Exhibit
4.1


EXECUTION
COPY


JUNIOR SUBORDINATED
INDENTURE


between


MORGANS HOTEL GROUP CO.


MORGANS GROUP LLC


and


JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

as Trustee






Dated as of August 4, 2006























 


TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  Definitions and Other Provisions of General
  Application

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  SECTION 1.2.

  	
   

  	
  Compliance Certificate and Opinions

  	
   

  	
  11

  
	
  SECTION 1.3.

  	
   

  	
  Forms of Documents Delivered to Trustee

  	
   

  	
  11

  
	
  SECTION 1.4.

  	
   

  	
  Acts of Holders

  	
   

  	
  12

  
	
  SECTION 1.5.

  	
   

  	
  Notices, Etc. to Trustee and Company

  	
   

  	
  14

  
	
  SECTION 1.6.

  	
   

  	
  Notice to Holders; Waiver

  	
   

  	
  14

  
	
  SECTION 1.7.

  	
   

  	
  Effect of Headings and Table of Contents

  	
   

  	
  15

  
	
  SECTION 1.8.

  	
   

  	
  Successors and Assigns

  	
   

  	
  15

  
	
  SECTION 1.9.

  	
   

  	
  Separability Clause

  	
   

  	
  15

  
	
  SECTION 1.10.

  	
   

  	
  Benefits of Indenture

  	
   

  	
  15

  
	
  SECTION 1.11.

  	
   

  	
  Governing Law

  	
   

  	
  15

  
	
  SECTION 1.12.

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  15

  
	
  SECTION 1.13.

  	
   

  	
  Non-Business Days

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  Security Forms

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  Form of Security

  	
   

  	
  16

  
	
  SECTION 2.2.

  	
   

  	
  Restricted Legend

  	
   

  	
  20

  
	
  SECTION 2.3.

  	
   

  	
  Form of Trustee’s Certificate of Authentication

  	
   

  	
  22

  
	
  SECTION 2.4.

  	
   

  	
  Temporary Securities

  	
   

  	
  22

  
	
  SECTION 2.5.

  	
   

  	
  Definitive Securities

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  The Securities

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  Payment of Principal and Interest

  	
   

  	
  23

  
	
  SECTION 3.2.

  	
   

  	
  Denominations

  	
   

  	
  25

  
	
  SECTION 3.3.

  	
   

  	
  Execution, Authentication, Delivery and Dating

  	
   

  	
  25

  
	
  SECTION 3.4.

  	
   

  	
  Global Securities

  	
   

  	
  26

  
	
  SECTION 3.5.

  	
   

  	
  Registration, Transfer and Exchange Generally

  	
   

  	
  28

  
	
  SECTION 3.6.

  	
   

  	
  Mutilated, Destroyed, Lost and Stolen Securities

  	
   

  	
  30

  
	
  SECTION 3.7.

  	
   

  	
  Persons Deemed Owners

  	
   

  	
  31

  
	
  SECTION 3.8.

  	
   

  	
  Cancellation

  	
   

  	
  31

  
	
  SECTION 3.9.

  	
   

  	
  Reserved

  	
   

  	
  31

  
	
  SECTION 3.10.

  	
   

  	
  Reserved

  	
   

  	
  31

  
	
  SECTION 3.11.

  	
   

  	
  Agreed Tax Treatment

  	
   

  	
  31

  
	
  SECTION 3.12.

  	
   

  	
  CUSIP Numbers

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  Satisfaction and Discharge

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  Satisfaction and Discharge of Indenture

  	
   

  	
  32

  
	
  SECTION 4.2.

  	
   

  	
  Application of Trust Money

  	
   

  	
  33

  
						




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  ARTICLE V

  	
  Remedies

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
   

  	
  Events of Default

  	
   

  	
  33

  
	
  SECTION 5.2.

  	
   

  	
  Acceleration of Maturity; Rescission and Annulment

  	
   

  	
  34

  
	
  SECTION 5.3.

  	
   

  	
  Collection of Indebtedness and Suits for Enforcement
  by Trustee

  	
   

  	
  35

  
	
  SECTION 5.4.

  	
   

  	
  Trustee May File Proofs of Claim

  	
   

  	
  36

  
	
  SECTION 5.5.

  	
   

  	
  Trustee May Enforce Claim Without Possession of
  Securities

  	
   

  	
  36

  
	
  SECTION 5.6.

  	
   

  	
  Application of Money Collected

  	
   

  	
  36

  
	
  SECTION 5.7.

  	
   

  	
  Limitation on Suits

  	
   

  	
  37

  
	
  SECTION 5.8.

  	
   

  	
  Unconditional Right of Holders to Receive Principal,
  Premium, if any, and Interest; Direct Action by Holders of Preferred
  Securities

  	
   

  	
  38

  
	
  SECTION 5.9.

  	
   

  	
  Restoration of Rights and Remedies

  	
   

  	
  38

  
	
  SECTION 5.10.

  	
   

  	
  Rights and Remedies Cumulative

  	
   

  	
  38

  
	
  SECTION 5.11.

  	
   

  	
  Delay or Omission Not Waiver

  	
   

  	
  38

  
	
  SECTION 5.12.

  	
   

  	
  Control by Holders

  	
   

  	
  39

  
	
  SECTION 5.13.

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  39

  
	
  SECTION 5.14.

  	
   

  	
  Undertaking for Costs

  	
   

  	
  39

  
	
  SECTION 5.15.

  	
   

  	
  Waiver of Usury, Stay or Extension Laws

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  The Trustee

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  Corporate Trustee Required

  	
   

  	
  40

  
	
  SECTION 6.2.

  	
   

  	
  Certain Duties and Responsibilities

  	
   

  	
  40

  
	
  SECTION 6.3.

  	
   

  	
  Notice of Defaults

  	
   

  	
  42

  
	
  SECTION 6.4.

  	
   

  	
  Certain Rights of Trustee

  	
   

  	
  43

  
	
  SECTION 6.5.

  	
   

  	
  May Hold Securities

  	
   

  	
  44

  
	
  SECTION 6.6.

  	
   

  	
  Compensation; Reimbursement; Indemnity

  	
   

  	
  45

  
	
  SECTION 6.7.

  	
   

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  46

  
	
  SECTION 6.8.

  	
   

  	
  Acceptance of Appointment by Successor

  	
   

  	
  46

  
	
  SECTION 6.9.

  	
   

  	
  Merger, Conversion, Consolidation or Succession to
  Business

  	
   

  	
  47

  
	
  SECTION 6.10.

  	
   

  	
  Not Responsible for Recitals or Issuance of
  Securities

  	
   

  	
  47

  
	
  SECTION 6.11.

  	
   

  	
  Appointment of Authenticating Agent

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  Holder’s Lists and Reports by Company

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
   

  	
  Company to Furnish Trustee Names and Addresses of
  Holders

  	
   

  	
  49

  
	
  SECTION 7.2.

  	
   

  	
  Preservation of Information, Communications to
  Holders

  	
   

  	
  49

  
	
  SECTION 7.3.

  	
   

  	
  Reports by Company

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  Consolidation, Merger, Conveyance, Transfer or Lease

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
   

  	
  Company May Consolidate, Etc., Only on Certain Terms

  	
   

  	
  50

  
	
  SECTION 8.2.

  	
   

  	
  Successor Company Substituted

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  Supplemental Indentures

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
   

  	
  Supplemental Indentures without Consent of Holders

  	
   

  	
  52

  
	
  SECTION 9.2.

  	
   

  	
  Supplemental Indentures with Consent of Holders

  	
   

  	
  52

  
						




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  SECTION 9.3.

  	
   

  	
  Execution of Supplemental Indentures

  	
   

  	
  53

  
	
  SECTION 9.4.

  	
   

  	
  Effect of Supplemental Indentures

  	
   

  	
  54

  
	
  SECTION 9.5.

  	
   

  	
  Reference in Securities to Supplemental Indentures

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  Covenants

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
   

  	
  Payment of Principal, Premium, if any, and Interest

  	
   

  	
  54

  
	
  SECTION 10.2.

  	
   

  	
  Money for Security Payments to be Held in Trust

  	
   

  	
  54

  
	
  SECTION 10.3.

  	
   

  	
  Statement as to Compliance

  	
   

  	
  55

  
	
  SECTION 10.4.

  	
   

  	
  Calculation Agent

  	
   

  	
  55

  
	
  SECTION 10.5.

  	
   

  	
  Additional Tax Sums

  	
   

  	
  56

  
	
  SECTION 10.6.

  	
   

  	
  Additional Covenants

  	
   

  	
  57

  
	
  SECTION 10.7.

  	
   

  	
  Waiver of Covenants

  	
   

  	
  57

  
	
  SECTION 10.8.

  	
   

  	
  Treatment of Securities

  	
   

  	
  58

  
	
  SECTION 10.9.

  	
   

  	
  Financial Covenants

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  Redemption of Securities

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
   

  	
  Optional Redemption

  	
   

  	
  58

  
	
  SECTION 11.2.

  	
   

  	
  Special Event Redemption

  	
   

  	
  58

  
	
  SECTION 11.3.

  	
   

  	
  Election to Redeem; Notice to Trustee

  	
   

  	
  59

  
	
  SECTION 11.4.

  	
   

  	
  Selection of Securities to be Redeemed

  	
   

  	
  59

  
	
  SECTION 11.5.

  	
   

  	
  Notice of Redemption

  	
   

  	
  59

  
	
  SECTION 11.6.

  	
   

  	
  Deposit of Redemption Price

  	
   

  	
  60

  
	
  SECTION 11.7.

  	
   

  	
  Payment of Securities Called for Redemption

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  Subordination of Securities

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.1.

  	
   

  	
  Securities Subordinate to Senior Debt

  	
   

  	
  61

  
	
  SECTION 12.2.

  	
   

  	
  No Payment When Senior Debt in Default; Payment Over
  of Proceeds Upon Dissolution, Etc.

  	
   

  	
  61

  
	
  SECTION 12.3.

  	
   

  	
  Payment Permitted If No Default

  	
   

  	
  63

  
	
  SECTION 12.4.

  	
   

  	
  Subrogation to Rights of Holders of Senior Debt

  	
   

  	
  63

  
	
  SECTION 12.5.

  	
   

  	
  Provisions Solely to Define Relative Rights

  	
   

  	
  63

  
	
  SECTION 12.6.

  	
   

  	
  Trustee to Effectuate Subordination

  	
   

  	
  64

  
	
  SECTION 12.7.

  	
   

  	
  No Waiver of Subordination Provisions

  	
   

  	
  64

  
	
  SECTION 12.8.

  	
   

  	
  Notice to Trustee

  	
   

  	
  64

  
	
  SECTION 12.9.

  	
   

  	
  Reliance on Judicial Order or Certificate of
  Liquidating Agent

  	
   

  	
  65

  
	
  SECTION 12.10.

  	
   

  	
  Trustee Not Fiduciary for Holders of Senior Debt

  	
   

  	
  65

  
	
  SECTION 12.11.

  	
   

  	
  Rights of Trustee as Holder of Senior Debt;
  Preservation of Trustee’s Rights

  	
   

  	
  65

  
	
  SECTION 12.12.

  	
   

  	
  Article Applicable to Paying Agents

  	
   

  	
  66

  
						




 iii
 






 



SCHEDULES


Schedule A–Determination of LIBOR


Exhibit A–Form of Officer’s Financial Certificate



 iv














 


JUNIOR SUBORDINATED
INDENTURE, dated as of August 4, 2006, between MORGANS  HOTEL GROUP CO., a Delaware corporation (the
“Guarantor”), MORGANS  GROUP LLC, a Delaware limited liability
company (the “Company”), and JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION, a national banking association, as Trustee (in such
capacity, the “Trustee”).


 


RECITALS OF THE
COMPANY


WHEREAS, the Guarantor, on behalf of the Company, has
duly authorized the execution and delivery of this Indenture to provide for the
issuance of the Company’s unsecured junior subordinated notes (the “Securities”) issued to evidence loans made to the Company of
the proceeds from the issuance by MHG Capital Trust I, a Delaware statutory
trust (the “Trust”), of undivided preferred
beneficial interests in the assets of the Trust (the “Preferred
Securities”) and undivided common beneficial interests in the assets
of the Trust (the “Common Securities”
and, collectively with the Preferred Securities, the “Trust
Securities”), and to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered; and


WHEREAS, all things necessary to make this Indenture a
valid agreement of the Company, in accordance with its terms, have been done.


NOW, THEREFORE, this Indenture Witnesseth:


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


ARTICLE I


DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION


SECTION 1.1.                Definitions.


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


(a)           the
terms defined in this Article I have the meanings assigned to them in this
Article I;


(b)           the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”;


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


(d)           unless
the context otherwise requires, any reference to an “Article” or a “Section”
refers to an Article or a Section, as the case may be, of this Indenture;









 



(e)           the
words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;


(f)            a
reference to the singular includes the plural and vice versa; and


(g)           the
masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.


“Act” when used
with respect to any Holder, has the meaning specified in Section 1.4.


“Administrative
Trustee” means, with respect to the Trust, each Person identified as
an “Administrative Trustee” in the Trust Agreement, solely in its capacity as
Administrative Trustee of the Trust under the Trust Agreement and not in its
individual capacity, or its successor in interest in such capacity, or any
successor Administrative Trustee appointed as therein provided.


“Additional Interest”
means the interest, if any, that shall accrue on any amounts payable on the
Securities, the payment of which has not been made on the applicable Interest
Payment Date and which shall accrue at the rate per annum specified or
determined as specified in such Security, in each case to the extent legally
enforceable.


“Additional Tax Sums”
has the meaning specified in Section 10.5.


“Additional Taxes” means
taxes, duties or other governmental charges imposed on the Trust as a result of
a Tax Event (which, for the sake of clarity, does not include amounts required
to be deducted or withheld by the Trust from payments made by the Trust to or
for the benefit of the Holder of, or any Person that acquires a beneficial
interest in, the Securities).


“Affiliate” of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control,” when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.


“Applicable Depositary Procedures”
means, with respect to any transfer or transaction involving a Global Security
or beneficial interest therein, the rules and procedures of the Depositary for
such Security, in each case to the extent applicable to such transaction and as
in effect from time to time.


“Authenticating Agent”
means any Person authorized by the Trustee pursuant to Section 6.11 to
act on behalf of the Trustee to authenticate the Securities.


“Board of Directors”
means the board of directors of the Company or any duly authorized committee of
that board.



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


“Business Day”
means any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in the City of New York are authorized or required by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office of the Trustee is closed for business.


“Calculation Agent”
has the meaning specified in Section 10.4.


“Code” means
the Internal Revenue Code of 1986, as amended.


“Common Securities”
has the meaning specified in the first recital of this Indenture.


“Commission” has
the meaning specified in Section 7.3(c).


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


“Company Request”
and “Company Order” mean,
respectively, the written request or order signed in the name of the Company by
its Chairman of the Board of Directors, its Vice Chairman of the Board of
Directors, its Chief Executive Officer, its President, its Chief Financial
Officer, its Treasurer, a Vice President, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.


“Corporate Trust Office”
means the principal office of the Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of
this Indenture is located at 600 Travis, 50th Floor, Houston,
Texas 77019 Attn:  Worldwide Securities
Services—MHG Capital Trust I.  Initially,
all notices and correspondence shall be addressed to Mudassir Mohamed,
telephone number (713) 216-2826.


“Debt” means, with
respect to any Person, whether recourse is to all or a portion of the assets of
such Person, whether currently existing or hereafter incurred and whether or
not contingent and without duplication, (i) every obligation of such Person for
money borrowed; (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of such Person with respect to letters of
credit, bankers’ acceptances or similar facilities issued for the account of
such Person; (iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or other accrued liabilities arising in the ordinary course of business);
(v) every capital lease obligation of such Person; (vi) all indebtedness of
such Person, whether incurred on or prior to the date of this Indenture or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options
and swaps and similar arrangements; (vii) every obligation of the type referred
to in clauses (i) through (vi) of another Person and all dividends of



 3
 






 



another Person the payment of which, in either case,
such Person has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise; and (viii) any renewals, extensions,
refundings, amendments or modifications of any obligation of the type referred
to in clauses (i) through (vii).


“Defaulted Interest”
has the meaning specified in Section 3.1.


“Delaware Trustee”
means, with respect to the Trust, the Person identified as the “Delaware
Trustee” in the Trust Agreement, solely in its capacity as Delaware Trustee of
the Trust under the Trust Agreement and not in its individual capacity, or its
successor in interest in such capacity, or any successor Delaware Trustee
appointed as therein provided.


“Depositary” means
an organization registered as a clearing agency under the Exchange Act that is
designated as Depositary by the Company or any successor thereto.  DTC will be the initial Depositary.


“Depositary Participant”
means a broker, dealer, bank, other financial institution or other Person for
whom from time to time a Depositary effects book-entry transfers and pledges of
securities deposited with the Depositary.


“Distributions”
means amounts payable in respect of the Trust Securities as provided in the
Trust Agreement and referred to therein as “Distributions.”


“Dollar” or  “$” means the currency of the United
States of America that, as at the time of payment, is legal tender for the
payment of public and private debts.


“DTC” means The
Depository Trust Company, a New York corporation, or any successor thereto.


“EBITDA”
means, for any period, without duplication (except as provided in clause
(b)(iii) below), the sum of the following amounts attributable to such period:


(a)           Net Income,
plus


(b)           the sum of
(i) Interest Charges, (ii) charges and expenses for taxes, (iii) depreciation
and amortization expense (including amortization of financing costs and debt
discounts regardless of whether such amounts are included in Interest Charges),
(iv) other non-cash charges and expenses (including non-cash charges resulting
from accounting changes), (v) any losses arising outside of the ordinary course
of business which have been included in the determination of Net Income, (vi)
other non-operating expenses, (vii) all amounts attributable to equity in
income/loss of unconsolidated subsidiaries, and (viii) the amount of cash
dividends or cash distributions actually paid to the Guarantor or a subsidiary
of the Guarantor from a Person in which the Guarantor owns an Equity Interest, minus


(c)           the sum of
(i) the income of Clift Holdings LLC, a Delaware limited liability company,
(ii) any gains arising outside of the ordinary course of business which have
been included in the determination of Net Income, and (iii) other non-operating
income,



 4
 






 



all as determined on a consolidated basis for the
Guarantor and its consolidated subsidiaries.


“Equity Interests” means
(a) the partnership interests (general
or limited) in a partnership, (b) the membership interests in a limited liability company and (c) the shares or
stock interests (both common stock and preferred stock) in a corporation.


“Event of Default”
has the meaning specified in Section 5.1.


“Exchange Act”
means the Securities Exchange Act of 1934 or any statute successor thereto, in
each case as amended from time to time.


“Expiration Date”
has the meaning specified in Section 1.4(h).


“Fixed Charge
Coverage” means the ratio of (i) EBITDA to (ii) Interest Charges for
the period of four consecutive fiscal quarters of the Guarantor ended on the
last day of the fiscal quarter of the Guarantor most recently ended prior to
such date; provided that for purposes of calculating Fixed Charge Coverage for
(1) the four consecutive fiscal quarters of the Guarantor ended June 30, 2006,
EBITDA and Fixed Charges for the period from April 1, 2006 to and including
June 30, 2006 shall be used, (2) the four consecutive fiscal quarters of the
Guarantor ended September 30, 2006, EBITDA and Fixed Charges for the period
from April 1, 2006 to and including September 30, 2006 shall be used, and (3)
the four consecutive fiscal quarters ended December 31, 2006, EBITDA and Fixed
Charges for the period from April 1, 2006 to and including December 31, 2006
shall be used.


“Fixed Rate Period”
shall have the meaning in the form of Security set forth in Section 2.1.


“GAAP”
means United States generally accepted accounting principles, consistently
applied, from time to time in effect.


“Global Security”
means a Security that evidences all or part of the Securities, the ownership
and transfers of which shall be made through book entries by a Depositary.


“Government Obligation” means
(a) any security that is (i) a direct obligation of the United States of
America of which the full faith and credit of the United States of America is
pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America or the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (b) any
depositary receipt issued by a bank (as defined in section 3(a)(2) of the
Securities Act) as custodian with respect to any Government Obligation that is
specified in clause (a) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any Government Obligation that is so specified and
held, provided, that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such depositary
receipt from any amount



 5
 






 



received by the custodian in respect of the Government
Obligation or the specific payment of principal or interest evidenced by such
depositary receipt.


“Guarantor” means Morgans Hotel Group Co., a Delaware
corporation.


“Holder” means a
Person in whose name a Security is registered in the Securities Register.


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


“Interest Charges” means, for any period,
the excess of (a) the sum of interest expense (including imputed interest
expense in respect of capital lease obligations) which, in accordance with
GAAP, would be included on a consolidated income statement for the Guarantor
and its consolidated subsidiaries as interest expense incurred for such period,
including, without duplication, any fixed financing charges for preferred
distributions and capital leases of the Guarantor and its consolidated
subsidiaries, as determined in accordance with GAAP, over (b) the sum of (i) to
the extent included in clause (a) above, interest expense (including imputed
interest expense in respect of capital lease obligations) for Clift Holdings
LLC, a Delaware limited liability company, (ii) to the extent included in
clause (a) above, accrued interest payable in kind, and (iii) the minority interest
share of the amounts included in clause (a) above.


“Interest Payment Date” means
January 30, April 30, July 30 and
October 30 of each year, commencing on October 30, 2006, during the term
of this Indenture.


“Investment Company Act”
means the Investment Company Act of 1940 or any successor statute thereto, in
each case as amended from time to time.


“Investment Company
Event” means the receipt by the Company of an Opinion of Counsel
experienced in such matters to the effect that, as a result of the occurrence
of a change in law or regulation (including any announced prospective change)
or a written change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, there
is more than an insubstantial risk that the Trust is or, within ninety (90)
days of the date of such opinion will be, considered an “investment company”
that is required to be registered under the Investment Company Act, which
change or prospective change becomes effective or would become effective, as
the case may be, on or after the date of the issuance of the Securities.


“LIBOR” has the
meaning specified in Schedule A.


“LIBOR Business Day”
has the meaning specified in Schedule A.


“LIBOR Determination Date”
has the meaning specified in Schedule A.


“Liquidation Amount”
has the meaning specified in the Trust Agreement.



 6
 






 



“Maturity” means,
when used with respect to any Security, the date on which the principal of such
Security or any installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.


“Net Income”
means, with reference to any period, the net income (or loss) before preferred
distributions of the Guarantor and its consolidated subsidiaries for such
period, as determined in accordance with GAAP.


“Notice of Default” means
a written notice of the kind specified in Section 5.1(c).


“Officer’s Certificate”
means a certificate signed by the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
the Treasurer, an Assistant Treasurer, the Secretary, a Vice President,\ or an
Assistant Secretary, of the Company and delivered to the Trustee.


“Opinion of Counsel”
means a written opinion of counsel, who may be counsel for or an employee of
the Company or any Affiliate of the Company.


“Optional
Redemption Price” has the meaning set forth in Section 11.1.


“Original Issue Date” means
the date of original issuance of each Security.


“Outstanding”
means, when used in reference to any Securities, as of the date of
determination, all Securities theretofore authenticated and delivered under
this Indenture, except:


(i)            Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;


(ii)           Securities
for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; provided,
that, if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and


(iii)          Securities
that have been paid or in substitution for or in lieu of which other Securities
have been authenticated and delivered pursuant to the provisions of this
Indenture, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;


provided, that in
determining whether the Holders of the requisite principal amount of
Outstanding Securities have given 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 to be Outstanding unless
the Company shall hold all Outstanding Securities, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
that a Responsible Officer of



 7
 






 



the Trustee actually knows to be so owned shall be so
disregarded.  Securities so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or such other
obligor.  Notwithstanding anything herein
to the contrary, Securities initially issued to the Trust that are owned by the
Trust shall be deemed to be Outstanding notwithstanding the ownership by the
Company or an Affiliate of any beneficial interest in the Trust.


“Paying Agent” means the Trustee or any Person (other
than the Company or any Affiliate of the Company) authorized by the Company to
pay the principal of or any premium or interest on, or other amounts in respect
of, any Securities on behalf of the Company.


“Person” means a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, company, limited liability company,
trust, unincorporated association, or government, or any agency or political
subdivision thereof, or any other entity of whatever nature.


“Place of Payment”
means, with respect to the Securities, the Corporate Trust Office of the
Trustee.


“Preferred Securities”
has the meaning specified in the first recital of this Indenture.


“Predecessor Security”
of any particular Security means every previous Security evidencing all or a
portion of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any
security authenticated and delivered under Section 3.6 in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.


“Proceeding” has
the meaning specified in Section 12.2(b).


“Property Trustee” means
the Person identified as the “Property Trustee” in the Trust Agreement, solely
in its capacity as Property Trustee of the Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Property Trustee appointed as therein provided.


“Purchase Agreement”
means the Purchase Agreement or Purchase Agreements (whether one or more)
executed and delivered contemporaneously with this Indenture by the Trust, the
Company and the purchaser(s) named therein, as the same may be amended from
time to time.


“Redemption Date”
means, when used with respect to any Security to be redeemed, the date fixed
for such redemption by or pursuant to this Indenture.


“Redemption Price”
means, when used with respect to any Security to be redeemed, in whole or in
part, the Special Redemption Price or the Optional Redemption Price, as
applicable, at which such Security or portion thereof is to be redeemed as
fixed by or pursuant to this Indenture.



 8
 






 



“Reference Banks”
has the meaning specified in Schedule A.


“Regular Record Date”
for the interest payable on any Interest Payment Date with respect to the
Securities means the date that is fifteen (15) days preceding such Interest
Payment Date (whether or not a Business Day).


“Responsible Officer”
means, when used with respect to the Trustee, the officer in the Worldwide
Securities Services department of the Trustee having direct responsibility for
the administration of this Indenture.


“Rights Plan” means
a plan of the Company providing for the issuance by the Company to all holders
of its Equity Interests of rights entitling the holders thereof to subscribe
for or purchase Equity Interests or any class or series of Equity Interests in
the Company which rights (i) are deemed to be transferred with such Equity
Interests and (ii) are also issued in respect of future issuances of such
Equity Interests, in each case until the occurrence of a specified event or events.


“Securities” or “Security” means any debt securities or
debt security, as the case may be, authenticated and delivered under this
Indenture.


“Securities Act”
means the Securities Act of 1933 or any successor statute thereto, in each case
as amended from time to time.


“Securities Register”
and “Securities Registrar” have
the respective meanings specified in Section 3.5.


“Senior Debt”
means the principal of and any premium and interest on (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company, whether or not such claim for
post-petition interest is allowed in such proceeding) all Debt of the Company,
whether incurred on or prior to the date of this Indenture or thereafter incurred, unless
it is provided in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, that such obligations are not superior in right
of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be
deemed to include any (i) debt or (ii) other debt securities (and guarantees,
if any, in respect of such debt securities) issued to any trust other than the
Trust (or a trustee of any such trust), partnership or other entity affiliated
with the Company that is a financing vehicle of the Company (a “financing
entity”) in connection with the issuance by such financing entity of equity
securities or other securities, in each case of (i) or (ii) pursuant to an
instrument that ranks pari passu
with or junior in right of payment to this Indenture.


“Special Event”
means the occurrence of an Investment Company Event or a Tax Event.


“Special Record Date”
for the payment of any Defaulted Interest means a date fixed by the Trustee
pursuant to Section 3.1.


“Special Redemption
Price” has the meaning set forth in Section 11.2.


“Stated Maturity”
means October 30, 2036.



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“Subsidiary” of a
Person means (a) any corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person and/or by one or more of its
Subsidiaries or (b) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person and/or by one or more of its
Subsidiaries.  Unless otherwise expressly
provided, all references herein to a “Subsidiary” shall mean a Subsidiary of
the Company.


“Tax Event” means
the receipt by the Company of an Opinion of Counsel experienced in such matters
to the effect that, as a result of (a) any amendment to or change (including
any announced prospective change) in the laws or any regulations thereunder of
the United States or any political subdivision or taxing authority thereof or
therein or (b) any judicial decision or any official administrative
pronouncement (including any private letter ruling, technical advice memorandum
or field service advice) or regulatory procedure, including any notice or
announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of
whether such judicial decision or Administrative Action is issued to or in
connection with a proceeding involving the Company or the Trust and whether or
not subject to review or appeal, which amendment, change, judicial decision or
Administrative Action is enacted, promulgated or announced, in each case, on or
after the date of issuance of the Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within ninety (90) days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Securities, (ii) interest payable
by the Company on the Securities is not, or within ninety (90) days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (iii) the Trust is, or will
be within ninety (90) days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.


“Trust” has the
meaning specified in the first recital of this Indenture.


“Trust Agreement”
means the Amended and Restated Trust Agreement executed and delivered by the
Company, the Property Trustee, Chase Bank USA, National Association, as
Delaware Trustee and the Administrative Trustees named therein,
contemporaneously with the execution and delivery of this Indenture, for the
benefit of the holders of the Trust Securities, as amended or supplemented from
time to time.


“Trustee” means
the Person named as the “Trustee” in the first paragraph of this instrument,
solely in its capacity as such and not in its individual capacity, until a
successor Trustee shall have become such pursuant to the applicable provisions
of this Indenture, and, thereafter, “Trustee”
shall mean or include each Person who is then a Trustee hereunder.


“Trust Indenture
Act” means the Trust
Indenture Act of 1939, as amended and as in effect on the date as of this
Indenture.


“Trust Securities”
has the meaning specified in the first recital of this Indenture.



 10
 






 



“Unsecured Debt”
means with respect to any Person, any Debt of such Person that is not secured
in any manner by any liens on any property, including, without limitation, the
Securities. It is agreed that for purposes of this definition and Section
10.9(b), Unsecured Debt shall not include bank lines of credit.


SECTION 1.2.                Compliance Certificate and Opinions.


(a)           Upon
any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall, if requested by the
Trustee, furnish to the Trustee an Officer’s Certificate stating that all
conditions precedent (including covenants compliance with which constitutes a
condition precedent), if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent (including
covenants compliance with which constitutes a condition precedent), if any,
have been complied with.


(b)           Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than the certificate provided pursuant to
Section 10.3) shall include:


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


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


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


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


SECTION 1.3.                Forms of Documents Delivered to
Trustee.


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


(b)           Any
certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or after reasonable inquiry should
know, that the certificate or opinion or representations with respect to
matters upon which his or her certificate or opinion is based are
erroneous.  Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of



 11
 






 



the Company stating that the information with respect
to such factual matters is in the possession of the Company, unless such
counsel knows, or after reasonable inquiry should know, that the certificate or
opinion or representations with respect to such matters are erroneous.


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


(d)           Whenever,
subsequent to the receipt by the Trustee of any Board Resolution, Officer’s
Certificate, Opinion of Counsel or other document or instrument, a clerical,
typographical or other inadvertent or unintentional error or omission shall be
discovered therein, a new document or instrument may be substituted therefor in
corrected form with the same force and effect as if originally received in the
corrected form and, irrespective of the date or dates of the actual execution
and/or delivery thereof, such substitute document or instrument shall be deemed
to have been executed and/or delivered as of the date or dates required with
respect to the document or instrument for which it is substituted.  Without limiting the generality of the
foregoing, any Securities issued under the authority of such defective document
or instrument shall nevertheless be the valid obligations of the Company
entitled to the benefits of this Indenture equally and ratably with all other
Outstanding Securities.


SECTION 1.4.                Acts of Holders.


(a)           Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given to or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent thereof duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments (including any appointment
of an agent) is or are delivered to the Trustee, and, where it is hereby
expressly required, to the Company.  Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or
instruments.  Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 1.4.


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


(c)           The
ownership of Securities shall be proved by the Securities Register.



 12
 






 



(d)           Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the same
Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.


(e)           Without
limiting the foregoing, a Holder entitled to take any action hereunder with
regard to any particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed agents each
of which may do so pursuant to such appointment with regard to all or any part
of such principal amount.


(f)            Except
as set forth in paragraph (g) of this Section 1.4, the Company may set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders of
Securities.  If any record date is set
pursuant to this paragraph, the Holders of Outstanding Securities on such
record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as defined in Section 1.4(h)) by Holders of the requisite principal
amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed
to prevent the Company from setting a new record date for any action for which
a record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect).  Promptly
after any record date is set pursuant to this paragraph, the Company, at its
own expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities in the manner set forth in Section
1.6.


(g)           The
Trustee may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to join in the giving or making of
(i) any Notice of Default, (ii) any declaration of acceleration or rescission
or annulment thereof referred to in Section 5.2, (iii) any request to
institute proceedings referred to in Section 5.7(b) or (iv) any
direction referred to in Section 5.12. 
If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided, that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date.  Nothing in this paragraph
shall be construed to prevent the Trustee from setting a new record date for
any action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect).  Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities in the manner set forth in Section 1.6.



 13














 


(h)           With respect to any record date set
pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto
that sets such record date may designate any day as the “Expiration Date” and from time to time may change the
Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of
the proposed new Expiration Date is given to the other party hereto in writing,
and to each Holder of Securities in the manner set forth in Section 1.6,
on or prior to the existing Expiration Date. 
If an Expiration Date is not designated with respect to any record date
set pursuant to this Section 1.4, the party hereto that set such record
date shall be deemed to have initially designated the ninetieth (90th) day after such record date
as the Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. 
Notwithstanding the foregoing, no Expiration Date shall be later than
the one hundred eightieth (180th)
day after the applicable record date.


SECTION 1.5.                Notices, Etc.  to Trustee and Company.


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


(a)           the Trustee by any Holder, any holder
of Preferred Securities or the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at its Corporate Trust Office, or


(b)           the Company by the Trustee, any
Holder or any holder of Preferred Securities shall be sufficient for every
purpose hereunder if in writing and mailed, first class, postage prepaid, to
the Company addressed to it at 475 Tenth Avenue, New York, NY 10018 or at any other address previously furnished in writing to
the Trustee by the Company.


SECTION 1.6.                Notice to Holders; Waiver.


Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class, postage prepaid, to
each Holder affected by such event to the address of such Holder as it appears
in the Securities Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice.  If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.



 14
 






 



SECTION 1.7.                Effect of Headings and Table of
Contents.


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


SECTION 1.8.                Successors and Assigns.


This Indenture shall be binding upon and shall inure
to the benefit of any successor to the Company and the Trustee, including any
successor by operation of law.  Except in
connection with a transaction involving the Company that is permitted under Article
VIII and pursuant to which the assignee agrees in writing to perform the
Company’s obligations hereunder, the Company shall not assign its obligations
hereunder.


SECTION
1.9.                Separability
Clause.


If 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 there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue.


SECTION 1.10.              Benefits of Indenture.


Nothing in this Indenture or in the Securities,
express or implied, shall give to any Person, other than the parties hereto and
their successors and assigns, the holders of Senior Debt, the Holders of the
Securities and, to the extent expressly provided in Sections 5.2, 5.8,
5.9, 5.11, 5.13, 9.2 and 10.7, the holders
of Preferred Securities, any benefit or any legal or equitable right, remedy or
claim under this Indenture.


SECTION 1.11.              Governing Law.


This Indenture and the rights and
obligations of each of the Holders, the Company and the Trustee shall be
construed in accordance with and governed by the laws of the State of New York
without reference to its conflict of laws provisions (other than section 5-1401
of the General Obligations Law).


SECTION 1.12.              Submission to Jurisdiction.


ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY
HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN).  BY EXECUTION AND DELIVERY OF THIS INDENTURE,
EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF
APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS INDENTURE.



 15
 






 



SECTION 1.13.              Non-Business Days.


If any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Securities)
payment of interest, premium, if any, or principal or other amounts in respect
of such Security shall not be made on such date, but shall be made on the next
succeeding Business Day (and no interest shall accrue in respect of the amounts
whose payment is so delayed for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, until such next
succeeding Business Day) except that, if such Business Day falls in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the Interest Payment Date or Redemption Date or at the Stated Maturity.


ARTICLE II


SECURITY FORMS


SECTION 2.1.                Form of Security.


Any Security issued hereunder shall be in
substantially the following form:


MORGANS GROUP LLC


Junior Subordinated Note
due 2036


	
  No.                  

  	
   

  	
  $                   

  



 


Morgans Group LLC, a limited liability company
organized and existing under the laws of Delaware (hereinafter called the “Company,” which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to JPMorgan Chase Bank, National Association,
not in its individual capacity, but solely as Property Trustee for MHG Capital
Trust I, or registered assigns, the principal sum of Fifty Million One Hundred
Thousand Dollars ($50,100,000) or such other principal amount represented
hereby as may be set forth in the records of the Securities Registrar
hereinafter referred to in accordance with the Indenture on October 30,
2036.  The Company further promises to
pay interest on said principal sum from August 4, 2006, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on January 30, April
30, July 30 and October 30 of each year, commencing October 30, 2006, or
if any such day is not a Business Day, on the next succeeding Business Day (and
no interest shall accrue in respect of the amounts whose payment is so delayed
for the period from and after such Interest Payment Date until such next
succeeding Business Day), except that, if such Business Day falls in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on the Interest Payment Date, at a fixed rate equal to 8.676% per annum through
the interest payment date on October 30, 2016 (“Fixed Rate Period”) and
thereafter at a variable rate
equal to LIBOR plus 3.25% per annum, together with Additional Tax Sums, if any,
as provided in Section 10.5 of the Indenture, until the principal hereof
is paid or duly provided for or made available for payment; provided, further,
that any



 16
 






 



overdue principal, premium, if any, or Additional Tax
Sums and any overdue installment of interest shall bear Additional Interest at
a fixed rate equal to 8.676% through the interest payment date on October 30,
2016 and thereafter at a variable rate equal to LIBOR plus 3.25% per annum (to
the extent that the payment of such interest shall be legally enforceable),
compounded quarterly, from the
dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand.


During the Fixed Rate
Period, the amount of interest payable shall be computed on the basis of a
360-day year of twelve 30-day months and the amount payable for any partial
period shall be computed on the basis of the number of days elapsed in a
360-day year of twelve 30-day months. 
Upon expiration of the Fixed Rate Period, the amount of interest payable
for any interest payment period will be computed on the basis of a 360-day year
and the actual number of days elapsed in the relevant interest period.  The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest installment.  Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than ten (10) days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.


Payment of principal of, premium, if any, and interest
on this Security shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  Payments of principal,
premium, if any, and interest due at the Maturity of this Security shall be
made at the Place of Payment upon surrender of such Securities to the Paying
Agent, and payments of interest shall be made, subject to such surrender where
applicable, by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Paying
Agent at least ten (10) Business Days prior to the date for payment by the
Person entitled thereto unless proper written transfer instructions have not
been received by the relevant record date, in which case such payments shall be
made by check mailed to the address of such Person as such address shall appear
in the Security Register. 
Notwithstanding the foregoing, so long as the Holder of this Security is
the Property Trustee, the payment of the principal of (and premium, if any) and
interest (including any overdue installment of interest and Additional Tax
Sums, if any) on this Security will be made at such place and to such account
as may be designated by the Property Trustee.


The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Debt, and this Security is issued
subject to the provisions of the Indenture with respect thereto.  Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his or her behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such
purposes.  Each Holder hereof, by his or



 17
 






 



her acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.


Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.


[FORM OF REVERSE OF
SECURITY]


This Security is one of a duly authorized issue of
securities of the Company (the “Securities”)
issued under the Junior Subordinated Indenture, dated as of August 4, 2006 (the
“Indenture”), between Morgans
Hotel Group Co., the Company and JPMorgan Chase Bank, National Association, as
Trustee (in such capacity, the “Trustee,”
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior Debt,
the Holders of the Securities and the holders of the Preferred Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.


All terms used in this Security that are defined in
the Indenture or in the Amended and Restated Trust Agreement, dated as of
August 4, 2006 (as modified, amended or supplemented from time to time, the “Trust Agreement”), relating to MHG Capital
Trust I (the “Trust”) among the
Company, as Depositor, the Trustees named therein and the Holders from time to
time of the Trust Securities issued pursuant thereto, shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case may be.


The Company may, on any Interest Payment Date, at its
option, upon not less than thirty (30) days’ nor more than sixty (60) days’
written notice to the Holders of the Securities (unless a shorter notice period
shall be satisfactory to the Trustee) on or after October 30, 2011 and subject to the terms and
conditions of Article XI of the Indenture, redeem this Security in whole
at any time or in part from time to time at a Redemption Price equal to one
hundred percent (100%) of the principal amount hereof, together, in the case of
any such redemption, with accrued interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date.


In addition, upon the occurrence and during the
continuation of a Special Event, the Company may, at its option, upon not less
than thirty (30) days’ nor more than sixty (60) days’ written notice to the
Holders of the Securities (unless a shorter notice period shall be satisfactory
to the Trustee), redeem this Security, in whole but not in part, subject to the
terms and conditions of Article XI of the Indenture at a Redemption
Price equal to one hundred three percent (103%) of the principal amount hereof,
together, in the case of any such redemption, with accrued interest, including
any Additional Interest, through but excluding the date fixed as the Redemption
Date.


In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.  If less than all the Securities are to be
redeemed, the particular Securities to



 18
 






 



be redeemed shall be selected not more than sixty (60)
days prior to the Redemption Date by the Trustee from the Outstanding
Securities not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security.


The Indenture permits, with certain exceptions as
therein provided, the Company and the Trustee at any time to enter into a
supplemental indenture or indentures for the purpose of modifying in any manner
the rights and obligations of the Company and of the Holders of the Securities,
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Securities.  The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.


No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
any premium, if any, and interest, including any Additional Interest (to the
extent legally enforceable), on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.


As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is restricted to
transfers to “Qualified Purchasers” (as such term is defined in the Investment
Company Act of 1940, as amended), and is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar and duly executed by, the Holder hereof or
such Holder’s attorney duly authorized in writing, and thereupon one or more
new Securities, of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.


The Securities are issuable only in registered form
without coupons in minimum denominations of $100,000 and any integral multiple
of $1,000 in excess thereof.  As provided
in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.


No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.


The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, whether or



 19
 






 



not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.


The Company and, by its acceptance of this Security or
a beneficial interest herein, the Holder of, and any Person that acquires a
beneficial interest in, this Security agree that, for United States federal,
state and local tax purposes, it is intended that this Security constitute
indebtedness.


This Security shall be construed in accordance with
and governed by the laws of the State of New York, without reference to its
conflict of laws provisions (other than section 5-1401 of the General
Obligations Law).


IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed on this              
day of                    ,
20   .


	
   

  	
  MORGANS GROUP LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Morgans Hotel
  Group Co., its managing

  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					



 


SECTION 2.2.                Restricted Legend.


(a)           Any Security issued hereunder shall
bear a legend in substantially the following form:


“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (“DTC”)
OR A NOMINEE OF DTC.  THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE,
AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.


UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO.  OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO



 20
 






 



SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM.  EACH
PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE
SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.


THE HOLDER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY
BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A OF THE SECURITIES ACT) AND A “QUALIFIED PURCHASER” (AS
DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED),
(III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND (B) THE HOLDER WILL
NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.


THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER.  TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST
THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH SECURITIES.



 21
 






 



THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN,
BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT
IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED (“ERISA”),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN
ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY
INTEREST THEREIN.  ANY PURCHASER OR
HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE
BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH
SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING
THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.”


(b)           The above legends shall not be
removed from any Security unless there is delivered to the Company satisfactory
evidence, which may include an Opinion of Counsel, as may be reasonably
required to ensure that any future transfers thereof may be made without
restriction under or violation of the provisions of the Securities Act and
other applicable law.  Upon provision of
such satisfactory evidence, the Company shall execute and deliver to the
Trustee, and the Trustee shall deliver, upon receipt of a Company Order
directing it to do so, a Security that does not bear the legend.


SECTION 2.3.                Form of Trustee’s Certificate of
Authentication.


The Trustee’s certificate of authentication shall be
in substantially the following form:


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


	
  Dated:

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authenticating
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  
					



 


SECTION 2.4.                Temporary Securities.


(a)           Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with



 22
 






 



such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Securities may determine,
as evidenced by their execution of such Securities.


(b)           If temporary Securities are issued,
the Company will cause definitive Securities to be prepared without
unreasonable delay.  After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder.  Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Securities of any authorized denominations
having the same Original Issue Date and Stated Maturity and having the same
terms as such temporary Securities. 
Until so exchanged, the temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities.


SECTION 2.5.                Definitive Securities.


The Securities issued on the Original Issue Date shall
be in definitive form.  The definitive
Securities shall be printed, lithographed or engraved, or produced by any
combination of these methods, if required by any securities exchange on which
the Securities may be listed, on a steel engraved border or steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.


ARTICLE III


THE SECURITIES


SECTION 3.1.                Payment of Principal and Interest.


(a)           The unpaid principal amount of the
Securities shall bear interest at a fixed rate equal to 8.676% per annum
through the interest payment date on October 30, 2016 and thereafter at a
variable rate of LIBOR plus 3.25% per annum until paid or duly provided for,
such interest to accrue from the Original Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, and
any overdue principal, premium, if any, or Additional Tax Sums and any overdue
installment of interest shall bear Additional Interest at the rate equal to a
fixed rate equal to 8.676% per annum through the interest payment date on
October 30, 2016 and thereafter at a variable rate
of LIBOR plus 3.25% per annum
compounded quarterly from the
dates such amounts are due until they are paid or funds for the payment thereof
are made available for payment.


(b)           Interest and Additional Interest on
any Security that is payable, and is punctually paid or duly provided for, on
any Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, except that interest and any
Additional Interest payable on the Stated Maturity (or any date of principal
repayment upon early maturity) of the principal of a Security or on a
Redemption Date shall be paid to the Person to whom principal is



 23
 






 



paid.  The
initial payment of interest on any Security that is issued between a Regular
Record Date and the related Interest Payment Date shall be payable as provided
in such Security.


(c)           Any interest on any Security that is
due and payable, but is not timely paid or duly provided for, on any Interest
Payment Date for Securities (herein called “Defaulted
Interest”) shall forthwith cease to be payable to the registered
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in paragraph (i) or (ii) below:


(i)            The Company may elect to make
payment of any Defaulted Interest to the Persons in whose names the Securities
(or their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest (a
“Special Record Date”), which
shall be fixed in the following manner. 
At least thirty (30) days prior to the date of the proposed payment, the
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest.  Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest, which
shall be not more than fifteen (15) days and not less than ten (10) days prior
to the date of the proposed payment and not less than ten (10) days after the
receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company
of such Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first class, postage prepaid, to
each Holder of a Security at the address of such Holder as it appears in the
Securities Register not less than ten (10) days prior to such Special Record
Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered on such
Special Record Date; or


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


(d)           Payments of interest on the
Securities shall include interest accrued to but excluding the respective
Interest Payment Dates.  During the Fixed
Rate Period, the amount of interest payable shall be computed on the basis of a
360-day year of twelve 30-day months and the amount payable for any partial
period shall be computed on the basis of the number of days elapsed in a
360-day year of twelve 30-day months. 
Upon expiration of the Fixed Rate Period,



 24
 






 



the amount of interest payable for any interest
payment period will be computed on the basis of a 360-day year and the actual
number of days elapsed in the relevant interest period.


(e)           Payment of principal of, premium, if
any, and interest on the Securities shall be made in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts. 
Payments of principal, premium, if any, and interest due at the Maturity
of such Securities shall be made at the Place of Payment upon surrender of such
Securities to the Paying Agent and payments of interest shall be made subject
to such surrender where applicable, by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in
writing to the Paying Agent at least ten (10) Business Days prior to the date
for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case
such payments shall be made by check mailed to the address of such Person as
such address shall appear in the Security Register.  Notwithstanding the foregoing, so long as the
holder of this Security is the Property Trustee, the payment of the principal
of (and premium, if any) and interest (including any overdue installment of
interest and Additional Tax Sums, if any) on this Security will be made at such
place and to such account as may be designated by the Property Trustee.


(f)            The parties hereto acknowledge and
agree that the holders of the Preferred Securities have certain rights to
direct the Company to modify the Interest Payment Dates and corresponding
Redemption Date and Stated Maturity of the Securities or a portion of the
Securities pursuant to the Purchase Agreement. 
In the event any such modifications are made to the Securities or a
portion of the Securities, appropriate changes to the form of Security set
forth in Article II hereof shall be made prior to the issuance and
authentication of new or replacement Securities.  Any such modification of the Interest Payment
Date and corresponding Redemption Date and Stated Maturity with respect to any
Securities or tranche of Securities shall not require or be subject to the
consent of the Trustee.


(g)           Subject to the foregoing provisions
of this Section 3.1, each Security delivered under this Indenture upon
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, that were carried by such
other Security.


SECTION 3.2.                Denominations.


The Securities shall be in registered form without
coupons and shall be issuable in minimum denominations of $100,000 and any
integral multiple of $1,000 in excess thereof.


SECTION 3.3.                Execution, Authentication, Delivery
and Dating.


(a)           At any time and from time to time
after the execution and delivery of this Indenture, the Company may deliver
Securities in an aggregate principal amount (including all then Outstanding
Securities) not in excess of Fifty Million One Hundred Thousand Dollars
($50,100,000) executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. 
In



 25
 






 



authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon:


(i)            a copy of any Board Resolution
relating thereto; and


(ii)           an Opinion of Counsel stating
that:  (1) such Securities, when
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will
constitute, and the Indenture constitutes, valid and legally binding
obligations of the Company, each enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; (2) the Securities have
been duly authorized and executed by the Company and have been delivered to the
Trustee for authentication in accordance with this Indenture; (3) the
Securities are not required to be registered under the Securities Act; and (4)
the Indenture is not required to be qualified under the Trust Indenture Act.


(b)           The Securities shall be executed on
behalf of the Company by its Chairman of the Board, its Vice Chairman of the
Board, its Chief Executive Officer, its President or one of its Vice
Presidents.  The signature of any of
these officers on the Securities may be manual or facsimile.  Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.


(c)           No Security shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. 
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 3.8, 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.


(d)           Each Security shall be dated the date
of its authentication.


SECTION 3.4.                Global Securities.


(a)           Upon the election of the Holder after
the Original Issue Date, which election need not be in writing, the Securities
owned by such Holder shall be issued in the form of one or more Global
Securities registered in the name of the Depositary or its nominee.  Each Global Security issued under this
Indenture shall be registered in the name of the Depositary designated by the
Company for such Global Security or a nominee thereof and delivered to such
Depositary or a



 26
 






 



nominee thereof or custodian therefor, and each such
Global Security shall constitute a single Security for all purposes of this
Indenture.


(b)           Notwithstanding any other provision
in this Indenture, no Global Security may be exchanged in whole or in part for
registered Securities, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary for such
Global Security or a nominee thereof unless (i) such Depositary advises the
Trustee and the Company in writing that such Depositary is no longer willing or
able to properly discharge its responsibilities as Depositary with respect to
such Global Security, and no qualified successor is appointed by the Company
within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary
ceases to be a clearing agency registered under the Exchange Act and no
successor is appointed by the Company within ninety (90) days after obtaining
knowledge of such event, (iii) the Company executes and delivers to the Trustee
a Company Order stating that the Company elects to terminate the book-entry
system through the Depositary or (iv) an Event of Default shall have occurred
and be continuing.  Upon the occurrence
of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee
shall notify the Depositary and instruct the Depositary to notify all owners of
beneficial interests in such Global Security of the occurrence of such event
and of the availability of Securities to such owners of beneficial interests
requesting the same.  The Trustee may
conclusively rely, and be protected in relying, upon the written identification
of the owners of beneficial interests furnished by the Depositary, and shall
not be liable for any delay resulting from a delay by the Depositary.  Upon the issuance of such Securities and the
registration in the Securities Register of such Securities in the names of the
Holders of the beneficial interests therein, the Trustees shall recognize such
holders of beneficial interests as Holders.


(c)           If any Global Security is to be
exchanged for other Securities or canceled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article III or (ii) the
principal amount thereof shall be reduced or increased by an amount equal to
(x) the portion thereof to be so exchanged or canceled, or (y) the principal
amount of such other Security to be so exchanged for a beneficial interest
therein, as the case may be, by means of an appropriate adjustment made on the
records of the Securities Registrar, whereupon the Trustee, in accordance with
the Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its
records.  Upon any such surrender or
adjustment of a Global Security by the Depositary, accompanied by registration
instructions, the Company shall execute and the Trustee shall authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) in accordance with the instructions of the Depositary.  The Trustee shall not be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
fully protected in relying on, such instructions.


(d)           Every Security authenticated and
delivered upon registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion thereof shall be authenticated and delivered in
the form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such Global
Security or a nominee thereof.



 27














 


(e)           Securities
distributed to holders of Book-Entry Preferred Securities (as defined in the
applicable Trust Agreement) upon the dissolution of the Trust shall be
distributed in the form of one or more Global Securities registered in the name
of a Depositary or its nominee, and deposited with the Securities Registrar, as
custodian for such Depositary, or with such Depositary, for credit by the
Depositary to the respective accounts of the beneficial owners of the
Securities represented thereby (or such other accounts as they may
direct).  Securities distributed to
holders of Preferred Securities other than Book-Entry Preferred Securities upon
the dissolution of the Trust shall not be issued in the form of a Global Security
or any other form intended to facilitate book-entry trading in beneficial
interests in such Securities.


(f)            The
Depositary or its nominee, as the registered owner of a Global Security, shall
be the Holder of such Global Security for all purposes under this Indenture and
the Securities, and owners of beneficial interests in a Global Security shall
hold such interests pursuant to the Applicable Depositary Procedures.  Accordingly, any such owner’s beneficial
interest in a Global Security shall be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the Depositary
or its nominee or its Depositary Participants. 
The Securities Registrar and the Trustee shall be entitled to deal with
the Depositary for all purposes of this Indenture relating to a Global Security
(including the payment of principal and interest thereon and the giving of
instructions or directions by owners of beneficial interests therein and the
giving of notices) as the sole Holder of the Security and shall have no
obligations to the owners of beneficial interests therein.  Neither the Trustee nor the Securities
Registrar shall have any liability in respect of any transfers effected by the
Depositary.


(g)           The
rights of owners of beneficial interests in a Global Security shall be exercised
only through the Depositary and shall be limited to those established by law
and agreements between such owners and the Depositary and/or its Depositary
Participants.


(h)           No
holder of any beneficial interest in any Global Security held on its behalf by
a Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. 
None of the Company, the Trustee nor any agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Global Security or maintaining, supervising or reviewing any records relating
to such beneficial ownership interests. 
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depositary
or impair, as between a Depositary and such holders of beneficial interests,
the operation of customary practices governing the exercise of the rights of
the Depositary (or its nominee) as Holder of any Security.


SECTION 3.5.                Registration, Transfer and Exchange
Generally.


(a)           The
Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the
registrar and transfer agent with respect to the Securities (the “Securities Registrar”), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Securities and of transfers and exchanges of Securities.  The Trustee shall



 28
 






 



at all times also be the Securities Registrar.  The provisions of Article VI shall
apply to the Trustee in its role as Securities Registrar.


(b)           Subject
to compliance with Section 2.2(b), upon surrender for registration of
transfer of any Security at the offices or agencies of the Company designated
for that purpose the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of any authorized denominations of like tenor and aggregate
principal amount.


(c)           At
the option of the Holder, Securities may be exchanged for other Securities of
any authorized denominations, of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency.  Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to
receive.


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


(e)           Every
Security presented or surrendered for transfer or exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Securities Registrar, duly executed by the Holder thereof or such Holder’s
attorney duly authorized in writing.


(f)            No
service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.


(g)           Neither
the Company nor the Trustee shall be required pursuant to the provisions of
this Section 3.5 (g):  (i) to
issue, register the transfer of or exchange any Security during a period beginning
at the opening of business fifteen (15) days before the day of selection for
redemption of Securities pursuant to Article XI and ending at the close
of business on the day of mailing of the notice of redemption or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except, in the case of any such Security to be redeemed in
part, any portion thereof not to be redeemed.


(h)           The
Company shall designate an office or offices or agency or agencies where
Securities may be surrendered for registration or transfer or exchange.  The Company initially designates the
Corporate Trust Office as its office and agency for such purposes.  The Company shall give prompt written notice
to the Trustee and to the Holders of any change in the location of any such
office or agency.


(i)            The
Securities may only be transferred to a “Qualified Purchaser” as such term is
defined in Section 2(a)(51) of the Investment Company Act.



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(j)            Neither
the Trustee nor the Securities Registrar shall be responsible for ascertaining
whether any transfer hereunder complies with the registration provisions of or
any exemptions from the Securities Act, applicable state securities laws or the
applicable laws of any other jurisdiction, ERISA, the Code, or the Investment
Company Act; provided, that if a certificate is specifically required by the
express terms of this Section 3.5 to be delivered to the Trustee or the
Securities Registrar by a Holder or transferee of a Security, the Trustee and
the Securities Registrar shall be under a duty to receive and examine the same
to determine whether or not the certificate substantially conforms on its face
to the requirements of this Indenture and shall promptly notify the party
delivering the same if such certificate does not comply with such terms.


SECTION 3.6.                Mutilated, Destroyed, Lost and Stolen
Securities.


(a)           If
any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Trustee to save the Company and
the Trustee harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
aggregate principal amount and bearing a number not contemporaneously
outstanding.


(b)           If
there shall be delivered to the Trustee (i) evidence to its satisfaction of the
destruction, loss or theft of any Security and (ii) such security or indemnity
as may be required by it to save each of the Company and the Trustee harmless,
then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and aggregate principal amount as such
destroyed, lost or stolen Security, and bearing a number not contemporaneously
outstanding.


(c)           If
any such mutilated, destroyed, lost or stolen Security has become or is about
to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.


(d)           Upon
the issuance of any new Security under this Section 3.6, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.


(e)           Every
new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
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.


(f)            The
provisions of this Section 3.6 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.



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SECTION 3.7.                Persons Deemed Owners.


The Company, the Trustee and any agent of the Company
or the Trustee shall treat the Person in whose name any Security is registered
as the owner of such Security for the purpose of receiving payment of principal
of and any interest on such Security and for all other purposes whatsoever, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.


SECTION 3.8.                Cancellation.


All Securities surrendered for payment, redemption,
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Securities
surrendered directly to the Trustee for any such purpose shall be promptly
canceled by it.  The Company may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee.  No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 3.8, except as expressly permitted by this
Indenture.  All canceled Securities shall
be retained or disposed of by the Trustee in accordance with its customary
practices and the Trustee shall deliver to the Company a certificate of such
disposition.


SECTION 3.9.                Reserved.


SECTION 3.10.              Reserved.


SECTION 3.11.              Agreed Tax Treatment.


Each Security issued hereunder shall provide that the
Company and, by its acceptance or acquisition of a Security or a beneficial
interest therein, the Holder of, and any Person that acquires a direct or
indirect beneficial interest in, such Security, intend and agree to treat such
Security as indebtedness of the Company for U.S.  Federal, state and local tax purposes and to
treat the Preferred Securities (including but not limited to all payments and
proceeds with respect to the Preferred Securities) as an undivided beneficial
ownership interest in the Securities (and any other Trust property) (and
payments and proceeds therefrom, respectively) for United States Federal, state
and local tax purposes.  The provisions
of this Indenture shall be interpreted to further this intention and agreement
of the parties.


SECTION 3.12.              CUSIP Numbers.


The Company in issuing the Securities may use “CUSIP”
numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP”
numbers in notices of redemption and other similar or related materials as a
convenience to Holders; provided,
that any such notice or other materials may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of redemption or other materials and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.



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ARTICLE IV


SATISFACTION AND DISCHARGE


SECTION 4.1.                Satisfaction and Discharge of
Indenture.


This Indenture shall, upon Company Request, cease to
be of further effect (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for and as
otherwise provided in this Section 4.1) and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when


(a)           either


(i)            all
Securities theretofore authenticated and delivered (other than (A) Securities
that have been mutilated, destroyed, lost or stolen and that have been replaced
or paid as provided in Section 3.6 and (B) Securities for whose payment
money has theretofore been deposited 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 10.2) have been delivered to the Trustee
for cancellation; or


(ii)           all
such Securities not theretofore delivered to the Trustee for cancellation


(A)          have
become due and payable, or


(B)           will
become due and payable at their Stated Maturity within one year of the date of
deposit, or


(C)           are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,


and the Company, in the case of subclause (ii)(A), (B)
or (C) above, has deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose (x) an amount in the currency or currencies in
which the Securities are payable, (y) Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than the due date of any payment,
money in an amount or (z) a combination thereof, in each case sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any premium and
interest (including any Additional Interest) to the date of such deposit (in
the case of Securities that have become due and payable) or to the Stated
Maturity (or any date of principal repayment upon early maturity) or Redemption
Date, as the case may be;


(b)           the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and



 32
 






 



(c)           the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with.


Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 6.6,
the obligations of the Company to any Authenticating Agent under Section
6.11 and, if money shall have been deposited with the Trustee pursuant to
subclause (a)(ii) of this Section 4.1, the obligations of the Trustee
under Section 4.2 and Section 10.2(e) shall survive.


SECTION 4.2.                Application of Trust Money.


Subject to the provisions of Section 10.2(d),
all money deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by the Trustee, in accordance with the provisions of
the Securities and this Indenture, to the payment in accordance with Section
3.1, either directly or through any Paying Agent as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium
and interest (including any Additional Interest) for the payment of which such
money or obligations have been deposited with or received by the Trustee.  Moneys held by the Trustee under this Section
4.2 shall not be subject to the claims of holders of Senior Debt under Article
XII.


ARTICLE V


REMEDIES


SECTION 5.1.                Events of Default.


“Event of Default”
means, wherever used herein with respect to the Securities, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):


(a)           default
in the payment of any interest upon any Security, including any Additional
Interest in respect thereof, when it becomes due and payable, and continuance
of such default for a period of thirty (30) days; or


(b)           default
in the payment of the principal of or any premium on any Security at its
Maturity; or


(c)           default
in the performance, or breach, of any covenant or warranty of the Company in
this Indenture or the Purchase Agreement and continuance of such default or
breach for a period of thirty (30) days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least thirty three and a third percent
(33-1/3%) in aggregate principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a “Notice of Default” hereunder;



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(d)           the
entry by a court having jurisdiction in the premises of a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or
in respect of the Company under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of sixty (60) consecutive days;


(e)           the
institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the Company of a petition
or answer or consent seeking reorganization or relief under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law,
or the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due and its willingness to be adjudicated a bankrupt
or insolvent, or the taking of corporate action by the Company in furtherance
of any such action; or


(f)            the
Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up
its business or otherwise terminated its existence, except in connection with
(1) the distribution of the Securities to holders of the Preferred
Securities in liquidation of their interests in the Trust, (2) the
redemption of all of the outstanding Preferred Securities or (3) certain
mergers, consolidations or amalgamations, each as and to the extent permitted
by the Trust Agreement.


SECTION 5.2.                Acceleration of Maturity; Rescission
and Annulment.


(a)           If
an Event of Default occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than thirty three and a third percent
(33-1/3%) in aggregate principal amount of the Outstanding Securities may
declare the principal amount of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), provided, that if, upon an Event of Default, the Trustee or the
Holders of not less than thirty three and a third percent (33-1/3%) in
principal amount of the Outstanding Securities fail to declare the principal of
all the Outstanding Securities to be immediately due and payable, the holders
of at least thirty three and a third percent (33-1/3%) in aggregate Liquidation
Amount of the Preferred Securities then outstanding shall have the right to
make such declaration by a notice in writing to the Property Trustee, the
Company and the Trustee; and upon any such declaration the principal amount of
and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable.


(b)           At
any time after such a declaration of acceleration with respect to Securities
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article V,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Indenture Trustee, or the



 34
 






 



holders of a majority in aggregate Liquidation Amount
of the Preferred Securities, by written notice to the Property Trustee, the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:


(i)            the
Company has paid or deposited with the Trustee a sum sufficient to pay:


(A)          all
overdue installments of interest on all Securities,


(B)           any
accrued Additional Interest on all Securities,


(C)           the
principal of and any premium on any Securities that have become due otherwise
than by such declaration of acceleration and interest (including any Additional
Interest) thereon at the rate borne by the Securities, and


(D)          all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, the Property Trustee and
their agents and counsel; and


(ii)           all
Events of Default with respect to Securities, other than the non-payment of the
principal of Securities that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.13;


provided, that if
the Holders of such Securities fail to annul such declaration and waive such
default, the holders of not less than a majority in aggregate Liquidation
Amount of the Preferred Securities then outstanding shall also have the right
to rescind and annul such declaration and its consequences by written notice to
the Property Trustee, the Company and the Trustee, subject to the satisfaction
of the conditions set forth in paragraph (b) of this Section 5.2.  No such rescission shall affect any
subsequent default or impair any right consequent thereon.


SECTION 5.3.                Collection of Indebtedness and Suits
for Enforcement by Trustee.


(a)           The
Company covenants that if:


(i)            default
is made in the payment of any installment of interest (including any Additional
Interest) on any Security when such interest becomes due and payable and such
default continues for a period of thirty (30) days, or


(ii)           default
is made in the payment of the principal of and any premium on any Security at
the Maturity thereof,


the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Securities, the whole amount
then due and payable on such Securities for principal and any premium and
interest (including any Additional Interest) and, in addition thereto, all
amounts owing the Trustee under Section 6.6.


(b)           If
the Company fails to pay such amounts forthwith upon such demand, the Trustee,
in its own name and as trustee of an express trust, may institute a judicial
proceeding for



 35
 






 



the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.


(c)           If
an Event of Default with respect to Securities occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.


SECTION 5.4.                Trustee May File Proofs of Claim.


In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or similar
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized hereunder in order to have claims of the Holders and the
Trustee allowed in any such proceeding. 
In particular, the Trustee shall be authorized to collect and receive
any moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to first pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts owing the Trustee, any
predecessor Trustee and other Persons under Section 6.6.


SECTION 5.5.                Trustee May Enforce Claim Without
Possession of Securities.


All rights of action and claims under this Indenture
or the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, subject to Article XII and after provision for the
payment of all the amounts owing the Trustee, any predecessor Trustee and other
Persons under Section 6.6, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.


SECTION 5.6.                Application of Money Collected.


Any money or property collected or to be applied by
the Trustee with respect to the Securities pursuant to this Article V
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money or property on account
of principal or any premium or interest (including any Additional Interest),
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:



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FIRST:  To the
payment of all amounts due the Trustee, any predecessor Trustee and other
Persons under Section 6.6;


SECOND:  To the
payment of all Senior Debt of the Company if and to the extent required by Article
XII;


THIRD:  Subject
to Article XII, to the payment of the amounts then due and unpaid upon
the Securities for principal and any premium and interest (including any
Additional Interest) in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
any premium and interest (including any Additional Interest), respectively; and


FOURTH:  The
balance, if any, to the Person or Persons entitled thereto.


SECTION 5.7.                Limitation on Suits.


Subject to Section 5.8, no Holder of any
Securities shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a
custodian, receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:


(a)           such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities;


(b)           the
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;


(c)           such
Holder or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request;


(d)           the
Trustee after its receipt of such notice, request and offer of indemnity has
failed to institute any such proceeding for sixty (60) days; and


(e)           no
direction inconsistent with such written request has been given to the Trustee
during such sixty (60)-day period by the Holders of a majority in aggregate
principal amount of the Outstanding Securities;


it being understood and intended that no one or more
of such Holders shall have any right in any manner whatever by virtue of, or by
availing itself of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Securities, or to obtain or to
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.



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SECTION 5.8.                Unconditional Right of Holders to
Receive Principal, Premium, if any,
and Interest; Direct Action by Holders of Preferred Securities.


Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium on such
Security at its Maturity and payment of interest (including any Additional
Interest) on such Security when due and payable and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.  Any
registered holder of the Preferred Securities shall have the right, upon the
occurrence of an Event of Default described in Section 5.1(a) or Section
5.1(b), to institute a suit directly against the Company for enforcement of
payment to such holder of principal of and any premium and interest (including
any Additional Interest) on the Securities having a principal amount equal to
the aggregate Liquidation Amount of the Preferred Securities held by such
holder.


SECTION 5.9.                Restoration of Rights and Remedies.


If the Trustee, any Holder or any holder of Preferred
Securities has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee, such Holder or such
holder of Preferred Securities, then and in every such case the Company, the
Trustee, such Holders and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Preferred Securities shall continue as
though no such proceeding had been instituted.


SECTION
5.10.              Rights
and Remedies Cumulative.


Except as otherwise provided in Section 3.6(f),
no right or remedy herein conferred upon or reserved to the Trustee or the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.


SECTION 5.11.              Delay or Omission Not Waiver.


No delay or omission of the Trustee, any Holder of any
Securities or any holder of any Preferred Security to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence
therein.  Every right and remedy given by
this Article V or by law to the Trustee or to the Holders and the right
and remedy given to the holders of Preferred Securities by Section 5.8
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee, the Holders or the holders of Preferred Securities, as the case
may be.



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SECTION 5.12.              Control by Holders.


The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities (or, as the case may be, the
holders of a majority in aggregate Liquidation Amount of Preferred Securities)
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided,
that:


(a)           such
direction shall not be in conflict with any rule of law or with this Indenture,


(b)           the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction, and


(c)           subject
to the provisions of Section 6.2, the Trustee shall have the right to
decline to follow such direction if a Responsible Officer or Officers of the
Trustee shall, in good faith, reasonably determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any such
direction or would involve the Trustee in personal liability.


SECTION 5.13.              Waiver of Past Defaults.


(a)           The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities or the holders of not less than a majority in aggregate
Liquidation Amount of the Preferred Securities may waive any past Event of
Default hereunder and its consequences except an Event of Default:


(i)            in
the payment of the principal of or any premium or interest (including any
Additional Interest) on any Outstanding Security (unless such Event of Default
has been cured and the Company has paid to or deposited with the Trustee a sum
sufficient to pay all installments of interest (including any Additional
Interest) due and past due and all principal of and any premium on all
Securities due otherwise than by acceleration), or


(ii)           in
respect of a covenant or provision hereof that under Article IX cannot
be modified or amended without the consent of each Holder of any Outstanding
Security.


(b)           Any
such waiver shall be deemed to be made on behalf of the Holders of all the
Outstanding Securities or, in the case of a waiver by holders of Preferred
Securities issued by such Trust, by all holders of Preferred Securities.


(c)           Upon
any such waiver, such Event of Default shall cease to exist and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Event of Default or impair any right consequent thereon.


SECTION 5.14.              Undertaking for Costs.


All parties to this Indenture agree, and each Holder
of any Security by his or her acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against



 39
 






 



the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees and expenses, against
any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions of
this Section 5.14 shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than ten percent (10%) in aggregate principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or any premium on the Security
after the Stated Maturity or any interest (including any Additional Interest)
on any Security after it is due and payable.


SECTION 5.15.              Waiver of Usury, Stay or Extension Laws.


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


ARTICLE VI



THE TRUSTEE


SECTION
6.1.                Corporate
Trustee Required.


There shall at all times be a Trustee hereunder with
respect to the Securities.  The Trustee
shall be a corporation or national banking association organized and doing
business under the laws of the United States or of any state thereof,
authorized to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or state authority and having an office within the United States.  If such entity publishes reports of condition
at least annually, pursuant to law or to the requirements of such supervising
or examining authority, then, for the purposes of this Section 6.1, the
combined capital and surplus of such entity shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.1, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.


SECTION 6.2.                Certain Duties and Responsibilities.


Except during the
continuance of an Event of Default:


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



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(ii)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; provided,
that in the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not they
substantially conform on their face to the requirements of this Indenture.


(b)           If
an Event of Default known to the Trustee has occurred and is continuing, the
Trustee shall, prior to the receipt of directions, if any, from the Holders of
at least a majority in aggregate principal amount of the Outstanding Securities
(or, if applicable, from the holders of at least a majority in aggregate
Liquidation Amount of Preferred Securities), exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.


(c)           Notwithstanding
the foregoing, 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.  Whether or
not therein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 6.2.  To the extent that, at law or in equity, the
Trustee has duties and liabilities relating to the Holders, the Trustee shall
not be liable to any Holder or any holder of Preferred Securities for the
Trustee’s good faith reliance on the provisions of this Indenture.  The provisions of this Indenture, to the
extent that they restrict the duties and liabilities of the Trustee otherwise
existing at law or in equity, are agreed by the Company and the Holders and the
holders of Preferred Securities to replace such other duties and liabilities of
the Trustee.


(d)           No
provisions of this Indenture shall be construed to relieve the Trustee from
liability with respect to matters that are within the authority of the Trustee
under this Indenture for its own negligent action, negligent failure to act or
willful misconduct, except that:


(i)            the
Trustee shall not be liable for any error or judgment made in good faith by an
authorized officer of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;


(ii)           the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of at
least a majority in aggregate principal amount of the Outstanding Securities
(or, as the case may be, the holders of a majority in aggregate Liquidation
Amount of Preferred Securities); and


(iii)          the
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company and money held



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by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law.


(e)           If
at any time the Trustee hereunder is not the same Person as the Property
Trustee under the Trust Agreement:


(i)            whenever
a reference is made herein to the dissolution, termination or liquidation of
the Trust, the Trustee shall be entitled to assume that no such dissolution,
termination, or liquidation has occurred so long as the Securities are or
continue to be registered in the name of such Property Trustee, and the Trustee
shall be charged with notice or knowledge of such dissolution, termination or
liquidation only upon written notice thereof given to the Trustee by the
Depositor under the Trust Agreement; and


(ii)           the
Trustee shall not be charged with notice or knowledge that any Person is a
holder of Preferred Securities or Common Securities issued by the Trust or
whether any group of holders of Preferred Securities constitutes any specified
percentage of all outstanding Preferred Securities for any purpose under this
Indenture, unless and until the Trustee is furnished with a list of holders by
such Property Trustee and the aggregate Liquidation Amount of the Preferred
Securities then outstanding.  The Trustee
may conclusively rely and shall be protected in relying on such list.


(f)            Notwithstanding
Section 1.10, the Trustee shall not, and shall not be deemed to, owe any
fiduciary duty to the holders of any of the Trust Securities issued by the
Trust and shall not be liable to any such holder (other than for the willful
misconduct or negligence of the Trustee) if the Trustee in good faith (i) pays
over or distributes to a registered Holder of the Securities or to the Company
or to any other Person, cash, property or securities to which such holders of
such Trust Securities shall be entitled or (ii) takes any action or omits to
take any action at the request of the Holder of such Securities.  Nothing in this paragraph shall affect the
obligation of any other such Person to hold such payment for the benefit of,
and to pay such amount over to, such holders of Preferred Securities or Common
Securities or their representatives.


SECTION 6.3.                Notice of Defaults.


Within ninety (90) days after the occurrence of any
default actually known to the Trustee, the Trustee shall give the Holders
notice of such default unless such default shall have been cured or waived; provided, that except in the case of a
default in the payment of the principal of or any premium or interest on any
Securities, the Trustee shall be fully protected in withholding the notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determines that withholding the notice is in the interest of holders of
Securities; and provided, further,
that in the case of any default of the character specified in Section 5.1(c),
no such notice to Holders shall be given until at least thirty (30) days after
the occurrence thereof.  For the purpose
of this Section 6.3, the term “default” means any event which is, or
after notice or lapse of time or both would become, an Event of Default.



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SECTION 6.4.                Certain Rights of Trustee.


Subject to the provisions of Section 6.2:


(a)           the
Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting in good faith and in accordance with the terms hereof
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;


(b)           if
(i) in performing its duties under this Indenture the Trustee is required to
decide between alternative courses of action, (ii) in construing any of the
provisions of this Indenture the Trustee finds ambiguous or inconsistent with
any other provisions contained herein or (iii) the Trustee is unsure of the
application of any provision of this Indenture, then, except as to any matter
as to which the Holders are entitled to decide under the terms of this
Indenture, the Trustee shall deliver a notice to the Company requesting the
Company’s written instruction as to the course of action to be taken and the
Trustee shall take such action, or refrain from taking such action, as the
Trustee shall be instructed in writing to take, or to refrain from taking, by
the Company; provided, that if the Trustee does not receive such instructions
from the Company within ten Business Days after it has delivered such notice or
such reasonably shorter period of time set forth in such notice the Trustee
may, but shall be under no duty to, take such action, or refrain from taking
such action, as the Trustee shall deem advisable and in the best interests of
the Holders, in which event the Trustee shall have no liability except for its
own negligence, bad faith or willful misconduct;


(c)           any
request or direction of the Company shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution;


(d)           the
Trustee may consult with counsel (which counsel may be counsel to the Trustee,
the Company or any of its Affiliates, and may include any of its employees) and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;


(e)           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 or any holder of Preferred Securities pursuant to this Indenture,
unless such Holders (or such holders of Preferred Securities) shall have
offered to the Trustee security or indemnity reasonably satisfactory to it
against the costs, expenses (including reasonable attorneys’ fees and expenses)
and liabilities that might be incurred by it in compliance with such request or
direction, including reasonable advances as may be requested by the Trustee;


(f)            the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, indenture, note or other
paper or document, but the Trustee in its discretion may make such inquiry or
investigation into such facts or matters as it may see fit,



 43
 






 



and, if the Trustee shall determine to make such
inquiry or investigation, it shall be entitled to examine the books, records
and premises of the Company, personally or by agent or attorney;


(g)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, custodians or
nominees and the Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent, attorney, custodian or nominee
appointed with due care by it hereunder;


(h)           whenever
in the administration of this Indenture the Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or taking
any other action with respect to enforcing any remedy or right hereunder, the
Trustees (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same aggregate principal amount of Outstanding
Securities as would be entitled to direct the Trustee under this Indenture in
respect of such remedy, right or action), (ii) may refrain from enforcing such
remedy or right or taking such action until such instructions are received and
(iii) shall be protected in acting in accordance with such instructions;


(i)            except
as otherwise expressly provided by this Indenture, the Trustee shall not be
under any obligation to take any action that is discretionary under the
provisions of this Indenture;


(j)            without
prejudice to any other rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with any
bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of
the definition of Event of Default, such expenses (including legal fees and
expenses of its agents and counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy laws or
law relating to creditors rights generally;


(k)           whenever
in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively rely
upon an Officer’s Certificate addressing such matter, which, upon receipt of
such request, shall be promptly delivered by the Company;


(l)            the
Trustee shall not be charged with knowledge of any Event of Default unless
either (i) a Responsible Officer of the Trustee shall have actual knowledge or
(ii) the Trustee shall have received written notice thereof from the Company or
a Holder; and


(m)          in
the event that the Trustee is also acting as Paying Agent, Authenticating Agent
or Securities Registrar hereunder, the rights and protections afforded to the
Trustee pursuant to this Article VI shall also be afforded such Paying
Agent, Authenticating Agent, or Securities Registrar.


SECTION 6.5.                May Hold Securities.


The Trustee, any Authenticating Agent, any Paying
Agent, any Securities Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner



 44
 






 



or pledgee of Securities and may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Securities Registrar or such other agent.


SECTION 6.6.                Compensation; Reimbursement; Indemnity.


(a)           The
Company agrees:


(i)            to
pay to the Trustee from time to time reasonable compensation for all services
rendered by it hereunder in such amounts as the Company and the Trustee shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);


(ii)           to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct; and


(iii)          to
the fullest extent permitted by applicable law, to indemnify the Trustee and
its Affiliates, and their officers, directors, shareholders, agents,
representatives and employees for, and to hold them harmless against, any loss,
damage, liability, tax (other than income, franchise or other taxes imposed on
amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any
kind or nature whatsoever incurred without negligence, bad faith or willful
misconduct on its part arising out of or in connection with the acceptance or
administration of this trust or the performance of the Trustee’s duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.


(b)           To
secure the Company’s payment obligations in this Section 6.6, the
Company hereby grants and pledges to the Trustee and the Trustee shall have a
lien prior to the Securities on all money or property held or collected by the
Trustee, other than money or property held in trust to pay principal and
interest on particular Securities.  Such
lien shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee.


(c)           The
obligations of the Company under this Section 6.6 shall survive the
satisfaction and discharge of this Indenture and the earlier resignation or
removal of the Trustee.


(d)           In
no event shall the Trustee be liable for any indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including, but not limited
to, lost profits, even if the Trustee has been advised of the likelihood of
such loss or damage and regardless of the form of action.


(e)           In
no event shall the Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether
declared or undeclared), terrorism, fire, riot,



 45
 






 



embargo, government action, including any laws,
ordinances, regulations, governmental action or the like which delay, restrict
or prohibit the providing of the services contemplated by this Indenture.


SECTION 6.7.                Resignation and Removal; Appointment of
Successor.


(a)           No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article VI shall become effective until the acceptance
of appointment by the successor Trustee under Section 6.8.


(b)           The
Trustee may resign at any time by giving written notice thereof to the Company.


(c)           Unless
an Event of Default shall have occurred and be continuing, the Trustee may be
removed at any time by the Company by a Board Resolution.  If an Event of Default shall have occurred
and be continuing, the Trustee may be removed by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities, delivered
to the Trustee and to the Company.


(d)           If
the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any reason, at a time when no
Event of Default shall have occurred and be continuing, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of Section 6.8.  If the Trustee
shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any reason, at a time when an Event of
Default shall have occurred and be continuing, the Holders, by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of Section 6.8.  If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
its appointment within sixty (60) days after the giving of a notice of
resignation by the Trustee or the removal of the Trustee in the manner required
by Section 6.8, any Holder who has been a bona fide Holder of a Security
for at least six months (or, if the Securities have been Outstanding for less
than six (6) months, the entire period of such lesser time) may, on behalf of
such Holder and all others similarly situated, and any resigning Trustee may,
at the expense of the Company, petition any court of competent jurisdiction for
the appointment of a successor Trustee.


(e)           The
Company shall give notice to all Holders in the manner provided in Section
1.6 of each resignation and each removal of the Trustee and each appointment
of a successor Trustee.  Each notice
shall include the name of the successor Trustee and the address of its
Corporate Trust Office.


SECTION 6.8.                Acceptance of Appointment by Successor.


(a)           In
case of the appointment hereunder of a successor Trustee, each successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of



 46
 






 



the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.


(b)           Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all rights, powers and trusts referred to in paragraph (a) of
this Section 6.8.


(c)           No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this Article
VI.


SECTION 6.9.                Merger, Conversion, Consolidation or
Succession to Business.


Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any Person succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided,
that such Person shall be otherwise qualified and eligible under this Article
VI.  In case any Securities shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation or as otherwise provided above
in this Section 6.9 to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or
in the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.


SECTION 6.10.              Not Responsible for Recitals or Issuance
of Securities.


The recitals contained herein and in the Securities,
except the Trustee’s certificates of authentication, shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities.  Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of the
Securities or the proceeds thereof.


SECTION 6.11.              Appointment of Authenticating Agent.


(a)           The
Trustee may appoint an Authenticating Agent or Agents with respect to the
Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits



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of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture
to the authentication and delivery of Securities by the Trustee or the Trustee’s
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent.  Each Authenticating Agent shall
be acceptable to the Company and shall at all times be a corporation organized
and doing business under the laws of the United States of America, or of any
State or Territory thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or state authority.  If such
Authenticating Agent publishes reports of condition at least annually pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 6.11 the combined capital and surplus
of such Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section 6.11,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 6.11.


(b)           Any
Person into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any Person succeeding to all or substantially all of the corporate trust
business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such Person
shall be otherwise eligible under this Section 6.11, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.


(c)           An
Authenticating Agent may resign at any time by giving written notice thereof to
the Trustee and to the Company.  The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the
Company.  Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.11, the Trustee may appoint a successor
Authenticating Agent eligible under the provisions of this Section 6.11,
which shall be acceptable to the Company, and shall give notice of such
appointment to all Holders.  Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.


(d)           The
Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section 6.11 in such amounts as
the Company and the Authenticating Agent shall agree from time to time.


(e)           If
an appointment of an Authenticating Agent is made pursuant to this Section
6.11, the Securities may have endorsed thereon, in addition to the Trustee’s
certificate of authentication, an alternative certificate of authentication in
the following form:



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


	
  Dated:

  	
   

  	
  JPMORGAN CHASE BANK, NATIONAL

  ASSOCIATION, not in its individual capacity, but

  solely as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signatory

  



ARTICLE VII


HOLDER’S LISTS AND REPORTS BY COMPANY


SECTION 7.1.                Company to Furnish Trustee Names and
Addresses of Holders.


The Company will furnish or cause to be furnished to
the Trustee:


(a)           semiannually,
on or before June 30 and December 31 of each year, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
a date not more than fifteen (15) days prior to the delivery thereof, and


(b)           at
such other times as the Trustee may request in writing, within thirty (30) days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than fifteen (15) days prior to the time such
list is furnished,


in each case to the extent such information is in the
possession or control of the Company and has not otherwise been received by the
Trustee in its capacity as Securities Registrar.


SECTION 7.2.                Preservation of Information,
Communications to Holders.


(a)           The
Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of Holders contained in the most recent list furnished to
the Trustee as provided in Section 7.1 and the names and addresses of
Holders received by the Trustee in its capacity as Securities Registrar.  The Trustee may destroy any list furnished to
it as provided in Section 7.1 upon receipt of a new list so furnished.


(b)           The
rights of Holders to communicate with other Holders with respect to their
rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.


(c)           Every
Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of the disclosure of
information as to the names and addresses of the Holders made pursuant to the
Trust Indenture Act.



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SECTION 7.3.                Reports by Company.


(a)           The Company shall
furnish to the Holders and to prospective purchasers of Securities, upon their
request, the information required to be furnished pursuant to Rule 144A(d)(4)
under the Securities Act.  The delivery
requirement set forth in the preceding sentence may be satisfied by compliance
with Section 7.3(b) hereof.


(b)           If
the Guarantor is no longer subject to the reporting requirements of the
Exchange Act, the Guarantor shall furnish to each of (i) the Trustee and (ii)
Taberna Capital Management, LLC, 450 Park Avenue, New York, New York
10022, Attn:  Thomas Bogal (or such other
address as designated by Taberna Capital Management, LLC upon written notice to
the Company) a duly completed and executed certificate substantially and
substantively in the form attached hereto as Exhibit A, including the
financial statements referenced in such Exhibit, which certificate and
financial statements shall be so furnished by the Guarantor not later than
forty-five (45) days after the end of each of the first three fiscal quarters
of each fiscal year of the Guarantor and not later than ninety (90) days after
the end of each fiscal year of the Guarantor.


(c)           If
the Guarantor intends to file its annual and quarterly information with the
Securities and Exchange Commission (the “Commission”)
in electronic form pursuant to Regulation S-T of the Commission using the
Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Guarantor shall notify
the Trustee in the manner prescribed herein of each such annual and quarterly
filing.  The Trustee is hereby authorized
and directed to access the EDGAR system for purposes of retrieving the financial
information so filed.  Compliance with
the foregoing shall constitute delivery by the Guarantor of its financial
statements to the Trustee in compliance with the provisions of Section 314(a)
of the Trust Indenture Act, if applicable. 
The Trustee shall have no duty to search for or obtain any electronic or
other filings that the Guarantor makes with the Commission, regardless of
whether such filings are periodic, supplemental or otherwise.  Delivery of reports, information and
documents to the Trustee pursuant to this Section 7.3(c) shall be solely
for purposes of compliance with this Section 7.3(c) and, if applicable,
with Section 314(a) of the Trust Indenture Act. 
The Trustee’s receipt of such reports, information and documents shall
not constitute notice to it of the content thereof or any matter determinable
from the content thereof, including the Company’s compliance with any of its
covenants hereunder, as to which the Trustee is entitled to rely upon Officers’
Certificates.


ARTICLE VIII


CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE


SECTION 8.1.                Company May Consolidate, Etc., Only on
Certain Terms.


The Company shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into the Company or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless:



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(a)           if
the Company shall consolidate with or merge into another Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, the entity formed by such consolidation or into which the Company is
merged or the Person that acquires by conveyance or transfer, or that leases, the
properties and assets of the Company substantially as an entirety shall be an
entity organized and existing under the laws of the United States of America or
any State or Territory thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest (including any
Additional Interest) on all the Securities and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed;


(b)           immediately
after giving effect to such transaction, no Event of Default, and no event
that, after notice or lapse of time, or both, would constitute an Event of
Default, shall have happened and be continuing; and


(c)           the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer or
lease and, if a supplemental indenture is required in connection with such
transaction, any such supplemental indenture comply with this Article VIII
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee may rely upon such Officer’s
Certificate and Opinion of Counsel as conclusive evidence that such transaction
complies with this Section 8.1.


SECTION 8.2.                Successor Company Substituted.


(a)           Upon
any consolidation or merger by the Company with or into any other Person, or
any conveyance, transfer or lease by the Company of its properties and assets
substantially as an entirety to any Person in accordance with Section 8.1
and the execution and delivery to the Trustee of the supplemental indenture
described in Section 8.1(a), the successor entity formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease 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 Person had been named as the Company herein;
and in the event of any such conveyance or transfer, following the execution
and delivery of such supplemental indenture, the Company shall be discharged
from all obligations and covenants under the Indenture and the Securities.


(b)           Such
successor Person may cause to be executed, and may issue either in its own name
or in the name of the Company, any or all of the Securities issuable hereunder
that theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor Person 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
that previously shall have been signed and delivered by the officers of the
Company to the Trustee for authentication, and any Securities that such
successor Person thereafter shall cause to be executed and delivered to the
Trustee on its behalf.  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.



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(c)           In
case of any such consolidation, merger, sale, conveyance or lease, such changes
in phraseology and form may be made in the Securities thereafter to be issued
as may be appropriate to reflect such occurrence.


ARTICLE IX


SUPPLEMENTAL INDENTURES


SECTION 9.1.                Supplemental Indentures without Consent
of Holders.


Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
reasonably satisfactory to the Trustee, for any of the following purposes:


(a)           to
evidence the succession of another Person to the Company, and the assumption by
any such successor of the covenants of the Company herein and in the
Securities; or


(b)           to
evidence and provide for the acceptance of appointment hereunder by a successor
trustee; or


(c)           to
cure any ambiguity, to correct or supplement any provision herein that may be
defective or inconsistent with any other provision herein, or to make or amend
any other provisions with respect to matters or questions arising under this
Indenture, which shall not be inconsistent with the other provisions of this
Indenture, provided, that such action pursuant to this clause (b) shall not
adversely affect in any material respect the interests of any Holders or the
holders of the Preferred Securities; or


(d)           to
comply with the rules and regulations of any securities exchange or automated
quotation system on which any of the Securities may be listed, traded or quoted;
or


(e)           to
add to the covenants, restrictions or obligations of the Company or to add to
the Events of Default, provided, that such action pursuant to this clause (e)
shall not adversely affect in any material respect the interests of any Holders
or the holders of the Preferred Securities; or


(f)            to
modify, eliminate or add to any provisions of the Indenture or the Securities
to such extent as shall be necessary to ensure that the Securities are treated
as indebtedness of the Company for United States Federal income tax purposes,
provided, that such action pursuant to this clause (f) shall not adversely
affect in any material respect the interests of any Holders or the holders of
the Preferred Securities.


SECTION 9.2.                Supplemental Indentures with Consent of
Holders.


(a)           Subject
to Section 9.1, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding



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any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any manner
the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security,


(i)            change
the Stated Maturity of the principal or any premium of any Security or change
the date of payment of any installment of interest (including any Additional
Interest) on any Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof or
change the place of payment where, or the coin or currency in which, any
Security or interest thereon is payable, or restrict or impair the right to
institute suit for the enforcement of any such payment on or after such date,
or


(ii)           reduce
the percentage in aggregate principal amount of the Outstanding Securities, the
consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver of compliance with any
provision of this Indenture or of defaults hereunder and their consequences
provided for in this Indenture, or


(iii)          modify
any of the provisions of this Section 9.2, Section 5.13 or Section
10.7, except to increase any percentage in aggregate principal amount of
the Outstanding Securities, the consent of whose Holders is required for any
reason, or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security;


provided, further,
that, so long as any Preferred Securities remain outstanding, no amendment
under this Section 9.2 shall be effective until the holders of a
majority in Liquidation Amount of the Preferred Securities shall have consented
to such amendment; provided, further, that if the consent of the Holder
of each Outstanding Security is required for any amendment under this
Indenture, such amendment shall not be effective until the holder of each
Outstanding Preferred Security shall have consented to such amendment.


(b)           It
shall not be necessary for any Act of Holders under this Section 9.2 to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.


SECTION 9.3.                Execution of Supplemental Indentures.


In executing or accepting the additional trusts
created by any supplemental indenture permitted by this Article IX or
the modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and shall be fully protected in conclusively
relying upon, an Officer’s Certificate and an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture, and that all conditions precedent herein provided for relating to
such action have been complied with.  The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture that affects the Trustee’s own rights, duties, indemnities or
immunities under this Indenture or otherwise. 
Copies of the final form of each supplemental indenture shall be
delivered by the Trustee at the



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expense of the Company to each Holder, and, if the
Trustee is the Property Trustee, to each holder of Preferred Securities,
promptly after the execution thereof.


SECTION
9.4.                Effect
of Supplemental Indentures.


Upon the execution of any supplemental indenture under
this Article IX, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Holder of Securities and every holder of Preferred
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.


SECTION 9.5.                Reference in Securities to Supplemental
Indentures.


Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article IX may,
and shall if required by the Company, bear a notation in form approved by the
Company as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new
Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.


ARTICLE X


COVENANTS


SECTION 10.1.              Payment of Principal, Premium, if any, and Interest.


The Company covenants and agrees for the benefit of
the Holders of the Securities that it will duly and punctually pay the
principal of and any premium and interest (including any Additional Interest)
on the Securities in accordance with the terms of the Securities and this
Indenture.


SECTION 10.2.              Money for Security Payments to be Held in
Trust.


(a)           Whenever
the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m.,
New York City time, on each due date of the principal of or any premium or
interest (including any Additional Interest) on any Securities, deposit with
such Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided in the Trust Indenture Act and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure to so act.


(b)           The
Company will cause each Paying Agent for the Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.2,
that such Paying Agent will (i) comply with the provisions of this Indenture
and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during
the continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent for payment in respect of the Securities.



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(c)           The
Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.


(d)           Any
money deposited with the Trustee or any Paying Agent for the payment of the
principal of and any premium or interest (including any Additional Interest) on
any Security and remaining unclaimed for two years after such principal and any
premium or interest has become due and payable shall (unless otherwise required
by mandatory provision of applicable escheat or abandoned or unclaimed property
law) be paid on Company Request to the Company, or (if then held by the
Company) shall (unless otherwise required by mandatory provision of applicable
escheat or abandoned or unclaimed property law) be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than thirty (30) days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.


SECTION 10.3.              Statement as to Compliance.


The Company shall deliver to the Trustee, within one
hundred and twenty (120) days after the end of each fiscal year of the Company
ending after the date hereof, an Officer’s Certificate covering the preceding
calendar year, stating whether or not to the knowledge of the signers thereof
the Company is in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder), and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.  The
delivery requirements of this Section 10.3 may be satisfied by compliance with
Section 8.16(a) of the Trust Agreement.


SECTION 10.4.              Calculation Agent.


(a)           The
Company hereby agrees that for so long as any of the Securities remain
Outstanding, there will at all times be an agent appointed to calculate LIBOR
in respect of each Interest Payment Date in accordance with the terms of Schedule
A (the “Calculation Agent”).  The Company has initially appointed the
Property Trustee as Calculation Agent for purposes of determining LIBOR for
each Interest Payment Date.  The
Calculation Agent may be removed by the Company at any time.  Notwithstanding the foregoing, so long as the
Property Trustee holds any of the Securities, the Calculation Agent shall be
the Property Trustee.  If the Calculation



 55
 






 



Agent is unable or unwilling to act as such or is
removed by the Company, the Company will promptly appoint as a replacement
Calculation Agent the London office of a leading bank which is engaged in
transactions in Eurodollar deposits in the international Eurodollar market and
which does not control or is not controlled by or under common control with the
Company or its Affiliates.  The
Calculation Agent may not resign its duties without a successor having been
duly appointed.


(b)           The
Calculation Agent shall be required to agree that, as soon as possible after
11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule
A), but in no event later than 11:00 a.m. (London time) on the Business Day
immediately following each LIBOR Determination Date, the Calculation Agent will
calculate the interest rate (the Interest Payment shall be rounded to the
nearest cent, with half a cent being rounded upwards) for the related Interest
Payment Date, and will communicate such rate and amount to the Company, the
Trustee, each Paying Agent and the Depositary. 
The Calculation Agent will also specify to the Company the quotations
upon which the foregoing rates and amounts are based and, in any event, the
Calculation Agent shall notify the Company before 5:00 p.m.  (London time) on each LIBOR Determination
Date that either:  (i) it has
determined or is in the process of determining the foregoing rates and amounts
or (ii) it has not determined and is not in the process of determining the
foregoing rates and amounts, together with its reasons therefor.  The Calculation Agent’s determination of the
foregoing rates and amounts for any Interest Payment Date will (in the absence
of manifest error) be final and binding upon all parties.  For the sole purpose of calculating the
interest rate for the Securities, “Business Day” shall be defined as any day on
which dealings in deposits in Dollars are transacted in the London interbank
market.


SECTION 10.5.              Additional Tax Sums.


So long as no Event of Default has occurred and is continuing,
if (a) the Trust is the Holder of all of the Outstanding Securities and (b) a
Tax Event described in clause (i) or (iii) in the definition of Tax Event in Section
1.1 hereof has occurred and is continuing, the Company shall pay to the
Trust (and its permitted successors or assigns under the related Trust
Agreement) for so long as the Trust (or its permitted successor or assignee) is
the registered holder of the Outstanding Securities, such amounts as may be
necessary in order that the amount of Distributions (including any Additional
Interest Amount (as defined in the Trust Agreement)) then due and payable by
the Trust on the Preferred Securities and Common Securities that at any time
remain outstanding in accordance with the terms thereof shall not be reduced as
a result of any Additional Taxes arising from such Tax Event (additional such
amounts payable by the Company to the Trust, the “Additional Tax Sums”).  Whenever
in this Indenture or the Securities there is a reference in any context to the
payment of principal of or interest on the Securities, such mention shall be
deemed to include mention of the payments of the Additional Tax Sums provided
for in this Section 10.5 to the extent that, in such context, Additional
Tax Sums are, were or would be payable in respect thereof pursuant to the
provisions of this Section 10.5 and express mention of the payment of
Additional Tax Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Tax Sums in those provisions hereof where
such express mention is not made.



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SECTION 10.6.              Additional Covenants.


(a)           The
Company covenants and agrees with each Holder of Securities that if an Event of
Default shall have occurred and be continuing, it shall not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company’s Equity Interests or
(ii) make any payment of principal of or any interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior
in interest to the Securities (other than (a) repurchases, redemptions or
other acquisitions of Equity Interests in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants or in connection with
the issuance of Equity Interests (or securities convertible into or exercisable
for such Equity Interests) as consideration in a transaction entered into prior
to the Event of Default, (b) as a result of any exchange or conversion of
any class or series of  Equity Interests
or indebtedness for any class or series of Equity Interests or indebtedness,
(c) the purchase of fractional interests in Equity Interests, and
(d) any dividend in the form of Equity Interests, warrants, options or
other rights where the dividend Equity Interests or the Equity Interests
issuable upon exercise of such warrants, options or other rights is the same
Equity Interest as that on which the dividend is being paid or ranks pari passu with or junior to such Equity Interests and any
cash payments in lieu of fractional shares issued in connection therewith).


(b)           The
Company also covenants with each Holder of Securities (i) to hold, directly or
indirectly, one hundred percent (100%) of the Common Securities of the Trust, provided, that any permitted successor of
the Company hereunder may succeed to the Company’s ownership of such Common
Securities, (ii) as holder of such Common Securities, not to voluntarily
dissolve, wind-up or liquidate the Trust other than (A) in connection
with a distribution of the Securities to the holders of the Preferred
Securities in liquidation of the Trust or (B) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement and
(iii) to use its reasonable commercial efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Trust to continue to be taxable
as a grantor trust and not as a corporation for United States Federal income
tax purposes.


SECTION 10.7.              Waiver of Covenants.


The Company may omit in any particular instance to
comply with any covenant or condition contained in Section 10.6 if,
before or after the time for such compliance, the Holders of at least a
majority in aggregate principal amount of the Outstanding Securities shall, by
Act of such Holders, and at least a majority of the aggregate Liquidation
Amount of the Preferred Securities then outstanding, by consent of such
holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
in respect of any such covenant or condition shall remain in full force and
effect.



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SECTION 10.8.              Treatment of Securities.


The Company will treat the Securities as indebtedness,
and the amounts, other than payments of principal, payable in respect of the
principal amount of such Securities as interest, for all U.S. federal income
tax purposes.  All payments in respect of
the Securities will be made free and clear of U.S. withholding tax to any
beneficial owner thereof that has provided an Internal Revenue Service Form W-9
or W-8BEN (or any substitute or successor form) establishing its U.S. or
non-U.S. status for U.S. federal income tax purposes and that no withholding is
required for U.S. federal income tax purposes, or any other applicable form
establishing a complete exemption from U.S. withholding tax.


SECTION 10.9.              Financial Covenants.


The Guarantor shall fully perform and satisfy the
following financial covenants:


(a)           The
Guarantor shall not permit the Fixed Charge Coverage, in each case for any
period of four consecutive fiscal quarters, to be less than 1.4 to 1.


(b)           The
Guarantor shall not, and shall not permit any subsidiary to, for a period of
six (6) months from August 4, 2006, directly or indirectly, create, incur,
assume, guarantee, have outstanding, or otherwise become or remain directly or
indirectly liable with respect to any (i) Unsecured Debt that is pari passu
with or subordinated to the Securities, or (ii) any Unsecured Debt issued to
(directly or indirectly) an issuer of trust preferred securities.


ARTICLE XI


REDEMPTION OF SECURITIES


SECTION 11.1.              Optional Redemption.


The Company may, at its option, on any Interest
Payment Date, on or after October 30, 2011, redeem the Securities in whole at
any time or in part from time to time, at a Redemption Price equal to one
hundred percent (100%) of the principal amount thereof (or of the redeemed
portion thereof, as applicable), together, in the case of any such redemption, with
accrued and unpaid interest, including any Additional Interest, through but
excluding the date fixed as the Redemption Date (the “Optional
Redemption Price”).


SECTION 11.2.              Special Event Redemption.


Prior to October 30, 2011, upon the occurrence and during
the continuation of a Special Event, the Company may, at its option, redeem the
Securities, in whole but not in part, at a Redemption Price equal to one
hundred three percent (103%) of the principal amount thereof, together, in the
case of any such redemption, with accrued interest, including any Additional
Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption Price”).



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SECTION 11.3.              Election to Redeem; Notice to Trustee.


The election of the Company to redeem any Securities,
in whole or in part, shall be evidenced by or pursuant to a Board
Resolution.  In case of any redemption at
the election of the Company, the Company shall, not less than forty-five (45)
days and not more than seventy-five (75) days prior to the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee and the Property Trustee under the Trust Agreement in writing of such
date and of the principal amount of the Securities to be redeemed and provide
the additional information required to be included in the notice or notices
contemplated by Section 11.5.  In
the case of any redemption of Securities, in whole or in part, (a) prior to the
expiration of any restriction on such redemption provided in this Indenture or
the Securities or (b) pursuant to an election of the Company which is subject
to a condition specified in this Indenture or the Securities, the Company shall
furnish the Trustee with an Officer’s Certificate and an Opinion of Counsel
evidencing compliance with such restriction or condition.


SECTION 11.4.              Selection of Securities to be Redeemed.


(a)           If
less than all the Securities are to be redeemed, the particular Securities to
be redeemed shall be selected and redeemed on a pro rata basis not more than
sixty (60) days prior to the Redemption Date by the Trustee from the
Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security.


(b)           The
Trustee shall promptly notify the Company in writing of the Securities selected
for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security that has
been or is to be redeemed.


(c)           The
provisions of paragraphs (a) and (b) of this Section 11.4 shall not
apply with respect to any redemption affecting only a single Security, whether
such Security is to be redeemed in whole or in part.  In the case of any such redemption in part,
the unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.


SECTION 11.5.              Notice of Redemption.


(a)           Notice
of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth
(60th) day, prior
to the Redemption Date to each Holder of Securities to be redeemed, in whole or
in part (unless a shorter notice shall be satisfactory to the Property Trustee
under the related Trust Agreement).


(b)           With
respect to Securities to be redeemed, in whole or in part, each notice of
redemption shall state:



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(i)            the
Redemption Date;


(ii)           the
Redemption Price or, if the Redemption Price cannot be calculated prior to the
time the notice is required to be sent, the estimate of the Redemption Price,
as calculated by the Company, together with a statement that it is an estimate
and that the actual Redemption Price will be calculated on the fifth Business
Day prior to the Redemption Date (and if an estimate is provided, a further
notice shall be sent of the actual Redemption Price on the date that such
Redemption Price is calculated);


(iii)          if
less than all Outstanding Securities are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of
the amount of and particular Securities to be redeemed;


(iv)          that
on the Redemption Date, the Redemption Price will become due and payable upon
each such Security or portion thereof, and that any interest (including any
Additional Interest) on such Security or such portion, as the case may be,
shall cease to accrue on and after said date; and


(v)           the
place or places where such Securities are to be surrendered for payment of the
Redemption Price.


(c)           Notice
of redemption of Securities to be redeemed, in whole or in part, at the
election of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable.  The notice if mailed in
the manner provided above shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice.  In any case, a failure to give such notice by
mail or any defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.


SECTION 11.6.              Deposit of Redemption Price.


Prior to 10:00 a.m., New York City time, on the
Redemption Date specified in the notice of redemption given as provided in Section
11.5, the Company will deposit with the Trustee or with one or more Paying
Agents an amount of money sufficient to pay the Redemption Price of, and any
accrued interest (including any Additional Interest) on, all the Securities (or
portions thereof) that are to be redeemed on that date.


SECTION 11.7.              Payment of Securities Called for
Redemption.


(a)           If
any notice of redemption has been given as provided in Section 11.5, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date.  On presentation and surrender of such
Securities at a Place of Payment specified in such notice, the Securities or
the specified portions thereof shall be paid and redeemed by the Company at the
applicable Redemption Price, together with accrued interest (including any
Additional Interest) to the Redemption Date.



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(b)           Upon
presentation of any Security redeemed in part only, the Company shall execute
and the Trustee shall authenticate and deliver to the Holder thereof, at the
expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of
the Security so presented and having the same Original Issue Date, Stated
Maturity and terms.


(c)           If
any Security called for redemption shall not be so paid upon surrender thereof
for redemption, the principal of and any premium on such Security shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.


ARTICLE XII


SUBORDINATION OF SECURITIES


SECTION 12.1.              Securities Subordinate to Senior Debt.


The Company covenants and agrees, and each Holder of a
Security, by its acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article XII,
the payment of the principal of and any premium and interest (including any
Additional Interest) on each and all of the Securities are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
of all Senior Debt.  Notwithstanding
anything herein to the contrary, the Securities shall be senior to the trade
debt of the Company incurred in the ordinary course of business.


SECTION
12.2.              No
Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution,
Etc.


(a)           In the
event and during the continuation of any default by the Company on any Senior
Debt (following any grace period, if applicable) upon written notice of such
default to the Company by the holders of such Senior Debt or any trustee, agent
or representative therefor, unless and until such default shall have been cured
or waived or shall have ceased to exist, no direct or indirect payment (in
cash, property, securities, by set-off or otherwise) shall be made or agreed to
be made on account of the principal of or any premium or interest (including
any Additional Interest) on any of the Securities, or in respect of any
redemption, repayment, retirement, purchase or other acquisition of any of the
Securities.


(b)           In
the event of a bankruptcy, insolvency or other proceeding described in clause
(d) or (e) of the definition of Event of Default (each such event, if any,
herein sometimes referred to as a “Proceeding”),
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Securities on account thereof.  Any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
entity provided for by a plan of reorganization or readjustment the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment),
which would otherwise



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(but for these subordination provisions) be payable or
deliverable in respect of the Securities shall be paid or delivered directly to
the holders of Senior Debt in accordance with the priorities then existing
among such holders until all Senior Debt (including any interest thereon
accruing after the commencement of any Proceeding) shall have been paid in
full.


(c)           In
the event of any Proceeding, after payment in full of all sums owing with
respect to Senior Debt, the Holders of the Securities, together with the
holders of any obligations of the Company ranking on a parity with the
Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
and any premium and interest (including any Additional Interest) on the
Securities and such other obligations before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any Equity
Interests or any obligations of the Company ranking junior to the Securities
and such other obligations.  If,
notwithstanding the foregoing, any payment or distribution of any character on
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior Debt at
the time outstanding and to any securities issued in respect thereof under any
such plan of reorganization or readjustment) shall be received by the Trustee
or any Holder in contravention of any of the terms hereof and before all Senior
Debt shall have been paid in full, such payment or distribution or security
shall be received in trust for the benefit of, and shall be paid over or
delivered and transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt (including any interest thereon
accruing after the commencement of any Proceeding) in full.  In the event of the failure of the Trustee or
any Holder to endorse or assign any such payment, distribution or security,
each holder of Senior Debt (and each trustee, agent or representative for
holders of Senior Debt) is hereby irrevocably authorized to endorse or assign
the same.


(d)           The
Trustee and the Holders, at the expense of the Company, shall take such
reasonable action (including the delivery of this Indenture to an agent or
representative for any holders of Senior Debt or consent to the filing of a
financing statement with respect hereto) as may, in the opinion of counsel
designated by the holders of a majority in principal amount of the Senior Debt
at the time outstanding, be necessary or appropriate to assure the
effectiveness of the subordination effected by these provisions.


(e)           The
provisions of this Section 12.2 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.


(f)            The
securing of any obligations of the Company, otherwise ranking on a parity with
the Securities or ranking junior to the Securities, shall not be deemed to
prevent such obligations from constituting, respectively, obligations ranking
on a parity with the Securities or ranking junior to the Securities.



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SECTION 12.3.              Payment Permitted If No Default.


Nothing contained in this Article XII or
elsewhere in this Indenture or in any of the Securities shall prevent (a) the
Company, at any time, except during the pendency of the conditions described in
paragraph (a) of Section 12.2 or of any Proceeding referred to in Section
12.2, from making payments at any time of principal of and any premium or
interest (including any Additional Interest) on the Securities or (b) the
application by the Trustee of any moneys deposited with it hereunder to the
payment of or on account of the principal of and any premium or interest
(including any Additional Interest) on the Securities or the retention of such
payment by the Holders, if, at the time of such application by the Trustee, it
did not have knowledge (in accordance with Section 12.8) that such
payment would have been prohibited by the provisions of this Article XII,
except as provided in Section 12.8.


SECTION 12.4.              Subrogation to Rights of Holders of
Senior Debt.


Subject to the payment in full of all amounts due or
to become due on all Senior Debt, or the provision for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to the holders of Senior
Debt, the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Debt pursuant to
the provisions of this Article XII (equally and ratably with the holders
of all indebtedness of the Company that by its express terms is subordinated to
Senior Debt of the Company to substantially the same extent as the Securities
are subordinated to the Senior Debt and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such
Senior Debt) to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to the
Senior Debt until the principal of and any premium and interest (including any
Additional Interest) on the Securities shall be paid in full.  For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article XII, and no payments
made pursuant to the provisions of this Article XII to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt, and the Holders of
the Securities, be deemed to be a payment or distribution by the Company to or
on account of the Senior Debt.


SECTION 12.5.              Provisions Solely to Define Relative
Rights.


The provisions of this Article XII 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 Debt on the other
hand.  Nothing contained in this Article
XII or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as between the Company and the Holders of the Securities, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Securities the principal of and any premium and interest
(including any Additional Interest) on the Securities as and when the same
shall become due and payable in accordance with their terms, (b) affect the
relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Debt or (c) prevent the Trustee or the Holder of any Security (or to the
extent expressly provided herein, the holder of any Preferred Security) from
exercising all remedies otherwise permitted by



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applicable law upon default under this Indenture,
including filing and voting claims in any Proceeding, subject to the rights, if
any, under this Article XII of the holders of Senior Debt to receive
cash, property and securities otherwise payable or deliverable to the Trustee
or such Holder.


SECTION 12.6.              Trustee to Effectuate Subordination.


Each Holder of a Security by his or her acceptance
thereof authorizes and directs the Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination provided in this Article XII and appoints the Trustee his
or her attorney-in-fact for any and all such purposes.


SECTION 12.7.              No Waiver of Subordination Provisions.


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


(b)           Without
in any way limiting the generality of paragraph (a) of this Section 12.7,
the holders of Senior Debt may, at any time and from to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to such Holders of the Securities and without
impairing or releasing the subordination provided in this Article XII or
the obligations hereunder of such Holders of the Securities to the holders of
Senior Debt, do any one or more of the following:  (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner Senior Debt or any instrument evidencing
the same or any agreement under which Senior Debt is outstanding, (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt, (iii) release any Person liable in any manner
for the payment of Senior Debt and (iv) exercise or refrain from exercising any
rights against the Company and any other Person.


SECTION 12.8.              Notice to Trustee.


(a)           The
Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment to or by the Trustee in respect of the Securities.  Notwithstanding the provisions of this Article
XII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder of Senior Debt or from any trustee,
agent or representative therefor; provided,
that if the Trustee shall not have received the notice provided for in this Section
12.8 at least two Business Days prior to the date upon which by the terms
hereof any monies may become payable for any purpose (including, the payment of
the principal of and any premium on or interest (including any Additional
Interest) on any Security),



 64
 






 



then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.


(b)           The
Trustee shall be entitled to rely on the delivery to it of a written notice by
a Person representing himself or herself to be a holder of Senior Debt (or a
trustee, agent, representative or attorney-in-fact therefor) to establish that
such notice has been given by a holder of Senior Debt (or a trustee, agent, representative
or attorney-in-fact therefor).  With
respect to any Senior Debt that is a syndicated loan, all rights of the holders
of such Senior Debt (including, without limitation, the rights to give and
receive notices) shall be taken or exercised on behalf of the holders of such
Senior Debt by an administrative agent for such holders or an equivalent
party.  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 Debt to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XII, and if
such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.


SECTION 12.9.              Reliance on Judicial Order or Certificate
of Liquidating Agent.


Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee and the Holders of
the Securities shall be entitled to conclusively rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII.


SECTION 12.10.            Trustee Not Fiduciary for Holders of Senior
Debt.


The Trustee, in its capacity as trustee under this
Indenture, shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article XII
or otherwise.


SECTION 12.11.            Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee’s Rights.


The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XII with respect to
any Senior Debt that may at any time be held by it, to the same extent



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as any other holder of Senior Debt, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.


SECTION 12.12.            Article
Applicable to Paying Agents


If 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
XII shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article
XII in addition to or in place of the Trustee.  For the avoidance of doubt, the Company shall
not be permitted to appoint itself or any Affiliate as a Paying Agent
hereunder.


* * * *


This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.


* *
* *



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


	
  

  	
  MORGANS HOTEL GROUP CO.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name: Marc Gordon

  
	
   

  	
   

  	
    Title: 
  Chief Investment Officer and Executive

  
	
   

  	
   

  	
  Vice President
  of Capital Markets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MORGANS GROUP LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Morgans Hotel Group Co., its managing

  member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Marc
  Gordon

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  Chief Investment Officer and

  	
   

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President of Capital

  
	
   

  	
   

  	
   

  	
  Markets

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

  not in its individual capacity, but solely as Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
   

  	
    Title:

  	
   

  
							



 



 67














 


Schedule
A


DETERMINATION OF LIBOR


With respect to the Securities, the London interbank
offered rate (“LIBOR”) shall be
determined by the Calculation Agent in accordance with the following provisions
(in each case rounded to the nearest .000001%):


(1) On the second LIBOR Business Day (as defined
below) prior to a Distribution Date after the expiration of the Fixed Rate
Period (each such day, a “LIBOR
Determination Date”), LIBOR for any given security shall for the
following interest payment period equal the rate, as obtained by the
Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that
appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps
and Derivatives Association, Inc.  2000
Interest Rate and Currency Exchange Definitions), or such other page as may
replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date.


(2) If, on any LIBOR Determination Date, such rate
does not appear on Dow Jones Telerate Page 3750 or such other page as may
replace such Page 3750, the Calculation Agent shall determine the arithmetic
mean of the offered quotations of the Reference Banks (as defined below) to
leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the
Calculation Agent by reference to requests for quotations as of approximately
11:00 a.m. (London time) on the LIBOR Determination Date made by the
Calculation Agent to the Reference Banks. 
If, on any LIBOR Determination Date, at least two of the Reference Banks
provide such quotations, LIBOR shall equal such arithmetic mean of such
quotations.  If, on any LIBOR
Determination Date, only one or none of the Reference Banks provide such
quotations, LIBOR shall be deemed to be the arithmetic mean of the offered
quotations that leading banks in the City of New York selected by the
Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an
amount determined by the Calculation Agent by reference to the principal London
offices of leading banks in the London interbank market; provided that, if the Calculation Agent is
required but is unable to determine a rate in accordance with at least one of
the procedures provided above, LIBOR shall be LIBOR as determined on the
previous LIBOR Determination Date.


(3) As used herein: 
“Reference Banks” means
four major banks in the London interbank market selected by the Calculation
Agent; and “LIBOR Business Day”
means a day on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) in London.



 1














 


Form of Officer’s
Financial Certificate


The undersigned, the [Chairman/Vice Chairman/Chief
Executive Officer/President/ Vice President/Chief
Financial Officer/Treasurer/Assistant Treasurer] of Morgans Hotel Group Co.,
hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated
Indenture, dated as of August 4, 2006, among Morgans Hotel Group Co. (the “Guarantor”),
Morgans Group LLC (the “Company”) and JPMorgan Chase Bank, National
Association, as trustee, that:


[FOR FISCAL YEAR END:  Attached hereto are the
audited consolidated financial statements (including the balance sheet, income
statement and statement of cash flows, and notes thereto, together with the
report of the independent accountants thereon) of the Guarantor and its
consolidated subsidiaries for the three years ended [date], 20   
..]


[FOR FISCAL QUARTER END:  Attached hereto are the
unaudited consolidated and consolidating financial statements (including the
balance sheet and income statement) of the Guarantor and its consolidated subsidiaries
for the fiscal quarter ended [date], 20   .]


The financial statements fairly present in all
material respects, in accordance with U.S. 
generally accepted accounting principles (“GAAP”), the financial
position of the Guarantor and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the
[quarterly] [interim] [annual] period ended [date], 20   , and
such financial statements have been prepared in accordance with GAAP
consistently applied throughout the period involved (expect as otherwise noted
therein).


There has been no monetary default with respect to any
indebtedness owed by the Guarantor and/or its subsidiaries (other than those
defaults cured within 30 days of the occurrence of the same) [, except as set
forth below:].


[Insert any exceptions by listing, in detail, the
nature of the condition or event causing such noncompliance, the period during
which such condition or event has existed and the action(s) the Guarantor has
taken, is taking, or proposes to take with respect to each such condition or
event.]


I have reviewed the terms of the Indenture and I have
made, or have caused to be made under my supervision, a detailed review of (i)
the covenants of the Company set forth therein, in particular, Section 10.9
(the “Financial Covenants”) and (ii) the transactions and conditions of the
Guarantor and its subsidiaries during the accounting period ended as of [             ]
(the “Accounting Period”), which Accounting Period is covered by the financial
statements attached hereto.  The
examinations described in the preceding sentence did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or an Event of Default (each as defined in the Indenture) during or at
the end of the Accounting Period or as of the date of this certificate [,
except as set forth below:].


[Insert any exceptions by listing, in detail, the
nature of the condition or event causing such noncompliance, the period during
which such condition or event has existed and the action(s) the Company has
taken, is taking, or proposes to take with respect to each such condition or
event.]









 



Page        
attached hereto sets forth the financial data and computations evidencing the
Guarantor’s compliance with the Financial Covenants, all of which data and
computations are true, complete and correct.


IN WITNESS WHEREOF, the undersigned has executed this
Officer’s Financial Certificate as of this            
day of                         ,
20   .


	
   

  	
  MORGANS HOTEL GROUP CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  
	
   

  	
   

  
	
   

  	
  Morgans Hotel
  Group Co.

  
	
   

  	
  475 Tenth Avenue

  
	
   

  	
  New York, NY
  10018

  
	
   

  	
  (212) 277-4260