Liens. 

17

 

        6.5    Extension of Credit.    Make loans, advances or extensions of credit to any Person, except (a) loans and
advances to a Borrower's customers evidenced by Pawn Tickets; and (b) advances to employees of a Borrower not exceeding Fifty Thousand Dollars ($50,000) in aggregate at any time outstanding;
and (c) loans to a Borrower's franchisees not to exceed (i) One Hundred Fifty Thousand Dollars ($150,000) in any instance, or (ii) Three Hundred Thousand Dollars ($300,000) during
any fiscal year provided that, promptly upon the making of any such loan, Borrower delivers and collaterally assigns to Bank all of such Borrower's interest in a note evidencing such loan and any
security therefor. 

        6.6    Guarantee Obligations.    Guarantee or otherwise, directly or indirectly, in any way be or become responsible
for obligations of any other Person, whether by agreement to purchase the indebtedness of any other Person, agreement for the furnishing of funds to any other Person through the furnishing of goods,
supplies or services, by way of stock purchase, capital contribution, advance or loan, for the purpose of paying or discharging (or causing the payment or discharge of) the indebtedness of any other
Person, or otherwise, except for the endorsement of negotiable instruments by a Borrower in the ordinary course of business for deposit for collection or in support of the Bond Issuance. 

        6.7    Subordination of Receivables.    Subordinate any indebtedness due to it from a Person to indebtedness of other
creditors of such Person. 

        6.8    Property Transfer, Merger or Lease-Back.    (a) Sell, lease, transfer or otherwise dispose
of properties and asset, having an aggregate book value of more than One Hundred Thousand Dollars ($100,000), (whether in one transaction or in a series of transactions) except as to the sale of
inventory in the ordinary course of business, transfers of assets between Pawnmart, Inc. and Xponential, Inc. and the sale of investment securities held by Xponential, Inc.;
(b) change its name, consolidate with or merge into any other corporation, permit another corporation to merge into it, acquire all or substantially all the properties or assets of any other
Person, enter into any reorganization or recapitalization or reclassify its capital stock, without the prior written consent of the Bank; or (c) enter into any sale-leaseback
transaction. 

        6.9    Pension Plan.    (a) Allow any fact, condition or event to occur or exist with respect to any employee
pension or profit sharing plans established or maintained by it which might constitute grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan,
or (b) permit any such plan to be the subject of termination proceedings (whether voluntary or involuntary) from which termination proceedings there may result a liability of a Borrower to the
PBGC which, in the opinion of the Bank, will have a materially adverse effect upon the operations, business, property, assets, financial condition or credit of a Borrower. 

        6.10    Financial Covenants.    Permit: 

        (a)   The
Fixed Charge Coverage Ratio as of the end of the fiscal quarters of each Borrower set forth below to be less than the ratio identified for such quarters: 

          (i)  quarter
ending March 31, 2003: 0.7:1.0; 

         (ii)  quarter
ending June 30, 2003: 0.8:1.0; 

        (iii)  quarter
ending September 30, 2003: 0.9:1.0; 

        (iv)  quarters
ending December 31, 2003 and thereafter: 1.6:1.0; 

        Compliance
with the foregoing financial covenant shall be tested quarterly on a rolling four (4) quarter basis, commencing with the period beginning January 1, 2003 and
ending March 31, 2003, and monitored monthly by the Bank. 

18

 

        (b)   Tangible
Net Worth to be less than Seven Million Three Hundred Thousand Dollar ($7,300,000). 

        6.11    Acquire/Open Stores.    Purchase or acquire new Locations at any time, without prior written consent of the
Bank. 

	7.
	EVENTS
OF DEFAULT—ENFORCEMENT—APPLICATION OF PROCEEDS 

        7.1    Events of Default.    The occurrence of any of the following events shall constitute an Event of Default
hereunder: 

        7.1.1    Failure to Pay Monies Due.    If any Borrower shall fail to pay, when due, any principal or interest under
any Note or other Indebtedness when due or shall default in an obligation described in Section 5.1 or 5.2 hereof and such failure or default shall continue for a period in excess of three
(3) Business Days after notice by Bank to Borrower thereof. 

        7.1.2    Misrepresentation.    If any warranty or representation in connection with or contained in this Agreement or
any Document, or if any Financial Statements now or hereafter furnished to the Bank by or on behalf of any Borrower, shall prove to be false or misleading in any material respect as of the date made
or deemed made hereunder. 

        7.1.3    Noncompliance with Bank Agreement.    If any Borrower shall fail to perform in the time and manner required
any of its obligations or covenants under, or shall fail to comply with any of the provisions of, this Agreement or any other Document and, in the case of a failure to perform obligations other than
those described in Sections 5.3, 5.4 through 5.8, and Sections 6.1 through 6.11 hereof, such failure shall continue for a period in excess of thirty (30) days after the earlier of Bank's notice
to Borrower thereof or the date a Borrower actually becomes aware thereof. 

        7.1.4    Other Defaults.    If any Borrower shall default in the payment when due of any of its borrowed money
indebtedness (other than to the Bank) in amounts in excess of One Hundred Thousand Dollars ($100,000) or in the observance or performance of any term, covenant or condition in any agreement or
instrument evidencing, securing or relating to such indebtedness, and such default be continued for a period sufficient to permit acceleration of the indebtedness, irrespective of whether any such
default shall be forgiven or waived or there has been acceleration by the holder thereof. 

        7.1.5    Judgments.    If there shall be rendered against any Borrower one or more judgments or decrees involving an
aggregate liability of One Hundred Thousand Dollars ($100,000) or more, which has or have become non-appealable and shall remain undischarged, unsatisfied by insurance and unstayed for
more than thirty (30) days, whether or not consecutive, or if a writ of attachment or garnishment against the property of a Borrower shall be issued and levied in an action claiming One Hundred
Thousand Dollars ($100,000) or more and not released or appealed and bonded in an amount and manner satisfactory to the Bank within thirty (30) days after such issuance and levy. 

        7.1.6    Business Suspension Bankruptcy Etc.    If any Borrower shall voluntarily suspend transaction of its business,
or if any Borrower shall not pay its debts as they mature or shall make a general assignment for the benefit of creditors, or proceedings in bankruptcy, or for reorganization or liquidation of a
Borrower under the Bankruptcy Code or under any other, state federal or other applicable law for the relief of debtors shall be commenced by a Borrower, or shall be commenced against any Borrower and
shall not be discharged within sixty (60) days of commencement, or a receiver, trustee or custodian shall be appointed for a Borrower or for any substantial portion of their respective
properties or assets. 

19

 

        7.1.7    Change of Management or Ownership.    If a majority of the persons serving on the board of directors of a
Borrower as of the date of this Agreement shall cease to serve on such board of directors or if Dwanye Moyer shall cease to be active in the management of Borrower and Bank considers (in its
reasonable discretion) such change to affect materially and adversely the prospects of Borrower. 

        7.1.8    Inadequate Funding or Termination of Employee Benefit Plan.    If a Borrower shall fail to meet its minimum
funding requirements under ERISA with respect to any employee benefit plan established or maintained by it, or if any such plan shall be subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a liability of a Borrower to the PBGC which in the opinion of the Bank will have a materially adverse effect upon the operations,
business, property, assets, financial condition or credit of a Borrower. 

        7.1.9    Occurrence of Certain Reportable Events.    If there shall occur, with respect to any pension plan maintained
by a Borrower any reportable event (within the meaning of Section 4043(b) of ERISA) which the Bank shall determine constitutes a ground for the termination of any such plan, and if such event
continues for thirty (30) days after the Bank gives written notice to the relevant Borrower, provided that termination of such plan or
appointment of such trustee would, in the opinion of the Bank, have a materially adverse effect upon the operations, business, property, assets, financial condition or credit of a Borrower, as the
case may be. 

        7.1.10    Repudiation of Documents.    If any Borrower repudiates, contests, revokes or purports to revoke any of its
obligations to Bank, or any rights or remedies of Bank, under Documents to which they are party. 

        7.2    Acceleration of Indebtedness, Remedies.    Upon the occurrence of an Event of Default, all Indebtedness shall
be due and payable in full immediately (without notice or demand in the case of an Event of Default of the type described in Section 7.1.6 above, and upon written notice from Bank in the case
of any other Event of Default) without presentation, demand, protest, notice of dishonor or other further notice of any kind, all of which are hereby expressly waived, and Bank shall have no further
commitment to make Advances. Unless all of the Indebtedness is then immediately fully paid, the Bank shall have and may exercise any one or more of the rights and remedies for which provision is made
for a secured party under the UCC, under the or for which provision is provided by law or in equity, including, without limitation, the right to take possession and sell, lease or otherwise dispose of
any or all of the Collateral and to set off against the Indebtedness any amount owing by the Bank to Borrower and/or any property of any Borrower in possession of the Bank. Each Borrower agrees, upon
request of the Bank, to assemble the Collateral and make it available to the Bank at any place designated by the Bank. 

20

 

        7.3    Application of Proceeds.    All of the Indebtedness shall constitute one loan secured by the Bank's security
interest in the Collateral and by all other security interests, mortgages, liens, claims, and encumbrances now and from time to time hereafter granted from each Borrower to the Bank. Upon the
occurrence of an Event of Default which is not cured within the cure period, if any, provided under Section 7.1, the Bank may in its sole discretion apply the Collateral to any portion of the
Indebtedness. The proceeds of any sale or other disposition of the Collateral authorized by this Agreement shall be applied by the Bank, first upon all expenses authorized by the UCC or otherwise in
connection with the sale and all reasonable attorneys' fees and legal expenses incurred by the Bank, the balance of the proceeds of such sale or other disposition shall be applied in the payment of
the Indebtedness, first to interest, then to principal, then to other Indebtedness and the surplus, if any, shall be paid over to Borrower or to such other Person or Persons as may be entitled thereto
under applicable law. Each Borrower shall remain liable for any deficiency, which each Borrower shall pay to the Bank immediately upon demand. 

        7.4    Cumulative Remedies.    The remedies provided for herein are cumulative to the remedies for collection of the
Indebtedness as provided by law, in equity or by any Document. Nothing herein contained is intended, nor shall it be construed, to preclude the Bank from pursuing any other remedy for the recovery of
any other sum to which the Bank may be or become entitled for the breach of this Agreement by a Borrower. 

	8.
	MISCELLANEOUS

        8.1    Independent Rights.    No single or partial exercise of any right, power or privilege hereunder, or any delay
in the exercise thereof, shall preclude other or further exercise of the rights of the parties to this Agreement. 

        8.2    Covenant Independence.    Each covenant in this Agreement shall be deemed to be independent of any other
covenant, and an exception illegality in one covenant shall not create an exception or illegality another covenant. 

        8.3    Waivers and Amendments.    No forbearance on the part of the Bank in enforcing any of its rights under this
Agreement or any other Document, nor any renewal, extension or rearrangement of any payment or covenant to be made or performed by any Borrower hereunder, shall constitute a waiver of any of the terms
of this Agreement or of any such right. No Default or Event of Default shall be waived by the Bank except in a writing signed and delivered by an officer of the Bank, and no waiver of any other
Default or Event of Default shall operate as a waiver of any Default or Event of Default or of the same Default or Event of Default on a future occasion. No other amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement or any Note or other Documents shall be effective unless the same shall be in writing and signed and delivered by an officer of the Bank. 

        8.4    Governing Law.    This Agreement, and each and every term and provision hereof, shall be governed by and
construed in accordance with the internal law of the State of Michigan. If any provisions of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid or unenforceable provisions had never been contained herein. Each Borrower hereby consents to the
jurisdiction of the courts of the State of Michigan and to the Federal Courts which include the Eastern District of Michigan and their territorial institutions, for all proceedings relating to the
enforcement hereof or any indebtedness hereunder. 

21

 

        8.5    Survival of Warranties, Etc.    All of Borrower's covenants, agreements, representations and warranties made in
connection with this Agreement and any document contemplated hereby shall survive the borrowing and the delivery of the Notes and shall be deemed to have been relied upon by the Bank, notwithstanding
any investigation heretofore or hereafter made by the Bank. All statements contained in any certificate or other document delivered to the Bank at any time by or on behalf of a Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by a Borrower in connection with this Agreement. 

        8.6    Costs and Expenses.    Each Borrower agrees that it will reimburse the Bank, upon demand, for all reasonable
costs and expenses incurred by the Bank in connection with (i) collecting or attempting to collect the Indebtedness or any part thereof, (ii) maintaining or defending the Bank's security
interests or liens (or the priority thereof), (iii) the enforcement of the Bank's rights or remedies under this Agreement or the other documents contemplated hereby, (iv) the preparation
or making of any amendments, modifications, waivers or consents with respect to this Agreement or the other documents contemplated hereby, and/or (v) any other matters or proceedings arising
out of or in connection with any lending arrangement between the Bank and any Borrower, which costs and expenses include without limit payments made by the Bank for taxes, insurance, assessments, or
other costs or expenses which any Borrower is required to pay under this Agreement or the other documents contemplated hereby, expenses related to the examination of the Collateral, audit expenses,
court costs and reasonable attorneys' fees (whether in-house or outside counsel is used, whether legal assistants are used, and whether such costs are incurred in formal or informal
collection actions, federal bankruptcy proceedings, probate proceedings, on appeal or otherwise), and all other costs and expenses of the Bank incurred in connection with any of the foregoing. 

        8.7    Payments on Saturdays, Etc.    Whenever any payment to be made hereunder shall be stated to be due on a
Saturday, Sunday or any other day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension, if any, shall be included in computing interest in
connection with such payment. 

        8.8    Binding Effect.    This Agreement shall inure to the benefit of and shall be binding upon the parties hereto
and their respective successors and assigns, provided, however, that a Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Bank. 

        8.9    Maintenance of Records.    Each Borrower will keep all of its records concerning its business operations and
accounting at its principal place of business. Each Borrower will give the Bank prompt written notice of any change in its principal place of business, or in the location of its records. 

        8.10    Notices.    All notices and communications provided for herein or in any Document contemplated hereby or
required by law to be given shall be in writing (unless expressly provided to the contrary) and, if personally delivered, effective when delivered at the address below or, in the case of mailing,
effective two (2) days after sending by first class mail, postage prepaid, addressed as follows: (a) If to the Borrower, to: 2175 Old Concord Road SE, Suite 200, Smyrna, Georgia 30080,
Attention: Robert Schleizer, CFO, and (b) if to the Bank, to: Comerica Bank, P.O. Box 4167, Houston, Texas 77210-4167, Attention: Dale Rahlfs, or to such other address as a
party shall have designated to the other in writing in accordance with this section. The giving of at least five (5) days notice before the Bank shall take any action described in any notice
shall conclusively be deemed reasonable for all purposes, provided, that this shall not be deemed to require the Bank to give five day notice or any notice if not specifically required in this
Agreement. 

22

 

        8.11    Interest and Charges.    It is not the intention of any parties to this Agreement to make an agreement in
violation of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Agreement, Bank shall ever be entitled to receive, collect or apply, as interest on the
Obligations, any amount in excess of the Legal Rate. If any Bank ever receives, collects or applies, as interest, any such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal is paid in full, any remaining excess shall be paid to Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Legal Rate, Borrower and the Bank shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as
an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate, allocate and spread in equal parts, the total
amount of interest throughout the entire contemplated term of the Indebtedness so that the interest rate is uniform throughout the entire term of the indebtedness; provided; however, that if the
Indebtedness are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Legal Rate, the
Bank shall refund to Borrower the amount of such excess or credit the amount of such excess against the total principal amount of the Indebtedness owing, and in such event, the Bank shall not be
subject to any penalties provided by any Applicable Law for contracting for, charging or receiving interest in excess of the Legal Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained herein. 

        8.12    Confidentiality.    Bank agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep confidential, in accordance with customary procedures for handling confidential information of this nature and in accordance with
safe and sound banking practices, any non-public information supplied to it by each Borrower pursuant to this Agreement which is identified by each Borrower as being confidential at the
time the same is delivered to Bank, provided that nothing herein shall limit the disclosure of any such information (a) to the extent required by applicable law, (b) to counsel for Bank,
(c) to Bank examiners, auditors or accountants of Bank, (d) in connection with any liquidation to which Bank is a party, provided, further, that, unless specifically prohibited by
applicable law or court order, Bank shall, prior to disclosure thereof, notify each Borrower of any request for disclosure of any such non-public information (i) by any governmental
authority or representative thereof (other than any such request in connection with an examination of such Bank's financial condition by such Governmental authority), or (ii) pursuant to legal
process, or (e) to any assignee or participant (or prospective assignee or participant) so long as such recipient of such confidential information agrees to keep such information confidential. 

        8.13    Counterparts.    This Agreement may be signed in any number of counterparts with the same effect as if the
signatures were upon the same instrument. 

        8.14    Headings.    Article and section headings in this Agreement are included for the convenience of reference only
and shall not constitute a part of this Agreement for any purpose. 

        8.15    Waiver of Jury Trial.    Each Borrower and the Bank hereby
irrevocably waive the right to trial by jury with respect to any and all actions or proceedings at any time in which any Borrower and the Bank are parties arising out of this Agreement or the other
Documents.

23

 

        IN
WITNESS WHEREOF, each Borrower and the Bank have caused this Agreement to be executed by their duly authorized officers as of the day and year first written above. 

	

 	
 	

PAWNMART, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      
 Robert W. Schleizer

Its: Chief Financial Officer
	

 	
 	

XPONENTIAL, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      
 Robert W. Schleizer

Its: Chief Financial Officer
	

 	
 	

COMERICA BANK
	

 	
 	

By:	
 	

/s/  DALE E. RAHLFS      
 Dale E. Rahlfs

Its: Vice President

24

EXHIBIT "A"

REVOLVING NOTE 

	$4,500,000	 	Detroit, Michigan

May    , 2003

        FOR VALUE RECEIVED, on or before the Maturity Date, PAWNMART, INC., a Nevada corporation and  XPONENTIAL,
 INC., a Delaware corporation (collectively, "Company") promises to pay to the order of COMERICA
BANK, a Michigan banking corporation ("Bank") at its main office at One Detroit Center, Detroit, Michigan, in lawful money of the United States of America so much of the
principal sum of FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) as shall have been advanced and then be outstanding hereunder and all the accrued and unpaid interest thereon. 

        Capitalized
terms used herein and not defined to the contrary have the meanings given them in the Revolving Credit Agreement of even date herewith between Company and Bank ("Agreement")
to which reference is hereby made. 

        Interest
on the Advances from time to time outstanding shall bear interest at the Applicable Interest Rate; provided, however, that in the event and so long as there shall exist an Event
of Default, the principal balance from time to time outstanding shall bear interest at the rates provided in Section 2.5 of the Agreement.
Interest shall be computed on the basis of a 360 day year and assessed for the actual number of days elapsed. Interest shall be payable on all Advances, monthly, on the first Business Day of
each month, commencing on June 1, 2003. 

        This
Note is note under which advances, repayments and readvances may be made subject to the terms and conditions of the Agreement. This Note evidences borrowing under, is subject to, is
secured in accordance with, and may be matured under, the terms of the Agreement, to which reference is hereby made. As additional security for this Note, Company grants Bank a lien on all property
and assets including deposits and other credits of the Company, at any time in possession or control of or owing by Bank for any purpose. 

        Company
hereby waives presentment for payment, demand, protest and notice of dishonor and nonpayment of this Note and agrees that no obligation hereunder shall be discharged by reason of
any extension, indulgence, release, or forbearance granted by any holder of this Note to any party now or hereafter liable hereon or any present or subsequent owner of any property, real or personal,
which is now or hereafter security for this Note. Any transferees of, or endorser, guarantor or surety paying this Note in full may succeed to all rights of Bank, and Bank shall be under no further
responsibility for the exercise thereof or the loan evidenced hereby. Nothing herein shall limit any right granted Bank by other instrument or by law. 

        This
Note shall be governed by and construed in accordance with the laws of the State of Michigan. 

	

 	
 	

PAWNMART, INC.
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

	

 	
 	

XPONENTIAL, INC.
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

EXHIBIT "B"

REQUEST FOR LOAN 

        The
undersigned authorized officer of PAWNMART, INC. and XPONENTIAL, INC.
(collectively, "Borrower") hereby submits this Request for Loan to COMERICA BANK ("Bank") pursuant to Section 2.2 of the Revolving Credit
Agreement ("Agreement") dated May 19, 2003 between Company and Bank. 

        Capitalized
terms used herein and not defined to the contrary have meanings given them in the Agreement. 

        Company:
(a) requests an Advance under the Note in the amount of $                        to be made
on                        , 200            , (b) certifies that
all of the
conditions for the Advance requested hereby under the Agreement, are satisfied as of the date hereof and shall be satisfied as of the date for the requested Advance, and (c) directs Bank to
disburse proceeds of the Advance requested hereby as follows: 

	

	

 
	

	

 
	

	

..1

        Executed as of this            day
of                        , 200            . 

	

 	
 	

PAWNMART, INC.
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

	

 	
 	

XPONENTIAL, INC.
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

	1
	If
request is for the renewal or conversion of an existing Advance, identify Advance to be converted by Applicable Interest Rate and Interest Period. 

List
of exhibits and schedules to Revolving Credit Agreement between PawnMart, Inc. and Xponential, Inc. and Comerica Bank dated May 19, 2003 which are not filed herewith: 

	Exhibit	 	Description
	
 C	
 	

List of Locations
	D	 	Pawn Ticket Formats
	
Schedule	
 	

Description
	

4.11	
 	

Material Agreements
	6.4	 	Indebtedness

The registrant will furnish supplementally a copy of any omitted exhibit or schedule to the Securities and Exchange Commission upon request. 

REVOLVING NOTE  

	$4,500,000	 	Detroit, Michigan

May 19, 2003

        FOR VALUE RECEIVED, on or before the Maturity Date, PAWNMART, INC., a Nevada corporation and  XPONENTIAL,
 INC., a Delaware corporation (collectively, "Company") promises to pay to the order of COMERICA
BANK, a Michigan banking corporation ("Bank") at its main office at One Detroit Center, Detroit, Michigan, in lawful money of the United States of America so much of the
principal sum of FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) as shall have been advanced and then be outstanding hereunder and all the accrued and unpaid interest thereon. 

        Capitalized
terms used herein and not defined to the contrary have the meanings given them in the Revolving Credit Agreement of even date herewith between Company and Bank ("Agreement")
to which reference is hereby made. 

        Interest
on the Advances from time to time outstanding shall bear interest at the Applicable Interest Rate; provided, however, that in the event and so long as there shall exist an Event
of Default, the principal balance from time to time outstanding shall bear interest at the rates provided in Section 2.5 of the Agreement.
Interest shall be computed on the basis of a 360 day year and assessed for the actual number of days elapsed. Interest shall be payable on all Advances, monthly, on the first Business Day of
each month, commencing on June 1, 2003. 

        This
Note is note under which advances, repayments and readvances may be made subject to the terms and conditions of the Agreement. This Note evidences borrowing under, is subject to, is
secured in accordance with, and may be matured under, the terms of the Agreement, to which reference is hereby made. As additional security for this Note, Company grants Bank a lien on all property
and assets including deposits and other credits of the Company, at any time in possession or control of or owing by Bank for any purpose. 

        Company
hereby waives presentment for payment, demand, protest and notice of dishonor and nonpayment of this Note and agrees that no obligation hereunder shall be discharged by reason of
any extension, indulgence, release, or forbearance granted by any holder of this Note to any party now or hereafter liable hereon or any present or subsequent owner of any property, real or personal,
which is now or hereafter security for this Note. Any transferees of, or endorser, guarantor or surety paying this Note in full may succeed to all rights of Bank, and Bank shall be under no further
responsibility for the exercise thereof or the loan evidenced hereby. Nothing herein shall limit any right granted Bank by other instrument or by law. 

        This
Note shall be governed by and construed in accordance with the laws of the State of Michigan. 

	

 	
 	

PAWNMART, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      
 Its: Chief Financial Officer
	

 	
 	

XPONENTIAL, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      
 Its: Chief Financial Officer

Comerica

Security Agreement

(All Assets) 

        As
of May 19, 2003, for value received, the undersigned ("Debtor") grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose address is 39200 Six Mile Road, Livonia,
Michigan 48152, Attention: Commercial Loan Documentation, Mail Code 7578, a continuing security interest and lien (any pledge, assignment, security interest or other lien arising hereunder is
sometimes referred to herein as a "security interest") in the Collateral (as defined below) to secure payment when due, whether by stated maturity, demand, acceleration or otherwise, of all existing
and future indebtedness ("Indebtedness") to the Bank of Pawnmart, Inc. ("Borrower") and/or Debtor. Indebtedness includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect, voluntary or involuntary, liquidated or unliquidated, joint or several, known or unknown; any and all obligations or
liabilities for which the Borrower and/or Debtor would otherwise be liable to the Bank were it not for the invalidity or unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or extensions of any of the above; all costs incurred by Bank in establishing, determining, continuing, or defending the
validity or priority of its security interest, or in pursuing its rights and remedies under this Agreement or under any other agreement between Bank and Borrower and/or Debtor or in connection with
any proceeding involving Bank as a result of any financial accommodation to Borrower and/or Debtor; and all other costs of collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and until paid all costs shall bear interest at the highest per annum rate applicable to any of the Indebtedness, but not in
excess of the maximum rate permitted by law. Any reference in this Agreement to attorney fees shall be deemed a reference to reasonable fees, costs, and expenses of both in-house and
outside counsel and paralegals, whether or not a suit or action is instituted, and to court costs if a suit or action is instituted, and whether attorney fees or court costs are incurred at the trial
court level, on appeal, in a bankruptcy, administrative or probate proceeding or otherwise. Debtor further covenants, agrees and represents as follows: 

	1.
	Collateral
shall mean all of the following property Debtor now or later owns or has an interest in, wherever located:

	(a)
	all
Accounts Receivable (for purposes of this Agreement, "Accounts Receivable" consists of all accounts; general intangibles; chattel paper (including without limit electronic chattel
paper and tangible chattel paper); contract rights; deposit accounts; documents; instruments; rights to payment evidenced by chattel paper, documents or instruments; health care insurance receivables;
commercial tort claims; letters of credit; letter of credit rights; supporting obligations; and rights to payment for money or funds advanced or sold),

	(b)
	all
Inventory,

	(c)
	all
Equipment and Fixtures,

	(d)
	all
Software (for purposes of this Agreement, "Software" consists of all (i) computer programs and supporting information provided in connection with a transaction relating to
the program, and (ii) computer programs embedded in goods and any supporting information provided in connection with a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered part of the goods, and whether or not, by becoming the owner of the goods, a person acquires a right to use the program in
connection with the goods, and whether or not the program is embedded in goods that consist solely of the medium in which the program is embedded), 

 

	(e)
	all
of Debtor's right, title and interest in the securities account denominated as account no. BJX-169293 (the "Account") maintained at Comerica Securities, Inc.
and all cash, securities, bonds, investment property or financial assets now or hereafter deposited or maintained in, or credited to, the Account into which Debtor has deposited or will deposit One
Million Two Hundred Thousand Dollars ($1,200,000). Any interest earned with respect to the funds in the Account will not constitute Collateral and Debtor shall be entitled to receive the interest
accrued at any time,

	(f)
	all
goods, instruments, documents, policies and certificates of insurance, deposits, money, investment property or other property (except real property which is not a fixture) which
are now or later in possession or control of Bank, or as to which Bank now or later controls possession by documents or otherwise, other than stock of Pawnmart, Inc. owned by Debtor, and

	(g)
	all
additions, attachments, accessions, parts, replacements, substitutions, renewals, interest, dividends, distributions, rights of any kind (including but not limited to stock
splits, stock rights, voting and preferential rights), products, and proceeds of or pertaining to the above including, without limit, cash or other property which were proceeds and are recovered by a
bankruptcy trustee or otherwise as a preferential transfer by Debtor. 

In
the definition of Collateral, a reference to a type of collateral shall not be limited by a separate reference to a more specific or narrower type of that collateral. 

	2.
	Warranties,
Covenants and Agreements. Debtor warrants, covenants and agrees as follows:

	2.1
	Debtor
shall furnish to Bank, in form and at intervals as Bank may request, any information Bank may reasonably request and allow Bank to examine, inspect, and copy any of Debtor's
books and records. Debtor shall, at the request of Bank, mark its records and the Collateral to clearly indicate the security interest of Bank under this Agreement.

	2.2
	At
the time any Collateral becomes, or is represented to be, subject to a security interest in favor of Bank, Debtor shall be deemed to have warranted that (a) Debtor is the
lawful owner of the Collateral and has the right and authority to subject it to a security interest granted to Bank; (b) none of the Collateral is subject to any security interest other than
that in favor of Bank; (c) there are no financing statements on file, other than in favor of Bank; (d) no person, other than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a security interest may be accomplished by control; and (e) Debtor acquired its rights in the Collateral in the ordinary
course of its business.

	2.3
	Debtor
will keep the Collateral free at all times from all claims, liens, security interests and encumbrances other than those in favor of Bank. Debtor will not, without the prior
written consent of Bank, sell, transfer or lease, or permit to be sold, transferred or leased, any or all of the Collateral, except for Inventory in the ordinary course of its business and will not
return any Inventory to its supplier. Bank or its representatives may at all reasonable times inspect the Collateral and may enter upon all premises where the Collateral is kept or might be located.

	2.4
	Debtor
will do all acts and will execute or cause to be executed all writings requested by Bank to establish, maintain and continue an exclusive, perfected and first security interest
of Bank in the Collateral. Debtor agrees that Bank has no obligation to acquire or perfect any lien on or security interest in any asset(s), whether realty or personalty, to secure payment of the
Indebtedness, and Debtor is not relying upon assets in which the Bank may have a lien or security interest for payment of the Indebtedness. 

2

 

	2.5
	Debtor
will pay within the time that they can be paid without interest or penalty all taxes, assessments and similar charges which at any time are or may become a lien, charge, or
encumbrance upon any Collateral, except to the extent contested in good faith and bonded in a manner satisfactory to Bank. If Debtor fails to pay any of these taxes, assessments, or other charges in
the time provided above, Bank has the option (but not the obligation) to do so and Debtor agrees to repay all amounts so expended by Bank immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Bank on any Indebtedness.

	2.6
	Debtor
will keep the Collateral in good condition and will protect it from loss, damage, or deterioration from any cause. Debtor has and will maintain at all times (a) with
respect to the Collateral, insurance under an "all risk" policy against fire and other risks customarily insured against, and (b) public liability insurance and other insurance as may be
required by law or reasonably required by Bank, all of which insurance shall be in amount, form and content, and written by companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon demand evidence satisfactory to Bank that the required insurance has been procured. If Debtor fails to maintain
satisfactory insurance, Bank has the option (but not the obligation) to do so and Debtor agrees to repay all amounts so expended by Bank immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Bank on any Indebtedness.

	2.7
	On
each occasion on which Debtor evidences to Bank the account balances on and the nature and extent of the Accounts Receivable, Debtor shall be deemed to have warranted that except
as otherwise indicated (a) each of those Accounts Receivable is valid and enforceable without performance by Debtor of any act; (b) each of those account balances are in fact owing,
(c) there are no setoffs, recoupments, credits, contra accounts, counterclaims or defenses against any of those Accounts Receivable, (d) as to any Accounts Receivable represented by a
note, trade acceptance, draft or other instrument or by any chattel paper or document, the same have been endorsed and/or delivered by Debtor to Bank, (e) Debtor has not received with respect
to any Account Receivable, any notice of the death of the related account debtor, nor of the dissolution, liquidation, termination of existence, insolvency, business failure, appointment of a receiver
for, assignment for the benefit of creditors by, or filing of a petition in bankruptcy by or against, the account debtor, and (f) as to each Account Receivable, except as may be expressly
permitted by Bank to the contrary in another document, the account debtor is not an affiliate of Debtor, the United States of America or any department, agency or instrumentality of it, or a citizen
or resident of any jurisdiction outside of the United States. Debtor will do all acts and will execute all writings requested by Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification, compromise or substitution for any Account Receivable without the prior written consent of Bank. Debtor shall, at Bank's request,
arrange for verification of Accounts Receivable directly with account debtors or by other methods acceptable to Bank.

	2.8
	Debtor
at all times shall be in strict compliance with all applicable laws, including without limit any laws, ordinances, directives, orders, statutes, or regulations an object of
which is to regulate or improve health, safety, or the environment ("Environmental Laws"). 

3

 

	2.9
	If
Bank, acting in its sole discretion, redelivers Collateral to Debtor or Debtor's designee for the purpose of (a) the ultimate sale or exchange thereof; or
(b) presentation, collection, renewal, or registration of transfer thereof; or (c) loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing
with it preliminary to sale or exchange; such redelivery shall be in trust for the benefit of Bank and shall not constitute a release of Bank's security interest in it or in the proceeds or products
of it unless Bank specifically so agrees in writing. If Debtor requests any such redelivery, Debtor will deliver with such request a duly executed financing statement in form and substance
satisfactory to Bank. Any proceeds of Collateral coming into Debtor's possession as a result of any such redelivery shall be held in trust for Bank and immediately delivered to Bank for application on
the Indebtedness. Bank may (in its sole discretion) deliver any or all of the Collateral to Debtor, and such delivery by Bank shall discharge Bank from all liability or responsibility for such
Collateral. Bank, at its option, may require delivery of any Collateral to Bank at any time with such endorsements or assignments of the Collateral as Bank may request.

	2.10
	At
any time and without notice, Bank may (a) cause any or all of the Collateral to be transferred to its name or to the name of its nominees; (b) receive or collect by
legal proceedings or otherwise all dividends, interest, principal payments and other sums and all other distributions at any time payable or receivable on account of the Collateral, and hold the same
as Collateral, or apply the same to the Indebtedness, the manner and distribution of the application to be in the sole discretion of Bank; (c) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement or any other agreement relating to or affecting the Collateral, and deposit or surrender control of the Collateral, and accept other property
in exchange for the Collateral and hold or apply the property or money so received pursuant to this Agreement; and (d) take such actions in its own name or in Debtor's name as Bank, in its sole
discretion, deems necessary or appropriate to establish exclusive control (as defined in the Uniform Commercial Code) over any Collateral of such nature that perfection of Bank's security interest may
be accomplished by control.

	2.11
	Bank
may assign any of the Indebtedness and deliver any or all of the Collateral to its assignee, who then shall have with respect to Collateral so delivered all the rights and
powers of Bank under this Agreement, and after that Bank shall be fully discharged from all liability and responsibility with respect to Collateral so delivered.

	2.12
	Debtor
delivers this Agreement based solely on Debtor's independent investigation of (or decision not to investigate) the financial condition of Borrower and is not relying on any
information furnished by Bank. Debtor assumes full responsibility for obtaining any further information concerning the Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate now or later. Debtor waives any duty on the part of Bank, and agrees that Debtor is not relying upon nor expecting Bank to disclose to
Debtor any fact now or later known by Bank, whether relating to the operations or condition of Borrower, the existence, liabilities or financial condition of any guarantor of the Indebtedness, the
occurrence of any default with respect to the Indebtedness, or otherwise, notwithstanding any effect such fact may have upon Debtor's risk or Debtor's rights against Borrower. Debtor knowingly accepts
the full range of risk encompassed in this Agreement, which risk includes without limit the possibility that Borrower may incur Indebtedness to Bank after the financial condition of Borrower, or
Borrower's ability to pay debts as they mature, has deteriorated. 

4

 

	2.13
	Debtor
shall defend, indemnify and hold harmless Bank, its employees, agents, shareholders, affiliates, officers, and directors from and against any and all claims, damages, fines,
expenses, liabilities or causes of action of whatever kind, including without limit consultant fees, legal expenses, and attorney fees, suffered by any of them as a direct or indirect result of any
actual or asserted violation of any law, including, without limit, Environmental Laws, or of any remediation relating to any property required by any law, including without limit Environmental Laws.

	3.
	Collection
of Proceeds.

	3.1
	Debtor
agrees to collect and enforce payment of all Collateral until Bank shall direct Debtor to the contrary. Immediately upon notice to Debtor by Bank and at all times after that,
Debtor agrees to fully and promptly cooperate and assist Bank in the collection and enforcement of all Collateral and to hold in trust for Bank all payments received in connection with Collateral and
from the sale, lease or other disposition of any Collateral, all rights by way of suretyship or guaranty and all rights in the nature of a lien or security interest which Debtor now or later has
regarding Collateral. Immediately upon and after such notice, Debtor agrees to (a) endorse to Bank and immediately deliver to Bank all payments received on Collateral or from the sale, lease or
other disposition of any Collateral or arising from any other rights or interests of Debtor in the Collateral, in the form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or later coming into Debtor's possession through enforcement of Debtor's rights or interests in the Collateral. Debtor
irrevocably authorizes Bank or any Bank employee or agent to endorse the name of Debtor upon any checks or other items which are received in payment for any Collateral, and to do any and all things
necessary in order to reduce these items to money. Bank shall have no duty as to the collection or protection of Collateral or the proceeds of it, nor as to the preservation of any related rights,
beyond the use of reasonable care in the custody and preservation of Collateral in the possession of Bank. Debtor agrees to take all steps necessary to preserve rights against prior parties with
respect to the Collateral. Nothing in this Section 3.1 shall be deemed a consent by Bank to any sale, lease or other disposition of any Collateral.

	3.2
	Debtor
agrees that immediately upon Bank's request (whether or not any Event of Default exists) the Indebtedness shall be on a "remittance basis" as follows: Debtor shall at its sole
expense establish and maintain (and Bank, at Bank's option may establish and maintain at Debtor's expense): (a) an United States Post Office lock box (the "Lock Box"), to which Bank shall have
exclusive access and control. Debtor expressly authorizes Bank, from time to time, to remove contents from the Lock Box, for disposition in accordance with this Agreement. Debtor agrees to notify all
account debtors and other parties obligated to Debtor that all payments made to Debtor (other than payments by electronic funds transfer) shall be remitted, for the credit of Debtor, to the Lock Box,
and Debtor shall include a like statement on all invoices; and (b) a non-interest bearing deposit account with Bank which shall be titled as designated by Bank (the "Cash Collateral
Account") to which Bank shall have exclusive access and control. Debtor agrees to notify all account debtors and other parties obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at Bank's request, shall include a like statement on all invoices. Debtor shall execute all documents and authorizations as
required by Bank to establish and maintain the Lock Box and the Cash Collateral Account. 

5

 

	3.3
	All
items or amounts which are remitted to the Lock Box, to the Cash Collateral Account, or otherwise delivered by or for the benefit of Debtor to Bank on account of partial or full
payment of, or with respect to, any Collateral shall, at Bank's option, (a) be applied to the payment of the Indebtedness, whether then due or not, in such order or at such time of application
as Bank may determine in its sole discretion, or, (b) be deposited to the Cash Collateral Account. Debtor agrees that Bank shall not be liable for any loss or damage which Debtor may suffer as
a result of Bank's processing of items or its exercise of any other rights or remedies under this Agreement, including without limitation indirect, special or consequential damages, loss of revenues
or profits, or any claim, demand or action by any third party arising out of or in connection with the processing of items or the exercise of any other rights or remedies under this Agreement. Debtor
agrees to indemnify and hold Bank harmless from and against all such third party claims, demands or actions, and all related expenses or liabilities, including, without limitation, attorney fees.

	4.
	Defaults,
Enforcement and Application of Proceeds.

	4.1
	Upon
the occurrence of any of the following events (each an "Event of Default"), Debtor shall be in default under this Agreement:

	(a)
	Any
failure to pay the Indebtedness or any other indebtedness when due, or such portion of it as may be due, by acceleration or otherwise; or

	(b)
	Any
failure or neglect to comply with, or breach of or default under, any term of this Agreement, or any other agreement or commitment between Borrower, Debtor, or any guarantor of
any of the Indebtedness ("Guarantor") and Bank; or

	(c)
	Any
warranty, representation, financial statement, or other information made, given or furnished to Bank by or on behalf of Borrower, Debtor, or any Guarantor shall be, or shall prove
to have been, false or materially misleading when made, given, or furnished; or

	(d)
	Any
loss, theft, substantial damage or destruction to or of any Collateral, or the issuance or filing of any attachment, levy, garnishment or the commencement of any proceeding in
connection with any Collateral or of any other judicial process of, upon or in respect of Borrower, Debtor, any Guarantor, or any Collateral; or

	(e)
	Sale
or other disposition by Borrower, Debtor, or any Guarantor of any substantial portion of its assets or property or voluntary suspension of the transaction of business by
Borrower, Debtor, or any Guarantor, or death, dissolution, termination of existence, merger, consolidation, insolvency, business failure, or assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings under any state or federal bankruptcy or insolvency laws or laws for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court appointee, sequestrator or otherwise, for all or any part of the property of Borrower, Debtor, or any Guarantor; or

	(f)
	Bank
deems the margin of Collateral insufficient or itself insecure, in good faith believing that the prospect of payment of the Indebtedness or performance of this Agreement is
impaired or shall fear deterioration, removal, or waste of Collateral; or

	(g)
	A
default shall occur under any instrument, agreement or other document evidencing, securing or otherwise relating to any of the Indebtedness. 

6

 

	4.2
	Upon
the occurrence of any Event of Default, Bank may at its discretion and without prior notice to Debtor declare any or all of the Indebtedness to be immediately due and payable,
and shall have and may exercise any one or more of the following rights and remedies:

	(a)
	Exercise
all the rights and remedies upon default, in foreclosure and otherwise, available to secured parties under the provisions of the Uniform Commercial Code and other applicable
law;

	(b)
	Institute
legal proceedings to foreclose upon the lien and security interest granted by this Agreement, to recover judgment for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any sale of it;

	(c)
	Institute
legal proceedings for the sale, under the judgment or decree of any court of competent jurisdiction, of any or all Collateral; and/or

	(d)
	Personally
or by agents, attorneys, or appointment of a receiver, enter upon any premises where Collateral may then be located, and take possession of all or any of it and/or render
it unusable; and without being responsible for loss or damage to such Collateral, hold, operate, sell, lease, or dispose of all or any Collateral at one or more public or private sales, leasings or
other disposition, at places and times and on terms and conditions as Bank may deem fit, without any previous demand or advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand, any right or equity of redemption, and any obligation of a prospective purchaser or lessee to inquire as to the power and
authority of Bank to sell, lease, or otherwise dispose of the Collateral or as to the application by Bank of the proceeds of sale or otherwise, which would otherwise be required by, or available to
Debtor under, applicable law are expressly waived by Debtor to the fullest extent permitted. 

At
any sale pursuant to this Section 4.2, whether under the power of sale, by virtue of judicial proceedings or otherwise, it shall not be necessary for Bank or a public officer under order of
a court to have present physical or constructive possession of Collateral to be sold. The recitals contained in any conveyances and receipts made and given by Bank or the public officer to any
purchaser at any sale made pursuant to this Agreement shall, to the extent permitted by applicable law, conclusively establish the truth and accuracy of the matters stated (including, without limit,
as to the amounts of the principal of and interest on the Indebtedness, the accrual and nonpayment of it and advertisement and conduct of the sale); and all prerequisites to the sale shall be presumed
to have been satisfied and performed. Upon any sale of any Collateral, the receipt of the officer making the sale under judicial proceedings or of Bank shall be sufficient discharge to the purchaser
for the purchase money, and the purchaser shall not be obligated to see to the application of the money. Any sale of any Collateral under this Agreement shall be a perpetual bar against Debtor with
respect to that Collateral. At any sale or other disposition of Collateral pursuant to this Section 4.2, Bank disclaims all warranties which would otherwise be given under the Uniform
Commercial Code, including without limit a disclaimer of any warranty relating to title, possession, quiet enjoyment or the like, and Bank may communicate these disclaimers to a purchaser at such
disposition. This disclaimer of warranties will not render the sale commercially unreasonable. 

7

 

	4.3
	Debtor
shall at the request of Bank, notify the account debtors or obligors of Bank's security interest in the Collateral and direct payment of it to Bank. Bank may, itself, upon the
occurrence of any Event of Default so notify and direct any account debtor or obligor. At the request of Bank, whether or not an Event of Default shall have occurred, Debtor shall immediately take
such actions as Bank shall request to establish exclusive control (as defined in the Uniform Commercial Code) by Bank over any Collateral which is of such a nature that perfection of a security
interest may be accomplished by control.

	4.4
	The
proceeds of any sale or other disposition of Collateral authorized by this Agreement shall be applied by Bank first upon all expenses authorized by the Uniform Commercial Code and
all reasonable attorney fees and legal expenses incurred by Bank; the balance of the proceeds of the sale or other disposition shall be applied in the payment of the Indebtedness, first to interest,
then to principal, then to remaining Indebtedness and the surplus, if any, shall be paid over to Debtor or to such other person(s) as may be entitled to it under applicable law. Debtor shall remain
liable for any deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees that Bank shall be under no obligation to accept any noncash proceeds in connection with any sale or
disposition of Collateral unless failure to do so would be commercially unreasonable. If Bank agrees in its sole discretion to accept noncash proceeds (unless the failure to do so would be
commercially unreasonable), Bank may ascribe any commercially reasonable value to such proceeds. Without limiting the foregoing, Bank may apply any discount factor in determining the present value of
proceeds to be received in the future or may elect to apply proceeds to be received in the future only as and when such proceeds are actually received in cash by Bank.

	4.5
	Nothing
in this Agreement is intended, nor shall it be construed, to preclude Bank from pursuing any other remedy provided by law for the collection of the Indebtedness or for the
recovery of any other sum to which Bank may be entitled for the breach of this Agreement by Debtor. Nothing in this Agreement shall reduce or release in any way any rights or security interests of
Bank contained in any existing agreement between Borrower, Debtor, or any Guarantor and Bank.

	4.6
	No
waiver of default or consent to any act by Debtor shall be effective unless in writing and signed by an authorized officer of Bank. No waiver of any default or forbearance on the
part of Bank in enforcing any of its rights under this Agreement shall operate as a waiver of any other default or of the same default on a future occasion or of any rights.

	4.7
	Debtor
(a) irrevocably appoints Bank or any agent of Bank (which appointment is coupled with an interest) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's expense, to do any of the following, as
Bank, in its sole discretion, deems appropriate:

	(i)
	to
demand, receive, sue for, and give receipts or acquittances for any moneys due or to become due on any Collateral (including without limit to draft against
Collateral) and to endorse any item representing any payment on or proceeds of the Collateral;

	(ii)
	to
execute and file in the name of and on behalf of Debtor all financing statements or other filings deemed necessary or desirable by Bank to evidence, perfect, or
continue the security interests granted in this Agreement; and

	(iii)
	to
do and perform any act on behalf of Debtor permitted or required under this Agreement. 

8

 

	4.8
	Upon
the occurrence of an Event of Default, Debtor also agrees, upon request of Bank, to assemble the Collateral and make it available to Bank at any place designated by Bank which is
reasonably convenient to Bank and Debtor.

	4.9
	The
following shall be the basis for any finder of fact's determination of the value of any Collateral which is the subject matter of a disposition giving rise to a calculation of any
surplus or deficiency under Section 9.615 (f) of the Uniform Commercial Code (as in effect on or after July 1, 2001): (a) the Collateral which is the subject matter of the
disposition shall be valued in an "as is" condition as of the date of the disposition, without any assumption or expectation that such Collateral will be repaired or improved in any manner;
(b) the valuation shall be based upon an assumption that the transferee of such Collateral desires a resale of the Collateral for cash promptly (but no later than 30 days) following the
disposition; (c) all reasonable closing costs customarily borne by the seller in commercial sales transactions relating to property similar to such Collateral shall be deducted including,
without limitation, brokerage commissions, tax prorations, attorneys' fees, whether inside or outside counsel is used, and marketing costs; (d) the value of the Collateral which is the subject
matter of the disposition shall be further discounted to account for any estimated holding costs associated with maintaining such Collateral pending sale (to the extent not accounted for in
(c) above), and other maintenance, operational and ownership expenses; and (e) any expert opinion testimony given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in appraising property similar to the Collateral and who have conducted and prepared a complete written appraisal of such
Collateral taking into consideration the factors set forth above. The "value" of any such Collateral shall be a factor in determining the amount of proceeds which would have been realized in a
disposition to a transferee other than a secured party, a person related to a secured party or a secondary obligor under Section 9-615(f).

	5.
	Miscellaneous.

	5.1
	Until
Bank is advised in writing by Debtor to the contrary, all notices, requests and demands required under this Agreement or by law shall be given to, or made upon, Debtor at the
first address indicated in Section 5.15 below.

	5.2
	Debtor
will give Bank not less than 90 days prior written notice of all contemplated changes in Debtor's name, location, chief executive office, principal place of business,
and/or location of any Collateral, but the giving of this notice shall not cure any Event of Default caused by this change.

	5.3
	Bank
assumes no duty of performance or other responsibility under any contracts contained within the Collateral.

	5.4
	Bank
has the right to sell, assign, transfer, negotiate or grant participations or any interest in, any or all of the Indebtedness and any related obligations, including without limit
this Agreement. In connection with the above, but without limiting its ability to make other disclosures to the full extent allowable, Bank may disclose all documents and information which Bank now or
later has relating to Debtor, the Indebtedness or this Agreement, however obtained. Debtor further agrees that Bank may provide information relating to this Agreement or relating to Debtor to the
Bank's parent, affiliates, subsidiaries, and service providers.

	5.5
	In
addition to Bank's other rights, any indebtedness owing from Bank to Debtor can be set off and applied by Bank on any Indebtedness at any time(s) either before or after maturity or
demand without notice to anyone. Any such action shall not constitute an acceptance of collateral in discharge of the Indebtedness. 

9

 

	5.6
	Debtor
waives any right to require the Bank to: (a) proceed against any person or property; (b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or otherwise comply with the provisions of Section 9-504 of the Uniform Commercial Code in effect prior to
July 1, 2001 or its successor provisions thereafter; or (c) pursue any other remedy in the Bank's power. Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default, notice of intent to accelerate or demand payment of any Indebtedness, any and all other notices to which the undersigned
might otherwise be entitled, and diligence in collecting any Indebtedness, and agree(s) that the Bank may, once or any number of times, modify the terms of any Indebtedness, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of any or all Indebtedness, or permit Borrower to incur additional Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor unconditionally and irrevocably waives each and every defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of Debtor under this Agreement, and acknowledges that such waiver is by this reference incorporated into each security
agreement, collateral assignment, pledge and/or other document from Debtor now or later securing the Indebtedness, and acknowledges that as of the date of this Agreement no such defense or setoff
exists.

	5.7
	Debtor
waives any and all rights (whether by subrogation, indemnity, reimbursement, or otherwise) to recover from Borrower any amounts paid or the value of any Collateral given by
Debtor pursuant to this Agreement.

	5.8
	In
the event that applicable law shall obligate Bank to give prior notice to Debtor of any action to be taken under this Agreement, Debtor agrees that a written notice given to Debtor
at least ten days before the date of the act shall be reasonable notice of the act and, specifically, reasonable notification of the time and place of any public sale or of the time after which any
private sale, lease, or other disposition is to be made, unless a shorter notice period is reasonable under the circumstances. A notice shall be deemed to be given under this Agreement when delivered
to Debtor or when placed in an envelope addressed to Debtor and deposited, with postage prepaid, in a post office or official depository under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The mailing shall be by overnight courier, certified, or first class mail.

	5.9
	Notwithstanding
any prior revocation, termination, surrender, or discharge of this Agreement in whole or in part, the effectiveness of this Agreement shall automatically continue or
be reinstated in the event that any payment received or credit given by Bank in respect of the Indebtedness is returned, disgorged, or rescinded under any applicable law, including, without
limitation, bankruptcy or insolvency laws, in which case this Agreement, shall be enforceable against Debtor as if the returned, disgorged, or rescinded payment or credit had not been received or
given by Bank, and whether or not Bank relied upon this payment or credit or changed its position as a consequence of it. In the event of continuation or reinstatement of this Agreement, Debtor agrees
upon demand by Bank to execute and deliver to Bank those documents which Bank determines are appropriate to further evidence (in the public records or otherwise) this continuation or reinstatement,
although the failure of Debtor to do so shall not affect in any way the reinstatement or continuation.

	5.10
	This
Agreement and all the rights and remedies of Bank under this Agreement shall inure to the benefit of Bank's successors and assigns and to any other holder who derives from Bank
title to or an interest in the Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal representatives, successors, and assigns of Debtor. Nothing in this Section 5.10 is
deemed a consent by Bank to any assignment by Debtor. 

10

 

	5.11
	If
there is more than one Debtor, all undertakings, warranties and covenants made by Debtor and all rights, powers and authorities given to or conferred upon Bank are made or given
jointly and severally.

	5.12
	Except
as otherwise provided in this Agreement, all terms in this Agreement have the meanings assigned to them in Article 9 (or, absent definition in Article 9, in any
other Article) of the Uniform Commercial Code, as those meanings may be amended, revised or replaced from time to time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without limit as amended by Act No. 348 of the Michigan Public Acts of 2000. Notwithstanding the foregoing, the parties
intend that the terms used herein which are defined in the Uniform Commercial Code have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the Uniform Commercial Code
shall in the future be amended or held by a court to define any term used herein more broadly or inclusively than the Uniform Commercial Code in effect on the date of this Agreement, then such term,
as used herein, shall be given such broadened meaning. If the Uniform Commercial Code shall in the future be amended or held by a court to define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the date of this Agreement, such amendment or holding shall be disregarded in defining terms used in this Agreement.

	5.13
	No
single or partial exercise, or delay in the exercise, of any right or power under this Agreement, shall preclude other or further exercise of the rights and powers under this
Agreement. The unenforceability of any provision of this Agreement shall not affect the enforceability of the remainder of this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or modification of this Agreement shall be effective unless the same shall be in writing and signed by Debtor and an authorized
officer of Bank. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to conflict of laws principles.

	5.14
	To
the extent that any of the Indebtedness is payable upon demand, nothing contained in this Agreement shall modify the terms and conditions of that Indebtedness nor shall anything
contained in this Agreement prevent Bank from making demand, without notice and with or without reason, for immediate payment of any or all of that Indebtedness at any time(s), whether or not an Event
of Default has occurred.

	5.15
	Debtor
represents and warrants that Debtor's exact name is the name set forth in this Agreement. Debtor further represents and warrants the following and agrees that Debtor is, and
at all times shall be, located in the following place [mark applicable provision]: 

	

o	
 	

Debtor is an individual, and Debtor is located (as determined pursuant to the Uniform Commercial Code) at Debtor's principal residence which is (street address, state and county or parish)
:                        .
	

ý	
 	

Debtor is a registered organization which is organized under the laws of one of the states comprising the United States (e.g. corporation, limited partnership, registered limited liability partnership or limited liability company), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) in the state under the laws of which it was organized, which is (street address, state and county or parish)
:                        .
	 	 	 

11

 

	

o	
 	

Debtor is a domestic organization which is not a registered organization under the laws of the United States or any state thereof (e.g. general partnership, joint venture, trust, estate or association), and Debtor is located (as determined pursuant
to the Uniform Commercial Code) at its sole place of business or, if it has more than one place of business, at its chief executive office, which is (street address, state and county or parish)
:                        .
	

o	
 	

Debtor is a registered organization organized under the laws of the United States, and Debtor is located in the state that United States law designates as its location or, if United States law authorizes the Debtor to designate the state for its
location, the state designated by Debtor, or if neither of the foregoing are applicable, at the District of Columbia. Debtor is located (as determined pursuant to the Uniform Commercial Code) at (street address, state and county or parish)
:                        .
	

o	
 	

Debtor is a foreign individual or foreign organization or a branch or agency of a bank that is not organized under the laws of the United States or a state thereof. Debtor is located (as determined pursuant to the Uniform Commercial Code)
at:                        .
	
If Collateral is located at other than the address specified above, such Collateral is located and shall be maintained at
	

STREET ADDRESS
	

CITY, STATE, ZIP CODE, COUNTY
	
Collateral shall be maintained only at the locations identified in this Section 5.15.

	5.16
	A
carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement under the Uniform Commercial Code and may be filed by Bank in any filing
office.

	5.17
	This
Agreement shall be terminated only by the filing of a termination statement in accordance with the applicable provisions of the Uniform Commercial Code, but the obligations
contained in Section 2.13 of this Agreement shall survive termination.

	6.
	DEBTOR
AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

	7.
	Special
Provisions Applicable to this Agreement.

	a.
	Debtor
shall at all times maintain a cash value of not less than One Million Two Hundred Thousand Dollars ($1,200,000) (the "Minimum Amount") in the Account. In the event the balance
in the Account falls below the Minimum Amount, Debtor shall have forty eight (48) hours to increase the balance in the Account to at amount equal to least the Minimum Amount and failure to do
so shall constitute an Event of Default. 

12

 

	b.
	Debtor
shall report the outstanding balance in the Account to Bank on the Borrowing Base Amount report required to be furnished to Bank pursuant to the Revolving Credit Agreement among
Debtor, Borrower and Bank of even date herewith, and deliver such supporting information as Bank may reasonably require. 

	

 	
 	

Debtor:
	

 	
 	

XPONENTIAL, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      

	 	 	 	 	Signature Of:

Its: Chief Financial Officer

MI-02379
(5-01) 

13

Comerica

Security Agreement

(All Assets) 

        As
of May 19, 2003, for value received, the undersigned ("Debtor") grants to Comerica Bank, a Michigan banking corporation ("Bank"), whose address is 39200 Six Mile Road, Livonia,
Michigan 48152, Attention: Commercial Loan Documentation, Mail Code 7578, a continuing security interest and lien (any pledge, assignment, security interest or other lien arising hereunder is
sometimes referred to herein as a "security interest") in the Collateral (as defined below) to secure payment when due, whether by stated maturity, demand, acceleration or otherwise, of all existing
and future indebtedness ("Indebtedness") to the Bank of Xponential, Inc. ("Borrower") and/or Debtor. Indebtedness includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect, voluntary or involuntary, liquidated or unliquidated, joint or several, known or unknown; any and all obligations or
liabilities for which the Borrower and/or Debtor would otherwise be liable to the Bank were it not for the invalidity or unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or extensions of any of the above; all costs incurred by Bank in establishing, determining, continuing, or defending the
validity or priority of its security interest, or in pursuing its rights and remedies under this Agreement or under any other agreement between Bank and Borrower and/or Debtor or in connection with
any proceeding involving Bank as a result of any financial accommodation to Borrower and/or Debtor; and all other costs of collecting Indebtedness, including without limit attorney fees. Debtor agrees
to pay Bank all such costs incurred by the Bank, immediately upon demand, and until paid all costs shall bear interest at the highest per annum rate applicable to any of the Indebtedness, but not in
excess of the maximum rate permitted by law. Any reference in this Agreement to attorney fees shall be deemed a reference to reasonable fees, costs, and expenses of both in-house and
outside counsel and paralegals, whether or not a suit or action is instituted, and to court costs if a suit or action is instituted, and whether attorney fees or court costs are incurred at the trial
court level, on appeal, in a bankruptcy, administrative or probate proceeding or otherwise. Debtor further covenants, agrees and represents as follows: 

	1.
	Collateral
shall mean all of the following property Debtor now or later owns or has an interest in, wherever located:

	(a)
	all
Accounts Receivable (for purposes of this Agreement, "Accounts Receivable" consists of all accounts; general intangibles; chattel paper (including without limit electronic chattel
paper and tangible chattel paper); contract rights; deposit accounts; documents; instruments; rights to payment evidenced by chattel paper, documents or instruments; health care insurance receivables;
commercial tort claims; letters of credit; letter of credit rights; supporting obligations; and rights to payment for money or funds advanced or sold),

	(b)
	all
Inventory,

	(c)
	all
Equipment and Fixtures,

	(d)
	all
Software (for purposes of this Agreement, "Software" consists of all (i) computer programs and supporting information provided in connection with a transaction relating to
the program, and (ii) computer programs embedded in goods and any supporting information provided in connection with a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered part of the goods, and whether or not, by becoming the owner of the goods, a person acquires a right to use the program in
connection with the goods, and whether or not the program is embedded in goods that consist solely of the medium in which the program is embedded),

	(e)
	all
goods, instruments, documents, policies and certificates of insurance, deposits, money, investment property or other property (except real property which is not a fixture) which
are now or later in possession or control of Bank, or as to which Bank now or later controls possession by documents or otherwise, and 

 

	(f)
	all
additions, attachments, accessions, parts, replacements, substitutions, renewals, interest, dividends, distributions, rights of any kind (including but not limited to stock
splits, stock rights, voting and preferential rights), products, and proceeds of or pertaining to the above including, without limit, cash or other property which were proceeds and are recovered by a
bankruptcy trustee or otherwise as a preferential transfer by Debtor. 

        In
the definition of Collateral, a reference to a type of collateral shall not be limited by a separate reference to a more specific or narrower type of that collateral. 

	2.
	Warranties,
Covenants and Agreements. Debtor warrants, covenants and agrees as follows:

	2.1
	Debtor
shall furnish to Bank, in form and at intervals as Bank may request, any information Bank may reasonably request and allow Bank to examine, inspect, and copy any of Debtor's
books and records. Debtor shall, at the request of Bank, mark its records and the Collateral to clearly indicate the security interest of Bank under this Agreement.

	2.2
	At
the time any Collateral becomes, or is represented to be, subject to a security interest in favor of Bank, Debtor shall be deemed to have warranted that (a) Debtor is the
lawful owner of the Collateral and has the right and authority to subject it to a security interest granted to Bank; (b) none of the Collateral is subject to any security interest other than
that in favor of Bank; (c) there are no financing statements on file, other than in favor of Bank; (d) no person, other than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a security interest may be accomplished by control; and (e) Debtor acquired its rights in the Collateral in the ordinary
course of its business.

	2.3
	Debtor
will keep the Collateral free at all times from all claims, liens, security interests and encumbrances other than those in favor of Bank. Debtor will not, without the prior
written consent of Bank, sell, transfer or lease, or permit to be sold, transferred or leased, any or all of the Collateral, except for Inventory in the ordinary course of its business and will not
return any Inventory to its supplier. Bank or its representatives may at all reasonable times inspect the Collateral and may enter upon all premises where the Collateral is kept or might be located.

	2.4
	Debtor
will do all acts and will execute or cause to be executed all writings requested by Bank to establish, maintain and continue an exclusive, perfected and first security interest
of Bank in the Collateral. Debtor agrees that Bank has no obligation to acquire or perfect any lien on or security interest in any asset(s), whether realty or personalty, to secure payment of the
Indebtedness, and Debtor is not relying upon assets in which the Bank may have a lien or security interest for payment of the Indebtedness.

	2.5
	Debtor
will pay within the time that they can be paid without interest or penalty all taxes, assessments and similar charges which at any time are or may become a lien, charge, or
encumbrance upon any Collateral, except to the extent contested in good faith and bonded in a manner satisfactory to Bank. If Debtor fails to pay any of these taxes, assessments, or other charges in
the time provided above, Bank has the option (but not the obligation) to do so and Debtor agrees to repay all amounts so expended by Bank immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Bank on any Indebtedness. 

2

 

	2.6
	Debtor
will keep the Collateral in good condition and will protect it from loss, damage, or deterioration from any cause. Debtor has and will maintain at all times (a) with
respect to the Collateral, insurance under an "all risk" policy against fire and other risks customarily insured against, and (b) public liability insurance and other insurance as may be
required by law or reasonably required by Bank, all of which insurance shall be in amount, form and content, and written by companies as may be satisfactory to Bank, containing a lender's loss payable
endorsement acceptable to Bank. Debtor will deliver to Bank immediately upon demand evidence satisfactory to Bank that the required insurance has been procured. If Debtor fails to maintain
satisfactory insurance, Bank has the option (but not the obligation) to do so and Debtor agrees to repay all amounts so expended by Bank immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Bank on any Indebtedness.

	2.7
	On
each occasion on which Debtor evidences to Bank the account balances on and the nature and extent of the Accounts Receivable, Debtor shall be deemed to have warranted that except
as otherwise indicated (a) each of those Accounts Receivable is valid and enforceable without performance by Debtor of any act; (b) each of those account balances are in fact owing,
(c) there are no setoffs, recoupments, credits, contra accounts, counterclaims or defenses against any of those Accounts Receivable, (d) as to any Accounts Receivable represented by a
note, trade acceptance, draft or other instrument or by any chattel paper or document, the same have been endorsed and/or delivered by Debtor to Bank, (e) Debtor has not received with respect
to any Account Receivable, any notice of the death of the related account debtor, nor of the dissolution, liquidation, termination of existence, insolvency, business failure, appointment of a receiver
for, assignment for the benefit of creditors by, or filing of a petition in bankruptcy by or against, the account debtor, and (f) as to each Account Receivable, except as may be expressly
permitted by Bank to the contrary in another document, the account debtor is not an affiliate of Debtor, the United States of America or any department, agency or instrumentality of it, or a citizen
or resident of any jurisdiction outside of the United States. Debtor will do all acts and will execute all writings requested by Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification, compromise or substitution for any Account Receivable without the prior written consent of Bank. Debtor shall, at Bank's request,
arrange for verification of Accounts Receivable directly with account debtors or by other methods acceptable to Bank.

	2.8
	Debtor
at all times shall be in strict compliance with all applicable laws, including without limit any laws, ordinances, directives, orders, statutes, or regulations an object of
which is to regulate or improve health, safety, or the environment ("Environmental Laws").

	2.9
	If
Bank, acting in its sole discretion, redelivers Collateral to Debtor or Debtor's designee for the purpose of (a) the ultimate sale or exchange thereof; or
(b) presentation, collection, renewal, or registration of transfer thereof; or (c) loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing
with it preliminary to sale or exchange; such redelivery shall be in trust for the benefit of Bank and shall not constitute a release of Bank's security interest in it or in the proceeds or products
of it unless Bank specifically so agrees in writing. If Debtor requests any such redelivery, Debtor will deliver with such request a duly executed financing statement in form and substance
satisfactory to Bank. Any proceeds of Collateral coming into Debtor's possession as a result of any such redelivery shall be held in trust for Bank and immediately delivered to Bank for application on
the Indebtedness. Bank may (in its sole discretion) deliver any or all of the Collateral to Debtor, and such delivery by Bank shall discharge Bank from all liability or responsibility for such
Collateral. Bank, at its option, may require delivery of any Collateral to Bank at any time with such endorsements or assignments of the Collateral as Bank may request. 

3

 

	2.10
	At
any time and without notice, Bank may (a) cause any or all of the Collateral to be transferred to its name or to the name of its nominees; (b) receive or collect by
legal proceedings or otherwise all dividends, interest, principal payments and other sums and all other distributions at any time payable or receivable on account of the Collateral, and hold the same
as Collateral, or apply the same to the Indebtedness, the manner and distribution of the application to be in the sole discretion of Bank; (c) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement or any other agreement relating to or affecting the Collateral, and deposit or surrender control of the Collateral, and accept other property
in exchange for the Collateral and hold or apply the property or money so received pursuant to this Agreement; and (d) take such actions in its own name or in Debtor's name as Bank, in its sole
discretion, deems necessary or appropriate to establish exclusive control (as defined in the Uniform Commercial Code) over any Collateral of such nature that perfection of Bank's security interest may
be accomplished by control.

	2.11
	Bank
may assign any of the Indebtedness and deliver any or all of the Collateral to its assignee, who then shall have with respect to Collateral so delivered all the rights and
powers of Bank under this Agreement, and after that Bank shall be fully discharged from all liability and responsibility with respect to Collateral so delivered.

	2.12
	Debtor
delivers this Agreement based solely on Debtor's independent investigation of (or decision not to investigate) the financial condition of Borrower and is not relying on any
information furnished by Bank. Debtor assumes full responsibility for obtaining any further information concerning the Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate now or later. Debtor waives any duty on the part of Bank, and agrees that Debtor is not relying upon nor expecting Bank to disclose to
Debtor any fact now or later known by Bank, whether relating to the operations or condition of Borrower, the existence, liabilities or financial condition of any guarantor of the Indebtedness, the
occurrence of any default with respect to the Indebtedness, or otherwise, notwithstanding any effect such fact may have upon Debtor's risk or Debtor's rights against Borrower. Debtor knowingly accepts
the full range of risk encompassed in this Agreement, which risk includes without limit the possibility that Borrower may incur Indebtedness to Bank after the financial condition of Borrower, or
Borrower's ability to pay debts as they mature, has deteriorated.

	2.13
	Debtor
shall defend, indemnify and hold harmless Bank, its employees, agents, shareholders, affiliates, officers, and directors from and against any and all claims, damages, fines,
expenses, liabilities or causes of action of whatever kind, including without limit consultant fees, legal expenses, and attorney fees, suffered by any of them as a direct or indirect result of any
actual or asserted violation of any law, including, without limit, Environmental Laws, or of any remediation relating to any property required by any law, including without limit Environmental Laws. 

4

 

	3.
	Collection
of Proceeds.

	3.1
	Debtor
agrees to collect and enforce payment of all Collateral until Bank shall direct Debtor to the contrary. Immediately upon notice to Debtor by Bank and at all times after that,
Debtor agrees to fully and promptly cooperate and assist Bank in the collection and enforcement of all Collateral and to hold in trust for Bank all payments received in connection with Collateral and
from the sale, lease or other disposition of any Collateral, all rights by way of suretyship or guaranty and all rights in the nature of a lien or security interest which Debtor now or later has
regarding Collateral. Immediately upon and after such notice, Debtor agrees to (a) endorse to Bank and immediately deliver to Bank all payments received on Collateral or from the sale, lease or
other disposition of any Collateral or arising from any other rights or interests of Debtor in the Collateral, in the form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or later coming into Debtor's possession through enforcement of Debtor's rights or interests in the Collateral. Debtor
irrevocably authorizes Bank or any Bank employee or agent to endorse the name of Debtor upon any checks or other items which are received in payment for any Collateral, and to do any and all things
necessary in order to reduce these items to money. Bank shall have no duty as to the collection or protection of Collateral or the proceeds of it, nor as to the preservation of any related rights,
beyond the use of reasonable care in the custody and preservation of Collateral in the possession of Bank. Debtor agrees to take all steps necessary to preserve rights against prior parties with
respect to the Collateral. Nothing in this Section 3.1 shall be deemed a consent by Bank to any sale, lease or other disposition of any Collateral.

	3.2
	Debtor
agrees that immediately upon Bank's request (whether or not any Event of Default exists) the Indebtedness shall be on a "remittance basis" as follows: Debtor shall at its sole
expense establish and maintain (and Bank, at Bank's option may establish and maintain at Debtor's expense): (a) an United States Post Office lock box (the "Lock Box"), to which Bank shall have
exclusive access and control. Debtor expressly authorizes Bank, from time to time, to remove contents from the Lock Box, for disposition in accordance with this Agreement. Debtor agrees to notify all
account debtors and other parties obligated to Debtor that all payments made to Debtor (other than payments by electronic funds transfer) shall be remitted, for the credit of Debtor, to the Lock Box,
and Debtor shall include a like statement on all invoices; and (b) a non-interest bearing deposit account with Bank which shall be titled as designated by Bank (the "Cash Collateral
Account") to which Bank shall have exclusive access and control. Debtor agrees to notify all account debtors and other parties obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at Bank's request, shall include a like statement on all invoices. Debtor shall execute all documents and authorizations as
required by Bank to establish and maintain the Lock Box and the Cash Collateral Account. 

5

 

	3.3
	All
items or amounts which are remitted to the Lock Box, to the Cash Collateral Account, or otherwise delivered by or for the benefit of Debtor to Bank on account of partial or full
payment of, or with respect to, any Collateral shall, at Bank's option, (a) be applied to the payment of the Indebtedness, whether then due or not, in such order or at such time of application
as Bank may determine in its sole discretion, or, (b) be deposited to the Cash Collateral Account. Debtor agrees that Bank shall not be liable for any loss or damage which Debtor may suffer as
a result of Bank's processing of items or its exercise of any other rights or remedies under this Agreement, including without limitation indirect, special or consequential damages, loss of revenues
or profits, or any claim, demand or action by any third party arising out of or in connection with the processing of items or the exercise of any other rights or remedies under this Agreement. Debtor
agrees to indemnify and hold Bank harmless from and against all such third party claims, demands or actions, and all related expenses or liabilities, including, without limitation, attorney fees.

	4.
	Defaults,
Enforcement and Application of Proceeds.

	4.1
	Upon
the occurrence of any of the following events (each an "Event of Default"), Debtor shall be in default under this Agreement:

	(a)
	Any
failure to pay the Indebtedness or any other indebtedness when due, or such portion of it as may be due, by acceleration or otherwise; or

	(b)
	Any
failure or neglect to comply with, or breach of or default under, any term of this Agreement, or any other agreement or commitment between Borrower, Debtor, or any guarantor of
any of the Indebtedness ("Guarantor") and Bank; or

	(c)
	Any
warranty, representation, financial statement, or other information made, given or furnished to Bank by or on behalf of Borrower, Debtor, or any Guarantor shall be, or shall prove
to have been, false or materially misleading when made, given, or furnished; or

	(d)
	Any
loss, theft, substantial damage or destruction to or of any Collateral, or the issuance or filing of any attachment, levy, garnishment or the commencement of any proceeding in
connection with any Collateral or of any other judicial process of, upon or in respect of Borrower, Debtor, any Guarantor, or any Collateral; or

	(e)
	Sale
or other disposition by Borrower, Debtor, or any Guarantor of any substantial portion of its assets or property or voluntary suspension of the transaction of business by
Borrower, Debtor, or any Guarantor, or death, dissolution, termination of existence, merger, consolidation, insolvency, business failure, or assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings under any state or federal bankruptcy or insolvency laws or laws for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court appointee, sequestrator or otherwise, for all or any part of the property of Borrower, Debtor, or any Guarantor; or

	(f)
	Bank
deems the margin of Collateral insufficient or itself insecure, in good faith believing that the prospect of payment of the Indebtedness or performance of this Agreement is
impaired or shall fear deterioration, removal, or waste of Collateral; or

	(g)
	A
default shall occur under any instrument, agreement or other document evidencing, securing or otherwise relating to any of the Indebtedness. 

6

 

	4.2
	Upon
the occurrence of any Event of Default, Bank may at its discretion and without prior notice to Debtor declare any or all of the Indebtedness to be immediately due and payable,
and shall have and may exercise any one or more of the following rights and remedies:

	(a)
	Exercise
all the rights and remedies upon default, in foreclosure and otherwise, available to secured parties under the provisions of the Uniform Commercial Code and other applicable
law;

	(b)
	Institute
legal proceedings to foreclose upon the lien and security interest granted by this Agreement, to recover judgment for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any sale of it;

	(c)
	Institute
legal proceedings for the sale, under the judgment or decree of any court of competent jurisdiction, of any or all Collateral; and/or

	(d)
	Personally
or by agents, attorneys, or appointment of a receiver, enter upon any premises where Collateral may then be located, and take possession of all or any of it and/or render
it unusable; and without being responsible for loss or damage to such Collateral, hold, operate, sell, lease, or dispose of all or any Collateral at one or more public or private sales, leasings or
other disposition, at places and times and on terms and conditions as Bank may deem fit, without any previous demand or advertisement; and except as provided in this Agreement, all notice of sale,
lease or other disposition, and advertisement, and other notice or demand, any right or equity of redemption, and any obligation of a prospective purchaser or lessee to inquire as to the power and
authority of Bank to sell, lease, or otherwise dispose of the Collateral or as to the application by Bank of the proceeds of sale or otherwise, which would otherwise be required by, or available to
Debtor under, applicable law are expressly waived by Debtor to the fullest extent permitted. 

At
any sale pursuant to this Section 4.2, whether under the power of sale, by virtue of judicial proceedings or otherwise, it shall not be necessary for Bank or a public officer under order of
a court to have present physical or constructive possession of Collateral to be sold. The recitals contained in any conveyances and receipts made and given by Bank or the public officer to any
purchaser at any sale made pursuant to this Agreement shall, to the extent permitted by applicable law, conclusively establish the truth and accuracy of the matters stated (including, without limit,
as to the amounts of the principal of and interest on the Indebtedness, the accrual and nonpayment of it and advertisement and conduct of the sale); and all prerequisites to the sale shall be presumed
to have been satisfied and performed. Upon any sale of any Collateral, the receipt of the officer making the sale under judicial proceedings or of Bank shall be sufficient discharge to the purchaser
for the purchase money, and the purchaser shall not be obligated to see to the application of the money. Any sale of any Collateral under this Agreement shall be a perpetual bar against Debtor with
respect to that Collateral. At any sale or other disposition of Collateral pursuant to this Section 4.2, Bank disclaims all warranties which would otherwise be given under the Uniform
Commercial Code, including without limit a disclaimer of any warranty relating to title, possession, quiet enjoyment or the like, and Bank may communicate these disclaimers to a purchaser at such
disposition. This disclaimer of warranties will not render the sale commercially unreasonable. 

7

 

	4.3
	Debtor
shall at the request of Bank, notify the account debtors or obligors of Bank's security interest in the Collateral and direct payment of it to Bank. Bank may, itself, upon the
occurrence of any Event of Default so notify and direct any account debtor or obligor. At the request of Bank, whether or not an Event of Default shall have occurred, Debtor shall immediately take
such actions as Bank shall request to establish exclusive control (as defined in the Uniform Commercial Code) by Bank over any Collateral which is of such a nature that perfection of a security
interest may be accomplished by control.

	4.4
	The
proceeds of any sale or other disposition of Collateral authorized by this Agreement shall be applied by Bank first upon all expenses authorized by the Uniform Commercial Code and
all reasonable attorney fees and legal expenses incurred by Bank; the balance of the proceeds of the sale or other disposition shall be applied in the payment of the Indebtedness, first to interest,
then to principal, then to remaining Indebtedness and the surplus, if any, shall be paid over to Debtor or to such other person(s) as may be entitled to it under applicable law. Debtor shall remain
liable for any deficiency, which it shall pay to Bank immediately upon demand. Debtor agrees that Bank shall be under no obligation to accept any noncash proceeds in connection with any sale or
disposition of Collateral unless failure to do so would be commercially unreasonable. If Bank agrees in its sole discretion to accept noncash proceeds (unless the failure to do so would be
commercially unreasonable), Bank may ascribe any commercially reasonable value to such proceeds. Without limiting the foregoing, Bank may apply any discount factor in determining the present value of
proceeds to be received in the future or may elect to apply proceeds to be received in the future only as and when such proceeds are actually received in cash by Bank.

	4.5
	Nothing
in this Agreement is intended, nor shall it be construed, to preclude Bank from pursuing any other remedy provided by law for the collection of the Indebtedness or for the
recovery of any other sum to which Bank may be entitled for the breach of this Agreement by Debtor. Nothing in this Agreement shall reduce or release in any way any rights or security interests of
Bank contained in any existing agreement between Borrower, Debtor, or any Guarantor and Bank.

	4.6
	No
waiver of default or consent to any act by Debtor shall be effective unless in writing and signed by an authorized officer of Bank. No waiver of any default or forbearance on the
part of Bank in enforcing any of its rights under this Agreement shall operate as a waiver of any other default or of the same default on a future occasion or of any rights.

	4.7
	Debtor
(a) irrevocably appoints Bank or any agent of Bank (which appointment is coupled with an interest) the true and lawful attorney of Debtor (with full power of
substitution) in the name, place and stead of, and at the expense of, Debtor and (b) authorizes Bank or any agent of Bank, in its own name, at Debtor's expense, to do any of the following, as
Bank, in its sole discretion, deems appropriate:

	(i)
	to
demand, receive, sue for, and give receipts or acquittances for any moneys due or to become due on any Collateral (including without limit to draft against
Collateral) and to endorse any item representing any payment on or proceeds of the Collateral;

	(ii)
	to
execute and file in the name of and on behalf of Debtor all financing statements or other filings deemed necessary or desirable by Bank to evidence, perfect, or
continue the security interests granted in this Agreement; and

	(iii)
	to
do and perform any act on behalf of Debtor permitted or required under this Agreement. 

8

 

	4.8
	Upon
the occurrence of an Event of Default, Debtor also agrees, upon request of Bank, to assemble the Collateral and make it available to Bank at any place designated by Bank which is
reasonably convenient to Bank and Debtor.

	4.9
	The
following shall be the basis for any finder of fact's determination of the value of any Collateral which is the subject matter of a disposition giving rise to a calculation of any
surplus or deficiency under Section 9.615 (f) of the Uniform Commercial Code (as in effect on or after July 1, 2001): (a) the Collateral which is the subject matter of the
disposition shall be valued in an "as is" condition as of the date of the disposition, without any assumption or expectation that such Collateral will be repaired or improved in any manner;
(b) the valuation shall be based upon an assumption that the transferee of such Collateral desires a resale of the Collateral for cash promptly (but no later than 30 days) following the
disposition; (c) all reasonable closing costs customarily borne by the seller in commercial sales transactions relating to property similar to such Collateral shall be deducted including,
without limitation, brokerage commissions, tax prorations, attorneys' fees, whether inside or outside counsel is used, and marketing costs; (d) the value of the Collateral which is the subject
matter of the disposition shall be further discounted to account for any estimated holding costs associated with maintaining such Collateral pending sale (to the extent not accounted for in
(c) above), and other maintenance, operational and ownership expenses; and (e) any expert opinion testimony given or considered in connection with a determination of the value of such
Collateral must be given by persons having at least 5 years experience in appraising property similar to the Collateral and who have conducted and prepared a complete written appraisal of such
Collateral taking into consideration the factors set forth above. The "value" of any such Collateral shall be a factor in determining the amount of proceeds which would have been realized in a
disposition to a transferee other than a secured party, a person related to a secured party or a secondary obligor under Section 9-615(f).

	5.
	Miscellaneous.

	5.1
	Until
Bank is advised in writing by Debtor to the contrary, all notices, requests and demands required under this Agreement or by law shall be given to, or made upon, Debtor at the
first address indicated in Section 5.15 below.

	5.2
	Debtor
will give Bank not less than 90 days prior written notice of all contemplated changes in Debtor's name, location, chief executive office, principal place of business,
and/or location of any Collateral, but the giving of this notice shall not cure any Event of Default caused by this change.

	5.3
	Bank
assumes no duty of performance or other responsibility under any contracts contained within the Collateral.

	5.4
	Bank
has the right to sell, assign, transfer, negotiate or grant participations or any interest in, any or all of the Indebtedness and any related obligations, including without limit
this Agreement. In connection with the above, but without limiting its ability to make other disclosures to the full extent allowable, Bank may disclose all documents and information which Bank now or
later has relating to Debtor, the Indebtedness or this Agreement, however obtained. Debtor further agrees that Bank may provide information relating to this Agreement or relating to Debtor to the
Bank's parent, affiliates, subsidiaries, and service providers.

	5.5
	In
addition to Bank's other rights, any indebtedness owing from Bank to Debtor can be set off and applied by Bank on any Indebtedness at any time(s) either before or after maturity or
demand without notice to anyone. Any such action shall not constitute an acceptance of collateral in discharge of the Indebtedness. 

9

 

	5.6
	Debtor
waives any right to require the Bank to: (a) proceed against any person or property; (b) give notice of the terms, time and place of any public or private sale of
personal property security held from Borrower or any other person, or otherwise comply with the provisions of Section 9-504 of the Uniform Commercial Code in effect prior to
July 1, 2001 or its successor provisions thereafter; or (c) pursue any other remedy in the Bank's power. Debtor waives notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default, notice of intent to accelerate or demand payment of any Indebtedness, any and all other notices to which the undersigned
might otherwise be entitled, and diligence in collecting any Indebtedness, and agree(s) that the Bank may, once or any number of times, modify the terms of any Indebtedness, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of any or all Indebtedness, or permit Borrower to incur additional Indebtedness, all without notice to Debtor and without affecting in any
manner the unconditional obligation of Debtor under this Agreement. Debtor unconditionally and irrevocably waives each and every defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of Debtor under this Agreement, and acknowledges that such waiver is by this reference incorporated into each security
agreement, collateral assignment, pledge and/or other document from Debtor now or later securing the Indebtedness, and acknowledges that as of the date of this Agreement no such defense or setoff
exists.

	5.7
	Debtor
waives any and all rights (whether by subrogation, indemnity, reimbursement, or otherwise) to recover from Borrower any amounts paid or the value of any Collateral given by
Debtor pursuant to this Agreement.

	5.8
	In
the event that applicable law shall obligate Bank to give prior notice to Debtor of any action to be taken under this Agreement, Debtor agrees that a written notice given to Debtor
at least ten days before the date of the act shall be reasonable notice of the act and, specifically, reasonable notification of the time and place of any public sale or of the time after which any
private sale, lease, or other disposition is to be made, unless a shorter notice period is reasonable under the circumstances. A notice shall be deemed to be given under this Agreement when delivered
to Debtor or when placed in an envelope addressed to Debtor and deposited, with postage prepaid, in a post office or official depository under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The mailing shall be by overnight courier, certified, or first class mail.

	5.9
	Notwithstanding
any prior revocation, termination, surrender, or discharge of this Agreement in whole or in part, the effectiveness of this Agreement shall automatically continue or
be reinstated in the event that any payment received or credit given by Bank in respect of the Indebtedness is returned, disgorged, or rescinded under any applicable law, including, without
limitation, bankruptcy or insolvency laws, in which case this Agreement, shall be enforceable against Debtor as if the returned, disgorged, or rescinded payment or credit had not been received or
given by Bank, and whether or not Bank relied upon this payment or credit or changed its position as a consequence of it. In the event of continuation or reinstatement of this Agreement, Debtor agrees
upon demand by Bank to execute and deliver to Bank those documents which Bank determines are appropriate to further evidence (in the public records or otherwise) this continuation or reinstatement,
although the failure of Debtor to do so shall not affect in any way the reinstatement or continuation.

	5.10
	This
Agreement and all the rights and remedies of Bank under this Agreement shall inure to the benefit of Bank's successors and assigns and to any other holder who derives from Bank
title to or an interest in the Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal representatives, successors, and assigns of Debtor. Nothing in this Section 5.10 is
deemed a consent by Bank to any assignment by Debtor. 

10

 

	5.11
	If
there is more than one Debtor, all undertakings, warranties and covenants made by Debtor and all rights, powers and authorities given to or conferred upon Bank are made or given
jointly and severally.

	5.12
	Except
as otherwise provided in this Agreement, all terms in this Agreement have the meanings assigned to them in Article 9 (or, absent definition in Article 9, in any
other Article) of the Uniform Commercial Code, as those meanings may be amended, revised or replaced from time to time. "Uniform Commercial Code" means Act No. 174 of the Michigan Public Acts
of 1962, as amended, revised or replaced from time to time, including without limit as amended by Act No. 348 of the Michigan Public Acts of 2000. Notwithstanding the foregoing, the parties
intend that the terms used herein which are defined in the Uniform Commercial Code have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the Uniform Commercial Code
shall in the future be amended or held by a court to define any term used herein more broadly or inclusively than the Uniform Commercial Code in effect on the date of this Agreement, then such term,
as used herein, shall be given such broadened meaning. If the Uniform Commercial Code shall in the future be amended or held by a court to define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the date of this Agreement, such amendment or holding shall be disregarded in defining terms used in this Agreement.

	5.13
	No
single or partial exercise, or delay in the exercise, of any right or power under this Agreement, shall preclude other or further exercise of the rights and powers under this
Agreement. The unenforceability of any provision of this Agreement shall not affect the enforceability of the remainder of this Agreement. This Agreement constitutes the entire agreement of Debtor and
Bank with respect to the subject matter of this Agreement. No amendment or modification of this Agreement shall be effective unless the same shall be in writing and signed by Debtor and an authorized
officer of Bank. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to conflict of laws principles.

	5.14
	To
the extent that any of the Indebtedness is payable upon demand, nothing contained in this Agreement shall modify the terms and conditions of that Indebtedness nor shall anything
contained in this Agreement prevent Bank from making demand, without notice and with or without reason, for immediate payment of any or all of that Indebtedness at any time(s), whether or not an Event
of Default has occurred.

	5.15
	Debtor
represents and warrants that Debtor's exact name is the name set forth in this Agreement. Debtor further represents and warrants the following and agrees that Debtor is, and
at all times shall be, located in the following place [mark applicable provision]: 

	

o	
 	

Debtor is an individual, and Debtor is located (as determined pursuant to the Uniform Commercial Code) at Debtor's principal residence which is (street address, state and county or parish)
:                        .
	

ý	
 	

Debtor is a registered organization which is organized under the laws of one of the states comprising the United States (e.g. corporation, limited partnership, registered limited liability partnership or limited liability company), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) in the state under the laws of which it was organized, which is (street address, state and county or parish)
:                        .
	 	 	 

11

 

	

o	
 	

Debtor is a domestic organization which is not a registered organization under the laws of the United States or any state thereof (e.g. general partnership, joint venture, trust, estate or association), and Debtor is located (as determined pursuant
to the Uniform Commercial Code) at its sole place of business or, if it has more than one place of business, at its chief executive office, which is (street address, state and county or parish)
:                        .
	

o	
 	

Debtor is a registered organization organized under the laws of the United States, and Debtor is located in the state that United States law designates as its location or, if United States law authorizes the Debtor to designate the state for its
location, the state designated by Debtor, or if neither of the foregoing are applicable, at the District of Columbia. Debtor is located (as determined pursuant to the Uniform Commercial Code) at (street address, state and county or parish)
:                        .
	

o	
 	

Debtor is a foreign individual or foreign organization or a branch or agency of a bank that is not organized under the laws of the United States or a state thereof. Debtor is located (as determined pursuant to the Uniform Commercial Code)
at:                        .
	
If Collateral is located at other than the address specified above, such Collateral is located and shall be maintained at
	

STREET ADDRESS
	

CITY, STATE, ZIP CODE, COUNTY
	
Collateral shall be maintained only at the locations identified in this Section 5.15.

	5.16
	A
carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement under the Uniform Commercial Code and may be filed by Bank in any filing
office.

	5.17
	This
Agreement shall be terminated only by the filing of a termination statement in accordance with the applicable provisions of the Uniform Commercial Code, but the obligations
contained in Section 2.13 of this Agreement shall survive termination.

	6.
	DEBTOR
AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS. 

12

 
	7.
	Special
Provisions Applicable to this Agreement. None. 

	

 	
 	

Debtor:
	

 	
 	

PAWNMART, INC.
	

 	
 	

By:	
 	

/s/  ROBERT W. SCHLEIZER      

	 	 	 	 	Signature Of:

Its: Chief Financial Officer

MI-02379
(5-01) 

13

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EXHIBIT 10.8

REVOLVING CREDIT AGREEMENTQuickLinks
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EXHIBIT 4.1    
    

ROCKWOOD
SPECIALTIES GROUP, INC. 

Company

ADVANTIS
TECHNOLOGIES, INC.

ALPHAGARY CORPORATION

CHEMICAL SPECIALTIES, INC.

COMPUGRAPHICS U.S.A. INC.

CYANTEK CORPORATION

ELECTROCHEMICALS INC.

EXSIL, INC.

LUREX, INC.

ROCKWOOD AMERICA INC.

ROCKWOOD PIGMENTS NA, INC.

ROCKWOOD SPECIALTIES INC.

RS FUNDING CORPORATION

SOUTHERN CLAY PRODUCTS, INC.

SOUTHERN COLOR N.A., INC. 

Guarantors

and 

THE
BANK OF NEW YORK 

Trustee

Indenture

Dated
as of July 23, 2003 

$375,000,000 

105/8%
Senior Subordinated Notes due 2011 

ROCKWOOD SPECIALTIES GROUP, INC.*  

Reconciliation and tie between Trust Indenture Act

of 1939 and Indenture, dated as of July 23, 2003  

	Trust Indenture

Act Section
 
	 	Indenture Section

	§ 310	 	(a)(1)	 	608
	 	 	(a)(2)	 	608
	 	 	(b)	 	609
	§ 312	 	(a)	 	701
	§ 312	 	(c)	 	702
	§ 313	 	(a)	 	703
	 	 	(a)(4)	 	1008
	 	 	(c)(1)	 	102
	 	 	(c)(2)	 	102
	 	 	(e)	 	102
	§ 315	 	(b)	 	602
	§ 316	 	(a)(last sentence)	 	101 ("Outstanding")
	 	 	(a)(1)(A)	 	502, 512
	 	 	(a)(1)(B)	 	513
	 	 	(b)	 	508
	 	 	(c)	 	104(d)
	§ 317	 	(a)(1)	 	503
	 	 	(a)(2)	 	504
	 	 	(b)	 	1003
	§ 318	 	(a)	 	111

	*
	This
reconciliation and tie shall not, for any purpose, be deemed to be a part of this Indenture. 

  

 
 

Table of Contents*    
    

	 
	 
	 	 
	 	Page

	ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION	 	1
	

SECTION 1.01	
 	

Definitions	
 	

1
	 	"Acquired Indebtedness"	 	2
	 	"Acquisition"	 	2
	 	"Act"	 	2
	 	"Additional Notes"	 	2
	 	"Adjusted Net Assets"	 	2
	 	"Affiliate"	 	2
	 	"Affiliate Transaction"	 	2
	 	"Agent"	 	2
	 	"Asset Sale"	 	2
	 	"Asset Sale Offer"	 	3
	 	"Bankruptcy Law"	 	3
	 	"Banks"	 	3
	 	"Board of Directors"	 	3
	 	"Board Resolution"	 	3
	 	"Business Day"	 	3
	 	"Capital Stock"	 	3
	 	"Capitalized Lease Obligation"	 	4
	 	"Cash Equivalents"	 	4
	 	"Change of Control"	 	4
	 	"Change of Control Offer"	 	5
	 	"Change of Control Payment"	 	5
	 	"Change of Control Payment Date"	 	5
	 	"Common Stock"	 	5
	 	"Commission"	 	5
	 	"Company"	 	5
	 	"Company Request" or "Company Order"	 	5
	 	"consolidated" or "Consolidated"	 	5
	 	"Consolidated Depreciation and Amortization Expense"	 	5
	 	"Consolidated Interest Expense"	 	5
	 	"Consolidated Net Income"	 	6
	 	"Contingent Obligations"	 	7
	 	"Corporate Trust Office"	 	7
	 	"Corporation"	 	7
	 	"Covenant Defeasance"	 	7
	 	"Credit Facilities"	 	7
	 	"Default"	 	7
	 	"Defaulted Interest"	 	7
	 	"Depositary"	 	7
	 	"Designated Noncash Consideration"	 	7
	 	"Designated Non-Guarantor Joint Venture"	 	7
	 	"Designated Preferred Stock"	 	8
	 	"Designated Senior Indebtedness"	 	8
	 	"Disqualified Stock"	 	8
	 	"Domestic Subsidiary"	 	8

	*
	This
table of contents shall not, for any purpose, be deemed to be a part of this Indenture. 

i

 

	 	"EBITDA"	 	8
	 	"EMU"	 	9
	 	"Equity Interests"	 	9
	 	"Equity Offering"	 	9
	 	"euro"	 	9
	 	"Event of Default"	 	9
	 	"Excess Proceeds"	 	9
	 	"Exchange Act"	 	9
	 	"Exchange Notes"	 	9
	 	"Exchange Offer"	 	9
	 	"Exchange Offer Registration Statement"	 	9
	 	"Excluded Contribution"	 	9
	 	"Existing Indebtedness"	 	9
	 	"Fixed Charge Coverage Ratio"	 	9
	 	"Fixed Charges"	 	10
	 	"Foreign Subsidiary"	 	10
	 	"Funding Guarantor"	 	10
	 	"GAAP"	 	11
	 	"Global Notes"	 	11
	 	"Government Securities"	 	11
	 	"guarantee"	 	11
	 	"Guarantee"	 	11
	 	"Guarantors"	 	11
	 	"Hedging Obligations"	 	11
	 	"Holder"	 	11
	 	"incur"	 	11
	 	"incurrence"	 	11
	 	"Indebtedness"	 	11
	 	"Indenture"	 	12
	 	"Independent Financial Advisor"	 	12
	 	"Initial Notes"	 	12
	 	"Interest Payment Date"	 	12
	 	"Investment Grade Securities"	 	12
	 	"Investments"	 	12
	 	"Issue Date"	 	13
	 	"KKR Equity Contribution"	 	13
	 	"Legal Defeasance"	 	13
	 	"Letter of Credit Obligations"	 	13
	 	"Lien"	 	13
	 	"Management Group"	 	13
	 	"Maturity"	 	14
	 	"Moody's"	 	14
	 	"Net Income"	 	14
	 	"Net Proceeds"	 	14
	 	"Non-payment Default"	 	14
	 	"Non-Registration Opinion and Supporting Evidence"	 	14
	 	"Note Register" and "Note Registrar"	 	14
	 	"Notes"	 	14
	 	"Obligations"	 	14
	 	"Offering Memorandum"	 	14
	 	 	 	 	 	 

ii

 

	 	"Officer"	 	14
	 	"Officers' Certificate"	 	14
	 	"Offshore Global Notes"	 	14
	 	"Offshore Note Exchange Date"	 	14
	 	"Offshore Physical Notes"	 	14
	 	"Opinion of Counsel"	 	15
	 	"Outstanding"	 	15
	 	"Parent Companies"	 	15
	 	"Pari Passu Indebtedness"	 	15
	 	"Paying Agent"	 	15
	 	"Payment Blockage Period"	 	15
	 	"Payment Default"	 	15
	 	"Permanent Offshore Global Note"	 	15
	 	"Permitted Asset Swap"	 	15
	 	"Permitted Holders"	 	16
	 	"Permitted Investments"	 	16
	 	"Permitted Junior Notes"	 	17
	 	"Person"	 	17
	 	"Physical Notes"	 	17
	 	"Predecessor Note"	 	17
	 	"Preferred Stock"	 	17
	 	"Private Placement Legend"	 	17
	 	"QIB"	 	17
	 	"Qualified Proceeds"	 	17
	 	"Receivables Facility"	 	18
	 	"Receivables Fees"	 	18
	 	"Redemption Date"	 	18
	 	"Redemption Price"	 	18
	 	"Refinancing Indebtedness"	 	18
	 	"Refunding Capital Stock"	 	18
	 	"Registration Rights Agreement"	 	18
	 	"Regular Record Date"	 	18
	 	"Regulation S"	 	18
	 	"Regulation S Certificate"	 	18
	 	"Related Business Assets"	 	18
	 	"Resale Restriction Termination Date"	 	18
	 	"Responsible Officer"	 	18
	 	"Restricted Investment"	 	18
	 	"Restricted Payments"	 	18
	 	"Restricted Subsidiary"	 	18
	 	"Retired Capital Stock"	 	18
	 	"Rule 144A"	 	18
	 	"Rule 144A Certificate"	 	18
	 	"S&P"	 	18
	 	"Securities Act"	 	19
	 	"Senior Credit Facilities"	 	19
	 	"Senior Discount Notes"	 	19
	 	"Senior Indebtedness"	 	19
	 	"Senior Indebtedness"	 	20
	 	"Senior Subordinated Indebtedness"	 	20
	 	 	 	 	 	 

iii

 

	 	"Shelf Registration Statement"	 	20
	 	"Significant Subsidiary"	 	20
	 	"Similar Business"	 	20
	 	"Special Record Date"	 	20
	 	"Stated Maturity"	 	20
	 	"Subordinated Indebtedness"	 	20
	 	"Subordinated Note Obligations"	 	20
	 	"Subsidiary"	 	20
	 	"Successor Company"	 	21
	 	"Successor Person"	 	21
	 	"Systems/Organizational Establishment Expenses"	 	21
	 	"Temporary Offshore Global Note"	 	21
	 	"Total Assets"	 	21
	 	"Transactions"	 	21
	 	"Trust Indenture Act" or "TIA"	 	21
	 	"Trustee"	 	21
	 	"Unrestricted Subsidiary"	 	21
	 	"U.S. Global Notes"	 	22
	 	"U.S. Physical Notes"	 	22
	 	"Vice President"	 	22
	 	"Voting Stock"	 	22
	 	"Weighted Average Life to Maturity"	 	22
	 	"Wholly Owned Restricted Subsidiary"	 	22
	 	"Wholly Owned Subsidiary"	 	22
	

SECTION 1.02	
 	

Compliance Certificates and Opinions	
 	

23
	

SECTION 1.03	
 	

Form of Documents Delivered to Trustee	
 	

23
	

SECTION 1.04	
 	

Acts of Holders	
 	

23
	

SECTION 1.05	
 	

Notices, Etc., to Trustee, Company, any Guarantor and Agent	
 	

24
	

SECTION 1.06	
 	

Notice to Holders; Waiver	
 	

25
	

SECTION 1.07	
 	

Effect of Headings and Table of Contents	
 	

25
	

SECTION 1.08	
 	

Successors and Assigns	
 	

25
	

SECTION 1.09	
 	

Separability Clause	
 	

26
	

SECTION 1.10	
 	

Benefits of Indenture	
 	

26
	

SECTION 1.11	
 	

Governing Law	
 	

26
	

SECTION 1.12	
 	

[INTENTIONALLY DELETED]	
 	

26
	

SECTION 1.13	
 	

Legal Holidays	
 	

26
	

SECTION 1.14	
 	

No Personal Liability of Directors, Officers, Employees and Stockholders	
 	

26
	

SECTION 1.15	
 	

Trust Indenture Act Controls	
 	

26
	

SECTION 1.16	
 	

Counterparts	
 	

26
	

ARTICLE TWO NOTE FORMS	
 	

27
	

SECTION 2.01	
 	

Forms Generally	
 	

27
	 	 	 	 	 	 

iv

 

	

SECTION 2.02	
 	

Form of Trustee's Certificate of Authentication	
 	

28
	

SECTION 2.03	
 	

Restrictive Legends	
 	

28
	

SECTION 2.04	
 	

Form of Certificate to Be Delivered After the Offshore Note Exchange Date	
 	

29
	

ARTICLE THREE THE NOTES	
 	

30
	

SECTION 3.01	
 	

Title and Terms	
 	

30
	

SECTION 3.02	
 	

Denominations	
 	

31
	

SECTION 3.03	
 	

Execution, Authentication, Delivery and Dating	
 	

31
	

SECTION 3.04	
 	

Temporary Notes	
 	

32
	

SECTION 3.05	
 	

Registration, Registration of Transfer and Exchange	
 	

32
	

SECTION 3.06	
 	

Mutilated, Destroyed, Lost and Stolen Notes	
 	

33
	

SECTION 3.07	
 	

Payment of Interest; Interest Rights Preserved	
 	

34
	

SECTION 3.08	
 	

Persons Deemed Owners	
 	

35
	

SECTION 3.09	
 	

Cancellation	
 	

35
	

SECTION 3.10	
 	

Computation of Interest	
 	

35
	

SECTION 3.11	
 	

Book-Entry Provisions for Global Notes	
 	

35
	

SECTION 3.12	
 	

Transfer Provisions	
 	

36
	

SECTION 3.13	
 	

Form of Regulation S Certificate	
 	

42
	

SECTION 3.14	
 	

Form of Rule 144A Certificate. Rule 144A Certificate	
 	

43
	

SECTION 3.15	
 	

CUSIP Numbers	
 	

43
	

SECTION 3.16	
 	

Issuance of Additional Notes	
 	

44
	

ARTICLE FOUR SATISFACTION AND DISCHARGE	
 	

44
	

SECTION 4.01	
 	

Satisfaction and Discharge of Indenture	
 	

44
	

SECTION 4.02	
 	

Application of Trust Money	
 	

45
	

ARTICLE FIVE REMEDIES	
 	

45
	

SECTION 5.01	
 	

Events of Default	
 	

45
	

SECTION 5.02	
 	

Acceleration of Maturity, Rescission and Annulment	
 	

47
	

SECTION 5.03	
 	

Collection of Indebtedness and Suits for Enforcement by Trustee	
 	

48
	

SECTION 5.04	
 	

Trustee May File Proofs of Claim	
 	

48
	

SECTION 5.05	
 	

Trustee May Enforce Claims Without Possession of Notes	
 	

49
	

SECTION 5.06	
 	

Application of Money Collected	
 	

49
	

SECTION 5.07	
 	

Limitation on Suits	
 	

50
	

SECTION 5.08	
 	

Unconditional Right of Holders to Receive Principal, Premium and Interest	
 	

50
	

SECTION 5.09	
 	

Restoration of Rights and Remedies	
 	

50
	 	 	 	 	 	 

v

 

	

SECTION 5.10	
 	

Rights and Remedies Cumulative	
 	

50
	

SECTION 5.11	
 	

Delay or Omission Not Waiver	
 	

51
	

SECTION 5.12	
 	

Control by Holders	
 	

51
	

SECTION 5.13	
 	

Waiver of Past Defaults	
 	

51
	

SECTION 5.14	
 	

Waiver of Stay or Extension Laws	
 	

51
	

ARTICLE SIX THE TRUSTEE	
 	

51
	

SECTION 6.01	
 	

Duties of the Trustee	
 	

51
	

SECTION 6.02	
 	

Notice of Defaults	
 	

52
	

SECTION 6.03	
 	

Certain Rights of Trustee	
 	

53
	

SECTION 6.04	
 	

Trustee Not Responsible for Recitals or Issuance of Notes	
 	

54
	

SECTION 6.05	
 	

May Hold Notes	
 	

54
	

SECTION 6.06	
 	

Money Held in Trust	
 	

54
	

SECTION 6.07	
 	

Compensation and Reimbursement	
 	

54
	

SECTION 6.08	
 	

Corporate Trustee Required; Eligibility	
 	

55
	

SECTION 6.09	
 	

Resignation and Removal; Appointment of Successor	
 	

55
	

SECTION 6.10	
 	

Acceptance of Appointment by Successor	
 	

56
	

SECTION 6.11	
 	

Merger, Conversion, Consolidation or Succession to Business	
 	

56
	

SECTION 6.12	
 	

Appointment of Authenticating Agent	
 	

57
	

ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY	
 	

58
	

SECTION 7.01	
 	

Company to Furnish Trustee Names and Addresses	
 	

58
	

SECTION 7.02	
 	

Disclosure of Names and Addresses of Holders	
 	

58
	

SECTION 7.03	
 	

Reports by Trustee	
 	

58
	

ARTICLE EIGHT MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS	
 	

59
	

SECTION 8.01	
 	

Company May Consolidate, Etc., Only on Certain Terms	
 	

59
	

SECTION 8.02	
 	

Subsidiary Guarantors May Consolidate, Etc., Only on Certain Terms	
 	

59
	

SECTION 8.03	
 	

Successor Substituted	
 	

60
	

ARTICLE NINE SUPPLEMENTAL INDENTURES	
 	

61
	

SECTION 9.01	
 	

Amendments or Supplements Without Consent of Holders	
 	

61
	

SECTION 9.02	
 	

Amendments, Supplements or Waivers with Consent of Holders	
 	

61
	

SECTION 9.03	
 	

Execution of Amendments, Supplements or Waivers	
 	

62
	

SECTION 9.04	
 	

Effect of Amendments, Supplements or Waivers	
 	

62
	

SECTION 9.05	
 	

Conformity with Trust Indenture Act	
 	

62
	

SECTION 9.06	
 	

Reference in Notes to Supplemental Indentures	
 	

62
	 	 	 	 	 	 

vi

 

	

SECTION 9.07	
 	

Notice of Supplemental Indentures	
 	

63
	

SECTION 9.08	
 	

Effect on Senior Indebtedness	
 	

63
	

ARTICLE TEN COVENANTS	
 	

63
	

SECTION 10.01	
 	

Payment of Principal, Premium, if Any, and Interest	
 	

63
	

SECTION 10.02	
 	

Maintenance of Office or Agency	
 	

63
	

SECTION 10.03	
 	

Money for Notes Payments to Be Held in Trust	
 	

63
	

SECTION 10.04	
 	

Corporate Existence	
 	

64
	

SECTION 10.05	
 	

Payment of Taxes and Other Claims	
 	

64
	

SECTION 10.06	
 	

Maintenance of Properties	
 	

65
	

SECTION 10.07	
 	

Insurance	
 	

65
	

SECTION 10.08	
 	

Statement by Officers as to Default	
 	

65
	

SECTION 10.09	
 	

Reports and Other Information	
 	

66
	

SECTION 10.10	
 	

Limitation on Restricted Payments	
 	

66
	

SECTION 10.11	
 	

Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock	
 	

72
	

SECTION 10.12	
 	

Limitation on Liens	
 	

75
	

SECTION 10.13	
 	

Limitations on Transactions with Affiliates	
 	

76
	

SECTION 10.14	
 	

Limitations on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries	
 	

77
	

SECTION 10.15	
 	

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries	
 	

78
	

SECTION 10.16	
 	

Limitation on Other Senior Subordinated Indebtedness	
 	

79
	

SECTION 10.17	
 	

Change of Control	
 	

79
	

SECTION 10.18	
 	

Asset Sales	
 	

81
	

SECTION 10.19	
 	

Waiver of Certain Covenants	
 	

83
	

ARTICLE ELEVEN REDEMPTION OF NOTES	
 	

83
	

SECTION 11.01	
 	

Right of Redemption	
 	

83
	

SECTION 11.02	
 	

Applicability of Article	
 	

84
	

SECTION 11.03	
 	

Election to Redeem; Notice to Trustee	
 	

84
	

SECTION 11.04	
 	

Selection by Trustee of Notes to Be Redeemed	
 	

84
	

SECTION 11.05	
 	

Notice of Redemption	
 	

84
	

SECTION 11.06	
 	

Deposit of Redemption Price	
 	

85
	

SECTION 11.07	
 	

Notes Payable on Redemption Date	
 	

85
	

SECTION 11.08	
 	

Notes Redeemed in Part	
 	

85
	

ARTICLE TWELVE GUARANTEES	
 	

86
	

SECTION 12.01	
 	

Guarantees	
 	

86
	 	 	 	 	 	 

vii

 

	

SECTION 12.02	
 	

Severability	
 	

87
	

SECTION 12.03	
 	

Restricted Subsidiaries	
 	

87
	

SECTION 12.04	
 	

Subordination of Guarantees	
 	

87
	

SECTION 12.05	
 	

Limitation of Guarantors' Liability	
 	

87
	

SECTION 12.06	
 	

Contribution	
 	

88
	

SECTION 12.07	
 	

Subrogation	
 	

88
	

SECTION 12.08	
 	

Reinstatement	
 	

88
	

SECTION 12.09	
 	

Release of a Guarantor	
 	

88
	

SECTION 12.10	
 	

Benefits Acknowledged	
 	

89
	

ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE	
 	

89
	

SECTION 13.01	
 	

Company's Option to Effect Legal Defeasance or Covenant Defeasance	
 	

89
	

SECTION 13.02	
 	

Legal Defeasance and Discharge	
 	

89
	

SECTION 13.03	
 	

Covenant Defeasance	
 	

89
	

SECTION 13.04	
 	

Conditions to Legal Defeasance or Covenant Defeasance	
 	

90
	

SECTION 13.05	
 	

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

91
	

SECTION 13.06	
 	

Reinstatement	
 	

92
	

ARTICLE FOURTEEN SUBORDINATION OF NOTES	
 	

92
	

SECTION 14.01	
 	

Notes Subordinate to Senior Indebtedness	
 	

92
	

SECTION 14.02	
 	

Payment over of Proceeds upon Dissolution, Etc	
 	

92
	

SECTION 14.03	
 	

Suspension of Payment When Senior Indebtedness Is in Default	
 	

93
	

SECTION 14.04	
 	

Payment Permitted If No Default	
 	

94
	

SECTION 14.05	
 	

Subrogation to Rights of Holders of Senior Indebtedness	
 	

94
	

SECTION 14.06	
 	

Provisions Solely to Define Relative Rights	
 	

95
	

SECTION 14.07	
 	

Trustee to Effectuate Subordination	
 	

95
	

SECTION 14.08	
 	

No Waiver of Subordination Provisions	
 	

95
	

SECTION 14.09	
 	

Notice to Trustee	
 	

95
	

SECTION 14.10	
 	

Reliance on Judicial Order or Certificate of Liquidating Agent	
 	

96
	

SECTION 14.11	
 	

Rights of Trustee as a Holder of Senior Indebtedness; Preservation of Trustee's Rights	
 	

96
	

SECTION 14.12	
 	

Article Applicable to Paying Agents	
 	

96
	

SECTION 14.13	
 	

No Suspension of Remedies	
 	

96
	

SECTION 14.14	
 	

Trust Moneys Not Subordinated	
 	

96
	

SECTION 14.15	
 	

Trustee Not Fiduciary for Holders of Senior Indebtedness	
 	

97

viii

        INDENTURE, dated as of July 23, 2003 (this "Indenture"), among ROCKWOOD SPECIALTIES GROUP, INC., a Delaware corporation (the "Company"), having its principal office at 100
Overlook Center, Princeton, NJ 08540, certain of the Company's direct and indirect Domestic Subsidiaries, each named in the signature pages hereto (each, a "Guarantor" and, collectively, the
"Guarantors"), and THE BANK OF NEW YORK, a New York banking corporation, Trustee (the "Trustee"). 

 
 

RECITALS OF THE COMPANY    
    

        The Company has duly authorized the creation of an issue of (i) 105/8% Senior Subordinated Notes due 2011 issued on the date hereof (the
"Initial Notes") and (ii) if and when issued pursuant to the Registration Rights Agreement, dated the date hereof, among the Company, the Guarantors and the Initial Purchasers (as defined
therein), (the "Registration Rights Agreement"), 105/8% Senior Subordinated Notes due 2011 issued in an Exchange Offer in exchange for any Initial Notes (the "Exchange Notes", and
collectively with the Initial Notes, the "Notes"), of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of
this Indenture. 

        Each
Guarantor has duly authorized its Guarantee of the Initial Notes, and if and when issued, the Exchange Notes and to provide therefor each Guarantor has duly authorized the execution
and delivery of this Indenture. 

        Upon
the issuance of the Exchange Notes, if any, or the effectiveness of a Shelf Registration Statement, this Indenture shall be subject to the provisions of the Trust Indenture Act of
1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. 

        All
things necessary have been done to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid and legally
binding obligations of the Company and to make this Indenture a valid and legally binding agreement of the Company, in accordance with their and its terms. 

        All
things necessary have been done to make the Guarantees, upon execution and delivery of this Indenture, the valid obligations of each Guarantor and to make this Indenture a valid and
legally binding agreement of each Guarantor, in accordance with their and its terms. 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

        For
and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders, as follows: 

 
 

ARTICLE ONE    
    
    DEFINITIONS AND OTHER PROVISIONS
  OF GENERAL APPLICATION    
    

        SECTION
1.01    Definitions.    

        For
all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: 

        (a)   the
terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; 

        (b)   all
other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the
terms "cash transaction" and "self-liquidating paper", as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust
Indenture Act; 

        (c)   all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP (as herein defined); and 

 

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

        "Acquired
Indebtedness" 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,
without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and 

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

        "Acquisition"
means the Acquisition by Rockwood Holdings, Inc. (formerly K-L Holdings, Inc.), of certain shares, businesses and assets from Laporte plc pursuant
to a Business and Share Sale and Purchase Agreement dated September 25, 2000 and related acquisition agreements. 

        "Act",
when used with respect to any Holder, has the meaning specified in Section 104 of this Indenture." 

        "Additional
Notes" means any Notes issued by the Company pursuant to Section 316. 

        "Adjusted
Net Assets" has the meaning specified in Section 1206 of this Indenture. 

        "Affiliate"
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For
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. 

        "Affiliate
Transaction" has the meaning specified in Section 1013 of this Indenture. 

        "Agent"
means JPMorgan Chase Bank, as administrative agent under the Senior Credit Facilities, and any future such agent under the Senior Credit Facilities. 

        "Asset
Sale" means: 

        (1)   the
sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a
sale and leaseback) of the Company or any Restricted Subsidiary (each referred to in this definition as a "disposition"), or 

        (2)   the
issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a single transaction or a series of related transactions, 

in
each case, other than: 

        (a)   a
disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out equipment in the ordinary course of business or inventory or goods held for sale
in the ordinary course of business; 

        (b)   the
disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Article Eight or any disposition that constitutes a Change of
Control pursuant to this Indenture; 

        (c)   the
making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 10.10; 

2

 

        (d)   any
disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions with an aggregate fair market
value of less than $2.5 million; 

        (e)   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 a Restricted
Subsidiary; 

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

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

        (h)   any
sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary (with the exception of Investments in Unrestricted Subsidiaries
acquired pursuant to clause (j) of the definition of "Permitted Investments");" 

        (i)    foreclosures
on assets; 

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

        (k)   any
financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issue Date, including, without limitation,
sale leasebacks and asset securitizations permitted by this Indenture. 

        "Asset
Sale Offer" has the meaning specified in Section 10.18 of this Indenture. 

        "Bankruptcy
Law" means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law relating to bankruptcy, insolvency, receivership,
winding-up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law. 

        "Banks"
means the lenders from time to time who are parties to the Senior Credit Facilities. 

        "Board
of Directors" means, with respect to any Person, either the board of directors of such Person or any duly authorized committee of such board. 

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

        "Business
Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York are authorized or obligated by law,
regulation or executive order to close. 

        "Capital
Stock" means: 

        (1)   in
the case of a corporation, corporate stock, 

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

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

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

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)   United
States dollars, 

        (2)   pounds
sterling, 

        (3)   (a)
euro, or any national currency of any participating member state in the European Union or (b) in the case of any Foreign Subsidiary that is a Restricted
Subsidiary, such local currencies held by them from time to time in the ordinary course of business, 

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

        (5)   certificates
of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million, 

        (6)   repurchase
obligations for underlying securities of the types described in clauses (4) and (5) above, entered into with any financial institution meeting
the qualifications specified in clause (5) above, 

        (7)   commercial
paper rated at least P-1 by Moody's or at least A-1 by S&P and in each case maturing within 12 months after the date of
creation thereof, 

        (8)   investment
funds investing 95% of their assets in securities of the types described in clauses (1) through (7) above, 

        (9)   readily
marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating
categories obtainable from either Moody's or S&P with maturities of 24 months or less from the date of acquisition, and 

        (10) Indebtedness
or preferred stock issued by Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's with maturities of 12 months or less
from the date of acquisition. 

        Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (1) through (3) above,  provided that such amounts are converted
into any currency listed in clauses (1) through (3) above, as promptly as practicable and in any event within ten Business Days following the receipt of such amounts. 

        "Change
of Control" means the occurrence of any of the following: 

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

        (2)   the
Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the
acquisition by 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 

4

 

disposing
of securities (within the meaning of Rule 13d-5(b)(1) 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 business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent corporations. 

        "Change
of Control Offer" has the meaning specified in Section 10.17 of this Indenture. 

        "Change
of Control Payment" has the meaning specified in Section 10.17 of this Indenture. 

        "Change
of Control Payment Date" has the meaning specified in Section 10.17 of this Indenture. 

        "Common
Stock" means, with respect to any Person, any and all shares, interests, participations and other equivalents (however designated, whether voting or non-voting) of
such Person's common stock, whether now outstanding or issued after the date of this Indenture, and includes, without limitation, all series and classes of such common stock. 

        "Commission"
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. 

        "Company"
means the Person named as the "Company" in the first paragraph of this Indenture, until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor Person. 

        "Company
Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant
Treasurer, and delivered to the Trustee. 

        "consolidated"
or "Consolidated" means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary. 

        "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 non-cash charges, excluding any non-cash 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, to the extent such expense was deducted in computing Consolidated Net
Income (including amortization of original issue discount, non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to
market valuation of Hedging Obligation pursuant to Financial Accounting Standards Board Statement No. 133—"Accounting for Derivative Instruments and Hedging Activities"), the
interest component of Capitalized Lease Obligations and net payments, if any, pursuant to Hedging Obligations, and excluding amortization of deferred financing fees), and 

        (b)   consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued. 

5

 

        "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 extraordinary gains or losses, less all fees and expenses relating thereto, shall be
excluded, 

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

        (3)   any
net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall
be excluded, 

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

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

        (6)   the
Net Income of any Person acquired in a pooling of interests transaction shall not be included for any period prior to the date of such acquisition, 

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

        (8)   any
increase in amortization or depreciation resulting from purchase accounting in relation to any acquisition that is consummated after the Issue Date, net of taxes,
shall be excluded, 

        (9)   any
net after-tax income (loss) from the early extinguishment of Indebtedness shall be excluded, and 

        (10) any
goodwill impairment charge pursuant to Financial Accounting Standards Board Statement No. 142—" Goodwill and Other Intangible Assets" shall be
excluded. 

        Notwithstanding
the foregoing, for the purpose of Section 10.10 only (other than clause (a)(4)(C)(4) thereof), there shall be excluded from Consolidated Net Income any
income arising from any sale or other disposition of Restricted Investments made by the Company and the Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the
Company and the Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Company or any Restricted Subsidiary, any sale of the stock of an
Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such 

6

 

amounts
increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(4)(C)(4) thereof. 

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

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

        (2)   to
advance or supply funds: 

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

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

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

        "Corporate
Trust Office" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at
the date of execution of this Indenture is located at The Bank of New York, 101 Barclay Street, 21St Floor West, New York, New York 10286, except that with respect to presentation of the
Notes for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be
conducted. 

        "Corporation"
includes corporations, associations, companies and business trusts. 

        "Covenant
Defeasance" has the meaning specified in Section 1303 of this Indenture. 

        "Credit
Facilities" means, with respect to the Company, one or more debt facilities, including, without limitation, the Senior Credit Facilities, or commercial paper facilities with
banks or other institutional lenders or investors or indentures providing for revolving credit loans, term loans, receivables financing, including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against receivables, letters of credit or other long-term indebtedness, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced, including increasing the amount borrowed thereunder, in whole or in part 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. 

        "Defaulted
Interest" has the meaning specified in Section 3.07 of this Indenture. 

        "Depositary"
means The Depositary Trust Company, its nominees and their respective successors. 

        "Designated
Noncash Consideration" means the fair market value of noncash consideration received by the Company or a Restricted Subsidiary in connection with an Asset Sale that is so
designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such
valuation, executed by an executive vice president and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such
Designated Noncash Consideration. 

        "Designated
Non-Guarantor Joint Venture" means any non-Wholly Owned Restricted Subsidiary engaged in a Similar Business that is designated as a Designated
NonGuarantor Joint Venture pursuant to an Officers' Certificate. 

7

   
        "Designated Preferred Stock" means preferred stock of the Company or any parent corporation thereof (in each case other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by an executive vice president and the principal financial officer of the
Company or the applicable parent corporation thereof, as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in
clause (a)(4)(C) of Section 10.10. 

        "Designated
Senior Indebtedness" means: 

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

        (2)   any
other Senior Indebtedness permitted under this Indenture the principal amount of which is $25.0 million or more and that has been specifically designated in
the instrument evidencing such Senior Indebtedness by the Company as Designated Senior Indebtedness. 

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

        "Domestic
Subsidiary" means, with respect to any Person, any Restricted Subsidiary of such Person other than a Foreign Subsidiary. 

        "EBITDA"
means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: 

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

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

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

        (d)   any
expenses or charges related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or Indebtedness permitted to be incurred by this
Indenture (whether or not successful) including such fees, expenses or charges related to the offering of the Notes and the Credit Facilities, and deducted in computing Consolidated Net Income,  plus

        (e)   the
amount of any restructuring charge deducted in such period in computing Consolidated Net Income, including any one-time costs incurred in connection with
acquisitions after the Issue Date, plus

        (f)    without
duplication, any other non-cash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or
reserve for a cash expenditure for a future period, plus

8

 

        (g)   the
amount of any minority interest expense deducted in calculating Consolidated Net Income (less the amount of any cash dividends paid to the holders of such minority
interests), plus

        (h)   Systems/Organizational
Establishment Expenses and, prior to December 31, 2001, unusual patent litigation expenses, less, without duplication,  plus

        (i)    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 in any prior period. 

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

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

        "Equity
Offering" means any public or private sale of Common Stock or preferred stock of the Company or any of its direct or indirect parent corporations (excluding Disqualified Stock),
other than: 

        (1)   public
offerings with respect to the Company's or any direct or indirect parent corporation's Common Stock registered on Form S-8, and 

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

        "euro"
means the single currency of participating member states of the EMU. 

        "Event
of Default" has the meaning specified in Section 5.01 of this Indenture. 

        "Excess
Proceeds" has the meaning specified in Section 10.18 of this Indenture. 

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

        "Exchange
Notes" has the meaning specified in the first recital of this Indenture. 

        "Exchange
Offer" means the offer by the Company to the Holders of the Initial Notes to exchange all of the Initial Notes for Exchange Notes as provided for in the Registration Rights
Agreement. 

        "Exchange
Offer Registration Statement" means the Exchange Offer Registration Statement as defined in the Registration Rights Agreement. 

        "Excluded
Contribution" means net cash proceeds, marketable securities or Qualified Proceeds received by the Company from: 

        (a)   contributions
to its common equity capital, and 

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

in
each case designated as Excluded Contributions pursuant to an Officers' Certificate executed by an executive vice president and the principal financial officer of the Company 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 Section 10.10(a)(4)(C). 

        "Existing
Indebtedness" means Indebtedness of the Company or the Restricted Subsidiaries in existence on the Issue Date, plus interest
accruing thereon. 

        "Fixed
Charge Coverage Ratio" means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In
the event that such Person or any Restricted Subsidiary thereof incurs, assumes, guarantees or redeems any 

9

 

Indebtedness
or issues or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Disqualified Stock or preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter period. 

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

        For
purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or
accounting officer of such Person. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of such Person to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall
be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor
of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate
chosen as such Person may designate. 

        "Fixed
Charges" means, with respect to any Person for any period, the sum of: 

        (a)   Consolidated
Interest Expense of such Person for such period, 

        (b)   all
cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock (including any Designated Preferred Stock) or any Refunding
Capital Stock of such Person, and 

        (c)   all
cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Stock. 

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

        "Funding
Guarantor" has the meaning specified in Section 12.06 of this Indenture. 

10

 

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

        "Global
Notes" has the meaning specified in Section 2.01 of this Indenture. 

        "Government
Securities" means securities that are: 

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

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

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

        "guarantee"
means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including,
without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. 

        "Guarantee"
means the guarantee by any Guarantor of the Company's obligations under this Indenture. 

        "Guarantors"
means all Restricted Subsidiaries that are Domestic Subsidiaries (other than certain special-purpose Restricted Subsidiaries formed in connection with Receivables Facility)
as of the Issue Date. 

        "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 

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

        "Holder"
means a holder of Notes. 

        "incur"
has the meaning specified in Section 10.11 of this Indenture. 

        "incurrence"
has the meaning specified in Section 10.11 of this Indenture. 

        "Indebtedness"
means, with respect to any Person, 

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

        (1)   in
respect of borrowed money; 

11

 

        (2)   evidenced
by bonds, securities, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in
respect thereof); 

        (3)   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 

        (4)   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)   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 

        (c)   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 Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness;
and obligations under or in respect of Receivables Facilities shall not be deemed to constitute Indebtedness. 

        "Indenture"
means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof. 

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

        "Initial
Notes" has the meaning stated in the first recital of this Indenture. 

        "Interest
Payment Date" means the Stated Maturity of an installment of interest on the Notes. 

        "Investment
Grade Securities" means: 

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

        (2)   debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating
organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or
instruments constituting loans or advances among the Company and its Subsidiaries, 

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

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

        "Investments"
means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital
contributions (excluding accounts receivable, 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 

12

 

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 10.10. 

        (1)   "Investments"
shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of
the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, 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; and 

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

        "Issue
Date" means July 23, 2003. 

        "KKR
Equity Contribution" means the $25.0 million common equity contribution to be made to the Company through the Parent Companies by affiliates of Kohlberg Kravis &
Roberts & Co. L.P. on the Issue Date. 

        "Legal
Defeasance" has the meaning specified in Section 13.02 of this Indenture. 

        "Letter
of Credit Obligations" means all Obligations in respect of Indebtedness of the Company with respect to letters of credit issued pursuant to the Senior Credit Facilities which
Indebtedness shall be deemed to consist of: 

        (a)   the
aggregate maximum amount available to be drawn under all such letters of credit (the determination of such aggregate maximum amount to assume compliance with all
conditions for drawing), and 

        (b)   the
aggregate amount that has been paid by, and not reimbursed to, the fronting bank and the lenders under such letters of credit. 

        "Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction;  provided that in no event shall an operating
lease be deemed to constitute a Lien. 

        "Management
Group" means at any time, the Chairman of the Board of Directors, any President, any Executive Vice President or Vice President, any Managing Director, any Treasurer and any
Secretary or other executive officer of any of Rockwood Holdings, Inc., Rockwood Specialties Consolidated, Inc., Rockwood Specialties International, Inc., the Company or any
Subsidiary of any such company at such time. 

13

 

        "Maturity",
when used with respect to any Note, means the date on which the principal of such Note or an installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise." 

        "Moody's"
means Moody's Investors Service, Inc. 

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

        "Net
Proceeds" means the aggregate cash proceeds received by the Company or any Restricted Subsidiary in respect of any Asset Sale, including, without limitation, any cash received upon
the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale, net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration, including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions, any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal,
premium, if any, and interest on Senior Indebtedness required (other than required by Section 10.18(b)(1)) to be paid as a result of such transaction and any deduction of appropriate amounts to
be provided by such Person 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. 

        "Non-payment
Default" has the meaning specified in Section 14.03 of this Indenture. 

        "Non-Registration
Opinion and Supporting Evidence" has the meaning specified in Section 3.12 of this Indenture. 

        "Note
Register" and "Note Registrar" have the respective meanings specified in Section 3.05. 

        "Notes"
has the meaning stated in the first recital of this Indenture and more particularly means any Notes authenticated and delivered under this Indenture. 

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

        "Offering
Memorandum" means the Offering Memorandum dated July 9, 2003 relating to the Notes. 

        "Officer"
means the Chairman of the Board of Directors, 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 must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Company that meets the requirements set forth in this Indenture. 

        "Offshore
Global Notes" has the meaning specified in Section 2.01 of this Indenture. 

        "Offshore
Note Exchange Date" has the meaning specified in Section 2.01 of this Indenture. 

        "Offshore
Physical Notes" has the meaning specified in Section 2.01 of this Indenture. 

14

 

        "Opinion
of Counsel" means, with respect to any Person, a written opinion of counsel, who may be counsel for such Person, including an employee of such Person. 

        "Outstanding",
when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: 

          (i)  Notes
theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; 

         (ii)  Notes,
or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes;  provided that, if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; 

        (iii)  Notes,
except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected Legal Defeasance and/or Covenant Defeasance as provided
in Article Thirteen; and 

        (iv)  Notes
which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this
Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands the
Notes are valid obligations of the Company; 

provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the purpose of making the calculations required by TIA Section 313, Notes owned by the Company or any other obligor upon
the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor. 

        "Parent
Companies" means Rockwood Holdings, Inc., Rockwood Specialties Consolidated, Inc. and Rockwood Specialties International, Inc. 

        "Pari
Passu Indebtedness" means any indebtedness of the Company which ranks pari passu in right of payment to the Notes. 

        "Paying
Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf
of the Company. 

        "Payment
Blockage Period" has the meaning specified in Section 14.03 of this Indenture. 

        "Payment
Default" has the meaning specified in Section 14.03 of this Indenture. 

        "Permanent
Offshore Global Note" has the meaning specified in Section 2.01. 

        "Permitted
Asset Swap" means the concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the
Company or any of its Restricted Subsidiaries and another Person; provided that any cash or Cash Equivalents received must be applied in accordance with
Section 10.18. 

15

 

        "Permitted
Holders" means Kohlberg Kravis Roberts & Co. L.P., its Affiliates and the Management Group. 

        "Permitted
Investments" means: 

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

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

        (c)   any
Investment by the Company or any Restricted Subsidiary of the Company in a Person that is engaged in a Similar Business if as a result of such Investment, 

        (1)   such
Person becomes a Restricted Subsidiary, or 

        (2)   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; 

        (d)   any
Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to
Section 10.18, or any other disposition of assets not constituting an Asset Sale; 

        (e)   any
Investment existing on the Issue Date; 

        (f)    advances
to employees not in excess of $10.0 million outstanding at any one time, in the aggregate; 

        (g)   any
Investment acquired by the Company or any Restricted Subsidiary, 

        (1)   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 Company of such other Investment or accounts receivable, or 

        (2)   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; 

        (h)   Hedging
Obligations permitted under Section 10.11(b)(10); 

        (i)    loans
and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the
ordinary course of business; 

        (j)    any
Investment in a Similar Business having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (j) 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 the
greater of (x) $60.0 million and (y) 4.0% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value); 

        (k)   Investments
the payment for which consists of Equity Interests of the Company, or any of its direct or indirect parent corporations (exclusive of Disqualified Stock);  provided, however, that such Equity Interests
shall not increase the amount available for Restricted Payments under Section 10.10(a)(C); 

        (l)    guarantees
of Indebtedness permitted under Section 10.11; 

16

 

        (m)  any
transaction to the extent it constitutes an investment that is permitted and made in accordance with Section 10.13(b) (except transactions described in
clauses (2), (6), (7) and (11) thereof); 

        (n)   Investments
consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons; 

        (o)   additional
Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (o) 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 the greater of
(x) $35.0 million and (y) 2.5% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); and 

        (p)   Investments
relating to any special purpose wholly-owned subsidiary of the Company organized in connection with a Receivables Facility that, in the good faith
determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility. 

        "Permitted
Junior Notes" has the meaning specified in Section 14.02 of this Indenture. 

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

        "Physical
Notes" has the meaning specified in Section 2.01 of this Indenture. 

        "Predecessor
Note" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 3.06 in exchange for a mutilated Note or in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Note. 

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

        "Private
Placement Legend" has the meaning specified in Section 2.03 of this Indenture. 

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

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

17

   
        "Receivables Facility" means one or more receivables financing facilities, as amended from time to time, the Indebtedness of which is non-recourse (except for standard
representations, warranties, covenants and indemnities made in connection with such facilities) to the Company and the Restricted Subsidiaries pursuant to which the Company and/or any of its
Restricted Subsidiaries sells its accounts receivable to a Person that is not a Restricted Subsidiary. 

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

        "Redemption
Date", when used with respect to any Note to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture." 

        "Redemption
Price", when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture." 

        "Refinancing
Indebtedness" has the meaning specified in Section 10.11 of this Indenture. 

        "Refunding
Capital Stock" has the meaning specified in Section 10.10 of this Indenture. 

        "Registration
Rights Agreement" has the meaning stated in the first recital of this Indenture. 

        "Regular
Record Date" has the meaning specified in Section 3.01 of this Indenture. 

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

        "Regulation S
Certificate" has the meaning specified in Section 3.12 of this Indenture. 

        "Related
Business Assets" means assets (other than cash or Cash Equivalents) used or useful in a Similar Business, provided that any
assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist
of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary. 

        "Resale
Restriction Termination Date" has the meaning specified in Section 3.11 of this Indenture. 

        "Responsible
Officer", when used with respect to the Trustee, means any vice president, any assistant treasurer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture. 

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

        "Restricted
Payments" has the meaning specified in Section 10.10 of this Indenture. 

        "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". 

        "Retired
Capital Stock" has the meaning specified in Section 10.10 of this Indenture. 

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

        "Rule 144A
Certificate" has the meaning specified in Section 3.12 of this Indenture. 

        "S&P"
means Standard and Poor's Ratings Group. 

18

 

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

        "Senior
Credit Facilities" means the Credit Agreement dated as of July 23, 2003, as amended, among the Company, as U.S. Borrower, Rockwood Specialties Limited, as U.K. Borrower,
Rockwood Specialties International, Inc., as a guarantor, Rockwood Specialties Consolidated, Inc. and Rockwood Holdings, Inc., as parent companies, the several lenders from time
to time party thereto, JPMorgan Chase Bank, as Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent and Goldman Sachs Credit Partners L.P. as
Documentation Agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals,
restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any
part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof. 

        "Senior
Discount Notes" means the Senior Discount Notes of Rockwood Specialties International Inc., issued on the Issue Date or any refinancing thereof in the form of Indebtedness
or preferred stock; provided, however, that such refinanced Indebtedness or preferred stock (i) shall be incurred by Rockwood Specialties
International, Inc., (ii) does not have a maturity date which is prior to August 15, 2011, (iii) does not require cash interest or cash dividends to be paid prior to
August 15, 2007, (iv) does not have an effective interest rate or dividend rate that exceeds 12% per annum and (v) does not have terms and conditions which taken as a whole, are
materially disadvantageous to the Holders of the Notes as compared to the Senior Discount Notes. 

        "Senior
Indebtedness" means: 

        (1)   the
Obligations under the Senior Credit Facilities; and 

        (2)   the
Obligations under any other Indebtedness permitted to be incurred by the Company under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes, 

including,
with respect to clauses (1) and (2), interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, in accordance with
and at the rate specified in the documents evidencing or governing such Senior Indebtedness, to the extent that such interest is an allowable claim in such bankruptcy proceeding. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness will not include: 

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

        (b)   any
obligation of the Company to its direct or indirect parent corporations or to any of its Subsidiaries or to any other Affiliate of the Company or any of such
Affiliate's Subsidiaries; 

        (c)   any
amounts owed by the Company for compensation to employees or for services rendered to the Company; 

        (d)   any
accounts payable or trade liabilities, including obligations in respect of funds held for the account of third parties, arising in the ordinary course of business,
including guarantees thereof or instruments evidencing such liabilities, other than obligations in Letter of Credit Obligations; 

        (e)   any
Indebtedness that is incurred in violation of this Indenture; 

        (f)    Indebtedness
which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company; 

19

 

        (g)   any
Indebtedness, guarantee or obligation of the Company which is subordinate or junior to any other Indebtedness, guarantee or obligation of the Company; 

        (h)   Indebtedness
evidenced by the Notes; 

        (i)    Capital
Stock of the Company; and 

        (j)    amounts
owing under leases (other than Capitalized Lease Obligations). 

        "Senior
Indebtedness" of any guarantor of the Notes, including the Guarantors, has a correlative meaning. 

        "Senior
Subordinated Indebtedness" means: 

        (a)   with
respect to the Company, Indebtedness which ranks equal in right of payment to the Notes, and 

        (b)   with
respect to any Guarantor, Indebtedness which ranks equal in right of payment to the Guarantee of such Guarantor. 

        "Shelf
Registration Statement" means the shelf registration statement as defined in the Registration Rights Agreement. 

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

        "Similar
Business" means the development, manufacture and distribution and/or provision of chemicals, chemical processes or performance materials and any services, activities or
businesses incidental or directly related or similar thereto, or any line of businesses engaged in by the Company and its Subsidiaries or any business activity that is a reasonable extension,
development or expansion thereof or ancillary thereto. 

        "Special
Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.07. 

        "Stated
Maturity", when used with respect to any Note or any installment of principal thereof or interest thereon, means the date specified in such Notes as the fixed date on which the
principal of such Notes or such installment of principal or interest is due and payable. 

        "Subordinated
Indebtedness" means: 

        (a)   with
respect to the Company, any Indebtedness of the Company which is by its terms subordinated in right of payment to the Notes and 

        (b)   with
respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to the Guarantee of such Guarantor. 

        "Subordinated
Note Obligations" means any principal of, premium, if any, and interest on the Notes payable pursuant to the terms of the Notes or upon acceleration, together with and
including any amounts received upon the exercise of rights of rescission or other rights of action, including claims for damages, or otherwise, to the extent relating to the purchase price of the
Notes or amounts corresponding to such principal, premium, if any, or interest on the Notes. 

        "Subsidiary"
means, with respect to any Person, 

        (1)   any
corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of
determination 

20

 

owned
or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and 

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

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

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

        "Successor
Company" has the meaning specified in Section 8.01 of this Indenture. 

        "Successor
Person" has the meaning specified in Section 8.02 of this Indenture. 

        "Systems/Organizational
Establishment Expenses" shall mean the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Company and the Restricted
Subsidiaries in (i) establishing financial, information technology and other similar systems of the Company and the Restricted Subsidiaries, including costs of the transition and integration of
any such systems acquired in the Acquisition, as a direct result of the establishment of the business acquired in the Acquisition as a standalone business following the Acquisition and
(ii) establishing the business acquired in the Acquisition as a standalone business following the Acquisition including the amortization of sign-on compensation arrangements for key
executives; provided that such expenses for the period after January 1, 2003 shall not exceed $2.0 million in the aggregate. 

        "Temporary
Offshore Global Note" has the meaning specified in Section 2.01. 

        "Total
Assets" means the total assets of the Company and the Restricted Subsidiaries, as shown on the most recent balance sheet of the Company. 

        "Transactions"
means all of the transactions (including the offering of the Notes pursuant to the Offering Memorandum) relating to the refinancing of the existing indebtedness of
Rockwood Specialties International, Inc., the Company and its Subsidiaries as described in the Offering Memorandum. 

        "Trust
Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was executed, except as provided in Section 9.05. 

        "Trustee"
means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean such successor Trustee. 

        "Unrestricted
Subsidiary" means: 

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

        (2)   any
Subsidiary of an Unrestricted Subsidiary. 

The
Board of Directors of the Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness 

21

 

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 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 10.10, and 

        (c)   each
of the Subsidiary to be so designated and 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 of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately
after giving effect to such designation no Default or Event of Default shall have occurred and be continuing and either: 

        (1)   the
Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described under Section 10.11(a), or 

        (2)   the
Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking into account such designation. Any such designation by the Board of Directors of the Company 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.
Global Notes" has the meaning specified in Section 2.01 of this Indenture. 

        "U.S.
Physical Notes" has the meaning specified in Section 2.01 of this Indenture. 

        "Vice
President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title
"vice president". 

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

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

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

        (2)   the
sum of all such payments. 

        "Wholly
Owned Restricted Subsidiary" means 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) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person. 

22

 

        SECTION
1.02    Compliance Certificates and Opinions.    

        Upon
any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers Certificate
stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or
opinion need be furnished. 

        Every
certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 10.08(a)) shall include: 

        (1)   a
statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; 

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

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

        (4)   a
statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. 

        SECTION
1.03    Form of Documents Delivered to Trustee.    

        In
any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 

        Any
certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are erroneous. 

        Where
any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they
may, but need not, be consolidated and form one instrument. 

        SECTION
1.04    Acts of Holders.    

        (a)    Any
request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby 

23

 

expressly
required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section. 

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

        (c)    The
principal amount and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Note Register. 

        (d)    If
the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but
the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Notes have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Notes shall be computed as of such record date;  provided that no such
authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after the record date. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of
any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect
of anything done, omitted or suffered to be done by the Trustee, the Company or any Guarantor in reliance thereon, whether or not notation of such action is made upon such Security. 

        SECTION
1.05    Notices, Etc., to Trustee, Company, any Guarantor and Agent.    

        Any
request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with, 

        (1)   the
Trustee by any Holder or by the Company or any Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing (which may be
via facsimile) to or with the Trustee at The Bank of New York, 101 Barclay Street, 21St Floor West, New York, New York 10286, Attention: Corporate Trust Administration Division, or 

        (2)   the
Company or any Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered in writing and mailed, first-class postage prepaid, or delivered by recognized overnight 

24

 

courier,
to the Company or such Guarantor addressed to it at the address of its principal office specified in the first paragraph, Attention: Thomas J. Riordan, or at any other address previously
furnished in writing to the Trustee by the Company or such Guarantor. 

        SECTION
1.06    Notice to Holders; Waiver.    

        Where
this Indenture provides for notice of any event to Holders by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to other Holders. Notices given by publication shall be deemed given on the first date on which publication is made and
notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing. 

        In
case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when
such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder. 

        Where
this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. 

        SECTION
1.07    Effect of Headings and Table of Contents.    

        The
Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 

        SECTION
1.08    Successors and Assigns.    

        All
covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 

25

  

        SECTION 1.09    Separability Clause.    

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

        SECTION
1.10    Benefits of Indenture.    

        Nothing
in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Notes Registrar and their successors
hereunder, the Holders and, with respect to any provisions hereof relating to the subordination of the Notes or the rights of holders of Senior Indebtedness, the holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this Indenture. 

        SECTION
1.11    Governing Law.    

        This
Indenture, the Notes and any Guarantee shall be governed by and construed in accordance with the laws of the State of New York. This Indenture is subject to the provisions of the
Trust Indenture Act that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. 

        SECTION
1.12    [INTENTIONALLY DELETED].    

        SECTION
1.13    Legal Holidays.    

        In
any case where any Interest Payment Date, Redemption Date or Stated Maturity or Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or Maturity; provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be. 

        SECTION
1.14    No Personal Liability of Directors, Officers, Employees and Stockholders.    

        No
director, officer, employee, incorporator or stockholder of the Company or any Guarantor or any of their parent companies shall have any liability for any obligations of the Company
or the Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note and
the related Guarantor waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Guarantees. 

        SECTION
1.15    Trust Indenture Act Controls.    

        If
any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA
shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as
so modified or excluded, as the case may be. 

        SECTION
1.16    Counterparts.    

        This
Indenture may be executed in any number of counterparts, each of which shall be original; but such counterparts shall together constitute but one and the same instrument. 

26

 

 
 

ARTICLE TWO    
    
    NOTE FORMS    
    

        SECTION
2.01    Forms Generally.    

        The
Initial Notes shall be known and designated as the "105/8% Senior Subordinated Notes due 2011" of the Company and the Exchange Notes shall be known and designated as
the "105/8% Exchange Notes due 2011" of the Company. The Notes and the Trustee's certificate of authentication shall be in substantially the forms set forth in Exhibit A and in
this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers
executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of
the Note. 

        The
definitive Notes shall be printed, lithographed, typewritten or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the
Company executing such Notes, as evidenced by their execution of such Notes. 

        Initial
Notes offered and sold in reliance on Rule 144A under the Securities Act shall be issued initially in the form of a single permanent global Note in substantially the form
set forth in Exhibit A and contain each of the legends set forth in Section 2.03 (the "U.S. Global Note"), registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Note
may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. 

        Initial
Notes offered and sold in offshore transactions in reliance on Regulation S under the Securities Act shall be issued initially in the form of a single temporary global
Note in substantially the form set forth in Exhibit A and contain the legends set forth in Section 2.03 (the "Temporary Offshore Global Note"), registered in the name of the nominee of
the Depositary, deposited with the Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. At any time following
41 days after the date hereof (the "Offshore Note Exchange Date"), upon receipt by the Trustee and the Company of a certificate substantially in the form set forth in Section 2.04, a
single permanent global Note substantially in the form of Exhibit A hereto (the "Permanent Offshore Global Note"; and together with the Temporary Offshore Global Note, the "Offshore Global
Note") duly executed by the Company and authenticated by the Trustee as hereinafter provided shall be deposited with the Trustee, as custodian for the Depositary, and the Note Registrar shall reflect
on its books and records the date and a decrease in the principal amount of the Temporary Offshore Global Note in an amount equal to the principal amount of the beneficial interest in the Temporary
Offshore Global Note transferred. The aggregate principal amount of the Offshore Global Note may from time to time be increased or decreased by adjustments made in the records of the Trustee, as
custodian for the Depositary or its nominee, as herein provided. Initial Notes issued pursuant to Section 3.05 in exchange for or upon transfer of beneficial interests in the U.S. Global Note
or the Offshore Global Note shall be in the form of U.S. Physical Notes or in the form of permanent
certificated Notes substantially in the form set forth in Exhibit A (the "Offshore Physical Notes"), respectively, as hereinafter provided. 

        The
Offshore Physical Notes and U.S. Physical Notes are sometimes collectively herein referred to as the "Physical Notes." The U.S. Global Note and the Offshore Global Note are sometimes
collectively referred to as the "Global Notes." 

27

 

        Exchange
Notes shall be issued substantially in the form set forth in Exhibit A. 

        SECTION
2.02    Form of Trustee's Certificate of Authentication.    

        Subject
to Section 6.11, the Trustee's certificate of authentication shall be in substantially the following form: 

TRUSTEE'S
CERTIFICATE OF AUTHENTICATION. 

This
is one of the Notes referred to in the within-mentioned Indenture. 

	 	 	 	THE BANK OF NEW YORK,

as Trustee
	Dated:	 	 	 	 
	 	
	 	 	 
	 	 	 	By	 
	 	 	 	 	
 Authorized Signatory

        SECTION
2.03    Restrictive Legends.    

        Unless
and until (i) an Initial Note is sold pursuant to an effective Shelf Registration Statement or (ii) an Initial Note is exchanged for an Exchange Note in an Exchange
Offer pursuant to an effective Exchange Offer Registration Statement, in either case, pursuant to this Indenture and the Registration Rights Agreement, it being expressly understood that the Trustee
shall have no obligation to monitor or otherwise determine compliance with the Registration Rights Agreement, (A) each U.S. Global Note and U.S. Physical Note shall bear the following legend
set forth below (the "Private Placement Legend") on the face thereof and (B) the Offshore Global Note and the Offshore Physical Note shall bear the Private Placement Legend on the face thereof
until the Offshore Note Exchange Date and receipt by the Company and the Trustee of a certificate substantially in the form of Section 2.04: 

THE
NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) OR
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ROCKWOOD SPECIALTIES GROUP, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF THIS NOTE) ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) OUTSIDE THE
UNITED STATES PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE TRANSACTION OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 

28

 

SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE TRANSACTION" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 

        Each
Global Note, whether or not an Initial Note, shall also bear the following legend on the face thereof: 

UNLESS
THIS CERTIFICATE IS PRESENTED, BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE 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 CEDE & CO. 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 SECTIONS 3.11 AND 3.12 OF THE INDENTURE. 

        SECTION
2.04    Form of Certificate to Be Delivered After the Offshore Note Exchange Date.    

	 	 	 	 	 	 	On or after                        , 2003
	THE BANK OF NEW YORK

101 Barclay Street,

21St Floor West,

New York, New York 10286

Attention: Corporate Trust Administration Division
	

 	
 	

Re:	
 	

ROCKWOOD SPECIALTIES GROUP, INC. (the "Company")
 105/8% Senior Subordinated Notes due 2011 (the "Notes")

Ladies
and Gentlemen: 

        This
letter relates to $            principal amount of Notes represented by the temporary offshore global note certificate (the "Temporary Offshore Global Note"). Pursuant to
Sections 2.01 and 2.03 of the Indenture dated as of July 23, 2003 (the "Indenture") relating to the Notes, we hereby certify that (1) we are the beneficial owner of such principal amount
of Notes represented by the Temporary Offshore Global Note and (2) we are a Non-U.S. Person to whom the Notes could be transferred in accordance with Rule 904 of
Regulation S promulgated under the Securities Act of 1933, as amended 

29

 

(the
"Regulation S"). Accordingly, you are hereby requested to exchange the Temporary Offshore Global Note for an unlegended Permanent Offshore Global Note representing the undersigned's interest in
the principal amount of Notes represented by the Temporary Offshore Global Note, all in the manner provided for in the Indenture. Accordingly, you are hereby requested to issue an Offshore Physical
Note representing the undersigned's interest in the principal amount of Notes represented by the Temporary Offshore Global Note, all in the manner provided by the Indenture. 

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

	 	 	Very truly yours,

[Name of Holder]
	

 	
 	

By:	

 
	 	 	 	
 Authorized Signature

 
 

ARTICLE THREE    
    
    THE NOTES    
    

        SECTION
3.01    Title and Terms.    

        The
aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited to $475,000,000, except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 3.04, 3.05, 3.06, 3.11, 3.12, 9.06, 10.17, 10.18 or 11.08 or pursuant to an Exchange Offer. 

        The
Notes shall be known and designated as the "105/8% Senior Subordinated Notes due 2011" of the Company. Their Stated Maturity shall be May 15, 2011, and they
shall bear interest at the rate of 105/8% per annum from July 23, 2003, or from the most recent Interest Payment Date to which interest has been paid or duly provided for,
payable on November 15, 2003 and semi-annually thereafter on May 15 and November 15 in each year and at said Stated Maturity, until the principal thereof is paid or
duly provided for and to the Person in whose name the Note (or any predecessor Note) is registered at the close of business on the May 1 and November 1 immediately preceding such
Interest Payment Date (each, a "Regular Record Date"). 

        The
principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in The City and State of New York or,
at the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the Note Register of Holders;  provided that all
payments of principal, premium, if any, and interest with respect to Notes represented by one or more permanent Global Notes
registered in the name of or held by Depositary or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof. Until otherwise
designated by the Company, the Company's office or agency in New York shall be the office of the trustee maintained for such purpose. 

        Holders
shall have the right to require the Company to purchase their Notes, in whole or in part, in the event of a Change in Control pursuant to Section 10.17. The Notes shall be
subject to repurchase pursuant to an Offer to Purchase as provided in Section 10.18. 

        The
Notes shall be redeemable as provided in Article Eleven. 

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        The
Notes shall be subordinated in right of payment to Senior Indebtedness as provided in Article Fourteen. 

        The
due and punctual payment of principal of, premium, if any, and interest on the Notes payable by the Company is irrevocably unconditionally guaranteed, to the extent set forth herein,
by each of the Guarantors. The Guarantee issued by any Guarantor will be subordinated to all existing and future Guarantor Senior Indebtedness of such Guarantor as provided in Article Twelve. 

        SECTION
3.02    Denominations.    

        The
Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. 

        SECTION
3.03    Execution, Authentication, Delivery and Dating.    

        The
Notes shall be executed on behalf of the Company by its Chairman, its President or a Vice President and attested by its Secretary or an Assistant Secretary. The signature of any of
these officers on the Notes may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Notes. 

        Notes
bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. 

        At
any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes. 

        On
the Issue Date, the Company shall deliver the Initial Notes in the aggregate principal amount of $375,000,000 executed by the Company to the Trustee for authentication, together with
a Company Order for the authentication and delivery of such Notes, directing the Trustee to authenticate the Notes and certifying that all conditions precedent to the issuance of Notes contained
herein have been fully complied with, and the Trustee in accordance with such Company Order shall authenticate and deliver such Initial Notes. At any time and from time to time after the Issue Date,
the Company may deliver Additional Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Additional Notes,
directing the Trustee to authenticate the Additional Notes and certifying that the issuance of such Additional Notes is in compliance with Article Ten hereof and that all other conditions precedent to
the issuance of Notes contained herein have been fully complied with, and the Trustee in accordance with such Company Order shall authenticate and deliver such Additional Notes;  provided that the
aggregate principal amount of any Additional Notes shall not exceed $100,000,000. On Company Order, the Trustee shall authenticate for
original issue Exchange Notes in an aggregate principal amount not to exceed $375,000,000 plus the aggregate principal amount of any Additional Notes issued;  provided that such Exchange Notes shall be
issuable only upon the valid surrender for cancellation of Initial Notes and any Additional Notes of a like
aggregate principal amount in accordance with an Exchange Offer pursuant to the Registration Rights Agreement and a Company Order for the authentication and delivery of such Exchange Notes and
certifying that all conditions precedent to the issuance of such Exchange Notes are complied with (including the effectiveness of the Exchange Offer Registration Statement related thereto). In each
case, the Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Company that it may reasonably require in connection with such authentication of Notes. Such
order shall specify the amount of Notes to be authenticated and the date on which the original issue of Notes is to be authenticated. 

31

 

        Each
Note shall be dated the date of its authentication. 

        No
Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. 

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

        SECTION
3.04    Temporary Notes.    

        Pending
the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as conclusively evidenced by their execution of such Notes. 

        If
temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 10.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes. 

        SECTION
3.05    Registration, Registration of Transfer and Exchange.    

        The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant
to Section 10.02 being herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Note Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the
Note Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as note registrar (the "Note Registrar") for the purpose of registering Notes and transfers of Notes
as herein provided. 

32

 

        Upon
surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 10.02, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations of a like aggregate principal amount. 

        At
the option of the Holder, Notes may be exchanged for other Notes of any authorized denomination and of a like aggregate principal amount, upon surrender of the Notes to be exchanged
at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange
is entitled to receive; provided that no exchange of Initial Notes for Exchange Notes shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the Commission, the Trustee shall have received an Officers' Certificate confirming that the Exchange Offer Registration Statement has been declared effective by the
Commission and the Initial Notes to be exchanged for the Exchange Notes shall be cancelled by the Trustee. 

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

        Every
Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by
written instruments of transfer, in form satisfactory to the Company and the Note Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. 

        No
service charge shall be made for any registration of transfer or exchange or redemption of Notes, but the Company may require payment of a sum sufficient to cover any taxes, fees or
other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 3.03, 3.04, 9.06, 10.17, 10.18, or 11.08
not involving any transfer. 

        SECTION
3.06    Mutilated, Destroyed, Lost and Stolen Notes.    

        If
(i) any mutilated Note is surrendered to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Note
or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. 

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

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

        Every
new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company and
each Guarantor, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder. 

33

 

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

        SECTION
3.07    Payment of Interest; Interest Rights Preserved.    

        Interest
on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to
Section 10.02; provided, however, that each installment of interest may at the Company's option be paid by (i) mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 3.08, to the address of such Person as it appears in the Note Register or (ii) transfer
to an account located in the United States maintained by the payee. 

        Any
interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular
Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: 

        (1)   The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 1.06, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names
the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). 

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

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

34

   
        SECTION 3.08    Persons Deemed Owners.    

        Prior
to the due presentment of a Note for registration of transfer, the Company, any Guarantor, the Trustee and any agent of the Company or the Trustee may treat the Person in whose
name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections 3.05 and 3.07) interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. 

        SECTION
3.09    Cancellation.    

        All
Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Notes previously authenticated hereunder which the Company has not issued
and sold, and all Notes so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of by the Trustee in accordance with its
customary procedures unless by Company Order the Company shall direct that cancelled Notes be returned to it. 

        SECTION
3.10    Computation of Interest.    

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

        SECTION
3.11    Book-Entry Provisions for Global Notes.    

        (a)    Each
Global Note initially shall (i) be registered in the name of the Depositary for such Global Notes or the nominee of such Depositary, (ii) be delivered
to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Section 2.03. 

        Members
of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note, and the Depositary may be treated by the
Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee 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 Depositary or impair, as between the Depositary and its Participants, the operation of customary practices governing the exercise of the rights of a beneficial owner of
any Note. The registered Holder of a Global Note may grant proxies and otherwise authorize any person, including Participants and persons that may hold interests through Participants, to take any
action which a Holder is entitled to take under this Indenture or the Notes. 

        (b)    Interests
of beneficial owners in a Global Note may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of
Section 3.12 hereof. Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, a nominee of the Depositary, its successors or
their respective nominees, except (i) as otherwise set forth in Section 3.12 and (ii) Physical Notes shall be transferred to beneficial owners in exchange for their beneficial
interests in a Global Note if the Depositary (1) notifies the Company that it is unwilling or unable to continue as depository for such Global Note and the Company thereupon fails to appoint a
successor depository or (2) has ceased to be a clearing agency registered under the 

35

 

Exchange
Act. In connection with the transfer of an entire Global Note to the beneficial owners pursuant to clause (ii) of this paragraph (b), the applicable Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the applicable Global Note, an equal aggregate principal amount of Physical Notes of authorized denominations. 

        (c)    Any
beneficial interest in a Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note shall, upon such transfer,
cease to be an interest in such Global Note and shall become an interest in such other Global Note and, accordingly, shall thereafter be subject to all transfer restrictions, if any, and other
procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. 

        (d)    Any
Physical Note delivered in exchange for an interest in a Global Note pursuant to paragraph (b) of this Section shall, unless such exchange is made on or after
the Resale Restriction Termination Date (as defined below), and except as otherwise provided in Section 3.12 hereof, bear the Private Placement Legend. 

        SECTION
3.12    Transfer Provisions.    

        Unless
and until (i) an Initial Note is sold pursuant to an effective Shelf Registration Statement or (ii) an Initial Note is exchanged for an Exchange Note in connection
with an Exchange Offer pursuant to an effective Exchange Offer Registration Statement, in each case, pursuant to the Registration Rights Agreement, the following provisions shall apply: 

        (a)    General.    The provisions of this Section 3.12 shall apply to all transfers involving any Physical Note
and any beneficial interest in a Global Note. 

        (b)    Certain Definitions.    As used in this Section 3.12 only, "delivery" of a certificate by a transferee
or transferor means the delivery to the Note Registrar by such transferee or transferor of the applicable certificate duly completed; "holding" includes both possession of a Physical Note and
ownership of a beneficial interest in a Global Note, as the context requires; "transferring" a Global Note means transferring that portion of the principal amount of the transferor's beneficial
interest therein that the transferor has notified the Note Registrar that it has agreed to transfer; and "transferring" a Physical Note means transferring that portion of the principal amount thereof
that the transferor has notified the Note Registrar that it has agreed to transfer. 

        As
used in this Indenture, "Regulation S Certificate" means a certificate substantially in the form set forth in Section 3.13; "Rule 144A Certificate" means a
certificate substantially in the form set forth in Section 3.14; and "Non-Registration Opinion and Supporting Evidence" means a written opinion of counsel reasonably acceptable to
the Company to the effect that, and such other certification or information as the Company may reasonably require to confirm that, the proposed transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities Act. 

        (c)    Deemed Delivery of a Rule 144A Certificate in Certain Circumstances.    A Rule 144A Certificate,
if not actually delivered, shall be deemed delivered if (i) (A) the transferor advises the Company and the Trustee in writing that the relevant offer and sale were made in accordance with the
provisions of Rule 144A (or, in the case of a transfer of a Physical Note, the transferor checks the box provided on the Physical Note to that effect) and (B) the transferee advises the
Company and the Trustee in writing that (x) it and, if applicable, each account for which it is acting in connection with the relevant transfer, is a QIB within the meaning of Rule 144A,
(y) it is aware that the transfer of Notes to it is being made in reliance on an exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A and
(z) prior to the proposed date of transfer it has been given the opportunity to obtain from the Company the information referred to 

36

 

in
Rule 144A(d)(4) and has either declined such opportunity or has received such information (or, in the case of a transfer of a Physical Note, the transferee signs the certification provided
on the Physical Note to that effect); or (ii) the transferor holds the U.S. Global Note and is transferring to a transferee that will take delivery in the form of the U.S. Global Note. 

        (d)    Procedures and Requirements.    

        (1)   If
the proposed transfer occurs prior to the Offshore Note Exchange Date, and the proposed transferor holds: 

        (A)  a
U.S. Physical Note, which is surrendered to the Note Registrar, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee requests delivery in the form
of a U.S. Physical Note, then the Note Registrar shall (x) register such transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such
surrendered U.S. Physical Note and (z) deliver a new U.S. Physical Note to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being
transferred of such surrendered U.S. Physical Note; 

         (ii)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Note, then the Note Registrar shall (x) cancel such surrendered U.S. Physical Note,
(y) record an increase in the principal amount of the U.S. Global Note equal to the principal amount being transferred of such surrendered U.S. Physical Note and (z) notify the
Depositary in accordance with the procedures of the Depositary that it approves of such transfer; or 

        (iii)  delivers
a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global Note, then the Note Registrar shall (x) cancel such surrendered U.S. Physical Note, (y) record an increase in the principal amount of
the Temporary Offshore Global Note equal to the principal amount being transferred of such surrendered U.S. Physical Note and (z) notify the Depositary in accordance with the procedures of the
Depositary that it approves of such transfer. 

In
any of the cases described in this Section 3.12(d)(1)(A), the Note Registrar shall deliver to the transferor a new U.S. Physical Note in principal amount equal to the principal amount not
being transferred of such surrendered U.S. Physical Note, as applicable. 

        (B)  the
U.S. Global Note, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee requests delivery in the form
of a U.S. Physical Note, then the Note Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a
decrease in the principal amount of the U.S. Global Note in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Note to such transferee duly
registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary that it
approves of such transfer; 

         (ii)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent 

37

 

Member
and requests that the proposed transferee receive a beneficial interest in the U.S. Global Note, then the transfer shall be effected in accordance with the procedures of the Depositary
therefor; or 

        (iii)  delivers
a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global Note, then the Note Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and
records, (x) record a decrease in the principal amount of the U.S. Global Note in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the
principal amount of the Temporary Offshore Global Note equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary that it approves of
such transfer. 

        (B)  the
Temporary Offshore Global Note, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee requests delivery in the form
of a U.S. Physical Note, then the Note Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a
decrease in the principal amount of the Offshore Global Note in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Note to such transferee
duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary that it
approves of such transfer; 

         (ii)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Note, then the Note Registrar shall (x) record a decrease in the principal amount of the
Offshore Global Note in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Note equal to the amount of such
decrease and (z) notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer; or 

        (iii)  delivers
a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global Note, then the transfer shall be effected in accordance with the procedures of the Depositary therefor. 

        (2)   If
the proposed transfer occurs on or after the Offshore Note Exchange Date and the proposed transferor holds: 

        (A)  a
U.S. Physical Note which is surrendered to the Note Registrar, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee requests delivery in the form
of a U.S. Physical Note, then the procedures set forth in Section 3.12(d)(1)(A)(i) shall apply; 

         (ii)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests that the proposed transferee receive a beneficial interest in the 

38

 

Offshore
Global Note, then the procedures set forth in Section 3.12(d)(1)(A)(ii) shall apply; or 

        (iii)  delivers
a Regulation S Certificate, then the Note Registrar shall cancel such surrendered U.S. Physical Note and at the direction of the transferee, either: 

         (x)  register
such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Note to such transferee in
principal amount equal to the principal amount being transferred of such surrendered U.S. Physical Note, or 

         (y)  if
the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Note equal to the principal amount
being transferred of such surrendered U.S. Physical Note and notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer. 

In
any of the cases described in this Section 3.12(d)(2)(A)(i), (ii) or (iii)(x), the Note Registrar shall deliver to the transferor a new U.S. Physical Note in principal amount equal to
the principal amount not being transferred of such surrendered U.S. Physical Note, as applicable. 

        (B)  the
U.S. Global Note, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee requests delivery in the form
of a U.S. Physical Note, then the procedures set forth in Section 3.12(d)(1)(B)(i) shall apply; or 

         (ii)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Note, then the procedures set forth in Section 3.12(d)(1)(B)(ii) shall apply; or 

        (iii)  delivers
a Regulation S Certificate, then the Note Registrar shall (x) record a decrease in the principal amount of the U.S. Global Note in an amount
equal to the beneficial interest therein being transferred, (y) notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer and (z) at the
direction of the transferee, either: 

         (x)  register
such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Note to such transferee in
principal amount equal to the amount of such decrease, or 

         (y)  if
the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Note equal to the amount of such
decrease. 

        (C)  an
Offshore Physical Note which is surrendered to the Note Registrar, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests delivery in the form of the U.S. Global Note, then the Note Registrar shall (x) cancel such surrendered Offshore Physical Note, (y) record an increase in the
principal amount of the U.S. Global Note equal to the principal amount being 

39

 

transferred
of such surrendered Offshore Physical Note and (z) notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer; 

         (ii)  where
the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Note,
then the Note Registrar shall (x) cancel such surrendered Offshore Physical Note, (y) record an increase in the principal amount of the Offshore Global Note equal to the principal amount
being transferred of such surrendered Offshore Physical Note and (z) notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer; or 

        (iii)  does
not make a request covered by Section 3.12(d)(2)(C)(i) or Section 3.12(d)(2)(C)(ii), then the Note Registrar shall (x) register such
transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such surrendered Offshore Physical Note and (z) deliver a new Offshore Physical
Note to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being transferred of such surrendered Offshore Physical Note. 

In
any of the cases described in this Section 3.12(d)(2)(C), the Note Registrar shall deliver to the transferor a new Offshore Physical Note in principal amount equal to the principal amount
not being transferred of such surrendered Offshore Physical Note, as applicable. 

        (D)  the
Offshore Global Note, and the proposed transferee or transferor, as applicable: 

          (i)  delivers
(or is deemed to have delivered pursuant to clause (c) above) a Rule 144A Certificate and the proposed transferee is or is acting through an
Agent Member and requests delivery in the form of the U.S. Global Note, then the Note Registrar shall (x) record a decrease in the principal amount of the Offshore Global Note in an amount
equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Note equal to the amount of such decrease and (z) notify the
Depositary in accordance with the procedures of the Depositary that it approves of such transfer; 

         (ii)  where
the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Note,
then the transfer shall be effected in accordance with the procedures of the Depositary therefor; or 

        (iii)  does
not make a request covered by Section 3.12(d)(2)(D)(i) or Section 3.12(d)(2)(D)(ii), then the Note Registrar shall (w) register such
transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein being transferred, (y) deliver a new Offshore Physical Note to such transferee duly registered in the name of such transferee in principal amount equal to the amount
of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary that it approves of such transfer. 

        (e)    Execution, Authentication and Delivery of Physical Notes.    In any case in which the Note Registrar is
required to deliver a Physical Note to a transferee or transferor, the Company shall execute, and the Trustee shall authenticate and make available for delivery, such Physical Note. 

        (f)    Certain Additional Terms Applicable to Physical Notes.    Any transferee entitled to receive a Physical Note
may request that the principal amount thereof be evidenced by one or more 

40

 

Physical
Notes in any authorized denomination or denominations and the Note Registrar shall comply with such request if all other transfer restrictions are satisfied. 

        (g)    Transfers Not Covered by Section 3.12(d).    The Note Registrar shall effect and record, upon receipt of
a written request from the Company so to do, a transfer not otherwise permitted by Section 3.12(d), such recording to be done in accordance with the otherwise applicable provisions of
Section 3.12(d), upon the furnishing by the proposed transferor or transferee of a Non-Registration Opinion and Supporting Evidence. 

        (h)    General.    By its acceptance of any Note bearing the Private Placement Legend, each Holder of such Note
acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in the Indenture. The
Note Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions with respect thereto set forth in this Indenture. The Note Registrar shall not be required
to determine (but may rely upon a determination made by the Company) the sufficiency or accuracy of any such certifications, legal opinions, other information or document. 

        (i)    Private Placement Legend.    Upon the transfer, exchange or replacement of Notes not bearing the Private
Placement Legend, the Note Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the
Note Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) the circumstances exist contemplated by the fourth paragraph of Section 2.01 (with respect to an
Offshore Physical Note) or the requested transfer is at least two years after the original issue date of the Initial Note (with respect to any Physical Note), (ii) there is delivered to the
Note Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such Notes are exchanged for Exchange Notes pursuant to an Exchange Offer. 

41

  

        SECTION 3.13    Form of Regulation S Certificate.    

Regulation S Certificate  

	To:	 	The Bank of New York

101 Barclay Street,

21st Floor West,

New York New York 10286

Attention: Corporate Trust Administration Division
	

 	
 	

Re:	

Rockwood Specialties Group, Inc. (the "Company")
 105/8% Senior Subordinated Notes due 2011 (the "Notes")

Ladies
and Gentlemen: 

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

        (1)   The
offer of the Notes was not made to a person in the United States (unless such person or the account held by it for which it is acting is excluded from the definition
of "U.S. person" pursuant to Rule 902(o) of Regulation S under the circumstances described in Rule 902(i)(3) of Regulation S) or specifically targeted at an identifiable
group of U.S. citizens abroad. 

        (2)   Either
(a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that
the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on
our behalf knows that the transaction was pre-arranged with a buyer in the United States. 

        (3)   Neither
we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable. 

        (4)   The
proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act. 

        (5)   If
we are a dealer or a person receiving a selling concession or other fee or remuneration in respect of the Notes, and the proposed transfer takes place before the
Offshore Note Exchange Date referred to in the Indenture, dated as of July 23, 2003, among the Company, the guarantors thereunder and The Bank of New York, as the Trustee, or we are an officer
or director of the Company or a distributor, we certify that the proposed transfer is being made in accordance with the provisions of Rules 903 and 904(c) of Regulation S. 

        You
and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative
or legal 

42

 

proceeding
or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. 

	 	 	Very truly yours,
	

 	
 	

[NAME OF SELLER]
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:

Address:
	

Date of this Certificate:                        , 2003

	
 	

 	

 

        SECTION
3.14    Form of Rule 144A Certificate.    

Rule 144A Certificate  

	To:	 	The Bank of New York

101 Barclay Street,

21St Floor West,

New York, New York 10286

Attention: Corporate Trust Administration Division
	

 	
 	

Re:	

Rockwood Specialties Group, Inc. (the "Company")

105/8% Senior Subordinated Notes due 2011 (the "Notes")

Ladies
and Gentlemen: 

        In
connection with our proposed sale of $            aggregate principal amount of Notes, we confirm that such sale has been effected pursuant to and in accordance with
Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act"). We are aware that the transfer of Notes to us is being made in reliance on the exemption from
the provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this Certificate we have been given the opportunity to obtain from the Company the
information referred to in Rule 144A(d)(4), and have either declined such opportunity or have received such information. 

        You
and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters covered hereby. 

	 	 	Very truly yours,
	

 	
 	

[NAME OF PURCHASER]
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:

Address:
	

Date of this Certificate:                        , 20 

	
 	

 	

 

        SECTION
3.15    CUSIP Numbers.    

        The
Company in issuing the Notes may use "CUSIP" numbers (if then generally in use) in addition to serial numbers, and, if so, the Trustee shall use such "CUSIP" numbers in addition to
serial numbers in notices of redemption, repurchase or other notices to Holders as a convenience to Holders; 

43

 

provided
that any such notice may state that no representation is made as to the correctness of such CUSIP numbers either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Notes, and any such redemption or repurchase shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. 

        SECTION
3.16    Issuance of Additional Notes.    

        The
Company may, subject to Section 10.11 of this Indenture, issue additional Notes having identical terms and conditions to the Initial Notes issued on the Issue Date (the
"Additional Notes"); provided that the aggregate principal amount of Initial Notes issued on the Issue Date and the aggregate principal amount of Additional Notes issued under this Indenture shall not
exceed $475,000,000. The Initial Notes issued on the Issue Date and any Additional Notes subsequently issued shall be treated as a single class for all purposes under this Indenture. Exchange Notes
issued in exchange for Initial Notes issued on the Issue Date and Exchange Notes issued for any Additional Notes subsequently issued shall be treated as a single class for all purposes under this
Indenture. 

 
 

ARTICLE FOUR    
    
    SATISFACTION AND DISCHARGE    
    

        SECTION
4.01    Satisfaction and Discharge of Indenture.    

        This
Indenture shall upon Company Request cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Notes expressly provided for herein or
pursuant hereto) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when: 

        (1)   either,

        (a)   all
Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 3.06 and (ii) Notes for whose payment money has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or 

        (b)   all
such Notes not theretofore delivered to the Trustee for cancellation, 

          (i)  have
become due and payable by reason of the making of a notice of redemption pursuant to Section 11.05 or otherwise, or 

         (ii)  will
become due and payable at their Stated Maturity within one year, or 

        (iii)  are
to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company, 

and
the Company or any Guarantor, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment
of interest to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such
deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; 

44

 

        (2)   no
Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit) with respect to this Indenture or the Notes shall have
occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; 

        (3)   the
Company has paid or caused to be paid all sums payable by it under this Indenture; 

        (4)   the
Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at the Stated
Maturity or the Redemption Date, as the case may be; and 

        (5)   the
Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein to the satisfaction and
discharge of this Indenture have been complied with. 

        Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.07, the obligations of the Company to any
Authenticating Agent under Section 6.12 and, if money or Government Securities shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section,
the obligations of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall survive such satisfaction and discharge. 

        SECTION
4.02    Application of Trust Money.    

        Subject
to the provisions of the last paragraph of Section 10.03, all money or Government Securities deposited with the Trustee pursuant to Section 4.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Government Securities has been deposited with
the Trustee; but such money or Government Securities need not be segregated from other funds except to the extent required by law. 

        If
the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 4.01 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and any Guarantor's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section 4.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities
in accordance with Section 4.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the
Trustee or Paying Agent. 

 
 

ARTICLE FIVE    
    
    REMEDIES    
    

        SECTION
5.01    Events of Default.    

        "Event
of Default", wherever used herein, means one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article
Fourteen or 

45

 

be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 

        (1)   default
in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes issued under the Indenture whether
or not such payment shall be prohibited by Article Fourteen hereof; 

        (2)   default
for 30 days or more in the payment when due of interest on or with respect to the Notes whether or not such payment shall be prohibited by Article
Fourteen hereof; 

        (3)   failure
by the Company or any Guarantor for 30 days after receipt of written notice given by the Trustee or the Holders of at least 30% in principal amount of the
Notes then outstanding to comply with any of its other agreements in this Indenture or the Notes; 

        (4)   default
under any mortgage, indenture or instrument under which there 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 issuance of the Notes, if both 

        (A)  such
default either (x) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods)
or (y) 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 $25.0 million or more at any one time outstanding; 

        (5)   failure
by the Company or any Significant Subsidiary to pay final judgments aggregating in excess of $25.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree which is not promptly stayed; 

        (6)   any
of the following events with respect to the Company or any Significant Subsidiary 

        (A)  the
Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law 

	(i)
	commences
a voluntary case;

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

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

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

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

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

	(ii)
	appoints
a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or 

46

 

	(iii)
	orders
the winding up or liquidation of the Company or any Significant Subsidiary; 

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

        (7)   the
Guarantee of any Significant Subsidiary shall for any reason cease to be in full force and effect or to be declared null and void or any responsible officer of any
Guarantor that is a Significant Subsidiary, as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of
this Indenture or the release of any such Guarantee in accordance with this Indenture. 

        SECTION
5.02    Acceleration of Maturity, Rescission and Annulment.    

        If
an Event of Default (other than an Event of Default specified in Section 5.01(6) above) occurs and is continuing, then and in every such case the Trustee or the Holders of not
less than 30% in principal amount of the Outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all Outstanding Notes to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given by Holders); provided, however, that, so long as any Indebtedness
permitted to be incurred under this Indenture as part of the Senior Credit Facilities shall be outstanding, no such acceleration shall be effective until the earlier of: 

        (1)   acceleration
of any such Indebtedness under the Senior Credit Facilities or 

        (2)   five
Business Days after the giving of written notice to the Company and the Agent of such acceleration. 

        Upon
the effectiveness of such declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in
Section 5.01(6) above occurs and is continuing, then the principal amount of all Outstanding Notes shall ipso facto become and be immediately due
and payable without any notice, declaration or other act on the part of the Trustee or any Holder. 

        At
any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in
this Article, the Holders of a majority in aggregate principal amount of the Outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its
consequences if 

        (a)   the
Company has paid or deposited with the Trustee a sum sufficient to pay: 

        (A)  all
overdue interest on all Outstanding Notes, 

        (B)  all
unpaid principal of (and premium, if any, on) any Outstanding Notes which has become due otherwise than by such declaration of acceleration, and interest on such
unpaid principal at the rate borne by the Notes, 

        (C)  to
the extent that payment of such interest is lawful, interest on overdue interest at the rate borne by the Notes, and 

        (D)  all
sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and 

        (b)   Events
of Default, other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section 5.13, 

no
such rescission shall affect any subsequent default or impair any right consequent thereon. 

        Notwithstanding
the preceding paragraph, in the event of any Event of Default specified in clause 5.01(4) above, such Event of Default and all consequences thereof (excluding any
resulting 

47

 

payment
default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose, 

        (x)   the
Indebtedness or guarantee that is the basis for such Event of Default has been discharged, 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)   if
the default that is the basis for such Event of Default has been cured. 

        Upon
a determination by the Company that the Senior Credit Facilities are no longer in effect, the Company shall promptly give to the Trustee written notice thereof, which notice shall
be countersigned by the Agent. Unless and until the Trustee shall have received such written notice with respect to the Senior Credit Facilities, the Trustee, subject to the TIA Sections 3.15(a)
through 3.15(d), shall be entitled in all respects to assume that the Senior Credit Facilities are in effect (unless a Responsible Officer of the Trustee shall have actual knowledge to the contrary). 

        SECTION
5.03    Collection of Indebtedness and Suits for Enforcement by Trustee.    The Company covenants that if: 

        (a)   default
is made in the payment of any installment of interest on any Note when such interest becomes due and payable and such default continues for a period of
30 days, or 

        (b)   default
is made in the payment of the principal of (or premium, if any, on) any Note at the Maturity thereof, 

the
Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal (and premium, if any)
and interest, and interest on any overdue principal (and premium, if any) and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installment of interest, at
the
rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel. 

        If
the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection
of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company, any Guarantor or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, any Guarantor or any other obligor upon the Notes, wherever situated. 

        If
an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders under this Indenture and the
Guarantees by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any such rights, including seeking recourse against any Guarantor, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy, including but without limitation,
seeking recourse against any Guarantor. 

        SECTION
5.04    Trustee May File Proofs of Claim.    

        In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the
Company or any other obligor including any Guarantor, upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of
the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of 

48

 

whether
the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise, 

          (i)  to
file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Notes and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and 

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

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.07. 

        Nothing
herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 

        SECTION
5.05    Trustee May Enforce Claims Without Possession of Notes.    

        All
rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which
such judgment has been recovered. 

        SECTION
5.06    Application of Money Collected.    

        Subject
to Article Fourteen, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid: 

        FIRST:    To the payment of all amounts due the Trustee under Section 6.07; 

        SECOND:    To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes in
respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal
(and premium, if any) and interest, respectively; and 

        THIRD:    The balance, if any, to the Company or any other obligor on the Notes, as their interests may appear or as a court of
competent jurisdiction may direct in writing; provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by this Indenture. 

49

 

        SECTION
5.07    Limitation on Suits.    

        No
Holder of any Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless: 

        (1)   such
Holder has previously given written notice to the Trustee of a continuing Event of Default; 

        (2)   the
Holders of not less than 30% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder; 

        (3)   such
Holder or Holders have offered to the Trustee reasonable indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with
such request; 

        (4)   the
Trustee for 30 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and 

        (5)   no
direction inconsistent with such written request has been given to the Trustee during such 30-day period by the Holders of a majority or more in principal
amount of the Outstanding Notes; 

it
being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture or the Guarantees to affect,
disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture or the Guarantees,
except in the manner herein provided and for the equal and ratable benefit of all the Holders. 

        SECTION
5.08    Unconditional Right of Holders to Receive Principal, Premium and Interest.    

        Notwithstanding
any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment, as provided herein
(including, if applicable, Article Eleven) and in such Note of the principal of (and premium, if any) and (subject to Section 3.07) interest on such Note on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the
consent of such Holder. 

        SECTION
5.09    Restoration of Rights and Remedies.    

        If
the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or the Guarantees and such proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, any Guarantor, any other
obligor of the Notes, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted. 

        SECTION
5.10    Rights and Remedies Cumulative.    

        Except
as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.06, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 

50

 

        SECTION
5.11    Delay or Omission Not Waiver.    

        No
delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 

        SECTION
5.12    Control by Holders.    

        The
Holders of not less than a majority in principal amount of the Outstanding Notes shall 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, provided that: 

        (1)   such
direction shall not be in conflict with any rule of law or with this Indenture, 

        (2)   subject
to Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such
direction, and 

        (3)   the
Trustee need not take any action which might involve it in personal liability or be unjustly prejudicial to the Holders not consenting. 

        SECTION
5.13    Waiver of Past Defaults.    

        Subject
to Sections 5.08 and 9.02 and the last paragraph of Section 5.02, the Holders of not less than a majority in principal amount of the Outstanding Notes may on behalf of the
Holders of all such Notes waive any past Default hereunder and its consequences, except a continuing Default or Event of Default (1) in respect of the payment of interest on, premium, if any,
or the principal of any such Note held by a non-consenting Holder, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without
the consent of the Holder of each Outstanding Note affected. 

        Upon
any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such
waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. 

        SECTION
5.14    Waiver of Stay or Extension Laws.    

        Each
of the Company, the Guarantors and any other obligor on the Notes covenants (to the extent that it may lawfully do so) that it will not 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 each of the Company, the Guarantors and any other obligor on the Notes (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not 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 SIX    
    
    THE TRUSTEE    
    

        SECTION
6.01    Duties of the Trustee.    

        (a)   Except
during the continuance of a Default or an Event of Default, 

51

 

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

        (2)   in
the absence of bad faith or willful misconduct 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; but in the case of any such certificates or opinions specifically
required by any provision hereof to be provided to it, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but not to
verify the contents thereof. 

        (b)   In
case a Default or an Event of Default has occurred and is continuing of which a Responsible Officer of the Trustee has actual knowledge or of which written notice of
such Default or Event of Default shall have been given to the Trustee by the Company, any other obligor of the Notes or by any Holder, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. 

        (c)   No
provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that 

        (1)   this
paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section; 

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

        (3)   the
Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority
in aggregate principal amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture; and 

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

        (d)   Whether
or not therein expressly so provided, 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. 

        SECTION
6.02    Notice of Defaults.    

        Within
ten days after the earlier of receipt from the Company of notice of the occurrence of any Default or Event of Default hereunder or the date when such Default or Event of Default
becomes known to the Trustee, the Trustee shall transmit, in the manner and to the extent provided in TIA Section 313(c), notice of such Default or Event of Default hereunder known to the
Trustee, unless such Default or Event of Default shall have been cured or waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so long as a trust committee of Responsible Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders. 

52

  

        SECTION 6.03    Certain Rights of Trustee.    

        Subject
to the provisions of TIA Sections 315(a) through 315(d): 

        (1)   the
Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in original or facsimile form) believed by it to be
genuine and to have been signed or presented by the proper party or parties; 

        (2)   any
request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution; 

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

        (4)   the
Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 

        (5)   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 reasonable security or indemnity satisfactory to it against the costs, expenses, losses and liabilities which might be
incurred by it in compliance with such request or direction; 

        (6)   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, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such
inquiry or investigation; 

        (7)   the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall
not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; 

        (8)   the
Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; and 

        (9)   the
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall
be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder. 

        The
Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 

53

 

        SECTION
6.04    Trustee Not Responsible for Recitals or Issuance of Notes.    

        The
recitals contained herein and in the Notes, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility on
Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the
Company of Notes or the proceeds thereof. 

        SECTION
6.05    May Hold Notes.    

        The
Trustee, any Paying Agent, any Note Registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes
and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not the Trustee, Paying Agent, Note Registrar or such other agent;  provided, however,
 that, if it acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign. 

        SECTION
6.06    Money Held in Trust.    

        Money
held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company. 

        SECTION
6.07    Compensation and Reimbursement.    

        The
Company agrees: 

        (1)   to
pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 

        (2)   except
as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as shall be determined to have been caused by its own negligence or willful misconduct; and 

        (3)   to
indemnify the Trustee for, and to hold it harmless against, any loss, liability, claim, damage or expense incurred without negligence or willful misconduct on its
part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. 

        The
obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless
the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture and resignation or removal of the Trustee. As security for the
performance of such obligations of the Company, the Trustee shall have a claim prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for
the payment of principal of (and premium, if any) or interest on particular Notes. 

54

 

        When
the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(6), the expenses (including the reasonable charges and
expenses of its counsel) of and the compensation for such services are intended to constitute expenses of administration under any applicable Federal or State bankruptcy, insolvency or other similar
law. 

        The
provisions of this Section shall survive the termination of this Indenture. 

        SECTION
6.08    Corporate Trustee Required; Eligibility.    

        There
shall be at all times a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and surplus of at least
$50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of Federal, State, territorial or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. 

        SECTION
6.09    Resignation and Removal; Appointment of Successor.    

        (a)   No
resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by
the successor Trustee in accordance with the applicable requirements of Section 6.10. 

        (b)   The
Trustee may resign at any time by giving written notice thereof to the Company. Upon receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of Directors, a copy of which shall be delivered to the resigning Trustee and a copy to the successor trustee. If the
instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. 

        (c)   The
Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to
the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. 

        (d)   If
at any time: 

        (1)   the
Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or 

        (2)   the
Trustee shall cease to be eligible under Section 608 and shall fail to resign after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or 

        (3)   the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, 

then,
in any such case, (i) the Company, by a Board Resolution, may remove the Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Note
for at least six months 

55

 

may,
on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 

        (e)   If
the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed
by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. 

        (f)    The
Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders in the manner provided for
in Section 1.06. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 

        SECTION
6.10    Acceptance of Appointment by Successor.    

        (a)   Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts. 

        (b)   Upon
request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor
Trustee all rights, powers and trusts referred to in paragraph (a) of this Section. 

        (c)   No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 

        SECTION
6.11    Merger, Conversion, Consolidation or Succession to Business.    

        Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder,  provided such
corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case at that
time any of the Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee. In
all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have; provided,
however, that 

56

 

the
right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation. 

        SECTION
6.12    Appointment of Authenticating Agent.    

        At
any time when any of the Notes remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents with respect to the Notes which shall be authorized to act on behalf of
the Trustee to authenticate Notes and the Trustee shall give written notice of such appointment to all Holders of Notes with respect to which such Authenticating Agent will serve, in the manner
provided for in Section 1.06. Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing signed by a Responsible Officer of the Trustee, and a copy of such instrument shall be promptly furnished to the Company.
Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Section. 

        Any
corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent. 

        An
Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and
shall give written notice of such appointment to all Holders of Notes, in the manner provided for in Section 1.06. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section. 

        The
Company agrees to pay to each Authenticating Agent from time to time such compensation for its services under this Section as shall be agreed in writing between the Company and such
Authenticating Agent. 

57

 

        If
an appointment is made pursuant to this Section, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of
authentication in the following form: 

        This
is one of the Notes designated therein referred to in the within-mentioned Indenture. 

	 	 	THE BANK OF NEW YORK

    as Trustee
	

 	
 	

By:	

 
	 	 	 	
 as Authenticating Agent
	

 	
 	

By:	

 
	 	 	 	
 as Authorized Officer

 
 

ARTICLE SEVEN    
    
    HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY    
    

        SECTION
7.01    Company to Furnish Trustee Names and Addresses.    The Company will furnish or cause to be furnished
to the Trustee 

        (a)   semiannually,
not more than 10 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date; and 

        (b)   at
such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and
content to that in paragraph (a) hereof as of a date not more than 15 days prior to the time such list is furnished; 

provided, however, that if and so long as the Trustee shall be the Note Registrar, no such list need be furnished. 

        SECTION
7.02    Disclosure of Names and Addresses of Holders.    

        Every
Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). 

        SECTION
7.03    Reports by Trustee.    

        Within
60 days after May 15 of each year commencing with the first May 15 after the first issuance of Notes pursuant to this Indenture, the Trustee shall transmit to
the Holders of Notes (with a copy to the Company at the Place of Payment), in the manner and to the extent provided in TIA Section 313(c), a brief report dated as of such May 15 if
required by TIA Section 313(a). 

58

 

 
 

ARTICLE EIGHT    
    
    MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS    
    

        SECTION
8.01    Company May Consolidate, Etc., Only on Certain Terms.    

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

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

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

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

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

        (A)  the
Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 1011(a) or 

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

        (5)   each
Guarantor, unless it is the other party to the transactions described above, in which case Section 8.02(2) below shall apply, shall have by supplemental
indenture confirmed that its Guarantee shall apply to such Person's obligations under this Indenture and the Notes; and 

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

        The
Successor Company shall succeed to, and be substituted for, the Company under this Indenture and the Notes. Notwithstanding clauses (3) and (4) above, 

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

        (b)   the
Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the guarantor or the Company in another State of the United States so long
as the amount of Indebtedness of the Company and the Restricted Subsidiaries is not increased thereby. 

        SECTION
8.02    Subsidiary Guarantors May Consolidate, Etc., Only on Certain Terms.    

        Subject
to Section 10.15(b), each Guarantor shall not, and the Company shall not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not such
Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to,
any Person unless: 

        (A)  (1)
such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, 

59

 

transfer,
lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any
territory thereof (such Guarantor or such Person, as the case may be, being herein called the "Successor Person"); 

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

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

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

        (B)  (1)
the transaction is made in compliance with Section 10.18; and 

        (2)   if
the Successor Person is a Restricted Subsidiary (other than such Guarantor or a Designated Non-Guarantor Joint Venture), the Successor Person expressly
assumes all the obligations of such Guarantor under the Indenture and such Guarantor's Guarantee pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory
to the trustee; provided, however, that if the Successor Person is a Designated
Non-Guarantor Joint Venture, all the obligations of such Guarantor under the Indenture and such Guarantor's Guarantee will be required to be expressly assumed by such Designated
Non-Guarantor Joint Venture only if, immediately after giving effect to such transaction or transactions on a pro forma
basis, (i) a Default or Event of Default would then exist and be continuing or (ii) the total assets (excluding intercompany assets) of such Guarantor, valued immediately prior to such
transaction, together with any assets (excluding intercompany assets) previously transferred to any Designated Non-Guarantor Joint Venture by any other Guarantor, valued at the time such
assets were transferred to such Designated Non-Guarantor Joint Ventures, would exceed 10.0% of the total assets (excluding intercompany assets) of the Issuer and its Restricted
Subsidiaries as shown on the most recent balance sheet of the Issuer and its Restricted Subsidiaries prior to the most recent proposed transfer. 

        Subject
to Section 10.15(b) hereof, the Successor Person shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor's Guarantee.
Notwithstanding the foregoing, any Guarantor may merge into or transfer all or part of its properties and assets to another Guarantor or the Company. 

        SECTION
8.03    Successor Substituted.    

        Upon
any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the assets of the Company or any Guarantor in
accordance with Sections 8.01 and 8.02 hereof, the successor Person formed by such consolidation or into which the Company or such Guarantor, as the case may be, is merged or the successor Person to
which such sale, assignment, conveyance, transfer, lease or disposition is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Guarantor, as
the case may be, under this Indenture and/or the Guarantees, as the case may be, with the same effect as if such successor Person had been named as the Company or such Guarantor, as the case may be,
herein and/or the Guarantees, as the case may be. When a successor Person assumes all obligations of its predecessor hereunder, the Notes or the Guarantees, as the case may be, such predecessor shall
be released from all obligations; provided that in the event of a transfer or lease, the predecessor shall not be released from the payment of principal
and interest or other obligations on the Notes or the Guarantees, as the case may be. 

60

  

 
 

ARTICLE NINE    
    
    SUPPLEMENTAL INDENTURES    
    

        SECTION
9.01    Amendments or Supplements Without Consent of Holders.    

        Without
the consent of any Holders, the Company, any Guarantor (with respect to a Guarantee or this Indenture to which it is a party), when authorized by Board Resolutions of their
respective Board of Directors, and the Trustee, at any time and from time to time, may amend or supplement this Indenture, any Guarantee or the Notes, in form satisfactory to the Trustee, for any of
the following purposes: 

        (1)   to
cure any ambiguity, omission or defect, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture; provided that such action shall not adversely affect the interests of the
Holders in any material respect; 

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

        (3)   to
comply with Article Eight hereof; 

        (4)   to
evidence the succession of another Person to the Company or to any Guarantor and to provide the assumption by such Person of the Company's or such Guarantor's
obligations to Holders; 

        (5)   to
make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any
such Holder; 

        (6)   to
add covenants for the benefit of the Holders or to surrender any right or power conferred in this Indenture upon the Company; 

        (7)   to
comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; 

        (8)   to
evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirements of Sections 6.09 and 6.10; 

        (9)   to
provide for the issuance of Exchange Notes or private exchange notes, which are identical to Exchange Notes except that they are not freely transferable; or 

        (10)  to
add a Guarantor under this Indenture. 

        SECTION
9.02    Amendments, Supplements or Waivers with Consent of Holders.    

        With
the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes, by Act of said Holders delivered to the Company and the Trustee, the Company,
any Guarantor (with respect to any Guarantee or this Indenture to which it is a party), when authorized by Board Resolutions of their respective Board of Directors, and the Trustee may amend or
supplement this Indenture, any Guarantee or the Notes for the purpose of adding any provisions hereto or thereto, changing in any manner or eliminating any of the provisions or of modifying in any
manner the rights of the Holders hereunder or thereunder (including, without limitation, consents obtained in connection with a purchase of, or tender offer or Exchange Offer for, the Notes) and any
existing Default, Event of Default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes, other than Notes beneficially owned by the Company or its Affiliates (including, without limitation, consents obtained in connection with a purchase of or tender offer or exchange
offer for Notes); provided,  

61

 

 however, that no such amendment, supplement or waiver shall, without the consent of the Holder of each Outstanding Note affected thereby: 

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

        (2)   reduce
the principal of or change the Maturity of any such Security or alter or waive the provisions with respect to the redemption of the Notes (other than Sections
10.17 and 10.18), 

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

        (4)   waive
a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the Payment Default that resulted from such acceleration, or in respect of a covenant or provision contained
in the Indenture or any guarantee which cannot be amended or modified without the consent of all Holders, 

        (5)   make
any Note payable in money other than that stated in such Notes, 

        (6)   make
any change in Section 5.13 or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes, 

        (7)   make
any change in these amendment, supplement and waiver provisions, 

        (8)   impair
the right of any Holder to receive payment of principal of, or interest on such Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes or 

        (9)   make
any change in Article Fourteen of this Indenture that would adversely affect the Holders. 

        SECTION
9.03    Execution of Amendments, Supplements or Waivers.    

        In
executing, or accepting the additional trusts created by, any amendment, supplement or waiver permitted by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be provided with, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment, supplement or waiver is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise. 

        SECTION
9.04    Effect of Amendments, Supplements or Waivers.    

        Upon
the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such amendment, supplement or waiver shall
form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 

        SECTION
9.05    Conformity with Trust Indenture Act.    

        Every
supplemental indenture executed pursuant to the Article shall conform to the requirements of the Trust Indenture Act as then in effect. 

        SECTION
9.06    Reference in Notes to Supplemental Indentures.    

        Notes
authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved
by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new 

62

 

Notes
so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Notes. 

        SECTION
9.07    Notice of Supplemental Indentures.    

        Promptly
after the execution by the Company, any Guarantor and the Trustee of any supplemental indenture pursuant to the provisions of Section 9.02, the Company shall give notice
thereof to the Holders of each Outstanding Note affected, in the manner provided for in Section 1.06, setting forth in general terms the substance of such supplemental indenture. 

        SECTION
9.08    Effect on Senior Indebtedness.    

        No
amendment, supplement or waiver shall adversely affect the rights of the Banks or holders of any other Designated Senior Indebtedness under Article Fourteen without the consent of the
Agent or the representative of such holders, as the case may be. 

 
 

ARTICLE TEN    
    
    COVENANTS    
    

        SECTION
10.01    Payment of Principal, Premium, if Any, and Interest.    

        The
Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any) and interest on the Notes in accordance with
the terms of the Notes and this Indenture. 

        SECTION
10.02    Maintenance of Office or Agency.    

        The
Company will maintain in The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Corporate Trust Office of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands. 

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

        SECTION
10.03    Money for Notes Payments to Be Held in Trust.    

        If
the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (or premium, if any) or interest on any of the Notes, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal of (or premium, if any) or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. 

63

 

        Whenever
the Company shall have one or more Paying Agents for the Notes, it will, on or before each due date of the principal of (or premium, if any) or interest on any Notes, deposit
with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. 

        The
Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will: 

        (1)   hold
all sums held by it for the payment of the principal of (and premium, if any) or interest on Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein provided; 

        (2)   give
the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal (and premium, if any) or interest;
and 

        (3)   at
any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. 

        The
Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to
pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such
Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. 

        Any
money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (or premium, if any) or interest on any Note and
remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 

        SECTION
10.04    Corporate Existence.    

        Subject
to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and that of each Restricted
Subsidiary and the corporate rights (charter and statutory) and franchises of the Company and each Restricted Subsidiary; provided, however, that the
Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries as a whole. 

        SECTION
10.05    Payment of Taxes and Other Claims.    

        The
Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed
upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary 

64

 

and
(b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; 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 whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Company) are being maintained in
accordance with GAAP. 

        SECTION
10.06    Maintenance of Properties.    

        The
Company will cause all properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted
Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Restricted Subsidiary. 

        SECTION
10.07    Insurance.    

        The
Company will at all times keep all of its and its Subsidiaries properties which are of an insurable nature insured with insurers, believed by the Company to be responsible, against
loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties. 

        SECTION
10.08    Statement by Officers as to Default.    

        (a)   The
Company will deliver to the Trustee within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the
Company and its Restricted Subsidiaries during the preceding quarter or the preceding fiscal year, as the case may be, has been made under the supervision of the signing officers with a view to
determining whether it has kept, observed, performed and fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill its obligations under this Indenture and
further stating, as to each such officer signing such certificate, that, to the best of his or her knowledge, the Company during such preceding quarter or the preceding fiscal year, as the case may
be, has kept, observed, performed and fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill each and every such covenant contained in this Indenture and
no Default or Event of Default occurred during such quarter or year, as the case may be, and at the date of such certificate there is no Default or Event of Default which has occurred and is
continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe its status, with particularity and that, to the best of his or her knowledge, no event has
occurred and remains by reason of which payments on the account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto. The Officers' Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal
year-end. For purposes of this Section 10.08(a), such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. 

        (b)   When
any Default or Event of Default has occurred and is continuing under this Indenture, or if the trustee for or the holder of any other evidence of Indebtedness of
the Company or any Restricted Subsidiary gives any notice or takes any other action with respect to a claimed default (other than with respect to Indebtedness in the principal amount of less than
$25,000,000), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission an 

65

 

Officers'
Certificate specifying such event, notice or other action within five Business Days of its occurrence. 

        SECTION
10.09    Reports and Other Information.    

        (a)   The
Company shall file with the Commission (and make available to the Trustee and Holders (without exhibits), without cost to each Holder, within 15 days after it
files with the Commission): 

        (1)   within
90 days (or the successor time period then in effect under the rules and regulations of the Exchange Act) after the end of each fiscal year, annual reports
on Form 10-K, or any successor or comparable form, containing the information required to be contained therein, or required in such successor or comparable form; 

        (2)   within
45 days (or the successor time period then in effect under the rules and regulations of the Exchange Act) after the end of each of the first three fiscal
quarters of each fiscal year, reports on Form 10-Q, containing the information required to be contained therein, or any successor or comparable form; 

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

        (4)   any
other information, documents and other reports which the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of
the Exchange Act; and 

        (5)   delivery
of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates); 

provided that the Company shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which
event the Company shall make available such information to prospective purchasers of the Notes, in addition to providing such information to the Trustee and the Holders, in each case within
15 days after the time the Company would be required to file such information with the Commission, if it were subject to Section 13 or 15(d) of the Exchange Act. 

        (b)   Notwithstanding
the foregoing, such requirements shall be deemed satisfied prior to the commencement of the Exchange Offer or the effectiveness of the Shelf Registration
Statement by the filing with the Commission of the Exchange Offer Registration Statement and/or Shelf Registration Statement within the time periods specified in the Registration Rights Agreement, and
any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act. 

        SECTION
10.10    Limitation on Restricted Payments.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly: 

        (1)   declare
or pay any dividend or make any distribution on account of the Company's or any Restricted Subsidiary's Equity Interests, including any dividend or distribution
payable in connection with any merger or consolidation other than, 

        (A)  dividends
or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or in options, warrants or other rights to purchase
such Equity Interests, or 

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

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

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

        (x)   Indebtedness
permitted under clauses (7) and (8) of Section 10.11(b), or 

        (y)   the
purchase, repurchase or other acquisition 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 acquisition; or 

        (4)   make
any Restricted Investment; 

(all
such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: 

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

        (B)  immediately
after giving effect to such transaction on a pro forma basis, the Company could incur at least $1.00 of additional Indebtedness under
Section 10.11(a); and 

        (C)  such
Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date
(including Restricted Payments permitted by clauses (1), (2) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (B) thereof only), (4) (only
to the extent that amounts that could have been paid pursuant to such clause if $5.0 million and $10.0 million were substituted in such clause for $10.0 million and
$20.0 million respectively), (5), (6)(A) and (C) and (9) of Section 10.10(b), but excluding all other Restricted Payments permitted by Section 10.10(b), is less than
the sum of: 

        (1)   50%
of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the
Issue Date, to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case such
Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus

        (2)   100%
of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Board of Directors, of marketable securities received by the
Company since immediately after the Issue Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness, Disqualified Stock or preferred stock pursuant
to Section 10.11(b)(13)) from the issue or sale of: 

        (x)   Equity
Interests of the Company, including Retired Capital Stock (as defined below), but excluding cash proceeds and marketable securities received from the sale of
(A) Equity Interests to members of management, directors or consultants of the Company, any direct or indirect parent corporation of the Company and the Company's Subsidiaries after the Issue 

67

 

Date
to the extent such amounts have been applied to Restricted Payments made in accordance with Section 10.10(b)(4) and (B) Designated Preferred Stock, and to the extent actually
contributed to the Company, Equity Interests of the Company's direct or indirect parent corporations (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such
corporations), or 

        (y)   debt
securities of the Company that have been converted into such Equity Interests of the Company; provided, however,
that this clause (2) shall not include the proceeds from (a) Refunding Capital Stock (as defined below), (b) Equity Interests or converted debt securities of the Company sold to a
Restricted Subsidiary or the Company, as the case may be, (c) Disqualified Stock or debt securities that have been converted into Disqualified Stock or (d) Excluded Contributions,  plus

        (3)   100%
of the aggregate amount of cash and marketable securities contributed to the capital of the Company following the Issue Date (other than net cash proceeds to the
extent such net cash proceeds have been used to incur Indebtedness, Disqualified Stock or preferred stock pursuant to Section 10.11(b)(13)) (other than by a Restricted Subsidiary and other than
by any Excluded Contributions), plus

        (4)   100%
of the aggregate amount received in cash and the fair market value of marketable securities received 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 and its Restricted Subsidiaries and
repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries and repayments of loans or advances which constitute Restricted Investments by the Company
and its Restricted Subsidiaries, or 

        (B)  the
sale (other than to the Company or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than
in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to clause (7) or (10) of Section 10.10(b) or
to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary, plus

        (5)   in
the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of the Investment in such Unrestricted Subsidiary, as
determined by the Board of Directors in good faith or if, in the case of an Unrestricted Subsidiary, such fair market value may exceed $25.0 million, in writing by an independent investment
banking firm of nationally recognized standing, at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other than an Unrestricted Subsidiary to the extent the
Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to clause (7) or (10) of Section 10.10(b) or to the extent such Investment
constituted a Permitted Investment. 

        (b)   The
foregoing provisions shall not prohibit: 

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

        (2)   (A)
the redemption, repurchase, retirement or other acquisition of any Equity Interests ("Retired Capital Stock") or Subordinated Indebtedness of the Company, or any
Equity Interests of any direct or indirect parent corporation of the Company, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of the Company (in each case, other than any Disqualified Stock) ("Refunding Capital 

68

 

Stock")
and (B) if immediately prior to the retirement of Retired Capital Stock, the declaration and payment of dividends thereon was permitted under clause (6) of this
Section 10.10(b), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or
otherwise acquire any Equity Interests of any direct or indirect parent corporation of the Company) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was
declarable and payable on such Retired Capital Stock immediately prior to such retirement; 

        (3)   the
redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Company which is incurred in compliance with Section 10.11 so long as, 

        (A)  the
principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired
for value, plus the amount of any reasonable premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired, 

        (B)  such
Indebtedness is subordinated to Senior Indebtedness and the Notes at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value, 

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

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

        (4)   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 corporations 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 corporations
pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the
aggregate Restricted Payments made under this clause (4) do not exceed in any calendar year $10.0 million (with unused amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum (without giving effect to the following proviso) of $20.0 million in any calendar year); provided further
that such amount in any calendar year may be increased by an amount not to exceed, 

        (A)  the
cash proceeds from the sale of Equity Interests of the Company and, to the extent contributed to the Company, Equity Interests of any of the Company's direct or
indirect parent corporations, 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 corporations that occurs
after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of
Section 10.10(a)(C), plus

        (B)  the
cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after the Issue Date,  less

        (C)  the
amount of any Restricted Payments previously made pursuant to clauses (A) and (B) of this Section 1010(b)(4); 

69

 

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

        (5)   the
declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any other Restricted Subsidiary issued in accordance
with the covenant described under Section 10.11 to the extent such dividends are included in the definition of Fixed Charges; 

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

        (B)  the
declaration and payment of dividends to a direct or indirect parent corporation of the Company, the proceeds of which will be used to fund the payment of dividends
to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of such parent corporation issued after the Issue Date,  provided that the amount of dividends paid
pursuant to this clause 6(B) shall not exceed the aggregate amount of cash actually contributed to the
Company from the sale of such Designated Preferred Stock, or 

        (C)  the
declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this
Section 10.10(b); 

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

        (7)   Investments
in Unrestricted Subsidiaries having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (7) that
are at the time outstanding, without giving
effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash and/or marketable securities, not to exceed $25.0 million at the time of such
Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); 

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

        (9)   the
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 corporations after the Issue Date, of up to 6% per annum of the net proceeds received by or contributed to the Company in such public offering, other than public offerings with respect
to the Company's Common Stock registered on Form S-8 and other than any public sale constituting an Excluded Contribution; 

        (10)  Investments
that are made with Excluded Contributions; 

        (11)  other
Restricted Payments in an aggregate amount not to exceed $30.0 million; 

70

  

        (12)  the
declaration and payment of dividends by the Company to, or the making of loans to, its parent corporation in amounts required for either of their
respective direct or indirect parent corporations to pay, 

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

        (B)  federal,
state and local income taxes, to the extent such income taxes are attributable to the income of the Company and the Restricted Subsidiaries and, to the extent
of the amount actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries, 

        (C)  customary
salary, bonus and other benefits payable to officers and employees of any direct or indirect parent corporation of the Company to the extent such salaries,
bonuses and other benefits are attributable to the ownership or operation of the Company and the Restricted Subsidiaries, and 

        (D)  general
corporate overhead expenses of any direct or indirect parent corporation of the Company to the extent such expenses are attributable to the ownership or
operation of the Company and the Restricted Subsidiaries; 

        (13)  distributions
or payments of Receivables Fees; 

        (14)  cash
dividends or other distributions on the Company's or any Restricted Subsidiary's Capital Stock used to fund the payment of fees and expenses incurred
in connection with the Transactions or owed to Affiliates, in each case to the extent permitted by Section 10.13; 

        (15)  the
payment of dividends or distributions to Rockwood Specialties International, Inc. to be applied to fund cash interest payments on the Senior
Discount Notes commencing August 15, 2007 in accordance with the terms of the Senior Discount Notes on the Issue Date; and 

        (16)  the
payment of dividends or distributions to Rockwood Specialties International, Inc. in an amount equal to the KKR Equity Contribution for the
purpose of repaying Indebtedness of any of the Parent Companies; provided, however, that for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date of the declaration of such dividends or distributions, after giving effect to such declaration on a pro forma basis, the
Company and Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 2.50 to 1.00; 

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (5) through (7),
clause (11) and clauses (15) and (16) of this Section 10.10(b), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence
thereof. 

        (c)   As
of the time of issuance of the Notes, all of the Company's Subsidiaries shall be Restricted Subsidiaries. The Company shall not permit any Unrestricted Subsidiary to
become a Restricted Subsidiary except pursuant to the last sentence of the definition of "Unrestricted Subsidiary" in Section 1.01 of this Indenture. For purposes of designating any Restricted
Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be
Restricted Payments in an amount determined as set forth in the last sentence of the definition of "Investment". Such designation will be permitted only if a Restricted Payment in such amount would be
permitted at such time, whether pursuant to Section 10.10(a) or under clause (7), (10) or (11) of Section 10.10(b), and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture. 

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        SECTION
10.11    Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, (collectively, "incur" and collectively, an "incurrence") with respect to any Indebtedness (including Acquired Indebtedness) and the Company shall not
issue any shares of Disqualified Stock and shall not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness
(including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if the Fixed Charge Coverage Ratio for the Company's and the Restricted Subsidiaries' most
recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified
Stock or preferred stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such
four-quarter period; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock
that may be incurred pursuant to the foregoing by Restricted Subsidiaries that are not Guarantors of the Notes shall not exceed $75.0 million at any one time outstanding. 

        (b)   The
foregoing limitations shall not apply to: 

        (1)   the
existence of Indebtedness under Credit Facilities on the Issue Date together with the incurrence by the Company or any Restricted Subsidiary of Indebtedness under
Credit Facilities and the issuance and creation of letters of credit and bankers' acceptances thereunder (with letters of credit and bankers' acceptances being deemed to have a principal amount equal
to the face amount thereof), up to an aggregate principal amount of $565.0 million outstanding at any one time; provided, however, that the
aggregate amount of Indebtedness incurred by Restricted Subsidiaries (other than Guarantors) pursuant to this clause (1) may not exceed $200.0 million outstanding at any one time; 

        (2)   the
incurrence by the Company and any Guarantor of Indebtedness represented by the Notes (including any Guarantee); 

        (3)   Existing
Indebtedness (other than Indebtedness described in clauses (1) and (2) above); 

        (4)   Indebtedness
(including Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by the Company or any of its Restricted Subsidiaries, to finance
the purchase, lease or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any
Person owning such assets, in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and
incurred pursuant to this clause (4) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness, Disqualified Stock and preferred stock incurred
pursuant to this clause (4), does not exceed the greater of (x) $50.0 million and (y) 3.5% of Total Assets; 

        (5)   Indebtedness
incurred by the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course
of business, including without limitation letters of credit in respect of workers' compensation claims, 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 

72

 

incurrence
of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; 

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

        (A)  such
Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (6)(A)), and 

        (B)  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 the Restricted Subsidiaries in connection with
such disposition; 

        (7)   Indebtedness
of the Company to a Restricted Subsidiary; provided that any such Indebtedness owing to a
non-Guarantor is subordinated in right of payment to the Notes; provided further that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or
another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; 

        (8)   Indebtedness
of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that: 

        (A)  any
such Indebtedness is made pursuant to an intercompany note, and 

        (B)  if
a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not the Company or a Guarantor such Indebtedness is subordinated in right of payment to the
Guarantee of such Guarantor; provided further that any subsequent transfer of any such Indebtedness (except to the Company or another Restricted
Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; 

        (9)   shares
of preferred stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided
that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer
of any such shares of preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock; 

        (10)  Hedging
Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of limiting: 

        (A)  interest
rate risk with respect to any Permitted Indebtedness, or 

        (B)  exchange
rate risk with respect to any currency exchange; 

        (11)  obligations
in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary
course of business; 

        (12)  Indebtedness
of any Guarantor in respect of such Guarantor's Guarantee; 

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        (13)  Indebtedness,
Disqualified Stock and preferred stock of the Company or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then
outstanding and incurred pursuant to this clause (13), does not at any one time outstanding exceed the sum of: 

        (x)   $115.0 million,
and 

        (y)   100%
of the net cash proceeds received by the Company since immediately after the Issue Date from the issue or sale of Equity Interests of the Company or cash
contributed to the capital of the Company (in each case other than proceeds of Disqualified Stock or sales of Equity Interests to the Company or any of its Subsidiaries) as determined in accordance
with clauses (C)(2) and (C)(3) of Section 10.10(a) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other
investments, payments or exchanges pursuant to Section 10.10(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (c) of the
definition thereof), 

provided further, however, that the aggregate amount of Indebtedness, Disqualified Stock and preferred stock incurred by Restricted Subsidiaries (other
than Guarantors) pursuant to this clause (13) may not exceed $75.0 million outstanding at any one time (it being understood that any Indebtedness, Disqualified Stock or preferred stock
incurred pursuant to this clause (13) shall cease to be deemed incurred or outstanding for purposes of this clause (13) but shall be deemed incurred for the purposes of
Section 10.11(a) from and after the first date on which the Company or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under
Section 10.11(a) without reliance on this clause (13)); 

        (14)  (A)
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, or 

        (B)  any
guarantee by a Restricted Subsidiary of Indebtedness of the Company, provided that such guarantee is incurred in
accordance with Section 10.15; 

        (15)  the
incurrence by the Company or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to refund or refinance any
Indebtedness, Disqualified Stock or preferred stock incurred as permitted under Section 10.11(a) and clauses (2) and (3) above, this clause (15) and clause (16)
below or any Indebtedness, Disqualified Stock or preferred stock issued to so refund or refinance such Indebtedness, Disqualified Stock or preferred stock including additional Indebtedness,
Disqualified Stock or preferred stock 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 which is not less than the remaining Weighted Average Life to Maturity of
the Indebtedness, Disqualified Stock or preferred stock being refunded or refinanced, 

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

        (C)  shall
not include (x) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that refinances Indebtedness, Disqualified Stock or preferred stock of
the 

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Company,
(y) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or preferred stock of a Guarantor; or
(z) Indebtedness, Disqualified Stock or preferred stock of the Company or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or preferred stock of an Unrestricted
Subsidiary; 

and  provided further that subclause (A) above of this clause (15) shall not apply to any refunding or refinancing of any Senior
Indebtedness; and 

        (16)  Indebtedness,
Disqualified Stock or preferred stock of Persons that are acquired by the Company or any Restricted Subsidiary or merged into the Company or
a Restricted Subsidiary in accordance with the terms of this Indenture; provided that such Indebtedness, Disqualified Stock or preferred stock is not
incurred in contemplation of such acquisition or merger; and provided further that after giving effect to such acquisition or merger, either: 

        (A)  the
Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 10.11(a),
or 

        (B)  the
Fixed Charge Coverage Ratio is greater than immediately prior to such acquisition or merger. 

        (c)   For
purposes of determining compliance with this Section 10.11, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock meets the
criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through (16) of this Section 10.11(b) or is
entitled to be incurred pursuant to Section 10.11(a), the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 10.11
and such item of Indebtedness, Disqualified Stock or Preferred Stock shall be treated as having been incurred pursuant to only one of such clauses of this Section 10.11(b) or pursuant to
Section 10.11(a) except as otherwise set forth in clause (13) of this Section 10.11(b). Accrual of interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness, Disqualified Stock or Preferred Stock shall not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this
Section 10.11. 

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

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

        SECTION
10.12    Limitation on Liens.    

        The
Company shall not, and shall not permit any Guarantor to, directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Senior
Subordinated Indebtedness or Subordinated Indebtedness on any asset or property of the Company or such Guarantor, or any income or profits therefrom, or assign or convey any right to receive income
therefrom, unless the 

75

 

Notes
(or a Guarantee in the case of Liens of a Guarantor) are equally and ratably secured with, or senior to, in the event the Lien relates to Subordinated Indebtedness, the obligations so secured or
until such time as such obligations are no longer secured by a Lien. 

        SECTION
10.13    Limitations on Transactions with Affiliates.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate of the Company (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $5.0 million, unless 

        (1)   such
Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and 

        (2)   the
Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration
in excess of $10.0 million, a resolution adopted by the majority of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (1) above. 

        (b)   The
foregoing provisions will not apply to the following: 

        (1)   transactions
between or among the Company and/or any of the Restricted Subsidiaries; 

        (2)   Restricted
Payments permitted by Section 10.10 and the definition of "Permitted Investment"; 

        (3)   the
payment of customary annual management, consulting, monitoring and advisory fees and related expenses to Kohlberg Kravis Roberts & Co. L.P. and its
Affiliates; 

        (4)   the
payment of reasonable and customary fees paid to, and indemnities provided on behalf of, officers, directors, employees or consultants of the Company, any of its
direct or indirect parent corporations or any Restricted Subsidiary; 

        (5)   payments
by the Company or any Restricted Subsidiary to Kohlberg Kravis Roberts & Co. L.P., and its Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a
majority of the Board of Directors of the Company in good faith; 

        (6)   transactions
in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that
such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 10.13(a)(1); 

        (7)   payments
or loans (or cancellation of loans) to employees or consultants of the Company, any of its direct or indirect parent corporations or any Restricted Subsidiary
which are approved by a majority of the Board of Directors of the Company in good faith; 

        (8)   any
agreement as in effect as of the Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous to the holders in any material respect); 

        (9)   the
existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including
any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter;  provided, however,
that the existence of, or the performance by the Company or any Restricted Subsidiary of obligations under any future amendment to
any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (9) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous to the Holders in any material respect; 

76

  

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

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

        (12)  the
issuance of Equity Interests (other than Disqualified Stock) of the Company to any Permitted Holder; and 

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

        SECTION
10.14    Limitations on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.    

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

        (a)   (1)
pay dividends or make any other distributions to the Company or any Restricted Subsidiary on its Capital Stock or, with respect to any other interest or
participation in, or measured by, its profits, or (2) pay any Indebtedness owed to the Company or any Restricted Subsidiary; 

        (b)   make
loans or advances to the Company or any Restricted Subsidiary; or 

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

        (1)   contractual
encumbrances or restrictions in effect on the Issue Date, including, without limitation, pursuant to the Senior Credit Facilities and their related
documentation; 

        (2)   this
Indenture and the Notes; 

        (3)   purchase
money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above 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
contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so
acquired; 

        (6)   contracts
for the sale of assets, including, without limitation, customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into
for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary; 

        (7)   secured
Indebtedness otherwise permitted to be incurred pursuant to Sections 10.11 and 10.12 that limit the right of the debtor to dispose of the assets securing such
Indebtedness; 

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

77

 

        (9)   other
Indebtedness, Disqualified Stock or preferred stock of Restricted Subsidiaries permitted to be incurred subsequent to the Issue Date pursuant to
Section 10.11; 

        (10)  customary
provisions in joint venture agreements and other similar agreements; 

        (11)  customary
provisions contained in leases and other agreements entered into in the ordinary course of business; 

        (12)  any
encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above 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) above,  provided
that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Board of Directors of the Company no more restrictive with respect to such encumbrance and other restrictions than those prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing; and 

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

        SECTION
10.15    Limitation on Guarantees of Indebtedness by Restricted Subsidiaries.    

        (a)   The
Company shall not permit any Restricted Subsidiary, other than a Guarantor, to guarantee the payment of any Indebtedness of the Company or any other Guarantor
unless: 

        (1)   such
Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a guarantee of payment of the Notes by such
Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Company or any Guarantor: 

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

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

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

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

        (A)  such
Guarantee of the Notes has been duly executed and authorized, and 

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

78

 

provided that this Section 10.15(a) shall not be applicable to any guarantee of any Restricted Subsidiary that 

        (x)   existed
at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or 

        (y)   guarantees
the payment of Obligations of the Company or any Restricted Subsidiary under the Senior Credit Facilities or any other Senior Indebtedness and any refunding,
refinancing or replacement thereof, in whole or in part, provided that such refunding, refinancing or replacement thereof constitutes Senior
Indebtedness and provided further that any such Senior Indebtedness and any refunding, refinancing or replacement thereof is not incurred pursuant to a
registered offering of securities under the Securities Act or a private placement of securities (including under Rule 144A) pursuant to an exemption from the registration requirements of the
Securities Act, which private placement provides for registration rights under the Securities Act. 

        (b)   Notwithstanding
the foregoing and the other provisions of this Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon: 

        (1)   any
sale, exchange or transfer of all of the Company's Capital Stock in any Restricted Subsidiary (by merger or otherwise), which sale, exchange or transfer is not
prohibited by this Indenture to (i) any Person not a Restricted Subsidiary or (ii) any Designated Non-Guarantor Joint Venture; provided,
however, that, in the case of transfers to a Designated Non-Guarantor Joint Venture, the applicable Guarantee shall not be released and discharged if, immediately
after giving effect to such release and discharge on a pro forma basis, (i) a Default or Event of Default would then exist and be continuing or (ii) the total assets (excluding
intercompany assets) of such Restricted Subsidiary transferred, valued immediately prior to its transfer to a Designated Non-Guarantor Joint Venture, together with any assets (excluding intercompany
assets) previously transferred to any Designated Non-Guarantor Joint Venture by any other Restricted Subsidiary that was a Guarantor, valued at the time such assets were transferred to
such Designated Non-Guarantor Joint Ventures, would exceed 10.0% of the total assets (excluding intercompany assets) of the Company and its Restricted Subsidiaries as shown on the most
recent balance sheet of the Company and its Restricted Subsidiaries prior to the most recent proposed transfer, or 

        (2)   the
release or discharge of the guarantee by such Restricted Subsidiary which resulted in the creation of such Guarantee, except a discharge or release by or as a result
of payment under such guarantee, or 

        (3)   if
the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary. 

        SECTION
10.16    Limitation on Other Senior Subordinated Indebtedness.    

        The
Company shall not, and shall not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to
any Indebtedness of the Company or any Guarantor, as the case may be, unless such Indebtedness is either: 

        (a)   equal
in right of payment with the Notes or such Guarantor's Guarantee, as the case may be, or 

        (b)   subordinate
in right of payment to the Notes or such Guarantor's guarantee, as the case may be. 

        SECTION
10.17    Change of Control.    

        (a)   If
a Change of Control occurs, the Company shall make an offer to purchase all of the Notes pursuant to the offer described below (the "Change of Control Offer") at a
price in cash (the "Change 

79

 

of
Control Payment") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject
to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date. Within 30 days following any Change of Control, the Company shall
send notice of such Change of Control Offer by first class mail, with a copy to the Trustee, to each Holder to the address of such Holder appearing in the Note Register with a copy to the Trustee,
with the following information: 

        (1)   a
Change of Control Offer is being made pursuant to this Section 10.17 and that all Notes properly tendered pursuant to such Change of Control Offer will be
accepted for payment; 

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

        (3)   any
Note not properly tendered will remain outstanding and continue to accrue interest; 

        (4)   unless
the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date; 

        (5)   Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third business day
preceding the Change of Control Payment Date; 

        (6)   Holders
will be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes, provided that the Paying Agent receives, not
later than the close of business on the last day of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of
Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and 

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

        (b)   While
the Notes are in global form and the Company makes an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option
to elect for the purchase of the Notes through the facilities of Depositary, Euroclear and Clearstream Banking, subject to their rules and regulations. 

        (c)   Prior
to complying with the provisions of this Section 10.17, but in any event within 30 days following a Change of Control, the Company shall either repay
all its outstanding Senior Indebtedness that prohibits it from repurchasing Notes in a Change of Control Offer or obtain the requisite consents, if any, under any outstanding Senior Indebtedness in
each case necessary to permit the repurchase of the Notes required by this Section 10.17, provided that the failure to repay such Indebtedness or
obtain such consent shall not affect the obligation to make a Change of Control Offer. 

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

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

80

 

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

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

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

        (f)    The
Paying Agent shall promptly mail to each Holder the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a
new Security equal in principal amount to any unpurchased portion of the Notes surrendered, if any, 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. 

        SECTION
10.18    Asset Sales.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless: 

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

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

        (A)  any
liabilities (as shown on the Company's, or such 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, that are assumed by the transferee of any such assets and for which the Company and all Restricted Subsidiaries
have been validly released by all creditors in writing, 

        (B)  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 (to
the extent of the cash received) within 180 days following the closing of such Asset Sale, and 

        (C)  any
Designated Noncash Consideration received by the Company or any Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with
all other Designated Noncash Consideration received pursuant to this clause (C) that is at that time outstanding, not to exceed the greater of (i) $75.0 million and
(ii) 7.0% of Total Assets at the time of the receipt of such Designated Noncash Consideration with the fair market value of each item of Designated Noncash Consideration, being measured at the
time received and without giving effect to subsequent changes in value, 

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

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

        (1)   to
permanently reduce: 

        (A)  Obligations
under the Senior Credit Facilities, and to correspondingly reduce commitments with respect thereto, 

81

 

        (B)  Obligations
under other Senior Indebtedness (and to correspondingly reduce commitments with respect thereto) or Senior Subordinated Indebtedness  provided that if the Company shall so reduce Obligations under Senior
Subordinated Indebtedness, it shall equally and ratably reduce Obligations under
the Notes if the Notes are then prepayable or, if the Notes may not then be prepaid, the Company shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all
Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid, or 

        (C)  Indebtedness
of a Restricted Subsidiary which is not a Guarantor, other than Indebtedness owed to the Company or another Restricted Subsidiary, 

        (2)   to
an investment in (a) any one or more businesses, provided that such investment in any business is in the form
of the acquisition of Capital Stock and results in the Company or a Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a
Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other assets, in each of (a), (b) and (c), used or useful in a Similar Business, and/or 

        (3)   to
an investment in (a) any one or more businesses, provided that such investment in any business is in the form of the acquisition of Capital Stock and results
in the Company or a Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) properties or
(c) other assets that, in 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 the Asset Sale that are not invested or applied as provided and within the time period set forth in Section 10.18(a) shall be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall make an offer to all Holders of the Notes and, if required by the terms of
any Pari Passu Indebtedness, to the holders of such Pari Passu Indebtedness, (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such Pari Passu Indebtedness, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus  accrued and unpaid interest, if
any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture. The Company shall commence
an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceeds $15.0 million by mailing the notice required pursuant to the terms of
this Indenture, with a copy to the Trustee. To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in this Indenture. If the aggregate principal amount of Notes or the Pari Passu
Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness to be purchased on a pro rata basis based on
the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. 

        (d)   Pending
the final application of any Net Proceeds pursuant to this Section 10.18, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds
temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture. 

        (e)   The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this 

82

 

Indenture,
the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof. 

        (f)    If
less than all of the Notes or such Pari Passu Indebtedness are to be redeemed at any time, selection for such Notes for redemption, will be made by the Trustee in
compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such
other method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be purchased or redeemed in part. 

        (g)   Notices
of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or redemption
date to each Holder to be purchased or redeemed at such Holder's registered address. If any Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such
Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. 

        (h)   A
new Note in principal amount equal to the unpurchased or unredeemed portion of any Note purchased or redeemed in part shall be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the purchase or redemption date, unless the Company defaults in payment of the purchase or Redemption Price, interest shall cease to accrue on
Notes or portions thereof purchased or called for redemption. 

        SECTION
10.19    Waiver of Certain Covenants.    

        The
Company and the Restricted Subsidiaries may omit in any particular instance to comply with any term, provision or condition set forth in or Sections 10.04 through 10.08, inclusive,
if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Notes, by Act of such Holders, waive such compliance in such instance with
such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. 

 
 

ARTICLE ELEVEN    
    
    REDEMPTION OF NOTES    
    

        SECTION
11.01    Right of Redemption.    

        The
Notes may be redeemed, at the election of the Company, as a whole or from time to time in part, at any time after May 15, 2007, subject to the conditions and at the Redemption
Prices specified in the form of Note, together with accrued interest to the Redemption Date. 

        In
addition to the optional redemption of the Notes in accordance with the provisions of the preceding paragraph, at any time prior to May 15, 2006, the Company may redeem up to
35% of the aggregate principal amount of the Notes under the Indenture at a redemption price equal to 110.625% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, 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, with the net proceeds of one or more
Equity Offerings of the Company or any direct or indirect parent of the Company to the extent such net proceeds are contributed to the Company; provided
that at least 65% of the sum of the aggregate principal amount of Notes remains outstanding immediately after the occurrence of each such redemption; provided
further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. 

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        SECTION
11.02    Applicability of Article.    

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

        SECTION
11.03    Election to Redeem; Notice to Trustee.    

        The
election of the Company to redeem any Notes pursuant to Section 11.01 above shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date
and of the principal amount of Notes to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to
Section 11.04. 

        SECTION
11.04    Selection by Trustee of Notes to Be Redeemed.    

        If
less than all the Notes are to be redeemed, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Notes not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the
principal of Notes; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less
than $1,000. 

        The
Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof
to be redeemed. 

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

        SECTION
11.05    Notice of Redemption.    

        Notice
of redemption shall be given in the manner provided for in Section 1.06 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder to be
redeemed. 

        All
notices of redemption shall state: 

        (1)   the
Redemption Date, 

        (2)   the
Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 11.07, if any, 

        (3)   if
less than all Outstanding Notes are to be redeemed, the identification (and, in the case of a partial redemption, the principal amounts) of the particular Notes to be
redeemed, 

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

        (5)   that
on the Redemption Date the Redemption Price (and accrued interest, if any, to the Redemption Date payable as provided in Section 11.07) will become due and
payable upon each such Note, or the portion thereof, to be redeemed, and that interest thereon will cease to accrue on and after said date, 

        (6)   the
place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest, if any, 

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

        (8)   that
Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price, 

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

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

        Notice
of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of
the Company. 

        SECTION
11.06    Deposit of Redemption Price.    

        Prior
to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Notes which are to be redeemed on that date. 

        SECTION
11.07    Notes Payable on Redemption Date.    

        Notice
of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together
with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such
Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Record Dates according to their terms and the provisions of Section 3.07. 

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

        SECTION
11.08    Notes Redeemed in Part.    

        Any
Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose
pursuant to Section 10.02 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered. 

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ARTICLE TWELVE    
    
    GUARANTEES    
    

        SECTION
12.01    Guarantees.    

        Each
Guarantor hereby jointly and severally, unconditionally and irrevocably guarantees the Notes and obligations of the Company hereunder and thereunder, and guarantees to each Holder
of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, that: (a) the principal of (and premium, if any) and interest on the Notes will be paid in
full when due, whether at Stated Maturity, by acceleration or otherwise (including, without limitation, the amount that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Law), together with interest on the overdue principal, if any, and interest on any overdue interest, to the extent lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or of any such other obligations, the same shall be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise, subject, however, in the case of clauses (a) and (b) above, to the limitation set forth in Section 12.05 hereof. 

        Each
Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence
of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. 

        Each
Guarantor hereby waives (to the extent permitted by law) the benefits of diligence, presentment, demand for payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the Company or any other Person, protest, notice and all demands whatsoever and covenants that the Guarantee of such
Guarantor shall not be discharged as to any Note except by complete performance of the obligations contained in such Note,
this Indenture and such Guarantee. Each Guarantor acknowledges that the Guarantee is a guarantee of payment and not of collection. Each of the Guarantors hereby agrees that, in the event of a default
in payment of principal (or premium, if any) or interest on such Note, whether at its Stated Maturity, by acceleration, purchase or otherwise, legal proceedings may be instituted by the Trustee on
behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against each of the Guarantors to enforce such Guarantor's Guarantee without first
proceeding against the Company or any other Guarantor. Each Guarantor agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are
prevented by applicable law from exercising their respective rights to accelerate the Maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with
respect to the Notes, such Guarantor shall pay to the Trustee for the account of the Holder, upon demand therefor, the amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the Holders. 

        If
any Holder or the Trustee is required by any court or otherwise to return to the Company or any Guarantor, or any custodian, trustee, liquidator or other similar official acting in
relation to either the Company or any Guarantor, any amount paid by any of them to the Trustee or such Holder, the Guarantee of each of the Guarantors, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Holders and the Trustee on the other hand, (x) subject to this
Article Twelve, the Maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the 

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purposes
of the Guarantee of such Guarantor notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligation as provided in Article Five hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the
purpose of the Guarantee of such Guarantor. 

        Each
Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the
Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall, to the
fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a "voidable preference", "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 

        SECTION
12.02    Severability.    

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

        SECTION
12.03    Restricted Subsidiaries.    

        The
Company shall cause any Restricted Subsidiary required to guarantee payment of the Notes pursuant to the terms and provisions of Section 10.15 to (i) execute and
deliver to the Trustee any amendment or supplement to this Indenture in accordance with the provisions of Article Nine of this Indenture pursuant to which such Restricted Subsidiary shall guarantee
all of the obligations on the Notes, whether for principal, premium, if any, interest (including interest accruing after the filing of, or which would have accrued but for the filing of, a petition by
or against the Company under Bankruptcy Law, whether or not such interest is allowed as a claim after such filing in any proceeding under such law) and other amounts due in connection therewith
(including any fees, expenses and indemnities), on an unsecured senior subordinated basis and (ii) deliver to such Trustee an Opinion of Counsel reasonably satisfactory to such Trustee to the
effect that such amendment or supplement has been duly executed and delivered by such Restricted Subsidiary and is in compliance with the terms of this Indenture. Upon the execution of any such
amendment or supplement, the obligations of the Guarantors and any such Restricted Subsidiary under their respective Guarantees shall become joint and several and each reference to the "Guarantor" in
this Indenture shall, subject to Section 12.08, be deemed to refer to all Guarantors, including such Restricted Subsidiary. Such Guarantee shall be released in accordance with
Section 8.03 and Section 10.15(b). 

        SECTION
12.04    Subordination of Guarantees.    

        The
Guarantee issued by any Guarantor shall be unsecured senior subordinated obligations of such Guarantor, ranking pari passu with all
other existing and future senior subordinated indebtedness of such Guarantor, if any. The Indebtedness evidenced by such Guarantee shall be subordinated on the same basis to Senior Indebtedness of
such Guarantor as the Notes are subordinated to Senior Indebtedness under Article Fourteen. 

        SECTION
12.05    Limitation of Guarantors' Liability.    

        Each
Guarantor and by its acceptance hereof each Holder confirms that it is the intention of all such parties that the guarantee by each such Guarantor pursuant to its Guarantee not
constitute a 

87

 

fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law or the provisions
of its local law relating to fraudulent transfer or conveyance. To effectuate the foregoing intention, the Holders and each such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under its Guarantee shall be limited to the maximum amount that will not, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to this Section 12.05, result in
the obligations of such Guarantor under its Guarantee constituting such fraudulent transfer or conveyance. 

        SECTION
12.06    Contribution.    

        In
order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, inter se, that in the event any
payment or distribution is made by any Guarantor (a "Funding Guarantor") under a Guarantee, such Funding Guarantor shall be entitled to a contribution from all other Guarantors in a  pro rata amount
based on the Adjusted Net Assets (as defined below) of each Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Notes or any other Guarantor's obligations with respect to the Guarantee of such Guarantor.
"Adjusted Net Assets" of such Guarantor at any date shall mean the lesser of (x) the amount by which the fair value of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under the
Guarantee of such Guarantor at such date and (y) the amount by which the present fair salable value of the assets of such Guarantor at such date exceeds the amount that will be required to pay
the probable liability of such Guarantor on its debts (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), excluding debt in respect of the Guarantee
of such Guarantor, as they become absolute and matured. 

        SECTION
12.07    Subrogation.    

        Each
Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 12.01;  provided, however, that, if
an Event of Default has occurred and is continuing, no Guarantor shall be entitled to enforce or receive any payments
arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full. 

        SECTION
12.08    Reinstatement.    

        Each
Guarantor hereby agrees (and each Person who becomes a Guarantor shall agree) that the Guarantee provided for in Section 12.01 shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligations or interest thereon is rescinded or must otherwise be restored by a Holder to the Company upon the
bankruptcy or insolvency of the Company or any Guarantor. 

        SECTION
12.09    Release of a Guarantor.    

        Concurrently
with the discharge of the Notes under Section 4.01, the Legal Defeasance of the Notes under Section 13.02 hereof, or the Covenant Defeasance of the Notes under
Section 13.03 hereof, the Guarantors shall be released from all their obligations under their Guarantees under this Article Twelve. Any Guarantor shall be released from all its obligations
under its Guarantee in accordance with Section 8.03 and Section 10.15(b). 

88

 

        SECTION
12.10    Benefits Acknowledged.    

        Each
Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and from its guarantee and waivers pursuant
to its Guarantees under this Article Twelve. 

 
 

ARTICLE THIRTEEN    
    
    DEFEASANCE AND COVENANT DEFEASANCE    
    

        SECTION
13.01    Company's Option to Effect Legal Defeasance or Covenant Defeasance.    

        The
Company may, at its option by Board Resolution, at any time, with respect to the Notes, elect to have either Section 13.02 or Section 13.03 be applied to all
Outstanding Notes upon compliance with the conditions set forth below in this Article Thirteen. 

        SECTION
13.02    Legal Defeasance and Discharge.    

        Upon
the Company's exercise under Section 13.01 of the option applicable to this Section 13.02, each of the Company and the Guarantors shall be deemed to have been
discharged from its respective obligations with respect to all Outstanding Notes on the date the conditions set forth in Section 13.04 are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, such Legal Defeasance means that each of the Company and the Guarantors shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Notes, which shall
thereafter be deemed to be "Outstanding" only for the purposes of Section 13.05 and the other Sections of this Indenture referred to in (A) and (B) below, and to have satisfied
all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Notes to receive, solely from the trust fund
described in Section 13.04 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on) and interest on such Notes when such payments are due,
(B) the obligations of each of the Company with respect to such Notes under Sections 3.04, 3.05, 3.06, 10.02 and 10.03, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the obligations of each of the Company and the Guarantors in connection therewith, and (D) this Article Thirteen. Subject to compliance with this Article Thirteen, the
Company may exercise its option under this Section 13.02 notwithstanding the prior exercise of its option under Section 13.03 with respect to the Notes. 

        SECTION
13.03    Covenant Defeasance.    

        Upon
the Company's exercise under Section 13.01 of the option applicable to this Section 13.03, each of the Company and the Guarantors shall be released from its respective
obligations under any covenant contained in Sections 8.01, 8.02 and in Sections 10.05, 10.06, 10.07, 10.09 through 10.18 with respect to the Outstanding Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or
Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the Outstanding Notes, the Company or any Guarantor, as applicable, may omit to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Sections 5.01(3), 5.01(4), 5.01(5) and 5.01(7) and, with respect
to only any Significant Subsidiary 

89

 

and
not the Company, Section 5.01(6), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. 

        SECTION
13.04    Conditions to Legal Defeasance or Covenant Defeasance.    

        The
following shall be the conditions to application of either Section 13.02 or Section 13.03 to the Outstanding Notes: 

        (1)   The
Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 6.08 who shall
agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (A) cash in U.S. dollars, or (B) non-callable Government Securities or (C) a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of (and premium, if any) and interest on the Outstanding Notes on the Stated
Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or interest due on the Notes; provided that the Trustee shall have
been irrevocably instructed to apply such cash or the proceeds of such Government Securities to said payments with respect to the Notes; and provided
further that upon the effectiveness of this Section 13.04, the cash or Government Securities deposited shall not be subject to the rights of the holders of Senior
Indebtedness pursuant to the provisions of Article Fourteen. Before such a deposit, the Company may give to the Trustee, in accordance with Section 11.03 hereof, a notice of its election to
redeem all of the Outstanding Notes at a future date in accordance with Article Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in
applying the foregoing; 

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

        (A)  the
Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or 

        (B)  since
the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law, 

in
either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders of the Outstanding
Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal Defeasance had not occurred; 

        (3)   in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that, subject to customary assumptions and exclusions, the Holders of the Outstanding Notes, will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such
Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; 

        (4)   no
Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit) shall have occurred and be continuing on the date of
such deposit or, insofar as Section 5.01(6) hereof is concerned, at any time during the period ending on the 91st 

90

 

day
after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period); 

        (5)   such
Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the Senior Credit Facilities or any other
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; 

        (6)   the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion and subject to customary assumptions and
exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under
any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders of the Outstanding Notes; 

        (7)   the
Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or any Guarantor or others; and 

        (8)   the
Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to
customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied
with. 

        SECTION
13.05    Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.    

        Subject
to the provisions of the last paragraph of Section 10.03, all cash and Government Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 13.05, the "Trustee") pursuant to Section 13.04 in respect of the Outstanding Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money or Government Securities
need not be segregated from other funds except to the extent required by law. 

        The
Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Securities deposited pursuant to Section 13.04
or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes. 

        Anything
in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or Government
Securities held by it as provided in Section 13.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered
to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance, as applicable, in accordance with this
Article. 

91

  

        SECTION 13.06    Reinstatement.    

        If
the Trustee or any Paying Agent is unable to apply any money or Government Securities in accordance with Section 13.05 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and each Guarantor's obligations under this Indenture and the Outstanding Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 13.02 or 13.03, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such
money or Government Securities in accordance with Section 13.05; provided, however, that if the Company makes any payment of principal of (or
premium, if any) or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent. 

 
 

ARTICLE FOURTEEN    
    
    SUBORDINATION OF NOTES    
    

        SECTION
14.01    Notes Subordinate to Senior Indebtedness.    

        The
Company covenants and agrees, and each Holder of a Note, by his acceptance thereof, likewise covenants and agrees, for the benefit of the holders, from time to time, of Senior
Indebtedness that, to the extent and in the manner hereinafter set forth in this Article, the Indebtedness represented by the Notes and the payment of the principal of (and premium, if any) and
interest on each and all of the Notes are hereby expressly made subordinate and subject in right of payment as provided in this Article to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness, whether outstanding on the date of this Indenture or hereafter incurred; provided, however, that the Notes, the Indebtedness
represented thereby and the payment of the principal of (and premium, if any) and interest on the Notes in all respects shall rank equally with, or prior to, all existing and future unsecured
indebtedness (including, without limitation, Indebtedness) of the Company that is subordinated to Senior Indebtedness. 

        SECTION
14.02    Payment over of Proceeds upon Dissolution, Etc.    

        In
the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its assets, or (b) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other marshalling of assets or liabilities of the Company, then and in any such event, 

        (1)   the
holders of Senior Indebtedness shall be entitled to receive payment in full in cash or cash equivalents (other than those cash equivalents referred to in
clause (3)(b) of the definition of "Cash Equivalents") of such Senior Indebtedness and all outstanding Letter of Credit Obligations shall be fully cash collateralized before the Holders will be
entitled to receive any payment with respect to the Subordinated Note Obligations, and until all Senior Indebtedness is paid in full in cash or cash equivalents, any distribution to which the Holders
would be entitled shall be made to the holders of Senior Indebtedness, except that Holders may receive: 

        (A)  shares
of stock and any debt securities that are subordinated at least to the same extent as the Notes to (i) Senior Indebtedness, and (ii) any securities
issued in exchange for Senior Indebtedness (collectively, the "Permitted Junior Notes"), and 

        (B)  payments
made from the trusts described under Article Thirteen; 

        (2)   any
payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form
of Permitted 

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Junior
Notes), by set-off or otherwise, to which the Holders or the Trustee would be entitled but for the provisions of this Article shall be paid by the liquidating trustee or agent or
other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and 

        (3)   in
the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Note shall have received any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or securities, in respect of principal of (and premium, if any) or interest on the Notes before all Senior Indebtedness is
paid in full or payment thereof provided for, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. 

        In
case the Company or any Guarantor, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of
its properties and assets substantially as an entirety to any Person pursuant to Article Eight, such consolidation, merger, conveyance, transfer, lease or disposition shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company or such Guarantor for the purposes of this Section
if the successor Person resulting from such consolidation, or surviving such merger, or into which the Company or such Guarantor shall have been merged, or the Person which shall have received a
conveyance, transfer, lease or other disposition as aforesaid, comply with the conditions set forth in Article Eight. 

        SECTION
14.03    Suspension of Payment When Senior Indebtedness Is in Default.    

        (a)   The
Company shall not make any payment upon or in respect of the Subordinated Note Obligations, except in Permitted Junior Notes described in Section 14.02 or
from the trust described in Article Thirteen, if: 

        (1)   a
default in the payment of the principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of bankers'
acceptances or fees relating to letters of credit or bankers' acceptances constituting Senior Indebtedness occurs and is continuing beyond any applicable period of grace (a "Payment Default"), or 

        (2)   any
other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such
default relates to accelerate its maturity without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, (a
"Non-payment Default"), and the Trustee receives a payment blockage notice with respect to such default from a representative of holders of such Designated Senior Indebtedness. 

        (b)   Payments
on the Notes, including any missed payments, may and shall be resumed: 

        (1)   in
the case of a Payment Default, upon the date on which such Payment Default is cured or waived or shall have ceased to exist or such Senior Indebtedness shall have
been discharged or 

93

 

paid
in full in cash or cash equivalents and all outstanding Letter of Credit Obligations shall have been fully cash collateralized, and 

        (2)   in
case of a Non-payment Default, unless the holders of the Designated Senior Indebtedness have or representative of such holders has accelerated the
maturity of such Designated Senior Indebtedness and such Designated Senior Indebtedness has not been repaid in full, the earlier of (x) the date on which such Non-payment Default is
cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, a "Payment Blockage Period"), or (z) the date such
Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their
representative. 

        (c)   No
new Payment Blockage Period shall be commenced until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice.
However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Agent, the Agent may give
another Payment Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 365 consecutive day period. No Non-payment Default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. 

        (d)   If
the Company fails to make any payment on the Notes when due or within any applicable grace period, whether or not on account of Section 14.03(a), such failure
shall constitute an Event of Default under this Indenture and shall enable the Holders to accelerate the Maturity of the Notes. 

        (e)   The
Company shall promptly notify holders of Senior Indebtedness if payment of the Notes is accelerated because of an Event of Default. 

        SECTION
14.04    Payment Permitted If No Default.    

        Nothing
contained in this Article or elsewhere in this Indenture or in any of the Notes shall prevent the Company, at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of creditors or other marshalling of assets and liabilities
of the Company referred to in Section 14.02 or under the conditions described in Section 14.03, from making payments at any time of principal of (and premium, if any, on) or interest on
the Notes. 

        SECTION
14.05    Subrogation to Rights of Holders of Senior Indebtedness.    

        Subject
to the payment in full of all Senior Indebtedness, the Holders shall be subrogated (equally and ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness of the Company to the same extent as the Notes are subordinated and which is entitled to like rights of subrogation) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Notes
shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which the Holders or the Trustee
would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness, and the Holders, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. 

94

 

        SECTION
14.06    Provisions Solely to Define Relative Rights.    

        The
provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders on the one hand and the holders of Senior Indebtedness on the
other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Notes is intended to or shall (a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the principal of (and premium, if any) and interest on the Notes as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the Holders and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Note from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness. 

        SECTION
14.07    Trustee to Effectuate Subordination.    

        Each
Holder of a Note by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes. 

        SECTION
14.08    No Waiver of Subordination Provisions.    

        (a)   No
right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided 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 non-compliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. 

        (b)   Without
in any way limiting the generality of paragraph (a) of this Section, the holders of Senior Indebtedness 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 Holders and without impairing or releasing the subordination provided in this Article or the obligations
hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any Person liable in any manner for the collection of Senior Indebtedness; and (4) exercise or refrain
from exercising any rights against the Company and any other Person. 

        SECTION
14.09    Notice to Trustee.    

        (a)   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. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the Trustee shall have received written notice thereof from the Company, the Agent or a holder of
Senior Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the receipt of any such written notice, the Trustee, subject to TIA Sections 315(a) through 315(d), shall be
entitled in all respects to assume that no such facts exist; provided, however, that, if the Trustee shall not have received the notice provided for in
this Section at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Note), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the 

95

 

same
to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. 

        (b)   Subject
to TIA Sections 315(a) through 315(d), the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor).
In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness 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 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
14.10    Reliance on Judicial Order or Certificate of Liquidating Agent.    

        Upon
any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d), and the Holders shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness 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. 

        SECTION
14.11    Rights of Trustee as a Holder of Senior Indebtedness; Preservation of Trustee's Rights.    

        The
Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 6.07. 

        SECTION
14.12    Article Applicable to Paying Agents.    

        In
case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided, however, that Section 14.11 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent. 

        SECTION
14.13    No Suspension of Remedies.    

        Nothing
contained in this Article shall limit the right of the Trustee or the Holders to take any action to accelerate the Maturity of the Notes pursuant to Article Five or to pursue any
rights or remedies hereunder or under applicable law, except as provided in Article Five. 

        SECTION
14.14    Trust Moneys Not Subordinated.    

        Notwithstanding
anything contained herein to the contrary, payments from cash or the proceeds of Government Securities held in trust under Article Thirteen hereof by the Trustee (or
other qualifying 

96

 

trustee)
and which were deposited in accordance with the terms of Article Thirteen hereof and not in violation of Section 14.03 hereof for the payment of principal of (and premium, if any) and
interest on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article Fourteen, and none of the Holders shall be
obligated to pay over any such amount to the Company or any holder of Senior Indebtedness or any other creditor of the Company. 

        SECTION
14.15    Trustee Not Fiduciary for Holders of Senior Indebtedness.    

        The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee shall mistakenly, in the
absence of gross negligence or willful misconduct, pay over or distribute to Holders of Notes or to the Company or to any other person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. 

97

        IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and
year first above written. 

	 	 	ROCKWOOD SPECIALTIES GROUP, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

ADVANTIS TECHNOLOGIES, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

ALPHAGARY CORPORATION
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

CHEMICAL SPECIALTIES, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

COMPUGRAPHICS U.S.A. INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	 	 	 	 	 

	

 	
 	

CYANTEK CORPORATION
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

ELECTROCHEMICALS INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

EXSIL, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

LUREX, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

ROCKWOOD AMERICA INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

ROCKWOOD PIGMENTS NA, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	 	 	 	 	 

	

 	
 	

ROCKWOOD SPECIALTIES INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

RS FUNDING CORPORATION
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

SOUTHERN CLAY PRODUCTS, INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

SOUTHERN COLOR N.A., INC.
	

 	
 	

By:	
 	

/s/ Thomas J. Riordan
	 	 	 	 	
 Name: Thomas J. Riordan

Title: Vice President
	

 	
 	

THE BANK OF NEW YORK

as Trustee
	

 	
 	

By:	
 	

/s/ Dorothy Miller
	 	 	 	 	
 Name: Dorothy Miller

Title: Vice President

  

 
 

EXHIBIT A    
    

[FACE OF NOTE] 

ROCKWOOD
SPECIALTIES GROUP, INC. 

105/8%
Senior Subordinated Note due 2011 

	No.	 	 	 	CUSIP No.	 	 	 	 
	 	 	
	 	 	 	

	 	 	 	 	 	 	$	 	 
	 	 	 	 	 	 	 	 	

        ROCKWOOD
SPECIALTIES GROUP, INC., a Delaware corporation (the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received,
promises to pay to                        , or its registered assigns, the principal sum
of                        Dollars
($                        ), on May 15, 2011. 

	Interest Rate:	 	105/8% per annum.(1)
	

Interest Payment Dates:	
 	

May 15 and November 15 of each year commencing November 15, 2003.
	

Regular Record Dates:	
 	

May 1 and November 1 of each year.

        Reference
is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place. 

	(1)
	Include
only for Exchange Notes. 

A-1

 

        IN
WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. 

	Dated:                             	 	ROCKWOOD SPECIALTIES GROUP, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:

A-2

 
(Form of Trustee's Certificate of Authentication) 

        This
is one of the 105/8% Senior Subordinated Notes due 2011 referred to in the within-mentioned Indenture. 

	 	 	 	THE BANK OF NEW YORK

as Trustee
	

Dated:	

 	
 	

By:	

 
	 	
	 	 	
 Authorized Signatory

A-3

 
[REVERSE SIDE OF NOTE] 

ROCKWOOD
SPECIALTIES GROUP, INC. 

105/8%
Senior Subordinated Note due 2011 

	1.
	Principal
and Interest; Subordination. 

        The
Company will pay the principal of this Note on May 15, 2011. 

        The
Company promises to pay interest on the principal amount of this Note on each Interest Payment Date, as set forth below, at the rate of 105/8% per annum
[(subject to adjustment as provided below)] [except that interest accrued on this Note pursuant to the fourth paragraph of this Section 1 for periods prior
to the applicable Exchange Offer or Shelf Registration Date (as such terms are defined in the Registration Rights Agreement referred to below) will accrue at the rate or rates borne by the Notes from
time to time during such periods].(2) 

	(2)
	Include
only for Exchange note. 

        Interest
will be payable semi-annually (to the Holders of record of the Notes (or any Predecessor Notes)) at the close of business on May 1 or November 1
immediately preceding the Interest Payment Date) on each Interest Payment Date, commencing November 15, 2003. 

        [The
Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated July 23, 2003, among the Company, the Guarantors and the Initial
Purchasers named therein (the "Registration Rights Agreement"). In the event that either (a) the Exchange Offer Registration Statement (as such term is defined in the Registration Rights
Agreement) is not filed with the SEC (as such term is defined in the Registration Rights Agreement) on or prior to the 90th calendar day following the Issue Date, (b) the Exchange Offer
Registration Statement (as such term is defined in the Registration Rights Agreement) has not been declared effective on or prior to the 180th calendar day following the Issue Date, or (c) the
Exchange Offer is not consummated (as such term is defined in the Registration Rights Agreement) on or prior to the 210th calendar day following the Issue Date, (d) the Shelf Registration
Statement is not declared effective on or prior to the 180th calendar day following the Issue Date (or, in the case of a Shelf Registration Statement required to be filed in response to a change in
law or applicable interpretation of the staff of the SEC, if later, within 90 days after publication of the change in law or interpretation, but in no event before 180 calendar days after the
Issue Date), or (e) the Shelf Registration Statement is filed and declared effective within the time periods specified in (d) above but shall thereafter cease to be effective (at any
time the Company is obligated to maintain the effectiveness thereof), without being succeeded within 90 days by an additional Shelf Registration Statement filed and declared effective, the
interest rate borne by this Note shall be increased by one-quarter of one percent per annum following such 90-day period in the case of (a) above, following such
180-day period in the case of (b) above, following such 210-day period in the case of (c) above, following such 180-day period in the case of
clause (d) above (or, in the case of the events provided in the parenthetical to clause (d), such later period as is provided in such parenthetical) or following such period as provided
in clause (e) above, which rate will be increased by an additional one-quarter of one percent per annum for each 90-day period that any additional interest continues to
accrue; provided that the aggregate increase in such annual interest rate shall in no event exceed one percent. Upon (v) the filing of the Exchange Offer Registration Statement after the
90-day period described in clause (a) above, (w) the effectiveness of the Exchange Offer Registration Statement after the 180-day period described in
clause (b) above or (x) the consummation of the Exchange Offer after the 210-day period described in clause (c) above, (y) the effectiveness of a Shelf
Registration Statement after the 180-day period (or, in the case of the events provided in the parenthetical to clause (d), such later period as is provided in such parenthetical)
described in (d) above, or (z) the Shelf Registration Statement again becoming effective as described in clause (c) above, the interest rate borne by this Note from the date of
such filing, effectiveness or consummation, 

A-4

 

as
the case may be, will be reduced to the interest rate set forth above; provided, however, that, if after any such reduction in interest rate, a
different event specified in clause (a), (b), (c), (d) or (e) above occurs, the interest rate may again be increased pursuant to the foregoing provisions.(3) 

	(3)
	Include
only for Initial Note. 

        Interest
on this Note will accrue from the most recent date to which interest has been paid [on this Note or the Note surrendered in exchange herefor](4) or, if
no interest has been paid, from July 23, 2003; provided that, if there is no existing default in the payment of interest and if this Note is
authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. 

	(4)
	Include
only for Exchange Note. 

        The
Company shall pay interest on overdue principal and premium, if any, and interest on overdue installments of interest, to the extent lawful, at a rate per annum equal to the rate of
interest applicable to the Notes. 

        The
indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness, and this Note is issued subject to such provisions. Each Holder of this Note, by accepting the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee its attorney-in-fact for such purpose. 

	2.
	Method
of Payment. 

        The
Company will pay interest (except defaulted interest) on the principal amount of the Notes on each May 15 and November 15 to the Persons who are Holders (as reflected
in the Note Register at the close of business on May 1 and November 1 immediately preceding the Interest Payment Date), in each case, even if the Note is cancelled on registration of
transfer or registration of exchange after such Regular Record Date; provided that, with respect to the payment of principal, the Company will make payment to the Holder that surrenders this Note to
any Paying Agent on or after May 15, 2011. 

        The
Company will pay principal (premium, if any) and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However,
the Company
may pay principal (premium, if any) and interest by its check payable in such money. The Company may pay interest on the Notes either (a) by mailing a check for such interest to a Holder's
registered address (as reflected in the Note Register) or (b) by wire transfer to an account located in the United States maintained by the payee. If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period. 

	3.
	Paying
Agent and Registrar. 

        Initially,
the Trustee will act as Paying Agent and Note Registrar. The Company may change any Paying Agent or Note Registrar upon written notice thereto. The Company, any Subsidiary or
any Affiliate of any of them may act as Paying Agent, Note Registrar or coregistrar. 

	4.
	Indenture;
Limitations. 

        The
Company issued the Notes under an Indenture dated as of July 23, 2003 (the "Indenture"), among the Company, the Guarantors and The Bank of New York, as trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those made part of the Indenture
by reference to 

A-5

 

the
Trust Indenture Act. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control. 

        The
Notes are unsecured senior subordinated obligations of the Company. The Indenture limits the aggregate principal amount of the Notes to $475,000,000. 

	5.
	Redemption.

        Optional Redemption.    The Notes may be redeemed at the option of the Company, in whole or in part, at any time and from time
to time on or after May 15, 2007, at the following Redemption Prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the Redemption Date (subject to
the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date), if redeemed during the
12-month period beginning May 15 of each of the years set forth below: 

	Year
 
	 	Redemption Price
	 
	2007	 	105.313	%
	2008	 	103.542	%
	2009	 	101.771	%
	2010 and thereafter	 	100.000	%

        In
addition to the optional redemption of the Notes in accordance with the provisions of the preceding paragraph, at any time prior to May 15, 2006, the Company may redeem up to
35% of the aggregate principal amount of the Notes under the Indenture at a redemption price equal to 110.625% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, 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, with the net proceeds of one or more
Equity Offerings of the Company or any direct or indirect parent of the Company to the extent such net proceeds are contributed to the Company; provided
that at least 65% of the sum of the aggregate principal amount of Notes remains outstanding immediately after the occurrence of each such redemption; provided
further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. 

        If
less than all the Notes are to be redeemed pursuant to the preceding two paragraphs, the Trustee shall select the Notes or portions thereof to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the Notes being redeemed are listed, or if the Notes are not so listed, by such other method the Trustee shall deem fair
and appropriate; provided that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than $1,000;  provided
further that any such redemption pursuant to the provisions
relating to an Equity Offering shall be made on a pro rata basis or on as nearly a pro rata basis as practicable (subject to the procedures of Depositary or any other depositary). 

        Notice
of a redemption will be mailed, first-class postage prepaid, at least 30 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at
such Holder's last address as it appears in the Note Register. Notes in original denominations larger than $1,000 may be redeemed in part in integral multiples of $1,000. On and after the Redemption
Date, interest ceases to accrue on Notes or portions of Notes called for redemption, unless the Company defaults in the payment of the Redemption Price. 

	6.
	Repurchase
upon a Change in Control and Asset Sales. 

        Upon
the occurrence of (a) a Change in Control, the Holders of the Notes will have the right to require that the Company purchase such Holder's outstanding Notes, in whole or in
part, at a purchase 

A-6

 

price
of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase and (b) Asset Sales, the Company may be obligated to make offers to purchase
Notes and Pari Passu Indebtedness with a portion of the Proceeds of such Asset Sales at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase. 

	7.
	Denominations;
Transfer; Exchange. 

        The
Notes are in registered form without coupons, in denominations of $1,000 and multiples of $1,000 in excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Note Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Note Registrar need not register the transfer or exchange of any Notes selected for redemption (except the unredeemed portion of any Note being redeemed in part). 

	8.
	Persons
Deemed Owners. 

        A
Holder may be treated as the owner of a Note for all purposes. 

	9.
	Unclaimed
Money. 

        If
money for the payment of principal (premium, if any) or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its
request. After that, Holders entitled to the money must look to the Company for payment, unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease. 

	10.
	Discharge
and Defeasance Prior to Redemption or Maturity. 

        If
the Company irrevocably deposits, or causes to be deposited, with the Trustee money or Government Securities sufficient to pay the then outstanding principal of (premium, if any) and
accrued interest on the Notes (a) to Redemption or Maturity Date, the Company will be discharged from its obligations under the Indenture and the Notes, except in certain circumstances for
certain covenants thereof, and (b) to the Stated Maturity, the Company will be discharged from certain covenants set forth in the Indenture. 

	11.
	Amendment;
Supplement; Waiver. 

        Subject
to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the
Outstanding Notes, and any existing Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Notes. Without
notice to or the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency and make any change
that does not adversely affect the rights of any Holder. 

	12.
	Restrictive
Covenants. 

        The
Indenture contains certain covenants, including, without limitation, covenants with respect to the following matters: (i) Incurrence of Indebtedness and Issuance of
Disqualified Stock; (ii) Restricted Payments; (iii) transactions with Affiliates; (iv) Liens; (v) purchase of Notes upon a Change in Control; (vi) disposition of
proceeds of Asset Sales; (vii) guarantees of Indebtedness by Restricted Subsidiaries; (viii) dividend and other payment restrictions affecting Restricted Subsidiaries; (ix) merger
and certain transfers of assets; and (x) limitation on Senior Subordinated Indebtedness. Within 120 days (or the successor time period then in effect under the rules and regulations of
the Exchange Act) after the end of each fiscal year, the Company must report to the Trustee on compliance with such limitations. 

A-7

 
	13.
	Successor
Persons. 

        When
a successor Person or other entity assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor Person will be released from those obligations. 

	14.
	Remedies
for Events of Default. 

        If
an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders of not less than 30% in principal amount of the Outstanding Notes may declare
all the Notes to be immediately due and payable. If a bankruptcy or insolvency default with respect to the Company or any of its Significant Subsidiaries occurs and is continuing, the Notes
automatically become immediately due and payable. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of at least a majority in aggregate principal amount of the Outstanding Notes may direct the Trustee in its exercise of any
trust or power. 

	15.
	Guarantees.

        The
Company's obligations under the Notes are fully, irrevocably and unconditionally guaranteed on an unsecured senior subordinated basis, to the extent set forth in the Indenture, by
each of the Guarantors. 

	16.
	Trustee
Dealings with Company. 

        The
Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may make loans to, accept deposits from, perform services for, and
otherwise deal with, the Company and its Affiliates as if it were not the Trustee. 

	17.
	Authentication.

        This
Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note. 

	18.
	Abbreviations. 

        Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN
(=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian) and U/G/M/A (=Uniform Gifts to Minors Act). 

        The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to Rockwood Specialties Group, Inc., 100 Overlook
Center, Princeton, NJ 08540, Attention: Thomas J. Riordan. 

A-8

 
[FORM
OF TRANSFER NOTICE] 

        FOR
VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto 

	Insert Taxpayer Identification No.
	

 (Please print or typewrite name and address including zip code of assignee)
	

 the within Note and all rights thereunder, hereby irrevocably constituting and appointing
	

 attorney to transfer such Note on the books of the Company with full power of substitution in the premises.

[THE
FOLLOWING PROVISION TO BE INCLUDED

ON ALL CERTIFICATES

EXCEPT PERMANENT OFFSHORE PHYSICAL

CERTIFICATES] 

        In
connection with any transfer of this Note occurring prior to the date which is the earlier of the date of an effective Registration Statement or the end of the period referred to in
Rule 144(k) under the Securities Act of 1933, as amended, the undersigned confirms that without utilizing any general solicitation or general advertising that: 

Check One

	o	 	(a)	 	this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder.
	

or
	

o	
 	

(b)	
 	

this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture.

A-9

 

If
none of the foregoing boxes is checked, the Trustee or other Note Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth herein and in Sections 3.11 and 3.12 of the Indenture shall have been satisfied. 

	Date:	 	 	 	 
	 	 	
	 	 
	 	 	 	 	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

	Signature Guarantee:	 	 	 	 
	 	 	
	 	 

TO
BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. 

        Signatures
must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended. 

        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, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. 

	Date:	 	 	 	 
	 	 	
	 	 
	 	 	 	 	NOTICE: To be executed by an executive officer

A-10

 
OPTION
OF HOLDER TO ELECT PURCHASE 

        If
you wish to have this Note purchased by the Company pursuant to Section 10.17 or Section 10.18 of the Indenture, check the
Box: o. 

        If
you wish to have a portion of this Note purchased by the Company pursuant to Section 10.17 or Section 10.18 of the Indenture, state the amount (in original principal
amount) below: 

	 	 	 	$	 
	 	 	 	 	

	

Date:	

 	
 	

 	

 
	 	
	 	 	 

	Your Signature:	 	 	 
	 	
	 	 
	(Sign exactly as your name appears on the other side of this Note)

	

Signature Guarantee:	

 	
 	

 
	 	
	 	 

        Signatures
must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended. 

A-11

QuickLinks

EXHIBIT 4.1

Table of Contents*

RECITALS OF THE COMPANY

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

ARTICLE TWO NOTE FORMS

ARTICLE THREE THE NOTES

ARTICLE FOUR SATISFACTION AND DISCHARGE

ARTICLE FIVE REMEDIES

ARTICLE SIX THE TRUSTEE

ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

ARTICLE EIGHT MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS

ARTICLE NINE SUPPLEMENTAL INDENTURES

ARTICLE TEN COVENANTS

ARTICLE ELEVEN REDEMPTION OF NOTES

ARTICLE TWELVE GUARANTEES

ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE

ARTICLE FOURTEEN SUBORDINATION OF NOTES

EXHIBIT A

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