EMERITUS
      CORPORATION







$32,000,000







6.25%
      Convertible Subordinated Debentures due 2008







INDENTURE







Dated
      as
      of November 23, 2005







U.S. BANK,
      NATIONAL ASSOCIATION,




AS
      TRUSTEE
















exhibit
          4.2.1 Indenture




CROSS-REFERENCE
      TABLE




EMERITUS
      CORPORATION





Trust
                Indenture
              Act
                Section
            
            Indenture§310(a)(1)
            
            7.10;
                12.1(a)(2)
            
            12.1(a)(3)
            
            12.1(a)(4)
            
            12.1(a)(5)
            
            12.1(b)
            
            7.10;
                12.1(c)
            
            12.1§311(a)
            
            7.11;
                12.1(b)
            
            7.11;
                12.1(c)
            
            12.1§312(a)
            
            12.1(b)
            
            12.1;
                12.3(c)
            
            12.1;
                12.3§313(a)
            
            7.6;
                12.1(b)
            
            7.6;
                12.1(c)
            
            7.6;
                12.1(d)
            
            7.6;
                12.1§314(a)
            
            4.2;
                12.1(b)
            
            12.1(c)
            
            12.1(d)
            
            12.1(e)
            
            12.1(f)
            
            12.1§315(a)
            
            7.1;
                12.1(b)
            
            7.1;
                12.1(c)
            
            7.1;
                12.1(d)
            
            7.1;
                12.1(e)
            
            7.1;
                12.1§316(a)
            
            7.1;
                12.1(b)
            
            7.1;
                12.1(c)
            
            7.1;
                12.1§317(a)
            
            12.1(b)
            
            12.1§318(a)
            
            Not
                Applicable






Note:  This
      Cross-Reference Table shall not, for any purpose, be deemed to be a part of
      the
      Indenture.


exhibit
          4.2.1 Indenture




TABLE
      OF
      CONTENTS


Page





ARTICLE 1DEFINITIONS
                  AND INCORPORATION BY REFERENCESECTION 1.1
              Definitions.
              1SECTION 1.2
              Other
                  Definitions.
              4SECTION 1.3
              Incorporation
                  by Reference to Trust Indenture Act.
              5SECTION 1.4
              Rules
                  of Construction.
              5ARTICLE 2THE
                  SECURITIESSECTION 2.1
              Form;
                  Dating; Incorporation of Form in Indenture.
              6SECTION 2.2
              Execution
                  and Authentication.
              7SECTION 2.3
              Registrar
                  and Agents.
              7SECTION 2.4
              Paying
                  Agent to Hold Money in Trust.
              8SECTION 2.5
              Transfer
                  and Exchange.
              9SECTION 2.6
              Replacement
                  Securities.
              13SECTION 2.7
              Outstanding
                  Securities.
              13SECTION 2.8
              Temporary
                  Securities.
              14SECTION 2.9
              Cancellation.
              14SECTION 2.10
              Defaulted
                  Interest.
              14SECTION 2.11
              Securityholder
                  Lists.
              15SECTION 2.12
              Persons
                  Deemed Owners.
              15SECTION 2.13
              CUSIP
                  Number.
              15ARTICLE 3REDEMPTIONSECTION 3.1
              No
                  Redemption.
              15ARTICLE 4COVENANTSSECTION 4.1
              Payment
                  of the Securities.
              16SECTION 4.2
              Commission
                  Reports.
              16SECTION 4.3
              Waiver
                  of Stay, Extension or Usury Laws.
              16SECTION 4.4
              Notice
                  of Default.
              17SECTION 4.5
              Compliance
                  Certificates.
              17SECTION 4.6
              Limitation
                  on Dividends and Other Distributions.
              17
  exhibit
            4.2.1 Indenture
 i
  
 ARTICLE 5SUCCESSOR
                  CORPORATIONSECTION 5.1
              When
                  Company May Merge, etc.
              18SECTION 5.2
              Successor
                  Corporation or Trust Substituted.
              18ARTICLE 6DEFAULTS
                  AND REMEDIESSECTION 6.1
              Events
                  of Default.
              19SECTION 6.2
              Acceleration.
              21SECTION 6.3
              Other
                  Remedies.
              21SECTION 6.4
              Waiver
                  of Defaults and Events of Default.
              21SECTION 6.5
              Control
                  by Majority.
              22SECTION 6.6
              Rights
                  of Holders to Receive Payment.
              22SECTION 6.7
              Collection
                  Suit by Trustee.
              22SECTION 6.8
              Trustee
                  May File Proofs of Claim.
              23SECTION 6.9
              Priorities.
              23SECTION 6.10
              Undertaking
                  for Costs.
              24SECTION 6.11
              Limitation
                  on Suits.
              24ARTICLE 7TRUSTEESECTION 7.1
              Duties
                  of Trustee.
              25SECTION 7.2
              Rights
                  of Trustee.
              26SECTION 7.3
              Individual
                  Rights of Trustee.
              27SECTION 7.4
              Trustee's
                  Disclaimer.
              27SECTION 7.5
              Notice
                  of Defaults.
              27SECTION 7.6
              Reports
                  by Trustee to Holders.
              28SECTION 7.7
              Compensation
                  and Indemnity.
              28SECTION 7.8
              Replacement
                  of Trustee.
              29SECTION 7.9
              Successor
                  Trustee by Merger, etc.
              30SECTION 7.10
              Eligibility;
                  Disqualification.
              30SECTION 7.11
              Preferential
                  Collection of Claims Against Company.
              30ARTICLE 8SATISFACTION
                  AND DISCHARGE OF INDENTURESECTION 8.1
              Satisfaction,
                  Discharge and Defeasance of the Securities.
              30SECTION 8.2
              Satisfaction
                  and Discharge of Indenture.
              31SECTION 8.3
              Survival
                  of Certain Obligations.
              31SECTION 8.4
              Application
                  of Trust Money.
              32SECTION 8.5
              Paying
                  Agent to Repay Monies Held.
              32
  exhibit
            4.2.1 Indenture
 ii
  
 SECTION 8.6
              Return
                  of Unclaimed Monies.
              32SECTION 8.7
              Reinstatement.
              33ARTICLE 9AMENDMENTS
                  AND WAIVERSSECTION 9.1
              Amendments
                  and Waivers Without Consent of Holders.
              33SECTION 9.2
              Amendments
                  and Waivers with Consent of Holders.
              34SECTION 9.3
              Compliance
                  with Trust Indenture Act.
              35SECTION 9.4
              Revocation
                  and Effect of Consents.
              35SECTION 9.5
              Notation
                  on or Exchange of Securities.
              36SECTION 9.6
              Trustee
                  to Sign Amendments, etc.
              36ARTICLE 10CONVERSION
                  OF SECURITIESSECTION 10.1
              Right
                  of Conversion; Conversion Price.
              36SECTION 10.2
              Issuance
                  of Shares on Conversion.
              37SECTION 10.3
              No
                  Adjustment for Interest or Dividends.
              37SECTION 10.4
              Adjustment
                  of Conversion Price.
              38SECTION 10.5
              Notice
                  of Adjustment of Conversion Price.
              40SECTION 10.6
              Notice
                  of Certain Corporate Action.
              41SECTION 10.7
              Taxes
                  on Conversions.
              42SECTION 10.8
              Fractional
                  Shares.
              42SECTION 10.9
              Cancellation
                  of Converted Securities.
              42SECTION 10.10
              Provisions
                  in Case of Consolidation, Merger or Sale of Assets.
              43SECTION 10.11
              Disclaimer
                  by Trustee of Responsibility for Certain Matters.
              43SECTION 10.12
              Covenant
                  to Reserve Shares.
              44ARTICLE 11SUBORDINATION;
                  SENIORITYSECTION 11.1
              Securities
                  Subordinated to Senior Indebtedness.
              44SECTION 11.2
              Company
                  Not to Make Payments with Respect to Securities in Certain
                  Circumstances.
              45SECTION 11.3
              Subrogation
                  of Securities.
              47SECTION 11.4
              Authorization
                  by Holders of Securities.
              48SECTION 11.5
              Notices
                  to Trustee.
              48SECTION 11.6
              Trustee's
                  Relation to Senior Indebtedness.
              49SECTION 11.7
              No
                  Impairment of Subordination.
              49SECTION 11.8
              Article 11
                  Not To Prevent Events of Default.
              50SECTION 11.9
              Paying
                  Agents other than the Trustee.
              50SECTION 11.10
              Securities
                  Senior to Subordinated Indebtedness.
              50
  exhibit
            4.2.1 Indenture
 iii
  
 ARTICLE 12MISCELLANEOUSSECTION 12.1
              Trust
                  Indenture Act Controls.
              50SECTION 12.2
              Notices.
              50SECTION 12.3
              Communications
                  by Holders with Other Holders.
              51SECTION 12.4
              Certificate
                  and Opinion as to Conditions Precedent.
              52SECTION 12.5
              Statements
                  Required in Certificate and Opinion.
              52SECTION 12.6
              Rules
                  by Trustee and Agents.
              52SECTION 12.7
              Record
                  Date.
              52SECTION 12.8
              Legal
                  Holidays.
              53SECTION 12.9
              Governing
                  Law.
              53SECTION 12.10
              No
                  Adverse Interpretation of Other Agreements.
              53SECTION 12.11
              No
                  Recourse Against Others.
              53SECTION 12.12
              Successors.
              53SECTION 12.13
              Multiple
                  Counterparts.
              53SECTION 12.14
              Table
                  of Contents, Headings, etc.
              53SECTION 12.15
              Severability.
              54
 
  exhibit
            4.2.1 Indenture
 iv




INDENTURE
      dated as of November 23, 2005 by and between Emeritus Corporation, a Washington
      corporation ("Company"), and U.S. Bank, National Association, a national
      banking association, as trustee ("Trustee").







RECITALS
      OF THE COMPANY




Each
      party agrees as follows for the benefit of the other party and for the equal
      and
      ratable benefit of the Holders of the Company's 6.25% Convertible Subordinated
      Debentures due 2008 (the "Securities"):







ARTICLE 1




DEFINITIONS
      AND INCORPORATION BY REFERENCE




SECTION 1.1  Definitions .




"Affiliate"
      means any Person directly or indirectly controlling or controlled by or under
      direct or indirect common control with the Company. For the purposes of this
      definition, "control" (including, with correlative meanings, the terms
      "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 or by agreement or
      otherwise.




"Agent"
      means any Registrar, Paying Agent, Conversion Agent, co-registrar or agent
      for
      service of notices and demands.




"Bankruptcy
      Law" means Title 11 of the U.S. Code or any similar Federal or State
      law for the relief of debtors.




"Board
      of
      Directors of the Company" means the Board of Directors of the Company or any
      committee of the Board.




"Board
      Resolution" means a resolution certified by the Secretary or an Assistant
      Secretary of the Company to have been duly adopted by the Board of Directors
      of
      the Company and to be in full force and effect on the date of such
      certification, and delivered to the Trustee.




"Business
      Day" means a day that is not a Legal Holiday.




"Capital
      Stock" means any and all shares or other equivalents (however designated) of
      capital stock, including all common stock and all preferred stock, in the case
      of corporation, or partnership interests or other equivalents (however
      designated) in the case of a partnership or common shares of beneficial interest
      or other equivalents (however designated) in the case of a
      trust.


exhibit
          4.2.1 Indenture
 **1**




"Closing
      Price" means with respect to the shares of Capital Stock of the Company on
      any
      day, (i) the reported last sale price regular way or, in case no such
      reported sale takes place on such day, the average of the reported closing
      bid
      and asked prices regular way, in either case on the American Stock Exchange,
      or
      (ii) if the shares of Capital Stock are not listed or admitted to trading
      on the American Stock Exchange, the reported last sale price regular way or,
      in
      case no such reported sale takes place on such day, the average of the reported
      closing bid and asked prices regular way, in either case on the principal
      national securities exchange on which the shares of Capital Stock are listed
      or
      admitted to trading, or (iii) if the shares of Capital Stock are not listed
      or admitted to trading on any national securities exchange, the average of
      the
      closing bid and asked prices as furnished by any New York Stock Exchange member
      firm selected from time to time by the Company for that purpose.




"Company"
      means the party named as such in this Indenture until a successor replaces
      it
      pursuant to this Indenture and thereafter means the successor.




"Corporate
      Trust Office" means the office of the Trustee at which at any particular time
      its corporate trust business shall be principally administered, which office
      at
      the date of execution of this Indenture is located at Corporate Trust Services,
      3 rd Floor,
      One Federal Street, Boston, Massachusetts, 02110.




"Custodian"
      means any receiver, trustee, liquidator or similar official under any Bankruptcy
      Law.




"Default"
      means any event which is, or after notice or passage of time or both would
      be,
      an Event of Default.




"Dollar"
      or "$" means the lawful money of the United States of America.




"Exchange
      Act" means the Securities Exchange Act of 1934, as amended.




"Holder"
      or "Securityholder" means the Person in whose name a Security is registered
      on
      the Security Register.




"Indebtedness,"
      as applied to any Person, means, without duplication: (i) all indebtedness
      for borrowed money whether or not evidenced by a promissory note, draft or
      similar instrument; (ii) that portion of obligations with respect to any
      lease that is properly classified as a liability on a balance sheet in
      accordance with generally accepted accounting principles; (iii) notes
      payable and drafts accepted representing extensions of credit; (iv) any
      balance owed for all or any part of the deferred purchase price of property
      or
      services, which purchase price is due more than six months from the date of
      incurrence of the obligation in respect thereof (except any such balance that
      constitutes (a) a trade payable or an accrued liability arising in the
      ordinary course of business or (b) a trade draft or note payable issued in
      the ordinary course of business in connection with the purchase of goods or
      services), if and to the extent such debt would appear as a liability


exhibit
          4.2.1 Indenture
 **2**




upon
      a
      balance sheet of such Person prepared in accordance with generally accepted
      accounting principles; (v) any debt of others described in the preceding
      clauses (i) through (iv) which such Person has guaranteed or for which
      it is otherwise liable; and (vi) any deferral, amendment, renewal,
      extension, supplement or refunding of any of the foregoing indebtedness; provided , however ,
      that,
      in computing the "Indebtedness" of any Person, there shall be excluded any
      particular indebtedness if, upon or prior to the maturity thereof and at the
      time of determination of such indebtedness, there shall have been deposited
      with
      a depository in trust money (or evidences of indebtedness if permitted by the
      instrument creating such indebtedness) in the necessary amount to pay, redeem
      or
      satisfy such indebtedness as it becomes due, and the amount so deposited shall
      not be included in any computation of the assets of such Person.




"Indenture"
      means this Indenture as amended or supplemented from time to time.




"Officer"
      means the Chairman of the Board, the President, any Vice President, the
      Treasurer, the Secretary or the Controller of the Company.




"Officers'
      Certificate" means a certificate signed by two Officers or by an Officer and
      an
      Assistant Treasurer, Assistant Secretary or Assistant Controller of the Company.
      See Sections 12.4 and 12.5.




"Opinion
      of Counsel" means a written opinion from Perkins Coie or any counsel to the
      Trustee or the Company or any other legal counsel who is reasonably acceptable
      to the Trustee. The counsel may be an employee of or counsel to the Company
      or
      the Trustee. See Sections 12.4 and 12.5.




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




"Restricted
      Security", means the Securities, upon original issuance thereof, and all
      Securities issued upon registration of transfer thereof or in exchange therefor,
      and at all times subsequent thereto, until, in the case of any such Securities
      the earlier of the following: (i) such Securities have been effectively
      registered under Section 5 of the Securities Act and disposed of in
      accordance with a registration statement covering them or (ii) such
      Securities have been distributed to the public pursuant to Rule 144 of the
      Securities Act (or any similar provisions then in force). When any Security
      which is a Restricted Security ceases to be a Restricted Security, such
      Restricted Security shall no longer be subject to the transfer restrictions
      as
      imposed by Section 2.5(2) hereof.




"Securities
      Act" means the Securities Act of 1933, as amended from time to
      time.


exhibit
          4.2.1 Indenture
 **3**




"Securities"
      means the securities in the form of Exhibit A hereto that are issued under
      this Indenture as amended or supplemented from time to time.




"Senior
      Indebtedness" means the principal, premium, if any, and unpaid interest
      (including interest accruing on or after the filing of any petition in
      bankruptcy or for reorganization relating to the Company whether or not a claim
      for post-filing interest is allowed in such proceeding), fees, charges,
      expenses, reimbursement and indemnification obligations, and all other amounts
      payable under or in respect of Indebtedness of the Company, whether any such
      Indebtedness exists as of the date of this Indenture or shall hereafter be
      created, incurred, assumed or guaranteed; provided, however, that Senior
      Indebtedness shall not include (A) Indebtedness owed to a Subsidiary,
      (B) pari passu Indebtedness or (C) Subordinated
      Indebtedness.




"Subordinated
      Indebtedness" means the principal, premium, if any, and interest on any
      Indebtedness of the Company which by its terms is expressly subordinated in
      right of payment to the Securities.




"Subsidiary"
      means a Person the majority of whose voting stock membership interests in LLC
      is
      owned by the Company or a subsidiary of the Company. Voting stock is Capital
      Stock having voting power under ordinary circumstances to elect directors or
      similar positions.




"TIA"
      or
      "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S. Code
§§ 77aaa - 77bbbb) as amended by the Trust Indenture Reform Act of
      1990 and as in effect on the date of this Indenture.




"Trustee"
      means the party named as such in this Indenture until a successor replaces
      it
      pursuant to this Indenture and thereafter means the successor.




"Trust
      Officer", when used with respect to the Trustee, means an officer of the Trustee
      customarily performing functions in corporate trust matters or any other officer
      of the Trustee to whom such matter is referred because of his knowledge of
      and
      familiarity with the particular subject.




"United
      States" means the United States of America.




SECTION 1.2  Other
      Definitions .





Term
            
            Defined
                in Section"Common
                Stock"
            
            10.1"Conversion
                Agent"
            
            2.3"conversion
                price"
            
            10.1"current
                market price"
            
            10.4"DTC"
            
            2.3"Depository"
            
            2.3


exhibit
          4.2.1 Indenture
 **4**







Term
            
            Defined
                in Section"Event
                of Default"
            
            6.1Exchange
                Global Security
            
            2.1Exchange
                Securities
            
            2.1"Legal
                Holiday"
            
            12.8"Paying
                Agent"
            
            2.3"Payment
                or Distribution"
            
            11.1"Registered
                Investor Securities"
            
            2.1"Registrar"
            
            2.3"Rule 13e-3
                Transaction"
            
            10.6"Security
                Register"
            
            2.3"U.S.
                Government Obligations"
            
            8.1







SECTION 1.3  Incorporation
      by Reference to Trust Indenture Act .




Whenever
      this Indenture refers to a provision of the TIA, the provision is incorporated
      by reference in and made a part of this Indenture. The following TIA terms
      used
      in this Indenture have the following meanings:




"Commission"
      means the Securities and Exchange Commission.




"obligor"
      on the indenture securities means the Company or any other obligor on the
      indenture securities.




All
      other
      terms used in this Indenture that are defined by the TIA, defined by TIA
      reference to another statute or defined by Commission rules have the meanings
      assigned to them therein.




SECTION 1.4  Rules
      of Construction .




Unless
      the context otherwise requires:




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




(2)  an
      accounting term not otherwise defined has the meaning assigned to it in
      accordance with United States generally accepted accounting principles in effect
      as of the time as to which such accounting principles are to be
      applied;




(3)  "or"
      is
      not exclusive; and




(4)  words
      in
      the singular include the plural, and in the plural include the
      singular.







exhibit
          4.2.1 Indenture
 **5**




ARTICLE 2




THE
      SECURITIES




SECTION 2.1  Form;
      Dating; Incorporation of Form in Indenture .




The
      aggregate principal amount of Securities which may be authenticated and
      delivered under this Indenture is limited to $32,000,000, except for Securities
      authenticated and delivered upon registration of transfer of, or in exchange
      for, or in lieu of, other Securities pursuant to Sections 2.3, 2.5, 2.6,
      2.8, 9.5 or 10.1.




The
      Securities shall be known and designated as the 6.25% Convertible Subordinated
      Notes Due 2008 of the Company. Their fixed maturity shall be July 1, 2008,
      and they shall bear interest at the rate per annum of 6.25%, from and including
      the date of issuance thereof until maturity or earlier redemption, payable
      semiannually on January 1 and July 1 commencing January 1, 2006,
      until the principal thereof is paid or made available for payment.




The
      Securities shall not be redeemable at the election of the Company.




The
      Securities shall be subordinated in right of payment to Senior Indebtedness,
      to
      the extent provided in Article 11.




The
      Securities shall be convertible as provided in Article 10.




The
      Securities and the Trustee's certificate of authentication shall be
      substantially in the form of Exhibit A which is incorporated in and made
      part of this Indenture. The Securities may have notations, legends or
      endorsements required by law, stock exchange rules, agreements to which the
      Company is subject, or usage. The Company shall approve the form of the
      Securities and any notation, legend or endorsement on them. Each Security shall
      be dated the date of its authentication.




The
      terms
      and provisions contained in the Securities shall constitute, and are hereby
      expressly made, a part of this Indenture and to the extent applicable, the
      Company and the Trustee, by their execution and delivery of this Indenture,
      expressly agree to such terms and provisions and to be bound
      thereby.




The
      Securities shall be issuable only in registered form without coupons. The
      Securities (the "Exchange Securities") issued in exchange for the Company's
      6.25% Convertible Subordinated Debentures due 2006 pursuant to Offer to Purchase
      dated October , 2005 in reliance on the exemption from registration provided
      by
      Section 3(a)(9) of the Securities Act will be issued in the form of a
      global Security in the aggregate principal amount of the Exchange Securities,
      which Security shall be in substantially the form of Exhibit A hereto,
      including the paragraphs referred to in footnotes 1 and 2, and is
      hereinafter referred to as the "Exchange Global Security."


exhibit
          4.2.1 Indenture
 **6**




All
      other
      Securities will be issued in fully registered form, which Securities shall
      be in
      substantially the form of Exhibit A hereto, excluding the information
      called for by footnote 1 thereto but including the information called for
      by footnote 2 thereto, and are hereinafter collectively referred to as
      "Registered Investor Securities."




SECTION 2.2  Execution
      and Authentication .




Two
      Officers shall sign the Securities for the Company by manual or facsimile
      signature. The Company's seal shall be impressed, affixed, imprinted or
      reproduced on the Securities and may be in facsimile form.




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




A
      Security shall not be valid until the Trustee manually signs the certificate
      of
      authentication on the Security. Such signature shall be conclusive evidence
      that
      the Security has been authenticated under this Indenture. Notwithstanding the
      foregoing, if any Security shall have been authenticated and delivered hereunder
      but never issued and sold by the Company, and the Company shall deliver such
      Security to the Trustee for cancellation as provided in Section 2.9, for
      all purposes of this Indenture such Security shall be deemed never to have
      been
      authenticated and delivered hereunder and shall never be entitled to the
      benefits of this Indenture.




The
      Trustee shall authenticate Securities for original issue in the aggregate
      principal amount of up to $32,000,000 upon the execution of the Indenture and
      a
      written order or orders of the Company signed by two Officers or by an Officer
      and an Assistant Treasurer of the Company. The aggregate principal amount of
      the
      Securities outstanding at any time may not exceed that amount.




The
      Trustee may appoint an authenticating agent to authenticate Securities. An
      authenticating agent may authenticate Securities whenever the Trustee may do
      so.
      Each reference in this Indenture to authentication by the Trustee includes
      authentication by such agent. An authenticating agent has the same rights as
      an
      Agent to deal with the Company or an Affiliate.




SECTION 2.3  Registrar
      and Agents .




The
      Company shall maintain an office or agency where Securities may be presented
      for
      registration of transfer or for exchange ("Registrar"), an office or agency
      where Securities may be presented for payment ("Paying Agent"), an office or
      agency where Securities may be presented for conversion ("Conversion Agent")
      and
      an office or agency where notices and demands to or upon the Company in respect
      of the Securities and this Indenture may be served. The Registrar shall keep
      a
      register of the Securities (the "Security Register") and of their transfer
      and
      exchange. The Company may have one or more co-registrars, one or more additional
      Paying Agents and one or more additional Conversion Agents. The Company or
      any
      Subsidiary may act as Paying Agent and/or


exhibit
          4.2.1 Indenture
 **7**




Conversion
      Agent. The term "Paying Agent" includes any additional paying agent and the
      term
      "Conversion Agent" includes any additional conversion agent.




The
      Company may change any Paying Agent, Registrar, Conversion Agent or co-registrar
      on sixty (60) days' prior written notice to the Trustee. The Company shall
      notify the Trustee in writing of the name and address of any such Agent. If
      the
      Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent
      for service of notices and demands, or fails to give the foregoing notice,
      the
      Trustee shall act as such.




The
      Company initially appoints the Trustee as Registrar, Paying Agent, Conversion
      Agent and agent for service of notices and demands.




With
      respect to the Securities issuable or issued in whole or in part in the form
      of
      Exchange Global Securities, the Company hereby appoints The Depository Trust
      Company ("DTC"), at present located at 55 Water Street, New York, New York,
      10041 as the depository for the Exchange Global Securities upon the terms and
      subject to the conditions herein set forth. (DTC and its successor or successors
      as such depository are herein called the "Depository.")




SECTION 2.4  Paying
      Agent to Hold Money in Trust .




At
      least
      one Business Day prior to each due date of the principal of, premium if any,
      and
      interest on any Securities, the Company shall deposit with each Paying Agent
      a
      sum sufficient to pay such principal, premium, if any, and interest so becoming
      due. The Company shall require each Paying Agent other than the Trustee to
      agree
      in writing that it will hold in trust for the benefit of Holders of Securities
      or the Trustee all money held by the Paying Agent for the payment of principal
      of, premium if any, or interest on the Securities and to notify the Trustee
      of
      any default by the Company (or any other obligor on the Securities) in making
      any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
      on or before each due date of the principal of, premium, if any, or interest
      on
      any Securities segregate the money and hold it as a separate trust fund. The
      Company at any time may require a Paying Agent to pay all money held by it
      to
      the Trustee and the Trustee may at any time during the continuance of any
      payment default, upon written request to a Paying Agent, require such Paying
      Agent to forthwith pay to the Trustee all sums so held in trust by such Paying
      Agent. Upon doing so, the Paying Agent (if other than the Company or a
      Subsidiary thereof) shall have no further liability for the money.




The
      final
      installment of principal of and premium, if any, on the Securities shall be
      payable only upon surrender of the Securities at the office or agency of the
      Trustee in the Borough of Manhattan, City and State of New York or the City
      of
      Boston, State of Massachusetts. Payments of principal of and premium, if any,
      and interest on the Securities shall be made at the office or agency of the
      Trustee maintained in the Borough of Manhattan, City and State of New York
      or
      the City of Boston, State of Massachusetts, or, in the case of any such payments
      other than the final payment of principal and


exhibit
          4.2.1 Indenture
 **8**




premium,
      if any, at the Company's option, by check mailed to the Person entitled thereto
      at such Person's address last appearing on the Security Register.




SECTION 2.5  Transfer
      and Exchange .




(1)  When
      a
      Security is presented to the Registrar or a co-registrar with a request to
      register the transfer thereof, the Registrar or co-registrar shall register
      the
      transfer as requested, and when Securities are presented to the Registrar or
      a
      co-registrar with a request to exchange them for an equal principal amount
      of
      Securities of other authorized denominations, the Registrar shall make the
      exchange as requested provided that every Security represented or surrendered
      for registration of transfer or exchange shall be duly endorsed and accompanied
      by a written instrument of transfer satisfactory to the Company and the
      Registrar duly executed by the Company or such Holder's attorney-in-fact duly
      authorized in writing; provided , further ,
      that
      the Registrar or co-registrar, as the case may be, shall not register the
      transfer of such Security if such Security is a Restricted Security unless
      the
      conditions in Section 2.5(2) hereof shall have been satisfied. The Holder
      of each Security, including each Restricted Security, by such Holder's
      acceptance thereof, agrees to be bound by the transfer restrictions set forth
      herein and in the legend on such Security.




(2)  Whenever
      any Restricted Security is presented or surrendered for registration of transfer
      or exchange for a Security registered in a name other than that of the Holder,
      no registration of transfer or exchange shall be made unless:




(a)  The
      registered Holder presenting such Restricted Security for transfer shall have
      certified to the Registrar in writing that the registered Holder is transferring
      the Restricted Security to the Company;




(b)  The
      Registrar has received written certification from the registered Holder, and
      a
      written opinion of counsel acceptable in form and substance to the Company
      and
      the Registrar, indicating that the transfer is being made pursuant to an
      available exemption from, or a transaction not otherwise subject to, the
      registration requirements of the Securities Act; or




(c)  the
      registered Holder presenting such Restricted Security for transfer shall have
      certified to the Registrar in writing that such registered Holder is
      transferring such Restricted Securities to a "qualified institutional buyer"
      (as
      defined in Rule 144A under the Securities Act) in compliance with the
      exemption from registration as provided by Rule 144A under the Securities
      Act.




For
      purposes of this Section 2.5(2), such certification to the Registrar in
      writing shall be in the form of the Transfer Notice set forth on the reverse
      of
      such Security.


exhibit
          4.2.1 Indenture
 **9**




(3)  Each
      certificate evidencing Restricted Securities shall bear a legend in
      substantially the following form:




THIS
      SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF INVESTMENT AND
      NOT
      WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION. THIS SECURITY
      (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER
      THIS
      SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR
      OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
      EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT
      THE
      SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
      THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
      SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR
      THE
      BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
      WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT
      OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO EMERITUS
      CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
      DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) IN THE CASE OF A HOLDER
      WHO IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
      SECURITIES ACT), FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
      TO
      RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
      INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
      A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) IN
      ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
      (AND CONFIRMED IN AN OPINION OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO
      THE
      ISSUER OF THIS SECURITY IF THE ISSUER SO REQUESTS) AND, IN EACH CASE, IN
      ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
      OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
      SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM
      IT
      OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.




The
      above
      legend may be removed from a certificate when it no longer evidences a Security
      which is a Restricted Security.




(4)  To
      permit
      registrations of transfers and exchanges, the Company shall issue and the
      Trustee or any authenticating agent shall authenticate Securities at the


exhibit
          4.2.1 Indenture
 **10**




Registrar's
      or co-registrar's request. No service charge shall be made for any registration
      of transfer or exchange of Securities but the Company or the Registrar may
      require payment of a sum sufficient to cover any tax or other governmental
      charge that may be imposed in relation thereto, but this provision shall not
      apply to any exchange pursuant to Section 2.8, 9.5 or 10.2 not
      involving any transfer.




(5)  The
      Registrar shall not be required (i) to issue, register the transfer of or
      exchange Securities during a period beginning at the opening of business
      15 days before the day of any selection of Securities for redemption under
      Section 3.2 and ending at the close of business on the day of selection, or
      (ii) to register the transfer or exchange of any Security so selected for
      redemption in whole or in part, except the unredeemed portion of any Security
      being redeemed in part.




(6)  Any
      Restricted Security as to which the restrictions on transfer set forth in
      Section 2.5(2) hereof shall have expired in accordance with their terms or
      shall have terminated may, upon surrender of such Restricted Security for
      exchange to the Registrar in accordance with the provisions of this
      Section 2.5(6) (accompanied, in the event that such restrictions on
      transfer have terminated by reason of a transfer pursuant to Rule 144 (or
      any successor provision), by an opinion of counsel reasonably acceptable to
      the
      Company, addressed to the Company and the Registrar and in form and scope
      satisfactory to the Company and the Registrar, to the effect that the transfer
      of such Restricted Security has been made in compliance with Rule 144 (or
      such successor provision)), be exchanged for a new Security, of like tenor
      and
      aggregate principal amount, which shall not bear the restrictive legend required
      by Section 2.5(3) hereof. The Company shall promptly inform the Registrar
      in writing of the effective date of any registration statement registering
      the
      Securities under the Securities Act.




(7)  Any
      person having a beneficial interest in an Exchange Global Security may upon
      request exchange such beneficial interest for a Registered Accredited Security
      only as provided in this paragraph. Upon receipt by the Company, the Trustee
      and
      the Registrar of (i) written instructions (or such other form of
      instructions as is customary) on behalf of any person having a beneficial
      interest in a Exchange Global Security and (ii) in the case of a Restricted
      Security, the following additional information and documents (all of which
      may
      be submitted by facsimile):




(A)
            if
                such beneficial interest is being transferred to the person designated
                as
                being the beneficial owner, a certification to that effect from such
                person; or




(B)
            if
                such beneficial interest is being transferred to a person other than
                the
                person designated as being the beneficial owner, the provisions of
                Section 2.5(2) hereof have been
                satisfied;


exhibit
          4.2.1 Indenture
 **11**




in
      which
      case the Trustee or any custodian for the Exchange Global Security, at the
      direction of the Trustee, shall, in accordance with the standing instructions
      and procedures existing between the Depository and such custodian, cause the
      aggregate principal amount of the Exchange Global Security to be reduced
      accordingly and, following such reduction, the Company shall execute and the
      Trustee shall authenticate and deliver to the transferee a Registered Security
      in the appropriate principal amount and, if such Security is a Restricted
      Security, including the appropriate legend. Securities issued in exchange for
      a
      beneficial interest in the Exchange Global Security pursuant to this paragraph
      shall be registered in such names and in such authorized denominations as shall
      be instructed in writing by or on behalf of any person having a beneficial
      interest in a Exchange Global Security to the Trustee and the Registrar. The
      Registrar shall deliver such Securities to the persons in whose names such
      Securities are so registered.




(8)  Notwithstanding
      any other provision of this Agreement (other than the provisions set forth
      in
      Section 2.5(2)(c) hereof), the Exchange Global Security may not be
      transferred as a whole except by the Depository to a nominee of the Depository
      or by a nominee of the Depository to the Depository or another nominee of the
      Depository or by Depository or any such nominee to a successor Depository or
      a
      nominee of such successor Depository.




(9)  If
      at any
      time either (i) the Depository for the Exchange Global Security notifies
      the Company that the Depository is unwilling or unable to continue as Depository
      for the Exchange Global Security and a successor Depository for the Exchange
      Global Security is not appointed by the Company within 90 days after
      delivery of such notice, or (ii) the Company, at its sole discretion,
      notifies the Trustee in writing that it elects to cause the issuance of
      Registered Securities under this Indenture, then the Company shall execute,
      and
      the Trustee shall authenticate and deliver, Registered Securities in an
      aggregate principal amount equal to the principal amount of the Exchange Global
      Security in exchange for such Exchange Global Security.




(10)  At
      such
      time as all beneficial interests in the Exchange Global Security have either
      been exchanged for Registered Securities, redeemed, repurchased or canceled,
      the
      Exchange Global Security shall be returned to or retained and canceled by the
      Trustee. At any time prior to such cancellation, if any beneficial interest
      in
      the Exchange Global Security is exchanged for Registered Securities, redeemed,
      repurchased or canceled, the principal amount of Securities represented by
      the
      Exchange Global Security shall be reduced accordingly and an endorsement shall
      be made on the Exchange Global Security, by the Trustee or any custodian
      therefor, at the direction of the Trustee, to reflect such
      reduction.




(11)  The
      transfer and exchange of the Exchange Global Security or beneficial interests
      therein shall be effected through the Depository, in accordance with this
      Indenture and the procedures of the Depository therefor, which shall include
      restrictions on transfer comparable to those set forth herein to the extent
      required by the Securities Act.




exhibit
          4.2.1 Indenture
 **12**




SECTION 2.6  Replacement
      Securities .




If
      a
      mutilated Security is surrendered to the Trustee or if the Holder of a Security
      presents evidence to the satisfaction of the Company and the Trustee that the
      Security has been lost, destroyed or wrongfully taken, the Company shall issue
      and the Trustee shall authenticate a new Security in replacement of and
      substitution for such Security if the requirements of the Trustee and the
      Company are met. An indemnity bond may be required by the Company or the Trustee
      that is sufficient in the judgment of the Company to protect the Company and
      is
      sufficient in the judgment of the Trustee to protect the Trustee or any Agent
      from any loss which it may suffer if a Security is replaced pursuant to this
      Section 2.6. The Company and the Trustee may charge for its expense in
      replacing a Security.




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




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




SECTION 2.7  Outstanding
      Securities .




Securities
      outstanding at any time are all Securities theretofore authenticated and
      delivered under this Indenture except: (a) Securities theretofore canceled
      by the Trustee or delivered to the Trustee for cancellation; and
      (b) Securities in exchange for or in lieu of which other Securities have
      been authenticated and delivered pursuant to this Indenture, other than any
      Securities in respect of which there shall have been presented to the Trustee
      proof satisfactory to it that such Securities are held by a bona fide purchaser
      in whose hands such Securities are valid obligations of the Issuer; provided ,
      that in
      determining whether the Securityholders of the requisite principal amount of
      outstanding Securities are present at a meeting of Securityholders for quorum
      purposes or have voted or taken or concurred in any action under this Indenture,
      including the making of any request, demand, authorization, direction, notice,
      consent or waiver hereunder, Securities owned by the Company or any other
      obligor upon the Securities or any Affiliate of the Company or such other
      obligor shall be disregarded and deemed not outstanding, except that, in
      determining whether the Trustee shall be protected in relying upon any such
      determination as to the presence of a quorum or upon any such request, demand,
      authorization, direction, notice, consent or waiver, only Securities which
      a
      Trust Officer of the Trustee actually knows to be so owned shall be
      disregarded.


exhibit
          4.2.1 Indenture
 **13**




If
      a
      Security is replaced pursuant to Section 2.6, it ceases to be outstanding
      until the Trustee receives proof satisfactory to it that the replaced Security
      is held by a bona fide purchaser.




If
      the
      Paying Agent (other than the Company or a Subsidiary) holds on the maturity
      date
      money deposited with it by or on behalf of the Company sufficient to pay the
      principal of, premium, if any, and accrued interest on Securities payable on
      that date, then on and after that date such Securities cease to be outstanding
      and interest on them ceases to accrue.




A
      Security does not cease to be outstanding because the Company or an Affiliate
      holds the Security.




SECTION 2.8  Temporary
      Securities .




Until
      definitive Securities are ready for delivery, the Company may prepare and the
      Trustee shall authenticate temporary Securities. Temporary Securities shall
      be
      substantially in the form of definitive Securities but may have non-material
      variations that the Company considers appropriate for temporary Securities.
      Without unreasonable delay, the Company shall prepare and the Trustee shall
      authenticate definitive Securities in exchange for temporary Securities upon
      written order of the Company signed by two Officers. Until so exchanged,
      temporary Securities represent the same rights as definitive Securities. Upon
      request of the Trustee, the Company shall provide a certificate to the effect
      that the temporary Securities meet the requirements of the second sentence
      of
      this Section 2.8.




SECTION 2.9  Cancellation .




The
      Company at any time may deliver Securities to the Trustee for cancellation.
      The
      Registrar, the Paying Agent and the Conversion Agent shall forward to the
      Trustee any Securities surrendered to them for transfer, exchange, payment
      or
      conversion. The Trustee shall cancel all Securities surrendered for transfer,
      exchange, payment or conversion and destroy canceled Securities and deliver
      a
      certificate of such destruction to the Company unless the Company directs the
      Trustee in writing prior to such destruction to deliver canceled Securities
      to
      the Company. Subject to Sections 2.6 and the second paragraph of
      Section 10.2, the Company may not issue Securities to replace Securities
      that it has previously paid or delivered to the Trustee for cancellation or
      that
      a Securityholder has converted pursuant to Article 10 hereof.




SECTION 2.10  Defaulted
      Interest .




If
      the
      Company defaults in a payment of interest on Securities, it shall pay the
      defaulted interest to the Persons who are Holders of the Securities on a
      subsequent special record date. After the deposit by the Company with the
      Trustee of money sufficient to pay such defaulted interest, the Trustee shall
      fix the special record date and payment date. Each such special record date
      shall be not less than 10 days prior to such


exhibit
          4.2.1 Indenture
 **14**




payment
      date. Each such payment date shall be not more than 60 days after the
      deposit by the Company of money to pay the defaulted interest. At least
      15 days before the special record date, the Company shall mail to each
      Holder of a Security, with a copy to the Trustee, a notice that states the
      special record date, the payment date, and the amount of defaulted interest
      to
      be paid.




SECTION 2.11  Securityholder
      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 Securityholders.
      If the Trustee is not the Registrar, the Registrar shall furnish to the Trustee
      at least seven Business Days prior to each semiannual interest payment date
      and
      at such other times as the Trustee may reasonably request in writing a list
      in
      such form and as of such date as the Trustee may require of the names and
      addresses of Securityholders upon which the Trustee may conclusively rely.
      The
      Trustee may destroy any such list upon receipt of a replacement list. The Paying
      Agent will solicit from each Securityholder a certification of social security
      number or taxpayer identification number in accordance with its customary
      practice and as required by law, unless the Paying Agent is in possession of
      such certification. Each Paying Agent is authorized to impose back-up
      withholding with respect to payments to be made to Securityholders to the extent
      required by law.




SECTION 2.12  Persons
      Deemed Owners .




Prior
      to
      registration of transfer, the Company, the Trustee or the Registrar and any
      agent of the Company, the Trustee or the Registrar may treat the Person in
      whose
      name such Security is registered as the owner of such Security and neither
      the
      Company, the Trustee, or the Registrar nor any agent of the Company, the Trustee
      or the Registrar shall be affected by notice to the contrary.




SECTION 2.13  CUSIP
      N umber .




The
      Company shall use a "CUSIP" number when issuing the Exchange Global Security,
      but shall not use a "CUSIP" number when issuing Registered Investor Securities.
      The Trustee may use the CUSIP number in notices of redemption or exchange as
      a
      convenience to Securityholders; provided that any such notice may state that
      no
      representation is made as to the correctness or accuracy of the CUSIP number
      printed in the notice or on the Securities and that reliance may be placed
      only
      on the other identification numbers printed on the Securities.







ARTICLE 3




REDEMPTION




SECTION 3.1  No
      Redemption .




The
      Company shall not have the right to redeem the Securities at its
      option.







exhibit
          4.2.1 Indenture
 **15**




ARTICLE 4




COVENANTS




SECTION 4.1  Payment
      of the Securities .




The
      Company shall pay the principal of, premium, if any, and interest on the
      Securities on the dates and in the manner provided in the Securities and this
      Indenture. An installment of principal, premium, if any, or interest shall
      be
      considered paid on the date it is due if the Trustee or Paying Agent (if other
      than the Company or a Subsidiary) holds on that date money designated for and
      sufficient to pay the installment. The Company shall pay interest on overdue
      principal and premium, if any, at the rate borne by the Security; it shall
      pay
      interest, including post-petition interest in the event of a proceeding under
      any Bankruptcy Law, on overdue installments of interest at the same rate to
      the
      extent lawful.




SECTION 4.2  Commission
      Reports .




The
      Company shall file with the Trustee, promptly after filing with the Commission,
      copies of the annual reports and of the information, documents and other reports
      (or copies of such portions of any of the foregoing as the Commission may by
      rules and regulations prescribe) which the Company is required to file with
      the
      Commission pursuant to Section 13 or 15(d) of the Exchange Act. The
      Company shall also comply with the other provisions of TIA
§ 314(a).




So
      long
      as the Securities remain outstanding, the Company shall cause its annual reports
      to shareholders (containing audited financial statements) and any other
      financial reports furnished by it to shareholders to be mailed to the Holders
      at
      their addresses appearing in the Security Register maintained by the
      Registrar.




For
      so
      long as any of the Securities remain outstanding and are "restricted securities"
      within the meaning of Rule 144(a)(3) under the Securities Act, the Company
      covenants and agrees that it shall, during any period in which it is not subject
      to Section 13 or 15(d) of the Exchange Act, make available to any holder or
      beneficial holder of securities which continue to be restricted securities
      in
      connection with any sale thereof or to any prospective purchaser of such
      securities, the information specified in, and meeting the requirements of,
      the
      Rule 144A(d)(4) under the Securities Act.




SECTION 4.3  Waiver
      of Stay, Extension or Usury Laws .




The
      Company expressly waives (to the extent that it may lawfully do so) any stay
      or
      extension law or any usury law or other law that would prohibit or forgive
      the
      Company from paying all or any portion of the principal of, premium, if any,
      or
      interest on Securities as contemplated herein, wherever enacted, now or at
      any
      time hereafter in force, or that may affect the covenants or the performance
      of
      this Indenture, and the Company (to the extent that it may lawfully do so)
      hereby expressly waives all benefit or


exhibit
          4.2.1 Indenture
 **16**




advantage
      of any such law and covenants that it will not hinder, delay or impede the
      execution of any power herein granted to the Trustee, but will suffer and permit
      the execution of every such power as though no such law had been
      enacted.




SECTION 4.4  Notice
      of Default .




The
      Company will, so long as any Securities are outstanding, deliver to the Trustee,
      within 10 days of becoming aware of any Default or Event of Default in the
      performance of any covenant, agreement or condition in this Indenture, an
      Officers' Certificate specifying such Default or Event of Default, the period
      of
      existence thereof and what action the Company is taking or proposes to take
      with
      respect thereto.




SECTION 4.5  Compliance
      Certificates .




The
      Company will deliver to the Trustee, within 120 days after the end of each
      fiscal year of the Company (which as of the date hereof is December 31), a
      written statement signed by the principal executive officer, principal financial
      officer or principal accounting officer of the Company, stating, as to each
      signer thereof:




(1)  that
      a
      review of the activities of the Company during such year and of performance
      under this Indenture has been made under his or her supervision;




(2)  that
      to
      the best of his or her knowledge, based on such review, the Company has kept,
      observed, performed and fulfilled in all material respects each and every
      condition and covenant contained in this Indenture throughout such year, or,
      if
      there has been a default in the fulfillment of any such condition or covenant,
      specifying each such default known to him or her and the nature and status
      thereof; and




(3)  the
      conversion price (as described in Article 10 of this Indenture) then in
      effect.




The
      Company will give the Trustee written notice of a change in the fiscal year
      of
      the Company, within a reasonable time after such change is
      effected.




SECTION 4.6  Limitation
      on Dividends and Other Distributions .




The
      Company will not declare or pay any dividends or make any distribution to
      holders of its Capital Stock (other than dividends or distributions payable
      in
      Capital Stock of the Company), or purchase, redeem or otherwise acquire or
      retire for value any of its Capital Stock or permit any Subsidiary to purchase,
      redeem or otherwise acquire or retire for value any of the Company's Capital
      Stock if at the time of any of the afore-mentioned actions an Event of Default
      has occurred and is continuing or would exist immediately after giving effect
      to
      such action.


exhibit
          4.2.1 Indenture
 **17**




Notwithstanding
      the foregoing, the provisions of this Section 4.6 will not prevent
      (i) the payment of any dividend within 60 days after the date of
      declaration when the payment would have complied with the foregoing provisions
      on the date of declaration; or (ii) the retirement of any share of the
      Company's Capital Stock by exchange for, or out of the proceeds of the
      substantially concurrent sale (other than to a Subsidiary) of, other shares
      of
      its Capital Stock.







ARTICLE 5




SUCCESSOR
      CORPORATION




SECTION 5.1  When
      Company May Merge, etc.




The
      Company shall not consolidate with or merge into, or transfer all or
      substantially all of its assets to, another Person in any transaction in which
      the Company is not the continuing or surviving entity unless (i) the
      resulting, surviving or transferee Person is a corporation which assumes by
      supplemental indenture, in form satisfactory to the Trustee, all the obligations
      of the Company under the Securities and this Indenture; (ii) such
      corporation is organized and existing under the laws of the United States,
      a
      State thereof or the District of Columbia although it in turn may be owned
      by a
      foreign entity; (iii) immediately after giving effect to such transaction
      no Default or Event of Default shall have happened and be continuing and the
      Officers' Certificate referred to in the following clause reflects that such
      Officers are not aware of any such Default or Event of Default that shall have
      happened and be continuing, and (iv) the Company shall have delivered to
      the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
      that such consolidation, merger or transfer and such supplemental indenture
      comply with this Indenture, and thereafter all obligations of the Company shall
      terminate.




SECTION 5.2  Successor
      Corporation or Trust Substituted .




Upon
      any
      consolidation or merger, or any transfer of all or substantially all of the
      assets of the Company in accordance with Section 5.1, the successor
      corporation formed by such consolidation or into which the Company is merged
      or
      to which such transfer is made shall succeed to, and be substituted for, and
      may
      exercise every right and power of, the Company under this Indenture with the
      same effect as if such successor corporation has been named as the Company
      herein; the Company shall thereupon be relieved of any further obligation or
      liability hereunder or upon the Securities; and the Company as the predecessor
      corporation may thereupon or at any time thereafter be dissolved, wound up
      or
      liquidated. Such successor corporation thereupon may cause to be signed, and
      may
      issue either in its own name or in the name of Emeritus Corporation, any or
      all
      of the Securities issuable hereunder which theretofore shall not have been
      signed by the Company and delivered to the Trustee; and, upon the order of
      such
      successor corporation, instead of the Company, and subject to all the terms,
      conditions and limitations in this Indenture prescribed, the Trustee shall
      authenticate and shall deliver any Securities which previously shall have been
      signed and delivered by the


exhibit
          4.2.1 Indenture
 **18**




Officers
      to the Trustee for authentication, and any Securities which such successor
      corporation thereafter shall cause to be signed and delivered to the Trustee
      for
      that purpose. All the Securities so issued shall in all respects have the same
      legal rank and benefit under this Indenture as the Securities theretofore or
      thereafter issued in accordance with the terms of this Indenture as though
      all
      such Securities had been issued at the date of the execution
      hereof.







ARTICLE 6




DEFAULTS
      AND REMEDIES




SECTION 6.1  Events
      of Default .




An
      "Event
      of Default", wherever used herein, means any one of the following events
      (whatever the reason for such Event of Default and whether it shall be
      occasioned by the provisions of Article 11 or be voluntary or involuntary
      or be effected by operation of law or pursuant to any judgment, decree or order
      or any court or any order, rule or regulation of any administrative or
      governmental body):




(1)  the
      Company defaults in the payment of interest on any Security when the same
      becomes due and payable and such default continues for a period of
      30 days;




(2)  the
      Company defaults in the payment of the principal of or premium, if any, on
      any
      Security when the same becomes due and payable at maturity, upon redemption
      or
      otherwise, and such default continues for five Business Days;




(3)  the
      Company fails to comply with any of its other covenants, agreements or
      conditions in the Securities or this Indenture and such default continues for
      the period and after the notice specified in the last paragraph of this
      Section 6.1;




(4)  there
      shall be a default under any bond, debenture, note or other evidence of
      Indebtedness or under any mortgage, indenture or other instrument under which
      there may be issued or by which there may be secured or evidenced any
      Indebtedness of the Company or any Subsidiary, whether any such Indebtedness
      now
      exists or shall hereafter be created, if (a) either (i) such event of
      default results from the failure to pay any such Indebtedness at maturity or
      (ii) as a result of such event of default, the maturity of such
      Indebtedness has been accelerated prior to its stated maturity and such
      acceleration shall not be rescinded or annulled or the accelerated amount paid
      within ten days after notice to the Company of such acceleration, or such
      Indebtedness having been discharged and (b) the principal amount of such
      Indebtedness, together with the principal amount


exhibit
          4.2.1 Indenture
 **19**




of
      any
      other such Indebtedness in default for failure to pay principal or interest
      thereon, or the maturity of which has been so accelerated, aggregates $1,000,000
      or more;




(5)  the
      Company pursuant to or within the meaning of any Bankruptcy Law:




(a)  commences
      a voluntary case or proceeding,




(b)  consents
      to the entry of an order for relief against it in an involuntary case or
      proceeding,




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




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




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




(a)  for
      relief against the Company in an involuntary case or proceeding,




(b)  appointing
      a Custodian of the Company or for all or substantially all of its property,
      or




(c)  ordering
      the liquidation of the Company,




and
      the
      order or decree remains unstayed and in effect for 90 days.




A
      default
      under clause (3) is not an Event of Default until the Trustee notifies the
      Company, or the Holders of a majority in principal amount of the Securities
      then
      outstanding notify the Company and the Trustee in writing, of the default and
      the Company does not cure the default within 60 days after receipt of such
      notice. The notice must specify the default, demand that it be remedied and
      state that the notice is a "Notice of Default." The Trustee shall give such
      notice to the Company only if directed to do so in writing by the Holders of
      a
      majority in principal amount of the Securities then outstanding. Such notice
      by
      the Trustee shall not be deemed to be a certification by the Trustee as to
      whether an Event of Default has occurred.




exhibit
          4.2.1 Indenture
 **20**




SECTION 6.2  Acceleration .




If
      an
      Event of Default (other than an Event of Default specified in
      Section 6.1(5) or 6.1(6) occurs and is continuing, the Trustee by
      notice to the Company, or the Holders of a majority in principal amount of
      the
      Securities then outstanding by notice to the Company and the Trustee, may
      declare to be due and payable immediately the principal amount of the Securities
      plus accrued interest to the date of acceleration. Upon any such declaration,
      such amount shall be due and payable immediately, and upon payment of such
      amount all of the Company's obligations with respect to the Securities, other
      than obligations under Section 7.7, shall terminate. If an Event of Default
      specified in Section 6.1(5) or 6.1(6) occurs, all unpaid principal and
      accrued interest on the Securities then outstanding shall become and be
      immediately due and payable without any declaration or the act on the part
      of
      the Trustee or any Holder. The Holders of a majority in principal amount of
      the
      outstanding Securities by written notice to the Trustee may rescind an
      acceleration and its consequences if (x) all existing Events of Default,
      other than the non-payment of the principal of the Securities, which have become
      due solely by such declaration of acceleration, have been cured or waived,
      (y) to the extent the payment of such interest is lawful, interest on
      overdue installments of interest and overdue principal and premium, if any,
      which has become due otherwise than by such declaration of acceleration, has
      been paid, and (z) the rescission would not conflict with any judgment or
      decree of a court of competent jurisdiction. The Trustee may rely upon such
      notice of rescission without any independent investigation as to the
      satisfaction of conditions (x), (y) and (z).




SECTION 6.3  Other
      Remedies .




If
      an
      Event of Default occurs and is continuing, the Trustee may pursue any available
      remedy by proceeding at law or in equity to collect the payment of principal,
      and premium, if any, or interest on the Securities or to enforce the performance
      of any provision of the Securities or this Indenture.




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




SECTION 6.4  Waiver
      of Defaults and Events of Default .




Subject
      to Section 9.2, the Holders of a majority in principal amount of the
      Securities then outstanding, on behalf of all the Securityholders, by written
      notice to the Trustee may waive a Default or Event of Default with respect
      to
      the Securities and its consequences. When a Default or Event of Default is
      waived, it is considered to be cured


exhibit
          4.2.1 Indenture
 **21**




and
      ceases to exist; but no such waiver shall extend to any subsequent or other
      Default or Event of Default or impair any right consequent thereon.




SECTION 6.5  Control
      by Majority .




The
      Holders of a majority in principal amount of the Securities then outstanding
      may
      direct in writing the time, method and place of conducting any proceeding for
      any remedy available to the Trustee, or exercising any trust or power conferred
      on it. The Trustee, however, may refuse to follow any direction that conflicts
      with law or this Indenture, that the Trustee determines may be unduly
      prejudicial to the rights of other Securityholders, it being understood that
      (subject to Section 7.1) the Trustee shall have no duty to ascertain
      whether or not such actions or forbearances are unduly prejudicial to such
      Securityholders or that may involve the Trustee in personal liability or for
      which the Trustee does not have adequate indemnification pursuant to
      Sections 7.1(5) and 7.2(6); provided that,
      the Trustee may take any other action deemed proper by the Trustee which is
      not
      inconsistent with such direction.




SECTION 6.6  Rights
      of Holders to Receive Payment .




Subject
      to Article 11, notwithstanding any other provision of this Indenture, the
      right of any Securityholder to receive payment of principal of, premium, if
      any,
      and interest on the Security, on or after the respective due dates expressed
      in
      the Security, or to bring suit for the enforcement of any such payment on or
      after such respective dates, is absolute and unconditional and shall not be
      impaired or affected without the consent of the Holder.




Notwithstanding
      any other provision of this Indenture, the right of any Holder of any Security
      to convert such Security or to bring suit for the enforcement of such right
      shall not be impaired or affected without the written consent of the
      Holder.




SECTION 6.7  Collection
      Suit by Trustee .




If
      an
      Event of Default in payment of interest or principal, and premium, if any,
      specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee
      may recover judgment in its own name and as trustee of an express trust against
      the Company or any other obligor on the Securities for the whole amount of
      unpaid principal, and premium, if any, and accrued interest remaining unpaid
      on
      the Securities, together with interest on overdue principal, and premium, if
      any, and to the extent that payment of such interest is lawful, interest on
      overdue installments of interest, in each case at the rate borne by the
      Securities and such further amount as shall be sufficient to cover the costs
      and
      expenses of collection, including the reasonable compensation, expenses,
      disbursements and advances of the Trustee, its agents and counsel.




exhibit
          4.2.1 Indenture
 **22**




SECTION 6.8  Trustee
      May File Proofs of Claim .




The
      Trustee may file such proofs of claim and other papers or documents as may
      be
      necessary or advisable in order to have the claims of the Trustee (including
      any
      claim for the reasonable compensation, expenses, disbursements and advances
      of
      the Trustee, its agents and counsel) and the Holders of Securities allowed
      in
      any judicial proceedings relative to the Company (or any other obligor upon
      the
      Securities), its creditors or its property and shall be entitled and empowered
      to collect and receive any monies or other property payable or deliverable
      on
      any such claims and to distribute the same. Any Custodian in any such judicial
      proceeding is hereby authorized by each Securityholder to make such payments
      to
      the Trustee, and in the event that the Trustee shall consent to the making
      of
      such payments directly to the Holders of Securities, to pay to the Trustee
      any
      amount due to it for the reasonable compensation, expenses, disbursements and
      advances of the Trustee, its agents and counsel, and any other amounts due
      the
      Trustee under Section 7.7.




Nothing
      herein contained shall be deemed to authorize the Trustee to authorize or
      consent to or accept or adopt on behalf of any Securityholder any plan or
      reorganization, arrangement, adjustment or composition affecting the Securities
      or the rights of any Holder thereof, or to authorize the Trustee to vote in
      respect of the claim of any Securityholder in any such proceedings.




SECTION 6.9  Priorities .




If
      the
      Trustee collects any money pursuant to this Article 6, it shall pay out the
      money in the following order:




FIRST:  to
      the
      Trustee amounts due under Section 7.7;




SECOND:  to
      holders of any Senior Indebtedness as required by Article 11;
      and




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




FOURTH:  to
      the
      Company.




The
      Trustee may fix a record date and payment date for any payment to Holders of
      Securities pursuant to this Section 6.9.




exhibit
          4.2.1 Indenture
 **23**




SECTION 6.10  Undertaking
      for Costs .




In
      any
      suit for the enforcement of any right or remedy under this Indenture or in
      any
      suit against the Trustee for any action taken or omitted by it as Trustee,
      a
      court in its discretion may require the filing by any party litigant in the
      suit
      of an undertaking to pay the costs of the suit, and the court in its discretion
      may assess reasonable costs, including reasonable attorney's fees, against
      any
      party litigant in the suit, having due regard to the merits and good faith
      of
      the claims or defenses made by the party litigant. This Section 6.10 does
      not apply to a suit by the Trustee, a suit by a Holder pursuant to
      Section 6.6 or a suit by Holders of more than 10% in principal amount of
      the Securities then outstanding or a suit by any holder of Senior
      Indebtedness.




SECTION 6.11  Limitation
      on Suits .




A
      Securityholder may not pursue any remedy with respect to this Indenture or
      the
      Securities unless:




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




(2)  the
      Holders of at least 25% in aggregate principal amount of the Securities at
      the
      time outstanding make a written request to the Trustee to pursue the
      remedy;




(3)  such
      Holder or Holders offer to the Trustee reasonable security or indemnity against
      any loss, liability or expense satisfactory to the Trustee;




(4)  the
      Trustee does not comply with the request within 60 days after receipt of
      notice, the request and the offer of security or indemnity; and




(5)  the
      Holders of a majority in aggregate principal amount of the Securities at the
      time outstanding do not give the Trustee a direction inconsistent with the
      request during such 60-day period.




A
      Securityholder may not use this Indenture to prejudice the rights of any other
      Securityholder or to obtain a preference or priority over any other
      Securityholder.







exhibit
          4.2.1 Indenture
 **24**




ARTICLE 7




TRUSTEE




SECTION 7.1  Duties
      of Trustee .




(1)  The
      duties and responsibilities of the Trustee shall be as provided by the TIA.
      If
      an Event of Default has occurred and is continuing, the Trustee shall exercise
      its rights and powers vested in it by this Indenture and use the same degree
      of
      care and skill in their exercise as a prudent Person would exercise or use
      under
      the circumstances in the conduct of his own affairs.




(2)  Except
      during the continuance of an Event of Default and after the curing or waiving
      of
      all such Events of Default which may have occurred:




(a)  The
      Trustee need perform only those duties that are specifically set forth in this
      Indenture, and the Trustee shall not be liable except for the performance of
      such duties as are specifically set forth in this Indenture, and no others,
      and
      no implied covenants or obligation shall be read into this Indenture against
      the
      Trustee.




(b)  In
      the
      absence of bad faith on its part, the Trustee may conclusively rely, as to
      the
      truth of the statements and the correctness of the opinions expressed therein,
      upon any statements, certificates, documents or opinions furnished to the
      Trustee hereunder and conforming to the requirements of this Indenture. The
      Trustee, however, shall examine the certificates and opinions to determine
      whether or not they conform to the requirements of this Indenture.




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




(a)  This
      paragraph does not limit the effect of paragraph (2) of this
      Section 7.1.




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




(c)  The
      Trustee shall not be liable with respect to any action it takes or omits to
      take
      in good faith in accordance with a direction received by it pursuant to
      Section 6.5.


exhibit
          4.2.1 Indenture
 **25**




(d)  No
      provision of this Indenture shall require the Trustee to expend or risk its
      own
      funds or otherwise incur any financial liability in the performance of any
      of
      its duties hereunder or in the exercise of any of its rights or powers, if
      it
      shall have reasonable grounds for believing that repayment of such funds or
      adequate indemnity against such risk or liability is not reasonably assured
      to
      it.




(4)  Every
      provision of this Indenture that in any way relates to the Trustee is subject
      to
      paragraphs (1), (2) and (3) of this Section 7.1 and subject to
      Sections 315 and 316 of the TIA.




(5)  Subject
      to subsection (3), the Trustee may refuse to perform any duty or exercise
      any right or power unless, subject to the provisions of the TIA, it receives
      indemnity satisfactory to it against any loss, liability, expense or
      fee.




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




(7)  The
      Trustee shall not be liable for any action taken by it in good faith and
      reasonably believed by it to be within the discretion or powers conferred upon
      it, in good faith omitted to be taken by it and reasonably believed to be beyond
      the discretion or powers conferred upon it, taken by it pursuant to any
      direction or instruction by which it is governed hereunder, or omitted to be
      taken by it by reason of the lack of direction or instruction required hereby
      for such action; nor shall it be responsible for the consequences of any error
      of judgment reasonably made by it.




SECTION 7.2  Rights
      of Trustee .




(1)  The
      Trustee may rely on and shall be protected in acting or refraining from acting
      upon any document believed by it to be genuine and to have been signed or
      presented by the proper Person. The Trustee need not investigate any fact or
      matter stated in the document.




(2)  Before
      the Trustee acts or refrains from acting, it may require an Officers'
      Certificate or an Opinion of Counsel, or both, which shall conform to
      Section 12.5. The Trustee shall not be liable for any action it takes or
      omits to take in good faith in reliance on such Officers' Certificate or Opinion
      of Counsel.




(3)  The
      Trustee may act through agents or attorneys and shall not be responsible for
      the
      misconduct or negligence of such agents or attorneys appointed with due care
      and
      shall not be responsible for their supervision.




(4)  The
      Trustee shall not be liable for any action it takes or omits to take in good
      faith which it believes to be authorized or within its rights or
      powers.


exhibit
          4.2.1 Indenture
 **26**




(5)  The
      Trustee may consult with counsel and the written advice of such counsel or
      any
      Opinion of Counsel shall be full and complete authorization and protection
      in
      respect of any action taken, suffered or omitted by the Trustee hereunder in
      good faith and reliance thereon.




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




(7)  The
      Trustee may execute any of the powers hereunder or perform any duties hereunder,
      either directly or indirectly, or by or through agents or attorneys, and the
      Trustee shall not be responsible for any misconduct or negligence on the part
      of
      any agent or attorney appointed with due care by it hereunder. The rights,
      privileges, protections, immunities and benefits given to the Trustee,
      including, without limitation, its right to be indemnified, are extended to,
      and
      shall be enforceable by, the Trustee in each of its capacities hereunder, and
      each agent, custodian and other Person employed to act hereunder and each such
      other Person shall be bound by the duties and obligations of the Trustee
      hereunder.




SECTION 7.3  Individual
      Rights of Trustee .




The
      Trustee in its individual or any other capacity may become the owner or pledgee
      of Securities and may otherwise deal with the Company or its Affiliates with
      the
      same rights it would have if it were not Trustee. Any Agent may do the same
      with
      like rights. The Trustee, however, is subject to Sections 7.10 and
      7.11.




SECTION 7.4  Trustee's
      Disclaimer .




The
      Trustee makes no representation as to the validity or adequacy of this Indenture
      or the Securities, it shall not be accountable for the Company's use of the
      proceeds from the Securities, and it shall not be responsible for any statement
      of the Company in the Indenture or any statement in the Securities other than
      its certificate of authentication or in any document used in the sale of the
      Securities other than any statement in writing provided by the Trustee expressly
      for use in such document.




SECTION 7.5  Notice
      of Defaults .




If
      a
      Default or Event of Default occurs and is continuing and if it is actually
      known
      to the Trustee, the Trustee shall mail to each Holder of Securities notice
      of
      the Default or Event of Default within 90 days after it occurs. Except in
      the case of a default in payment of principal of, premium, if any, or interest
      on any Security, the Trustee may withhold the notice if and so long as a
      committee of its Trust Officers in good faith determines that withholding the
      notice is in the interests of Holders of Securities.


exhibit
          4.2.1 Indenture
 **27**




Notwithstanding
      anything to the contrary expressed in this Indenture, the Trustee shall not
      be
      deemed to have knowledge of any Event of Default hereunder unless and until
      a
      Trust Officer shall have actual knowledge thereof, or shall have received
      written notice thereof from the Company at its principal Corporate Trust Office
      as specified in Section 12.1. The Trustee shall not be deemed to have
      actual knowledge of an Event of Default hereunder and shall not be required
      to
      take notice of any Event of Default, except in the case of an Event of Default
      under Sections 6.1(1) or 6.1(2) (provided that the Trustee is the
      Paying Agent), until a Trust Officer receives written notice thereof from the
      Company or any Securityholder that such a Default or an Event of Default has
      occurred.




SECTION 7.6  Reports
      by Trustee to Holders .




Within
      60 days after each May 15 beginning with May 15 of the first year
      in which Securities are outstanding hereunder, the Trustee, if required by
      the
      provisions of TIA § 313(a), shall mail to each Securityholder a brief
      report dated as of January 15 of such year that complies with TIA
§ 313(a). The Trustee also shall comply with TIA § 313(b),
§ 313(c) and § 313(d).




A
      copy of
      each report at the time of its mailing to Securityholders shall be filed with
      the Commission and each securities exchange, if any, on which the Securities
      are
      listed. The Company agrees to notify the Trustee in writing whenever the
      Securities become listed or delisted on or from any securities
      exchange.




SECTION 7.7  Compensation
      and Indemnity .




The
      Company shall pay to the Trustee from time to time, and the Trustee shall be
      entitled to, such compensation for its services as shall be agreed to in writing
      between the Company and Trustee from time to time, and other reasonable
      compensation (which compensation shall not be limited by any provision of law
      in
      regard to the compensation of a trustee of an express trust). The Company shall
      reimburse the Trustee upon request for all reasonable disbursements, expenses
      and advances incurred or made by it. Such expenses may include, but shall not
      be
      limited to, the reasonable compensation, disbursements and expenses of the
      Trustee's agents and counsel.




The
      Company shall indemnify the Trustee for, and hold it harmless against, any
      loss
      or liability incurred by it in connection with the acceptance or administration
      of this trust, including without limitation the taking of any remedial action
      and the costs and expenses therewith and costs and expenses of defending itself
      against any claim or liability in connection with the Securities or the exercise
      or performance of any of its powers or duties hereunder. The Trustee shall
      notify the Company promptly of any claim asserted against the Trustee for which
      it may seek indemnity and the Company may elect by written notice to the Trustee
      to assume the defense of any such claim at the Company's expense with counsel
      reasonably satisfactory to the Trustee; provided,


exhibit
          4.2.1 Indenture
 **28**




however,
      that if the Trustee is advised by counsel that the interests of the Company
      and
      the Trustee conflict, the Trustee shall have the right to retain separate
      counsel.




The
      Company need not reimburse the Trustee for any expense or indemnify it against
      any loss or liability incurred by it solely by reason of the Trustee's
      negligence or willful misconduct. The Company shall not be liable for any
      settlement of any claim or action effected without the Company's consent, which
      consent shall not be unreasonably withheld. To secure the Company's payment
      obligations in this Section, the Trustee shall have a lien prior to the
      Securities on all money or property held or collected by the
      Trustee.




When
      the
      Trustee incurs expenses or renders services after an Event of Default specified
      in Section 6.1 occurs, the expenses and the compensation for the services
      are intended to constitute expenses of administration under any applicable
      bankruptcy or comparable law. The provisions of this Section shall survive
      termination of this Indenture.




SECTION 7.8  Replacement
      of Trustee .




A
      resignation or removal of the Trustee and appointment of a successor Trustee
      shall become effective only upon the successor Trustee's acceptance of
      appointment as provided in this Section 7.8.




The
      Trustee may resign by so notifying the Company. The Holders of a majority in
      principal amount of the Securities then outstanding may remove the Trustee
      by so
      notifying the Trustee and may appoint a successor Trustee with the Company's
      written consent. The Company may remove the Trustee if:




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




(2)  the
      Trustee is adjudged a bankrupt or an insolvent;




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




(4)  the
      Trustee otherwise becomes incapable of acting.




If
      the
      Trustee resigns or is removed or if a vacancy exists in the office of Trustee
      for any reason, the Company shall promptly appoint a successor
      Trustee.




If
      a
      successor Trustee does not take office within 45 days after the retiring
      Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
      of a majority in principal amount of the Securities then outstanding may
      petition any court of competent jurisdiction for the appointment of a successor
      Trustee at the expense of the Company.


exhibit
          4.2.1 Indenture
 **29**




If
      the
      Trustee fails to comply with Section 7.10, any Securityholder may petition
      any court of competent jurisdiction for the removal of the Trustee and the
      appointment of a successor Trustee.




A
      successor Trustee shall deliver a written acceptance of its appointment to
      the
      retiring Trustee and to the Company. Immediately after that, the retiring
      Trustee shall, upon payment of its fees and expenses, transfer all property
      held
      by it as Trustee to the successor Trustee, subject to the lien provided for
      in
      Section 7.7, the resignation or removal of the retiring Trustee shall
      become effective, and the successor Trustee shall have all the rights, powers
      and duties of the Trustee under this Indenture. Notwithstanding the replacement
      of the Trustee pursuant to this Section 7.8, the Company's obligations
      under Section 7.7 shall continue for the benefit of the retiring Trustee
      with respect to expenses and liabilities incurred by it and compensation earned
      by it prior to such replacement or otherwise or the Indenture. A successor
      Trustee shall mail notice of its succession to each Holder of
      Securities.




SECTION 7.9  Successor
      Trustee by Merger, etc.




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




SECTION 7.10  Eligibility;
      Disqualification .




This
      Indenture shall always have a Trustee who satisfies the requirements of TIA
      § 310(a)(1). The Trustee shall have a combined capital and surplus of at
      least $50,000,000 as set forth in its most recent published annual report of
      condition. The Trustee shall comply with TIA § 310(b), including the
      optional provision permitted by the second sentence of TIA
§ 310(b)(9).




SECTION 7.11  Preferential
      Collection of Claims Against Company .




The
      Trustee is subject to TIA § 311(a), excluding any creditor relationship
      listed in TIA § 311(b). A Trustee who has resigned or been removed shall be
      subject to TIA § 311(a) to the extent indicated therein.







ARTICLE 8




SATISFACTION
      AND DISCHARGE OF INDENTURE




SECTION 8.1  Satisfaction,
      Discharge and Defeasance of the Securities .




The
      Company shall be deemed to have paid and discharged the entire indebtedness
      on
      the Securities after the date of the deposit referred to in paragraph (1)
      below, the provisions of this Indenture shall no longer be in effect in respect
      of the Securities, and the Trustee, at the expense of the Company, shall execute
      proper


exhibit
          4.2.1 Indenture
 **30**




instruments
      acknowledging satisfaction and discharge of such indebtedness; provided that the
      following conditions shall have been satisfied:




(1)  the
      Company has deposited or caused to be deposited with the Trustee irrevocably
      as
      trust funds in trust, specifically pledged as security for, and dedicated solely
      to, the benefit of the Holders of the Securities, with reference to this
      Section 8.1, (a) money or (b) U.S. Government Obligations or
      (c) a combination thereof, sufficient, in the opinion of a nationally
      recognized independent registered public accounting firm expressed in a written
      certification thereof delivered to the Trustee, to pay and discharge the entire
      indebtedness on all the Securities for principal, premium, if any, and interest,
      if any, to the maturity date of the Securities as such principal, premium,
      if
      any, or interest becomes due and payable in accordance with the terms of this
      Indenture and the Securities;




(2)  the
      Company has paid or caused to be paid all other sums payable hereunder by the
      Company in connection with all of the Securities, including all fees and
      expenses of the Trustee; and




(3)  the
      Company has delivered to the Trustee an Opinion of Counsel and an Officers'
      Certificate, each stating that all conditions precedent herein provided for
      relating to the satisfaction and discharge of the entire Indebtedness on the
      Securities and the discharge of this Indenture and the termination of the
      Company's obligations hereunder have been complied with.




"U.S.
      Government Obligations" means direct, non-callable obligations of, or
      non-callable obligations guaranteed by, the United States for the timely payment
      of which obligation or guarantee the full faith and credit of the United States
      is pledged.




SECTION 8.2  Satisfaction
      and Discharge of Indenture .




In
      addition to its rights under Section 8.1, the Company may terminate all of
      its obligations under this Indenture when:




(1)  all
      of
      the Securities theretofore authenticated and delivered (other than
      (a) Securities which have been destroyed, lost or stolen and which have
      been replaced or paid as provided in Section 2.7 hereof and
      (b) Securities for whose payment money has theretofore been deposited with
      the Trustee or the Paying Agent in trust or segregated and held in trust by
      the
      Company and thereafter repaid to the Company or discharged from such trust,
      as
      provided in Section 2.4 and Section 8.6 hereof) have been delivered to
      the Trustee for cancellation; and


exhibit
          4.2.1 Indenture
 **31**




(2)  the
      Company has paid or caused to be paid all other sums payable hereunder by the
      Company in connection with the outstanding Securities, including all fees and
      expenses of the Trustee.




SECTION 8.3  Survival
      of Certain Obligations .




Notwithstanding
      the satisfaction and discharge of this Indenture pursuant to Section 8.1,
      the respective obligations of the Company specified in Sections 2.3, 2.4,
      2.5, 2.6, 2.11, 4.1, 7.7, 8.5, 8.6, 8.7 and in Article 10 shall survive
      until the Securities are no longer outstanding, and after the Securities are
      no
      longer outstanding, or upon compliance with Section 8.2, only the
      obligations of the Company in such Sections 7.7 and 8.6 shall survive.
      Nothing contained in this Article 8 shall abrogate any of the obligations
      or duties of the Trustee under this Indenture.




SECTION 8.4  Application
      of Trust Money .




(1)  Subject
      to the provisions of Section 8.6, all money and U.S. Government
      Obligations deposited with the Trustee for the Securities pursuant to
      Section 8.1 or Section 8.2, and all money received by the Trustee in
      respect of U.S. Government Obligations deposited with the Trustee for the
      Securities pursuant to Section 8.1 or Section 8.2 shall be held in
      trust and reinvested by the Trustee in (a) U.S. Government Obligations
      or (b) beneficial interests in one or more mutual funds which invest solely
      in U.S. Government Obligations and which are rated in the highest
      applicable rating category by a nationally-recognized statistical rating
      organization in accordance with the Company's written instructions and applied
      by the Trustee in accordance with the provisions of the Securities and this
      Indenture, to the payment, either directly or through any Paying Agent
      (including the Company or any Subsidiary acting as Paying Agent) as the Trustee
      may determine, to the Persons entitled thereto, of the principal, premium,
      if
      any, and interest, if any, on the Securities; but such money need not be
      segregated from other funds except to the extent required by law. Money and
      U.S. Obligations so held in trust are not subject to the subordination
      provisions of Article 11.




(2)  The
      Trustee shall deliver or pay to the Company from time to time upon the Company's
      written request any U.S. Government Obligations or money held by it as
      provided in Section 8.1 or Section 8.2 which, in the written opinion
      of a nationally recognized independent registered public accounting firm
      expressed in a written certification thereof delivered to the Trustee, are
      then
      in excess of the amount thereof which then would have been required to be
      deposited for the purpose for which such U.S. Government Obligations, or
      money, were deposited or received.




SECTION 8.5  Paying
      Agent to Repay Monies Held .




Upon
      the
      satisfaction and discharge of this Indenture, all monies then held by any Paying
      Agent under the provisions of this Indenture shall, upon written demand of


exhibit
          4.2.1 Indenture
 **32**




the
      Company, be repaid to it or paid to the Trustee, and thereupon such Paying
      Agent
      shall be released from all further liability with respect to such
      monies.




SECTION 8.6  Return
      of Unclaimed Monies .




Any
      monies deposited with or paid to the Trustee or any Paying Agent for the
      Securities, or then held by the Company in trust, for the payment of any
      principal, premium, if any, and interest, if any, on the Securities and not
      applied but remaining unclaimed by the Holders of the Securities for two years
      after the date upon which the principal of, premium, if any, and interest,
      if
      any, on the Securities, as the case may be, shall have become due and payable,
      shall, unless otherwise required by mandatory provisions of applicable escheat
      or abandoned or unclaimed property law, be repaid to the Company by such Trustee
      or any Paying Agent on written demand by the Company or (if then held by the
      Company or any Affiliate) shall be discharged from such trust; and the Holders
      of the Securities entitled to receive such payment shall thereafter look only
      to
      the Company for the payment thereof; provided , however ,
      that,
      before being required to make any such repayment, the Trustee may, or shall
      at
      the written request of the Company, at the expense of the Company, cause to
      be
      published once in an authorized newspaper in the same city in which the place
      of
      payment with respect to the Securities shall be located and in an authorized
      newspaper in the City of New York, or mail to each such Holder, a notice (in
      such form as may be deemed appropriate by the Trustee) that said monies remain
      unclaimed and that, after a date named therein, any unclaimed balance of said
      monies then remaining will be returned to the Company.




SECTION 8.7  Reinstatement .




If
      the
      Trustee or Paying Agent is unable to apply any money or U.S. Government
      Obligations in accordance with Section 8.1 by reason of any legal
      proceeding or by reason of any order or judgment of any court or governmental
      authority enjoining, restraining or otherwise prohibiting such application,
      the
      Company's obligations under this Indenture and the Securities shall be revived
      and reinstated as though no deposit had occurred pursuant to Section 8.1
      until such time as the Trustee or Paying Agent is permitted to apply all such
      money or U.S. Government Obligations in accordance with Section 8.4; provided , however ,
      that if
      the Company has made any payment of principal of, premium, if any, or interest
      on the Securities because of the reinstatement of its obligations, the Company
      shall be subrogated to the rights of the Holders of such Securities to receive
      such payment from the money or U.S. Government Obligations held by the
      Trustee or Paying Agent.







exhibit
          4.2.1 Indenture
 **33**




ARTICLE 9




AMENDMENTS
      AND WAIVERS




SECTION 9.1  Amendments
      and Waivers Without Consent of Holders .




The
      Company, when authorized by Board Resolution, and the Trustee at any time and
      from time to time, may amend or supplement this Indenture, (any such amendment
      or supplement to be in a form satisfactory to the Trustee) or the Securities
      without notice to or consent of any Securityholder for any of the following
      purposes:




(1)  to
      comply
      with Section 5.1; or




(2)  to
      provide for uncertificated Securities in addition to or in place of certificated
      Securities; or




(3)  to
      cure
      any ambiguity, defect or inconsistency, or to make any other change that does
      not adversely affect the interests of the Holders of Securities in any material
      respect; or




(4)  to
      add to
      the covenants of the Company, for the benefit of the Holders or to surrender
      any
      right or power herein conferred upon the Company; or




(5)  to
      add
      any Event of Default.




The
      Trustee shall be entitled to receive upon request an Opinion of Counsel to
      its
      satisfaction with respect to any supplement to this Indenture without consent
      of
      the Holders that all conditions precedent have been satisfied.




SECTION 9.2  Amendments
      and Waivers with Consent of Holders .




With
      the
      written consent of the Holders of not less than 66-2/3% in aggregate principal
      amount of the Securities at the time outstanding, the Company, when authorized
      by Board Resolution, and the Trustee may amend or supplement this Indenture
      (any
      such amendment or supplement to be in a form satisfactory to the Trustee) or
      the
      Securities for the purpose of adding any provisions to or changing in any manner
      or eliminating any of the provisions of this Indenture or of any supplemental
      indenture or of modifying in any manner the rights of the Holders of the
      Securities. The Holders of a majority in principal amount of the Securities
      then
      outstanding may waive compliance in a particular instance by the Company with
      any provision of this Indenture or the Securities without notice to any
      Securityholder. Subject to Section 9.4, without the consent of each Holder
      of Securities affected, however, an amendment, supplement or waiver, including
      a
      waiver pursuant to Section 6.4, may not:




(1)  reduce
      the amount of Securities whose Holders must consent to an amendment or
      waiver;


exhibit
          4.2.1 Indenture
 **34**




(2)  reduce
      the rate of or extend the time for payment of interest on any
      Security;




(3)  reduce
      the principal of or extend the fixed maturity of any Security;




(4)  waive
      (except unless theretofore cured) a default in the payment of the principal
      of
      (and premium, if any on), interest on or redemption amounts with respect to
      any
      Security;




(5)  make
      any
      Security payable in currency other than that stated in the
      Security;




(6)  make
      any
      change in Sections 6.4, 6.6 or 9.2;




(7)  make
      any
      change that adversely affects the right to convert any Security; or




(8)  make
      any
      change in Article 11 that adversely affects the rights of any
      Securityholder.




To
      secure
      a consent of the Holders under this Section, it shall not be necessary for
      the
      Holders to approve the particular form of any proposed amendment or waiver;
      rather, it shall be sufficient if such consent approves the substance
      thereof.




After
      an
      amendment under this Section becomes effective, the Company shall mail to
      Securityholders a notice briefly describing such amendment.




SECTION 9.3  Compliance
      with Trust Indenture Act .




Every
      amendment or supplement to this Indenture or the Securities shall comply with
      the TIA as then in effect.




SECTION 9.4  Revocation
      and Effect of Consents .




Subject
      to this Indenture, each amendment, supplement or waiver evidencing other action
      shall become effective in accordance with its terms. Until an amendment,
      supplement or waiver becomes effective, a consent to it by a Holder of a
      Security is a continuing consent by the Holder even if notation of the consent
      is not made on any Security. Any such Holder or subsequent Holder, however,
      may
      revoke the consent as to his Security or portion of a Security, if the Trustee
      receives the notice of revocation before the date the amendment, waiver or
      other
      action becomes effective.




The
      Company may, but shall not be obligated to, fix a record date for the purpose
      of
      determining the Holders entitled to consent to any amendment, supplement or
      waiver. If a record date is fixed, then notwithstanding the provisions of the
      immediately preceding paragraph, those Persons who were Holders at such record
      date (or their duly


exhibit
          4.2.1 Indenture
 **35**




designated
      proxies) and only those Persons, shall be entitled to consent to such amendment,
      supplement or waiver or to revoke any consent previously given, whether or
      not
      such Persons continue to be Holders after such record date. No consent shall
      be
      valid or effective for more than 90 days after such record date unless
      consent from Holders of the principal amount of Securities then outstanding
      required hereunder for such amendment, supplement or waiver to be effective
      shall have also been given and not revoked within such 90-day
      period.




After
      an
      amendment, waiver or other action becomes effective, pursuant to
      Section 9.1 or Section 9.2, as the case may be, it shall bind every
      Holder of a Security.




SECTION 9.5  Notation
      on or Exchange of Securities .




If
      an
      amendment, supplement or waiver changes the terms of a Security, the Trustee
      may
      request the Holder of the Security to deliver it to the Trustee. The Trustee
      may
      place an appropriate notation on the Security about the changed terms and return
      it to the Holder. Alternatively, if the Company or the Trustee so determine,
      the
      Company in exchange for the Security shall issue and the Trustee shall
      authenticate a new Security that reflects the changed terms the cost and expense
      of which will be borne by the Company.




SECTION 9.6  Trustee
      to Sign Amendments, etc.




The
      Trustee need not sign any amendment that adversely affects its rights or
      interests, as determined by the Trustee in its sole discretion. In signing
      or
      refusing to sign any amendment the Trustee shall be entitled to receive and
      shall be fully protected in relying upon, an Opinion of Counsel stating that
      such amendment is authorized or permitted by this Indenture. The Company may
      not
      sign an amendment until its Board of Directors approves it.







ARTICLE 10




CONVERSION
      OF SECURITIES




SECTION 10.1  Right
      of Conversion; Conversion Price .




Subject
      to the provisions of Section 7 of the Securities, the Holder of any
      Security or Securities shall have the right, at such Holder's option, at any
      time before the close of business on July 1, 2008, to convert, subject to
      the terms and provisions of this Article 10, the principal of any such
      Security or Securities or any portion thereof which is $1,000 principal amount
      or an integral multiple thereof into shares of common stock of the Company,
      par
      value $.0001 per share ("Common Stock"), initially at the conversion price
      per
      share of $22.00 or, in case an adjustment of such price has taken place pursuant
      to the provisions of Section 10.4, then at the price as last adjusted (such
      price or adjusted price being referred to herein as the "conversion price"),
      upon surrender of the Security or Securities, the principal of which is so
      to be
      converted, accompanied by written notice of


exhibit
          4.2.1 Indenture
 **36**




conversion
      duly executed, to the Company, at any time during usual business hours at the
      office or agency maintained by it for such purpose, and, if so required by
      the
      Conversion Agent or Registrar, accompanied by a written instrument or
      instruments of transfer in form satisfactory to the Conversion Agent or
      Registrar duly executed by the Holder or his duly authorized representative
      in
      writing. For convenience, the conversion of any portion of the principal of
      any
      Security or Securities into shares of Common Stock is hereinafter sometimes
      referred to as the conversion of such Security or Securities.




SECTION 10.2  Issuance
      of Shares on Conversion .




As
      promptly as practicable after the surrender, as herein provided, of any Security
      or Securities for conversion, the Company shall deliver or cause to be delivered
      at its said office or agency, to or upon the written order of the Holder of
      the
      Security or Securities so surrendered, certificates representing the number
      of
      fully paid and nonassessable shares of Common Stock into which such Security
      or
      Securities may be converted in accordance with the provisions of this
      Article 10. Such conversion shall be deemed to have been made as of the
      close of business on the date that such Security or Securities shall have been
      surrendered for conversion by delivery thereof with a written notice of
      conversion duly executed, so that the rights of the Holder of such Security
      or
      Securities as a Securityholder shall cease at such time and, subject to the
      following provisions of this paragraph, the Person or Persons entitled to
      receive the shares of Common Stock upon conversion of such Security or
      Securities shall be treated for all purposes as having become the record holder
      or holders of such shares of Common Stock at such time and such conversion
      shall
      be at the conversion price in effect at such time; provided , however ,
      that no
      such surrender on any date when the stock transfer books of the Company shall
      be
      closed shall be effective to constitute the Person or Persons entitled to
      receive the shares of Common Stock upon such conversion as the record holder
      or
      holders of such shares of Common Stock on such date, but such surrender shall
      be
      effective to constitute the Person or Persons entitled to receive such shares
      of
      Common Stock as the record holder or holders thereof for all purposes at the
      close of business on the next succeeding day on which such stock transfer books
      are open; and provided , further ,
      that in
      such event such conversion shall be at the conversion price in effect on the
      date that such Security or Securities shall have been surrendered for conversion
      by delivery thereof, as if the stock transfer books of the Company had not
      been
      closed. The Company shall give or cause to be given to the Trustee written
      notice whenever the stock transfer books of the Company shall be
      closed.




Upon
      Conversion of any Security which is converted in part only, the Company shall
      execute and the Trustee shall authenticate and deliver to or on the order of
      the
      Holder thereof, at the expense of the Company, a new Security or Securities
      of
      authorized denominations in principal amount equal to the unconverted portion
      of
      such Security.




exhibit
          4.2.1 Indenture
 **37**




SECTION 10.3  No
      Adjustment for Interest or Dividends .




No
      payment or adjustment in respect of interest on the Securities or dividends
      on
      the shares of Common Stock shall be made upon the conversion of any Security
      or
      Securities; provided , however ,
      that if
      a Security or any portion thereof shall be converted subsequent to any regular
      record date and on or prior to the next succeeding interest payment date, the
      interest falling due on such interest payment date shall be payable on such
      interest payment date notwithstanding such conversion, and such interest
      (whether or not punctually paid or duly provided for) shall be paid to the
      Person in whose name such Security is registered at the close of business on
      such regular record date and Securities surrendered for conversion during the
      period from the close of business on any regular record date to the opening
      of
      business on the corresponding interest payment date must be accompanied by
      payment of an amount equal to the interest payable on such interest payment
      date.




SECTION 10.4  Adjustment
      of Conversion Price .




(1)  In
      case
      the Company shall pay or make a dividend or other distribution on any class
      of
      Capital Stock of the Company in shares of Common Stock, the conversion price
      in
      effect at the opening of business on the day following the date fixed for the
      determination of shareholders entitled to receive such dividend or other
      distribution shall be reduced by multiplying such conversion price by a fraction
      of which the numerator shall be the number of shares of Common Stock outstanding
      at the close of business on the date fixed for such determination and the
      denominator shall be the sum of such number of shares and the total number
      of
      shares constituting such dividend or other distribution, such reduction to
      become effective immediately after the opening of business on the day following
      the date fixed for such determination.




(2)  In
      case
      the Company shall issue rights or warrants to all or substantially all holders
      of its shares of Common Stock entitling them to subscribe for or purchase shares
      of Common Stock (or securities convertible into or exchangeable for Common
      Stock) at a price per share (or having a conversion or exchange price per share)
      less than the current market price per share (determined as provided in
      paragraph (6) of this Section 10.4) of the shares of Common Stock on
      the date fixed for the determination of shareholders entitled to receive such
      rights or warrants, the conversion price in effect at the opening of business
      on
      the day following the date fixed for such determination shall be reduced by
      multiplying such conversion price by a fraction of which the numerator shall
      be
      the number of shares of Common Stock outstanding at the close of business on
      the
      date fixed for such determination plus the number of shares of Common Stock
      which the aggregate of the subscription price of the total number of shares
      of
      Common Stock so offered for subscription or purchase (or the aggregate
      conversion of exchange price of the convertible or exchangeable securities
      so
      offered) would purchase at such current market price and the denominator shall
      be the number of shares of Common Stock outstanding at the close of business
      on
      the date fixed for such determination plus the number of shares of Common Stock
      so offered for subscription or


exhibit
          4.2.1 Indenture
 **38**




purchase,
      such reduction to become effective immediately after the opening of business
      on
      the day following the date fixed for such determination. In the event that
      all
      of the shares of Common Stock subject to such rights or warrants have not been
      issued when such rights or warrants expire, then the conversion price shall
      promptly be readjusted to the conversion price which would then be in effect
      had
      the adjustment upon the issuance of such rights or warrants been made on the
      basis of the actual number of shares of Common Stock issued upon the exercise
      of
      such rights or warrants. For the purposes of this paragraph (2), the number
      of shares of Common Stock at any time outstanding shall not include shares
      held
      in the treasury of the Company but shall include shares issuable in respect
      of
      scrip certificates issued in lieu of fractions of shares of Common Stock. The
      Company will not issue any rights or warrants in respect of shares of Common
      Stock held in the treasury of the Company.




(3)  In
      case
      the outstanding shares of Common Stock shall be subdivided into a greater number
      of shares, the conversion price in effect at the opening of business on the
      day
      following the day upon which such subdivision becomes effective shall be
      proportionately reduced, and, conversely, in case outstanding shares of Common
      Stock shall each be combined into a smaller number of shares, the conversion
      price in effect at the opening of business on the day following the day upon
      which such combination becomes effective shall be proportionately increased,
      such reduction or increase, as the case may be, to become effective immediately
      after the opening of business on the day following the day upon which such
      subdivision or combination becomes effective.




(4)  In
      case
      the Company shall, by dividend or otherwise, distribute to all or substantially
      all holders of shares of Common Stock evidences of indebtedness or assets
      (including securities, but excluding any (a) rights or warrants referred to
      in paragraph (2) of this Section 10.4, (b) any dividend or
      distribution not prohibited by Section 4.6 hereof and (c) any dividend
      or distribution referred to in paragraph (1) of this Section 10.4),
      the conversion price shall be adjusted so that the same shall equal the price
      determined by multiplying the conversion price in effect immediately prior
      to
      the close of business on the day fixed for the determination of shareholders
      entitled to receive such distribution by a fraction of which the numerator
      shall
      be the current market price per share (determined as provided in
      paragraph (6) of this Section) of the shares of Common Stock on the date
      fixed for such determination less the then fair market value as determined
      by
      the Board of Directors of the Company (whose determination shall be conclusive
      and described in a resolution of the Board of Directors of the Company filed
      with the Trustee) of the portion of the assets or evidences of indebtedness
      so
      distributed allocable to one share of Common Stock and the denominator shall
      be
      such current market price per share of the shares of Common Stock, such
      adjustment to become effective immediately prior to the opening of business
      on
      the day following the date fixed for the determination of shareholders entitled
      to receive such distribution.




(5)  In
      case
      the shares of Common Stock shall be changed into the same or a different number
      of shares of any class or classes of stock, whether by capital


exhibit
          4.2.1 Indenture
 **39**




reorganization,
      reclassification, or otherwise (other than a subdivision or combination of
      shares or a stock dividend described in paragraph (1) or (3) of this
      Section 10.4, or a consolidation, merger or sale of assets described in
      Section 10.10), then and in each such event the Holders of Securities shall
      have the right thereafter to convert such Securities into the kind and amount
      of
      shares of stock and other securities and property receivable upon such
      reorganization, reclassification or other change, by holders of the number
      of
      shares of Common Stock into which such Securities might have been converted
      immediately prior to such reorganization, reclassification or
      change.




(6)  For
      the
      purpose of any computation under paragraphs (2) and (4) for this
      Section, the current market price per share of Common Stock on any date shall
      be
      deemed to be the average of the Closing Prices for the 15 consecutive
      Business Days selected by the Company commencing not more than 30 and not less
      than 20 Business Days before the date in question.




(7)  No
      adjustment in the conversion price shall be required unless such adjustment
      (plus any adjustments not previously made by reason of this paragraph (7))
      would require an increase or decrease of at least 1% in such price; provided , however ,
      that
      any adjustments which by reason of this paragraph (7) are not required to
      be made shall be carried forward and taken into account in any subsequent
      adjustment. All calculations under this paragraph (7) shall be made to the
      nearest cent.




(8)  The
      Company may, but shall not be required to, make such reductions in the
      conversion price, in addition to those required by paragraphs (1), (2),
      (3), (4) and (5) of this Section 10.4 as the Company's Board of
      Directors considers to be advisable in order to avoid or diminish any income
      tax
      to any holders of shares of Common Stock resulting from any dividend or
      distribution of stock or issuance of rights or warrants to purchase or subscribe
      for stock or from any event treated as such for income tax purposes or for
      any
      other reasons. The Board of Directors shall have the power to resolve any
      ambiguity or correct any error in the adjustments made pursuant to this
      Section 10.4 and its actions in so doing shall be final and
      conclusive.




(9)  The
      adjustments provided for in this Section 10.4 shall be made successively
      whenever any event listed above shall occur.




SECTION 10.5  Notice
      of Adjustment of Conversion Price .




Whenever
      the conversion price for the Securities is adjusted as herein
      provided:




(1)  the
      Company shall compute the adjusted conversion price in accordance with
      Section 10.4 and shall prepare an Officers' Certificate setting forth the
      adjusted conversion price and showing in reasonable detail the facts upon which
      such adjustment is based and the computation thereof, and such certificate
      shall
      forthwith be filed at each office or agency


exhibit
          4.2.1 Indenture
 **40**




maintained
      for the purpose of conversion of the Securities pursuant to Section 2.4 and
      with the Trustee; and




(2)  a
      notice
      stating that the conversion price has been adjusted and setting forth the
      adjusted conversion price shall as soon as practicable be mailed by the Company
      to all Holders of the Securities at their last addresses as they shall appear
      in
      the Security Register.




(3)  If
      the
      conversion price is adjusted and the Company fails to file an Officers'
      Certificate with the Trustee as provided by Section 10.5(1) and the Trustee
      is acting as the Conversion Agent, the Trustee shall be entitled to rely
      conclusively on the conversion price set forth in the Officers' Certificate
      most
      recently received by the Trustee (or as set forth in the Securities and this
      Indenture if the conversion price shall not have been adjusted).




SECTION 10.6  Notice
      of Certain Corporate Action .




(1)  In
      case:




(a)  the
      Company shall authorize the granting to holders of its shares of Common Stock
      of
      rights or warrants entitling them to subscribe for or purchase any shares of
      Capital Stock of any class or of any other rights; or




(b)  of
      any
      reclassification of the shares of Common Stock of the Company, or of any
      consolidation or merger to which the Company is a party and for which approval
      of any shareholders of the Company is required, or of the sale or transfer
      of
      all or substantially all of the assets of the Company; or




(c)  of
      the
      voluntary or involuntary dissolution, liquidation or winding up of the
      Company;




then
      the
      Company shall cause to be filed at each office or agency maintained for the
      purpose of conversion of the Securities pursuant to Section 2.3 and shall
      cause to be mailed to the Trustee and all Holders of the Securities at their
      last addresses as they shall appear in the Security Register, at least
      20 days (or 10 days in any case specified in clause (a) or
      (b) above) prior to the applicable record date hereinafter specified, a
      notice stating (x) the date on which a record is to be taken for the
      purpose of such dividend, distribution, rights or warrants, or, if a record
      is
      not to be taken, the date as of which the Holders of shares of Common Stock
      of
      record to be entitled to such dividend, distribution, rights or warrants are
      to
      be determined, or (y) the date on which such reclassification,
      consolidation, merger, sale, transfer, dissolution, liquidation or winding
      up is
      expected to become effective, and the date as of which it is expected that
      holders of shares of Common Stock of record shall be entitled to exchange their
      shares of Common


exhibit
          4.2.1 Indenture
 **41**




Stock
      for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer, dissolution, liquidation or winding
      up.
      Such notice shall also state whether such transaction will result in any
      adjustment in the conversion price applicable to the Securities and, if so,
      shall state what the adjusted conversion price will be and when it will become
      effective. Neither the failure to give the notice required by this Section,
      nor
      any defect therein, to any particular Holder shall affect the sufficiency of
      the
      notice or the legality or validity of any such dividend, distribution, right,
      warrant, reclassification, consolidation, merger, sale, transfer, liquidation,
      dissolution or winding-up, or the vote on any action authorizing such with
      respect to the other holders.




(2)  In
      case
      the Company or any Affiliate of the Company shall propose to engage in a
      "Rule 13e-3 Transaction" as defined in the Commission's Rule 13e-3
      under the Exchange Act, the Company shall, no later than the date on which
      any
      information with respect to such Rule 13e-3 Transaction is first required
      to be given to the Commission or any other Person pursuant to such
      Rule 13e-3, cause to be mailed to all Holders at their last addresses as
      they shall appear in the Security Register, a copy of all information required
      to be given to the holders of the Company's Capital Stock pursuant to such
      Rule 13e-3. The information required to be given under this paragraph shall
      be in addition to and not in lieu of any other information required to be given
      by the Company pursuant to this Section 10.6 or any other provision of the
      Securities or this Indenture.




SECTION 10.7  Taxes
      on Conversions .




The
      Company will pay any and all stamp or similar taxes that may be payable in
      respect of the issuance or delivery of shares of Common Stock on conversion
      of
      the Securities pursuant hereto. The Company shall not, however, be required
      to
      pay any tax which may be payable in respect of any transfer involved in the
      issuance and delivery of shares of Common Stock in a name other than that of
      the
      Holder of the Security or Securities to be converted, and no such issuance
      or
      delivery shall be made unless and until the Person requesting such issuance
      has
      paid to the Company the amount of any such tax, or has established to the
      satisfaction of the Company that such tax has been paid.




SECTION 10.8  Fractional
      Shares .




No
      fractional shares or scrip representing fractional shares shall be issued upon
      any conversion of the Securities. If any such conversion would otherwise require
      the issuance of a fractional share an amount equal to such fraction multiplied
      by the current market price per share of Common Stock (determined as provided
      in
      paragraph (6) of Section 10.4) on the last trading day prior to the
      date of conversion shall be paid to the Holder in cash by the
      Company.




exhibit
          4.2.1 Indenture
 **42**




SECTION 10.9  Cancellation
      of Converted Securities .




All
      Securities delivered for conversion shall be delivered to the Trustee or the
      Conversion Agent to be canceled by or at the direction of the Trustee or the
      Conversion Agent, which shall dispose of the same as provided in
      Section 2.10.




SECTION 10.10  Provisions
      in Case of Consolidation, Merger or Sale of Assets .




(1)  In
      case
      of any consolidation of the Company with, or merger of the Company into, any
      Person, or in case of any merger of another Person into the Company (other
      than
      a consolidation or merger which does not result in any reclassification,
      conversion, exchange or cancellation of outstanding shares of Common Stock),
      or
      in case of any sale or transfer of all or substantially all of the assets of
      the
      Company, the Person formed by such consolidation or resulting from such merger
      or which acquires such assets, as the case may be, shall execute and deliver
      to
      the Trustee a supplemental indenture providing that the Holder of each Security
      then outstanding shall have the right thereafter, during the period such
      Security shall be convertible as specified in Section 10.1 to convert such
      Security only into the kind and amount of securities, cash and other property
      receivable upon such consolidation, merger, sale or transfer by a holder of
      the
      number of shares of Common Stock into which such Security might have been
      converted immediately prior to such consolidation, merger, sale or transfer.
      Such supplemental indenture shall provide for adjustments which, for events
      subsequent to the effective date of such supplemental indenture, shall be as
      nearly equivalent as may be practicable to the adjustments provided for in
      this
      Article 10. The above provisions of this Section 10.10 shall similarly
      apply to successive consolidations, mergers, sales or transfers.




(2)  The
      Trustee shall not be under any responsibility to determine the correctness
      of
      any provisions contained in any such supplemental indenture relating either
      to
      the kind or amount of shares of stock or securities or property receivable
      by
      Holders upon the conversion of their Securities after any such reclassification,
      change, consolidation, merger, sale or conveyance or to any adjustment to be
      made with respect thereto.




SECTION 10.11  Disclaimer
      by Trustee of Responsibility for Certain Matters .




The
      Trustee and each Conversion Agent (other than the Company or any Subsidiary)
      shall not at any time be under any duty or responsibility to any Holder of
      the
      Securities to determine whether any facts exist which may require any adjustment
      of the conversion price, how it should be calculated or what it should be,
      or
      with respect to the nature or extent of any such adjustment when made, or with
      respect to the method employed, or herein or in any supplemental indenture
      provided to be employed, in making the same. The Trustee and each Conversion
      Agent (other than the Company or any Subsidiary) shall not be accountable with
      respect to the validity, value, kind or amount of any shares of Common Stock,
      or
      of any securities or property, which may at


exhibit
          4.2.1 Indenture
 **43**




any
      time
      be issued or delivered upon the conversion of any Security; and it makes no
      representation with respect thereto. The Trustee and each Conversion Agent
      (other than the Company or any Subsidiary) shall not be responsible for any
      failure of the Company to issue, transfer or deliver any shares of Common Stock
      or stock certificates or other securities or property upon the surrender of
      any
      Security for the purpose of conversion or, subject to Section 7.1, to
      comply with any of the covenants of the Company contained in this
      Article 10.




SECTION 10.12  Covenant
      to Reserve Shares .




The
      Company covenants that it will at all times reserve and keep available, free
      from preemptive rights, out of its authorized shares of Common Stock, solely
      for
      the purpose of issuance upon conversion of the Securities as herein provided,
      such number of shares of Common Stock as shall then be issuable upon the
      conversion of all outstanding Securities. The Company covenants that all shares
      of Common Stock which shall be so issuable shall be, when issued, duly and
      validly issued and fully paid and non-assessable. For purposes of this
      Section 10.12, the number of shares of Common Stock which shall be
      deliverable upon the conversion of all outstanding Securities shall be computed
      as if at the time of computation all outstanding Securities were held by a
      single holder.







ARTICLE 11




SUBORDINATION;
      SENIORITY




SECTION 11.1  Securities
      Subordinated to Senior Indebtedness .




(1)  The
      Company agrees, and each Holder of the Securities by his acceptance thereof
      likewise agrees, that the payment of the principal of, premium, if any, and
      interest on the Securities (all of the foregoing, a "Payment or Distribution")
      is subordinated and junior in right of payment, to the extent and in the manner
      provided in this Article 11, except as provided in Article 8, to the
      prior payment in full in cash of all Senior Indebtedness whether outstanding
      on
      the date hereof or hereafter created, incurred, assumed or
      guaranteed.




A
      Payment
      or Distribution shall include any asset of any kind or character, and may
      consist of cash, securities or other property, by set-off or otherwise, and
      shall include, without limitation, any purchase, redemption or other acquisition
      of Securities or the making of any deposit of funds or securities pursuant
      to
      this Indenture (including, without limitation, any deposit pursuant to
      Article 8 hereof).




(2)  The
      Senior Indebtedness of the Company shall continue to be Senior Indebtedness
      and
      entitled to the benefit of these subordination provisions irrespective of any
      amendment, modification or waiver of any term of any instrument relating to
      refinancing of the Senior Indebtedness.


exhibit
          4.2.1 Indenture
 **44**




(3)  All
      the
      provisions of this Indenture and the Securities shall be subject to the
      provisions of this Article 11 so far as they may be applicable thereto,
      except that nothing in this Article 11 shall apply to claims for, or
      payments to, the Trustee under or pursuant to Section 7.7.




(4)  No
      right
      of any holder of any Senior Indebtedness to enforce subordination as herein
      provided shall at any time or in any way be affected or impaired by any failure
      to act on the part of the Company, any Paying Agent, the Holders of the
      Securities, the Trustee or the holders of the Senior Indebtedness, or by any
      noncompliance by the Company, any Paying Agent, the Holders of the Securities
      or
      the Trustee with any of the terms, provisions and covenants of the Securities
      or
      this Indenture, regardless of any knowledge thereof that any such holder of
      Senior Indebtedness may have or be otherwise charged with.




SECTION 11.2  Company
      Not to Make Payments with Respect to Securities in Certain
      Circumstances .




No
      Payment or Distribution shall be made by the Company, the Trustee (upon receipt
      of notice in accordance with Section 11.5) or any Paying Agent on account
      of principal of, premium, if any, or interest on the Securities, whether upon
      stated maturity, upon redemption or acceleration, or otherwise, or on account
      of
      the purchase or other acquisition of Securities, whether upon stated maturity,
      upon redemption or acceleration, or otherwise, if there shall have occurred
      and
      be continuing a default with respect to any Senior Indebtedness permitting
      the
      acceleration thereof or with respect to the payment of any Senior Indebtedness
      and (a) such default is the subject of a judicial proceeding or
      (b) notice of such default in writing or by telegram has been given to the
      Company by any holder or holders of any Senior Indebtedness, unless and until
      the Company shall have received written notice from such holder or holders
      that
      such default or event of default shall have been cured or waived or shall have
      ceased to exist.




In
      the
      event of any dissolution or winding up or liquidation or reorganization of
      the
      Company, whether voluntary or involuntary, or bankruptcy, insolvency,
      receivership or other proceedings in connection therewith, relative to the
      Company or to its creditors, all amounts due or to become due upon all Senior
      Indebtedness shall first be paid in full in cash, or payment thereof provided
      for to the satisfaction of the holders thereof, before any Payment or
      Distribution is made on account of the redemption price or principal of (and
      premium, if any) or interest on the Securities; and (subject to the power of
      a
      court of competent jurisdiction to make other equitable provision, which shall
      have been determined by such court to give effect to the rights conferred in
      this Article upon the Senior Indebtedness and the holders thereof with respect
      to the Securities or the Holders thereof or the Trustee, by a lawful plan of
      reorganization or readjustment under applicable law) upon any such dissolution
      or winding up or liquidation or reorganization, any payment or distribution
      by
      the Company or distribution of assets of the Company of any kind or character,
      whether in cash, property or securities (other than securities of the Company
      as
      reorganized or readjusted


exhibit
          4.2.1 Indenture
 **45**




or
      securities of the Company or any other company, trust or corporation provided
      for by a plan of reorganization or readjustment, the payment of which is junior
      or otherwise subordinate, at least to the extent provided in this
      Article 11 with respect to the Securities to the payment of all Senior
      Indebtedness at the time outstanding and to the payment of all securities issued
      in exchange therefor to the holders of the Senior Indebtedness at the time
      outstanding), to which the Holders of the Securities or the Trustee would be
      entitled except for the provisions of this Article 11, shall be paid by the
      Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
      or
      other Person making such Payment or Distribution directly to the holders of
      Senior Indebtedness of the Company or their representative or representatives,
      or to the trustee or trustees under any indenture pursuant to which any
      instruments evidencing any Senior Indebtedness may have been issued, as their
      respective interests may appear, to the extent necessary to pay all Senior
      Indebtedness in full in cash, after giving effect to any concurrent payment
      or
      distribution to or for the holders of Senior Indebtedness, before any Payment
      or
      Distribution is made to the Holders of the Securities or to the Trustee, except
      that the Trustee will have a lien for the payment of its fees and
      expenses.




In
      the
      event that, notwithstanding the foregoing, any Payment or Distribution by the
      Company of any kind or character, whether such payment shall be in cash,
      property or securities, prohibited by the foregoing, and the Company shall
      have
      made payment to the Trustee or the Holders of the Securities before all Senior
      Indebtedness is paid in full in cash, or provision is made for such payment
      to
      the satisfaction of the holders thereof, and if such fact shall then have been
      or thereafter be made known to a Trust Officer of the Trustee or, as the case
      may be, such Holder, then and in such event such Payment or Distribution shall
      be paid over by the Trustee (if the Notice required by Section 11.5 has
      been received by the Trustee) or such Holder or delivered to the holders of
      Senior Indebtedness or their representative or representatives, or to the
      trustee or trustees under any indenture pursuant to which any instruments
      evidencing any Senior Indebtedness may have been issued, as their respective
      interests may appear, for application to the payment of all Senior Indebtedness
      remaining unpaid to the extent necessary to pay all Senior Indebtedness in
      full
      in cash, after giving effect to any concurrent Payment or Distribution to or
      for
      the holders of such Senior Indebtedness, and, until so delivered, the same
      shall
      be held in trust by any Holder of a Security as the property of the holders
      of
      Senior Indebtedness.




The
      consolidation of the Company with, or the merger of the Company into, another
      Person or the liquidation or dissolution of the Company following the conveyance
      or transfer of its property as an entirety, or substantially as an entirety,
      to
      another corporation upon the terms and conditions provided in Article 5
      shall not be deemed a dissolution, winding up, liquidation or reorganization
      for
      the purposes of this Section 10.2 if such other Person shall, as a part of
      such consolidation, merger, conveyance or transfer, comply with the conditions
      stated in Article 5. Nothing in this Section shall apply to claims of, or
      payments to, the Trustee under or pursuant to Section 7.7.


exhibit
          4.2.1 Indenture
 **46**




The
      holders of Senior Indebtedness may, at any time and from time to time, without
      the consent of or notice to the Holders of the Securities, without incurring
      responsibility to the Holders of the Securities and without impairing or
      releasing the obligations of the Holders of the Securities hereunder to the
      holders of Senior Indebtedness: (i) change the manner, place or terms of
      payment or change or extend the time of payment of, or renew or alter, Senior
      Indebtedness, or otherwise amend in any manner Senior Indebtedness or any
      instrument evidencing the same or any agreement under which Senior Indebtedness
      is outstanding; (ii) sell, exchange, release or otherwise deal with any
      property pledged, mortgaged or otherwise securing Senior Indebtedness;
      (iii) release any Person liable in any manner for the collection of Senior
      Indebtedness; (iv) apply any amounts received to any liability of the
      Company owing to holders of Senior Indebtedness; and/or (v) exercise or
      refrain from exercising any rights against the Company and any other
      Person.




SECTION 11.3  Subrogation
      of Securities .




Subject
      to the payment in full in cash of all amounts then due (whether by acceleration
      of the maturity thereof or otherwise) on account of all Senior Indebtedness
      at
      the time outstanding, the Holders of the Securities shall be subrogated to
      the
      rights of the holders of Senior Indebtedness to receive Payments or
      Distributions of cash, property or securities of the Company applicable to
      the
      Senior Indebtedness until the principal of, premium, if any, and interest on
      the
      Securities shall be paid in full; and, for the purposes of such subrogation,
      no
      Payments or Distributions to the holders of Senior Indebtedness to which the
      Holders of the Securities or the Trustee would be entitled except for the
      provisions of this Article 11, and no payments over pursuant to the
      provisions of this Article 11 to the holders of Senior Indebtedness by
      Holders of the Securities or the Trustee, shall, as between the Company, the
      Company's creditors other than holders of Senior Indebtedness, and the Holders
      of the Securities, be deemed to be a payment by the Company to or on account
      of
      the Senior Indebtedness. It is understood that the provisions of this
      Article 11 are and are intended solely for the purpose of defining the
      relative rights of the Holders of the Securities, on the one hand, and the
      holders of Senior Indebtedness, on the other hand.




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


exhibit
          4.2.1 Indenture
 **47**




securities
      of the Company received upon the exercise of any such remedy. Nothing in this
      Article 11 shall prevent conversions of Securities pursuant to
      Article 10.




Upon
      any
      payment or distribution of assets of the Company referred to in this
      Article 11, the Trustee, subject to the provisions of Section 7.1, and
      the Holders of the Securities shall be entitled to rely upon any order or decree
      made by any court of competent jurisdiction in which any dissolution, winding
      up, liquidation or reorganization proceedings are pending, or certificate of
      the
      receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
      making such payment or distribution, delivered to the Trustee or to the Holders
      of the Securities, for the purpose of ascertaining the Persons entitled to
      participate in such distribution, the holders of Senior Indebtedness and other
      indebtedness of the Company, the amount thereof or payable thereon, the amount
      or amounts paid or distributed thereon and all other facts pertinent thereto
      or
      to this Article 11.




SECTION 11.4  Authorization
      by Holders of Securities .




Each
      holder of a Security by his acceptance thereof authorizes and directs the
      Trustee on his behalf to take such action as may be necessary or appropriate
      to
      effectuate, as between the Holder of the Security and the holders of Senior
      Indebtedness, the subordination provided in this Article 11 and appoints
      the Trustee his attorney-in-fact for any and all such purposes including,
      without limitation, to execute, verify, deliver and file any proofs of claim
      which any holder of Senior Indebtedness may at any time require in order to
      prove and realize upon any rights or claims pertaining to the Securities and
      to
      effectuate the full benefit of the subordination contained herein. Upon failure
      of the Trustee so to do, any such holder of Senior Indebtedness shall be deemed
      to be irrevocably appointed the agent and attorney-in-fact of the Holder to
      execute, verify, deliver and file any such proofs of claim.




SECTION 11.5  Notices
      to Trustee .




The
      Company shall give prompt written notice to the Trustee of any fact known to
      it
      which would prohibit the making of any payment of moneys to or by the Trustee
      in
      respect of the Securities pursuant to the provisions of this Article 11.
      Notwithstanding the provisions of this Article 11 or any other provision of
      this Indenture, the Trustee shall not be charged with knowledge of the existence
      of any facts which would prohibit the making of any payment of moneys to or
      by
      the Trustee in respect of the Securities pursuant to the provisions of this
      Article 11 unless and until a Trust Officer of the Trustee shall have
      received at its Corporate Trust Office written notice thereof from the Company
      or a holder or holders of Senior Indebtedness or from any trustee or agent
      therefor; and, prior to the receipt of any such written notice, the Trustee,
      subject to the provisions of Section 7.1, shall be entitled in all respects
      to assume that no such facts exist; provided , however ,
      that if
      a Trust Officer of the Trustee shall not have received at least three Business
      Days prior to the date upon which by the terms hereof any such moneys may become
      payable for any purpose (including, without limitation, the payment


exhibit
          4.2.1 Indenture
 **48**




of
      the
      principal of, premium, if any, or interest on any Security) with respect to
      such
      moneys the notice provided for in this Section 11.5, then, anything herein
      contained to the contrary notwithstanding, the Trustee shall have the full
      power
      and authority to receive such moneys and to apply the same to the purpose for
      which they were received and shall not be affected by any notice to the contrary
      which may be received by it within three Business Days prior to such
      date.




The
      Trustee shall be entitled to rely conclusively on the delivery to it of a
      written notice by a Person representing himself to be a holder of Senior
      Indebtedness (or a trustee on behalf of such holder) to establish that such
      notice has been given by a holder of Senior Indebtedness or a trustee or agent
      on behalf of any such holder. In the event that the Trustee determines in good
      faith that further evidence is required with respect to the right of any Person
      as a holder of Senior Indebtedness to participate in any payment or distribution
      pursuant to this Article 11, the Trustee may request such Person to furnish
      evidence to the reasonable satisfaction of the Trustee as to the amount of
      Senior Indebtedness held by such Person, the extent to which such Person is
      entitled to participate in such payment or distribution and any other facts
      pertinent to the rights of such Person under this Article 11, and if such
      evidence is not furnished, the Trustee may defer any payment to such Person
      pending judicial determination as to the right of such Person to receive such
      payment.




SECTION 11.6  Trustee's
      Relation to Senior Indebtedness .




The
      Trustee in its individual capacity shall be entitled to all the rights set
      forth
      in this Article 11 in respect of any Senior Indebtedness at any time held
      by it, to the same extent as any other holder of Senior Indebtedness, and
      nothing in Section 7.11 or elsewhere in this Indenture shall deprive the
      Trustee of any of its rights as such holder.




With
      respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
      or to observe only such of its covenants and obligations as are specifically
      set
      forth in this Article 11, and no implied covenants or obligations with
      respect to the holders of Senior Indebtedness shall be read into this Indenture
      against the Trustee. The Trustee shall not owe any fiduciary duty to the holders
      of Senior Indebtedness and shall not be liable to any such holder if it shall
      mistakenly pay over or distribute to Holders of the Securities or the Company
      or
      any other Person money or assets to which any holder of Senior Indebtedness
      shall be entitled by virtue of this Article 11 or otherwise.




SECTION 11.7  No
      Impairment of Subordination .




No
      right
      of any present or future holder of any Senior Indebtedness to enforce
      subordination as herein provided shall at any time in any way be prejudiced
      or
      impaired by any act or failure to act on the part of the Company, the Trustee
      or
      the Holder of any of the Securities or by any act, or failure to act, in good
      faith, by any such holder of Senior Indebtedness, or by any noncompliance by
      the
      Company, the Trustee or the Holder of any of the Securities with the terms,
      provisions and covenants of this


exhibit
          4.2.1 Indenture
 **49**




Indenture,
      regardless of any knowledge thereof which any such holder may have or otherwise
      be charged with.




SECTION 11.8  Article 11
      Not To Prevent Events of Default .




The
      failure to make a payment on account of principal of, premium, if any, or
      interest on the Securities by reason of any provision in this Article 11
      shall not be construed as preventing the occurrence of an Event of Default
      with
      respect to such Securities under Section 6.1.




SECTION 11.9  Paying
      Agents other than the Trustee .




In
      any
      case at any time any Paying Agent other than the Trustee shall have been
      appointed by the Company and be then acting hereunder, the term "Trustee" as
      used in this Article 11 shall in such case (unless the context shall
      otherwise require) be construed as extending to and including such Paying Agent
      within its meaning as fully for all intents and purposes as if such Paying
      Agent
      were named in this Article 11 in addition to or in place of the
      Trustee.




SECTION 11.10  Securities
      Senior to Subordinated Indebtedness .




The
      indebtedness represented by the Securities will be senior and prior in right
      of
      payment to all Subordinated Indebtedness, to the extent and in the manner
      provided in such Subordinated Indebtedness.







ARTICLE 12




MISCELLANEOUS




SECTION 12.1  Trust
      Indenture Act Controls .




If
      any
      provision of this Indenture limits, qualifies or conflicts with another
      provision which is required to be included in this Indenture by the TIA, the
      required provisions shall control. The provisions of TIA Sections 310
      through 317 that impose duties on any Person (including the provisions
      automatically deemed included herein unless expressly excluded by this
      Indenture) are a part of and govern this Indenture, whether or not physically
      contained herein.




SECTION 12.2  Notices.




Any
      notices or other communications required or permitted hereunder shall be in
      writing, and shall be sufficiently given if made by hand delivery, or first
      class mail, postage prepaid (except that any notice by the Trustee to the
      Company of a default or an Event of Default under this Indenture shall be by
      registered or certified mail, postage prepaid, return receipt requested), or
      by
      a nationally-recognized overnight express courier service (which notices or
      communications shall be deemed received, in the case of the


exhibit
          4.2.1 Indenture
 **50**




Company,
      the business day after the receipt thereof by such service and, in the case
      of
      the Trustee, upon receipt), addressed as follows:




if
      to the
      Company:




Emeritus
      Corporation




3131
      Elliott Avenue, Suite 500




Seattle,
      Washington 98121




if
      to the
      Trustee:




U.S. Bank,
      National Association




Corporate
      Trust Services, 3 rd Floor




One
      Federal Street




Boston,
      Massachusetts 02110









The
      Company or the Trustee by notice to the other may designate additional or
      different addresses as shall be furnished in writing by either party. Any notice
      or communication to the Company or the Trustee shall be deemed to have been
      given or made as of the date so delivered if personally delivered, and five
      (5) calendar days after mailing if sent by registered or certified mail
      (except that a notice of change of address shall not be deemed to have been
      given until actually received by the addressee).




Any
      notice or communication mailed to a Securityholder shall be mailed to the
      address of such Securityholder as it appears on the registration books of the
      Registrar and shall be sufficiently given if so mailed within the time
      prescribed.




Failure
      to mail a notice or communication to a Securityholder or any defect in it shall
      not affect its sufficiency with respect to other Securityholders. If a notice
      or
      communication is mailed in the manner provided above, it is duly given, whether
      or not the addressee receives it.




In
      case
      by reason of the suspension of regular mail service, or by reason of any other
      cause, it shall be impossible to mail any notice, as required by this Indenture,
      then such method of notification as shall be made with the approval of the
      Trustee shall constitute a sufficient mailing of such notice.




If
      the
      Company mails any notice or communication to Securityholders, it shall mail
      a
      copy to the Trustee and all Agents at the same time.




SECTION 12.3  Communications
      by Holders with Other Holders .




Securityholders
      may communicate pursuant to TIA §312(b) with other Securityholders with
      respect to their rights under this Indenture or the Securities. The


exhibit
          4.2.1 Indenture
 **51**




Company,
      the Trustee, the Registrar and anyone else shall have the protection of TIA
      § 312(c).




SECTION 12.4  Certificate
      and Opinion as to Conditions Precedent .




Upon
      any
      request or application by the Company to the Trustee to take any action under
      this Indenture, the Company shall furnish to the Trustee:




(1)  an
      Officers' Certificate (which shall include the statements set forth in
      Section 12.5) stating that, in the opinion of the signers, all conditions
      precedent, if any, provided for in this Indenture relating to the proposed
      action have been complied with; and




(2)  an
      Opinion of Counsel (which shall include the statements set forth in
      Section 12.5) stating that, in the opinion of such counsel, all such
      conditions precedent have been complied with.




SECTION 12.5  Statements
      Required in Certificate and Opinion .




Each
      Certificate and Opinion with respect to compliance with a condition or covenant
      provided for in this Indenture shall include:




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




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




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




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




SECTION 12.6  Rules
      by Trustee and Agents .




The
      Trustee may make reasonable rules for action by or at a meeting of
      Securityholders. The Registrar, Paying Agent or Conversion Agent may make
      reasonable rules for its functions.




SECTION 12.7  Record
      Date .




Whenever
      the Company or the Trustee solicits an act of Securityholders, the Company
      or
      the Trustee may fix in advance of the solicitation of such act a date as


exhibit
          4.2.1 Indenture
 **52**




the
      record date for determining Securityholders entitled to perform said act. The
      record date shall be not more than 15 days prior to the date fixed for the
      solicitation of said act.




SECTION 12.8  Legal
      Holidays .




A
      "Legal
      Holiday" is a Saturday, a Sunday or a day on which banks or trust companies
      in
      the city in which either the Trustee or the Company is located are not required
      to be open. If a payment date is a Legal Holiday at a place of payment, payment
      may be made at that place on the next succeeding day that is not a Legal
      Holiday, and no interest shall accrue for the intervening period.




SECTION 12.9  Governing
      Law .




The
      laws
      of the State of New York shall govern this Indenture and the Securities without
      regard to principles of conflicts of law.




SECTION 12.10  No
      Adverse Interpretation of Other Agreements .




This
      Indenture may not be used to interpret another indenture, loan or debt agreement
      of the Company or a Subsidiary. Any such indenture, loan or debt agreement
      may
      not be used to interpret this Indenture.




SECTION 12.11  No
      Recourse Against Others .




No
      shareholder, director or officer, as such, past, present or future, of the
      Company or of any successor corporation or trust shall have any liability for
      any obligation of the Company under the Securities or the Indenture or for
      any
      claim based on, in respect of or by reason of, such obligations or their
      creation. Each Holder of a Security by accepting a Security waives and releases
      all such liability. The waiver and release are part of the consideration for
      the
      issuance of the Securities.




SECTION 12.12  Successors .




All
      agreements of the Company in this Indenture and the Securities shall bind its
      successor. All agreements of the Trustee in this Indenture shall bind its
      successor.




SECTION 12.13  Multiple
      Counterparts .




The
      parties may sign multiple counterparts of this Indenture. Each signed
      counterpart shall be deemed an original, but all of them together represent
      the
      same agreement.




SECTION 12.14  Table
      of Contents, Headings, etc .




The
      table
      of contents, cross-reference sheet and headings of the Articles and Sections
      of
      this Indenture have been inserted for convenience of reference only, are


exhibit
          4.2.1 Indenture
 **53**




not
      to be
      considered a part hereof, and shall in no way modify or restrict any of the
      terms or provisions hereof.




SECTION 12.15  Severability .




In
      case
      any provision in this Indenture or in the Securities shall be invalid, illegal
      or unenforceable, the validity, legality and enforceability of the remaining
      provisions shall not in any way be affected or impaired thereby, and a Holder
      shall have no claim therefor against any party hereto.


exhibit
          4.2.1 Indenture
 **54**




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





EMERITUS
                CORPORATION
              
              
              
              By:
                  /s/ Raymond R. Brandstrom
                Name:
                  Raymond
                  R. Brandstrom
                Title:
                  Vice
                  Chairman, Vice President of Finance
                and Chief Financial OfficerU.S. BANK,
                NATIONAL ASSOCIATION,
              as
                Trustee
              
              
              By:
                  /s/ Todd R. DiNezza
                Name:
                  Todd R.
                  DiNezza
                Title:
                  Assistant
                  Vice President










exhibit
          4.2.1 Indenture
 **55**




EXHIBIT A




FORM
      OF
      SECURITY

















exhibit
          4.2.1 Indenture




[FORM
      OF
      FACE OF SECURITY]




Unless
      and until it is exchanged in whole or in part for Securities in definitive
      form,
      this Security may not be transferred except as a whole by the Depository to
      a
      nominee of the Depository or by a nominee of the Depository to the Depository
      or
      another nominee of the Depository or by the Depository or any such nominee
      to a
      successor Depository or a nominee of such successor Depository. Unless this
      certificate is presented by an authorized representative of the Depository
      Trust
      Company, a New York corporation (55 Water Street, New York, New York)
      ("DTC"), to the issuer or its agent for registration of transfer, exchange
      or
      payment, and any certificate issued is registered in the name of Cede & Co.
      Or such other name as may be requested by an authorized representative of DTC
      (and any payment is made to Cede & Co. Or such other entity as may be
      requested by an authorized representative of DTC), ANY
      TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
      IS WRONGFUL inasmuch
      as the registered owner hereof, Cede & Co., has an interest
      herein. 1  This
      paragraph should be included only if the Security is issued in global
      form.




[THIS
      SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF INVESTMENT AND
      NOT
      WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION. THIS SECURITY
      (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER
      THIS
      SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR
      OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
      EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT
      THE
      SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
      THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
      SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR
      THE
      BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
      WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT
      OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO EMERITUS
      CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
      DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) IN THE CASE OF A HOLDER
      WHO IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
      SECURITIES ACT), FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
      TO
      RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
      INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
      A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) IN
      ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
      (AND CONFIRMED IN AN OPINION OF COUNSEL


exhibit
          4.2.1 Indenture
 **1**




ACCEPTABLE
      IN FORM AND SUBSTANCE TO THE ISSUER OF THIS SECURITY IF THE ISSUER SO REQUESTS)
      AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
      STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND
      (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
      PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN
      (II) ABOVE.] 2  To be
      included on all Securities which are Restricted Securities







EMERITUS
      CORPORATION




6.25%
      Convertible Subordinated Debenture Due 2008




EMERITUS
      CORPORATION ,
      a
      Washington corporation, promises to pay to





6.25%
            S
                P
                E C I M E N
            6.25%DUE2008
            
            DUE2008




or
      registered assigns, the principal sum of ______________________________________
      Dollars, on July 1, 2008




Interest
      Payment Dated: January 1 and July 1




Record
      Dates: December 15 and June 15




Additional
      provisions of this Security are set forth on other side of this
      Security.




Dated:





CERTIFICATE
                OF AUTHENTICATION
              U.S. BANK,
                NATIONAL ASSOCIATION
            
            EMERITUS
                CORPORATIONas
                Trustee, certifies that this is one of the Securities referred to
                in the
                within mentioned Indenture.By:
            
            By:
            By:Authorized
                Signatory
            SEAL
            Chairman
                of the Board
            Vice
                President, Finance








1
 2


exhibit
          4.2.1 Indenture
 **2**




[FORM
      OF
      REVERSE OF SECURITY]




EMERITUS
      CORPORATION




6.25%
      Convertible Subordinated Debenture Due 2008







1.  Interest .  Emeritus
      Corporation, a Washington corporation, (the "Company"), promises to pay interest
      on the principal amount of this Security at the rate per annum shown above.
      The
      Company will pay interest semiannually on January 1 and July 1 of each
      year beginning January 1, 2006. Interest on the Securities will accrue from
      the most recent date to which interest has been paid or, if no interest has
      been
      paid, from _______________, 2005; provided that, if there is no existing Default
      in the payment of interest, and if this Security is authenticated between a
      record date referred to on the face hereof and the next succeeding interest
      payment date, interest shall accrue from such interest payment date. Interest
      will be computed on the basis of a 360 day year of twelve 30-day
      months.




2.  Method
      of Payment .
      The
      Company will pay interest on the Securities (except defaulted interest) to
      the
      persons who are the registered Holders of the Securities at the close of
      business on the December 15 or June 15 next preceding the interest
      payment date. Holders must surrender Securities to a Paying Agent to collect
      principal payments. The Company will pay principal and interest in money of
      the
      United States that at the time of payment is legal tender for payment of public
      and private debts. The Company, however, may pay principal and interest by
      its
      check payable in such money. It may mail an interest check to a Holder's
      registered address.




The
      final
      installment of principal of and premium, if any, on this Security shall be
      payable only upon surrender of this Security at the office or agency of the
      Trustee in the Borough of Manhattan, City and State of New York or the City
      of
      Boston, State of Massachusetts. Payments of principal and premium, if any,
      and
      interest on this Security shall be made at the office or agency of the Trustee
      maintained in the Borough of Manhattan, City and State of New York or the City
      of Boston, State of Massachusetts, or, in the case of any such payments other
      than the final payment of principal and premium, if any, at the Company's
      option, by check mailed to the Person entitled thereto at such Person's address
      last appearing on the Company's register.




3.  Registrar
      and Agents .
      Initially, U.S. Bank, National Association will act as Registrar, Paying
      Agent, Conversion Agent and agent for service of notices and demands. The
      Company may change any Registrar, co-registrar, Paying Agent, Conversion Agent
      and agent for service of notices and demands without notice. The Company or
      any
      of its Subsidiaries may act as Paying Agent or Conversion Agent. The address
      of
      U.S. Bank, National Association is Corporate Trust Services, 3 rd Floor,
      One Federal Street, Boston, Massachusetts, 02110.


exhibit
          4.2.1 Indenture
 **1**




4.  Indenture;
      Limitations .
      The
      Company issued the Securities under an Indenture dated as of _______________,
      2005 (the "Indenture") between the Company and U.S. Bank, National
      Association (the "Trustee"). Capitalized terms herein are used as defined in
      the
      Indenture unless otherwise defined herein. The terms of the Securities include
      those stated in the Indenture and those made part of the Indenture by reference
      to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as
      in effect on the date of the Indenture. The Securities are subject to all such
      terms, and the Holders of the Securities are referred to the Indenture and
      said
      Act for a statement of them.




The
      Securities are general unsecured obligations of the Company limited to
      $32,000,000 principal amount. The Indenture imposes certain limitations on
      the
      ability of the Company to, among other things, make payments in respect of
      its
      Capital Stock, merge or consolidate with any other Person and sell, lease,
      transfer or otherwise dispose of its properties or assets.




5.  Optional
      Redemption by the Company. The
      Company shall not have the right, at its option, to redeem the
      Securities.




6.  Conversion .
      A
      Holder of a Security may convert such Security into shares of common stock
      of
      the Company before July 1, 2008. The initial conversion price is $22.00 per
      share, subject to adjustment in certain events. To determine the number of
      shares issuable upon conversion of a Security, divide the principal amount
      to be
      converted by the conversion price in effect on the conversion date. The Company
      will deliver a check for any fractional share.




To
      convert a Security, a Holder must (1) complete and sign the conversion
      notice on the back of the Security, (2) surrender the Security to the
      Conversion Agent, (3) furnish appropriate endorsements and transfer
      documents if required by the Registrar or Conversion Agent and (4) pay any
      transfer or similar tax if required. No payment or adjustment is to be made
      on
      conversion for interest accrued hereon or for dividends on shares of common
      stock issued on conversion provided, however, that if a Security is surrendered
      for conversion after the record date for a payment of interest and on or before
      the interest payment date, then, notwithstanding such conversion, the interest
      falling due to such interest payment date will be paid to the Person in whose
      name the Security is registered at the close of business on such record date
      and
      any Security surrendered for conversion during the period from the close of
      business on any regular record date to the opening of business on the
      corresponding interest payment date must be accompanied by payment of an amount
      equal to the interest payable on such interest payment date. A Holder may
      convert a portion of a Security if the portion is $1,000 principal amount or
      an
      integral multiple thereof.


exhibit
          4.2.1 Indenture
 **2**




If
      the
      Company is a party to a consolidation or merger or a transfer or lease of all
      or
      substantially all of its assets, the right to convert a Security into shares
      of
      common stock may be changed into a right to convert it into securities, cash
      or
      other assets of the Company or another Person.




7.  Subordination .
      This
      Security is subordinated to all Senior Indebtedness of the Company. To the
      extent and in the manner provided in the Indenture, Senior Indebtedness must
      be
      paid before any payment may be made to any Holders of Securities. Any
      Securityholder by accepting this Security agrees to such subordination and
      authorizes the Trustee to give it effect.




In
      addition to all other rights of Senior Indebtedness described in the Indenture,
      the Senior Indebtedness shall continue to be Senior Indebtedness and entitled
      to
      the benefits of the subordination provisions irrespective of any amendment,
      modification or waiver of any term of any instrument relating to the Senior
      Indebtedness or extension or renewal of the Senior Indebtedness.




8.  Denominations,
      Transfer, Exchange .
      The
      Securities issued under the Indenture are in the aggregate principal amount
      of
      up to $32,000,000. The Securities are in registered form without coupons in
      denominations of $1,000 principal amount and integral multiples thereof. A
      Holder may register the transfer of or exchange Securities in accordance with
      the Indenture. The Registrar may require a Holder, among other things, to
      furnish appropriate endorsements and transfer documents and to pay any taxes
      and
      fees required by law or permitted by the Indenture. The Registrar need not
      register the transfer of or exchange any Securities selected for redemption
      or
      register the transfer of or exchange any Securities for a period of 15 days
      before a selection of Securities to be redeemed.




9.  Persons
      Deemed Owners .
      The
      registered Holder of a Security may be treated as its owner for all
      purposes.




10.  Unclaimed
      Money .
      If
      money for the payment of principal or interest on any Securities remains
      unclaimed for two years, the Trustee and the Paying Agent will, unless otherwise
      required by mandatory provisions of applicable escheat or abandoned or unclaimed
      property law, pay the money back to the Company at its request. After that,
      Holders may look only to the Company for payment.




11.  Discharge
      Prior to Maturity .
      The
      Indenture will be discharged and canceled except for certain sections thereof
      upon payment of all the Securities, or upon the irrevocable deposit with the
      Trustee of funds or U.S. Government Obligations maturing on or before such
      payment date, sufficient to pay principal, premium, if any, and interest on
      such
      payment.


exhibit
          4.2.1 Indenture
 **3**




12.  Amendment
      and Waiver .
      Subject
      to certain exceptions, without notice to the Holders of the Securities, the
      Indenture or the Securities may be amended with the consent of the Holders
      of at
      least 66-2/3% in principal amount of the Securities then outstanding and any
      existing default or compliance with any provision may be waived with the consent
      of the Holders of a majority in principal amount of the Securities then
      outstanding. Without the consent of or notice to any Securityholder, the Company
      may amend or supplement the Indenture or the Securities to, among other things,
      provide for uncertificated Securities, to cure any ambiguity, defect or
      inconsistency or make any other change that does not adversely affect the rights
      of any Securityholder.




13.  Successors .
      When a
      successor assumes all the obligations of its predecessor under the Securities
      and the Indenture, the predecessor will be released from those
      obligations.




14.  Defaults
      and Remedies .
      If an
      Event of Default, as defined in the Indenture (other than a Event of Default
      relating to bankruptcy of the Company), occurs and is continuing, the Trustee
      or
      the Holders of a majority in principal amount of Securities may declare all
      the
      Securities to be due and payable immediately in the manner and with the effect
      provided in the Indenture. If an Event of Default relating to bankruptcy of
      the
      Company occurs, then all Securities shall become immediately due and payable
      without any declaration or act on the part of the Trustee or any Holder. Holders
      of Securities may not enforce the Indenture or the Securities except as provided
      in the Indenture. The Trustee may require indemnity satisfactory to it, subject
      to the provisions of the TIA, before it enforces the indenture or the
      Securities. Subject to certain limitations, Holders of a majority in principal
      amount of the Securities then outstanding may direct the Trustee in its exercise
      of any trust or power. The Trustee may withhold from Holders of Securities
      notice of any continuing default (except a default in payment of principal
      or
      interest) if it determines that withholding notice is in their interests. The
      Company is required to file periodic reports with the Trustee as to the absence
      of any Default or Event of Default.




15.  Trustee
      Dealings with the Company .
      U.S.
      Bank, National Association, the Trustee under the Indenture, in its individual
      or any other capacity, may make loans to, accept deposits from, and perform
      services for the Company or its Affiliates, and may otherwise deal with the
      Company or its Affiliates, as if it were not Trustee.




16.  No
      Recourse Against Others .
      No
      shareholder, director, officer or incorporator, as such, past, present or
      future, of the Company or any successor corporation shall have any liability
      for
      any obligation of the Company under the Securities or the Indenture or for
      any
      claim based on, in respect of or by reason of, such obligations or their
      creation. Each Holder of a Security by accepting a Security waives


exhibit
          4.2.1 Indenture
 **4**




and
      releases all such liability. The waiver and release are part of the
      consideration for the issuance of the Securities.




17.  Authentication .
      This
      Security shall not be valid until the Trustee signs the certificate of
      authentication on the other side of this Security.




18.  Abbreviations .
      Customary abbreviations may be used in the name of a Securityholder or an
      assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
      entireties), JT TEN (=joint tenants with rights of survivorship and not as
      tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
      Act).




The
      Company will furnish to any Securityholder upon written request and without
      charge a copy for the Indenture. It also will furnish the text of this Security
      in larger type. Requests may be made to: Emeritus Corporation, 3131 Elliott
      Avenue, Suite 500, Seattle, Washington, 98121, Attention: Vice President,
      Finance.







exhibit
          4.2.1 Indenture
 **5**




TRANSFER
      NOTICE




If
      you
      the Holder wants to assign this Security, fill in the form below and have your
      signature guaranteed:




For
      value
      received, I or we assign and transfer this Security to




(INSERT
      ASSIGNEE'S SOCIAL SECURITY OR




TAX
      IDENTIFICATION NUMBER)











(Print
                or type assignee's name, address and zip code)agent
                to transfer this Security on the books of the Company. The agent
                may
                substitute another to act for him.




In
      connection with the transfer of this Security, the undersigned certifies
      that:





(Check
                one)(a)
            This
                Security is being transferred to Emeritus Corporation.(b)
            Transfer
                other than those above in connection with which the Company and the
                Registrar have received an opinion of counsel (satisfactory to them
                in
                form and substance) to the effect that the transfer is being made
                pursuant
                to an exemption from, or in a transaction not subject to, the registration
                requirements of the Securities Act.








Date:


exhibit
          4.2.1 Indenture
 **1**







Your
                signature:(Sign
                exactly as your name appears on the other side of this
                Security)Signature
                Guarantee:









I F
      NONE OF
      THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED TO REGISTER
      THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE CONDITIONS TO ANY SUCH
      TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE HEREOF AND IN THE
      INDENTURE SHALL HAVE BEEN SATISFIED.







exhibit
          4.2.1 Indenture
 **2**




CONVERSION
      NOTICE




To
      convert this Security into shares of common stock of the Company, check the
      box:










To
      convert only part of this Security, state the principal amount to be converted
      (which must be a minimum of $1,000 or any multiple thereof):





$




If
      you
      want the Security certificate, if any, made out in another person's name, fill
      in the form below:




(INSERT
      OTHER PERSON'S SOCIAL SECURITY OR




TAX
      IDENTIFICATION NUMBER)











(Print
                or type assignee's name, address and zip code)Date:Your
                signature:(Sign
                exactly as your name appears on the other side of this
                Security)Signature
                Guarantee By:Note:
            Signature
                must be guaranteed by a member firm of the New York Stock Exchange
                or a
                commercial bank or trust company.





exhibit
          4.2.1 Indenture