CARAUSTAR INDUSTRIES, INC. SENIOR SECURED NOTES DUE 2014 INDENTURE Dated as of August 20, 2009

Exhibit 4.2

Execution Copy

CARAUSTAR INDUSTRIES, INC.

SENIOR SECURED NOTES DUE 2014

INDENTURE

Dated as of August 20, 2009

WILMINGTON TRUST FSB,

as Trustee

TABLE OF CONTENTS

 

 

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N.A. means Not Applicable.

 

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This INDENTURE dated as of August 20, 2009, is by and among the Company (as defined herein), each Guarantor (as defined herein) from time to time party hereto, and Wilmington Trust FSB, as trustee (the “ Trustee ”).

Each party hereto agrees as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below):

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions .

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

“ ABL Priority Collateral ” has the meaning provided for such term in the Intercreditor Agreement.

“ Accrued Bankruptcy Interest ” means all interest accruing subsequent to the occurrence of any events specified in Section 6.01(j) or (k) or which would have accrued but for any such event.

“ Acquired Indebtedness ” means, with respect to any specified Person,

(1) Indebtedness of any other Person existing at the time such other Person is merged or consolidated with or into or becomes a Restricted Subsidiary of such specified Person, including 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.

Indebtedness shall be deemed to be incurred on the date of the related acquisition of such asset or the date such other Person becomes a Restricted Subsidiary, including by designation, or the date of such merger or consolidation, as applicable.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

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

“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such transfer or exchange.

“ Asset Acquisition ” means (1) an Investment by the Company or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary, or shall be merged with or into the Company or any Restricted Subsidiary or (2) the acquisition by the Company or any Restricted Subsidiary of the property of any Person (other than a Restricted Subsidiary) that constitutes all or substantially all of the property of such Person or comprises any division or line of business of such Person or any other properties of such Person other than in the ordinary course of business.

“ Asset Sale ” means:

(1) the sale, lease, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a Sale and Lease-Back Transaction) of the Company or any Restricted Subsidiary (each referred to in this definition as a “disposition”), 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 or Cash Equivalents;

(b) a disposition of obsolete, worn out or surplus equipment in the ordinary course of business;

(c) a disposition of inventory or goods held for sale in the ordinary course of business;

(d) the discount or write-off of delinquent accounts receivable or the sale of such accounts receivable for purposes of collection, in the ordinary course of business;

(e) the receipt of up to $2 million in aggregate proceeds relating to the disposition of certain closed facilities currently held for sale by the Company or any Restricted Subsidiary as set forth in Schedule 1 hereto;

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

(g) the making of any Restricted Payment that is permitted to be made, and is made, under Section 4.10;

(h) the making of any Permitted Investment;

 

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(i) any disposition of assets with an aggregate Fair Market Value of less than $100,000 in any transaction or series of related transactions;

(j) 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 Guarantor;

(k) any lease, assignment or sub-lease of any real or personal property in the ordinary course of business; and

(l) any sale of Equity Interests in, or issuance of Indebtedness or other securities of, an Unrestricted Subsidiary.

“ Asset Sale Trigger Date ” means the later of (i) the 181st day after receipt of Net Asset Sale Proceeds from an Asset Sale, or (ii) the 361st day after receipt of Net Asset Sale Proceeds from an Asset Sale, if the Company has entered into an agreement on terms acceptable to the Required Noteholders to apply Net Asset Sale Proceeds to the purchase or construction of assets permitted in Section 4.13(b).

“ Attributable Debt ” in respect of a Sale and Lease-Back Transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

“ Available Cash ” means, as of the Available Cash Determination Date, cash and Cash Equivalents of the Company and its Restricted Subsidiaries, on a consolidated basis, that qualify as Permitted Investments under this Indenture, but excluding any such amounts that (i) constitute proceeds of inventory and accounts receivable to the extent that such proceeds are required to be applied to repay the Credit Facility or are restricted from being used to redeem the Notes under the terms of the Credit Facility and the Intercreditor Agreement, (ii) represent balances in deposit accounts against which checks have been written and are outstanding, or (iii) are held as collateral in support of letter of credit, surety bond, hedging or other indemnity obligations as permitted under Section 4.12 (including, without limitation, the deposits described in clause (15) of the definition of “Permitted Investments”).

“ Available Cash Determination Date ” means December 31, 2009.

“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors.

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

 

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“ Board of Directors ” means (1) with respect to a corporation, the board of directors of the corporation; (2) with respect to a partnership, the board of directors of the general partner of the partnership; (3) with respect to a limited liability company, the board of directors of the single member or the managing member of such limited liability company, as applicable, or in the case of a manager-managed limited liability company, the board of directors, board of managers or manager of such manager; and (4) with respect to any other Person, the board or committee of such Person serving a similar function, including, in each case, any duly authorized committee of such board or other governing body.

“ Board Resolution ” means a copy of a resolution certified by the secretary or an assistant secretary (or individual performing comparable duties) of the applicable Person to have been duly adopted by the Board of Directors of such Person, or a duly authorized committee of such Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

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

“ 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.

“ Capital Expenditures ” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP.

“ 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 equity or ownership 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.

“ Cases ” means the cases filed by the Company and certain of its subsidiaries and affiliates with the United States Bankruptcy Court for the Northern District of Georgia under chapter 11 of the United States Bankruptcy Code (Case Nos. 09-73830; 09-73835—09-73837; 09-73839—09-73841; 09-73843 – 09-73851; 09-73853 – 09-73855).

 

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“ Cash Equivalents ” means

(1) United States dollars,

(2) in the case of any Foreign Restricted Subsidiary, such local currencies held by such Foreign Restricted Subsidiary from time to time in the ordinary course of business,

(3) securities issued by, 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 12 months or less from the date of acquisition,

(4) 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 of not less than $300,000,000 and a Thomson Bank Watch Rating of “B” or better,

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

(6) 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,

(7) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and in each case maturing within 12 months after the date of creation thereof,

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

(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.

“ Cash Flow Adjustments ” means the sum of the following for the Company and its Subsidiaries during or for any applicable period: (i) Capital Expenditures (net of any proceeds of any related financings), (ii) cash payments made in respect of any acquisitions of any businesses (including related fees and expenses and any earn-out, purchase price adjustment, non-competition, and other customary payments required to be made in respect of such acquisitions) permitted pursuant to this Indenture, (iii) amounts paid in respect of Permitted Investments and Restricted Payments permitted to be made pursuant to this Indenture, (iv) scheduled principal

 

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payments and mandatory and voluntary prepayments of funded Indebtedness (including Capital Lease Obligations) permitted to be incurred pursuant to this Indenture, provided that payments in respect of any revolving credit Indebtedness under the Credit Facility or any other revolving credit facility shall not be included in this clause (iv) unless accompanied by a permanent reduction in the related commitment for such Indebtedness, (v) cash payments required to be made in such period in respect of any liability accrued in a prior accounting period, and (vi) payments made in respect of cash charges incurred pursuant to the Cases and related matters, including those in connection with the Plan of Reorganization.

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

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision), other than to a direct or indirect Wholly-Owned Subsidiary of the Company;

(2) the liquidation or dissolution of, or adoption of a plan relating to the liquidation or dissolution of, the Company or any successors thereto;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision), other than one or more of the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power entitled to vote in the election of directors of the Company or such other Person surviving the transaction; or

(4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors.

“ Collateral ” means, collectively, all of the property and assets of the Company or the Guarantors which, at the time in question, is subject to the Liens created by the Collateral Documents.

“ Collateral Account ” means the collateral account established pursuant to the Indenture and the Collateral Documents.

“ Collateral Agent ” means the Trustee or any other collateral agent under the Collateral Documents.

“ Collateral Documents ” means, collectively, the Mortgages, the Security Agreement, the Pledge Agreement, the Intercreditor Agreement and all other mortgages, deeds of trust, pledge agreements, collateral assignments, security agreements, fiduciary transfers, debentures, fiduciary assignments or other instruments evidencing or creating any Liens in favor of the Collateral Agent in all or any portion of the Collateral, in each case, as amended, amended and restated, extended, renewed, supplemented or otherwise modified from time to time, in accordance with the terms thereof.

 

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“ Company ” means Caraustar Industries, Inc., a Delaware corporation, and any successor thereto.

“ consolidated ” with respect to any Person, unless otherwise specifically indicated, refers to such Person consolidated with the Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person.

“ 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 related noncash charges, excluding any noncash item that represents an accrual or reserve for a cash expenditure for a future period, of such Person and the Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.

“ Consolidated Fixed Charges ” means, with respect to any Person for any period, the sum, without duplication, of:

(1) consolidated interest expense of such Person and the Restricted Subsidiaries for such period, including amortization of original issue discount resulting from the issuance of Indebtedness at less than par, non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to Financial Accounting Standards Board Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities”), the interest component of Capitalized Lease Obligations and deferred payment obligations, and net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness, and all commissions, discounts and other fees and charges owed with respect to bankers’ acceptances, letter of credit financings and Hedging Obligations,

(2) the product of (a) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock of such Person made during such period plus all cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Stock made during such period, and (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, and

(3) consolidated capitalized interest of such Person and the Restricted Subsidiaries for such period, whether paid or accrued, less

(4) interest income for such period (but excluding any non-cash interest income attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to FASB Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities”).

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

 

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“ Consolidated Net Income ” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and the Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP, adjusted to exclude (only to the extent included in computing such Net Income and without duplication):

(1) any extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including those relating to severance, relocation costs and one-time compensation charges),

(2) the cumulative effect of a change in accounting principles during such period,

(3) the Net Income (or loss) 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; provided that Consolidated Net Income of the Company shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period, and

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

“ Contested Collateral Lien Conditions ” means the following conditions:

(1) any proceeding instituted contesting such Lien shall conclusively operate to stay the sale or forfeiture of any portion of the Collateral on account of such Lien;

(2) such proceeding shall be continued in good faith;

(3) adequate reserves with respect to such Lien shall have been established in accordance with GAAP; and

(4) such Lien shall in all respects be subject and subordinate in priority to the Lien created and evidenced by the Collateral Documents, except if and to the extent that the law or regulation creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Lien created and evidenced by the Collateral Documents.

“ Continuing Director ” means, as of any date of determination, any member of the Board of Directors of the Company who:

(1) was a member of the Board of Directors of the Company on, or within 30 days after, the Issue Date; or

 

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(2) was nominated for election or elected or appointed to the Board of Directors of the Company with the unanimous approval of the Continuing Directors who were members of the Board of Directors of the Company at the time of such election or appointment (provided, that (a) any approval pursuant to this clause (2) shall be deemed to be unanimous if one, but not more than one, Continuing Director abstains from voting on the approval and (b) any individual whose initial election as director occurs as the result of an actual or threatened election contest, including an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors, shall not be considered a Continuing Director).

“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 13.02 hereof, or such other address as to which the Trustee may give notice to the Company.

“ Crane Bond Documents ” means that certain Loan Agreement, dated as of June 1, 1992, between the City of Chicago, Illinois and Caraustar Custom Packaging Group, Inc. (as successor to Crane Carton Company, LLC), that certain Trust Indenture, dated as of June 1, 1992, between the City of Chicago, Illinois and LaSalle Bank National Association, that certain letter of credit number 3041739 issued by Bank of America, N.A. in favor of LaSalle Bank National Association, in a stated amount of $3,565,625.00 and expiring on December 16, 2009, and such other documents, instruments and agreements executed in connection therewith, in each case executed or issued in connection with the Crane Bonds and as amended, supplemented and otherwise modified from time to time.

“ Crane Bonds ” means the Economic Revenue Development Bonds, Series 1992 (Crane Carton Company Project) issued by the City of Chicago, Illinois, in an original aggregate principal amount of $3,500,000.

“ Credit Facility ” means, means the Credit Agreement to be entered into as of the Issue Date by and among the Company, the Restricted Subsidiaries, General Electric Capital Corp., as administrative and collateral agent, and the lenders party thereto in their capacities as lenders thereunder, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, in accordance with the provisions thereof and hereof, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.

“ Credit Facility Agent ” means, at any time, the Person serving at such time as the “Agent” or “Administrative Agent” under the Credit Facility or any other representative then most recently designated in accordance with the applicable provisions of the Credit Facility, together with its successors in such capacity.

 

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“ Credit Facility Collateral Agent ” means, at any time, the Person serving at such time as the “Collateral Agent” under the Credit Facility Collateral Documents, together with its successors in such capacity.

“ Credit Facility Collateral Documents ” means, collectively, the Intercreditor Agreement and all other mortgages, deeds of trust, pledge agreements, collateral assignments, security agreements, fiduciary transfers, debentures, fiduciary assignments or other instruments evidencing or creating any Liens in favor of the Credit Facility Collateral Agent in all or any portion of the Collateral, in each case, as amended, amended and restated, extended, renewed, supplemented or otherwise modified from time to time, in accordance with the terms thereof.

“ Custodian ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03(c) as Custodian with respect to the Notes, and any and all successors thereto appointed as custodian hereunder and having become such pursuant to the applicable provisions of this Indenture.

“ Debtors ” means the Company and certain of its subsidiaries and affiliates that are debtors under the Cases.

“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in substantially the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03(b) hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.

“ 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, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, 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 any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase that Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of that Capital Stock provide that the Company may not repurchase or redeem any of that Capital Stock unless the repurchase or redemption complies with the provisions of this Indenture; provided further 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 or upon termination of an employee’s employment.

 

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“ Domestic Restricted Subsidiary ” means any Domestic Subsidiary that is a Restricted Subsidiary.

“ Domestic Subsidiary ” means, with respect to any Person, any 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, without duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such person or any of its Restricted Subsidiaries in connection with an Asset Sale to the extent such losses were deducted in computing Consolidated Net Income, plus

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

(3) Consolidated Fixed Charges of such Person for such period to the extent the same was deducted in calculating such Consolidated Net Income, plus

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

(5) any fees, expenses or charges related to or arising from the restructuring of the Debtors in connection with the Cases, including, without limitation, all fees, expenses or charges incurred or reimbursed by the Debtors (including those of the Debtors, the informal committees of holders of the Debtors’ public indebtedness, the committee appointed to represent the interests of equity holders in the Cases, any witnesses retained by the Debtors in the Cases and the respective legal and financial advisors of such parties), whether incurred in connection with the planning, negotiation, structuring or implementation of the Plan of Reorganization, and whether incurred prior to the petition date of the Cases, during the pendency of the Cases or after the effective date of the Cases, less

(6) non-cash items increasing Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business and other than any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges for any prior period.

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

“ Event of Loss ” means, with respect to any property, any (i) loss, destruction or damage of such property, (ii) condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property, or confiscation or requisition of the use of such property or (iii) settlement in lieu of clause (ii) above.

 

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“ Event of Loss Trigger Date ” means the later of (i) the 181st day after receipt of Net Loss Proceeds with respect to an Event of Loss, or (ii) the 361st day after receipt of Net Loss Proceeds with respect to an Event of Loss, if the Company has entered into an agreement on terms acceptable to the Required Noteholders to apply Net Loss Proceeds in accordance with Sections 4.22(a)(1) and 4.22(a)(2).

“ Excess Available Cash ” means all Available Cash in excess of $10 million as of the Available Cash Determination Date.

“ Excess Cash Flow ” means, for any six-month period, the sum of operating cash flow as shown on the Company’s consolidated cash flow statements for such period, minus the aggregate amount of Cash Flow Adjustments during such period; provided , that , if in the six-month period preceding such period the Excess Cash Flow calculation yielded a negative amount, such negative amount will be offset against the positive amount of Excess Cash Flow during such period prior to a redemption of Notes under Section 3.09.

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

“ Existing Indebtedness ” means Indebtedness of the Company or any Restricted Subsidiaries in existence on the Issue Date, other than any Indebtedness discharged in connection with the issuance of the Notes pursuant to the Plan of Reorganization.

“Fair Market Value ” means with respect to any asset or property the sale value of such asset or property that would reasonably be expected to be obtained in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy.

“ Foreign Restricted Subsidiary ” means any Foreign Subsidiary that is a Restricted Subsidiary.

“ Foreign Subsidiary ” means, with respect to any Person, any 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.

“ GAAP ” means generally accepted accounting principles in the United States which are in effect on the Issue Date.

“ Global Note Legend ” means the legend set forth in Section 2.06(f), which is required to be placed on all Global Notes issued under this Indenture.

“ Global Notes ” means the global Notes substantially in the form of Exhibit A hereto issued in accordance with Article 2 hereof.

“ Government Securities ” means securities that are:

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

 

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(2) 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.

“g uarantee ” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“ Guarantee ” means the guarantee by any Guarantor of the Note Obligations.

“ Guarantors ” means each of:

(1) Austell Holding Company, LLC, a Georgia limited liability company;

(2) Camden Paperboard Corporation, a New Jersey corporation;

(3) Caraustar, G.P., a South Carolina general partnership;

(4) Caraustar Custom Packaging Group, Inc., a Delaware corporation;

(5) Caraustar Custom Packaging Group (Maryland), Inc., a Maryland corporation;

(6) Caraustar Industrial & Consumer Products Group, Inc., a Delaware corporation;

(7) Caraustar Mill Group, Inc., an Ohio corporation;

(8) Caraustar Recovered Fiber Group, Inc., a Delaware corporation;

(9) Chicago Paperboard Corporation, an Illinois corporation;

(10) Federal Transport, Inc., an Ohio corporation;

(11) Gypsum MGC, Inc., a Delaware corporation;

(12) Halifax Paper Board Company, Inc., a North Carolina corporation;

(13) McQueeney Gypsum Company, a Delaware corporation;

(14) McQueeney Gypsum Company, LLC, a Delaware limited liability company;

 

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(15) Paragon Plastics, Inc., a South Carolina corporation;

(16) PBL Inc., a Delaware corporation;

(17) RECCMG, LLC, a Georgia limited liability company;

(18) Sprague Paperboard, Inc., a Connecticut corporation; and

(19) any other Domestic Subsidiary that executes a Guarantee in accordance with the provisions of this Indenture or assumes liability under a Guarantee pursuant to Section 10.04;

and their respective successors and assigns, in each case, until the Guarantee of such Person has been released in accordance with this Indenture.

“ Hedging Obligations ” means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate, currency or commodity price risks either generally or under specific contingencies. For the avoidance of doubt, forward purchase contracts of energy and other commodities for use in the ordinary course of business of such Person or its Affiliates shall not constitute Hedging Obligations as provided herein.

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

“ Indebtedness ” means, with respect to any Person (without duplication of items covered by multiple clauses in this definition),

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

(a) in respect of borrowed money,

(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without double counting, reimbursement agreements in respect thereof),

(c) representing the balance deferred and unpaid of the purchase price of any property or services, 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,

(d) in respect of Capitalized Lease Obligations and the present value (discounted at the interest rate borne by the Notes, compounded annually) of total obligations of the lessee for rental payments during the remaining term of the lease included in any Sale and Lease-Back Transaction (including any period for which such lease has been extended), or

(e) representing any Hedging Obligations,

 

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

(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of another Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business, and

(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) 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 such obligations shall not include any Indebtedness secured solely by a Lien on any Equity Interests in joint ventures or in Unrestricted Subsidiaries.

“ Indenture ” means this instrument, as originally executed or as it may from time to time be supplemented or amended in accordance with Article 9 hereof.

“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.

“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of the Issue Date, among the Pledgors, the Credit Facility Agent, the Credit Facility Collateral Agent, the Trustee and the Collateral Agent, as amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof.

“ Interest Payment Dates ” shall have the meaning set forth in paragraph 1 of each Note.

“ Internal Revenue Service ” means the U.S. Internal Revenue Service.

“ Investments ” means, with respect to any Person, (a) any purchase or other acquisition by such Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by, (iii) any Indebtedness of or (iv) any equity ownership interest in, any other Person, (b) any acquisition by such Person of all or a significant part of the assets or business conducted by any other Person, or all or substantially all of the assets or business of a division, branch or other unit operation of any other Person, (c) any loan, advance (other than deposits with financial institutions available for withdrawal on demand and prepaid expenses) or capital contribution by such Person to any other Person, including all Indebtedness of any other Person to such Person arising from the sale of property by such Person other than in the ordinary course of its business, and (d) any guarantee by such Person in respect of any Indebtedness of any other Person.

For purposes of the definition of “Unrestricted Subsidiary” and Section 4.11,

(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 Foreign Subsidiary of the Company at the time that such Foreign Subsidiary is designated an Unrestricted Subsidiary; provided , however , that upon a redesignation of such Foreign 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

 

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(x) the Company’s “Investment” in such Foreign 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 Foreign 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 Board of Directors of the Company.

“ Issue Date ” means August 20, 2009.

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

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

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

“ Mortgages ” mean, collectively, any and all mortgages, deeds of trust or other instruments entered into by the Company or any Guarantor on or after the Issue Date evidencing or creating a Lien on real property in favor of the Collateral Agent in accordance with the terms of this Indenture.

“ 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 Asset Sale Proceeds ” means the aggregate cash proceeds received by the Company or any Restricted Subsidiary in respect of any Asset Sale (including any cash received upon the sale or other disposition of any noncash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale and the sale or disposition of such noncash consideration, including legal, accounting and investment banking fees, and brokerage and sales commissions, taxes paid or payable by the Company or any Restricted Subsidiary 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 Indebtedness secured by a Lien on the asset or assets being sold (or Capital Stock of an entity

 

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that directly or indirectly owns such assets) that were subject to such Asset Sale required (other than required by clause (1) of paragraph (b) of Section 4.13) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Company or any Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company or any Restricted Subsidiaries after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

“ Net Loss Proceeds ” means the aggregate cash proceeds received by the Company or any of its Subsidiaries in respect of any Event of Loss, including, without limitation, insurance proceeds from condemnation awards or damages awarded by any judgment, net of the direct costs in recovery of such Net Loss Proceeds (including, without limitation, legal, accounting, appraisal and insurance adjuster fees and any relocation expenses incurred as a result thereof), and any taxes attributable to such Event of Loss paid or payable by the Company or any Restricted Subsidiary as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements).

“ Note Documents ” means the Indenture, the Notes, the Collateral Documents and the Post Closing Letter.

“ Note Obligations ” means all Obligations under the Note Documents.

“ Note Priority Collateral ” has the meaning provided for such term in the Intercreditor Agreement.

“ Notes ” means $85,000,000 in aggregate principal amount of the Company’s Senior Secured Notes due 2014 issued on the Issue Date, which amount may be increased to reflect payments of PIK Interest pursuant to Section 4.01(b), substantially in the form set forth in Exhibit A . For purposes of this Indenture, all references to Notes to be issued or authenticated upon transfer, replacement or exchange shall be deemed to refer to the Notes. For purposes of this Indenture, all references to “principal amount” of the Notes shall include any increase in the principal amount of the Notes as a result of the payment of PIK Interest pursuant to Section 4.01(b).

“ Notes Secured Creditors ” means, collectively, the Trustee and the Holders.

“ Obligations ” means (without duplication of items covered by multiple items in this definition) any principal, interest, penalties, fees, indemnifications, reimbursements (including 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.

“ Officer ” means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company or a Restricted Subsidiary, as applicable.

 

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“ 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 the Indenture.

“ Opinion of Counsel ” means a written opinion from legal counsel who is reasonably acceptable to the Trustee, which may be subject to customary assumptions, limitations and qualifications. The counsel may be an employee of or counsel to the Company or the Trustee.

“ Participant ” means, with respect to the Depositary, a Person who has an account with the Depositary.

“ Permit ” means any license, franchise, authorization, statement of compliance, certificate of operation, certificate of occupancy and permit required for the lawful ownership, occupancy, operation and use of all or a material portion of the Permitted Business (which may be temporary or permanent).

“ Permitted Business ” means any line of business conducted by the Company or its Subsidiaries on the Issue Date, or any business that is a reasonable extension, development or expansion of any of the foregoing.

“ Permitted Holders ” means any Person which receives Class A Common Stock of the Company pursuant to the Plan of Reorganization as of the Issue Date. In addition, any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made and (to the extent required pursuant to the terms hereof) consummated in accordance with the requirements of this Indenture (or would require a Change of Control Offer in the absence of the waiver of such requirement by holders in accordance with this Indenture) will thereafter constitute additional Permitted Holders.

“ Permitted Indebtedness ” has the meaning set forth in Section 4.09 hereof.

“ Permitted Investments ” means:

(1) receivables owing to the Company or any Restricted Subsidiary and other similar extensions of credit to customers created or acquired consistent with past practice or otherwise in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided , however , that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(2) any Investment in the Company or any Domestic Restricted Subsidiary;

(3) any Investment in cash and Cash Equivalents;

(4) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is engaged in a Permitted Business if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary, or

 

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(b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary;

(5) any Investment in the assets of a Person or a division, line of business or other business segment of such Person constituting a Permitted Business where such assets are acquired by the Company or a Restricted Subsidiary;

(6) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to and in compliance with Section 4.13 or any other disposition of assets not constituting an Asset Sale;

(7) any Investment existing on the Issue Date;

(8) any Investment acquired by the Company or any Restricted Subsidiary:

(a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or

(b) as a result of a foreclosure by the Company or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(9) Hedging Obligations permitted under clause (b)(10) of Section 4.09;

(10) Investments having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed $10 million (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(11) guarantees of Indebtedness permitted under Section 4.09;

(12) Investments consisting of purchases and acquisitions of inventory, supplies, material or equipment in the ordinary course of business;

(13) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other business related purposes, in each case incurred in the ordinary course of business and not in excess of an aggregate of $500,000 outstanding at any one time;

(14) loans and advances to customers and suppliers consistent with past practice or otherwise in the ordinary course of business; and

 

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(15) Investments (i) consisting of deposits in respect of credit card obligations not in excess of an aggregate of $500,000 outstanding at any one time and (ii) in respect of energy and other commodity purchases for use in the business of the Company and its Subsidiaries not in excess of an aggregate of $1,000,000 outstanding at any one time.

“ Permitted Liens ” means:

(1) Liens securing Obligations under the Credit Facility (including, without limitation, Indebtedness in respect of letters of credit and guarantees issued thereunder and “Bank Products” as defined therein) subject to the terms of the Intercreditor Agreement, so long as the principal amount of the Indebtedness thereunder was incurred pursuant to clause (1) of the definition of “Permitted Indebtedness”;

(2) Liens on property securing the Crane Bonds, so long as the principal amount of Indebtedness thereunder does not exceed the amount permitted by clause (3) of the definition of “Permitted Indebtedness”;

(3) inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable and Liens for taxes, assessments or governmental charges or levies, which (i) have been delinquent for no more than 60 days, (ii) are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, or (iii) in the case of any such charge or claim which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

(4) Liens in respect of property of the Company or any Subsidiary of the Company imposed by law, such as carriers’, warehousemen’s, materialmen’s, landlords’ and mechanics’ Liens, maritime Liens and other similar Liens arising in the ordinary course of business, provided that, in the case of any such Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

(5) Liens on property of the Company or any Subsidiary of the Company existing on the Issue Date and not extinguished pursuant to the Plan of Reorganization;

(6) easements, rights-of-way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and title deficiencies on or with respect to any real property of the Pledgors, not securing Indebtedness, that either (x) are in existence as of the Issue Date, or (y) are created or come into existence after the Issue Date, and which, in any such case, do not individually or in the aggregate (i) interfere in any material respect with the ordinary conduct of the business of the Company and the Restricted Subsidiaries, taken as a whole, or (ii) materially impair the use (for its intended purposes) or the value of the properties subject thereto, taken as a whole;

(7) Liens arising out of judgments or awards not resulting in an Event of Default being contested in good faith and by an appropriate appeal proceedings and in respect of which there shall be in effect a stay of execution pending such appeal or proceedings; provided that the aggregate amount of all such judgments or awards does not exceed $500,000 (to the extent not covered by insurance) outstanding at any time;

 

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(8) Liens (other than any Lien imposed by the United States Employee Retirement Income Securities Act of 1974, as amended) (i) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or public utility obligations, (ii) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (iii) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that, in the case of any such Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

(9) Leases with respect to the properties of the Company or any Subsidiary of the Company, in each case entered into in the ordinary course of the Company’s or such Subsidiary’s business, so long as such leases entered into after the Issue Date are subordinate in all respects to the Liens granted and evidenced by the Collateral Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of any of the Company or the Restricted Subsidiaries or (ii) materially impair the use (for its intended purposes) or the value of the properties subject thereto, taken as a whole;

(10) Liens on the Collateral securing Hedging Obligations payable to any lender or holder of Indebtedness or an Affiliate thereof to the extent such Hedging Obligations are secured by Liens on assets also securing such Indebtedness (including all Obligations in respect thereof);

(11) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any Subsidiary of the Company in the ordinary course of business in accordance with the past practices of the Company and the Subsidiaries of the Company;

(12) Liens securing the Indebtedness described in clause (4) of paragraph (b) of Section 4.09; provided that (i) the Indebtedness secured by any such Lien (including refinancings thereof) does not exceed 100% of the cost (including fees and premiums in connection with such transactions) of the property being acquired, leased or otherwise financed at the time of the incurrence of such Indebtedness and (ii) any such Liens attach only to the property being financed pursuant to such Indebtedness (together with improvements thereon and proceeds thereof) and do not encumber any other property of the Company or any Subsidiary of the Company (it being understood that all Indebtedness to a single lender shall be considered to be a single purchase money obligation, whether drawn at one time or from time to time);

(13) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Company or any Subsidiary of the Company, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

 

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(14) Liens on property of a Person existing at the time such Person is acquired by or merged with or into or consolidated with the Company or any Subsidiary of the Company (and not created in anticipation or contemplation thereof) in accordance with the provisions of this Indenture; provided that such Liens were in existence prior to the contemplation of the acquisition, merger or consolidation and do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon and proceeds thereof);

(15) Liens securing Obligations under the Indenture, the Notes, the Guarantees and the Collateral Documents;

(16) Liens securing Acquired Indebtedness (and any Refinancing Indebtedness which refinances such Acquired Indebtedness) incurred in accordance with Section 4.09; provided that (i) such Liens secured the Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and (ii) such Liens do not extend to or cover any property of the Company or the Subsidiaries of the Company other than the property that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Subsidiary of the Company, together with improvements thereon and proceeds thereof;

(17) licenses of any patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights, trade-secrets, know-how and processes, granted by the Company or any Subsidiary of the Company in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of the Company and the Subsidiaries of the Company;

(18) Liens in favor of the Company or any Guarantor; provided that such Liens are subject to the Liens of the Collateral Documents;

(19) Liens securing Refinancing Indebtedness; provided that (i) such Liens do not extend to or cover any property of the Company or the Subsidiaries of the Company other than the property that secured the refinanced Indebtedness, together with improvements thereon and proceeds thereof and (ii) the material terms of such Liens are, taken as a whole, no less favorable to the Holders in any material respect, as compared to the terms of the Liens securing such refinanced Indebtedness; provided , further , that in the case of any such Liens securing such Indebtedness that is renewed, extended, refinanced or replaced within 12 months of its scheduled maturity or subsequent to the occurrence of any default or event of default under such Indebtedness, such material terms may be on terms that are, taken as a whole, substantially consistent with then prevailing terms for Liens securing Indebtedness of such type, as determined in the judgment of the Board of Directors;

(20) Liens on Equity Interests in any Unrestricted Subsidiaries that secure Indebtedness of such Unrestricted Subsidiaries;

(21) Liens securing any Attributable Debt on assets that are the subject of any Sale and Lease-Back Transaction permitted by Section 4.16;

 

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(22) Liens securing Indebtedness of any Foreign Subsidiaries otherwise permitted pursuant to this Indenture;

(23) Liens in respect of the deposits described in clause (15) of the definition of Permitted Investments;

(24) other Liens securing Indebtedness not to exceed $1,000,000 in the aggregate outstanding at any one time; and

(25) Liens extending, renewing or replacing, in whole or in part, any of the Liens referred to above, so long as (i) such Liens do not extend to any other property (other than improvements, accessions, proceeds or dividends or distributions with respect thereto) and (ii) the material terms of such Liens are, taken as a whole, no less favorable to the Holders in any material respect, as compared to the terms of the Liens being extended, renewed or replaced; provided , further , that in the case of any such Liens securing such Indebtedness that is renewed, extended, refinanced or replaced within 12 months of its scheduled maturity or subsequent to the occurrence of any default or event of default under such Indebtedness, such material terms may be on terms that are, taken as a whole, substantially consistent with then prevailing terms for Liens securing Indebtedness of such type, as determined in the judgment of the Board of Directors;

provided, however , that (except as set forth in clauses (1), (3), (10), (14), (15), (16), (19) through (25) above) no Liens shall be permitted to exist, directly or indirectly, on any Equity Interests, intercompany notes or other securities constituting Collateral.

“ Permitted Prior Liens ” means:

(1) Liens described in clauses (1), (2), (5), (6), (8), (10), (11), (12), (13), (14), (16), (20), (21), (22), (23) and (25)of the definition of “Permitted Liens;”

(2) Liens described in clause (24) of the definition of Permitted Indebtedness; provided , that the Fair Market Value of the property subject to the Lien securing the Indebtedness relating to such Lien does not exceed $1,000,000; and

(3) Permitted Liens that arise by operation of law and are not voluntarily granted, to the extent entitled by law to priority over the Liens created by the Collateral Documents.

“ 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.

“ PIK Interest ” means interest paid on the Notes in accordance with Section 4.01(b) hereof in the form of increasing the outstanding principal amount of the Notes or issuing additional Notes.

“ Plan of Reorganization ” means the first amended joint plan of reorganization of the Company and certain of its subsidiaries and affiliates, dated as of June 30, 2009, as amended, supplemented or modified from time to time.

 

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“ Pledge Agreement ” means the pledge agreement, dated as of the Issue Date, between the Collateral Agent, the Company and certain Guarantors parties thereto, as it may be amended or supplemented from time to time in accordance with its terms.

“ Pledgor ” means the Company, the Guarantors, and any other Person (if any) that provides collateral security for any Note Obligations.

“ Post Closing Letter ” shall mean the Post Closing Letter dated as of the Issue Date among the Collateral Agent and the Company.

“ Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same Indebtedness as that evidenced by such particular Note; and any Note authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same Indebtedness as the 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.

“ Priority Lien Debt ” means:

(a) Indebtedness of the Company or any Guarantor under the Credit Facility permitted by clause (1) of paragraph (b) of Section 4.09;

(b) Hedging Obligations incurred to hedge or manage interest rate risk with respect to Indebtedness under the Credit Facility described in the preceding clause (a), provided that (i) such Hedging Obligations are secured by a Lien on only the assets and properties that secure Indebtedness under the Priority Lien Debt in respect of which such Hedging Obligations are incurred; and (ii) such Lien is senior to or on a parity with the Indebtedness under the Credit Facility in respect of which such Hedging Obligations arise; and

(c) Indebtedness secured by (i) a Lien described in clause (2), (5), (12), (14), (16), (19), (21) or (24) of the definition of “Permitted Liens” and (ii) a Lien described in clause (25) of the definition of “Permitted Liens” if such Lien has extended, renewed or replaced a Lien securing Priority Lien Debt.

“ Receivables ” shall include all receivables arising out of the sale or lease of inventory or the provision of services in the ordinary course of business of the Company or any of its Subsidiaries.

“ Regular Record Date ” for the interest payable on any Interest Payment Date means the applicable date specified as a “Record Date” on the face of the Note.

“ Reference Period ” with regard to any Person means the four full fiscal quarters (or such lesser period during which such Person has been in existence) ended immediately preceding any date upon which any determination is to be made pursuant to the terms of the Notes or the Indenture.

 

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“ Related Party ” means (i) any member of the Board of Directors of the Company or any executive officer of the Company (or any member of the immediate family of any such member or executive officer), (ii) any Person of which a person described in clause (i) is a partner, director or executive officer; (iii) any Person beneficially owning, or otherwise controlling (or sharing control of), more than 20% of the Company’s issued and outstanding common stock; (iv) any Person that is an Affiliate of a Person described in clause (iii); or (v) any director or executive officer of a Person described in clause (iii) or in clause (iv) (or any member of the immediate family of any such director or executive officer).

“ Required Noteholders ” means Holders of more than 50% of the principal amount of Notes then outstanding.

“ Responsible Officer ,” when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) with direct responsibility for the administration of this Indenture 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 or her knowledge of and familiarity with the particular subject.

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

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

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

“ Sale and Lease-Back Transaction ” means any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of such leasing.

“ SEC ” means the Securities and Exchange Commission or any successor thereto.

“ Securities Act ” means the Securities Act of 1933 and the rules and regulations of the SEC promulgated thereunder.

“ Security ” means any Equity Interest, voting trust certificate, bond, debenture, note or other evidence of Indebtedness, whether secured or unsecured, convertible or subordinated, or any certificate of interest, share or participation in, any temporary or interim certificate for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing, but shall not include any evidence of the Note Obligations.

 

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“ Security Agreement ” means the security agreement, dated as of the Issue Date, between the Collateral Agent, the Company and certain Guarantors parties thereto, as it may be amended or supplemented from time to time in accordance with its terms.

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

“ Sprague Bond Documents ” means that certain Trust Indenture, dated as of October 1, 1997, between the Town of Sprague, Connecticut and the Bank of New York, as trustee, that certain Loan Agreement, dated as of October 1, 1997, between the Town of Sprague, Connecticut and International Paper Company, that certain Promissory Note, dated as of April 8, 1999, by the Company in favor of International Paper Company, in an aggregate principal amount of $4,700,000, and such other documents, instruments and agreements executed in connection therewith, in each case executed or issued in connection with the Sprague Bonds.

“ Sprague Bonds ” means the Environmental Improvement Revenue Bonds, 1997 Series A (International Paper Company Project) issued by the Town of Sprague, Connecticut, in an original principal amount of $4,700,000.

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

“ Subordinated Indebtedness ” means:

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

(2) 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.

“ 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 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:

(a) more than 50% of the capital accounts, distribution rights, Capital Stock or voting interests, 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

 

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(b) such Person or any Subsidiary of such Person is the sole general partner, a controlling general partner or otherwise controls such entity.

“ TIA ” means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder.

“ Total Leverage Ratio ” of any Person on any date of determination means the ratio, on a pro forma basis, of (a) the aggregate outstanding principal amount of the Indebtedness of such Person on such date as would be reflected as a liability on the balance sheet of such Person on such date in accordance with GAAP, to (b) the aggregate amount of EBITDA of such Person attributable to continuing operations and businesses (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of) for the Reference Period immediately preceding such date.

For purposes of making the computation of the Total Leverage Ratio:

(1) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculations as a result of such person or one of its Subsidiaries (including any person who becomes a Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also, including any EBITDA (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X promulgated under the Exchange Act) attributable to any Person or properties that are the subject of the Asset Acquisition or Asset Sale during the Reference Period) occurring during the Reference Period or any time subsequent to the last day of the Reference Period and on or prior to such date, as if such Asset Sale or Asset Acquisition (including the incurrence or assumption of any such Acquired Indebtedness) occurred on the first day of the Reference Period. Further, if such person or any of its Subsidiaries directly or indirectly guarantees Indebtedness of a third person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such person or any subsidiary of such person had directly incurred or otherwise assumed such other Indebtedness that was so guaranteed;

(2) transactions giving rise to the need to calculate the Total Leverage Ratio shall be assumed to have occurred on the first day of the Reference Period; and

(3) the incurrence or repayment of any Indebtedness, or issuance or redemption of any Disqualified Stock, during the Reference Period or subsequent to the Reference Period and on or prior to such date (and the application of the proceeds therefrom to the extent used to refinance or retire other Indebtedness) shall be assumed to have occurred on the first day of such Reference 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 the Company.

 

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“ Trustee ” means the Person named as the “Trustee” in the first paragraph of this instrument 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 if and only if:

(1) such Subsidiary is a Foreign Subsidiary or a Domestic Subsidiary acquired or created after the date of this Indenture,

(2) such Subsidiary or any of its Subsidiaries does not own any Equity Interests or Indebtedness of, or own or hold any Lien on any property of, the Company or any Restricted Subsidiary (other than any Subsidiary of the Subsidiary to be so designated),

(3) each of (i) the Subsidiary to be so designated and (ii) its Subsidiaries, in each case, 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, and

(4) such designation complies with Section 4.11.

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 and the Restricted Subsidiaries could incur at least $1.00 of additional Indebtedness pursuant to the Total Leverage Ratio test described in paragraph (a) of Section 4.09, or

(2) the Total Leverage Ratio for the Company and the Restricted Subsidiaries would be equal to or less than such ratio for the Company and the 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 resolution adopted by the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions, as applicable.

 

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“ 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 (x) the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness, including remaining sinking fund payments or payments at serial or final maturity or redemption or similar payment with respect to such Disqualified Stock or preferred stock multiplied by (y) the amount of such payment, by

(2) the sum of all such payments.

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

Section 1.02. Other Definitions .

 

 

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Section 1.03. Incorporation by Reference of Trust Indenture Act .

(a) Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

(b) The following TIA terms used in this Indenture have the following meanings:

“ indenture securities ” means the Notes and the Guarantees;

“ indenture security holder ” means a Holder;

“ indenture to be qualified ” means this Indenture;

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

“ obligor ” on the Notes means the Company and any successor obligor upon the Notes.

(c) All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein have the meanings so assigned to them either in the TIA, by another statute or SEC rule, as applicable.

Section 1.04. Rules of Construction .

(a) Unless the context otherwise requires:

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

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

(iii) “or” is not exclusive;

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

 

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(v) all references in this instrument to “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed;

(vi) 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.

(vii) “including” means “including without limitation”;

(viii) provisions apply to successive events and transactions;

(ix) references to sections of or rules under the Securities Act, the Exchange Act or the TIA shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time thereunder; and

(x) references to any contract, agreement or instrument shall mean the same, as amended, modified, supplemented or amended and restated from time to time, in each case, in accordance with the applicable restrictions contained therein, in this Indenture or in any Collateral Document, as the case may be.

ARTICLE II

THE NOTES

Section 2.01. Terms; Form and Dating .

(a) General . The aggregate principal amount of Notes that may be authenticated and delivered and outstanding under this Indenture is limited to $85,000,000 (plus the principal amount of any additional Notes issued in payment of PIK interest pursuant to the terms of Section 4.01 hereof). The Notes shall mature on August 15, 2014. The Notes and the Trustee’s certificate of authentication shall be substantially in the form included in Exhibit A hereto, which is hereby incorporated in and expressly made part of this Indenture. The Notes may have notations, legends or endorsements required by law, exchange rule or usage in addition to those set forth on Exhibit A . Each Note shall be dated the date of its authentication. The terms and provisions contained in the Notes shall constitute a part of this Indenture, and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. To the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Form of Notes . Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified therein, and each shall provide that it shall represent the

 

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aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions thereof, transfers of interests therein and payments of PIK Interest. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with written instructions given by the Holder thereof as required by Section 2.06 hereof.

(c) Book-Entry Provisions . This Section 2.01(c) shall apply only to Global Notes deposited with the Trustee, as custodian for the Depositary. Participants and Indirect Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company 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 Trustee or any agent of the Company 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 or Indirect Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(d) Certificated Securities .

(i) The Company shall issue Definitive Notes to all owners of beneficial interests in Global Notes if: (1) at any time the Depositary notifies the Company that it is unwilling or unable to continue to act as Depositary for the Global Notes or if at any time the Depositary shall no longer be eligible to act as such because it ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company shall not have appointed a successor Depositary within 120 days after the Company receive such notice or becomes aware of such ineligibility or (2) the Company, at its option, determines that the Global Notes shall be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of any of the events set forth in clauses (1) or (2) above, the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver, Definitive Notes, in authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes. Upon the exchange of a Global Note for Definitive Notes, such Global Note shall be cancelled by the Trustee or an agent of the Company or the Trustee.

(ii) The Company shall issue Definitive Notes to a Holder of a Global Note (or such party designated by such Holder) in exchange for such Global Note, upon written request from a Holder of a Global Note if a Default or Event of Default shall have occurred and be continuing. Upon the occurrence of the foregoing, the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver, Definitive Notes, in authorized denominations, in an aggregate principal amount equal to the principal amount of the

 

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Global Note or portion of a Global Note being exchanged. Upon the exchange of all or a portion of a Global Note for Definitive Notes, such Global Note shall be cancelled or correspondingly reduced by the Trustee or an agent of the Company or the Trustee. In the event that the Definitive Notes are not issued to a party designated by such Holder promptly after the Company has received a request from such Holder, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to this Indenture, the right of any such party designated by such Holder to pursue such remedy with respect to the portion of the Global Note that represents such party’s beneficial interest as if such Definitive Notes had been issued.

(iii) Definitive Notes issued in exchange for a Global Note pursuant to this Section 2.01 shall be registered in such names and in such authorized denominations as the Depositary shall instruct the Trustee. The Trustee or such agent shall deliver such Definitive Notes to or as directed by the Persons in whose names such Definitive Notes are so registered or to the Depositary.

Section 2.02. Execution and Authentication .

(a) One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature.

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

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

(d) The Trustee shall initially authenticate the Notes for original issue on the Issue Date in an aggregate principal amount of $85,000,000 upon a written order of the Company in the form of an Officers’ Certificate of the Company (“ Authentication Order ”). The Trustee shall authenticate and deliver any additional Notes (or increases in the principal amount of any Notes) as a result of a payment of PIK Interest, for an aggregate principal amount specified in such Authentication Order for such additional Notes (or increases in the principal amount of any Notes) issued or increased hereunder (so long as permitted by the terms of this Indenture, including, without limitation, Section 4.09), for original issue upon an Authentication Order (other than as provided in Section 2.07). Each such written order shall specify the amount of the Notes (or the increase in principal amount) to be authenticated and the date on which the Notes (or the increase in principal amount) are to be authenticated.

(e) On any Interest Payment Date on which the Company pays PIK Interest with respect to a Global Note in accordance with Section 4.01(b), the Trustee shall, after receipt of an Authentication Order, increase the principal amount of such Global Note by an amount equal to the interest payable, rounded up to the nearest $1.00, for the relevant interest period on the principal amount of such Global Note as of the relevant record date for such Interest Payment Date, to the credit of the Holders on such record date, pro rata in accordance with their interests, and an adjustment shall be made on the books and records of the Trustee (if it is then the

 

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Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Custodian, to reflect such increase. On any Interest Payment Date on which the Company pays PIK Interest by issuing additional Notes, the principal amount of any such Notes issued to any Holder, for the relevant interest period as of the relevant record date for such Interest Payment Date, shall be rounded up to the nearest $1.00. Each additional Note shall be an additional obligation of the Company and the Guarantors and shall be governed by, and entitled to the benefits of, this Indenture and shall be subject to the terms of this Indenture (including the Guarantees), shall rank pari passu with and be subject to the same terms (including the rate of interest from time to time payable thereon) as all other Notes (except, as the case may be, with respect to the issuance date and aggregate principal amount), and shall have the benefit of the Liens securing the Notes.

(f) The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.

(g) The Notes shall be issued in integral multiples of $1.00 (in each case with a minimum denomination of at least $1.00).

Section 2.03. Registrar and Paying Agent .

(a) The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar” ) and an office or agency where Notes may be presented for payment (“ Paying Agent” ). The Registrar shall keep a register (the “ Security Register” ) of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. Either the Company or any of its Subsidiaries may act as Paying Agent or Registrar.

(b) The Company initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes.

(c) The Company initially appoints the Trustee to act as Registrar and Paying Agent and to act as Custodian with respect to the Global Notes, and the Trustee hereby agrees so to initially act.

(d) The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent (that is not also the Trustee). The agreement shall implement the provisions of this Indenture that relate to such Agent.

 

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Section 2.04. Paying Agent to Hold Money in Trust .

The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all funds held by it relating to the Notes to the Trustee. The Company at any time may require a Paying Agent to pay all funds held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for such funds. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all funds held by it as Paying Agent. Upon any Event of Default under Sections 6.01(j) or (k) hereof relating to the Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05. Holder Lists .

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA §312(a). If the Trustee is not the Registrar, the Company shall furnish or cause to be furnished to the Trustee at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date or such shorter time as the Trustee may allow, as the Trustee may reasonably require of the names and addresses of the Holders and the Company shall otherwise comply with TIA §312(a).

Section 2.06. Transfer and Exchange .

(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes as provided in Section 2.01(d)(i). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and Section 2.10 hereof. Except as otherwise provided herein, every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or Section 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in Section 2.01(d) and this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. Neither the Company nor the Trustee will be liable for any delay by a Holder of a Global Note or the Depositary in identifying the beneficial owners of Notes, except as a result of the Company’s or Trustee’s own negligent action, negligent failure to act or own willful misconduct, as the case may be. In the absence of bad faith on their part, the Company and the Trustee may conclusively rely on, and will be protected in relying on written instructions from the Holder of a Global Note or the Depositary for all purposes under this Indenture.

 

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(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in Global Notes may be subject to restrictions on transfer to the extent required by the Securities Act.

Beneficial interests in any Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Note, in accordance with the Applicable Procedures. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b).

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes. The holder of a beneficial interest in a Global Note may exchange such beneficial interest for a Definitive Note or transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note only upon the occurrence of the events described in Section 2.01(d)(ii), in which event such owner of such beneficial interest shall instruct the Depositary (or shall cause the appropriate Participant to direct the Depositary) in accordance with the Applicable Procedures to instruct the Trustee to reduce the aggregate principal amount of the Global Note by the applicable amount of such exchange or transfer and to issue in exchange therefore a Definitive Note or Notes in such aggregate amount and registered as provided in such instruction; and upon the Trustee’s receipt of such instruction from the Depositary (or from the applicable Participant or beneficial owner pursuant to the Depositary’s proxy procedures), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver, in both cases in accordance with Section 2.02 hereof, to the Person designated in such instruction a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail or deliver such Definitive Notes to the Persons in whose names such Notes are so registered.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer together with surrender of the Definitive Note to be exchanged or transferred, (and, accompanied by a written instrument or instruments of transfer as provided in Section 2.06(e) hereof, and subject to the Applicable Procedures), the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Global Notes pursuant to Section 2.06(g) hereof.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer

 

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in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, reasonably requested by the Company to demonstrate compliance by such Holder with applicable law.

(f) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

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

(g) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such

 

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Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(h) General Provisions Relating to Transfers and Exchanges .

(i) To permit registrations of transfers and exchanges, the Company shall execute Global Notes and Definitive Notes, and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s order (including an Authentication Order given pursuant to Section 2.02) or at the Registrar’s request (in connection with any transfer or exchange of Notes pursuant to this Section 2.06).

(ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.08, 3.09, 3.10, 4.13, 4.19, 4.22 and 9.05 hereof) (in which event the Company will be responsible for the payment of such taxes).

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

(iv) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Regular Record Date and the next succeeding Interest Payment Date.

(v) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

 

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

(vii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

(viii) Notwithstanding anything contained herein to the contrary, neither the Trustee nor the Registrar shall be responsible for ascertaining whether any purchase or transfer complies with the registration provisions of or exemptions from the Securities Act or other state, federal securities laws that may be applicable; provided , however , that if a certificate is specifically required by the express terms of this Section 2.06 to be delivered to a Trustee by a purchaser or required by the express terms of this Section 2.06 to be delivered to a Trustee by a purchaser or transferee of a Note, the Trustee shall be under a duty to receive and examine the same to determine whether it complies on its face with the requirements of this Section 2.06 and shall promptly notify the party delivering the same if such transfer does not comply with such terms.

Section 2.07. Replacement Notes .

If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate a replacement Note. If required by the Trustee or the Company, the Holder of such Note shall provide indemnity that is sufficient, in the judgment of (i) the Trustee, to protect the Trustee or (ii) the Company, to protect the Company, the Trustee, any Agent and any authenticating agent, from any loss that any of them may suffer in connection with such replacement. If required by the Company, such Holder shall reimburse the Company for its reasonable expenses in connection with such replacement.

Every replacement Note issued in accordance with this Section 2.07 shall be the valid obligation of the Company, evidencing the same debt as the destroyed, lost or stolen Note, and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08. Outstanding Notes .

(a) The Notes outstanding at any time shall be the entire principal amount of Notes represented by all of the Global Notes and Definitive Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those subject to reductions in beneficial interests effected by the Trustee in accordance with Section 2.06 hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note shall not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

 

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(b) If a Note is replaced pursuant to Section 2.07 hereof, it shall cease to be outstanding unless the Trustee receives proof satisfactory to it that the replaced note is held by a bona fide purchaser.

(c) If the principal amount of any Note is considered paid under Section 4.01 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.

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

Section 2.09. Treasury Notes .

In determining the Required Noteholders or otherwise whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Subsidiary of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded.

Section 2.10. Temporary Notes .

Until certificates representing Notes are ready for delivery, the Company may prepare and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Global Notes or Definitive Notes in exchange for temporary Notes, as applicable.

Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.

Section 2.11. Cancellation .

The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. Upon sole direction of the Company, the Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirements of the Exchange Act or other applicable laws). Certification of the destruction of all cancelled Notes shall be delivered to the Company from time to time upon request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

 

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Section 2.12. Payment of Interest; Defaulted Interest .

If the Company defaults in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related Interest Payment Date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall send or cause to be sent to Holders a notice that states the special record date, the related Interest Payment Date and the amount of such interest to be paid.

Section 2.13. CUSIP or ISIN Numbers .

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

Section 2.14. Record Date .

The record date for purposes of determining the identity of Holders of Notes entitled to vote or consent to any action by vote or consent or permitted under this Indenture shall be determined as provided for in TIA Section 316(c).

ARTICLE III

REDEMPTION AND PREPAYMENT

Section 3.01. Notices to Trustee .

If the Company elects or is required to redeem Notes pursuant to the provisions of this Article III, the Company shall furnish to the Trustee, at least 30 days (15 days in the case of redemption pursuant to Section 3.08 or 3.09) but not more than 60 days before a redemption date (or such shorter period as allowed by the Trustee), an Officers’ Certificate setting forth (a) the applicable section of this Indenture pursuant to which the redemption shall occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed and (d) the redemption price.

 

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Section 3.02. Selection of Notes to Be Redeemed or Repurchased .

If less than all of the Notes are to be redeemed or repurchased at any time, the Trustee shall select the Notes for redemption or repurchase among the Holders of the Notes as follows: (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate. In the event of partial redemption or repurchase by lot, the particular Notes to be redeemed or repurchased shall be selected, unless otherwise provided herein, not less than 30 days (15 days in the case of redemption pursuant to Section 3.08 or 3.09) nor more than 60 days prior to the redemption or repurchase date by the Trustee from the outstanding Notes not previously called for redemption or repurchase.

The Trustee shall promptly notify the Company in writing of the Notes selected for redemption or repurchase and, in the case of any Note selected for partial redemption or repurchase, the principal amount thereof to be redeemed or repurchased. Notes and portions of Notes selected shall be in amounts of $1,000 or integral multiples thereof, except that if all of the Notes of a Holder are to be redeemed or repurchased, the entire outstanding amount of Notes held by such Holder, even if not an integral multiple of $1,000, shall be redeemed or repurchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or repurchase also apply to portions of Notes called for redemption or repurchase.

Section 3.03. Notice of Redemption .

At least 30 days (15 days in the case of redemption pursuant to Section 3.08 or 3.09) but not more than 60 days prior to a redemption or repurchase date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption or repurchase to each Holder whose Notes are to be redeemed or repurchased at such Holder’s registered address appearing in the Security Register; provided, however , that redemption or repurchase notices may be mailed more than 60 days prior to a redemption or repurchase date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture.

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

(a) the redemption date;

(b) the redemption price (the appropriate calculation of which shall be set forth in an Officers’ Certificate delivered to the Trustee no later than two (2) Business Days prior to the redemption date);

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

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

 

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

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

(g) the applicable section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

(h) that no representation is made as to the correctness of the CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the Notes.

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense; provided, however , that the Company shall have delivered to the Trustee, at least 35 days (20 days in the case of redemption pursuant to Section 3.08 or 3.09) (or such shorter period as may be allowed by the Trustee), prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice (in the name and at the expense of the Company) and setting forth the information to be stated in such notice as provided in this Section 3.03.

Section 3.04. Effect of Notice of Redemption .

Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption shall become irrevocably due and payable on the redemption date at the redemption price; provided , that any defect in or failure to give notice in accordance with Section 3.03 shall not affect the validity of the proceedings for the redemption of any Note taken in accordance with the terms of this Indenture. A notice of redemption may not be conditional.

Section 3.05. Deposit of Redemption Price .

On or prior to 10:00 a.m. New York City time on any redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and, if applicable, accrued and unpaid interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly, and in any event within two (2) Business Days after the redemption date, return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest, if any, on, all Notes to be redeemed.

If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for purchase or redemption in accordance with Section 2.08(d) hereof, whether or not such Notes are presented for payment. If a Note is redeemed on or after a Regular Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such Regular Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

 

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Section 3.06. Notes Redeemed in Part .

Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company’s written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

Section 3.07. Optional Redemption .

(a) The Company may redeem the Notes, in whole or in part, from time to time, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest to the applicable date of redemption (the “ Redemption Date ”), subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant, Interest Payment Date pursuant to Section 4.01, if redeemed during the twelve-month period ending on August 20 of each of the years indicated below:

 

(b) Any prepayment pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08. Mandatory Redemption with Available Cash .

If the Company has Excess Available Cash on the Available Cash Determination Date, the Company shall apply an amount equal to such Excess Available Cash to redeem Notes at a redemption price of 100% of the aggregate principal amount of Notes redeemed plus accrued and unpaid interest to the date of redemption. Within 15 days after the Available Cash Determination Date, the Company shall deliver to the Trustee an Officers’ Certificate stating the amount of Excess Available Cash, if any, on the Available Cash Determination Date. The Redemption Date for redemptions under this Section 3.08 shall be thirty (30) days following the Available Cash Determination Date. Any prepayment pursuant to this Section 3.08 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.09. Mandatory Redemption with Excess Cash Flow .

Not later than February 15 and August 15 of each year (each an “ Excess Cash Flow Payment Date ”), commencing on August 15, 2010, if the Company has Excess Cash Flow for the six-month period ended on the most recent December 31 or June 30, as applicable (each an “ Excess Cash Flow Determination Date ”), the Company shall apply an amount equal to 75% of the amount of such Excess Cash Flow (to the extent not used to reduce amounts outstanding

 

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under the Credit Facility) to redeem Notes, at a redemption price of 100% of the aggregate principal amount of Notes redeemed plus accrued and unpaid interest to the date of redemption. At least 15 days prior to each Excess Cash Flow Payment Date, the Company shall deliver to the Trustee an Officers’ Certificate stating the amount of Excess Cash Flow, if any, for the six-month period ending on the immediately preceding Excess Cash Flow Determination Date, the amount of such Excess Cash Flow applied to reduce amounts outstanding under the Credit Facility and the net amount of Excess Cash Flow to be applied to redeem Notes. The Redemption Date for redemptions under this Section 3.09 shall be the Excess Cash Flow Payment Date following the applicable Excess Cash Flow Determination Date. Any prepayment pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.10. Offer To Purchase by Application of Excess Proceeds .

(a) In the event that, pursuant to Section 4.13 or 4.22 hereof, the Company shall be required to commence an Asset Sale Offer or Event of Loss Offer (each, an “ Offer to Purchase ”), it shall follow the procedures specified below.

(b) The Company shall commence the Offer to Purchase by sending, by first-class mail, with a copy to the Trustee, to each Holder at such Holder’s address appearing in the Security Register, a notice the terms of which shall govern the Offer to Purchase stating:

(i) that the Offer to Purchase is being made pursuant to this Section 3.10 and Section 4.13 or 4.22, as the case may be;

(ii) the principal amount of Notes required to be purchased pursuant to Section 4.13 or 4.22, as the case may be (the “ Offer Amount ”), the offer price set forth in Section 4.13 or 4.22, as applicable, the Offer Period and the Purchase Date (each as defined below);

(iii) except as provided in clause (ix), that all Notes timely tendered and not withdrawn shall be accepted for payment;

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

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

(vi) that Holders electing to have a Note purchased pursuant to an Offer to Purchase may elect to have Notes purchased in integral multiples of $1,000 only, unless such Holder is electing to have all of its Notes purchased and such Notes are in an amount less than an integral multiple of $1,000;

(vii) that Holders electing to have a Note purchased pursuant to any Offer to Purchase shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry

 

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transfer, to the Company, the Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice before the close of business on the third Business Day before the Purchase Date;

(viii) that Holders shall be entitled to withdraw their election if the Company or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note (or portions thereof) the Holder delivered for purchase and a statement that such Holder is withdrawing such Holder’s election to have such Note purchased;

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

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

(xi) any other procedures the Holders must follow in order to tender their Notes (or portions thereof) for payment and the procedures that Holders must follow in order to withdraw an election to tender Notes (or portions thereof) for payment.

(c) The Offer to Purchase shall remain open for a period of at least 20 Business Days but no more than 30 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “ Offer Period ”). No later than five (5) Business Days after the termination of the Offer Period (the “ Purchase Date ”), the Company shall purchase the Offer Amount or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Offer to Purchase. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. The Company shall notify all Holders of the results of the Offer to Purchase on or as soon as practicable following the Purchase Date.

(d) On or prior to the Purchase Date, the Company shall, to the extent lawful:

(i) accept for payment (on a pro rata basis to the extent necessary), the Offer Amount of Notes or portions of Notes properly tendered and not withdrawn pursuant to the Offer to Purchase, or if less than the Offer Amount has been tendered, all Notes tendered;

(ii) deposit with the Paying Agent funds in an amount equal to the offer price as set forth in Section 4.13 or 4.22, as applicable, in respect of all Notes or portions of Notes so accepted for payment; and

(iii) deliver or cause to be delivered to the Trustee the Notes so accepted for payment together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company and that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.10.

 

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(e) The Paying Agent (or the Company, if acting as the Paying Agent), as the case may be, shall promptly deliver to each tendering Holder the offer price as set forth in Section 4.13 or 4.22, as applicable, for such Holder’s Notes or portions of Notes being purchased by the Company. In the event that any portion of the Notes surrendered is not purchased by the Company, the Company shall promptly execute and issue a new Note in a principal amount equal to such unpurchased portion of the Note surrendered, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver (or cause to be transferred by book-entry) such new Note to such Holder.

(f) If the Purchase Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such Regular Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer to Purchase.

(g) The Company shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with Sections 4.13 or 4.22, as applicable, this Section 3.10 or other provisions of this Indenture, the Company shall comply with applicable securities laws and regulations and shall not be deemed to have breached its obligations under Sections 4.13 or 4.22, as applicable, this Section 3.10 or such other provisions of this Indenture by virtue of such compliance.

(h) Other than as specifically provided in this Section 3.10, any purchase pursuant to this Section 3.10 shall be made in accordance with the provisions of Section 3.01 through 3.06 hereof.

ARTICLE IV

COVENANTS

Section 4.01. Payment of Notes .

(a) The Company shall calculate and pay or cause to be paid the principal of, premium, if any, and interest on, the Notes on the dates and in the manner provided in this Indenture and the Notes. Principal, premium, if any, and cash interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. New York time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. Such Paying Agent shall return to the Company promptly, and in any event, no later than two (2) Business Days following the date of payment, any money (including accrued interest) that exceeds such amount of principal, premium, if any, and interest paid on the Notes. If a payment date is a Legal Holiday in New York City, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.

 

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(b) With respect to interest on the Notes for a semiannual period due on an Interest Payment Date, the Company may elect either (i) to pay interest due on the Notes on such Interest Payment Date by payment of cash interest for such semiannual period at a rate of 10% per annum or (ii) to pay the interest due on the Notes on such Interest Payment Date by payment of PIK Interest for such semi-annual period at the rate of 15% per annum; provided , however , the interest rate payable on the Notes with respect to any portion of an interest period during which an Event of Default (other than an Event of Default described in Section 6.01(a) or 6.01(b)) shall have occurred and be continuing shall be 12% per annum, if paid in cash, or 17% per annum, if paid in PIK Interest. If the Company elects to pay PIK Interest on any Interest Payment Date it must deliver, not less than 45 days prior to such Interest Payment Date, an Authentication Order to the Trustee specifying the aggregate amount of PIK Interest to be paid through increases in the Global Note and through the issuance of additional Notes; provided , however , the Company shall deliver an updated Authentication Order on the day preceding an Interest Payment Date to the extent modifications in the amount of PIK Interest to be paid are needed in accordance with the terms of the Indenture due to the continuation or cessation of an Event of Default. Following such election, on the relevant Interest Payment Date the Trustee shall record increases in the Global Note and authenticate and deliver additional Notes, as appropriate, in the aggregate principal amounts required to pay the PIK Interest then due. The Company shall deliver an Authentication Order to the Trustee in accordance with Section 2.2 hereof upon payment of PIK Interest through the issuance of additional Notes. PIK Interest paid in accordance with this Section 4.01 shall be considered paid on the due date. The Company’s failure to deliver advance notice to the Trustee in accordance with this paragraph shall be deemed an irrevocable election to pay interest in cash on the upcoming Interest Payment Date.

(c) The Company shall pay interest (including Accrued Bankruptcy Interest) on overdue principal and premium, if any, at a rate of 17% per annum to the extent lawful; it shall pay interest (including Accrued Bankruptcy Interest) on overdue installments of interest (without regard to any applicable grace periods), at the same rate to the extent lawful.

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

Section 4.02. Maintenance of Office or Agency .

(a) The Company shall maintain an office or agency (which may be an office or drop facility of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be presented or surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

 

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

(c) The Company hereby designates the Corporate Trust Office of the Trustee as one such office, drop facility or agency of the Company in accordance with Section 2.03 hereof.

Section 4.03. Reports .

(a) The Company shall deliver or cause to be delivered to each of the Holders (which delivery may be effected by electronic means), or shall post on a confidential website (access to which shall require agreement by the Holders to the terms of the confidentiality agreement attached hereto as Exhibit C or another customary confidentiality agreement reasonably acceptable to the Required Holders and made available on such website as a condition to access thereof, a form of which shall be provided by the Company to the Trustee and to each Holder or beneficial owner of the Notes upon request), the following information:

(i) within 90 days after the end of each fiscal year of the Company, (A) audited consolidated financial statements of the Company for such fiscal year (including balance sheets, statements of operations and statements of cash flows as would be required from an SEC registrant in an Annual Report on Form 10-K), certified by a national accounting firm and prepared in accordance with GAAP and (B) a management’s discussion and analysis of financial condition and results of operations (an “ MD&A ”), in narrative form, with respect to such financial statements substantially similar to that which would be required to be included in an Annual Report on Form 10-K by an SEC registrant;

(ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, (A) unaudited condensed consolidated financial statements of the Company for such quarter and the year-to-date period and the comparable period of the prior fiscal year (including balance sheets, statements of operations and statements of cash flows as would be required from an SEC registrant in a Quarterly Report on Form 10-Q), prepared in accordance with GAAP and (B) an MD&A with respect to such financial statements substantially similar to that which would be required to be included in a Quarterly Report on Form 10-Q by an SEC registrant; and

(iii) from time to time, upon reasonable request of any Holder, a brief description of the nature of the business of the Company and its products and services and any other information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Notwithstanding the financial statement reporting periods set forth in clauses (i) and (ii) above and the related comparable prior period comparative forms, the Company may deliver or cause to be delivered such financial statements as are prescribed under GAAP taking into account the Company’s “fresh start” accounting as applicable in connection with the effectiveness of the Plan of Reorganization.

 

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(b) The Company may, in the discretion of the Board of Directors of the Company, elect to conduct quarter-end and/or year-end earnings calls following the delivery of the financial statements and an MD&A.

(c) The Company’s reporting obligations with respect to this Section 4.03 shall be satisfied in the event the Company files such information with the SEC on EDGAR and delivers a copy of such information to the Trustee, unless the SEC does not permit such filings.

(d) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the MD&A, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results and operations of the Unrestricted Subsidiaries of the Company.

Section 4.04. Compliance Certificate .

(a) The Company and any Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company, the Guarantors and their respective Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company, the Guarantors and their respective Subsidiaries have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge after such inquiry the Company, the Guarantors and their respective Subsidiaries have kept, observed, performed and fulfilled each and every covenant contained in this Indenture and are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).

(b) The Company shall deliver to the Trustee, within 30 days after the Company becomes aware of the occurrence thereof, written notice in the form of an Officers’ Certificate of any Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

Section 4.05. Payments of Taxes and Other Claims .

The Company shall pay, and shall cause each of its Subsidiaries to pay or discharge or cause to be paid or discharged, before the same shall become delinquent (a) all material taxes, assessments and governmental charges levied or imposed upon its or its Subsidiaries’ income, profits or property and (b) all material lawful claims for labor, materials and supplies which, if unpaid, would be reasonably likely to by law become a Lien upon its property or the property of any of its Subsidiaries; provided , that the Company shall not be required to pay or discharge or

 

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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 negotiations or proceedings and for which disputed amounts adequate reserves (in the good faith judgment of the Board of Directors or management of the Company) have been made in accordance with GAAP.

Section 4.06. Stay, Extension and Usury Laws .

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

Section 4.07. Corporate Existence .

Subject to Article 5 and Section 10.04 hereof, each of the Company and the Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each Subsidiary, in accordance with the respective organizational documents (as the same may be amended from time to time) of each of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of each of the Company and its Subsidiaries; provided, however , that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any Subsidiary, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes, or that such preservation is not necessary in connection with any transaction not prohibited by this Indenture.

Section 4.08. Payments for Consent .

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

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

(a) The Company will not, and will 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 will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided , however , that after the first anniversary

 

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of the Issue Date, the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock or preferred stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock or preferred stock, if (i) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect to, such incurrence of Indebtedness or issuance of shares of Disqualified Stock or preferred stock, and (ii) the Total Leverage Ratio for the Company’s and the Restricted Subsidiaries’ most recently ended four 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 was less than or equal to 3.0 to 1 and would have been less than or equal to 3.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the 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.

(b) The foregoing limitations will not apply to the following (each of the following, “ Permitted Indebtedness ”):

(1) the incurrence of Indebtedness and obligations in respect of “Bank Products” under the Credit Facility by the Company or any of the Company’s Restricted Subsidiaries 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), not to exceed $75,000,000 outstanding at any time;

(2) the incurrence by the Company and any Guarantor of Indebtedness (including any Guarantee thereof) represented by the Notes in aggregate principal amount not to exceed $85,000,000 plus the amount of any PIK Interest;

(3) Existing Indebtedness (other than Indebtedness described in the immediately preceding clauses (1) and (2)), including (a) Indebtedness owing under the Sprague Bond Documents not to exceed $4,700,000 in the aggregate principal amount at any time outstanding and (b) Indebtedness owing under the Crane Bond Documents not to exceed $3,500,000 in the aggregate principal amount at any time outstanding, in each case reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon;

(4) Indebtedness (including Capitalized Lease Obligations) and Disqualified Stock incurred by the Company or Indebtedness (including Capitalized Lease Obligations) incurred by any of the Restricted Subsidiaries, to finance the purchase, lease, construction or improvement of property (real or personal) or equipment that is used or useful in the ordinary course of a Permitted Business, whether through the direct purchase of assets or the purchase of 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 and Disqualified Stock then outstanding and incurred pursuant to this clause (4) does not exceed $5,000,000 in the aggregate outstanding at any time;

 

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(5) to the extent such incurrence does not result in the incurrence by the Company or any Restricted Subsidiary of any obligation for the payment of borrowed money of others, Indebtedness of the Company or any of its Restricted Subsidiaries owed to any Person in connection with workers’ compensation, self-insurance, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such person, in each case incurred in the ordinary course of business;

(6) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition provided, however , that the aggregate principal amount of Indebtedness incurred pursuant to this clause (6) shall not exceed $5,000,000 in the aggregate outstanding at any time;

(7) Indebtedness (including Indebtedness related to Sale and Lease-Back Transactions) of the Company to a Restricted Subsidiary or of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that:

(i) if the Company or any Guarantor is the borrower of such Indebtedness and the lender is a Restricted Subsidiary that is not a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Note Obligations, in the case of the Company, or the Guarantee, in the case of a Guarantor; and

(ii) 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 not permitted by this clause (7);

(8) shares of Disqualified Stock or 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 Disqualified Stock or preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of Disqualified Stock or preferred stock;

(9) (i) any guarantee by the Company or a Guarantor of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of this Indenture, provided , that such guarantee by any Restricted Subsidiary that is not a Guarantor must

 

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be expressly subordinated to the prior payment in full in cash of all Note Obligations; or (ii) any guarantee by a Guarantor of Indebtedness of the Company, provided that such Indebtedness is incurred in accordance with this Section 4.09;

(10) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of limiting risk with respect to fluctuation in interest rates, foreign currency exchange rates or commodity prices with respect to any Indebtedness permitted to be incurred pursuant to this Section 4.09 or business operations in any Permitted Business;

(11) to the extent such incurrence does not result in the incurrence by the Company or any Restricted Subsidiary of any obligation for the payment of borrowed money of others, obligations in respect of performance, bid, appeal and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

(12) the incurrence by the Company of Indebtedness or Disqualified Stock or the incurrence by any Restricted Subsidiary of Indebtedness in exchange for, or the net proceeds of which are used to extend, refund, refinance, defease, renew or replace, any Indebtedness or Disqualified Stock incurred under clause (1), (2), 3(b) or (4) above or this clause (12) or any Indebtedness or Disqualified Stock incurred in exchange for, or the net proceeds of which are used to extend, refund, refinance, defease, renew or replace, such Indebtedness or Disqualified Stock, including additional Indebtedness or Disqualified Stock incurred to pay premiums (including tender premiums), defeasance costs and fees in connection therewith prior to its respective maturity (the “ Refinancing Indebtedness ”); provided , however , that:

(A) such Refinancing Indebtedness 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 or Disqualified Stock being extended, refunded, refinanced, defeased, renewed or replaced,

(B) [Intentionally Omitted];

(C) to the extent such Refinancing Indebtedness extends, refunds, refinances, defeases, renews or replaces (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 extended, refunded, refinanced, defeased, renewed or replaced or (ii) Disqualified Stock, such Refinancing Indebtedness must be Disqualified Stock,

(D) the principal amount (or accreted value, if applicable) of such Refinancing Indebtedness (or liquidation preference in the case of Disqualified Stock) does not exceed the sum of the outstanding principal amount (or accreted value, if applicable) of the Indebtedness so extended, refunded, refinanced, defeased, renewed or replaced (plus all accrued interest thereon and the amount of all premiums and reasonable expenses incurred in connection therewith),

 

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(E) the Indebtedness is incurred either by the Company and/or by one or more Restricted Subsidiaries that are obligors on the Indebtedness being extended, refunded, refinanced, defeased, renewed or replaced,

(F) the Indebtedness shall be secured only by the property or assets (if any) securing the Indebtedness to be so extended, refunded, refinanced, defeased, renewed or replaced,

(G) such Refinancing Indebtedness would result in a net saving to the Company and its Subsidiaries (taking into account any fees, costs or premiums associated with the incurrence thereof) and the material terms of such Refinancing Indebtedness are, taken as a whole, no less favorable in any material respect to the Company and its Subsidiaries than the terms of the refinanced Indebtedness; provided , that in the case of any such Indebtedness that is renewed, extended, refinanced or replaced within 12 months of its scheduled maturity or subsequent to the occurrence of any default or event of default under such Indebtedness, such material terms (including interest rates, fees, and costs and premium) may be on terms that are, taken as a whole, substantially consistent with then prevailing terms for Indebtedness of such type, as determined in the judgment of the Board of Directors; and

(H) such Refinancing Indebtedness shall not include:

(x) Indebtedness or Disqualified Stock of a Restricted Subsidiary (other than a Restricted Subsidiary that is a Guarantor or that is a primary obligor or guarantor of the Indebtedness being refinanced) that extends, refunds, refinances, defeases, renews or replaces Indebtedness, Disqualified Stock or preferred stock of the Company, or

(y) Indebtedness or Disqualified Stock of the Company or a Restricted Subsidiary (other than a Restricted Subsidiary that is a primary obligor or guarantor of the Indebtedness being refinanced) that extends, refunds, refinances, defeases, renews or replaces Indebtedness, Disqualified Stock or preferred stock of an Unrestricted Subsidiary;

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

(14) Indebtedness of Foreign Subsidiaries arising from working capital lines of credit in their local countries, not to exceed $1,000,000 principal amount outstanding in the aggregate at any time;

 

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(15) Indebtedness of the Company or any Restricted Subsidiaries to the extent the net proceeds thereof are promptly deposited to effect a Legal Defeasance or Covenant Defeasance as provided in Article VIII or to satisfy and discharge this Indenture pursuant to Section 12.01, provided , that all proceeds of such Indebtedness will be kept in a restricted account controlled by the Collateral Agent until such net proceeds are deposited to effect such Legal Defeasance, Covenant Defeasance or satisfaction and discharge; or

(16) other Indebtedness not to exceed $1,000,000 principal amount outstanding in the aggregate at any time.

(c) Neither the Company nor any Guarantor will incur any Indebtedness (including Permitted Indebtedness) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes or such Guarantee on substantially identical terms; provided , however , that no Indebtedness of the Company or any Guarantor shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor solely by virtue of being unsecured.

(d) For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness, Disqualified Stock or preferred stock meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or preferred stock described in clauses (1) through (16) of paragraph (b) above or is entitled to be incurred pursuant to paragraph (a) of this Section 4.09, the Company, in its sole discretion, will classify or reclassify such item of Indebtedness, Disqualified Stock or preferred stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or preferred stock in one of the above clauses; provided , however , that any incurrence of Indebtedness under the Credit Facility must be first applied to clause (1) of Section 4.09(b). For purposes of determining compliance with this Section 4.09, at the time of incurrence, the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above.

(e) 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. 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.

 

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Section 4.10. Restricted Payments .

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

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any Restricted Subsidiary’s Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s or any Restricted Subsidiary’s Equity Interests in their capacity as such, other than:

(i) dividends or distributions by the Company payable solely in Equity Interests (other than Disqualified Stock) of the Company, or

(ii) dividends or distributions by a Restricted Subsidiary to the Company or to another Restricted Subsidiary;

(2) purchase, redeem, defease or otherwise acquire or retire (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any Restricted Subsidiary of the Company (other than in the case of the Restricted Subsidiaries, any such Equity Interests owned by the Company or any of its Restricted Subsidiaries; or

(3) make any principal payment on or with respect to, or redeem, repurchase, defease or otherwise acquire or retire in each case, prior to the date of any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of the Company or such Restricted Subsidiary (including any payment in respect of any amendment of the terms of such Subordinated Indebtedness, which amendment is sought in connection with any such acquisition of Subordinated Indebtedness or seeks to shorten any such date), other than Indebtedness owed to the Company or a Guarantor permitted under Section 4.09;

(all such payments and other actions set forth in clauses (1) through (3) above being collectively referred to as “ Restricted Payments ”), unless, at the time of and after giving effect to such Restricted Payment:

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

(B) immediately after giving effect to such Restricted Payment on a pro forma basis, as if such Restricted Payment had been made at the beginning of the applicable four quarter period, the Company could incur at least $1.00 of additional Indebtedness pursuant to the Total Leverage Ratio test set forth in paragraph (a) of Section 4.09 (for the purpose of this clause (B), without regard to the time limitation of one year following the Issue Date contained in such Section 4.09(a)); and

 

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(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and the Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2) and (3) of paragraph (b) of this Section 4.10), does not exceed the lesser of (x) $1,000,000 for any four fiscal quarter period beginning with the commencement of the first full fiscal quarter after the Issue Date or (y) the sum (without duplication) of:

(i) 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

(ii) 100% of the aggregate net cash proceeds received by the Company since immediately after the Issue Date, and not used to repay Indebtedness under the Credit Facility, redeem the Notes or make any Permitted Investment, from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Subordinated Indebtedness and is incurred in compliance with the Total Leverage Ratio test set forth in paragraph (a) of Section 4.09, plus

(iii) 50% of any dividends received by the Company or a Restricted Subsidiary of the Company since immediately after the Issue Date from an Unrestricted Subsidiary of the Company, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the Company for such period, minus

(iv) 100% of the amount of Excess Cash Flow used or required to be used to redeem Notes from and after the Issue Date pursuant to Section 3.09.

(b) The foregoing provisions will not prohibit:

(1) the repurchase, retirement or other acquisition or retirement of common Equity Interests of the Company held by any future, present or former employee, director or consultant of the Company or any of its Subsidiaries upon the cessation of employment or service of such employee, director or consultant 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 (1) do not exceed $1,000,000 in any calendar year; and provided , further , that such Restricted Payments will be included in the calculation of the amount of Restricted Payments under Section 4.10(a) above ;

 

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(2) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary issued in accordance with Section 4.09 to the extent such dividends are included in the definition of Consolidated Fixed Charges;

(3) 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;

(4) other Restricted Payments to holders of the Company’s common Equity Interests funded from Net Asset Sale Proceeds from of one or more Asset Sales permitted by Section 4.13, provided that the Total Leverage Ratio for the Company’s most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which any such Restricted Payment is made was less than or equal to 3.5 to 1 and would have been less than or equal to 3.5 to 1, determined on a pro forma basis, as if such Restricted Payment had been made at the beginning of such four quarter period; provided , however , that Restricted Payments permitted by this clause (4) will be included in the calculation of the amount of Restricted Payments in Section 4.10(a) above; or

(5) the payment of cash in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exercisable for Capital Stock of the Company;

provided, however , that (x) at the time of, and after giving effect to, any Restricted Payment permitted under clause (1), no payment Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and (y) at the time of, and after giving effect to, any Restricted Payment permitted under clauses (2) and (4), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof.

(c) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the assets, property or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.10 will be determined in good faith by the Board of Directors of the Company and evidenced by a Board Resolution and, in the case of any assets or securities with a Fair Market Value in excess of $10,000,000, based upon a valuation opinion or appraisal issued by an appraiser, valuation firm, accounting firm, financial advisor, or investment banking firm of national standing. Other than with respect to any payment described in clauses (1) through (3) of paragraph (b) of this Section 4.10, no later than the date of making any Restricted Payment, the Company will deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.10 were computed, together with a copy of any Board Resolution or valuation opinion or appraisal required hereunder.

 

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Section 4.11. Investments .

(a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly make or maintain any Investment other than Permitted Investments.

(b) The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and the Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Investments in an amount determined as set forth in the last sentence of the definition of “Investment.” Such designation will be permitted only if a Investment in such amount would be permitted at such time pursuant to the definition of “Permitted Investments” hereunder, and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

Section 4.12. Liens .

The Company will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind, other than Permitted Liens, upon any of its property now owned or acquired after the date of the Indenture or upon any income or profits therefrom.

Section 4.13. Asset Sales .

(a) The Company will not, and will not permit any Restricted Subsidiary to, consummate 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 not substantially less than the Fair Market Value of the assets or Equity Interests sold or otherwise disposed of as determined by the Board of Directors of the Company;

(2) with respect to any Asset Sale involving consideration in excess of $10,000,000, such Fair Market Value is determined by the Board of Directors of the Company based upon advice of a qualified third party appraiser, valuation firm, accounting firm, investment banking firm, or financial advisor and evidenced by a resolution of the Board of Directors of the Company set forth in an Officers’ Certificate delivered to the Trustee;

(3) in the case of an Asset Sale involving consideration in excess of $1,000,000, at least 85% 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 footnotes thereto) (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or such Restricted Subsidiary’s Guarantee) that are assumed by the

 

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transferee of any such assets and for which the Company and all Restricted Subsidiaries have been validly released in writing by all creditors of such liabilities, and

(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 30 Business Days following the closing of such Asset Sale,

shall be deemed to be cash for purposes of this clause (3) and for no other purpose; and

(4) if such Asset Sale involves the disposition of Note Priority Collateral, the Net Asset Sale Proceeds thereof (other than amounts to be applied as set forth in Section 4.13(d) below) shall be paid directly by the purchaser of such Collateral to the Collateral Agent for deposit into the Collateral Account, and, if any property other than cash or Cash Equivalents is received as consideration in such Asset Sale, such property shall be made subject to the Lien of the Indenture and the applicable Collateral Documents, in each case, subject to and pending application pursuant to the provisions set forth in this Indenture and the Collateral Documents.

(b) Within 180 days after the Company’s or any Restricted Subsidiary’s receipt of Net Asset Sale Proceeds from any Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply the Net Asset Sale Proceeds from such Asset Sale:

(1) (A) If the Asset Sale involves the disposition of ABL Priority Collateral, to the repayment of Indebtedness under the Credit Facility, or (B) if the Asset Sale involves the disposition of Collateral subject to a Permitted Prior Lien securing Priority Lien Debt, to the repayment of Priority Lien Debt secured by such Permitted Prior Lien in an amount up to the Net Asset Sale Proceeds attributable to the disposition of such Collateral (and, if such Priority Lien Debt is revolving credit Indebtedness and the borrowing base of such Indebtedness is not reduced in connection with the disposition of such Collateral, to correspondingly reduce commitments with respect thereto), or

(2) to an investment in (a) any one or more Permitted Businesses, provided that if such investment in any business is in the form of the acquisition of Capital Stock, such investment results in the Company or a Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such Person such that it constitutes a Restricted Subsidiary, (b) Capital Expenditures or (c) acquisitions of other assets (other than the payment of ordinary operating expenses), in each of (a), (b) and (c), used or useful in a Permitted Business (any of the foregoing clauses (a), (b), or (c), “ Replacement Assets ”); provided, that any Replacement Assets acquired with any Net Asset Sale Proceeds of Collateral shall be owned by the Company or by a Guarantor and shall not be subject to any Liens other than Permitted Liens, and the Company or such Guarantor, as the case may be, shall execute and deliver to the Collateral Agent such Collateral Documents or other instruments as shall be reasonably necessary to cause such Replacement Assets to become subject to a Lien in favor of the Collateral Agent on behalf of the Trustee, for the benefit of the Holders, securing its obligations under the Notes or its Guarantee, as the case may be, and otherwise shall comply with terms of this Indenture and the Credit Facility;

 

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provided that if, within such 180-day period, the Company or applicable Restricted Subsidiary has entered into an agreement on terms acceptable to the Required Noteholders to apply such Net Asset Sale Proceeds to the purchase or construction of assets permitted in this paragraph (b), then the Company may extend such 180-day period for up to an additional 180 days.

(c) Any Net Asset Sale Proceeds that are not invested or applied as provided and within the time period set forth in paragraph (b) of this Section 4.13, will be deemed to constitute “Excess Proceeds.” On the Asset Sale Trigger Date, or such earlier date, if any, as the Board of Directors of the Company determines not to apply the Net Asset Sale Proceeds relating to such Asset Sale as set forth in paragraph (b) of this Section 4.13, the Company shall either (i) to the extent permitted by Section 4.10(b)(4), make a Restricted Payment to holders of the Company’s common Equity Interests in an amount up to the amount of such Excess Proceeds, or (ii) make an offer to all Holders (an “ Asset Sale Offer ”), to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds (or the portion thereof not applied toward a Restricted Payment pursuant to clause (i) above) at an offer price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the offer price for the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds (or the portion thereof not applied toward a Restricted Payment pursuant to clause (i) above), the Company may use any remaining Excess Proceeds for any purposes, subject to other covenants contained in this Indenture. If the offer price for the aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer exceeds the amount of Excess Proceeds (or the portion thereof not applied toward a Restricted Payment pursuant to clause (i) above), the Trustee shall select the Notes to be purchased on a pro rata basis in authorized denominations based on the aggregate principal amount of the Notes so tendered. Upon completion of any Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

(d) Notwithstanding the foregoing, all Net Asset Sale Proceeds of any Collateral in respect of any Asset Sale shall, pending their application in accordance with this Section 4.13 or the release thereof in accordance with the provisions of the Collateral Documents, be deposited in the Collateral Account as provided in with the Intercreditor Agreement.

(e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws 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 the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof.

 

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Section 4.14. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries .

The Company will not, and will 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:

(1) (a) 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

(b) pay any Indebtedness owed to the Company or any Restricted Subsidiary;

(2) make loans or advances to the Company or any Restricted Subsidiary; or

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

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Credit Facility and the related documentation;

(2) the Indenture, the Collateral Documents and the Notes, in each case, as the same may be amended from time to time in accordance with the terms thereof;

(3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (3) of the preceding paragraph 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 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; provided that such restrictions or encumbrances relate only to the assets (or Capital Stock of an entity directly or indirectly owning such assets) being sold pursuant to these contracts;

 

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(7) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and 4.12 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;

(9) customary provisions contained in leases and other agreements entered into in the ordinary course of business; and

(10) any encumbrances or restrictions of the type referred to in clauses (1), (2), (3), (5) and (7) of the preceding paragraph imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1), (2), (3), (5) and (7) above or this clause (10), 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 in any material respect with respect to such encumbrance and other restrictions than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Section 4.15. Transactions with Related Parties .

(a) The Company will not, and will 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, arrangement, loan, advance or guarantee with, or for the benefit of, any Related Party (each of the foregoing, a “ Related Party Transaction ”), unless:

(1) such Related Party Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that could reasonably be expected to be obtained in a comparable transaction by the Company or such Restricted Subsidiary with a Person that is not a Related Party;

(2) with respect to any Related Party Transaction or series of Related Party Transactions involving aggregate payments or consideration in excess of $500,000 in any fiscal year with a Related Party described in clause (iii), (iv) or (v) of the definition of “Related Party”, such Related Party Transaction is approved by either:

(A) the unanimous written consent of all members of the Board of Directors of the Company then in office;

(B) the affirmative vote at a duly held meeting of the Board of Directors of the Company (at which a quorum is present) of all of the members of the Board of Directors of the Company then in attendance at such meeting (excluding any members recusing themselves due to an actual or potential conflict of interest, provided that no action may be taken by less than a majority of all directors present at such meeting); or

 

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(C) (i) the affirmative vote at a duly held meeting of the Board of Directors of the Company (at which a quorum is present) of a majority of the members of the Board of Directors of the Company then in office and (ii) the approval of each disinterested holder of the Company’s Class A Common Stock that received at least 15% of the Class A Common Stock of the Company on the Issue Date pursuant to the Plan of Reorganization and continues to hold at least 15% of the outstanding Class A Common Stock at the time of the proposed Related Party Transaction; and

(3) with respect to any Related Party Transaction or series of Related Party Transactions involving aggregate payments or consideration in excess of $500,000 in any fiscal year with a Related Party described in clause (i) or (ii) of the definition of “Related Party”, such Related Party Transaction is approved by either:

(A) the unanimous written consent of all members of the Board of Directors then in office; or

(B) the affirmative vote at a duly held meeting of the Board of Directors of the Company (at which a quorum is present) of a majority of the members of the Board of Directors of the Company then in office.

(b) The foregoing provisions will not apply to the following:

(1) transactions between or among the Company and any of its direct or indirect Wholly-Owned Subsidiaries;

(2) Restricted Payments permitted by Section 4.10;

(3) the payment of reasonable and customary compensation and fees to, and indemnities provided for the benefit of, officers, directors, employees or consultants of the Company, or any Restricted Subsidiary in the ordinary course of business;

(4) loans and advances permitted by clause (13) of the definition of “Permitted Investments”;

(5) transactions pursuant to employment agreements, benefit plans (including the Management Equity Plan referred to in the Plan of Reorganization) and similar arrangements for employees of the Company and its Subsidiaries or directors of the Company (including the issuance of Common Stock or other Equity Interests thereunder) which, in each case, are expressly provided for in the Plan of Reorganization or are approved in good faith by the Board of Directors; or

(6) any purchase of conventional insurance products in the ordinary course of business.

 

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Section 4.16. Sale and Leaseback Transactions .

The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale and Lease-Back Transaction; provided that the Company or any of its Restricted Subsidiaries may enter into a Sale and Lease-Back Transaction if:

(1) the Company or that Restricted Subsidiary, if applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Lease-Back Transaction under the Total Leverage Ratio test in paragraph (a) of Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12;

(2) the sale price of that Sale and Lease-Back Transaction is not less than the Fair Market Value, as determined in good faith by the Board of Directors of the Company and, where the Fair Market Value exceeds $5,000,000, set forth in an Officers’ Certificate and delivered to the Trustee, of the property that is the subject of that Sale and Lease-Back Transaction; and

(3) the transfer of assets in that Sale and Lease-Back Transaction is permitted by, and the Company causes the proceeds of such transaction to be applied in compliance with, Section 4.13 hereof.

Section 4.17. Issuances and Sales of Equity Interests of Restricted Subsidiaries .

The Company will not, and will not permit any of its Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary to any Person (other than the Company or a Restricted Subsidiary of the Company that is a Wholly-Owned Subsidiary), unless:

(1) such transfer, conveyance, sale, lease or other disposition is of all Equity Interests in such Restricted Subsidiary owned by the Company or such Restricted Subsidiaries; and

(2) the cash Net Asset Sale Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.13.

In addition, the Company will not permit any of its Restricted Subsidiaries to issue any of its Equity Interests to any Person other than to the Company or a Restricted Subsidiary that is a Wholly-Owned Subsidiary.

Section 4.18. Designation of Restricted and Unrestricted Subsidiaries .

The Company’s Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value (as determined in good faith by the Company’s Board of Directors) of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to be an Investment made as of the time of the designation. That designation shall only be

 

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permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an “Unrestricted Subsidiary.” The Company’s Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

Section 4.19. Repurchase at the Option of Holders Upon a Change of Control .

(a) If a Change of Control occurs, the Company will make an offer (the “ Change of Control Offer ”) to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder’s Notes pursuant to the Change of Control Offer at a purchase price, in cash, equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest on the Notes repurchased, to the Purchase Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

(b) Within 30 days following any Change of Control, the Company shall mail a notice of such Change of Control Offer by first class mail, postage prepaid, to each Holder, with a copy to the Trustee, describing the transaction or transactions that constitute the Change of Control and stating:

(1) that the Change of Control Offer is being made pursuant to this Section 4.19 and that all Notes tendered shall be accepted for payment;

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

(3) that any Note not tendered shall remain outstanding and continue to accrue interest;

(4) that, unless the Company defaults in the payment of the purchase price in the Change of Control Offer, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on and after the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall 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 at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing such Holder’s election to have the Notes purchased; and

 

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(7) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

(c) So long as the Notes are in global form, if the Company makes an offer to purchase all of the Notes pursuant to a Change of Control Offer, a Holder may exercise its option to elect for the purchase of Notes through the facilities of the Depositary, subject to its rules and regulations.

(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 those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Change in Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.19 of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 4.19 by virtue of such compliance.

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

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

(2) prior to 10:00 a.m. New York City time on such date, deposit with the Paying Agent an amount equal to the purchase price in the Change of Control Offer in respect of all Notes or portions of Notes properly tendered; and

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

(f) The Paying Agent shall promptly mail to each Holder of Notes properly tendered the purchase price in the Change of Control Offer for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(g) Notwithstanding anything to the contrary in this Section 4.19, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.19 and purchases all Notes validly tendered and not withdrawn under the Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

 

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Section 4.20. Additional Guarantees .

If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary after the date of this Indenture that is wholly-owned, directly or indirectly, by the Company and has assets in excess of $25,000 or annual revenues in excess of $25,000, such Domestic Restricted Subsidiary shall become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel and an Officers’ Certificate, satisfactory to the Trustee and subject to customary assumptions and exclusions, within 30 days after the date on which it was acquired or created or first had such assets or revenues.

Section 4.21. Business Activities .

The Company will not, and will not permit any of its Subsidiaries to, engage in any business or investment activities other than a Permitted Business.

Section 4.22. Events of Loss .

(a) In the event of an Event of Loss with respect to any Collateral with a Fair Market Value (or replacement cost, if greater, if insured for its full replacement cost) in excess of $500,000, within 180 days after the receipt of the Net Loss Proceeds of such Event of Loss, the Company or such Guarantor, at its option, may apply the Net Loss Proceeds from such Event of Loss,

(1) to the rebuilding, repair, replacement or construction of improvements to the affected Collateral (the “ Subject Property ”), provided , that if such Event of Loss occurs with respect to Collateral with a Fair Market Value in excess of $2,000,000, the Company delivers (A) a written opinion from a reputable contractor that the Subject Property can be rebuilt, repaired, replaced or constructed and operating within 330 days from the date of such opinion; and (B) an Officers’ Certificate certifying that the Company or the affected Guarantor has available from Net Loss Proceeds (including amounts collectible from the applicable insurance carrier) or other sources sufficient funds to complete the rebuilding, repair, replacement or construction described in this clause (1);

(2) to the investment in Replacement Assets, provided, that any Replacement Assets acquired with any Net Loss Proceeds of Collateral shall be owned by the Company or by a Guarantor and shall not be subject to any Liens other than Permitted Liens, and the Company or such Guarantor, as the case may be, shall execute and deliver to the Collateral Agent such Collateral Documents