Document:

Exhibit 10.39

 

SL GREEN OPERATING
PARTNERSHIP, L.P.

 

Fifth Amendment to

First Amended and Restated Agreement of Limited Partnership

 

This Amendment is made as of March 15, 2006, by
SL GREEN REALTY CORP., a Maryland corporation, as general partner (the “General
Partner”), of SL GREEN OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the “Partnership”), for the purpose of amending the First
Amended and Restated Agreement of Limited Partnership of the Partnership dated August 20,
1997 (the “Partnership Agreement”). All capitalized terms used herein
and not defined shall have the respective meanings ascribed to them in the
Partnership Agreement.

 

WHEREAS, the Partnership desires to provide for equity
incentives to certain persons who provide services for the benefit of the
Partnership (“Grantees”) in the form of Partnership Units which
shall be designated “LTIP Units.”

 

WHEREAS, pursuant to Section 4.2.A of the
Partnership Agreement, the Partnership is issuing LTIP Units to the Grantees.

 

WHEREAS, pursuant to Sections 4.2.A, 5.4, 6.2, 8.6.E
and 14.1.B the General Partner is amending the Partnership Agreement to
facilitate the issuance of the LTIP Units.

 

NOW, THEREFORE, in consideration of the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the General Partner
hereby amends the Agreements as follows:

 

1.                                      Issuance
of LTIP Units.

 

A.                                    Pursuant
to Section 4.2.A of the Partnership Agreement, the Partnership hereby issues
750,000 LTIP Units to the Grantees
in the respective amounts set forth on Schedule A hereto. The holder of any
LTIP Units shall have the benefits and obligations under the Partnership
Agreement to which the holder of such a Limited Partner Interest may be
entitled or obliged under the Partnership Agreement, as supplemented and
amended by the rights, powers, privileges, restrictions, qualifications and
limitations specified in Exhibit F to the Partnership Agreement as added
by this Amendment.

 

B.                                    The
admission of the Grantees as Additional Limited Partners of the Partnership
shall become effective as of the date of this Amendment, which shall also be
the date upon which the names of the Grantees are recorded on the books and
records of the Partnership, and Exhibit A to the Partnership Agreement is
amended to reflect such admission.

 

2.                                      Amendments
to Partnership Agreement.

 

The General Partner, as
general partner of the Partnership and as attorney-in-fact for its Limited
Partners, hereby amends the Partnership Agreement as follows:

 

 

A.                                    Article 1
of the Partnership Agreement is amended by inserting the following definitions
in alphabetical order:

 

“Class A Unit Economic Balance” has the
meaning set forth in Section 6.1.E.

 

“Economic Capital Account Balance” has the
meaning set forth in Section 6.1.E.

 

“LTIP Units” means the Partnership Units
designated as such having the rights, powers, privileges, restrictions,
qualifications and limitations set forth in Exhibit F hereto.

 

B.                                    Section 4.2.C
of the Partnership Agreement is amended by replacing the text thereof with the
following:

 

C.                                    Classes
of Partnership Units. From and after the Effective Date, subject to Section 4.2.A
above, the Partnership shall have two classes of Partnership Units, entitled “Class A
Units” and “Class B Units.”  From
and after March    , 2006, the Partnership shall have an
additional class of Partnership Units, entitled “LTIP Units.”  Either Class A Units or Class B
Units, at the election of the General Partner, in its sole and absolute
discretion, may be issued to newly admitted Partners in exchange for the
contribution by such Partners of cash, real estate partnership interests,
stock, notes or other assets or consideration, provided that, any Partnership
Unit that is not specifically designated by the General Partner as being of a
particular class shall be deemed to be a Class A Unit.

 

C.                                    Section 4.2
of the Partnership Agreement is amended by appending the following new
paragraph D:

 

D.                                    Issuance
of LTIP Units. From time to time the General Partner may issue LTIP
Units to Persons providing services to or for the benefit of the Partnership. LTIP
Units shall have the rights, powers, privileges, restrictions, qualifications
and limitations specified in Exhibit F hereto. LTIP Units are intended to
qualify as profits interests in the Partnership and for the avoidance of doubt,
the provisions of Section 4.4 shall not apply to the issuance of LTIP
Units.

 

D.                                    Section 5.1.A
of the Partnership Agreement is amended by replacing the text of the first
sentence thereof with the following:

 

A.                                    General.
The General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Partnership during
such quarter or shorter period to the Partners who are Partners on the
Partnership Record Date with respect to such quarter or shorter period as
provided in Sections 5.1.B, 5.1.C and 5.1.D below.

 

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E.                                     Sections
5.1.C and 5.1.D of the Partnership Agreement are amended by appending the
following sentence to each such Section:

 

For purposes of the
foregoing calculations, LTIP Units with an associated Distribution
Participation Date (as defined in Exhibit F hereto) that falls on or
before the date of the relevant distribution shall be treated as outstanding Class A
Units.

 

F.                                      Section 5.1
of the Partnership Agreement is amended by appending the following new
paragraph F:

 

F.                                      LTIP
Units Intended to Qualify as Profits Interests. Distributions made pursuant
to this Section 5.1 shall be adjusted as necessary to ensure that the
amount apportioned to each LTIP Unit does not exceed the amount attributable to
items of Partnership income or gain realized after the date such LTIP Unit was
issued by the Partnership. The intent of this Section 5.1.F is to ensure
that any LTIP Units issued after the date of this Agreement qualify as “profits
interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993)
and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001), and Section 5.1
shall be interpreted and applied consistently therewith. The General Partner at
its discretion may amend this Section 5.1.F to ensure that any LTIP
Units granted after the date of this Agreement will qualify as “profits
interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993)
and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001) (and any
other similar rulings or regulations that may be in effect at such time).

 

G.                                    Section 6.1
of the Partnership Agreement is amended by appending the following new
paragraph E:

 

E.                                     Special
Allocations With Respect to LTIP Units. After giving effect to the special
allocations set forth in Section 1 of Exhibit C hereto, and
notwithstanding the provisions of Sections 6.1.A and 6.1.B above, but subject
to the prior allocation of income and gain under clauses 6.1.A(i) through (v) above,
any Liquidating Gains shall first be allocated to the holders of LTIP Units
until the Economic Capital Account Balances of such holders, to the extent attributable
to their ownership of LTIP Units, are equal to (i) the Class A Unit
Economic Balance, multiplied by (ii) the number of their LTIP Units; provided
that no such Liquidating Gains will be allocated with respect to any particular
LTIP Unit unless and to the extent that such Liquidating Gains, when aggregated
with other Liquidating Gains realized since the issuance of such LTIP Unit,
exceed Liquidating Losses realized since the issuance of such LTIP Unit. After
giving effect to the special allocations set forth in Section 1 of Exhibit C
hereto, and notwithstanding the provisions of Sections 6.1.A and 6.1.B above,
in the event that, due to distributions with respect to Class A Units in
which the LTIP Units do not participate or otherwise, the Economic Capital
Account Balance of any present or former holder of LTIP Units, to the extent
attributable to the holder’s

 

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ownership of LTIP Units,
exceeds the target balance specified above, then Liquidating Losses shall be
allocated to such holder to the extent necessary to reduce or eliminate the
disparity. In the event that Liquidating Gains or Liquidating Losses are
allocated under this Section 6.1.E, Net Income allocable under clause
6.1.A(vi) and any Net Losses shall be recomputed without regard to the
Liquidating Gains or Liquidating Losses so allocated. For this purpose, “Liquidating
Gains” means any net capital gain realized in connection with the actual or
hypothetical sale of all or substantially all of the assets of the Partnership,
including but not limited to net capital gain realized in connection with an
adjustment to the Carrying Value of Partnership assets under Section 1.D
of Exhibit B to this Agreement. Similarly, “Liquidating Losses”
means any net capital loss realized in connection with any such event. The “Economic
Capital Account Balances” of the holders of LTIP Units will be equal to
their Capital Account balances, plus the amount of their shares of any Partner
Minimum Gain or Partnership Minimum Gain, in either case to the extent
attributable to their ownership of LTIP Units. Similarly, the “Class A
Unit Economic Balance” shall mean (i) the Capital Account balance of
the General Partner, plus the amount of the General Partner’s share of any Partner
Minimum Gain or Partnership Minimum Gain, in either case to the extent
attributable to the General Partner’s ownership of Class A Units and
computed on a hypothetical basis after taking into account all allocations
through the date on which any allocation is made under this Section 6.1.E,
divided by (ii) the number of the General Partner’s Class A Units. Any
such allocations shall be made among the holders of LTIP Units in proportion to
the amounts required to be allocated to each under this Section 6.1.E. The
parties agree that the intent of this Section 6.1.E is to make the Capital
Account balance associated with each LTIP Unit economically equivalent to the
Capital Account balance associated with the General Partner’s Class A
Units (on a per-unit basis), but only if the Partnership has recognized
cumulative net gains with respect to its assets since the issuance of the
relevant LTIP Unit.

 

H.                                   Section 8.6.A
of the Partnership Agreement is amended by appending the following clause (v):

 

(v)                                 Notwithstanding
the foregoing, the Redemption Right shall not be exercisable with respect to
any Class A Unit issued upon conversion of an LTIP Unit until on or after
the date that is two years after the date on which the LTIP Unit was issued,
provided however, that the foregoing restriction shall not apply if the
Redemption Right is exercised by a LTIP Unit holder in connection with a
transaction that falls within the definition of a “change of control” under the
agreement or agreements pursuant to which the LTIP Units were issued to him or
her and provided further that the two (2) year requirement set forth in
the first sentence of Section 8.6.A(i) shall not apply with respect
to Class A Units issued upon conversion of LTIP Units.

 

I.                                        Section 10.2
of the Partnership Agreement is amended by designating the existing text of Section 10.2
as paragraph A, and by appending the following new paragraph B:

 

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B.                                    To
the extent provided for in Treasury Regulations, revenue rulings, revenue
procedures and/or other IRS guidance issued after the date hereof, the
Partnership is hereby authorized to, and at the direction of the General
Partner shall, elect a safe harbor under which the fair market value of any
Partnership Interests issued after the effective date of such Treasury
Regulations (or other guidance) will be treated as equal to the liquidation
value of such Partnership Interests (i.e., a value equal to the total amount
that would be distributed with respect to such interests if the Partnership
sold all of its assets for their fair market value immediately after the
issuance of such Partnership Interests, satisfied its liabilities (excluding
any non-recourse liabilities to the extent the balance of such liabilities
exceeds the fair market value of the assets that secure them) and distributed
the net proceeds to the Partners under the terms of this Agreement). In the
event that the Partnership makes a safe harbor election as described in the
preceding sentence, each Partner hereby agrees to comply with all safe harbor
requirements with respect to transfers of such Partnership Interests while the
safe harbor election remains effective.

 

J.                                        Section 1.D(2) of
Exhibit B to the Partnership Agreement is amended by replacing the text
thereof with the following:

 

(2)                                 Such
adjustments shall be made as of the following times:  (a) immediately prior to the acquisition
of an additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) immediately
prior to the acquisition of a more than de minimis additional interest in the
Partnership by any new or existing Partner as consideration for the provision
of services to or for the benefit of the Partnership in a partner capacity or
in anticipation of becoming a partner; (c) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis amount
of property as consideration for an interest in the Partnership; and (d) immediately
prior to the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (except
for a liquidation resulting from the termination of the Partnership under Section 708(b)(1)(B) of
the Code), provided  however that adjustments pursuant to clauses (a),
(b) and (c) above shall be made only if the General Partner
determines that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership.

 

K.                                   Section 1
of Exhibit C to the Partnership Agreement is hereby amended by appending
the following new paragraph H:

 

H.                                   Forfeiture
Allocations. Upon a forfeiture of any unvested Partnership Interest by any
Partner, gross items of income, gain, loss or deduction shall be allocated to
such Partner if and to the extent required by final Treasury Regulations
promulgated after the Effective Date to ensure that allocations made

 

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with respect to all
unvested Partnership Interests are recognized under Code Section 704(b).

 

L.                                     The
Partnership Agreement is hereby amended by appending Exhibit F to this
Amendment as Exhibit F to the Partnership Agreement.

 

3.                                      Continuation
of Partnership Agreement.

 

The
Partnership Agreement and this Amendment shall be read together and shall have
the same force and effect as if the provisions of the Partnership Agreement and
this Amendment (including Exhibit F hereto) were contained in one document.
Any provisions of the Partnership Agreement not amended by this Amendment shall
remain in full force and effect as provided in the Partnership Agreement
immediately prior to the date hereof.

 

[Remainder of
page intentionally blank]

 

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IN
WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Partnership Agreement as of the                
day of March, 2006.

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  SL GREEN REALTY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  GRANTEES:

  
	
   

  	
   

  
	
   

  	
  *Individual Counterpart Signature
  Pages Attached.

  

 

 

[Signature Page to Amendment to the Partnership Agreement]

 

 

SL GREEN OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become one of the within
named Limited Partners of SL Green Operating Partnership, L.P. (the “Partnership”)
hereby becomes a party to the First Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of August 20, 1997 and amended
through the date hereof (the “Partnership Agreement”), by and among SL
Green Realty Corp. and such Limited Partners. The undersigned agrees that this
signature page may be attached to any counterpart of the
Partnership Agreement.

 

 

	
  Date:

  	
   

  	
   

  
	
   

  	
  Name of Limited Partner (please print)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  

 

 

Schedule A to Fifth
Amendment to Partnership Agreement

 

 

	
  Name and Address

  	
   

  	
  Number of LTIP Units

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT F

 

SL GREEN OPERATING PARTNERSHIP, L.P.

 

DESIGNATION OF THE RIGHTS, POWERS, PRIVILEGES,

RESTRICTIONS, QUALIFICATIONS AND LIMITATIONS

OF THE LTIP UNITS

 

The
following are the terms of the LTIP Units:

 

1.                                      Vesting.

 

A.                                    Vesting,
Generally. LTIP Units may, in the sole discretion of the General Partner,
be issued subject to vesting, forfeiture and additional restrictions on
transfer pursuant to the terms of an award, vesting or other similar agreement
(a “Vesting Agreement”). The terms of any Vesting Agreement may be
modified by the General Partner from time to time in its sole discretion,
subject to any restrictions on amendment imposed by the relevant Vesting
Agreement or by the terms of any plan pursuant to which the LTIP Units are
issued, if applicable. LTIP Units that have vested and are no longer subject to
forfeiture under the terms of a Vesting Agreement are referred to as “Vested
LTIP Units”; all other LTIP Units are referred to as “Unvested LTIP
Units.”  Subject to the terms of any
Vesting Agreement, a holder of LTIP Units shall be entitled to transfer his or
her LTIP Units to the same extent, and subject to the same restrictions as
holders of Class A Units are entitled to transfer their Class A Units
pursuant to Article XI of the Agreement.

 

B.                                    Forfeiture
or Transfer of Unvested LTIP Units. Unless otherwise specified in the
relevant Vesting Agreement, upon the occurrence of any event specified in a
Vesting Agreement as resulting in either the forfeiture of any LTIP Units, or
the right of the Partnership or the General Partner to repurchase LTIP Units at
a specified purchase price, then upon the occurrence of the circumstances
resulting in such forfeiture or if the Partnership or the General Partner
exercises such right to repurchase, then the relevant LTIP Units shall
immediately, and without any further action, be treated as cancelled or
transferred to the General Partner, as applicable, and no longer outstanding
for any purpose. Unless otherwise specified in the Vesting Agreement, no
consideration or other payment shall be due with respect to any LTIP Units that
have been forfeited, other than any distributions declared with a record date
prior to the effective date of the forfeiture. In connection with any
forfeiture or repurchase of LTIP Units, the balance of the portion of the
Capital Account of the holder that is attributable to all of his or her LTIP
Units shall be reduced by the amount, if any, by which it exceeds the target
balance contemplated by Section 6.1.E of the Agreement, calculated with respect to the holder’s
remaining LTIP Units, if any.

 

C.                                    Legend.
Any certificate evidencing an LTIP Unit shall bear an appropriate legend
indicating that additional terms, conditions and restrictions on transfer,
including without limitation any Vesting Agreement, apply to the LTIP Unit.

 

F-1

 

2.                                      Distributions.

 

A.                                    LTIP
Distribution Amount. Commencing from the Distribution Participation Date
(as defined below) established for any LTIP Units, for any quarterly or other
period holders of such LTIP Units shall be entitled to receive, if, when and as
authorized by the General Partner out of funds legally available for the
payment of distributions, regular cash distributions in an amount per unit
equal to the distribution payable on each Class A Unit for the
corresponding quarterly or other period (the “LTIP Distribution Amount”).
In addition, from and after the Distribution Participation Date, LTIP Units
shall be entitled to receive, if, when and as authorized by the General Partner
out of funds or other property legally available for the payment of
distributions, non-liquidating special, extraordinary or other distributions in
an amount per unit equal to the amount of any non-liquidating special,
extraordinary or other distributions payable on the Class A Units which may be
made from time to time. LTIP Units shall also be entitled to receive, if, when
and as authorized by the General Partner out of funds or other property legally
available for the payment of distributions, distributions representing proceeds
of a sale or other disposition of all or substantially all of the assets of the
Partnership in an amount per unit equal to the amount of any such distributions
payable on the Class A Units, whether made prior to, on or after the
Distribution Participation Date, provided that the amount of such distributions
shall not exceed the positive balances of the Capital Accounts of the holders
of such LTIP Units to the extent attributable to the ownership of such LTIP
Units. Distributions on the LTIP Units, if authorized, shall be payable on such
dates and in such manner as may be authorized by the General Partner (any
such date, a “Distribution Payment Date”); provided that the
Distribution Payment Date and the record date for determining which holders of
LTIP Units are entitled to receive a distribution shall be the same as the
corresponding dates relating to the corresponding distribution on the Class A
Units.

 

B.                                    Distribution
Participation Date. The “Distribution Participation Date” for each
LTIP Units will be either (i) with respect to LTIP Units granted pursuant
to the General Partner’s 2005 Long-Term Outperformance Plan (the “2005
Outperformance Plan”), the applicable Valuation Date (as defined in the
Vesting Agreement of each Person granted LTIP Units under the 2005
Outperformance Plan) or (ii) with respect to other LTIP Units, such date
as may be specified in the Vesting Agreement or other documentation
pursuant to which such LTIP Units are issued.

 

3.                                      Allocations.

 

Commencing with the portion of the taxable year of the
Partnership that begins on the Distribution Participation Date established for
any LTIP Units, such LTIP Units shall be allocated Net Income and Net Loss in
amounts per LTIP Unit equal to the amounts allocated per Class A Unit. The
allocations provided by the preceding sentence shall be subject to the proviso
to the first sentence of Section 6.1.B of the Agreement. The General Partner
is authorized in its discretion to delay or accelerate the participation of the
LTIP Units in allocations of Net Income and Net Loss, or to adjust the
allocations

 

F-2

 

made after the
Distribution Participation Date, so that the ratio of (i) the total amount
of Net Income or Net Loss allocated with respect to each LTIP Unit in the
taxable year in which that LTIP Unit’s Distribution Participation Date falls,
to (ii) the total amount distributed to that LTIP Unit with respect to
such period, is more nearly equal to such ratio as computed for the Class A
Units held by the General Partner.

 

4.                                      Adjustments.

 

The Partnership shall maintain at all times a
one-to-one correspondence between LTIP Units and Class A Units for
conversion, distribution and other purposes, including without limitation
complying with the following procedures; provided that the foregoing is not
intended to alter the Capital Account Limitation (as defined in Section 7.C
of this Exhibit F), the special allocations pursuant to Section 6.1.E
of the Partnership Agreement, differences between non-liquidating distributions
to be made with respect to the LTIP Units and Class A Units prior to the
Distribution Participation Date for such LTIP Units, differences between
liquidating distributions to be made with respect to the LTIP Units and Class A
Units pursuant to Section 13.2 of the Partnership Agreement or Section 2.A
of this Exhibit F in the event that the Capital Accounts attributable to
the LTIP Units are less than those attributable to the Class A Units due
to insufficient special allocations pursuant to Section 6.1.E of the
Partnership Agreement or related provisions. If an Adjustment Event (as defined
below) occurs, then the General Partner shall make a corresponding adjustment
to the LTIP Units to maintain such one-for-one correspondence between Class A
Units and LTIP Units. The following shall be “Adjustment Events”:  (A) the Partnership makes a distribution
on all outstanding Class A Units in Partnership Units, (B) the
Partnership subdivides the outstanding Class A Units into a greater number
of units or combines the outstanding Class A Units into a smaller number
of units, or (C) the Partnership issues any Partnership Units in exchange
for its outstanding Class A Units by way of a reclassification or
recapitalization of its Class A Units. If more than one Adjustment Event
occurs, the adjustment to the LTIP Units need be made only once using a single
formula that takes into account each and every Adjustment Event as if all
Adjustment Events occurred simultaneously. For the avoidance of doubt, the
following shall not be Adjustment Events: (x) the issuance of Partnership Units
in a financing, reorganization, acquisition or other similar business
transaction, (y) the issuance of Partnership Units pursuant to any employee
benefit or compensation plan or distribution reinvestment plan, or (z) the
issuance of any Partnership Units to the General Partner in respect of a
capital contribution to the Partnership of proceeds from the sale of securities
by the General Partner. If the Partnership takes an action affecting the Class A
Units other than actions specifically described above as Adjustment Events and
in the opinion of the General Partner such action would require an adjustment
to the LTIP Units to maintain the one-to-one correspondence described above,
the General Partner shall have the right to make such adjustment to the LTIP
Units, to the extent permitted by law and by the terms of any plan pursuant to
which the LTIP Units have been issued,
in such manner and at such time as the General Partner, in its sole discretion,
may determine to be appropriate under the circumstances. If an adjustment
is made to the LTIP Units as

 

F-3

 

herein provided the
Partnership shall promptly file in the books and records of the Partnership an
officer’s certificate setting forth such adjustment and a brief statement of
the facts requiring such adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent manifest error. Promptly
after filing of such certificate, the Partnership shall mail a notice to each
holder of LTIP Units setting forth the adjustment to his or her LTIP Units and
the effective date of such adjustment.

 

5.                                      Ranking.

 

The LTIP Units shall rank on parity with the Class A
Units in all respects, subject to the proviso in the first sentence of Section 4
of this Exhibit F.

 

6.                                      No
Liquidation Preference.

 

The LTIP Units shall have no liquidation preference.

 

7.                                      Right
to Convert LTIP Units into Class A Units.

 

A.                                    Conversion
Right. A holder of LTIP Units shall have the right (the “Conversion
Right”), at his or her option, at any time to convert all or a portion of
his or her Vested LTIP Units into Class A Units. Holders of LTIP Units
shall not have the right to convert Unvested LTIP Units into Class A Units
until they become Vested LTIP Units; provided, however, that when
a holder of LTIP Units is notified of the expected occurrence of an event that
will cause his or her Unvested LTIP Units to become Vested LTIP Units, such
Person may give the Partnership a Conversion Notice conditioned upon and
effective as of the time of vesting, and such Conversion Notice, unless
subsequently revoked by the holder of the LTIP Units, shall be accepted by the
Partnership subject to such condition. The General Partner shall have the right
at any time to cause a conversion of Vested LTIP Units into Class A Units.
In all cases, the conversion of any LTIP Units into Class A Units shall be
subject to the conditions and procedures set forth in this Section 7.

 

B.                                    Number
of Units Convertible. A holder of Vested LTIP Units may convert such
Vested LTIP Units into an equal number of fully paid and non-assessable Class A
Units, giving effect to all adjustments (if any) made pursuant to Section 4.
Notwithstanding the foregoing, in no event may a holder of Vested LTIP
Units convert a number of Vested LTIP Units that exceeds (x) the Economic
Capital Account Balance of such holder, to the extent attributable to its
ownership of LTIP Units, divided by (y) the Class A Unit Economic Balance,
in each case as determined as of the effective date of conversion (the “Capital
Account Limitation”).

 

C.                                    Notice.
In order to exercise his or her Conversion Right, a holder of LTIP Units shall
deliver a notice (a “Conversion Notice”) in the form attached as
Attachment A to this Exhibit F to the Partnership not less than 10
nor more than 60 days prior to a date

 

F-4

 

(the “Conversion Date”) specified in such Conversion Notice. Each
holder of LTIP Units covenants and agrees with the Partnership that all Vested
LTIP Units to be converted pursuant to this Section 7 shall be free and clear
of all liens. Notwithstanding anything herein to the contrary, a holder of LTIP
Units may deliver a Redemption Notice pursuant to Section 8.6 of the
Agreement relating to those Class A Units that will be issued to such
holder upon conversion of such LTIP Units into Class A Units in advance of
the Conversion Date; provided, however, that the redemption of such Class A
Units by the Partnership shall in no event take place until the Conversion Date.
For clarity, it is noted that the objective of this paragraph is to put a
holder of LTIP Units in a position where, if he or she so wishes, the Class A
Units into which his or her Vested LTIP Units will be converted can be redeemed
by the Partnership simultaneously with such conversion, with the further
consequence that, if the General Partner elects to assume the Partnership’s
redemption obligation with respect to such Class A Units under Section 8.6
of the Agreement by delivering to such holder Shares rather than cash, then
such holder can have such Shares issued to him or her simultaneously with the
conversion of his or her Vested LTIP Units into Class A Units. The General
Partner shall cooperate with a holder of LTIP Units to coordinate the timing of
the different events described in the foregoing sentence.

 

D.                                    Forced
Conversion. The Partnership, at any time at the election of the General
Partner, may cause any number of Vested LTIP Units held by a holder of
LTIP Units to be converted (a “Forced Conversion”) into an equal number
of Class A Units, giving effect to all adjustments (if any) made pursuant
to Section 4; provided, that the Partnership may not cause a
Forced Conversion of any LTIP Units that would not at the time be eligible for
conversion at the option of the holder of such LTIP Units pursuant to Section 7.B
above. In order to exercise its right to cause a Forced Conversion, the
Partnership shall deliver a notice (a “Forced Conversion Notice”) in the
form attached as Attachment B to this Exhibit F to the
applicable holder not less than 10 nor more than 60 days prior to the
Conversion Date specified in such Forced Conversion Notice. A Forced Conversion
Notice shall be provided in the manner provided in Section 15.1 of the
Agreement.

 

E.                                     Conversion
Procedures. A conversion of Vested LTIP Units for which the holder thereof
has given a Conversion Notice or the Partnership has given a Forced Conversion
Notice shall occur automatically after the close of business on the applicable
Conversion Date without any action on the part of such holder of LTIP
Units, as of which time such holder of LTIP Units shall be credited on the
books and records of the Partnership with the issuance as of the opening of
business on the next day of the number of Class A Units issuable upon such
conversion. After the conversion of LTIP Units as aforesaid, the Partnership
shall deliver to such holder of LTIP Units, upon his or her written request, a
certificate of the General Partner certifying the number of Class A Units
and remaining LTIP Units, if any, held by such Person immediately after such
conversion.

 

F-5

 

F.                                      Treatment
of Capital Account. For purposes of making future allocations under Section 6.1.E
of the Agreement and applying the Capital Account Limitation, the portion of
the Economic Capital Account balance of the applicable holder of LTIP Units
that is treated as attributable to his or her LTIP Units shall be reduced, as
of the date of conversion, by the product of the number of LTIP Units converted
multiplied by the Class A Unit Economic Balance.

 

G.                                    Mandatory
Conversion in Connection with a Transaction. If the Partnership or the
General Partner shall be a party to any transaction (including without
limitation a merger, consolidation, unit exchange, self tender offer for all or
substantially all Class A Units or other business combination or
reorganization, or sale of all or substantially all of the Partnership’s
assets, but excluding any transaction which constitutes an Adjustment Event),
in each case as a result of which Class A Units shall be exchanged for or
converted into the right, or the holders of Class A Units shall otherwise
be entitled, to receive cash, securities or other property or any combination
thereof (each of the foregoing being referred to herein as a “Transaction”),
then the General Partner shall, immediately prior to the Transaction, exercise
its right to cause a Forced Conversion with respect to the maximum number of
LTIP Units then eligible for conversion, taking into account any allocations
that occur in connection with the Transaction or that would occur in connection
with the Transaction if the assets of the Partnership were sold at the
Transaction price or, if applicable, at a value determined by the General
Partner in good faith using the value attributed to the Partnership Units in
the context of the Transaction (in which case the Conversion Date shall be the
effective date of the Transaction and the conversion shall occur immediately
prior to the effectiveness of the Transaction).

 

In anticipation of such Forced Conversion and the
consummation of the Transaction, the Partnership shall use commercially
reasonable efforts to cause each holder of LTIP Units to be afforded the right
to receive in connection with such Transaction in consideration for the Class A
Units into which his or her LTIP Units will be converted the same kind and
amount of cash, securities and other property (or any combination thereof)
receivable upon the consummation of such Transaction by a holder of the same
number of Class A Units, assuming such holder of Class A Units is not
a Person with which the Partnership consolidated or into which the Partnership
merged or which merged into the Partnership or to which such sale or transfer
was made, as the case may be (a “Constituent Person”), or an
affiliate of a Constituent Person. In the event that holders of Class A
Units have the opportunity to elect the form or type of consideration to
be received upon consummation of the Transaction, prior to such Transaction the
General Partner shall give prompt written notice to each holder of LTIP Units
of such election, and shall use commercially reasonable efforts to afford such
holders the right to elect, by written notice to the General Partner, the form or
type of consideration to be received upon conversion of each LTIP Unit held by
such holder into Class A Units in connection with such Transaction. If a
holder of LTIP Units fails to make such an election, such holder (and any of
its transferees) shall receive upon conversion of each LTIP Unit held him or
her (or by any of his or her transferees) the same kind and amount of

 

F-6

 

consideration that a
holder of a Class A Unit would receive if such holder of Class A
Units failed to make such an election.

 

Subject to the rights of the Partnership and the
General Partner under any Vesting Agreement and the terms of any plan under
which LTIP Units are issued, the Partnership shall use commercially reasonable
effort to cause the terms of any Transaction to be consistent with the
provisions of this Section 7 and to enter into an agreement with the
successor or purchasing entity, as the case may be, for the benefit of any
holders of LTIP Units whose LTIP Units will not be converted into Class A
Units in connection with the Transaction that will (i) contain provisions
enabling the holders of LTIP Units that remain outstanding after such
Transaction to convert their LTIP Units into securities as comparable as
reasonably possible under the circumstances to the Class A Units and (ii) preserve
as far as reasonably possible under the circumstances the distribution, special
allocation, conversion, and other rights set forth in the Agreement for the
benefit of the holders of LTIP Units.

 

8.                                      Redemption
at the Option of the Partnership.

 

LTIP Units will not be redeemable at the option of the
Partnership; provided, however, that the foregoing shall not
prohibit the Partnership from repurchasing LTIP Units from the holder thereof
if and to the extent such holder agrees to sell such Units.

 

9.                                      Voting
Rights.

 

A.                                    Voting
with Class A Units. Holders of LTIP Units shall have the right to vote
on all matters submitted to a vote of the holders of Class A Units;
holders of LTIP Units and Class A Units shall vote together as a single class,
together with any other class or series of units of limited
partnership interest in the Partnership upon which like voting rights have been
conferred. In any matter in which the LTIP Units are entitled to vote,
including an action by written consent, each LTIP Unit shall be entitled to
vote a Percentage Interest equal on a per unit basis to the Percentage Interest
of the Class A Units.

 

B.                                    Special
Approval Rights. In addition to, and not in limitation of, the provisions
of Section 9.A above (and notwithstanding anything appearing to be
contrary in the Agreement), the General Partner and/or the Partnership shall
not, without the affirmative consent of the holders of sixty-six and two-thirds
percent (66 2/3%) of the then outstanding LTIP Units, given in person or by
proxy, either in writing or at a meeting, take any action that would materially
and adversely alter, change, modify or amend the rights, powers or privileges
of the LTIP Units; but subject in any event to the following provisions: (i) no
consent of the holders of LTIP Units will be required if and to the extent that
any such alteration, change, modification or amendment would similarly alter,
change, modify or amend the rights, powers or privileges of the Class A
Units; (ii) with respect to the occurrence of any merger, consolidation or
other business

 

F-7

 

combination or reorganization, so long as the LTIP Units either (x) are
all converted into Class A Units immediately prior to the effectiveness of
the transaction, (y) remain outstanding with the terms thereof materially
unchanged or (z) if the Partnership is not the surviving entity in such
transaction, are exchanged for a security of the surviving entity with terms
that are materially the same with respect to rights to allocations,
distributions, redemption, conversion and voting as the LTIP Units and without
any income, gain or loss expected to be recognized by the holder upon the
exchange for federal income tax purposes (and with the terms of the Class A
Units or such other securities into which the LTIP Units (or the substitute
security therefor) are convertible materially the same with respect to rights
to allocations, distributions, redemption, conversion and voting), the
occurrence of any such event shall not be deemed to materially and adversely
alter, change, modify or amend the rights, powers or privileges of the LTIP
Units, provided further, that if some, but not all, of the LTIP Units are
converted into Class A Units immediately prior to the effectiveness of the
transaction (and neither clause (y) or (z) above is applicable), then the
consent required pursuant to this Section will be the consent of the
holders of sixty-six and two-thirds percent (66 2/3%) of the LTIP Units to
be outstanding following such conversion; (iii) any creation or issuance
of any Class A Units or of any class of series of common or
preferred units of the Partnership (whether ranking junior to, on a parity with
or senior to the LTIP Units with respect to payment of distributions,
redemption rights and the distribution of assets upon liquidation, dissolution
or winding up), which either (x) does not require the consent of the holders of
Class A Units or (y) does require such consent and is authorized by a vote
of the holders of Class A Units and LTIP Units voting together as a single
class, together with any other class or series of units of limited
partnership interest in the Partnership upon which like voting rights have been
conferred, shall not be deemed to materially and adversely alter, change,
modify or amend the rights, powers or privileges of the LTIP Units; and (iv) any
waiver by the Partnership of restrictions or limitations applicable to any
outstanding LTIP Units with respect to any holder or holders thereof shall not
be deemed to materially and adversely alter, change, modify or amend the
rights, powers or privileges of the LTIP Units with respect to other holders. The
foregoing voting provisions will not apply if, as of or prior to the time when
the action with respect to which such vote would otherwise be required will be
taken or be effective, all outstanding LTIP Units shall have been converted
and/or redeemed, or provision is made for such redemption and/or conversion to
occur as of or prior to such time.

 

F-8

 

Attachment A to Exhibit F

 

Notice
of Election by Partner to Convert

LTIP Units into Class A Units

 

The undersigned holder of LTIP Units hereby
irrevocably elects to convert the number of Vested LTIP Units in SL Green
Operating Partnership, L.P. (the “Partnership”) set forth below into Class A
Units in accordance with the terms of the First Amended and Restated Agreement
of Limited Partnership of the Partnership, as amended. The undersigned hereby
represents, warrants, and certifies that the undersigned: (a) has title to
such LTIP Units, free and clear of the rights or interests of any other person
or entity other than the Partnership; (b) has the full right, power, and
authority to cause the conversion of such LTIP Units as provided herein; and (c) has
obtained the consent or approval of all persons or entities, if any, having the
right to consent or approve such conversion.

 

	
  Name of Holder:

  	
   

  	
   

  
	
   

  	
  (Please Print: Exact Name as Registered with
  Partnership)

  
	
   

  
	
  Number of LTIP Units to be Converted:

  	
   

  	
   

  
	
   

  
	
  Conversion Date:

  	
   

  	
   

  
								

 

 

	
   

  	
   

  	
   

  
	
  (Signature of Holder:
  Sign Exact Name as Registered with Partnership)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Street Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (City)

  	
  (State)

  	
  (Zip Code)

  	
   

  
	
   

  
	
  Signature
  Guaranteed by:

  	
   

  	
   

  
						

 

 

Attachment B to Exhibit F

 

Notice
of Election by Partnership to Force Conversion

of LTIP Units into Class A Units

 

SL Green Operating Partnership, L.P. (the “Partnership”)
hereby irrevocably elects to cause the number of LTIP Units held by the holder
of LTIP Units set forth below to be converted into Class A Units in
accordance with the terms of the First Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended.

 

	
  Name of Holder:

  	
   

  	
   

  
	
   

  	
  (Please Print:
  Exact Name as Registered with Partnership)

  
	
   

  
	
  Number of LTIP Units to be Converted:

  	
   

  	
   

  
	
   

  
	
  Conversion Date:Exhibit 4.21

 

 

iSTAR FINANCIAL INC.

6.0% SENIOR NOTES DUE 2010

 

 

THIRD SUPPLEMENTAL INDENTURE

Dated as of December 12,
2003

 

 

US BANK TRUST NATIONAL 

ASSOCIATION

Trustee

 

 

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust Indenture

  Act Section

  	
   

  	
  Indenture Section

  	
   

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.11

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  312

  	
  (a)

  	
   

  	
  2.05

  	
   

  
	
   

  	
  (b)

  	
   

  	
  11.03

  	
   

  
	
   

  	
  (c)

  	
   

  	
  11.03

  	
   

  
	
  313

  	
  (a)

  	
   

  	
  7.06

  	
   

  
	
   

  	
  (b)(2)

  	
   

  	
  7.07

  	
   

  
	
   

  	
  (c)

  	
   

  	
  7.06;11.02

  	
   

  
	
   

  	
  (d)

  	
   

  	
  7.06

  	
   

  
	
  314

  	
  (a)

  	
   

  	
  4.03;11.02

  	
   

  
	
   

  	
  (c)(1)

  	
   

  	
  11.04

  	
   

  
	
   

  	
  (c)(2)

  	
   

  	
  11.04

  	
   

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (e)

  	
   

  	
  11.05

  	
   

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  	
   

  
	
  315

  	
  (a)

  	
   

  	
  7.01

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.05,11.02

  	
   

  
	
   

  	
  (c)

  	
   

  	
  7.01

  	
   

  
	
   

  	
  (d)

  	
   

  	
  7.01

  	
   

  
	
   

  	
  (e)

  	
   

  	
  6.11

  	
   

  
	
  316

  	
  (a) (last sentence)

  	
   

  	
  2.09

  	
   

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  	
   

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
   

  	
  6.07

  	
   

  
	
   

  	
  (c)

  	
   

  	
  2.13

  	
   

  
	
  317

  	
  (a)(1)

  	
   

  	
  6.08

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  6.09

  	
   

  
	
   

  	
  (b)

  	
   

  	
  2.04

  	
   

  
	
  318

  	
  (a)

  	
   

  	
  11.01

  	
   

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (c)

  	
   

  	
  11.01

  	
   

  

 

N.A. means not applicable.

*  This Cross-Reference Table is
not part of the Indenture.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Other Definitions

  	
  20

  
	
  Section 1.03.

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
  21

  
	
  Section 1.04.

  	
  Rules of Construction

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
   

  	
   

  	
   

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form and Dating

  	
  22

  
	
  Section 2.02.

  	
  Execution and Authentication

  	
  22

  
	
  Section 2.03.

  	
  Registrar and Paying Agent

  	
  23

  
	
  Section 2.04.

  	
  Paying Agent to Hold Money in Trust

  	
  23

  
	
  Section 2.05.

  	
  Holder Lists

  	
  24

  
	
  Section 2.06.

  	
  Transfer and Exchange

  	
  24

  
	
  Section 2.07.

  	
  Replacement Notes

  	
  28

  
	
  Section 2.08.

  	
  Outstanding Notes

  	
  28

  
	
  Section 2.09.

  	
  Treasury Notes

  	
  29

  
	
  Section 2.10.

  	
  Temporary Notes

  	
  29

  
	
  Section 2.11.

  	
  Cancellation

  	
  29

  
	
  Section 2.12.

  	
  Defaulted Interest

  	
  29

  
	
  Section 2.13.

  	
  Record Date

  	
  30

  
	
  Section 2.14.

  	
  CUSIP Numbers

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
   

  	
   

  	
   

  
	
  REDEMPTION AND PREPAYMENT

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Notices to Trustee

  	
  30

  
	
  Section 3.02.

  	
  Selection of Notes to Be Redeemed

  	
  30

  
	
  Section 3.03.

  	
  Notice of Redemption

  	
  31

  
	
  Section 3.04.

  	
  Effect of Notice of Redemption

  	
  32

  
	
  Section 3.05.

  	
  Deposit of Redemption Price

  	
  32

  
	
  Section 3.06.

  	
  Notes Redeemed in Part

  	
  32

  
	
  Section 3.07.

  	
  Optional Redemption

  	
  32

  
	
  Section 3.08.

  	
  Mandatory Redemption

  	
  33

  

 

i

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE 4

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Payment of Notes

  	
  34

  
	
  Section 4.02.

  	
  Maintenance of Office or Agency

  	
  34

  
	
  Section 4.03.

  	
  Reports to Holders

  	
  34

  
	
  Section 4.04.

  	
  Compliance Certificate

  	
  35

  
	
  Section 4.05.

  	
  Taxes

  	
  36

  
	
  Section 4.06.

  	
  Stay, Extension and Usury Laws

  	
  36

  
	
  Section 4.07.

  	
  Limitation on Restricted Payments

  	
  36

  
	
  Section 4.08.

  	
  Limitation on Dividend and Other Payment
  Restrictions Affecting Subsidiaries

  	
  38

  
	
  Section 4.09.

  	
  Limitation on Incurrence of Additional
  Indebtedness

  	
  39

  
	
  Section 4.10.

  	
  Limitation on Transactions with Affiliates

  	
  40

  
	
  Section 4.11.

  	
  Limitation on Liens

  	
  42

  
	
  Section 4.12.

  	
  Corporate Existence

  	
  42

  
	
  Section 4.13.

  	
  Offer to Repurchase Upon Change of Control

  	
  43

  
	
  Section 4.14.

  	
  Limitation on Preferred Stock of
  Subsidiaries

  	
  44

  
	
  Section 4.15.

  	
  Conduct of Business

  	
  44

  
	
  Section 4.16.

  	
  Limitation of Guarantees by Subsidiaries

  	
  45

  
	
  Section 4.17.

  	
  Maintenance of Total Unencumbered Assets

  	
  45

  
	
  Section 4.18.

  	
  Termination of Certain Covenants In Event
  of Investment Grade Rating

  	
  45

  
	
  Section 4.19.

  	
  Maintenance of Properties; Books and
  Records; Compliance with Law

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
   

  	
   

  	
   

  
	
  SUCCESSORS

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Merger, Consolidation, or Sale of Assets

  	
  46

  
	
  Section 5.02.

  	
  Successor Corporation Substituted

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
   

  	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Events of Default

  	
  48

  
	
  Section 6.02.

  	
  Acceleration

  	
  50

  
	
  Section 6.03.

  	
  Other Remedies

  	
  51

  
	
  Section 6.04.

  	
  Waiver of Past Defaults

  	
  51

  
	
  Section 6.05.

  	
  Control by Majority

  	
  51

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
  Section 6.06.

  	
  Limitation on Suits

  	
  51

  
	
  Section 6.07.

  	
  Rights of Holders of Notes to Receive
  Payment

  	
  52

  
	
  Section 6.08.

  	
  Collection Suit by Trustee

  	
  52

  
	
  Section 6.09.

  	
  Trustee May File Proofs of Claim

  	
  52

  
	
  Section 6.10.

  	
  Priorities

  	
  53

  
	
  Section 6.11.

  	
  Undertaking for Costs

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
   

  	
   

  	
   

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of Trustee

  	
  54

  
	
  Section 7.02.

  	
  Rights of Trustee

  	
  55

  
	
  Section 7.03.

  	
  Individual Rights of Trustee

  	
  55

  
	
  Section 7.04.

  	
  Trustee’s Disclaimer

  	
  56

  
	
  Section 7.05.

  	
  Notice of Defaults

  	
  56

  
	
  Section 7.06.

  	
  Reports by Trustee

  	
  56

  
	
  Section 7.07.

  	
  Compensation and Indemnity

  	
  56

  
	
  Section 7.08.

  	
  Replacement of Trustee

  	
  57

  
	
  Section 7.09.

  	
  Successor Trustee by Merger, etc

  	
  58

  
	
  Section 7.10.

  	
  Eligibility; Disqualification

  	
  58

  
	
  Section 7.11.

  	
  Preferential Collection of Claims

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
   

  	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Option to Effect Legal Defeasance or
  Covenant Defeasance

  	
  59

  
	
  Section 8.02.

  	
  Legal Defeasance and Discharge

  	
  59

  
	
  Section 8.03.

  	
  Covenant Defeasance

  	
  60

  
	
  Section 8.04.

  	
  Conditions to Legal or Covenant Defeasance

  	
  60

  
	
  Section 8.05.

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

  	
  62

  
	
  Section 8.06.

  	
  Repayment to Company

  	
  62

  
	
  Section 8.07.

  	
  Reinstatement

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
   

  	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Without Consent of Holders of Notes

  	
  63

  
	
  Section 9.02.

  	
  With Consent of Holders of Notes

  	
  64

  
	
  Section 9.03.

  	
  Compliance with Trust Indenture Act

  	
  65

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
  Section 9.04.

  	
  Revocation and Effect of Consents

  	
  65

  
	
  Section 9.05.

  	
  Notation on or Exchange of Notes

  	
  66

  
	
  Section 9.06.

  	
  Trustee to Sign Amendments, etc

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
   

  	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Satisfaction and Discharge

  	
  66

  
	
  Section 10.02.

  	
  Application of Trust Money

  	
  67

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Trust Indenture Act Controls

  	
  68

  
	
  Section 11.02.

  	
  Notices

  	
  68

  
	
  Section 11.03.

  	
  Communication by Holders of Notes with
  Other Holders of Notes

  	
  69

  
	
  Section 11.04.

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
  69

  
	
  Section 11.05.

  	
  Statements Required in Certificate or
  Opinion

  	
  69

  
	
  Section 11.06.

  	
  Rules by Trustee and Agents

  	
  70

  
	
  Section 11.07.

  	
  No Personal Liability of Directors,
  Officers, Employees and Stockholders

  	
  70

  
	
  Section 11.08.

  	
  Governing Law

  	
  70

  
	
  Section 11.09.

  	
  No Adverse Interpretation of Other
  Agreements

  	
  70

  
	
  Section 11.10.

  	
  Successors

  	
  70

  
	
  Section 11.11.

  	
  Severability

  	
  70

  
	
  Section 11.12.

  	
  Counterpart Originals

  	
  70

  
	
  Section 11.13.

  	
  Table of Contents, Headings, etc

  	
  70

  
	
  Section 11.14.

  	
  Conflicts with Indenture

  	
  71

  

 

EXHIBITS

 

Exhibit A                                               FORM OF
NOTE

 

iv

 

SUPPLEMENTAL
INDENTURE dated as of December 12, 2003 between iStar Financial Inc., a
Maryland corporation (the “Company”),
and US Bank Trust National Association, as trustee (the “Trustee”).

 

The Company
has heretofore delivered to the Trustee an Indenture dated as of February 5,
2001, a form of which has been filed with the Securities and Exchange
Commission under the Securities Act as an exhibit to the Company’s
Registration Statement on Form S-3 (Registration No. 333-109599), providing
for the issuance from time to time of debt securities of the Company.

 

The Board of
Directors of the Company has duly adopted resolutions authorizing the Company
to execute and deliver this Supplemental Indenture.

 

The Company
and the Trustee agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the Notes:

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.                                                                         Definitions.

 

“Acquired Indebtedness” means Indebtedness
of a Person or any of its Subsidiaries existing at the time such Person becomes
a Subsidiary of the Company or at the time it merges or consolidates with the
Company or any of its Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case whether or not incurred
by such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Subsidiary of the Company or such acquisition, merger or
consolidation.

 

“Additional Notes” means additional Notes
(other than the Initial Notes) issued under this Supplemental Indenture in
accordance with Section 2.02 and 4.09.

 

“Affiliate” means, with respect to any
specified Person, any other Person who directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, such specified Person. The term “control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative of the foregoing.

 

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

 

 

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

 

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

 

“Asset Sale” means any direct or indirect
sale, issuance, conveyance, transfer, lease (other than operating leases
entered into in the ordinary course of business), assignment or other transfer
for value by the Company or any Subsidiary of the Company (including any sale
and leaseback transaction) to any Person other than the Company or a Wholly
Owned Subsidiary of the Company of:

 

(1)                                  any
Capital Stock of any Subsidiary of the Company; or

 

(2)                                  any
of the Company’s or its Subsidiaries’ other property or assets other than sales
of loan-related assets made in the ordinary course of the Company’s real estate
lending business and other asset sales made in the ordinary course of the
Company’s business.

 

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

 

“Board of Directors” means, as to any
Person, the board of directors of such Person or any duly authorized committee
thereof.

 

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

 

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

 

2

 

“Capitalized Lease Obligation” means, as to
any Person, the obligations of such Person under a lease that are required to
be classified and accounted for as capital lease obligations under GAAP and,
for purposes of this definition, the amount of such obligations at any date shall
be the capitalized amount of such obligations at such date, determined in
accordance with GAAP.

 

“Capital Stock” means:

 

(1)                                  with
respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not
voting) of corporate stock, including each class of Common Stock and
Preferred Stock of such Person; and

 

(2)                                  with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.

 

“Cash Equivalents” means:

 

(1)                                  marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition thereof;

 

(2)                                  marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
S&P or Moody’s;

 

(3)                                  commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s;

 

(4)                                  certificates
of deposit or bankers’ acceptances maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250.0 million;

 

(5)                                  repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clause (1) above entered into with any bank
meeting the qualifications specified in clause (4) above; and

 

3

 

(6)                                  investments
in money market funds that invest substantially all their assets in securities
of the types described in clauses (1) through (5) above.

 

“Change of Control”  means the occurrence of one or more of the
following events:

 

(1)                                  any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company
to any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a “Group”),
together with any Affiliates thereof (whether or not otherwise in compliance
with the provisions of this Supplemental Indenture) other than to the Permitted
Holders;

 

(2)                                  the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Supplemental Indenture);

 

(3)                                  any
Person or Group (other than the Permitted Holders) shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company; provided,
however, that no Change of
Control shall be deemed to have occurred as a result of the sale or transfer by
the Permitted Holders of shares of Capital Stock of the Company representing
more than 50% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of the Company to a Person or Group, whether in
one transaction or a series of related transactions, that has an
investment grade senior unsecured credit rating from both of Moody’s and
S&P and the Company’s senior unsecured ratings from Moody’s and S&P are
the same or better immediately following such sale or transfer as before such
sale or transfer; or

 

(4)                                  the
replacement of a majority of the Board of Directors of the Company over a
two-year period from the directors who constituted the Board of Directors of
the Company at the beginning of such period, and such replacement shall not
have been approved by a vote of at least a majority of the Board of Directors
of the Company then still in office who either were members of such Board of
Directors at the beginning of such period or whose election as a member of such
Board of Directors was previously so approved.

 

“Code” means the Internal Revenue Code of
1986, as amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, in each case as in effect from time to time.

 

“Commission” means the Securities and
Exchange Commission, as from time to time constituted, created under the
Exchange Act, or if at any time after the execution of this Supplemental
Indenture such Commission is not existing and performing the duties now

 

4

 

assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.

 

“Common Stock” of any Person means any and
all shares, interests or other participations in, and other equivalents
(however designated and whether voting or non-voting) of such Person’s common
stock, whether outstanding on the Measurement Date or issued after the
Measurement Date, and includes, without limitation, all series and classes
of such common stock.

 

“Company” means iStar Financial Inc. and
any and all successors thereto that become a party to this Supplemental
Indenture in accordance with its terms.

 

“Consolidated Adjusted Earnings” with
respect to any Person, for any period, means the Consolidated Net Income, less
dividend payments on Preferred Stock, plus depreciation and amortization
(including the Company’s share of joint venture depreciation and amortization).

 

“Consolidated EBITDA” means, with respect
to any Person, for any period, the sum (without duplication) of:

 

(1)                                  Consolidated
Net Income; and

 

(2)                                  to
the extent Consolidated Net Income has been reduced thereby:

 

(a)                                  all
income taxes of such Person and its Subsidiaries paid or accrued in accordance
with GAAP for such period (other than income taxes attributable to extraordinary
gains or losses and direct impairment charges or the reversal of such charges
on the Company’s assets);

 

(b)                                 Consolidated
Interest Expense; and

 

(c)                                  depreciation
and amortization;

 

all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP.

 

“Consolidated Fixed Charge Coverage Ratio”
means, with respect to any Person, the ratio of Consolidated EBITDA of such
Person during the four full fiscal quarters (the “Four Quarter Period”) ending prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio for which financial statements are available (the “Transaction Date”) to Consolidated Fixed
Charges of such Person for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, “Consolidated
EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving
effect on a pro forma basis for the period of such calculation to:

 

5

 

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

 

(2)                                  any
asset sales or other dispositions or any asset originations, asset purchases,
Investments and Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
such Person or one of its Subsidiaries (including any Person who becomes a
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Exchange
Act) attributable to the assets which are originated or purchased, the
Investments that are made and the assets that are the subject of the Asset
Acquisition or asset sale or other disposition during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to the last
day of the Four Quarter Period and on or prior to the Transaction Date, as if
such asset sale or other disposition or asset origination, asset purchase,
Investment or Asset Acquisition (including the incurrence, assumption or
liability for any such Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness.

 

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

 

(1)                                  Consolidated
Interest Expense; plus

 

(2)                                  the
amount of all dividend payments on any series of Preferred Stock of such
Person and, to the extent permitted under this Supplemental Indenture, its
Subsidiaries (other than dividends paid in Qualified Capital Stock) paid,
accrued or scheduled to be paid or accrued during such period.

 

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

 

6

 

(1)                                  the
aggregate of the interest expense of such Person and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, including
without limitation: (a) any amortization of debt discount; (b) the
net costs under Interest Swap Obligations; (c) all capitalized interest;
and (d) the interest portion of any deferred payment obligation; and

 

(2)                                  to
the extent not already included in clause (1), the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Subsidiaries during such period as determined on
a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, with
respect to any Person, for any period, the aggregate net income (or loss) of
such Person and its Subsidiaries before the payment of dividends on Preferred
Stock for such period on a consolidated basis, determined in accordance with
GAAP; provided that there shall
be excluded therefrom:

 

(1)                                  after-tax
gains and losses from Asset Sales or abandonments or reserves relating thereto
(including gains and losses from the sale of corporate tenant lease assets);

 

(2)                                  after-tax
items classified as extraordinary gains or losses and direct impairment charges
or the reversal of such charges on the Company’s assets;

 

(3)                                  the
net income of any Person acquired in a “pooling of interests” transaction
accrued prior to the date it becomes a Subsidiary of the referent Person or is
merged or consolidated with the referent Person or any Subsidiary of the
referent Person;

 

(4)                                  the
net income (but not loss) of any Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Subsidiary
of that income is restricted by a contract, operation of law or otherwise,
except for such restrictions permitted by clauses (f), (g) and (h) of
Section 4.08 whether such permitted restrictions exist on the Measurement
Date or are created thereafter;

 

(5)                                  the
net income or loss of any other Person, other than a Consolidated Subsidiary of
the referent Person, except:

 

(a)                                  to
the extent (in the case of net income) of cash dividends or distributions paid
to the referent Person, or to a Wholly Owned Subsidiary of the referent Person
(other than a Subsidiary described in clause (4) above), by such
other Person; or

 

7

 

(b)                                 that
the referent Person’s share of any net income or loss of such other Person
under the equity method of accounting for Affiliates shall not be excluded;

 

(6)                                  any
restoration to income of any contingency reserve of an extraordinary,
nonrecurring or unusual nature, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Measurement Date;

 

(7)                                  income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued, but not including revenues, expenses, gains and
losses relating to real estate properties sold or held for sale, even if they
were classified as attributable to discontinued operations under the provisions
of SFAS No. 144); and

 

(8)                                  in
the case of a successor to the referent Person by consolidation or merger or as
a transferee of the referent Person’s assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets.

 

“Consolidated Net Worth”  of any Person means the consolidated
stockholders’ equity of such Person, as of the end of the last completed fiscal
quarter ending on or prior to the date of the transaction giving rise to the
need to calculate Consolidated Net Worth determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person and interests in such Person’s
Consolidated Subsidiaries not owned, directly or indirectly, by such Person.

 

“Consolidated Subsidiary” means, with
respect to any Person, a Subsidiary of such Person, the financial statements of
which are consolidated with the financial statements of such Person in
accordance with GAAP.

 

“Corporate Trust Office of the Trustee”
shall be at the address of the Trustee specified in Section 11.02 or such
other address as to which the Trustee may give notice to the Company.

 

“Currency Agreements” means any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect the Company or any Subsidiary of the Company
against fluctuations in currency values.

 

“Custodian” means any custodian, receiver,
trustee, assignee, liquidator, sequestrator or similar official under any
Bankruptcy Law.

 

“Default” means an event or condition the
occurrence of which is, or with the lapse of time or the giving of notice or
both would be, an Event of Default.

 

8

 

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

 

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

 

“Disqualified Capital Stock” means that
portion of any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable at the option of
the holder thereof), or upon the happening of any event (other than an event
which would constitute a Change of Control), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (except, in each case, upon
the occurrence of a Change of Control) on or prior to the final maturity date
of the Notes.

 

“Equity Offering” means an underwritten
public offering of Qualified Capital Stock of the Company pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act or a private placement of Qualified Capital Stock of the Company
generating gross proceeds of at least $25.0 million.

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

 

“Existing Credit Agreements” mean: (1) the
Credit Agreement dated as of July 26, 2001, between the Company, the
lenders party thereto in their capacities as lenders thereunder and Bank of
America, N.A., as agent; (2) the Amended and Restated Credit Agreement
dated as of December 28, 2000 between SFI II, Inc. and Greenwich
Capital Markets, Inc., as lender; (3) the credit facility between
Deutsche Bank AG, New York Branch, and iStar DB Seller LLC, dated as of January 11,
2001; (4) the credit facility, dated as of August 12, 1998, between
Lehman Brothers Holdings, Inc. and SFT Whole Loan A, Inc.; and (5) the
Master Repurchase Agreement dated September 30, 2002 between Goldman Sachs
Mortgage Company and iStar Finance Sub V LLC, in each case, together with the
related documents thereto (including, without limitation, any security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted by Section 4.09 hereof) or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such

 

9

 

agreement or
any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.

 

“fair market value” means, with respect to
any asset or property, the price which could be negotiated in an arm’s-length,
free market transaction, for cash, between a willing seller and a willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction. Fair market value shall be determined by the Board of
Directors of the Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the Company
delivered to the Trustee.

 

“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a
significant segment of the accounting profession of the United States, which
are in effect as of the Measurement Date. For the avoidance of doubt, revenues,
expenses, gains and losses that are included in results of discontinued
operations because of the application of SFAS No. 144 will be treated as
revenues, expenses, gains and losses from continuing operations.

 

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

 

“Global Notes” means, individually and
collectively, the Global Notes, in the form of Exhibit A, issued in
accordance with Section 2.01 or 2.06.

 

“Government Securities” means direct
obligations of, or obligations guaranteed by, the United States of America, and
for the payment of which the United States pledges its full faith and credit.

 

“Guarantor” means: each of the Company’s
Subsidiaries that in the future executes a supplemental indenture in which such
Subsidiary agrees to be bound by the terms of this Supplemental Indenture as a
Guarantor; provided that any Person constituting a Guarantor as described above
shall cease to constitute a Guarantor when its respective Guarantee is released
in accordance with the terms of this Supplemental Indenture.

 

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

 

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

 

(1)                                  all
Obligations of such Person for borrowed money;

 

(2)                                  all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;

 

10

 

(3)                                  all
Capitalized Lease Obligations of such Person;

 

(4)                                  all
Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not overdue by
90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted);

 

(5)                                  all
Obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction;

 

(6)                                  guarantees
and other contingent obligations in respect of Indebtedness referred to in
clauses (1) through (5) above and clause (8) below;

 

(7)                                  all
Obligations of any other Person of the type referred to in clauses (1) through
(6) above which are secured by any lien on any property or asset of such
Person, the amount of such Obligation being deemed to be the lesser of the fair
market value of such property or asset and the amount of the Obligation so
secured;

 

(8)                                  all
Obligations under Currency Agreements and Interest Swap Obligations of such
Person; and

 

(9)                                  all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any.

 

For purposes
hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Supplemental Indenture, and if such
price is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in
good faith by the Board of Directors of the issuer of such Disqualified Capital
Stock.

 

“Indenture” means the Indenture dated as of
February 5, 2001 between the Company and the Trustee as amended or
supplemented from time to time.

 

“Independent Financial Advisor” means a
firm: (1) that does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the Company;
and (2) that, in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which it is to
be engaged.

 

11

 

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

 

“Initial Notes” means the $350.0 million
principal amount of 6.0% Senior Notes due 2010 of the Company issued on the
Issue Date.

 

“Interest Payment Date” means June 15
and December 15 of each year commencing June 15, 2004.

 

“Interest Swap Obligations” means the
obligations of any Person pursuant to any arrangement with any other Person,
whereby, directly or indirectly, such Person is entitled to receive from time
to time periodic payments calculated by applying either a floating or a fixed
rate of interest on a stated notional amount in exchange for periodic payments
made by such other Person calculated by applying a fixed or a floating rate of
interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.

 

“Investment” means, with respect to any
Person, any direct or indirect loan or other extension of credit (including,
without limitation, a guarantee), or corporate tenant lease to or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences or Indebtedness issued by, any
Person. “Investment” shall exclude extensions of trade credit by the Company
and any Subsidiary of the Company on commercially reasonable terms in
accordance with the Company’s or its Subsidiaries’ normal trade practices, as
the case may be.

 

“Investment Grade” means a rating of the
Notes by both S&P and Moody’s, each such rating being one of such agency’s
four highest generic rating categories that signifies investment grade (i.e.
BBB- (or the equivalent) or higher by S&P and Baa3 (or the equivalent) or
higher by Moody’s); provided, in
each case, such ratings are publicly available; provided, further,
that in the event Moody’s or S&P is no longer in existence for purposes of
determining whether the Notes are rated “Investment Grade,” such organization may be
replaced by a nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) designated by the Company, notice of
which shall be given to the Trustee.

 

“Issue Date” means December 12, 2003,
the date of original issuance of the Initial Notes.

 

“Lien” means any lien, mortgage, deed of
trust, pledge, security interest, charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any lease in the
nature thereof and any agreement to give any security interest).

 

12

 

“Maturity” when used with respect to the
Notes means the date on which the principal of the Notes becomes due and
payable as therein provided or as provided in this Supplemental Indenture,
whether at Stated Maturity or on a redemption date or pursuant to a Change of
Control Offer, and whether by declaration of acceleration, call for redemption,
purchase or otherwise.

 

“Measurement Date” means August 16,
2001.

 

“Moody’s” means Moody’s Investors Service, Inc.
or any successor rating agency.

 

“Non-Recourse Indebtedness” means any of
the Company’s or any of its Subsidiaries’ Indebtedness that is:

 

(1)                                  specifically
advanced to finance the acquisition of investment assets and secured only by
the assets to which such Indebtedness relates without recourse to the Company
or any of its Subsidiaries (other than subject to such customary carve-out
matters for which the Company or its Subsidiaries acts as a guarantor in
connection with such Indebtedness, such as fraud, misappropriation and
misapplication, unless, until and for so long as a claim for payment or
performance has been made thereunder (which has not been satisfied) at which
time the obligations with respect to any such customary carve-out shall not be
considered Non-Recourse Indebtedness, to the extent that such claim is a
liability of the Company for GAAP purposes);

 

(2)                                  advanced
to any of the Company’s Subsidiaries or group of its Subsidiaries formed for
the sole purpose of acquiring or holding investment assets against which a loan
is obtained that is made without recourse to, and with no cross-collateralization
against, the Company or any of the Company’s Subsidiaries’ other assets (other
than subject to such customary carve-out matters for which the Company or its
Subsidiaries acts as a guarantor in connection with such Indebtedness, such as
fraud, misappropriation and misapplication, unless, until and for so long as a
claim for payment or performance has been made thereunder (which has not been
satisfied) at which time the obligations with respect to any such customary
carve-out shall not be considered Non-Recourse Indebtedness, to the extent that
such claim is a liability of the Company for GAAP purposes) and upon complete
or partial liquidation of which the loan must be correspondingly completely or
partially repaid, as the case may be; or

 

(3)                                  specifically
advanced to finance the acquisition of real property and secured by only the
real property to which such Indebtedness relates without recourse to the
Company or any of its Subsidiaries (other than subject to such customary
carve-out matters for which the Company or its Subsidiaries acts as a guarantor
in connection with such Indebtedness, such as fraud, misappropriation and
misapplication, unless, until and for so long as a claim for payment or
performance has been made thereunder (which has not been satisfied) at which
time the obligations

 

13

 

with respect to any such customary carve-out
shall not be considered Non-Recourse Indebtedness, to the extent that such
claim is a liability of the Company for GAAP purposes).

 

“Notes” means, collectively, the Initial
Notes and the Additional Notes, if any, and treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Supplemental Indenture.

 

“Obligations” means all obligations for
principal, premium, interest, penalties, fees, indemnification, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.

 

“Officer” means, with respect to any
Person, the President, Chief Executive Officer, any Vice President, Chief
Operating Officer, Treasurer, Secretary or the Chief Financial Officer of such
Person.

 

“Officers’ Certificate” means, with respect
to any Person, a certificate signed by two Officers of such Person; provided,
however, that every Officers’ Certificate with respect to compliance with a
covenant or condition provided for in this Supplemental Indenture shall include
(i) a statement that the Officers making or giving such Officers’
Certificate have read such condition and any definitions or other provisions
contained in this Supplemental Indenture relating thereto and (ii) a
statement as to whether, in the opinion of the signers, such conditions have
been complied with.

 

“Opinion of Counsel” means an opinion from
legal counsel who is reasonably acceptable to the Trustee that meets the
requirements of Section 11.05. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.

 

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

 

“Permitted Holder(s)” means SOFI-IV SMT
Holdings, L.L.C. and Starwood Capital Group, L.L.C. and each of their
respective Affiliates.

 

“Permitted Indebtedness” means, without
duplication, each of the following:

 

(1)                                  Indebtedness
under the Initial Notes and under the Company’s $150.0 million aggregate
principal amount of 6.5% Senior Notes due 2013 that were issued on December 12,
2003, the Company’s $350.0 million aggregate principal amount of 8 3/4% Senior
Notes due 2008 that were issued on the Measurement Date and the $185.0 million
aggregate principal amount of 7.0% Senior Notes due 2008 that were issued in March and
April of 2003;

 

14

 

(2)                                  Indebtedness
incurred pursuant to the Existing Credit Agreements in an aggregate principal
amount at any time outstanding not to exceed the maximum aggregate amount
available under the Existing Credit Agreements in existence on the Measurement
Date and as in effect on the Measurement Date reduced by any required permanent
repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder;

 

(3)                                  other
Indebtedness of the Company and its Subsidiaries outstanding on the Measurement
Date reduced by the amount of any scheduled amortization payments or mandatory
prepayments when actually paid or permanent reductions thereon;

 

(4)                                  Interest
Swap Obligations of the Company covering Indebtedness of the Company or any of
its Subsidiaries and Interest Swap Obligations of any Subsidiary of the Company
covering Indebtedness of such Subsidiary; provided,
however, that such Interest Swap
Obligations are entered into to protect the Company and its Subsidiaries from
fluctuations in interest rates on Indebtedness incurred in accordance with this
Supplemental Indenture to the extent the notional principal amount of such
Interest Swap Obligation does not exceed the principal amount of the
Indebtedness to which such Interest Swap Obligation relates;

 

(5)                                  Indebtedness
under Currency Agreements; provided
that in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;

 

(6)                                  Indebtedness
of a Subsidiary of the Company to the Company or to a Wholly Owned Subsidiary
of the Company for so long as such Indebtedness is held by the Company or a
Wholly Owned Subsidiary of the Company;

 

(7)                                  Indebtedness
of the Company to a Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is held by a Wholly Owned Subsidiary of the Company, in each case
subject to no Lien; provided
that: (a) any Indebtedness of the Company to any Wholly Owned Subsidiary
of the Company is unsecured and subordinated, pursuant to a written agreement,
to the Company’s obligations under this Supplemental Indenture and the Notes;
and (b) if as of any date any Person other than a Wholly Owned Subsidiary
of the Company owns or holds any such Indebtedness or any Person holds a Lien
in respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;

 

(8)                                  Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of

 

15

 

daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two business
days of incurrence;

 

(9)                                  Indebtedness
of the Company or any of its Subsidiaries represented by letters of credit for
the account of the Company or such Subsidiary, as the case may be, in
order to provide security for workers’ compensation claims, payment obligations
in connection with self-insurance or similar requirements in the ordinary
course of business;

 

(10)                            Refinancing
Indebtedness; and

 

(11)                            additional
Indebtedness of the Company and its Subsidiaries in an aggregate principal
amount not to exceed $15.0 million at any one time outstanding (which
amount may, but need not, be incurred in whole or in part under the
Existing Credit Agreements).

 

For purposes
of determining compliance with Section 4.09 hereof, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
Permitted Indebtedness described in clauses (1) through (11) above or
is entitled to be incurred pursuant to the second paragraph of such covenant,
the Company shall, in its sole discretion, classify (or later reclassify) such
item of Indebtedness in any manner that complies with this covenant. Accrual of
interest, accretion or amortization of original issue discount, the payment of
interest on any Indebtedness in the form of additional Indebtedness with
the same terms, and the payment of dividends on Disqualified Capital Stock in
the form of additional shares of the same class of Disqualified
Capital Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Capital Stock for purposes of the “Limitation on
Incurrence of Additional Indebtedness” covenant.

 

“Permitted Liens”  means the following types of Liens:

 

(1)                                  Liens
for taxes, assessments or governmental charges or claims either: (a) not
delinquent; or (b) contested in good faith by appropriate proceedings and
as to which the Company or its Subsidiaries shall have set aside on its books
such reserves as may be required pursuant to GAAP;

 

(2)                                  statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made in respect thereof;

 

(3)                                  Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of

 

16

 

social security, including any Lien securing
letters of credit issued in the ordinary course of business consistent with
past practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);

 

(4)                                  judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired;

 

(5)                                  easements,
rights-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its Subsidiaries;

 

(6)                                  any
interest or title of a lessor under any Capitalized Lease Obligation; provided that such Liens do not extend to
any property or assets which is not leased property subject to such Capitalized
Lease Obligation;

 

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

 

(8)                                  Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds thereof;

 

(9)                                  Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Company or any of its
Subsidiaries, including rights of offset and set-off;

 

(10)                            Liens
securing Interest Swap Obligations which Interest Swap Obligations relate to
Indebtedness that is otherwise permitted under this Supplemental Indenture; and

 

(11)                            Liens
securing Indebtedness under Currency Agreements.

 

“Person” means an individual, partnership,
corporation, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.

 

17

 

“Preferred Stock” of any Person means any
Capital Stock of such Person that has preferential rights to any other Capital
Stock of such Person with respect to dividends or redemptions or upon
liquidation.

 

“Qualified Capital Stock” means any Capital
Stock that is not Disqualified Capital Stock.

 

“Refinance” means, in respect of any
security or Indebtedness, to refinance, extend, renew, refund, repay, prepay,
redeem, defease or retire, or to issue a security or Indebtedness in exchange
or replacement for, such security or Indebtedness in whole or in part. “Refinanced”
and “Refinancing” shall have correlative meanings.

 

“Refinancing Indebtedness” means any
Refinancing by the Company or any Subsidiary of the Company of Indebtedness
incurred in accordance with Section 4.09 hereof (other than pursuant to
clauses (2), (4), (5), (6), (7), (8), (9) or (11) of the definition
of Permitted Indebtedness), in each case that does not:

 

(1)                                  result
in an increase in the aggregate principal amount of Indebtedness of such Person
as of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the Company
in connection with such Refinancing); or

 

(2)                                  create
Indebtedness with: (a) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced; or (b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided
that (i) if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness solely of the
Company, and (ii) if such Indebtedness being Refinanced is subordinate or
junior to the Notes, then such Refinancing Indebtedness shall be subordinate to
the Notes at least to the same extent and in the same manner as the
Indebtedness being Refinanced.

 

“REIT” means Real Estate Investment Trust.

 

“Responsible Officer” means, when used with
respect to the Trustee, any managing director, director, principal, vice
president, assistant vice president, assistant treasurer, associate or any
other officer within the corporate trust department of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also shall mean, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge and familiarity with the particular subject.

 

“Secured Indebtedness” means any
Indebtedness secured by a Lien upon the property of the Company or any of its
Subsidiaries.

 

18

 

“Securities Act” means the Securities Act
of 1933, as amended.

 

“Senior Recourse Indebtedness” means all
Indebtedness of the Company and its Subsidiaries (other than Indebtedness that
is Non-Recourse Indebtedness and other than Subordinated Indebtedness).

 

“Significant Subsidiary,” with respect to
any Person, means any Subsidiary of such Person that satisfies the criteria for
a “significant subsidiary” set forth in Rule 1.02(w) of
Regulation S-X under the Exchange Act.

 

“S&P” means Standard & Poor’s
Ratings Group, a division of McGraw Hill Inc., a New York corporation, or any
successor rating agency.

 

“Stated Maturity” when used with respect to
any Indebtedness or any installment of interest thereon means the dates
specified in such Indebtedness as the fixed date on which the principal of or
premiums on such Indebtedness or such installment of interest is due and
payable.

 

“Subordinated Indebtedness” means all of
the Company’s and its Subsidiaries’ Indebtedness that expressly provides that
such Indebtedness shall be subordinated in right of payment to any other
Indebtedness and matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise, or is redeemable at the sole option of the holder
thereof (except, in each case, upon the occurrence of a Change of Control) on
or after the final maturity date of the Notes.

 

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

 

(1)                                  any
corporation of which the outstanding Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person; or

 

(2)                                  any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.

 

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

 

“Total Unencumbered Assets” as of any date
means the sum of:

 

(1)                                  those
Undepreciated Real Estate Assets not securing any portion of Secured
Indebtedness; and

 

19

 

(2)                                  all
other assets (but excluding intangibles and accounts receivable) of the Company
and its Subsidiaries not securing any portion of Secured Indebtedness
determined on a consolidated basis in accordance with GAAP.

 

“Trustee” means the party named as such
above until a successor replaces it in accordance with the applicable
provisions of this Supplemental Indenture and thereafter means the successor
serving hereunder.

 

“Trust Indenture Act” means the Trust
Indenture Act of 1939, as amended.

 

“Undepreciated Real Estate Assets” means,
as of any date, the cost (being the original cost to the Company or any of
Subsidiaries plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization of such
real estate assets, determined on a consolidated basis in accordance with GAAP.

 

“Unsecured Indebtedness” means any
Indebtedness of the Company or any of its Subsidiaries that is not Secured
Indebtedness.

 

“Weighted Average Life to Maturity” means,
when applied to any Indebtedness at any date, the number of years obtained by
dividing: (1) the then outstanding aggregate principal amount of such
Indebtedness into; (2) the sum of the total of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking
fund, serial maturity or other required payment of principal, including payment
at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and
the making of such payment.

 

“Wholly Owned Subsidiary” of any Person
means any Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Subsidiary, directors’
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by such Person or any
Wholly Owned Subsidiary of such Person.

 

Section 1.02.                                                                         Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.10

  
	
  “Authentication
  Order”

  	
   

  	
  2.02

  
	
  “Change
  of Control Date”

  	
   

  	
  4.13

  
	
  “Change
  of Control Payment Date”

  	
   

  	
  4.13

  
	
  “Change
  of Control Offer”

  	
   

  	
  4.13

  
	
  “Change
  of Control Purchase Date”

  	
   

  	
  4.13

  
	
  “Change
  of Control Purchase Price”

  	
   

  	
  4.13

  

 

20

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.03

  
	
  “DTC”

  	
   

  	
  2.03

  
	
  “Event
  of Default”

  	
   

  	
  6.01

  
	
  “incur”

  	
   

  	
  4.09

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.02

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Redemption
  Date”

  	
   

  	
  3.07

  
	
  “Restricted
  Payment”

  	
   

  	
  4.07

  
	
  “Surviving
  Entity”

  	
   

  	
  5.01

  

 

Section 1.03.                                                                         Incorporation
by Reference of Trust Indenture Act. Whenever this Supplemental Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this
Supplemental Indenture.

 

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

 

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

 

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

 

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

 

(c)                                  “or”
is not exclusive;

 

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

 

(e)                                  provisions
apply to successive events and transactions; and

 

(f)                                    references
to sections of or rules under the Securities Act shall be deemed to
include substitute, replacement of successor sections or rules adopted by
the SEC from time to time.

 

21

 

ARTICLE 2

THE NOTES

 

Section 2.01.                                                                         Form and
Dating.

 

(a)                                  General. The Notes
and the Trustee’s certificate of authentication shall be substantially in the form of
Exhibit A hereto. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.

 

The terms and
provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Supplemental Indenture and the Company and the
Trustee, by their execution and delivery of this Supplemental Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions
of this Supplemental Indenture, the provisions of this Supplemental Indenture
shall govern and be controlling.

 

(b)                                 Global Notes. Notes
issued in global form shall be substantially in the form of Exhibit A
attached hereto (including the Global Note Legend thereon and the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with written instructions given by the
Holder thereof as required by Section 2.06 hereof.

 

Section 2.02.                                                                         Execution
and Authentication. One
or more Officers shall sign the Notes for the Company by manual or facsimile
signature.

 

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

 

A Note shall
not be valid until authenticated by the manual signature of the Trustee. The
signature shall be conclusive evidence that the Note has been authenticated
under this Supplemental Indenture.

 

22

 

The Trustee
shall, upon a written order of the Company signed by one or more Officers (an “Authentication Order”), authenticate Notes
for original issue on the Issue Date in aggregate principal amount not to
exceed $350,000,000 (other than as provided in Section 2.07). The Trustee
shall authenticate Additional Notes thereafter (so long as permitted by the
terms of this Supplemental Indenture) for original issue upon one or more
Authentication Orders in aggregate principal amount as specified in such order
(other than as provided in Section 2.07). Each such Authentication Order
shall specify the amount of Notes to be authenticated, whether the Notes are to
be Initial Notes or Additional Notes and whether the Notes are to be issued as
Definitive Notes or Global Notes or such other information as the Trustee shall
reasonably request.

 

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

 

Section 2.03.                                                                         Registrar
and Paying Agent. The
Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange (“Registrar”) and an office or
agency where Notes may be presented for payment (“Paying Agent”). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more
additional paying agents. The term “Registrar” includes any co-registrar and
the term “Paying Agent” includes any additional paying agent. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Supplemental Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.

 

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

 

The Company
initially appoints the Trustee to act as the Registrar and Paying Agent and to
act as Custodian with respect to the Global Notes.

 

Section 2.04.                                                                         Paying
Agent to Hold Money in Trust. The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal, premium, if any, or interest on the Notes,
and will notify the Trustee in writing of any default by the Company in making
any such payment. While any such default continues, the Trustee may require
a Paying Agent to pay all money held by it to the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company
or a

 

23

 

Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

 

Section 2.05.                                                                         Holder
Lists. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA § 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of the Holders and the Company shall otherwise comply with TIA § 312(a).

 

Section 2.06.                                                                             Transfer
and Exchange.

 

(a)                                  Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the Depositary
to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes will be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee written notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and,
in either case, a successor Depositary is not appointed by the Company within
120 days after the date of such notice from the Depositary or (ii) the
Company in its sole discretion determines that the Global Notes (in whole but
not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be
issued in such names as the Depositary shall instruct the Trustee in writing. Global
Notes also may be exchanged or replaced, in whole or in part, as provided
in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a); provided,
however, that beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b) or (c) hereof.

 

(b)                                 Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in
the Global Notes shall be effected through the Depositary, in accordance with
the provisions of this Supplemental Indenture and the Applicable Procedures. Transfers
of beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one
or more of the other following subparagraphs, as applicable:

 

24

 

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

 

(ii)                                  All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar either
(A) (1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant account
to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in (1) above.
Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Supplemental Indenture
and the Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.

 

(c)                                   Transfer or Exchange of Beneficial Interests
for Definitive Notes. If any holder of a beneficial
interest in a Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction
of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(g) hereof,
and the Company shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered.

 

(d)                                 Transfer and Exchange of Definitive Notes for
Beneficial Interests. A Holder of a Definitive Note may exchange
such Note for a beneficial interest in a Global Note or transfer such Definitive
Notes to a Person who takes delivery thereof in the form of a

 

25

 

beneficial interest in a Global
Note at any time. Upon receipt of a request for such an exchange or transfer,
the Trustee shall cancel the applicable Definitive Note and increase or cause
to be increased the aggregate principal amount of one of the Global Notes.

 

If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected at a time when a Global
Note has not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee
shall authenticate one or more Global Notes in an aggregate principal amount
equal to the principal amount of Definitive Notes so transferred.

 

(e)                                   Transfer and Exchange of Definitive Notes for
Definitive Notes. Upon written request by a Holder of
Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e),
the Registrar shall register the transfer or exchange of Definitive Notes. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Registrar the Definitive Notes duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to
the Registrar duly executed by such Holder or by its attorney, duly authorized
in writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
this Section 2.06(e).

 

A Holder of
Definitive Notes may transfer such Notes to a Person who takes delivery
thereof in the form of a Definitive Note. Upon receipt of a written
request to register such a transfer, the Registrar shall register the
Definitive Notes pursuant to the instructions from the Holder thereof.

 

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

 

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

 

26

 

(g)                                 Cancellation and/or Adjustment of Global
Notes. At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in
part, each such Global Note shall be returned to or retained and canceled by
the Trustee in accordance with Section 2.11 hereof. At any time prior to
such cancellation, if any beneficial interest in a Global Note is exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

 

(h)                                 General Provisions Relating to Transfers and
Exchanges.

 

(i)                                     To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s
order or at the Registrar’s request.

 

(ii)                                  No service charge
shall be made to a holder of a beneficial interest in a Global Note or to a
Holder of a Definitive Note for any registration of transfer or exchange, but
the Company and the Trustee may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.13 and
9.05 hereof).

 

(iii)                               The Registrar shall not
be required to register the transfer of or exchange any Note selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part.

 

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

 

(v)                                 The Company shall not
be required (A) to issue, to register the transfer of or to exchange any
Notes during a period beginning at the opening of business 15 days before the
day of any selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection, (B) to register
the transfer of or to exchange any Note so selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part or
(C) to register the transfer

 

27

 

of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.

 

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

 

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

 

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

 

Section 2.07.                                                                         Replacement
Notes. If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee’s
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note
is replaced. The Company may charge for its expenses in replacing a Note.

 

Every
replacement Note is an additional obligation of the Company and shall be
entitled to all of the benefits of this Supplemental Indenture equally and
proportionately with all other Notes duly issued hereunder.

 

Section 2.08.                                                                         Outstanding
Notes. The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Note.

 

If a Note is
replaced pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser.

 

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

 

28

 

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

 

Section 2.09.                                                                         Treasury
Notes. In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee actually knows are so owned shall be so disregarded.

 

Section 2.10.                                                                         Temporary
Notes. Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have
variations that the Company considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.

 

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

 

Section 2.11.                                                                         Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

 

Section 2.12.                                                                         Defaulted
Interest. If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment. The Company shall fix or cause
to be fixed each such special record date and payment date; provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or,
upon the written request of the Company, the Trustee in the name and at the
expense of the Company) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.

 

29

 

Section 2.13.                                                                         Record
Date. The Company may set a record date for purposes of determining
the identity of Holders entitled to vote or to consent to any action by vote or
consent authorized or permitted by Sections 6.04 and 6.05.

 

Section 2.14.                                                                         CUSIP
Numbers. The Company in issuing the Notes may use “CUSIP” numbers (if
then generally in use), and, if so, the Trustee shall use CUSIP numbers in
notices of redemption as a convenience to Holders; provided that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the Notes or
as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Notes, and any such
redemption shall not be affected by any defect in or the omission of such
numbers. The Company will promptly notify the Trustee in writing of any change
in the CUSIP numbers.

 

ARTICLE 3

REDEMPTION AND PREPAYMENT

 

Section 3.01.                                                                         Notices
to Trustee. If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers’ Certificate setting forth (i) the clause of this Supplemental
Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed, (iv) the
redemption price and (v) the CUSIP numbers of the Notes to be redeemed.

 

Section 3.02.                                                                         Selection
of Notes to Be Redeemed. In the event that the Company chooses to redeem
less than all of the Notes, selection of the Notes for redemption will be made
by the Trustee either:

 

(1)                                  in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed; or

 

(2)                                  on
a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.

 

No Notes of a
principal amount of $1,000 or less shall be redeemed in part. If a partial
redemption is made with the proceeds of an Equity Offering (as defined in Section 3.07(b)),
the Trustee will select the Notes only on a pro
rata basis or on as nearly a pro
rata basis as is practicable (subject to DTC procedures).

 

The Trustee
shall promptly notify the Company in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
principal amount

 

30

 

thereof to be
redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Notes of a Holder are to
be redeemed, the entire outstanding amount of Notes held by such Holder, even
if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Supplemental Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption.

 

Section 3.03.                                                                         Notice
of Redemption. At least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class mail
(at its own expense), a notice of redemption to each Holder whose Notes are to
be redeemed at its registered address.

 

The notice
shall identify the Notes to be redeemed, including the CUSIP numbers, and shall
state:

 

(a)                                  the redemption date;

 

(b)                                 the redemption price
and the amount of accrued and unpaid interest, if any, to be paid;

 

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

 

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

 

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

 

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

 

(g)                                 the paragraph of the
Notes and/or Section of this Supplemental Indenture pursuant to which the
Notes called for redemption are being redeemed; and

 

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

 

At the Company’s
written request, the Trustee shall give the notice of redemption in the Company’s
name and at its expense; provided,
however, that the Company shall
have provided to the Trustee, at least 45 days prior to the redemption date
(unless a shorter notice shall be satisfactory to the Trustee), the information
required by clauses (a) through (d) above.

 

31

 

Section 3.04.                                                                         Effect
of Notice of Redemption. Once notice of redemption is mailed in accordance
with Section 3.03 hereof, Notes called for redemption become irrevocably
due and payable on the redemption date at the redemption price. A notice of
redemption may not be conditional.

 

Section 3.05.                                                                         Deposit
of Redemption Price. One Business Day prior to the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date and any amounts owed the Trustee. The Trustee or the
Paying Agent shall promptly return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Notes to be
redeemed and any amounts owed the Trustee.

 

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

 

Section 3.06.                                                                         Notes
Redeemed in Part. Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon the Company’s written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.

 

Section 3.07.                                                                         Optional
Redemption. (a)  At any time on or prior to December 15, 2010,
the Notes may be redeemed or purchased in whole but not in part at
the Company’s option at a price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest, if any, to,
the date of redemption or purchase (the “Redemption
Date”) (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).

 

“Applicable Premium” means, with respect to
a Note at any Redemption Date, the greater of: (1) 1.0% of the principal
amount of such Note; and (2) the excess of (a) the present value at
such Redemption Date of (i) the principal amount of such Note on December 15,
2010 plus (ii) all required remaining scheduled interest payments due on
such Note through December 15, 2010, computed using a discount rate equal
to the Treasury Rate plus 50 basis points; over (b) the principal amount
of such Note on such Redemption Date. Calculation of the Applicable Premium
will be made by the Company or on behalf of the Company by such

 

32

 

Person as the
Company shall designate; provided,
however, that such calculation
shall not be a duty or obligation of the Trustee.

 

“Treasury Rate” means, with respect to a
Redemption Date, the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15(519) that has
become publicly available at least two Business Days prior to such Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from
such Redemption Date to December 15, 2010; provided, however,
that if the period from such Redemption Date to December 15, 2010 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to December 15,
2010 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

 

(b)                                 Optional Redemption Upon Equity Offerings. At
any time, or from time to time, on or prior to December 15, 2006, the
Company may, at its option, use the net cash proceeds of one or more Equity
Offerings to redeem up to 35% of the principal amount of the Notes issued under
this Supplemental Indenture at a redemption price of 106% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
redemption; provided that:

 

(1)                                  at
least 65% of the principal amount of Notes issued under this Supplemental
Indenture remains outstanding immediately after any such redemption; and

 

(2)                                  the
Company makes such redemption not more than 60 days after the consummation
of any such Equity Offering.

 

Other than as
specifically provided in this Section 3.07, any redemption pursuant to
this Section 3.07 shall be made pursuant to the provisions of Sections
3.01 through 3.06 hereof.

 

Section 3.08.                                                                         Mandatory
Redemption. The Company shall not be required to make mandatory redemption
payments with respect to the Notes prior to Maturity.

 

33

 

ARTICLE 4

COVENANTS

 

Section 4.01.                                                                         Payment
of Notes. The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due.

 

The Company
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue principal at the rate equal to the then
applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

 

Section 4.02.                                                                         Maintenance
of Office or Agency. The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may be an
office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer
or for exchange and where notices and demands to or upon the Company in respect
of the Notes and this Supplemental Indenture may be served. The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the
Trustee.

 

The Company may also
from time to time designate one or more other offices or agencies where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided,
however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, the City of New York
for such purposes. The Company shall give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any
such other office or agency.

 

The Company
hereby designates the Corporate Trust Office of the Trustee as one such office
or agency of the Company in accordance with Section 2.03.

 

Section 4.03.                                                                         Reports
to Holders. Whether or not required by the rules and regulations of
the Commission, so long as any Notes are outstanding, the Company shall furnish
the Holders of Notes:

 

34

 

(1)                                  all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” that describes the
financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management’s
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its
Subsidiaries) and, with respect to the annual information only, a report
thereon by the Company’s certified independent accountants; and

 

(2)                                  all
current reports that would be required to be filed with the Commission on Form 8-K
if the Company were required to file such reports, in each case within the time
periods specified in the Commission’s rules and regulations.

 

In addition,
whether or not required by the rules and regulations of the Commission,
the Company shall file a copy of all such information and reports with the
Commission for public availability within the time periods specified in the
Commission’s rules and regulations (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company has agreed that,
for so long as any Notes remain outstanding, it will furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.

 

Section 4.04.                                                                         Compliance
Certificate. (a)  The Company shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers’ Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled their obligations under this Supplemental Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Supplemental Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions of this Supplemental Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company
is taking or proposes to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the Notes
is prohibited or if such event has occurred, a description of the event and
what action the Company is taking or proposes to take with respect thereto.

 

35

 

(b)                                 The
Company shall, so long as any of the Notes are outstanding, deliver to the
Trustee, forthwith upon any Officer becoming aware of any Default or Event of
Default, an Officers’ Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.

 

Section 4.05.                                                                         Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay, prior
to delinquency, all material taxes, assessments, and governmental levies except
such as are contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the
Holders.

 

Section 4.06.                                                                         Stay,
Extension and Usury Laws. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may affect
the covenants or the performance of this Supplemental 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 shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.

 

Section 4.07.                                                                         Limitation
on Restricted Payments. The Company shall not, and shall not cause or
permit any of its Subsidiaries to, directly or indirectly:

 

(1)                                  declare
or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company’s Capital Stock to holders of such Capital
Stock;

 

(2)                                  purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Company or any warrants, rights or options to purchase or acquire shares of any
class of such Capital Stock; or

 

(3)                                  make
any principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of the
Company that is subordinate or junior in right of payment to the Notes

 

if at the time of such action (each, a “Restricted Payment”) or immediately after
giving effect thereto,

 

(i)                                     a
Default or an Event of Default shall have occurred and be continuing; or

 

36

 

(ii)                                  the
Company is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with Section 4.09 hereof; or

 

(iii)                               the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Measurement Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property
as determined in good faith by the Board of Directors of the Company) shall
exceed the sum of:

 

(w)                               95%
of the cumulative Consolidated Adjusted Earnings (or if cumulative Consolidated
Adjusted Earnings shall be a loss, minus 100% of such loss) of the Company
earned subsequent to June 30, 2001 and on or prior to the date the
Restricted Payment occurs (the “Reference Date”) (treating such period as a
single accounting period); plus

 

(x)                                   100%
of the aggregate net cash proceeds received by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale subsequent
to the Measurement Date and on or prior to the Reference Date of Qualified
Capital Stock of the Company; plus

 

(y)                                 without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company’s Capital Stock (excluding, in the case of clauses
(iii)(x) and (y), any net cash proceeds from an Equity Offering to the
extent used to redeem the Notes in compliance with the provisions set forth
under Section 3.07(b) hereof).

 

The foregoing
provisions do not prohibit:

 

(1)                                  the
payment of any dividend within 60 days after the date of declaration of
such dividend if the dividend would have been permitted on the date of
declaration;

 

(2)                                  if
no Default or Event of Default shall have occurred and be continuing, the
acquisition of any shares of Capital Stock of the Company, either (i) solely
in exchange for shares of Qualified Capital Stock of the Company or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock of the Company;

 

37

 

(3)                                  if
no Default or Event of Default shall have occurred and be continuing, the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Notes either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) through the application of
net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of (a) shares of Qualified Capital Stock of the
Company or (b) Refinancing Indebtedness;

 

(4)                                  so
long as no Default or Event of Default shall have occurred and be continuing,
repurchases by the Company of Common Stock of the Company from employees of the
Company or any of its Subsidiaries or their authorized representatives upon the
death, disability or termination of employment of such employees, in an
aggregate amount not to exceed $500,000 in any calendar year;

 

(5)                                  the
declaration or payment by the Company of any dividend or distribution that is
necessary to maintain its status as a REIT under the Code if:

 

(a)                                  the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to
1.0; and

 

(b)                                 no
Default or Event of Default shall have occurred and be continuing;

 

(6)                                  the
payment of any dividend on Preferred Stock of the Company; and

 

(7)                                  Restricted
Payments in an amount not to exceed $75.0 million.

 

In determining
the aggregate amount of Restricted Payments made subsequent to the Measurement
Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2) (ii), 3 (ii) (a),
(4), (5) and (7) shall be included in such calculation.

 

Section 4.08.                                                                         Limitation
on Dividend and Other Payment Restrictions Affecting Subsidiaries.  The Company shall not, and shall not cause or
permit any of its Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary of the Company to:

 

(1)                                  pay
dividends or make any other distributions on or in respect of its Capital
Stock;

 

(2)                                  make
loans or advances or to pay any Indebtedness or other obligation owed to the
Company or any other Subsidiary of the Company; or

 

(3)                                  transfer
any of its property or assets to the Company or any other Subsidiary of the
Company,

 

38

 

except for
such encumbrances or restrictions existing under or by reason of:

 

(a)                                  applicable
law;

 

(b)                                 this
Supplemental Indenture;

 

(c)                                  customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Subsidiary of the Company;

 

(d)                                 any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired;

 

(e)                                  agreements
existing on the Measurement Date to the extent and in the manner such
agreements are in effect on the Measurement Date;

 

(f)                                    provisions
of any agreement governing Indebtedness incurred in accordance with this
Supplemental Indenture that impose such encumbrances or restrictions upon the
occurrence of a default or failure to meet financial covenants or conditions
under the agreement;

 

(g)                                 restrictions
on the transfer of assets (other than cash) held in a Subsidiary of the Company
imposed under any agreement governing Indebtedness incurred in accordance with
this Supplemental Indenture;

 

(h)                                 provisions
of any agreement governing Indebtedness incurred in accordance with this
Supplemental Indenture that require a Subsidiary to service its debt
obligations before making dividends, distributions or advancements in respect
of its Capital Stock;

 

(i)                                     an
agreement governing Indebtedness incurred to Refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (b), (d) or
(e) above; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such Indebtedness are not
materially less favorable to the Company in any material respect as determined
by the Board of Directors of the Company in their reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (b), (d) or (e).

 

Section 4.09.                                                                         Limitation
on Incurrence of Additional Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, “incur”) any Indebtedness (including,
without limitation, Acquired Indebtedness) other than Permitted Indebtedness.

 

39

 

Notwithstanding
the foregoing, if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, the Company or any of its Subsidiaries may incur
Indebtedness (including, without limitation, Acquired Indebtedness), in each
case if on the date of the incurrence of such Indebtedness, after giving effect
to the incurrence thereof:

 

•                  the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 1.50 to 1.0;

 

•                  the ratio of the
aggregate amount of Indebtedness outstanding on a consolidated basis to the
Company’s Consolidated Net Worth is less than 5.0 to 1.0; and

 

•                  the ratio of the
aggregate amount of Senior Recourse Indebtedness outstanding on a consolidated
basis to the sum of: (1) the Company’s Consolidated Net Worth; and (2) the
aggregate amount of the Subordinated Indebtedness outstanding on a consolidated
basis is less than 2.75 to 1.0; provided,
however, that the aggregate principal amount of such Subordinated
Indebtedness is not in excess of the Company’s Consolidated Net Worth.

 

Notwithstanding
the foregoing, the Company shall not permit TriNet Corporate Realty Trust, Inc.
(“TriNet”) or any of its
Subsidiaries to incur Indebtedness (as defined in the indenture governing
TriNet’s outstanding publicly-held debt securities on the Measurement Date) if,
immediately after giving effect to the incurrence of such Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Indebtedness of TriNet and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 55% of the sum of (without
duplication): (1) the Total Assets (as defined in the indenture governing
TriNet’s outstanding publicly-held debt securities on the Measurement Date) of
TriNet and its Subsidiaries as of the end of the calendar quarter covered in
TriNet’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
as the case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Indebtedness; and (2) the purchase price of
any real estate assets or mortgages receivable acquired, and the amount of any
securities offering proceeds received (to the extent that such proceeds were
not used to acquire real estate assets or mortgages receivable or used to
reduce Indebtedness), by TriNet or any Subsidiary of TriNet since the end of
such calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Indebtedness. The above limitation shall
terminate immediately upon TriNet ceasing to exist as a Subsidiary of the
Company as a result of a merger or consolidation of TriNet with the Company or
the sale, transfer, disposition or distribution of all or substantially all of
TriNet’s assets to the Company.

 

Section 4.10.                                                                         Limitation
on Transactions with Affiliates. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to

 

40

 

exist any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an “Affiliate
Transaction”), other than: (1) Affiliate Transactions permitted
as described below; and (2) Affiliate Transactions on terms that are no
less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm’s-length basis from a Person that
is not an Affiliate of the Company or such Subsidiary.

 

All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $5.0 million shall be
approved by the Board of Directors of the Company or such Subsidiary, as the
case may be, such approval to be evidenced by a Board Resolution stating
that such Board of Directors has determined that such transaction complies with
the foregoing provisions. If the Company or any Subsidiary of the Company
enters into an Affiliate Transaction (or a series of related Affiliate
Transactions related to a common plan) that involves an aggregate fair market
value of more than $10.0 million, the Company or such Subsidiary, as the
case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related
transactions to the Company or the relevant Subsidiary, as the case may be,
from a financial point of view, from an Independent Financial Advisor and file
the same with the Trustee.

 

The
restrictions set forth in the first paragraph of this Section 4.10 shall
not apply to:

 

(1)                                  reasonable
fees and compensation paid to and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Subsidiary of the
Company as determined in good faith by the Company’s Board of Directors or
senior management;

 

(2)                                  transactions
exclusively between or among the Company and any of its Subsidiaries or exclusively
between or among such Subsidiaries in the ordinary course of business, provided such transactions are not
otherwise prohibited by this Supplemental Indenture;

 

(3)                                  transactions
between the Company or one of its Subsidiaries and any Person in which the
Company or one of its Subsidiaries has made an Investment in the ordinary
course of the Company’s real estate lending business and such Person is an
Affiliate solely because of such Investment;

 

(4)                                  transactions
between the Company or one of its Subsidiaries and any Person in which the
Company or one of its Subsidiaries holds an interest as a joint venture partner
and such Person is an Affiliate solely because of such interest;

 

(5)                                  any
agreement as in effect as of the Measurement Date or any amendment thereto or
any transaction contemplated thereby (including pursuant to any

 

41

 

amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Measurement Date; and

 

(6)                                  Restricted
Payments permitted by Section 4.07.

 

Section 4.11.                                                                         Limitation
on Liens. The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind on the assets of the Company securing
Indebtedness of the Company unless:

 

(1)                                  in
the case of Liens securing Indebtedness of the Company that is expressly
subordinate or junior in right of payment to the Notes, the Notes are secured
by a Lien on such property, assets or proceeds that is senior in priority to
such Liens; and

 

(2)                                  in
all other cases, the Notes are equally and ratably secured except for:

 

(a)                                  Liens
existing as of the Measurement Date to the extent and in the manner such Liens
are in effect on the Measurement Date;

 

(b)                                 Liens
securing the Notes;

 

(c)                                  Liens
securing Refinancing Indebtedness that is incurred to Refinance any
Indebtedness that has been secured by a Lien permitted under this Supplemental
Indenture and that has been incurred in accordance with the provisions of this
Supplemental Indenture; provided,
however, that such Liens: (i) are
no less favorable to the Holders than the Liens in respect of the Indebtedness
being Refinanced; and (ii) do not extend to or cover any property or
assets of the Company not securing the Indebtedness so Refinanced; and

 

(d)                                 Permitted
Liens.

 

Section 4.12.                                                                         Corporate
Existence. Subject to Article 5 hereof, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer

 

42

 

desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof
is not adverse in any material respect to the Holders.

 

Section 4.13.                                                                         Offer
to Repurchase Upon Change of Control. (a)  Upon the occurrence of a
Change of Control (the date of such occurrence, the “Change of Control Date”), each Holder shall have the right
to require the Company to purchase such Holder’s Notes in whole or in part in
integral multiples of $1,000 at a purchase price (the “Change of Control Purchase Price”) in cash
equal to 101% of the principal amount of such Notes, plus accrued and unpaid
interest, if any, at the date of purchase (the “Change of Control Purchase Date”), pursuant to and in
accordance with the offer described in this Section 4.13 (the “Change of Control Offer”).

 

(b)                                 Within
30 days following the Change of Control Date the Company shall send, by first class mail,
a notice to the Holders and the Trustee stating:

 

(i)                                     that
the Change of Control Offer is being made pursuant to this Section 4.13
and that all Notes validly tendered will be accepted for payment;

 

(ii)                                  the
Change of Control Purchase Price and the Change of Control Purchase Date, which
shall be a Business Day that is no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the “Change
of Control Payment Date”) other than as may be required by law;

 

(iii)                               that
any Note not tendered will continue to accrue interest;

 

(iv)                              that
any Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date unless the
Company shall default in the payment of the Change of Control Purchase Price of
the Notes and the only remaining right of the Holder is to receive payment of
the Change of Control Purchase Price upon surrender of the applicable Note to
the Paying Agent;

 

(v)                                 that
Holders electing to have a portion of a Note purchased pursuant to a Change of
Control Offer may only elect to have such Note purchased in integral
multiples of $1,000;

 

(vi)                              that
if a Holder elects to have a Note purchased pursuant to the Change of Control
Offer it will be required to surrender the Note, with the form entitled “Option
of Holder to Elect Purchase” on the reverse of the Note completed, or transfer
by book-entry transfer, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;

 

43

 

(vii)                           that
a Holder will be entitled to withdraw its election if the Company receives, not
later than the third Business Day preceding the Change of Control Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes such Holder delivered for purchase,
and a statement that such Holder is withdrawing its election to have such Note
purchased; and

 

(viii)                        that
if Notes are purchased only in part a new Note of the same type will be
issued in principal amount equal to the unpurchased portion of the Notes
surrendered.

 

(c)                                  On
or before the Change of Control Payment Date, the Company shall, to the extent
lawful, accept for payment, all Notes or portions thereof validly tendered
pursuant to the Change of Control Offer, and shall deliver to the Trustee an
Officers’ Certificate stating that such Notes or portions thereof were accepted
for payment by the Company in accordance with the terms of this Section 4.13.
The Company, the Depositary or the Paying Agent, as the case may be, shall
promptly mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof.

 

(d)                                 The
Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an offer hereunder. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.13, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.13 by virtue thereof.

 

Section 4.14.                                                                         Limitation
on Preferred Stock of Subsidiaries. The Company shall not permit any of its
Subsidiaries to issue any Preferred Stock (other than to the Company or to a
Wholly Owned Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly Owned Subsidiary of the Company) to own any Preferred Stock
of any Subsidiary of the Company, other than Preferred Stock outstanding on the
Measurement Date of Subsidiaries formed to facilitate maintaining the Company’s
REIT status.

 

Section 4.15.                                                                         Conduct
of Business. The Company and its Subsidiaries shall engage primarily in the
financing and real-estate related businesses contemplated by Article III(b) of
the Company’s Amended and Restated Charter as in effect on the Measurement Date
and other activities related to or arising out of those activities.

 

44

 

Section 4.16.                                                                         Limitation
of Guarantees by Subsidiaries. The Company shall not permit any of its
Subsidiaries, directly or indirectly, by way of the pledge of any intercompany
note or otherwise, to assume, guarantee or in any other manner become liable
with respect to any Indebtedness of the Company, unless, in any such case:

 

(1)                                  such
Subsidiary executes and delivers a supplemental indenture to this Supplemental
Indenture, providing a guarantee of payment of the Notes by such Subsidiary;
and

 

(2)                                  if
such assumption, guarantee or other liability of such Subsidiary is provided in
respect of Indebtedness that is expressly subordinated to the Notes, the
guarantee or other instrument provided by such Subsidiary in respect of such subordinated
Indebtedness shall be subordinated to the Guarantee pursuant to subordination
provisions no less favorable to the Holders of the Notes than those contained
in this Supplemental Indenture.

 

Notwithstanding
the foregoing, any such Guarantee by a Subsidiary of the Notes shall provide by
its terms that it shall be automatically and unconditionally released and
discharged, without any further action required on the part of the Trustee
or any Holder, upon:

 

(1)                                  the
unconditional release of such Subsidiary from its liability in respect of the
Indebtedness in connection with which such Guarantee was executed and delivered
pursuant to the preceding paragraph; or

 

(2)                                  any
sale or other disposition (by merger or otherwise) to any Person that is not a
Subsidiary of the Company of all of the Company’s Capital Stock in, or all or
substantially all of the assets of, such Subsidiary; provided that: (a) such sale or disposition of such
Capital Stock or assets is otherwise in compliance with the terms of this Supplemental
Indenture; and (b) such assumption, guarantee or other liability of such
Subsidiary has been released by the holders of the other Indebtedness so
guaranteed.

 

Section 4.17.                                                                         Maintenance
of Total Unencumbered Assets. The Company and its Subsidiaries shall
maintain Total Unencumbered Assets of not less than 125% of the aggregate
outstanding principal amount of the Unsecured Indebtedness of the Company and
its Subsidiaries, in each case on a consolidated basis.

 

Section 4.18.                                                                         Termination
of Certain Covenants In Event of Investment Grade Rating. In the event that
each of the Rating Categories assigned to the Notes by the Rating Agencies is
Investment Grade, the obligations under the covenants contained in
Sections 4.07, 4.08, 4.10, 4.11, 4.14, 4.15 and 4.16 hereof shall cease to
apply to the Company in the event, and only for so long as, the Notes are rated
Investment Grade and no Default or Event of Default has occurred and is
continuing.

 

45

 

Section 4.19.                                                                         Maintenance
of Properties; Books and Records; Compliance with Law. (a)  The
Company shall and shall cause each of its Subsidiaries to at all times cause
all properties used or useful in the conduct of its business to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment, and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereto; provided that
nothing in this Section 4.19 shall prevent the Company or any of its
Subsidiaries from discontinuing the operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is
either (i) in the ordinary course of business, (ii) in the reasonable
and good faith judgment of the Board of Directors or management of the Company
or the Subsidiary concerned, as the case may be, desirable in the conduct
of the business of the Company or such Subsidiary, as the case may be, or (iii) otherwise
permitted by this Supplemental Indenture.

 

(b)                                 The
Company shall and shall cause each of its Subsidiaries to keep proper and true
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of the Company and each
of its Subsidiaries, and reflect on its financial statements adequate accruals
and appropriations to reserves, all in accordance with GAAP consistently
applied to the Company and its Subsidiaries taken as a whole.

 

(c)                                  The
Company shall and shall cause each of its Subsidiaries to comply in all
material respects with all statutes, laws, ordinances, or government rules and
regulations to which it is subject, non-compliance with which would materially
adversely affect the business, earnings, properties, assets or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.

 

ARTICLE 5

SUCCESSORS

 

Section 5.01.                                                                         Merger,
Consolidation, or Sale of Assets. The Company shall not, in a single
transaction or series of related transactions, consolidate or merge with
or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Subsidiary of the Company to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of
the Company’s assets (determined on a consolidated basis for the Company and
the Company’s Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless:

 

46

 

(1)                                  either:

 

(a)                                  the
Company shall be the surviving or continuing corporation; or

 

(b)                                 the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
and of the Company’s Subsidiaries substantially as an entirety (the “Surviving Entity”):

 

(i)                                     shall
be a corporation organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia; and

 

(ii)                                  shall
expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the due
and punctual payment of the principal of, and premium, if any, and interest on
all of the Notes and the performance of every covenant of the Notes and this
Supplemental Indenture on the part of the Company to be performed or
observed;

 

(2)                                  immediately
after giving effect to such transaction and the assumption contemplated by
clause (1)(b)(ii) above (including giving effect to any Indebtedness
and Acquired Indebtedness incurred or anticipated to be incurred in connection
with or in respect of such transaction), the Company or such Surviving Entity,
as the case may be: (a) shall have a Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of the Company immediately prior to
such transaction; and (b) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.09
hereof; provided, however, that this clause (2) shall
not apply in the event of a transaction between the Company and TriNet;

 

(3)                                  immediately
before and immediately after giving effect to such transaction and the
assumption contemplated by clause (1)(b)(ii) above (including,
without limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction), no Default or Event of Default shall have
occurred or be continuing; and

 

(4)                                  the
Company or the Surviving Entity shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation, merger,
sale, assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of this
Supplemental Indenture and that all conditions precedent in this Supplemental
Indenture relating to such transaction have been satisfied.

 

47

 

For purposes
of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single
transaction or series of transactions) of all or substantially all of the
properties or assets of one or more Subsidiaries of the Company the Capital
Stock of which constitutes all or substantially all of the properties and
assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.

 

Section 5.02.                                                                         Successor
Corporation Substituted. Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with Section 5.01
hereof, in which the Company is not the continuing corporation, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Supplemental Indenture referring to the “Company”
shall refer instead to the successor corporation and not to the Company), and may exercise
every right and power of, the Company under this Supplemental Indenture and the
Notes with the same effect as if such successor corporation had been named as
the Company herein; provided, however, that, in the case of a transfer by
lease, the predecessor Company shall not be relieved from the obligation to pay
the principal of and interest on the Notes.

 

ARTICLE 6

DEFAULTS AND REMEDIES

 

Section 6.01.                                                                             Events
of Default. The following are “Events
of Default”:

 

(1)                                  the
failure to pay interest on any Notes when the same becomes due and payable and
the default continues for a period of 30 days;

 

(2)                                  the
failure to pay the principal on any Notes, when such principal becomes due and
payable, at maturity, upon redemption or otherwise (including the failure to
make a payment to purchase Notes tendered pursuant to a Change of Control
Offer);

 

(3)                                  a
default in the observance or performance of any other covenant or agreement
contained in this Supplemental Indenture and such default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Notes
(except in the case of a default with respect to Section 5.01 hereof,
which will constitute an Event of Default with such notice requirement but
without such passage of time requirement);

 

48

 

(4)                                  the
failure to pay at final maturity (giving effect to any applicable grace periods
and any extensions thereof) the principal amount of any Indebtedness (other
than Non-Recourse Indebtedness) of the Company or any Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness (which acceleration is not rescinded, annulled or otherwise cured
within 20 days of receipt by the Company or such Subsidiary of notice of
any such acceleration) if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in default
for failure to pay principal at final maturity or which has been accelerated,
aggregates $20.0 million or more at any time;

 

(5)                                  one
or more judgments in an aggregate amount in excess of $20.0 million shall
have been rendered against the Company or any of its Subsidiaries and such
judgments remain undischarged, unpaid or unstayed for a period of 60 days
after such judgment or judgments become final and non-appealable (other than
any judgments as to which, and only to the extent, a reputable insurance
company has acknowledged coverage of such judgments in writing);

 

(6)                                  there
shall have been the entry by a court of competent jurisdiction of:

 

(a)                                  a
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy
Law; or

 

(b)                                 a
decree or order adjudging the Company or any Significant Subsidiary bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company or any Significant Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any
Significant Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree or
order for relief shall continue to be in effect, or any such other decree or
order shall be unstayed and in effect, for a period of 60 consecutive days; or

 

(7)                                  (a) 
the Company or any Significant Subsidiary commences a voluntary case or proceeding
under any applicable Bankruptcy Law or any other case or proceeding to be
adjudicated bankrupt or insolvent;

 

(b)                                 the Company or any
Significant Subsidiary consents to the entry of a decree or order for relief in
respect of the Company or such Significant Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it;

 

(c)                                  the Company or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law;

 

49

 

(d)                                 the Company or any
Significant Subsidiary:

 

(i)                                     consents
to the filing of such petition or the appointment of, or taking possession by,
a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or such Significant Subsidiary or of any substantial part of
its property;

 

(ii)                                  makes
an assignment for the benefit of creditors; or

 

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

 

(e)                                  the Company or any
Significant Subsidiary takes any corporate action in furtherance of any such
actions in this clause (7).

 

Section 6.02.                                                                         Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (6) or (7) above with respect to the Company) shall
occur and be continuing, the Trustee or the Holders of at least 25% in
principal amount of outstanding Notes may declare the principal of and
accrued interest on all the Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Event of Default and that
it is a “notice of acceleration” (the “Acceleration
Notice”), and the same shall become immediately due and payable.

 

If an Event of
Default specified in clauses (6) or (7) above with respect to
the Company occurs and is continuing, then all unpaid principal of, and
premium, if any, and accrued and unpaid interest on all of the outstanding
Notes shall ipso facto become and
be immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.

 

At any time
after a declaration of acceleration with respect to the Notes as described in
the preceding paragraph, the Holders of a majority in principal amount of the
Notes may rescind and cancel such declaration and its consequences:

 

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

 

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

 

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

 

50

 

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

 

(5)                                  in
the event of the cure or waiver of an Event of Default of the type described in
clauses (6) or (7) of Section 6.01 hereof, the Trustee
shall have received an Officers’ Certificate and an Opinion of Counsel that
such Event of Default has been cured or waived. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.

 

Section 6.03.                                                                         Other
Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Supplemental Indenture.

 

The Trustee may maintain
a proceeding even if it does not possess any of the Notes or does not produce
any of them in the proceeding. A delay or omission by the Trustee or any Holder
of a Note in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. All remedies are cumulative to the extent permitted by
law.

 

Section 6.04.                                                                         Waiver
of Past Defaults. Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes by notice in writing to the
Trustee may on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal of, premium, if
any, or interest on, the Notes (including in connection with a Change of
Control Offer or other offer to purchase) (provided,
however, that the Holders of a
majority in aggregate principal amount of the then outstanding Notes may rescind
an acceleration and its consequences, including any related payment default
that resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Supplemental Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

 

Section 6.05.                                                                         Control
by Majority. Holders of a majority in principal amount of the then
outstanding Notes may, by written notice, direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Supplemental Indenture
that the Trustee determines may be unduly prejudicial to the rights of
other Holders of Notes or that may involve the Trustee in any personal
liability.

 

Section 6.06.                                                                         Limitation
on Suits. A Holder of a Note may pursue a remedy with respect to this
Supplemental Indenture or the Notes only if:

 

51

 

(a)                                  a Holder gives to the
Trustee written notice of a continuing Event of Default;

 

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

 

(c)                                  such Holder or
Holders offer and, if requested, provide to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;

 

(d)                                 the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer and, if requested, the provision of indemnity; and

 

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

 

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

 

Section 6.07.                                                                         Rights
of Holders of Notes to Receive Payment. Notwithstanding any other provision
of this Supplemental Indenture, the right of any Holder to receive payment of
principal, premium, if any, and interest on the Notes so held, on or after the
respective due dates expressed in the Notes (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.

 

Section 6.08.                         Collection
Suit by Trustee. If an Event of Default specified in Section 6.01(1) or
(2) occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal of, premium, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any amounts due the Trustee under Section 7.07 hereof.

 

Section 6.09.                         Trustee May File
Proofs of Claim. The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian 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 in writing to the making of such payments directly to the Holders, to
pay to the Trustee any amount due to it

 

52

 

for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07
hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

 

Section 6.10.                                                                         Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay out
the money in the following order:

 

First: 
to the Trustee, its agents and attorneys for amounts due under Section 7.07
hereof, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;

 

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

 

Third: 
to the Company or to such party as a court of competent jurisdiction
shall direct.

 

The Trustee may fix
a record date and payment date for any payment to Holders of Notes pursuant to
this Section 6.10.

 

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

 

53

 

ARTICLE 7

TRUSTEE

 

Section 7.01.                                                                         Duties
of Trustee. (a)  If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Supplemental 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.

 

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

 

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

 

(ii)                                  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 Supplemental Indenture in the absence of
bad faith on the Trustee’s part; provided,
however, that the Trustee shall
examine the certificates and opinions to determine whether or not they
substantially conform to the requirements of this Supplemental Indenture.

 

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

 

(i)                                     this paragraph
does not limit the effect of paragraph (b) of this Section 7.01;

 

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

 

(iii)                               the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a written direction received by it pursuant to Section 6.05;
and

 

(iv)                              the Trustee shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties under this Supplemental Indenture or in
the exercise of any of its rights or powers, if it has reasonable grounds to
believe repayment of the funds or adequate indemnity against the risk or
liability is not reasonably assured to it.

 

54

 

(d)                                 Every
provision of this Supplemental Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee is subject to the
provisions of this Section 7.01 and to the provisions of the TIA.

 

(e)                                  The
Trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity satisfactory to it against any loss, liability or
expense.

 

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

 

(g)                                 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
not less than a majority in principal amount of the Notes at the time
outstanding given pursuant to Section 6.05 of this Supplemental Indenture,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee under this Supplemental Indenture.

 

Section 7.02.                                                                         Rights
of Trustee. (a)  The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.

 

(b)                                 Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel that conforms to Section 11.04. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers’ Certificate or Opinion of Counsel.

 

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

 

(d)                                 The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within its rights or powers, except
conduct that constitutes willful misconduct, negligence or bad faith.

 

(e)                                  The
Trustee may consult with counsel, and the Trustee will not be liable for
any action it takes or omits in reliance on, and in accordance with, written
advice of counsel.

 

(f)                                    The
Trustee will not be required to investigate any facts or matters stated in any
document, but if it decides to investigate any matters or facts, the Trustee or
its agents or attorneys will be entitled to examine the books, records and
premises of the Company.

 

Section 7.03.                                                                         Individual
Rights of Trustee. The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the

 

55

 

Company or any Affiliate of the Company with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11 hereof.

 

Section 7.04.                                                                         Trustee’s
Disclaimer. The Trustee (i) is not responsible for and makes no
representation as to the validity or adequacy of this Supplemental Indenture, (ii) shall
not be accountable for the Company’s use of the proceeds from the Notes and (iii) shall
not be responsible for any statement of the Company in this Supplemental
Indenture, other than the Trustee’s certificate of authentication, or in any
prospectus used in the sale of any of the Notes, other than statements, if any,
provided in writing by the Trustee for use in such prospectus.

 

Section 7.05.                                                                         Notice
of Defaults. The Trustee will give to the Holders notice of any Default
with regard to the Notes actually known to a Responsible Officer within 90 days
after receipt of such knowledge and in the manner and to the extent provided in
TIA § 313(c), and otherwise as provided in Section 11.02 of this
Supplemental Indenture; provided,
however, that except in the case
of a Default in payment of the principal of, premium, if any, or interest on
any Note, the Trustee will be protected in withholding notice of Default if and
so long as a committee of its Responsible Officers in good faith determines
that withholding of the notice is in the interests of the Holders of the Notes.

 

Section 7.06.                                                                         Reports
by Trustee. Within 60 days after each October 15 beginning with the October 15
following the date of this Supplemental Indenture, the Trustee will mail to
each Holder, at the name and address which appears on the registration books of
the Company, and to each Holder who has, within the two years preceding the
mailing, filed that person’s name and address with the Trustee for that purpose
and each Holder whose name and address have been furnished to the Trustee
pursuant to Section 2.05, a brief report dated as of that October 15
which complies with TIA § 313(a). Reports to Noteholders pursuant to this Section 7.06
shall be transmitted in the manner and to the extent provided in TIA § 313(c).
The Trustee also will comply with TIA § 313(b).

 

A copy of each
report will at the time of its mailing to Holders be filed with each stock
exchange on which the Notes are listed and also with the SEC. The Company will
promptly notify the Trustee when the Notes are listed on any stock exchange and
of any delisting of the Notes.

 

Section 7.07.                                                                         Compensation
and Indemnity. The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee’s compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation and expenses, disbursements and advances of the
Trustee’s agents, counsel, accountants and experts.

 

56

 

The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including reasonable attorney’s fees) incurred by it in connection with the
administration of the trust created by this Supplemental Indenture and the
performance of its duties under this Supplemental Indenture. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may have
separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent. The
Company need not reimburse any expense or indemnify against any loss, expense
or liability incurred by the Trustee to the extent it is due to the Trustee’s
own willful misconduct, negligence or bad faith.

 

To secure the
Company’s obligations to make payments to the Trustee under this Section 7.07,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, other than money or property held in trust to pay
principal or interest on particular Notes. Those obligations of the Company
shall survive the satisfaction and discharge of this Supplemental Indenture.

 

When the
Trustee incurs expenses or renders services after an Event of Default specified
in Sections 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services of the Trustee are intended to constitute
expenses of administration under any Bankruptcy Law.

 

For purposes
of this Section 7.07, “Trustee” will include any predecessor Trustee, but
the willful misconduct, negligence or bad faith of any Trustee shall not affect
the rights of any other Trustee under this Section 7.07.

 

Section 7.08.                                                                         Replacement
of Trustee. The Trustee may resign at any time by so notifying the
Company. The Holders of a majority in aggregate principal amount of the then
outstanding Notes may remove the Trustee by so notifying the Trustee and
the Company and may appoint a successor Trustee. The Company may remove
the Trustee if:

 

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

 

(b)                                 the Trustee is
adjudged bankrupt or insolvent or an order for relief is entered with respect
to the Trustee under any Bankruptcy Law;

 

(c)                                  a custodian or public
officer takes charge of the Trustee or its property; or

 

(d)                                 the Trustee becomes
incapable of acting.

 

If the Trustee
resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a majority in
aggregate principal amount of

 

57

 

the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.

 

No removal or
appointment of a Trustee will be valid if that removal or appointment would
conflict with any law applicable to the Company.

 

A successor
Trustee will deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Immediately after that, the retiring Trustee will,
subject to the Lien provided for in Section 7.07, transfer all property
held by it as Trustee to the successor Trustee, the resignation or removal of
the retiring Trustee will become effective, and the successor Trustee will have
all the rights, powers and duties of the Trustee under this Supplemental
Indenture. A successor Trustee will mail notice of its succession to each
Holder.

 

If a successor
Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of a majority
in aggregate principal amount of the then outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

 

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

 

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

 

Section 7.09.                                                                         Successor
Trustee by Merger, etc. If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all of its corporate trust
assets to, another Person, the resulting, surviving or transferee Person will,
without any further act, be the successor Trustee.

 

If at the time
a successor by merger, conversion or consolidation to the Trustee succeeds to
the trusts created by this Supplemental Indenture any of the Notes have been
authenticated but not delivered, the successor to the Trustee may adopt
the certificate of authentication of the predecessor Trustee, and deliver the
Notes which were authenticated by the predecessor Trustee; and if at that time
any of the Notes have not been authenticated, the successor to the Trustee may authenticate
those Notes in its own name as the successor to the Trustee; and in either case
the certificates of authentication will have the full force provided in this
Supplemental Indenture for certificates of authentication.

 

Section 7.10.                                                                         Eligibility;
Disqualification. The Trustee will at all times satisfy the requirements of
TIA § 310(a). The Trustee will at all times have (or shall be a member of
a bank holding company system whose parent corporation has) a combined capital
and surplus

 

58

 

of at least $50,000,000 as set forth in its
most recently published annual report of condition, which will be deemed for
this paragraph to be its combined capital and surplus. The Trustee will comply
with TIA § 310(b).

 

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

 

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01.                                                                         Option
to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the
option of its Board of Directors evidenced by a Board Resolution set forth in
an Officers’ Certificate, at any time, elect to have either Section 8.02
or 8.03 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.

 

Section 8.02.                                                                         Legal
Defeasance and Discharge. Upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.02, the Company shall,
subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from its obligations with respect to
all outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, “Legal Defeasance”).
For this purpose, Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be “outstanding” only for the
purposes of Section 8.05 hereof and the other Sections of this
Supplemental Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Supplemental
Indenture (and the Trustee, on written demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder:  (a) the
rights of Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (b) the Company’s obligations
with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company’s obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of
its option under Section 8.03 hereof.

 

59

 

Section 8.03.                                                                         Covenant
Defeasance. Upon the Company’s exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.14, 4.15, 4.16, 4.17, 4.18 hereof and clause (2) of
Section 5.01 hereof with respect to the outstanding Notes on and after the
date the conditions set forth in Section 8.04 are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall
thereafter be deemed not “outstanding” for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed “outstanding”
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may omit
to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Supplemental Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.03 hereof, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(4) and (5) hereof shall not constitute Events of
Default.

 

Section 8.04.                                                                         Conditions
to Legal or Covenant Defeasance. The following shall be the conditions to
the application of either Section 8.02 or 8.03 hereof to the outstanding
U.S. Notes:

 

In order to
exercise either Legal Defeasance or Covenant Defeasance:

 

(a)                                  the Company must
irrevocably deposit with the Trustee, in trust, for the benefit of the Holders,
cash in United States dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes on the
stated date for payment thereof or on the applicable redemption date, as the
case may be, and any other amounts owing under this Supplemental
Indenture, if in the case of an optional redemption date prior to electing to
exercise either Legal Defeasance or Covenant Defeasance, the Company has
delivered to the Trustee an irrevocable notice to redeem all of the outstanding
Notes on such redemption date;

 

(b)                                 in the case of an
election under Section 8.02 hereof, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (i) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (ii) since
the date of this Supplemental Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect

 

60

 

that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred;

 

(c)                                  in the case of an
election under Section 8.03 hereof, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred;

 

(d)                                 no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;

 

(e)                                  such Legal Defeasance
or Covenant Defeasance shall not result in a breach or violation of, or
constitute a default under this Supplemental Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;

 

(f)                                    the Company shall
have delivered to the Trustee an Officers’ Certificate stating that the deposit
was not made by the Company with the intent of preferring the Holders over any
other creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or others;

 

(g)                                 the Company shall have
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have been
complied with; and

 

(h)                                 the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that, assuming no
intervening bankruptcy of the Company between the date of deposit and the 91st
day following the date of deposit and that no Holder is an insider of the
Company, after the 91st day following the date of deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally.

 

Notwithstanding the foregoing, the opinion of
counsel required by clause (b) above with respect to Legal Defeasance need
not be delivered if all Notes not theretofore delivered to the Trustee for
cancellation (1) have become due and payable or (2) will become due
and payable on the maturity date within one year under arrangements
satisfactory to the Trustee

 

61

 

for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.

 

Section 8.05.                                                                         Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions. Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the Trustee
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Supplemental Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as Paying Agent) as
the Trustee may determine, to the Holders of such Notes of all sums due
and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

 

The Company
shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities
deposited pursuant to Section 8.04 hereof or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.

 

Anything in
this Article 8 to the contrary notwithstanding, the Trustee shall deliver
or pay to the Company from time to time upon the written request of the Company
any money or non-callable Government Securities held by it as provided in Section 8.04
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee (which may be the opinion delivered under Section 8.04(a) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06.                                                                         Repayment
to Company. Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its written request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once,
in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

 

62

 

Section 8.07.                                                                         Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company’s obligations under this Supplemental
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01.                                                                         Without
Consent of Holders of Notes. Notwithstanding Section 9.02 of this
Supplemental Indenture, the Company and the Trustee may amend or
supplement this Supplemental Indenture or the Notes without the consent of any
Holder of a Note:

 

(a)                                  to cure any
ambiguity, defect or inconsistency that does not adversely affect in any
material respect the rights hereunder of any Holder of the Notes;

 

(b)                                 to provide for
uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions of Article 2 hereof (including the related
definitions) in a manner that does not materially adversely affect any Holder;

 

(c)                                  to provide for the
assumption of the Company’s obligations to the Holders by a successor to the
Company pursuant to Article 5 hereof;

 

(d)                                 to make any change
that would provide any additional rights or benefits to the Holders of the
Notes or that does not adversely affect in any material respect the rights
hereunder of any Holder of the Notes;

 

(e)                                  to comply with
requirements of the SEC in order to effect or maintain the qualification of
this Supplemental Indenture under the TIA; or

 

(f)                                    to evidence and
provide for the acceptance of appointment under this Supplemental Indenture of
a successor Trustee.

 

63

 

Upon the
written request of the Company accompanied by, to the extent necessary, a Board
Resolution authorizing the execution of any such amended or supplemental
Supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company
in the execution of any amended or supplemental Supplemental Indenture
authorized or permitted by the terms of this Supplemental Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Supplemental Indenture that affects its own rights, duties or
immunities under this Supplemental Indenture or otherwise.

 

Section 9.02.                                                                         With
Consent of Holders of Notes. Except as provided below in this Section 9.02,
the Company and the Trustee may amend or supplement this Supplemental
Indenture (including Section 4.13 hereof), and the Notes with the written
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of
the principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Supplemental Indenture or the Notes may be
waived with the written consent of the Holders of a majority in principal
amount of the then outstanding Notes voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes).

 

Upon the
written request of the Company accompanied by a Board Resolution authorizing
the execution of any such amended or supplemental Supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 7.02 hereof, the Trustee shall join
with the Company in the execution of such amended or supplemental Supplemental
Indenture unless such amended or supplemental Supplemental Indenture directly
affects the Trustee’s own rights, duties or immunities under this Supplemental
Indenture or otherwise, in which case the Trustee may in its discretion,
but shall not be obligated to, enter into such amended or supplemental
Supplemental Indenture.

 

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

 

After an
amendment, supplement or waiver under this Section becomes effective, the
Company shall mail to the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amended or supplemental Supplemental Indenture or
waiver. Subject to Sections 6.04 and

 

64

 

6.07 hereof,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive in writing compliance
in a particular instance by the Company with any provision of this Supplemental
Indenture or the Notes. However, without the written consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):

 

(a)                                  reduce the amount of
Notes whose Holders must consent to an amendment;

 

(b)                                 reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes;

 

(c)                                  reduce the principal
of or change or have the effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to redemption or reduce
the redemption price therefor;

 

(d)                                 make any Notes payable
in money other than that stated in the Notes;

 

(e)                                  make any change in
provisions of this Supplemental Indenture protecting the right of each Holder
to receive payment of principal of and interest on such Note on or after the
due date thereof or to bring suit to enforce such payment, or permitting
Holders of a majority in principal amount of Notes to waive Defaults or Events
of Default;

 

(f)                                    after the Company’s
obligation to purchase Notes arises thereunder, amend, change or modify in any
material respect the obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control or, after such Change of
Control has occurred, modify any of the provisions or definitions with respect
thereto; or

 

(g)                                 modify or change any
provision of this Supplemental Indenture or the related definitions affecting
the subordination or ranking of the Notes in a manner which adversely affects
the Holders.

 

Section 9.03.                                                                         Compliance
with Trust Indenture Act. Every amendment or supplement to this
Supplemental Indenture or the Notes shall be set forth in a amended or
supplemental Supplemental Indenture that complies with the TIA as then in
effect.

 

Section 9.04.                                                                         Revocation
and Effect of Consents. Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent by the Holder of
a Note and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or

 

65

 

amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

 

Section 9.05.                                                                         Notation
on or Exchange of Notes. The Trustee may place an appropriate notation
about an amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon
receipt of an Authentication Order, authenticate new Notes that reflect the
amendment, supplement or waiver.

 

Failure to
make the appropriate notation or issue a new Note shall not affect the validity
and effect of such amendment, supplement or waiver.

 

Section 9.06.                                                                         Trustee
to Sign Amendments, etc. The Trustee shall sign any amended or supplemental
Supplemental Indenture authorized pursuant to this Article 9 if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an
amendment or supplemental Supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be
fully protected in relying conclusively upon, in addition to the documents
required by Section 11.04 hereof, an Officer’s Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Supplemental Indenture.

 

ARTICLE 10

SATISFACTION AND DISCHARGE

 

Section 10.01.                                                                  Satisfaction
and Discharge. This Supplemental Indenture will be discharged and will
cease to be of further effect (except as to surviving rights or registration of
transfer or exchange of the Notes, as expressly provided for in this
Supplemental Indenture) as to all outstanding Notes, when:

 

(a)                                  either:

 

(i)                                     all
the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes 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) have been delivered to the Trustee for cancellation; or

 

66

 

(ii)                                  all
Notes not theretofore delivered to the Trustee for cancellation have become due
and payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the Notes to
the date of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be;

 

(b)                                 the
Company has paid all other sums payable under this Supplemental Indenture by
the Company; and

 

(c)                                  the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel stating that all conditions precedent under this Supplemental Indenture
relating to the satisfaction and discharge of this Supplemental Indenture have
been complied with.

 

Section 10.02.                  Application of
Trust Money

 

. Subject to
the provisions of Section 8.06, all money deposited with the Trustee
pursuant to Section 10.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Supplemental Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee; but such
money need not be segregated from other funds except to the extent required by law.

 

If the Trustee
or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 10.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
obligations under this Supplemental Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to Section 10.01;
provided that if the Company has
made any payment of principal of, premium, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

 

67

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.01.                                                                  Trust
Indenture Act Controls. If any provision of this Supplemental Indenture
limits, qualifies or conflicts with the duties imposed by TIA § 318(c),
the imposed duties shall control.

 

Section 11.02.                                                                  Notices.
Any notice or communication by the Company or the Trustee to the others is duly
given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others’ address:

 

If to the
Company:

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

Facsimile:  (212) 930-9494

Attention:  Chief Executive Officer

 

With a copy
to:

Clifford Chance US LLP

200 Park Avenue, 52nd Floor

New York, NY  10166-0153

Facsimile:  (212) 878-8375

Attention:  Kathleen L. Werner, Esq.

 

If to the
Trustee:

US Bank Trust National Association

100 Wall Street, 19th Floor

New York, NY 10005

Attention:  Angelita Pena, Corporate
Trust Department

 

The Company or
the Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.

 

All notices and
communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if

 

68

 

telexed; when
receipt acknowledged, if telecopied; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.

 

Any notice or
communication to a Holder shall be mailed by first class mail, certified
or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed to any Person
described in TIA § 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.

 

If a notice or
communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.

 

If the Company
mails a notice or communication to Holders, it shall mail a copy to the Trustee
and each Agent at the same time.

 

Section 11.03.                                                                  Communication
by Holders of Notes with Other Holders of Notes. Holders may communicate
pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Supplemental Indenture or the Notes. The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA § 312(c).

 

Section 11.04.                                                                  Certificate
and Opinion as to Conditions Precedent. Upon any request or application by
the Company to the Trustee to take any action under this Supplemental Indenture,
the Company shall furnish to the Trustee:

 

(a)                                  an Officers’
Certificate in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 11.05 hereof)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Supplemental Indenture relating to the
proposed action have been satisfied; and

 

(b)                                 an Opinion of Counsel
in form and substance reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 11.05 hereof) stating that, in
the opinion of such counsel, all such conditions precedent and covenants have
been satisfied.

 

Section 11.05.                                                                  Statements
Required in Certificate or Opinion. Each certificate or opinion with respect
to compliance with a condition or covenant provided for in this Supplemental
Indenture (other than a certificate provided pursuant to TIA § 314(a)(4))
shall comply with the provisions of TIA § 314(e) and shall include:

 

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

 

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

 

69

 

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

 

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

 

Section 11.06.                                                                  Rules by
Trustee and Agents. The Trustee may make reasonable rules for
action by or at a meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.

 

Section 11.07.                                                                  No
Personal Liability of Directors, Officers, Employees and Stockholders. No
past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for
issuance of the Notes.

 

Section 11.08.                                                                  Governing
Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

Section 11.09.                                                                  No
Adverse Interpretation of Other Agreements. This Supplemental Indenture may not
be used to interpret any other indenture, loan or debt agreement of the Company
or its Subsidiaries or of any other Person. Any such indenture, loan or debt
agreement may not be used to interpret this Supplemental Indenture.

 

Section 11.10.                                                                  Successors.
All agreements of the Company in this Supplemental Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Supplemental
Indenture shall bind its successors.

 

Section 11.11.                                                                  Severability.
In case any provision in this Supplemental Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 11.12.                                                                  Counterpart Originals.
The parties may sign any number of copies of this Supplemental Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

 

Section 11.13.                                                                  Table
of Contents, Headings, etc. The Table of Contents, Cross-Reference Table
and Headings of the Articles and Sections of this Supplemental Indenture

 

70

 

have been inserted for convenience of
reference only, are not to be considered a part of this Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.

 

Section 11.14.                                                                  Conflicts
with Indenture. If any provision of this Supplemental Indenture is
inconsistent with any provision of the Indenture, the provision of this
Supplemental Indenture will control with regard to the Notes.

 

[Signatures on following page]

 

71

 

SIGNATURES

 

Dated as of December 12,
2003

 

	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  US BANK TRUST NATIONAL

  ASSOCIATION, not in its individual capacity,

  but solely as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

72

 

EXHIBIT A

 

[Face of Note]

 

[Insert the Global Note Legend, if applicable pursuant to the
provisions of the Supplemental Indenture]

 

CUSIP/CINS 45031UAB7

 

6.0% Senior Notes due 2010

 

	
  No. 

  	
   

  	
  $

  

 

iSTAR FINANCIAL INC.

 

promises to
pay to                                                         ,
or registered assigns, the principal sum of           

 

Dollars on December 15, 2010.

 

Interest Payment Dates:  June 15
and December 15

 

Record Dates:  June 1 and December 1

 

Dated:  [                    ]

 

 

	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

SEAL

 

This is one of the Notes referred to

in the within-mentioned Supplemental Indenture:

US BANK TRUST NATIONAL ASSOCIATION
  as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

A-2

 

[Back of Note]

        6.0% Senior Notes due 2010

 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

 

1. INTEREST. iStar Financial Inc., a Maryland
corporation (the “Company”), promises
to pay interest on the principal amount of this Note at 6.0% per annum from December 12,
2003 until maturity. The Company will pay interest semi-annually in arrears on June 15
and December 15 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an “Interest
Payment Date”). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from December 12, 2003; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided,
further, that the first Interest
Payment Date shall be June 15, 2004. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

 

2. METHOD OF PAYMENT. The Company will pay
interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the June 1 or December 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, and premium, if any, on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be 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. The Company reserves the right to pay interest to
Holders of Notes by check mailed to such Holders at their registered addresses
or by wire transfer to Holders of at least $5 million aggregate principal amount
of Notes.

 

3. PAYING AGENT AND REGISTRAR. Initially, US
Bank Trust National Association, the Trustee under the Indenture, will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries may act
in any such capacity.

 

A-3

 

4. INDENTURE. The Company issued the Notes
under an Indenture dated as of February 5, 2001, as amended and
supplemented, including as supplemented by a Supplemental Indenture dated as of
December 12, 2003 (collectively, the “Indenture”)
between the Company and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company. The Company is issuing $350.0 million in aggregate
principal amount on the Issue Date and may issue Additional Notes in
accordance with the terms of the Indenture.

 

5. OPTIONAL REDEMPTION.

 

(a)                                  Optional Redemption. At any time on or
prior to December 15, 2010, the Notes may be redeemed or purchased in
whole but not in part at the Company’s option at a price equal to 100% of
the principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest, if any, to, the date of redemption or purchase (the “Redemption Date”) (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date). Such redemption or purchase may be made
upon notice mailed by first-class mail to each Holder’s registered
address, not less than 30 nor more than 60 days prior to the Redemption
Date.

 

“Applicable Premium” means, with respect to
a Note at any Redemption Date, the greater of: (1) 1.0% of the principal
amount of such Note; and (2) the excess of (a) the present value at
such Redemption Date of (i) the redemption price of such Note on December 15,
2010 plus (ii) all required remaining scheduled interest payments due on
such Note through December 15, 2010, computed using a discount rate equal
to the Treasury Rate plus 50 basis points; over (b) the principal amount
of such Note on such Redemption Date. Calculation of the Applicable Premium
will be made by the Company or on behalf of the Company by such Person as the
Company shall designate; provided,
however, that such calculation
shall not be a duty or obligation of the Trustee.

 

“Treasury Rate” means, with respect to a
Redemption Date, the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15(519) that has
become publicly available at least two Business Days prior to such Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from
such Redemption Date to December 15, 2010; provided, however,
that if the period from such Redemption Date to December 15, 2010 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to December 15,
2010 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

 

A-4

 

(b)                                 Optional Redemption Upon Equity Offerings.
At any time, or from time to time, on or prior to December 15, 2006, the
Company may, at its option, use the net cash proceeds of one or more Equity
Offerings to redeem up to 35% of the principal amount of the Notes issued under
the Indenture at a redemption price of 106% of the principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that:

 

(1)                    at least 65%
of the principal amount of Notes issued under the Indenture remains outstanding
immediately after any such redemption; and

 

(2)                    the Company
makes such redemption not more than 60 days after the consummation of any
such Equity Offering.

 

6. MANDATORY REDEMPTION.

 

Except as set
forth in paragraph 7 below, the Company shall not be required to make mandatory
redemption payments with respect to the Notes.

 

7. REPURCHASE AT OPTION OF HOLDER.

 

Upon the
occurrence of a Change of Control, the Company will be required to offer to
purchase all of the outstanding Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, thereon to
the date of repurchase.

 

8. NOTICE OF REDEMPTION. Notice of redemption
will be mailed at least 30 days but not more than 60 days before the redemption
date to each Holder whose Notes are to be redeemed at its registered address. Notes
in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Notes held by a Holder are to
be redeemed. On and after the redemption date interest ceases to accrue on
Notes or portions thereof called for redemption.

 

9. DENOMINATIONS, TRANSFER, EXCHANGE. The
Notes are in registered form without coupons in denominations of $1,000
and integral multiples of $1,000. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company and the Trustee
may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.

 

10. PERSONS DEEMED OWNERS. The registered
Holder of a Note may be treated as its owner for all purposes.

 

A-5

 

11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject
to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture or the
Notes may be waived with the written consent of the Holders of a majority
in principal amount of the then outstanding Notes voting as a single class. Without
the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company’s obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect in any material respects the rights under the
Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act or to evidence and provide for the acceptance of appointment
under the Indenture of a successor Trustee.

 

12. DEFAULTS AND REMEDIES. Events of Default
are set forth in the Indenture. If any Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may direct
the Trustee in writing in its exercise of any trust or power. The Trustee may withhold
from Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

 

13. TRUSTEE DEALINGS WITH COMPANY. The
Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as
if it were not the Trustee.

 

14. NO RECOURSE AGAINST OTHERS. A director,
officer, employee, incorporator or stockholder, of the Company, as such, shall
not have any liability for any obligations of the Company under the Notes or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and

 

A-6

 

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

 

15. AUTHENTICATION. This Note shall not be
valid until authenticated by the manual signature of the Trustee or an
authenticating agent.

 

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

 

17. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes and
the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification
numbers placed thereon.

 

A-7

 

The Company
will furnish to any Holder upon written request and without charge a copy of
the Indenture. Requests may be made to:

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

Attention:  Investor Relations

 

A-8

 

ASSIGNMENT
FORM

 

To assign this
Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to:                                                                                                                                               

(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or
tax I.D. no.)

 

 

 

(Print or type assignee’s name,
address and zip code)

 

and irrevocably appoint                                                                                                                                                                             

to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

 

	
  Date: 

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name

  appears on the face of this Note)

  
	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
							

 

*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-9

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If you want to
elect to have this Note purchased by the Company pursuant to Section 4.13
of the Indenture, check the following box : 
o

 

If you want to
elect to have only part of the Note purchased by the Company pursuant to Section 4.13
of the Indenture, state the amount you elect to have purchased:

 

	
  $

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name

  appears on the face of this Note)

  
	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
								

 

*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-10

 

SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE

 

The following
exchanges of a part of this Global Note for an interest in another Global
Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of

  decrease in

  Principal Amount

  of this Global Note

  	
   

  	
  Amount of

  increase in

  Principal Amount

  of this Global Note

  	
   

  	
  Principal Amount

  of this Global Note

  following such

  decrease (or increase)

  	
   

  	
  Signature of

  authorized officer

  of Trustee or Note

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-11

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