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Exhibit 10.30  

  
 

    AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
  INTRABIOTICS PHARMACEUTICALS, INC.    
  

 
 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	 	 	 	 	 	 	 
	1	 	ACCOUNTING AND OTHER TERMS	 	4
	

2	
 	

LOAN AND TERMS OF PAYMENT	
 	

4
	 	 	2.1	 	Promise to Pay	 	4
	 	 	2.2	 	Termination of Commitment to Lend	 	5
	 	 	2.3	 	Overadvances	 	5
	 	 	2.4	 	Interest Rate, Payments	 	5
	 	 	2.5	 	Fees	 	5
	

3	
 	

CONDITIONS OF LOANS	
 	

5
	 	 	3.1	 	Conditions Precedent to Initial Credit Extension	 	5
	 	 	3.2	 	Conditions Precedent to all Credit Extensions	 	6
	

4	
 	

CREATION OF SECURITY INTEREST	
 	

6
	 	 	4.1	 	Grant of Security Interest	 	6
	 	 	4.2	 	Authorization of File	 	6
	

5	
 	

REPRESENTATIONS AND WARRANTIES	
 	

6
	 	 	5.1	 	Due Organization and Authorization	 	6
	 	 	5.2	 	Collateral	 	6
	 	 	5.3	 	Litigation	 	7
	 	 	5.4	 	No Material Adverse Change in Financial Statements	 	7
	 	 	5.5	 	Solvency	 	7
	 	 	5.6	 	Regulatory Compliance	 	7
	 	 	5.7	 	Subsidiaries	 	7
	 	 	5.8	 	Full Disclosure	 	7
	

6	
 	

AFFIRMATIVE COVENANTS	
 	

8
	 	 	6.1	 	Government Compliance	 	8
	 	 	6.2	 	Financial Statements, Reports, Certificates	 	8
	 	 	6.3	 	Inventory; Returns	 	8
	 	 	6.4	 	Taxes	 	9
	 	 	6.5	 	Insurance	 	9
	 	 	6.6	 	Primary Accounts	 	9
	 	 	6.7	 	Financial Covenants	 	9
	 	 	6.8	 	Performance Covenant	 	9
	 	 	6.9	 	Cash Collateral	 	9
	 	 	6.10	 	Registration of Intellectual Property Rights	 	10
	 	 	6.11	 	Further Assurances	 	10
	

7	
 	

NEGATIVE COVENANTS	
 	

10
	 	 	7.1	 	Dispositions	 	10
	 	 	7.2	 	Changes in Business, Ownership, Management or Locations of Collateral	 	10
	 	 	7.3	 	Mergers or Acquisitions	 	11
	 	 	7.4	 	Indebtedness	 	11
	 	 	7.5	 	Encumbrance	 	11
	 	 	7.6	 	Distributions; Investments	 	11
	 	 	7.7	 	Transactions with Affiliates	 	11
	 	 	7.8	 	Subordinated Debt	 	11
	 	 	7.9	 	Compliance	 	11  

2

 

	

8	
 	

EVENTS OF DEFAULT	
 	

11
	 	 	8.1	 	Payment Default	 	12
	 	 	8.2	 	Covenant Default	 	12
	 	 	8.3	 	Material Adverse Change	 	12
	 	 	8.4	 	Attachment	 	12
	 	 	8.5	 	Insolvency	 	12
	 	 	8.6	 	Other Agreements	 	12
	 	 	8.7	 	Judgments	 	12
	 	 	8.8	 	Misrepresentations	 	13
	

9	
 	

BANK'S RIGHTS AND REMEDIES	
 	

13
	 	 	9.1	 	Rights and Remedies	 	13
	 	 	9.2	 	Power of Attorney	 	13
	 	 	9.3	 	Accounts Collection	 	14
	 	 	9.4	 	Bank Expenses	 	14
	 	 	9.5	 	Bank's Liability for Collateral	 	14
	 	 	9.6	 	Remedies Cumulative	 	14
	 	 	9.7	 	Demand Waiver	 	14
	

10	
 	

NOTICES	
 	

14
	

11	
 	

CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER	
 	

14
	

12	
 	

GENERAL PROVISIONS	
 	

15
	 	 	12.1	 	Successors and Assigns	 	15
	 	 	12.2	 	Indemnification	 	15
	 	 	12.3	 	Time of Essence	 	15
	 	 	12.4	 	Severability of Provision	 	15
	 	 	12.5	 	Amendments in Writing, Integration	 	15
	 	 	12.6	 	Counterparts	 	15
	 	 	12.7	 	Survival	 	15
	 	 	12.8	 	Confidentiality	 	15
	 	 	12.9	 	Effect of Amendment and Restatement	 	16
	 	 	12.10	 	Attorneys' Fees, Costs and Expenses	 	16
	

13	
 	

DEFINITIONS	
 	

16
	 	 	13.1	 	Definitions	 	16

3

  

        This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated August 20, 2001, between SILICON VALLEY BANK ("Bank"), whose address is
3003 Tasman Drive, Santa Clara, California 95054 and INTRABIOTICS PHARMACEUTICALS, INC. ("Borrower"), whose address is 1245 Terra Bella Avenue, Mountain View, California 94043. 

 
 

RECITALS    
  

        A.    Bank
and Borrower are parties to that certain Loan and Security Agreement dated August 25, 1999, as amended (collectively, the "Original Agreement"). 

        B.    Borrower
and Bank desire in this Agreement to set forth their agreement with respect to a working capital and term loan and to amend and restate in its entirety without
novation the Original Agreement in accordance with the provisions herein. 

 
 

AGREEMENT    
  

        The parties agree as follows: 

1    ACCOUNTING AND OTHER TERMS  

        Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial
statements" includes the notes and schedules. The terms "including" and "includes" always mean "including (or includes) without limitation," in this or any Loan Document. 

2    LOAN AND TERMS OF PAYMENT  

2.1    Promise to Pay.  

        Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions. 

2.1.1    Revolving Advances.  

        (a)  Bank
will make Advances not exceeding the Committed Revolving Line. Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement. 

        (b)  To
obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be made. Borrower must
promptly confirm the notification by delivering to Bank the Payment/Advance Form attached as Exhibit B. Bank will credit Advances to Borrower's deposit account. Bank may make Advances under
this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on
any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance. 

        (c)  The
Committed Revolving Line terminates on the Revolving Maturity Date, when all Advances are immediately payable. 

2.1.2    Term Loan.  

        (a)  Bank
will make a Term Loan available to Borrower as follows: 

        Borrower
will pay 48 equal installments of principal of $156,250 plus Interest (the "Term Loan Payment"). Each Term Loan Payment is payable on the 20th of each month during the term of
the loan. Borrower's final Term Loan Payment, due on August 20, 2005, includes all outstanding Term 

4

 

Loan principal and accrued interest. The initial disbursement shall be advanced at the Closing Date and shall repay all amounts outstanding under Borrower's existing term facility with Bank. 

2.2    Termination of Commitment to Lend.  

        Bank's obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank's sole discretion, there has been a material adverse change in the
general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from
the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement. 

2.3    Overadvances.  

        If Borrower's Obligations under Section 2.1.1 exceed the Committed Revolving Line, Borrower must immediately pay in cash to Bank the excess. 

2.4    Interest Rate, Payments.  

        (a)  Interest
Rate. (i) Advances accrue interest on the outstanding principal balance at a per annum variable rate of 300 basis points above the CD Rate; and
(ii) the Term Loan accrues interest, at Borrower's option at either: (i) at a fixed rate of 450 basis points above the Treasury Bill Rate or (ii) a variable per annum rate equal
to 2.00 percentage points above the Prime Rate. Borrower shall elect such rate at the time the Term Loan is disbursed. After an Event of Default, Obligations accrue interest at 5 percent
above the rate effective immediately before the Event of Default. Interest is computed on a 360 day year for the actual number of days elapsed. 

        (b)  Payments.
Interest due on the Committed Revolving Line is payable on the 20th of each month. Bank may debit any of Borrower's deposit accounts including Account Number
                        for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify
Borrower when it debits Borrower's accounts. These debits are not a
set-off. Payments received after 12:00 noon
Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue. 

2.5    Fees.  

        Borrower will pay: 

        (a)  Facility
Fee. A fully earned, non-refundable Facility Fee of $6,250 for the Committed Revolving Line and $65,625 for the Term Loan due on the Closing Date;
and 

        (b)  Bank
Expenses. All Bank Expenses (including reasonable attorneys' fees and reasonable expenses) incurred through and after the date of this Agreement, are payable when
due. 

3    CONDITIONS OF LOANS  

3.1    Conditions Precedent to Initial Credit Extension.  

        Bank's obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees it requires; 

        All
debts to General Electric Credit Corporation be paid in full and Borrower has delivered to Bank UCC terminations evidencing such pay off; and 

        Loan
# 1100074724 between Borrower and Bank shall be repaid with the proceeds of the Term Loan. 

5

 

3.2    Conditions Precedent to all Credit Extensions.  

        Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following: 

        (a)  timely
receipt of any Payment/Advance Form; and 

        (b)  the
representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the effective date of each Credit Extension
and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower's representation and warranty on that date that the representations
and warranties of Section 5 remain true. 

4    CREATION OF SECURITY INTEREST  

4.1    Grant of Security Interest.  

        Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of
Borrower's duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank may place a "hold" on any deposit
account pledged as Collateral. If this Agreement is terminated, Bank's lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations. 

4.2    Authorization of File.  

        Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to
perfect or protect Bank's interest in the Collateral. 

5    REPRESENTATIONS AND WARRANTIES  

        Borrower represents and warrants as follows: 

5.1    Due Organization and Authorization.  

        Borrower and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material
Adverse Change. Borrower has not changed its state of formation or its organizational structure or type or any organizational number (if any) assigned by its jurisdiction of formation. 

        The
execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's formation documents, nor constitute an event of default under
any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material
Adverse Change. 

5.2    Collateral.  

        Borrower has good title to the Collateral, free of Liens except Permitted Liens. Borrower has no other deposit account, other than the deposit accounts described
in the Schedule. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the possession of any third party bailee (such as at a warehouse). In 

6

 

the event that Borrower, after the date hereof, intends to store or otherwise deliver the Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee
must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. All Inventory is in all material respects of good and marketable quality, free from material defects.
Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is valid and enforceable
and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any
third party, except to the extent such claim could not reasonably be expected to cause a Material Adverse Change. 

5.3    Litigation.  

        Except as shown in the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower's Responsible Officers and legal counsel, threatened
by or against Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change. 

5.4    No Material Adverse Change in Financial Statements.  

        All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Borrower's consolidated
financial condition and Borrower's consolidated results of operations. There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent
financial statements submitted to Bank. 

5.5    Solvency.  

        The fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 

5.6    Regulatory Compliance.  

        Borrower is not an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act. Borrower is not engaged as one of
its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower's or any
Subsidiary's properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being
contested in good faith with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all
notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material
Adverse Change. 

5.7    Subsidiaries.  

        Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 

7

 

5.8    Full Disclosure.  

        No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written
certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or
statements not misleading. It being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted results. 

6    AFFIRMATIVE COVENANTS  

        Borrower will do all of the following for so long as Bank has an obligations to lend, or there are outstanding Obligations: 

6.1    Government Compliance.  

        Borrower will maintain its and all Subsidiaries' legal existence and good standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower's business or operations. Borrower will comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower's business or operations or would reasonably be
expected to cause a Material Adverse Change. 

6.2    Financial Statements, Reports, Certificates.  

        (a)  Borrower
will deliver to Bank: (i) when Weekly Reporting or Monthly Reporting applies, as soon as available, but no later than 30 days after the last day
of each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available, but no later than 95 days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) within
5 days of filing (unless Weekly Reporting or Monthly Reporting applies), copies of all statements, reports and notices made available to Borrower's security holders or to any holders of
Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal
actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $100,000 or more; (v) as soon as available, but no later
than 30 days after the last day of each year, budgets, sales and annual projections (approved by Borrower's Board of Directors), operating plans or other financial information Bank reasonably
requests; and (vi) prompt notice of any material change in the composition of the Intellectual Property, including any subsequent ownership right of Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between Borrower and Bank or knowledge of an event that materially adversely affects the value of the Intellectual Property. 

        (b)  Within
50 days after the last day of each quarter (unless Weekly Reporting or Monthly Reporting applies), Borrower will deliver to Bank with the quarterly
financial statements a Compliance Certificate signed by a Responsible Officer in the form of Exhibit C. 

        (c)  Allow
Bank to audit Borrower's Collateral at Borrower's expense. Such audits will be conducted only at such times as an Event of Default has occurred and is continuing. 

8

 

6.3    Inventory; Returns.  

        Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors
will follow Borrower's customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than
$50,000. 

6.4    Taxes.  

        Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on
demand, appropriate certificates attesting to the payment. 

6.5    Insurance.  

        Borrower will keep its business and the Collateral insured for risks and in amounts, as Bank may reasonably request. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank in Bank's reasonable discretion. All property policies will have a lender's loss payable endorsement showing Bank as an additional loss payee
and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy. At Bank's request,
Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank's option, be payable to Bank on account of the Obligations. 

6.6    Primary Accounts.  

        Borrower will maintain its primary banking relationship with Bank, which relationship shall include Borrower maintaining account balances in any account at or
through Bank representing at least 85% of all account balances of Borrower at any financial institution. 

6.7    Financial Covenants.  

        Borrower will maintain as of the last day of each quarter, unless Monthly Reporting or Weekly Reporting is required by the terms of their definitions, as
appropriate: 

          (i)  Liquidity Coverage. A Liquidity ratio of 2.00 to 1.00. "Liquidity" is defined as a ratio of unrestricted cash (and
equivalents) deposited with Bank and/or invested through Bank in investment accounts, divided by Term Loan outstandings. Beginning January 4, 2002, Borrower shall be required to comply with the
Weekly Reporting. 

        (ii)  Maximum Loss. Borrower may suffer quarterly losses not to exceed 20% of its projections, approved by its Board of
Directors, submitted to Bank. 

        (iii)  Remaining Months Liquidity. Borrower will maintain a Remaining Months Liquidity of at least 6 months. "Remaining
Months Liquidity" is defined as Liquidity minus outstanding balance under the Term Loan divided by Cash Burn. "Cash Burn" is defined as: The trailing 3 month average change in cash from
operations, in accordance with GAAP, unless Weekly Reporting or Monthly Reporting applies, at which time Cash Burn shall be defined as the current or most recently reported change in cash from
operations. 

6.8    Performance Covenant.  

        Borrower will commence its oral mucositis CT2 trial by December 31, 2001 and will notify Bank at such time as the first patient has been enrolled in the
trial. 

9

 

6.9    Cash Collateral.  

        Notwithstanding Sections 6.7 and 6.8, Borrower shall maintain a certificate of deposit (the "CD") to be held on account with Bank in a minimum principal amount
equivalent to 105% of the aggregate outstandings under the Term Loan in the event Borrower fails to meet any Financial Covenant in Section 6.7 or the Performance Covenant in Section 6.8.
The CD shall be held until such time as Borrower restores and maintains compliance with the terms of this Agreement. In the event Borrower is in compliance with all terms of this Agreement, except for
the Maximum Loss covenant, Borrower may establish a CD in an amount equivalent to 55% of the aggregate outstandings under the Term Loan, provided,
Borrower shall have delivered to Bank, within 10 days of such default of the Maximum Loss covenant, updated/revised financial projections. Bank, in its sole discretion, may determine whether to
waive or reset such covenant as it deems appropriate. If Borrower has not complied with Section 6.7 entitled "Financial Covenants" and 6.8 entitled "Performance Covenant" of this Agreement
within 60 days of the date of the Maximum Loss covenant Event of Default or Bank has not determined to waive such Event of Default, Borrower will be required to establish a CD in an amount
equivalent to 105% of the aggregate outstanding under the Term Loan.. Notwithstanding the foregoing, provided Borrower maintains such a pledged CD in a minimum amount equal to 105% of the aggregate
outstanding under the Term Loan with Bank, it shall not be deemed an Event of Default with respect to a violation of the Financial Covenants or Performance Covenant, however, it shall not be construed
in any way as to cure Borrower's violation or any other Event of Default under the Loan Agreement or Bank's agreement to (i) waive any other Event of Default under the Loan Agreement; or
(ii) forbear from exercising its rights and remedies if an Event of Default occurs, exists or continues under the Loan Agreement in any other respect. 

6.10    Registration of Intellectual Property Rights.  

        Borrower will register with the United States Patent and Trademark Office or the United States Copyright Office its Intellectual Property within 30 days of
the date of this Agreement, and additional Intellectual Property rights developed or acquired including revisions or additions with any product before the sale or licensing of the product to any third
party. 

        Borrower
will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of material infringements and
(ii) not allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without Bank's written consent. 

6.11    Further Assurances.  

        Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement. 

7    NEGATIVE COVENANTS  

        Borrower will not do any of the following without Bank's prior written consent, which will not be unreasonably withheld, for so long as Bank has an obligation to
lend and there are any outstanding Obligations: 

7.1    Dispositions.  

        Convey, sell, lease, transfer or otherwise dispose of (collectively "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar
arrangements for the use of 

10

 

the property of Borrower or its Subsidiaries in the ordinary course of business; (iii) of worn-out or obsolete Equipment; or (iv) Equipment with a net book value of up to
$3,000,000. 

7.2    Changes in Business, Ownership, Management or Locations of Collateral.  

        Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or
have a material change in its ownership or management of greater than 25% (other than by the sale of Borrower's equity securities in a public offering or to venture capital investors so long as
Borrower identifies the venture capital investors prior to the closing of the investment). Borrower will not, without at least 30 days prior written notice, relocate its chief executive office,
change its state of formation (including reincorporation), change its organizational number or name or add any new offices or business locations (such as warehouses) in which Borrower maintains or
stores over $5,000 in Collateral. 

7.3    Mergers or Acquisitions.  

        Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of another Person, except where (i) no Event of Default has occurred and is continuing or would result from such action during the term
of this Agreement and (ii) such transaction would not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower. 

7.4    Indebtedness.  

        Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 

7.5    Encumbrance.  

        Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted here, subject to Permitted Liens. 

7.6    Distributions; Investments.  

        Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do
so. Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock, except for repurchases of stock from former employees or directors of Borrower under the terms of applicable repurchase
agreements in an aggregate amount not to exceed $50,000 in the aggregate in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the
repurchases. 

7.7    Transactions with Affiliates.  

        Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary
course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a nonaffiliated Person. 

11

 

7.8    Subordinated Debt.  

        Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent. 

7.9    Compliance.  

        Become an "investment company" or a company controlled by an "investment company," under the Investment Company Act of 1940 or undertake as one of its important
activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be
expected to have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 

8    EVENTS OF DEFAULT

        Any
one of the following is an Event of Default: 

12

   8.1    Payment Default.  

        If Borrower fails to pay any of the Obligations within 3 days after their due date. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extension will be made during the cure period); 

8.2    Covenant Default.  

        If Borrower does not perform any obligation in Section 6 or violates any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has not
cured the default within 10 days after it occurs, or if the default cannot be cured within 10 days or cannot be cured after Borrower's attempts within 10 day period, and the
default may be cured within a reasonable time, then Borrower has an additional period (of not more than 30 days) to attempt to cure the default. During the additional time, the failure to cure
the default is not an Event of Default (but no Credit Extensions will be made during the cure period); 

8.3    Material Adverse Change.  

        If there (i) occurs a material adverse change in the business, operations, or condition (financial or otherwise) of the Borrower, or (ii) is a
material impairment of the prospect of repayment of any portion of the Obligations; or (iii) is a material impairment of the value or priority of Bank's security interests in the Collateral. 

8.4    Attachment.  

        If any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy
is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower's assets, or if a notice of
lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if
stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions will be made during the cure period); 

8.5    Insolvency.  

        If Borrower becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed
within 30 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed); 

8.6    Other Agreements.  

        If there is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding $100,000
or that could cause a Material Adverse Change; 

8.7    Judgments.  

        If a money judgment(s) in the aggregate of at least $50,000 is rendered against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or 

13

 

8.8    Misrepresentations.  

        If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this
Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document. 

9    BANK'S RIGHTS AND REMEDIES  

9.1    Rights and Remedies.  

        When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 

        (a)  Declare
all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Bank); 

        (b)  Stop
advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank; 

        (c)  Settle
or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable; 

        (d)  Make
any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the Collateral if Bank
requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank's rights or remedies; 

        (e)  Apply
to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of
Borrower; 

        (f)    Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive,
royalty-free license or other right to use, without charge, Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names, Trademarks, service
marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's
exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit; and 

        (g)  Dispose
of the Collateral according to the Code. 

9.2    Power of Attorney.  

        Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name on
any checks or other forms of payment or security; (ii) sign Borrower's name on any invoice or bill of lading for any Account or drafts against account debtors, (iii) make, settle, and
adjust all claims under Borrower's insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines
reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to sign Borrower's name on any documents
necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank's appointment as Borrower's attorney in fact, and all of Bank's
rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions terminates. 

14

 

9.3    Accounts Collection.  

        When an Event of Default occurs and continues, Bank may notify any Person owing Borrower money of Bank's security interest in the funds and verify the amount of
the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper
endorsements for deposit. 

9.4    Bank Expenses.  

        If Borrower fails to pay any amount or furnish any required proof of payment to third persons, Bank may make all or part of the payment or obtain insurance
policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the
then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default. 

9.5    Bank's Liability for Collateral.  

        If Bank complies with reasonable banking practices and Section 9-207 of the Code, it is not liable for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other
person. Borrower bears all risk of loss, damage or destruction of the Collateral. 

9.6    Remedies Cumulative.  

        Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the
Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given. 

9.7    Demand Waiver.  

        Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 

10    NOTICES  

        All notices or demands by any party about this Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at the beginning of this Agreement. A party may change its notice address
by giving the other party written notice. 

11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER  

        California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in Santa Clara County, California. 

        BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

15

 

12    GENERAL PROVISIONS  

12.1    Successors and Assigns.  

        This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it
without Bank's prior written consent which may be granted or withheld in Bank's discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement. 

12.2    Indemnification.  

        Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct. 

12.3    Time of Essence.  

        Time is of the essence for the performance of all obligations in this Agreement. 

12.4    Severability of Provision.  

        Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision. 

12.5    Amendments in Writing, Integration.  

        All amendments to this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and
supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement merge
into this Agreement and the Loan Documents. 

12.6    Counterparts.  

        This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement. 

12.7    Survival.  

        All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower
in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run. 

12.8    Confidentiality.  

        In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of
information may be made (i) to Bank's subsidiaries or affiliates in connection with their business with Borrower, (ii) to prospective transferees or purchasers of any interest in the
loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement of the terms of this provision), 

16

 

(iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank's examination or audit and (v) as Bank considers appropriate exercising
remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank's possession when disclosed to Bank, or becomes part of
the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 

12.9    Effect of Amendment and Restatement.  

        This Agreement is intended to and does completely amend and restate, without novation, the Original Agreement. All credit extensions or loans outstanding under
the Original Agreement are and shall continue to be outstanding under this Agreement. All security interests granted under the Original Agreement are hereby confirmed and ratified and shall continue
to secure all Obligations under this Agreement. 

12.10    Attorneys' Fees, Costs and Expenses.  

        In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 

13    DEFINITIONS  

13.1    Definitions.  

        In this Agreement: 

        "Accounts" are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale
or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower
and Borrower's Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code. 

        "Advance" or "Advances" is a loan advance (or advances) under the Committed Revolving
Line. 

        "Affiliate" of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by
or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and
members. 

        "Bank Expenses" are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). 

        "Borrower's Books" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the
Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 

        "Business Day" is any day that is not a Saturday, Sunday or a day on which the Bank is closed. 

        "Cash Burn" is defined in Section 6.7. 

        "CD Rate" is the interest rate in effect for Bank's 365-day certificate of deposit rate securing the Committed Revolving Line. 

        "Closing Date" is the date of this Agreement. 

17

 

        "Code" is the Uniform Commercial Code, as applicable. 

        "Collateral" is the property described on Exhibit A.

        "Committed Revolving Line" is an Advance of up to $2,500,000. 

        "Contingent Obligation" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse
by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations
from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or
determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good
faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. 

        "Copyrights" are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work,
whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 

        "Credit Extension" is each Advance, Term Loan, or any other extension of credit by Bank for Borrower's benefit. 

        "Equipment" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest. 

        "ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations. 

        "GAAP" is generally accepted accounting principles. 

        "Indebtedness" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and
other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and
(d) Contingent Obligations. 

        "Insolvency Proceeding" are proceedings by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 

        "Intellectual Property" is all of Borrower's: 

        (a)  Copyrights,
Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and royalties
from the use; 

        (b)  Any
trade secrets and any intellectual property rights in computer software and computer software products now or later existing, created, acquired or held; 

        (c)  All
design rights which may be available to Borrower now or later created, acquired or held; 

        (d)  Any
claims for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use
or infringement of the intellectual property rights above; 

        All
proceeds and products of the foregoing, including all insurance, indemnity or warranty payments. 

18

 

        "Inventory" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or
in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other
proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title. 

        "Investment" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance
or capital contribution to any Person. 

        "Lien" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 

        "Liquidity Coverage" is defined in Section 6.7. 

        "Loan Documents" are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, and any other
present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 

        "Mask Works" are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired. 

        "Material Adverse Change" is defined in Section 8.3. 

        "Monthly Reporting" applies until such time as Borrower has received a minimum of $20,000,000 in new capital from sources acceptable to
Bank and at any time Borrower's Liquidity is less than 2.50 to 1.00 and/or Borrower's Remaining Months Liquidity is 9 months or less. 

        "Obligations" are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash management
services, letters of credit and foreign exchange contracts, if any and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank. 

        "Original Agreement" has the meaning set forth in recital paragraph A. 

        "Patents" are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same. 

        "Permitted Indebtedness" is: 

        (a)  Borrower's
indebtedness to Bank under this Agreement or any other Loan Document; 

        (b)  Indebtedness
existing on the Closing Date and shown on the Schedule; 

        (c)  Subordinated
Debt; 

        (d)  Indebtedness
to trade creditors incurred in the ordinary course of business; and 

        (e)  Indebtedness
secured by Permitted Liens. 

        "Permitted Investments" are: 

        (a)  Investments
shown on the Schedule and existing on the Closing Date; and 

        (b)  (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation or Moody's Investors
Service, Inc., and (iii) Bank's certificates of deposit issued maturing no more than 1 year after issue. 

19

 

        "Permitted Liens" are: 

        (a)  Liens
existing on the Closing Date and shown on the Schedule or arising under this Agreement or other Loan Documents; 

        (b)  Liens
for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank's security interests; 

        (c)  Licenses
or sublicenses granted in the ordinary course of Borrower's business and any interest or title of a licensor or under any license or sublicense,  if the licenses and sublicenses permit granting Bank a
security interest; 

        (d)  Leases
or subleases granted in the ordinary course of Borrower's business, including in connection with Borrower's leased premises or leased property; 

        (e)  Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c),  but any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the
indebtedness may not increase. 

        "Person" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust,
unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 

        "Remaining Months Liquidity" is defined in Section 6.7. 

        "Responsible Officer" is each of the Chief Executive Officer, the President, the Chief Financial Officer, the Senior Director of Finance
and the Controller of Borrower. 

        "Revolving Maturity Date" is August 20, 2002. 

        "Schedule" is any attached schedule of exceptions. 

        "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in writing. 

        "Subsidiary" is for any Person, or any other business entity of which more than 50% of the voting stock or other equity interests is owned
or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 

        "Tangible Net Worth" is, on any date, the consolidated total assets of Borrower and its Subsidiaries  minus, (i) any amounts attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, Patents,
trade and service marks and names, Copyrights and research and development expenses except prepaid expenses, and (c) reserves not already deducted from assets,  and (ii) Total Liabilities.

        "Term Loan" a loan of $7,500,000. 

        "Term Loan Maturity Date" is August 20, 2005. 

        "Total Liabilities" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance
sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt. 

        "Trademarks" are trademark and servicemark rights, registered or not, applications to register and registrations and like protections, and
the entire goodwill of the business of Assignor connected with the trademarks. 

20

 

        "Weekly Reporting" means from January 4, 2002 until the close of at least $20,000,000 in new capital from sources acceptable to
Bank, Borrower will provide to Bank a Borrower-prepared reporting of the Liquidity Covenant, signed by a Responsible Officer, by the Friday of each week and the Liquidity Coverage shall be tested on a
weekly basis. 

	BORROWER:	 
	

IntraBiotics Pharmaceuticals, Inc.	

 
	

By:	

/s/ Kenneth J. Kelley
	

 
	

Title:	

President and CEO
	

 
	

BANK:	

 
	

SILICON VALLEY BANK	

 
	

By:	

/s/ Silicon Valley Bank
	

 
	

Title:	

Vice President
	

 

21

EXHIBIT A  

        The Collateral consists of all of Borrower's right, title and interest in and to the following whether owned now or hereafter arising: 

        All
goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any
of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 

        All
inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above; 

        All
contract rights and general intangibles (as such definitions may be amended from time to time according to the Code), now owned or hereafter acquired, including, without limitation,
goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of
any kind,; 

        All
now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of
goods, the licensing of technology or the rendering of services by Borrower (as such definitions may be amended from time to time according to the Code) whether or not earned by performance, and any
and all credit insurance, insurance (including refund) claims and proceeds, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower; 

        All
documents, cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, letter of credit rights,
certificates of deposit, instruments and chattel paper and electronic chattel paper now owned or hereafter acquired and Borrower's Books relating to the foregoing; 

        All
copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now
owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired; all claims for damages by way of any
past, present and future infringement of any of the foregoing; 

        Silicon
Valley Bank's Certificate of Deposit Number 8800053649 in an aggregate amount not less than $2,500,000 together with all renewals of, extensions of, substitutions of,
replacements of, and proceeds of the foregoing; and 

        All
Borrower's Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds
thereof. 

EXHIBIT B  

Loan Payment/Advance Request Form  

        Deadline for same day processing is 12:00 P.S.T. 

	Fax To:	 	 	 	Date:	 
	 	 	 	 	 	

	/ /	 	Loan Payment:	 	 	 	 	 
	IntraBiotics Pharmaceuticals, Inc. (Borrower)
	

 	
 	

From Account	

#	

 	

 	

To Account	

#	

 
	 	 	 	 	
 (Deposit Account #)	 	 	 	
 (Loan Account #)
	

 	
 	

Principal	

$	

 	

and/or Interest	

$	

 	

 
	 	 	 	 	
	 	 	

	

 	
 	

All Borrower's representation and warranties in the Loan and Security Agreement are true, correct and complete in all material respects to on the date of the telephone transfer request for and advance, but those representations and warranties
expressly referring to another date shall be true, correct and complete in all material respects as of the date:

	

 	
 	
Authorized Signature:	

 	
 	
Phone Number:	

 
	 	 	 	
	 	 	

	

/ /	
 	
Loan Advance:	

 	

 	

 	

 	

 
	 	 	Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.
	

 	
 	

From Account	

#	

 	

To Account	

#	

 	

 
	 	 	 	 	
 (Loan Account #)	 	 	
 (Deposit Account #)
	

 	
 	

Amount of Advance	

$	

 	

 	

 	

 	

 
	 	 	 	 	
	 	 	 
	 	 	All Borrower's representation and warranties in the Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects to on the date of the telephone transfer request for and advance,
but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date:

	

 	
 	
Authorized Signature:	

 	
Phone Number:	

 
	 	 	 	
	 	

	

 	
 	
Outgoing Wire Request	

 	

 	

 
	 	 	Complete only if all or a portion of funds from the loan advance above are to be wired.
	 	 	Deadline for same day processing is 12:00pm, P.S.T.
	

 	
 	

Beneficiary Name:	

 	

Amount of Wire:	

$	

 
	 	 	 	
	 	 	

	

 	
 	

Beneficiary Bank:	

 	

Account Number:	

 	

 
	 	 	 	
	 	 	

	

 	
 	

City and Sate:	

 	

 	

 	

 
	 	 	 	
	 	 	 

	

 	
 	

Beneficiary Bank Transit (ABA) #:	
 	

 	
 	

Beneficiary Bank Code (Swift, Sort, Chip, etc.):	
 	

 
	 	 	 	 	
	 	(For International Wire Only)	 	

	

 	
 	

Intermediary Bank:	
 	

 	
 	

Transit (ABA) #:	
 	

 
	 	 	 	 	
	 	 	 	

	

 	
 	

For Further Credit to:	
 	

 	
 	

 	
 	

 
	 	 	 	 	

	

 	
 	

Special Instruction:	
 	

 	
 	

 	
 	

 
	 	 	 	 	

	

 	
 	
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer
service(s), which agreements(s) were previously received and executed by me (us).

	

 	
 	

Authorized Signature:	

 	
 	

2nd Signature (If Required):	

 
	 	 	 	
	 	 	

	

 	
 	

Print Name/Title:	

 	
 	

Print Name/Title:	

 
	 	 	 	
	 	 	

	

 	
 	

Telephone #	

 	
 	

Telephone #	

 
	 	 	 	
	 	 	

 

Schedule to Loan and Security Agreement  

The
exact correct corporate name of Borrower is (attach a copy of the formation documents, e.g., articles, partnership agreement)
:                                         
       
 

Borrower's
State of
formation:                                       
          

Borrower
has operated under only the following other names (if none, so state): 

                                        
                                          
              
 

All
other address at which the Borrower does business are as follows (attach additional sheets if necessary and include all warehouse addresses)
:                                         
                                          
    

Borrower
has deposit accounts and/or investment accounts located only at the following institutions: 

                                        
                                          
                                         
                                          
   
 

List
Acct.
Numbers:                                        
                                         
                

Liens
existing on the Closing Date and disclosed to and accepted by Bank in writing: 

                                        
                                          
                                         
                                          
   
 

                                        
                                          
                                         
                                          
   
 

                                        
                                          
                                         
                                          
   
 

Investments
existing on the Closing Date and disclosed to and accepted by Bank in
writing:                                        
                                         
                                          
                                          
   
 

Subordinated Debt:  

Indebtedness
on the Closing Date and disclosed to and consented to by Bank in writing: 

                                        
                                          
                                         
                                          
   
 

                                        
                                          
                                         
                                          
   
 

The
following is a list of the Borrower's copyrights (including copyrights of software) which are registered with the United States Copyright Office. (Please include name of the copyright and
registration number and attach a copy of the registration): 

                                        
                                          
                                         
                                          
   
 

The
following is a list of all software which the Borrower sells, distributes or licenses to others, which is not registered with the United States
Copyright Office. (Please include versions which are not registered: 

                                        
                                          
                                         
                                          
   
 

The
following is a list of all of the Borrower's patents which are registered with the United States Patent Office. (Please include name of the patent and registration number and attach a copy of the
registration.): 

                                        
                                          
                                         
                                          
   
 

The
following is a list of all of the Borrower's patents which are pending with the United States Patent Office. (Please include name of the patent and a copy of the
application.)
                                         
                                          
    

The
following is a list of all of the Borrower's registered trademarks. (Please include name of the trademark and a copy of the registration.)
:                                         
                                          
   
 

Borrower
is not subject to litigation which would have a material adverse effect on the Borrower's financial condition, except the following (attach additional comments, if
needed)
:                                         
                                

Tax
ID
Number                                        
                                
 

Organizational
Number, if
any:                                        
                                 

2

 
 

EXHIBIT C
  COMPLIANCE CERTIFICATE    
  

	TO:	 	SILICON VALLEY BANK

3003 Tasman Drive

Santa Clara, CA 95054
	

FROM:	
 	

INTRABIOTICS PHARMACEUTICALS, INC.

        The
undersigned authorized officer of IntraBiotics Pharmaceuticals, Inc. ("Borrower") certifies that under the terms and conditions of the Amended and Restated
Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period
ending                        with all required covenants except as noted
below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. Attached are the required documents supporting the certification.
The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying
letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and
that compliance is determined not just at the date this certificate is delivered. 

Please indicate compliance status by circling Yes/No under "Complies" column.  

	Reporting Covenant
 
	 	Required
	 	Complies

	Financial statements + CC	 	*Monthly within 30 days	 	Yes No
	Annual (Audited)	 	FYE within 95 days	 	Yes No
	Annual Projections (approved)	 	FYE within 30 days	 	Yes No
	10-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes No

*
when Weekly Reporting or Monthly Reporting applies. 

        Monthly Reporting applies at such times as Borrower has received a minimum of $20,000,000 in new capital from sources acceptable to Bank
and at any time Borrower's Liquidity is less than 2.50 to 1.00 and/or Borrower's Remaining Months Liquidity is 9 months or less. 

        Weekly Reporting applies from January 4, 2002 until the close of at least $20,000,000 in new capital from sources acceptable to
Bank, Borrower will provide to Bank a Borrower-prepared financial statement with a reporting of the Liquidity Covenant, signed by a Responsible Officer, by the Friday of each week and the Liquidity
Coverage shall be tested on a weekly basis. 

	Financial Covenant
 
	 	Required
	 	Actual
	 	Complies

	Maintain on a Quarterly Basis:	 	 	 	 	 	 
	 	Minimum Liquidity Coverage	 	2.00:1.00	 	            :1.00	 	Yes No
	 	Performance Covenant	 	**	 	 	 	Yes No
	Minimum Remaining Months Liquidity	 	6 Months	 	            Months	 	Yes No
	Maximum Loss:	 	Quarterly***	 	$                  	 	Yes No

**Borrower
will commence its oral mucositis CT2 trial by December 31, 2001 and will notify Bank at such time as the first patient has been enrolled in the trial. 

*
**Borrower shall not report quarterly losses in excess of 20% of its projection approved by its Board of Directors. 

        Performance
Covenant 

	Have there been updates to Borrower's intellectual property?	 	Yes / No
	

Borrower only has deposit accounts located at the following institutions:
                                         
                               .

 

	Comments Regarding Exceptions: See Attached.	 	 
	

Sincerely,	
 	

 
	

IntraBiotics Pharmaceuticals, Inc.	
 	

 
	

 Signature	
 	

 
	

 Title	
 	

 
	

 Date	
 	

 

	
BANK USE ONLY
	

Received by:	
 	

        
 AUTHORIZED SIGNER
	

Date:	
 	

        

	

Verified:	
 	

        
 AUTHORIZED SIGNER
	

Date:	
 	

        

	

Compliance Status:	
 	

Yes No
	

2

[Silicon LOGO]

SILICON VALLEY BANK  

 PRO FORMA INVOICE FOR LOAN CHARGES  

	BORROWER:	 	IntraBiotics Pharmaceuticals, Inc.	 	 	 	 	 
	

LOAN OFFICER:	
 	

Samuel Thompson	
 	
 	

 	
 	

 
	

DATE:	
 	

August 20, 2001	
 	
 	

 	
 	

 
	

 	
 	

Revolving Loan Fee	
 	
$	

6,250.00	
 	

 
	 	 	Term Loan Fee	 	 	65,625.00	 	 
	 	 	UCC Search Fee	 	 	200.00	 	 
	 	 	UCC Filing Fee	 	 	75.00	 	 
	 	 	Intellectual Property Filing Fees	 	 	550.00	 	 
	 	 	Documentation Fee	 	 	1,500.00	 	 
	

 	
 	

Good Faith Deposit	
 	
$	

(10,000.00	
)	

 
	

 	
 	

TOTAL FEE DUE	
 	
$	

64,200.00	
 	

 
	 	 	 	 	
	 	 

Please indicate the method of payment:  

        {    }    A check for the total amount is attached.  

        {    }    Debit DDA
#                        for the total amount.  

        {    }    Loan proceeds  

Borrower:  

By:                                       
                   

        (Authorized Signer)  

                                       
                         

Silicon Valley Bank                (Date)

Account Officer's Signature  

  
 

    INTELLECTUAL PROPERTY SECURITY AGREEMENT    
  

        This Intellectual Property Security Agreement is entered into as of August 20, 2001 by and between SILICON VALLEY BANK ("Bank") and IntraBiotics
Pharmaceuticals, Inc. ("Grantor"). 

RECITALS  

        A.    Bank
has agreed to make certain advances of money and to extend certain financial accommodation to Grantor (the "Loans") in the amounts and manner set forth in that
certain Amended and Restated Loan and Security Agreement by and between Bank and Grantor dated August 20, 2001 (as the same may be amended, modified or supplemented from time to time, the "Loan
Agreement"; capitalized terms used herein are used as defined in the Loan Agreement). Bank is willing to make the Loans to Grantor, but only upon the condition, among others, that Grantor shall grant
to Bank a security interest in certain Copyrights, Trademarks, Patents, and Mask Works to secure the obligations of Grantor under the Loan Agreement. 

        B.    Pursuant
to the terms of the Loan Agreement, Grantor has granted to Bank a security interest in all of Grantor's right, title and interest, whether presently existing or
hereafter acquired, in, to and under all of the Collateral. 

        NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, as collateral security for the prompt and complete
payment when due of its obligations under the Loan Agreement, Grantor hereby represents, warrants, covenants and agrees as follows: 

 
 

AGREEMENT    
  

        To secure its obligations under the Loan Agreement, Grantor grants and pledges to Bank a security interest in all of Grantor's right, title and interest in, to
and under its Intellectual Property Collateral (including without limitation those Copyrights, Patents, Trademarks and Mask Works listed on Schedules A, B, C, and D hereto), and including without
limitation all proceeds thereof (such as, by way of example but not by way of limitation, license royalties and proceeds of infringement suits), the right to sue for past, present and future
infringements, all rights corresponding thereto throughout the world and all re-issues, divisions continuations, renewals, extensions and continuations-in-part
thereof. 

        This
security interest is granted in conjunction with the security interest granted to Bank under the Loan Agreement. The rights and remedies of Bank with respect to the security
interest granted hereby are in addition to those set forth in the Loan Agreement and the other Loan Documents, and those which are now or hereafter available to Bank as a matter of law or equity. Each
right, power and remedy of Bank provided for herein or in the Loan Agreement or any of the Loan Documents, or now or hereafter existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power or remedy provided for herein and the exercise by Bank of any one or more of the rights, powers or remedies provided for in this Intellectual Property Security
Agreement, the Loan Agreement or any of the other Loan Documents, or now or hereafter existing at law or in equity, shall not preclude the simultaneous or later exercise by any person, including Bank,
of any or all other rights, powers or remedies. 

 

        IN
WITNESS WHEREOF, the parties have cause this Intellectual Property Security Agreement to be duly executed by its officers thereunto duly authorized as of the first date written above. 

	 	 	 	GRANTOR:
	

Address of Grantor:	
 	

IntraBiotics Pharmaceuticals, Inc.
	

1245 Terra Bella Avenue	
 	

By:	

 
	Mountain View, CA 94043	 	 	

	Attn:	 	 	Title:	 
	 	
	 	 	

	

 	

 	
 	

 	

 
	

 	

 	
 	

BANK:
	

Address of Bank:	
 	

SILICON VALLEY BANK
	

3003 Tasman Drive	
 	

By:	

 
	Santa Clara, CA 95054-1191	 	 	

	Attn:	 	 	Title:	 
	 	
	 	 	

2

 
 

EXHIBIT A
  
    Copyrights    

	Description
 
	 	Registration/

Application

Number
	 	Registration/

Application

Date

	

 	
 	

 	
 	

 

 
 

EXHIBIT B
  
    Patents    

	Description
 
	 	Registration/

Application

Number
	 	Registration/

Application

Date

 
 

EXHIBIT C
  
    Trademarks    

	Description
 
	 	Registration/

Application

Number
	 	Registration/

Application

Date

 
 

EXHIBIT D
  
    Mask Works    

	Description
 
	 	Registration/

Application

Number
	 	Registration/

Application

Date

 
 

CORPORATE BORROWING RESOLUTION    
  

	Borrower:	IntraBiotics Pharmaceuticals, Inc.

1245 Terra Bella Avenue

Mountain View, CA 94043	 	Bank:	Silicon Valley Bank

3003 Tasman Drive

Santa Clara, CA 95054-1191

        I, the Secretary or Assistant Secretary of IntraBiotics Pharmaceuticals, Inc. ("Borrower"), CERTIFY that Borrower is a corporation
existing under the laws of the State of California. 

        I certify that at a meeting of Borrower's Directors (or by other authorized corporate action) duly held the following resolutions were
adopted. 

        It
is resolved that any one of the following officers of Borrower, whose name, title and signature is below: 

	NAMES	 	POSITIONS	 	ACTUAL SIGNATURES
	
	 	
	 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

	

	
 	

	
 	

may
act for Borrower and: 

Borrow Money.    Borrow money from Silicon Valley Bank ("Bank"). 

Execute Loan Documents.    Execute any loan documents Bank requires. 

Grant Security.    Grant Bank a security interest in any of Borrower's assets. 

Negotiate Items.    Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an
interest and receive cash or otherwise use the proceeds. 

Letters of Credit.    Apply for letters of credit from Bank. 

Foreign Exchange Contracts.    Execute spot or forward foreign exchange contracts. 

Issue Warrants.    Issue warrants for Borrower's stock. 

Further Acts.    Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including
documents or agreement that waive Borrowers right to a jury trial) they think necessary to effectuate these Resolutions. 

        Further resolved that all acts authorized by these Resolutions and performed before they were adopted are ratified. These Resolutions
remain in effect and Bank may rely on them until Bank receives written notice of their revocation. 

        I certify that the persons listed above are Borrower's officers with the titles and signatures shown following their names and that these
resolutions have not been modified are currently effective. 

 

CERTIFIED TO AND ATTESTED BY:  

	
X	

	

 
	 	*Secretary or Assistant Secretary	 
	
X	

	

 
	*NOTE: In case the Secretary or other certifying officer is designated by the foregoing resolutions as one of the signing officers, this resolution should also be signed by a second Officer or Director of
Borrower.

2

QuickLinks

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT INTRABIOTICS PHARMACEUTICALS, INC.

TABLE OF CONTENTS

RECITALS

AGREEMENT

EXHIBIT C COMPLIANCE CERTIFICATE

INTELLECTUAL PROPERTY SECURITY AGREEMENT

AGREEMENT

EXHIBIT A Copyrights

EXHIBIT B Patents

EXHIBIT C Trademarks

EXHIBIT D Mask Works

CORPORATE BORROWING RESOLUTIONPrepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 4.1  

 
 
 

MANDALAY RESORT GROUP,
  as Issuer    
  

and  

 THE BANK OF NEW YORK,

as Trustee  

 

INDENTURE  

 Dated as of December 20, 2001  

 $300,000,000  

 93/8% Senior Subordinated Notes due 2010  

CROSS-REFERENCE TABLE*  

	TIA

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)	 	 	 	7.08; 7.10; 12.02
	(c)	 	 	 	N.A.
	311 (a)	 	 	 	7.11
	(b)	 	 	 	7.11
	(c)	 	 	 	N.A.
	312 (a)	 	 	 	2.05
	(b)	 	 	 	12.03
	(c)	 	 	 	12.03
	313 (a)	 	 	 	7.06
	(b)	 	 	 	7.06
	(c)	 	 	 	7.06; 12.02
	(d)	 	 	 	7.06
	314 (a)	 	 	 	4.07; 12.02
	(b)	 	 	 	N.A.
	(c)	 	(1)	 	12.04
	(c)	 	(2)	 	12.04
	(c)	 	(3)	 	N.A.
	(d)	 	 	 	N.A.
	(e)	 	 	 	12.05
	(f)	 	 	 	N.A.
	315 (a)	 	 	 	7.01(b)
	(b)	 	 	 	7.05; 12.02
	(c)	 	 	 	7.01(a)
	(d)	 	 	 	7.01(c)
	(e)	 	 	 	6.11
	316 (a)	 	(last sentence)	 	12.06
	(a)	 	(1)(A)	 	6.05
	(a)	 	(1)(B)	 	6.04
	(a)	 	(2)	 	N.A.
	(b)	 	 	 	6.07
	317 (a)	 	(1)	 	6.08
	(a)	 	(2)	 	6.09
	(b)	 	 	 	2.04
	318 (a)	 	 	 	12.01
	(b)	 	 	 	N.A.
	(c)	 	 	 	10.01

	N.A.
	means
Not Applicable.

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

   TABLE OF CONTENTS  

	 
	 	 
	 	Page

	
ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE
	

SECTION 1.01.	
 	

Definitions.	
 	

1
	SECTION 1.02.	 	Incorporation by Reference of Trust Indenture Act.	 	7
	SECTION 1.03.	 	Rules of Construction.	 	7
	
ARTICLE TWO

THE SECURITIES
	

SECTION 2.01.	
 	

Forms Generally.	
 	

7
	SECTION 2.02.	 	Execution and Authentication; Aggregate Principal Amount; Delivery.	 	8
	SECTION 2.03.	 	Registrar and Paying Agent.	 	8
	SECTION 2.04.	 	Paying Agent To Hold Money in Trust.	 	9
	SECTION 2.05.	 	Securityholder Lists.	 	9
	SECTION 2.06.	 	Transfer and Exchange.	 	10
	SECTION 2.07.	 	Replacement Securities.	 	10
	SECTION 2.08.	 	Outstanding Securities.	 	10
	SECTION 2.09.	 	Temporary Securities.	 	10
	SECTION 2.10.	 	Cancellation.	 	10
	SECTION 2.11.	 	Defaulted Interest.	 	11
	SECTION 2.12.	 	Mandatory Disposition of Securities Pursuant to Gaming Laws.	 	11
	SECTION 2.13.	 	CUSIP Numbers.	 	11
	SECTION 2.14.	 	Restrictive Legends.	 	12
	SECTION 2.15.	 	Book-Entry Provisions For Global Security.	 	13
	SECTION 2.16.	 	Special Transfer Provisions.	 	14
	
ARTICLE THREE

SUBORDINATION
	

SECTION 3.01.	
 	

Securities Subordinated to Senior Debt.	
 	

16
	SECTION 3.02.	 	No Payment on Securities in Certain Circumstances.	 	16
	SECTION 3.03.	 	Securities Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of Company.	 	17
	SECTION 3.04.	 	Securityholders To Be Subrogated to Rights of Holders of Senior Debt.	 	18
	SECTION 3.05.	 	Obligations of the Company Unconditional.	 	18
	SECTION 3.06.	 	Trustee and Paying Agent Entitled To Assume Payments Not Prohibited in Absence of Notice.	 	19
	SECTION 3.07.	 	Application by Trustee of Monies Deposited with It.	 	19
	SECTION 3.08.	 	Subordination Rights Not Impaired By Acts or Omissions of Company or Holders of Senior Debt.	 	19
	SECTION 3.09.	 	Securityholders Authorize Trustee To Effectuate Subordination of Securities.	 	19
	SECTION 3.10.	 	Right of Trustee and Paying Agent To Hold Senior Debt; Preservation of Trustee's Rights.	 	20
	SECTION 3.11.	 	Article Three Not To Prevent Events of Default.	 	20
	SECTION 3.12.	 	Trustee Not Fiduciary for Holders of Senior Debt.	 	20  

-i-

 

	
ARTICLE FOUR

COVENANTS
	

SECTION 4.01.	
 	

Payment of Securities.	
 	

20
	SECTION 4.02.	 	Corporate Existence.	 	21
	SECTION 4.03.	 	Payment of Taxes and Other Claims.	 	21
	SECTION 4.04.	 	Maintenance of Properties.	 	21
	SECTION 4.05.	 	Maintenance of Office or Agency.	 	21
	SECTION 4.06.	 	Compliance Certificate; Notice of Default.	 	22
	SECTION 4.07.	 	Reports.	 	22
	SECTION 4.08.	 	Waiver of Stay, Extension of Usury Laws.	 	22
	SECTION 4.09.	 	Limitation on Liens.	 	22
	SECTION 4.10.	 	Limitation on Sale and Lease-Back Transactions.	 	24
	SECTION 4.11.	 	Defeasance of Certain obligations.	 	24
	SECTION 4.12.	 	Limitation on Layering Debt.	 	25
	SECTION 4.13.	 	Change of Control.	 	26
	
ARTICLE FIVE

SUCCESSOR CORPORATION
	
ARTICLE SIX

DEFAULTS AND REMEDIES
	

SECTION 6.01.	
 	

Events of Default.	
 	

28
	SECTION 6.02.	 	Acceleration.	 	29
	SECTION 6.03.	 	Other Remedies.	 	29
	SECTION 6.04.	 	Waiver of Past Defaults.	 	30
	SECTION 6.05.	 	Control by Majority.	 	30
	SECTION 6.06.	 	Limitation on Suits.	 	30
	SECTION 6.07.	 	Rights of Holders To Receive Payment.	 	30
	SECTION 6.08.	 	Collection Suit by Trustee.	 	31
	SECTION 6.09.	 	Trustee May File Proofs of Claim.	 	31
	SECTION 6.10.	 	Priorities.	 	31
	SECTION 6.11.	 	Undertaking for Costs.	 	31
	
ARTICLE SEVEN

TRUSTEE
	

SECTION 7.01.	
 	

Duties of Trustee.	
 	

31
	SECTION 7.02.	 	Rights of Trustee.	 	32
	SECTION 7.03.	 	Individual Rights of Trustee.	 	33
	SECTION 7.04.	 	Trustee's Disclaimer.	 	33
	SECTION 7.05.	 	Notice of Defaults.	 	33
	SECTION 7.06.	 	Reports by Trustee.	 	34
	SECTION 7.07.	 	Compensation and Indemnity.	 	34
	SECTION 7.08.	 	Replacement of Trustee.	 	34
	SECTION 7.09.	 	Successor Trustee by Merger, Etc.	 	35
	SECTION 7.10.	 	Eligibility; Disqualification.	 	35
	SECTION 7.11.	 	Preferential Collection of Claims Against Company.	 	36
	SECTION 7.12.	 	Authenticating Agent.	 	36  

-ii-

 

	
ARTICLE EIGHT

DISCHARGE OF INDENTURE
	

SECTION 8.01.	
 	

Termination of Company's obligations.	
 	

37
	SECTION 8.02.	 	Application of Trust Money.	 	39
	SECTION 8.03.	 	Repayment to the Company.	 	39
	SECTION 8.04.	 	Reinstatement.	 	39
	
ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS
	

SECTION 9.01.	
 	

Without Consent of Holders.	
 	

39
	SECTION 9.02.	 	With Consent of Holders.	 	40
	SECTION 9.03.	 	Compliance with Trust Indenture Act.	 	40
	SECTION 9.04.	 	Revocation and Effect of Consents.	 	40
	SECTION 9.05.	 	Notation on or Exchange of Securities.	 	41
	SECTION 9.06.	 	Trustee To Sign Amendments, Etc.	 	41
	
ARTICLE TEN

MEETINGS OF SECURITYHOLDERS
	

SECTION 10.01.	
 	

Purposes for Which Meetings May Be Called.	
 	

42
	SECTION 10.02.	 	Manner of Calling Meetings.	 	42
	SECTION 10.03.	 	Call of Meetings by Company or Holders.	 	42
	SECTION 10.04.	 	Who May Attend and Vote at Meetings.	 	43
	SECTION 10.05.	 	Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment.	 	43
	SECTION 10.06.	 	Voting at the Meeting and Record To Be Kept.	 	43
	SECTION 10.07.	 	Exercise of Rights of Trustee or Securityholders May Not Be Hindered or Delayed by Call of Meeting.	 	44
	
ARTICLE ELEVEN

REDEMPTION
	

SECTION 11.01.	
 	

Notices to Trustee.	
 	

44
	SECTION 11.02.	 	Selection of Securities To Be Redeemed.	 	44
	SECTION 11.03.	 	Notice of Redemption.	 	44
	SECTION 11.04.	 	Effect of Notice of Redemption.	 	45
	SECTION 11.05.	 	Deposit of Redemption Price.	 	45
	SECTION 11.06.	 	Securities Redeemed in Part.	 	45  

-iii-

 

	
ARTICLE TWELVE

MISCELLANEOUS
	

SECTION 12.01.	
 	

Trust Indenture Act Controls.	
 	

46
	SECTION 12.02.	 	Notices.	 	46
	SECTION 12.03.	 	Communication by Holders with Other Holders.	 	46
	SECTION 12.04.	 	Certificates and Opinion as to Conditions Precedent.	 	46
	SECTION 12.05.	 	Statements Required in Certificate or Opinion.	 	47
	SECTION 12.06.	 	When Treasury Securities Disregarded.	 	47
	SECTION 12.07.	 	Rules by Paying Agent, Registrar.	 	47
	SECTION 12.08.	 	Legal Holidays.	 	47
	SECTION 12.09.	 	Governing Law.	 	47
	SECTION 12.10.	 	No Adverse Interpretation of Other Agreements.	 	47
	SECTION 12.11.	 	No Recourse Against Others.	 	47
	SECTION 12.12.	 	Successors.	 	48
	SECTION 12.13.	 	Duplicate Originals.	 	48
	SECTION 12.14.	 	Severability.	 	48
	SECTION 12.15.	 	Effect of Headings, Table of Contents, Etc.	 	48
	

Exhibit A—	
 	

Form of Initial Security
	Exhibit B—	 	Form of Exchange Security
	Exhibit C—	 	Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors
	Exhibit D—	 	Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S

-iv-

   
        INDENTURE, dated as of December 20, 2001, between Mandalay Resort Group, a Nevada corporation ("Company"), and The Bank of New York, a New York banking corporation, as Trustee
("Trustee"). 

RECITALS  

        The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its 93/8% Series A Senior
Subordinated Notes due 2010 (the "Initial Securities") and the issuance of 93/8% Series B Senior Subordinated Notes due 2010 to be exchanged for the Initial Securities (the
"Exchange Securities" and, together with the Initial Securities, the "Securities") pursuant to the Registration Rights Agreement (as defined herein). 

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

        NOW,
THEREFORE, THIS INDENTURE WITNESSETH: 

        For
and in consideration of the premises and the purchase of the Securities by the Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of the Holders of the Securities, as follows: 

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE  

        SECTION
1.01.    Definitions. 

        "Affiliate"
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, "control" (including, with correlative meaning, the term "controlling," "controlled by" and "under common control with") as used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by agreement or otherwise. 

        "Authenticating
Agent" shall have the meaning provided in Section 7.12. 

        "Bankruptcy
Law" shall have the meaning provided in Section 6.01. 

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

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

        "Capital
lease obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to
be capitalized on the balance sheet in accordance with GAAP. 

        "Certificated
Securities" means Securities in definitive registered form. 

        "Change
of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting
Stock of the Company; or (b) the Company 

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consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person or any Person
consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (i) the outstanding Voting Stock of the Company is converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee corporation or its parent corporation and (ii) immediately after such transaction no "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total Voting Stock of the surviving or transferee corporation, as applicable; or (c) during any consecutive
two-year period, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office. 

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

        "Consolidated
Net Tangible Assets" means the total amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current
liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount
thereof is being computed) and (ii) all goodwill, trade names, trademarks, patents, purchased technology, unamortized debt discount and other like intangible assets, all as set forth on the
most recent quarterly balance sheet of the Company and its consolidated subsidiaries and computed in accordance with generally accepted accounting principles. 

        "Consolidated
Property" means any property of the Company or its subsidiaries. 

        "Credit
Facilities" means, with respect to the Company, any one or more debt facilities or commercial paper facilities, in each case with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. 

        "Custodian"
shall have the meaning provided in Section 6.01. 

        "Debt"
of any Person means (a) any indebtedness of such Person, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or letters of credit, or representing the balance deferred and unpaid of the
purchase price of any property, including any such indebtedness incurred in connection with the acquisition by such Person or any of its subsidiaries of any other business or entity, if and to the
extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with generally accepted accounting principles, including for such purpose obligations
under capitalized leases, and
(b) any guaranty, endorsement (other than for collection or deposit in the ordinary course of business), discount with recourse, agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire or to supply or advance funds with respect to, or to become liable with respect to (directly or indirectly), any indebtedness, obligation, liability or dividend of any Person, but
shall not include indebtedness or amounts owed (except to banks or other financial institutions) for compensation to 

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employees, or for goods or materials purchased, or services utilized, in the ordinary course of business of such Person. Notwithstanding anything to the contrary in the foregoing, "Debt" shall not
include (i) any contracts providing for the completion of construction or other payment or performance with respect to the construction, maintenance or improvement of property or equipment of
the Company or its Affiliates or (ii) any contracts providing for the obligation to advance funds, property or services on behalf of an Affiliate of the Company in order to maintain the
financial condition of such Affiliate, in each case, including Existing and Permitted Completion Guarantees and Make-Well Agreements. For purposes hereof, a "capitalized lease" shall be
deemed to mean a lease of real or personal property which, in accordance with generally accepted accounting principles, is required to be capitalized. 

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

        "Depositary"
shall mean The Depository Trust Company. 

        "Detroit
Joint Venture" means the Michigan limited liability company governed by an Operating Agreement, dated October 7, 1997, by and between Circus Circus Michigan, Inc.,
a wholly owned subsidiary of the Company, and Atwater Casino Group, L.L.C. 

        "Disqualified
Stock" means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable (in each case, other than into common stock of the Company), pursuant to a sinking fund obligation or
otherwise, or is exchangeable for Debt, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the final maturity date of the specified security. Notwithstanding the
foregoing, in no event shall Capital Stock that is considered Disqualified Stock solely by reason of such Capital Stock being convertible at the option of the holder of such Capital Stock into other
Capital Stock (other than Disqualified Stock) constitute Disqualified Stock. 

        "Event
of Default" shall have the meaning provided in Section 6.01. 

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

        "Exchange
Securities" shall have the meaning provided in the Recitals. 

        "Existing
and Permitted Completion Guarantees and Make-Well Agreements" means (i) that certain Amended and Restated Make-Well Agreement by the Company in
favor of Bank of America National Trust and Savings Association dated as of November 24, 1997 relating to the Circus and Eldorado joint venture, a Nevada general partnership, as such agreement
may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any extension of the term thereof, (ii) that certain Company
Guaranty by the Company in favor of Bank of America National Trust and Savings Association dated as of June 30, 1999, and any other contract providing for the completion of construction or
other payment or performance with respect to the construction, maintenance or improvement of property or equipment of the Detroit Joint Venture, or (iii) any "make-well,"
"keep-well" or other agreement or arrangement of whatever nature providing for the obligation to advance funds, property or services on behalf of the Detroit Joint Venture, or given for
the purpose of assuring or holding harmless any governmental entity or agency and/or lender against loss with respect to any obligation of the Detroit Joint Venture. 

        "Funded
Debt" means all Debt of the Company that (i) matures by its terms, or is renewable at the option of any obligor thereon to a date, more than one year after the date of
original issuance of such Debt and (ii) ranks at least equal in right of payment with the Securities. 

        "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 of 

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such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. 

        "Gaming
Authority" means the Nevada Gaming Commission, the Nevada Gaming Control Board, the Mississippi Gaming Commission, the Illinois Gaming Board and the Michigan Gaming Control
Board, or any similar federal, state or local commission, agency or other regulatory body which has, or may at any time after the date of this Indenture have, jurisdiction over the gaming activities
of the Company or a subsidiary of the Company (or any joint venture in which the Company or a subsidiary of the Company is a participant) or any successor thereto. 

        "Gaming
Laws" means the gaming laws of a jurisdiction or jurisdictions to which the Company or a subsidiary of the Company (or any joint venture in which the Company or a subsidiary of
the Company is a participant) is, or may at any time after the date of this Indenture be, subject. 

        "Global
Security" shall have the meaning provided in Section 2.01. 

        "Holder"
or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. 

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

        "Initial
Purchasers" means Banc of America Securities LLC, Deutsche Banc Alex. Brown Inc., Salomon Smith Barney Inc., Credit Suisse First Boston Corporation, Dresdner
Kleinwort Wasserstein—Grantchester, Inc., Merrill Lynch & Co., Credit Lyonnais Securities (USA) Inc., Scotia Capital (USA) Inc., SG Cowen Securities
Corporation, UBS Warburg LLC and Wells Fargo Brokerage Services LLC. 

        "Initial
Securities" shall have the meaning provided in the Recitals. 

        "Interest
Rate Protection obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. 

        "Issue
Date" means December 20, 2001. 

        "Joint
Venture" means (i) with respect to properties located in the United States, any partnership, corporation or other entity, in which up to and including 50% of the
partnership interests, outstanding voting stock or other equity interests are owned, directly or indirectly, by the Company and/or one or more subsidiaries, and (ii) with respect to properties
located outside the United States, any partnership, corporation or other entity in which up to and including 60% of the partnership interests, outstanding voting stock or other equity interests are
owned, directly or indirectly, by the Company and/or one or more subsidiaries. 

        "Legal
Holiday" shall have the meaning provided in Section 12.08. 

        "Lien"
means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, security interest, lien (statutory or other), or preference, priority or other security or
similar agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement having substantially the same
economic effect as any of the foregoing). 

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

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        "Officers'
Certificate" means a certificate signed by two Officers or by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant Controller of the Company. See Sections
12.04 and 12.05. The Trustee shall have no duty or obligation to investigate the accuracy of such Officers' Certificate. 

        "Opinion
of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. See Sections
12.04 and 12.05. 

        "Paying
Agent" shall have the meaning provided in Section 2.03. 

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

        "Physical
Securities" shall have the meaning provided in Section 2.01. 

        "Predecessor
Securities" of any Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security, and, for the purpose at
this definition, any Security authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or
stolen Security. 

        "principal"
of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security. 

        "Private
Placement Legend" shall have the meaning provided in Section 2.14. 

        "Project
Cost" means, with respect to any Resort Property, the aggregate costs required to complete such construction project in accordance with the plans therefor and applicable legal
requirements, as set forth in an Officers' Certificate submitted to the Trustee, setting forth in reasonable detail all amounts theretofore expended and any anticipated costs and expenses estimated to
be incurred and reserves to be established in connection with the construction and development of such future addition or improvement, including direct costs related thereto such as construction
management, architectural engineering and interior design fees, site work, utility installations and hook-up fees, construction permits, certificates and bonds, land acquisition costs and
the cost of furniture, fixtures, furnishings, machinery and equipment, but excluding the following: principal or interest payments on any Debt (other than interest which is required to be capitalized
in accordance with GAAP, which shall be included in determining Project Cost), or costs related to the operation of the Resort Property including, but not limited to, non-construction
supplies and pre-operating payroll. The Trustee shall have no duty or obligation to investigate the accuracy of such Officers' Certificate. 

        "Representative"
means the indenture trustee or other trustee, agent or representative for any Senior Debt. 

        "Registrar"
shall have the meaning provided in Section 2.03. 

        "Registration
Rights Agreement" means the Registration Rights Agreement, dated as of December 20, 2001, among the Company and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time in accordance with the terms thereof. 

        "Resort
Property" means any property owned or to be owned by the Company or any of its subsidiaries that is, or will be upon completion, a casino (including a riverboat casino),
casino-hotel, destination resort or a theme park. 

        "Responsible
Officer" shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice
president, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers,
respectively, or to 

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whom any corporate trust matter is referred because of such Person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this
Indenture. 

        "Restricted
Security" shall have the meaning provided in Section 2.14. 

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

        "Sale
and Lease-Back Transaction" means any arrangement with any Person (other than the Company or a subsidiary of the Company), or to which any such Person is a party,
providing for the leasing to the Company or a subsidiary of the Company for a period of more than three years of any Consolidated Property which has been or is to be sold or transferred by the Company
or such subsidiary to such Person or to any other Person (other than the Company or a subsidiary of the Company) to which funds have been or are to be advanced by such Person on the security of the
leased property. 

        "SEC"
means the Securities and Exchange Commission. 

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

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

        "Senior
Debt" shall have the meaning provided in Section 3.01. 

        "subsidiary"
of any Person means (i) any corporation of which at least a majority in interest of the outstanding stock having by the terms thereof voting power under ordinary
circumstances to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by such Person, or by one or more other corporations a majority in interest of
such stock of which is similarly owned or controlled, or by such Person and one or more other corporations a majority in interest of such stock of which is similarly owned or controlled and
(ii) any other Person (other than a corporation, or a partnership, corporation or other entity described in clause (ii) of the definition of Joint Venture) in which such Person or any
subsidiary, directly or indirectly, has greater than a 50% ownership interest. 

        "TIA"
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in Section 9.03 hereto. 

        "Treasury
Securities" means any investment in obligations issued or guaranteed by the United States government or any agency thereof. 

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

        "U.S.
Government obligations" means direct non-cancelable obligations of the United States of America for the payment of which the full faith and credit of the United States
is pledged. 

        "Value"
means, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds of the sale or
transfer of property leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value, in the opinion of the Board of Directors as evidenced by a board resolution, of
such property at the time of entering into such Sale and Lease Back Transaction. 

        "Voting
Stock" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitled the holders thereof to vote in the election of members of
the board of directors of such Person. 

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        "wholly
owned" means with respect to any subsidiary of any Person of which at least 99% of the outstanding Capital Stock is owned by such Person or another wholly owned subsidiary of
such Person. For purposes of this definition, any directors' qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a
subsidiary. 

        SECTION
1.02.    Incorporation by Reference of Trust Indenture Act.

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

        "Commission"
means the SEC. 

        "indenture
securities" means the Securities. 

        "indenture
security holder" means a Securityholder or Holder. 

        "indenture
to be qualified" means this Indenture. 

        "indenture
trustee" or "institutional trustee" means the Trustee. 

        "obligor"
on the indenture securities means the Company. 

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

        SECTION
1.03.    Rules of Construction. 

        Unless
the context otherwise requires: 

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

        (2)  an
accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; 

        (3)  "or"
is not exclusive; 

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

        (5)  provisions
apply to successive events and transactions. 

ARTICLE TWO

THE SECURITIES  

        SECTION
2.01.    Forms Generally. 

        The
Initial Securities and the Trustee's certificate of authentication relating thereto shall be substantially in the form of  Exhibit A and shall be in a principal amount not greater than $300,000,000.
The Exchange Securities and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit B. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or Depositary rule or usage. The Company and the Trustee shall approve the form of the Securities and any notation, legend or endorsement on them. If required, the
Securities may bear the appropriate legend regarding any original issue discount for federal income tax purposes. Each Security shall be dated the date of its authentication. 

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

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        Securities
offered and sold in reliance on Rule 144A or Regulation S shall be issued initially in the form of one or more permanent global Securities in registered form,
substantially in the form set forth in Exhibit A (the "Global Security"), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter provided, and shall bear the legend set forth in Section 2.14. The aggregate principal amount of the Global Security may
from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. 

        Securities
issued in exchange for interests in a Global Security pursuant to Section 2.15 may be issued in the form of permanent certificated Securities in registered form in
substantially the form set forth in Exhibits A and B (the "Physical Securities"). 

        SECTION
2.02.    Execution and Authentication; Aggregate Principal Amount; Delivery. 

        Two
Officers shall sign the Securities for the Company by original or facsimile signature. 

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

        A
Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. 

        Upon
a written order of the Company signed by two Officers or by an Officer and an Assistant Treasurer of the Company, the Trustee shall authenticate the Securities. 

        The
Trustee shall authenticate (i) Initial Securities for original issue in the aggregate principal amount not to exceed $300,000,000 and (ii) Exchange Securities for issue
only in a registered Exchange Offer, pursuant to the Registration Rights Agreement, for a like principal amount of Initial Securities, in each case upon a written order of the Company in the form of
an Officers' Certificate of the Company. Each such written order shall specify the amount of Securities to be authenticated and the date on which the Securities are to be authenticated, whether the
Securities are to be Initial Securities or Exchange Securities and whether the Securities are to be issued as Physical Securities or Global Securities or such other information as the Trustee may
reasonably request. In addition, with respect to authentication pursuant to clause (ii) of the first sentence of this paragraph, the first such written order from the Company shall be
accompanied by an Opinion of Counsel of the Company in a form reasonably satisfactory to the Trustee stating that the issuance of the Exchange Securities complies with this Indenture and has been duly
authorized by the Company. The aggregate principal amount of Securities outstanding at any time may not exceed $300,000,000. 

        The
Securities shall be issuable only in registered form without coupons and only in minimum denominations of $1,000 and in integral multiples of $1,000 in denominations above $1,000. 

        The
Company and the Trustee, by their execution and authentication, respectively, of the Securities, expressly agree to the terms and conditions stated therein and to be bound thereby. 

        SECTION
2.03.    Registrar and Paying Agent. 

        The
Company shall maintain an office or agency where the Securities may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where the
Securities may be
presented for payment ("Paying Agent"). At all times the Registrar and the Paying Agent shall each maintain an office or agency in the State of New York where the Securities may be presented for the
above purposes. The Registrar shall keep a register of the Securities and of their registration of transfer and exchange. The Company may have one or more co-registrars and one or more
additional paying agents for the Securities. The term "Paying Agent" includes any additional paying agent. The term "Registrar" includes any co-registrar. 

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        The
Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent for
the Securities, the Trustee shall act as such. 

        The
Company initially appoints the Trustee as Registrar and Paying Agent. 

        SECTION
2.04.    Paying Agent To Hold Money in Trust. 

        Subject
to the provisions of Article Three and Section 8.03 hereof, each Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities, and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a subsidiary of the
Company acts as Paying Agent, it shall, on or before each due date of principal of or interest on the Securities, segregate the money and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon doing so the Paying Agent shall have no further liability for the money. 

        SECTION
2.05.    Securityholder Lists. 

        The
Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or 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 Securityholders relating to such interest payment date or request, as the case
may be. 

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        SECTION 2.06.    Transfer and Exchange. 

        Where
a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the
requirements of Section 8-401(1) of the New York Uniform Commercial Code are met. Where Securities are presented to the Registrar or a co-registrar with a request to
exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of
transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. The Company may charge a reasonable fee for any transfer or exchange but not for any exchange pursuant to
Section 2.09 or 9.05. 

        The
Company need not issue, and the Registrar or co-Registrar need not register the transfer or exchange of, (i) any Security during a period beginning at the opening
of business 15 days before the day of mailing of a notice of redemption of the Securities for redemption under Section 11.02 and ending at the close of business on the day of such
mailing, or (ii) any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. 

        SECTION
2.07.    Replacement Securities. 

        If
the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate and make available for
delivery a replacement Security if the requirements of Section 8-405 of the New York Uniform Commercial Code are met. Before any Security is replaced, an indemnity bond must be
provided sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security. Every replacement Security shall constitute a contractual obligation of the Company and shall be
entitled to all the benefits of this Indenture equally with all other Securities issued hereunder. 

        SECTION
2.08.    Outstanding Securities. 

        Securities
outstanding at any time are all the Securities that have been authenticated by the Trustee except for those canceled by it and those described in this Section. Subject to the
provisions of
Section 12.06 hereof, a Security does not cease to be outstanding because the Company or an Affiliate holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. 

        If
the Paying Agent holds on the maturity date money sufficient to pay Securities payable on that date, then on and after that date such Securities shall cease to be outstanding and
interest on them shall cease to accrue. 

        SECTION
2.09.    Temporary Securities. 

        Until
definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a written order of the Company signed by two
Officers of the Company. Temporary Securities shall be substantially in the form of definitive Securities, but may have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. 

        SECTION
2.10.    Cancellation. 

        The
Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall cancel and dispose of any Securities surrendered to them for
registration of transfer, exchange, payment or cancellation in accordance with their customary procedures. The 

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Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. 

        SECTION
2.11.    Defaulted Interest. 

        If
the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest to the Persons who are Securityholders on a subsequent special record date. After
the deposit by the Company with the Trustee of money sufficient to pay such defaulted interest, the Company shall fix the record date and payment date. At least 15 days before the record date,
the Company shall mail to each Securityholder, with a copy to the Trustee, a notice that states the record date, the payment date, and the amount of defaulted interest to be paid. The Company may pay
defaulted interest in any other lawful manner. 

        SECTION
2.12.    Mandatory Disposition of Securities Pursuant to Gaming Laws.

        Each
Holder and beneficial owner of Securities, by accepting or otherwise acquiring an interest in the Securities, shall be deemed to have agreed that if the Gaming Authority of any
jurisdiction in which the Company or any of its subsidiaries (or any Joint Venture in which the Company or a subsidiary of the Company is a participant) now or hereafter conducts or proposes to
conduct gaming requires that a Person who is a Holder or beneficial owner of Securities must be licensed, qualified or found suitable, or comply with any other requirement under applicable Gaming
Laws, such Holder or beneficial owner shall apply for a license, qualification or a finding of suitability or comply with such other requirement, as the case may be, within the prescribed time period.
The Trustee shall have no duty to conduct or perform any due diligence or investigation to determine whether any Holder must comply with any applicable Gaming Laws. If such Holder or beneficial owner
fails to apply to be, or fails to become, licensed or qualified, is found unsuitable under applicable gaming laws or fails to comply with any other requirement, as the case may be (a "failure of
compliance"), then the Company shall have the right, at its option, (i) to require such Person to dispose of its Securities or beneficial interest therein within 30 days of receipt of
notice of the Company's election or such earlier date as may be requested or prescribed by the Gaming Authority or (ii) to redeem such Securities (which redemption may be less than
30 days following the notice of redemption if so requested or prescribed by the Gaming Authority) at a redemption price equal to the lesser of (A) such Person's cost, (B) 100% of
the principal amount thereof, plus accrued and unpaid interest to the earlier of the redemption date and the date of any failure of compliance, or (C) such other amount as may be required by
applicable law or by order of any Gaming Authority. The Company shall notify the Trustee in writing of any such redemption as soon as practicable. The Company and the Trustee shall not be responsible
for any costs or expenses any such Holder or beneficial owner may incur in connection with its application for a license, qualification or a finding of suitability or its compliance with any other
requirement of a Gaming Authority. Immediately upon the imposition by a Gaming Authority of a requirement that a Holder or beneficial owner of Securities dispose of Securities, such Holder or
beneficial owner shall, to the extent required by applicable Gaming Laws, have no further right (i) to exercise, directly or indirectly, through any trustee, nominee or any other Person or
entity, any right conferred by the Securities or (ii) to receive any interest, dividends or any other distributions or payments with respect to the Securities or any remuneration in any form
with respect to the Securities from the Company or the Trustee, except the redemption price referred to in this Section 2.12. 

        SECTION
2.13.    CUSIP Numbers. 

        The
Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption 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
Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such 

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redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. 

        SECTION
2.14.    Restrictive Legends. 

        Each
Global Security and Physical Security that constitutes a Restricted Security shall bear the following legend (the "Private Placement Legend")(each, a "Restricted Security") on the
face thereof until after the second anniversary of the later of the Issue Date and the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any predecessor
security) (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the opinion of counsel for the Company, unless otherwise agreed by the Company and the Holder thereof): 

        THE
SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. 

        Each
Global Security shall also bear the following legends on the face thereof: 

        UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF 

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

        TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING THIS NOTE. 

        SECTION
2.15.    Book-Entry Provisions For Global Security.

        (a)  The
Global Securities initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee
as custodian for such Depositary and (iii) bear legends as set forth in Section 2.14. 

        Members
of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary, or
the Trustee as its custodian, or under the Global Securities, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise
of the rights of a Holder of any Security. 

        (b)  Transfers
of a Global Security shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of
beneficial owners in a Global Security may be transferred or exchanged for Physical Securities in accordance with the rules and procedures of the Depositary and the provisions of Section 2.16.
In addition, Physical Securities shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Security if (i) the Depositary notifies the Company and the
Trustee that it is unwilling or unable to continue as Depositary for the Global Securities and a successor depositary is not appointed by the Company within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depositary to issue Physical Securities. 

        (c)  In
connection with any transfer or exchange of a portion of the beneficial interest in a Global Security to beneficial owners pursuant to paragraph (b), the
Registrar shall (if one or more Physical Securities are to be issued) reflect on its books and records the date and a decrease in the principal amount of such Global Security in an amount equal to the
principal amount of the beneficial interest in the Global Security to be transferred, and the Company shall execute and prepare and the Trustee shall authenticate and deliver one or more Physical
Securities of like tenor and amount. 

        (d)  In
connection with the transfer of an entire Global Security to beneficial owners pursuant to paragraph (b), such Global Security shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute and prepare and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Security, an equal aggregate principal amount of Physical Securities of authorized denominations registered in the name of such beneficial owners. The Trustee
is not responsible for any delay in said 

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delivery as it is contingent upon the Depositary's delivery of information and the co-delivery of the Physical Securities. 

        (e)  Any
Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Security pursuant to paragraph (b) or (c) shall,
except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.16, bear the legend regarding transfer restrictions applicable to the Physical Securities set forth in
Section 2.14. 

        (f)    The
Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members,
to take any action which a Holder is entitled to take under this Indenture or the Securities. 

        SECTION
2.16.    Special Transfer Provisions. 

        (a)  Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following
provisions shall apply with respect to the registration of any proposed transfer of a Security constituting a Restricted Security to any Institutional Accredited Investor that is not a QIB or to any
Non-U.S. Person: 

        (i)    the
Registrar shall register the transfer of any Security constituting a Restricted Security, whether or not such Security bears the Private Placement Legend, if
(x) the requested transfer is after the second anniversary of the Issue Date (provided, however,
that, to the knowledge of the Registrar, neither the Company nor any Affiliate of the Company has held any beneficial interest in such Security, or portion thereof, at any time on or prior to the
second anniversary of the Issue Date) or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit C and any legal opinions and certifications
required thereby or (2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has delivered to the Registrar a certificate substantially in the form of  Exhibit D; and

        (ii)  if
the proposed transferor is an Agent Member holding a beneficial interest in the Global Security, upon receipt by the Registrar of (x) the certificate, if any,
required by paragraph (i) above and (y) written instructions given in accordance with the Depositary's and the Registrar's procedures, 

whereupon
(a) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding Physical Securities) a decrease in the principal
amount of such Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security to be transferred, and (b) the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Securities of like tenor and amount. 

        (b)  Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a
Security constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): 

        (i)    the
Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Security stating,
or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is 

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relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and 

        (ii)  if
the proposed transferee is an Agent Member, and the Securities to be transferred consist of Physical Securities which after transfer are to be evidenced by an
interest in a Global Security, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of such Global Security in an amount equal to the principal amount of the Physical Securities to be transferred, and the Trustee shall
cancel the Physical Securities so transferred. 

        (c)  Private Placement Legend. Upon the transfer, exchange or replacement of Securities not bearing the Private Placement
Legend, the Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the
Registrar shall deliver only Securities that bear the Private Placement Legend unless (i) the requested transfer is after the second anniversary of the Issue Date
(provided, however, that, to the knowledge of the Registrar, neither the Company nor any Affiliate of
the Company has held any beneficial interest in such Security, or portion thereof, at any time prior to or on the second anniversary of the Issue Date), or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act. 

        (d)  General. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such a Security
acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this
Indenture. 

        The
Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16. The Company shall have
the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time during the Registrar's normal business hours upon the giving of reasonable
written notice to the Registrar. 

        The
Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners of interests in any Global Security) other than to require delivery
of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof. 

        (e)  Transfers of Securities Held by Affiliates. Any certificate (i) evidencing a Security that has been transferred to
an Affiliate of the Company within three years after the Issue Date, as evidenced by a notation on the Assignment Form for such transfer or in the representation letter delivered in respect thereof,
or (ii) evidencing a Security that has been acquired from an Affiliate (other than by an Affiliate) in a transaction or a chain of transactions not involving any public offering, shall, until
two years after the last date on which either the Company or any Affiliate of the Company was an owner of such Security, in each case, bear a legend in substantially the form set forth in
Section 2.14, unless otherwise agreed by the Company (with written notice thereof to the Trustee). 

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ARTICLE THREE

SUBORDINATION  

        SECTION
3.01.    Securities Subordinated to Senior Debt.

        The
Company, for itself and its successors, and each Holder, by his acceptance of Securities, agrees that the payment of the principal of, premium, if any, and interest on the Securities
is subordinated, to the extent and in the manner provided in this Article Three, to the prior payment in full in cash or cash equivalents of all Senior Debt. 

        For
purposes of this Article Three, "Senior Debt" means the principal, premium, if any, and interest on any Debt of the Company, whenever created, incurred, issued, assumed or
guaranteed, unless, in the case of any particular Debt, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Debt shall not be
senior in right of payment to the Securities. Without limiting the generality of the foregoing, Senior Debt shall include (a) the principal of, and interest on, and other amounts due on or in
connection with the Debt of the Company under the Credit Facilities; (b) all Interest Rate Protection obligations of the Company; (c) all obligations of the Company under standby letters
of credit; and (d) Debt evidenced by the 6.45% Senior Notes of the Company due 2006, 91/2% Senior Notes of the Company due 2008, the 7.0% Debentures of the Company due 2036 and
the 6.70% Debentures of the Company due 2096. Notwithstanding the foregoing, Senior Debt shall not include (a) to the extent that it may constitute Debt, any obligation for federal, state,
local or other taxes; (b) any Debt among or between the Company and/or any one or more subsidiaries and Affiliates of the Company; (c) to the extent that it may constitute Debt, any
obligation in respect to any trade payable incurred for the purchase of goods or materials, or for services obtained, in the ordinary course of business; (d) Debt evidenced by the
63/4% Senior Subordinated Notes of the Company due 2003, the 91/4% Senior Subordinated Notes due 2005, 101/4% Senior Subordinated Notes of the Company due
2007 and the 75/8% Senior Subordinated Debentures of the Company due 2013, with respect to which the Securities will rank pari passu in
right of payment; (e) Debt of the Company that is expressly subordinate or junior in right of payment to any other Debt of the Company; (f) to the extent that it may constitute Debt, any
obligation owing under leases (other than Capital lease obligations) or management agreements; and (g) any obligation that by operation of law is subordinate to any general unsecured
obligations of the Company; provided that any guaranty by the Company of Debt of a subsidiary of the Company to third parties shall constitute Senior
Debt unless, in the case of any particular guaranty, the instrument creating or evidencing the same provides that such guaranty is subordinated to any other Debt of the Company;  provided, further, that in the event a subsidiary of the Company advances to the Company the proceeds
attributable to Debt incurred by such subsidiary to a third party, which Debt has been guaranteed by the Company pursuant to a guaranty which itself constitutes Senior Debt, then such obligation of
the Company to repay such advance to the subsidiary shall constitute Senior Debt, unless such obligation is created or evidenced by an instrument which provides that such obligation is subordinated to
any other Debt of the Company. This Article Three shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Debt, and
such provisions are made for the benefit of the holders of
Senior Debt, and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. 

        SECTION
3.02.    No Payment on Securities in Certain Circumstances.

        (a)  Upon
the maturity of any Senior Debt by lapse of time, acceleration or otherwise, all principal thereof and interest thereon and other amounts due in connection
therewith shall first be paid in full, or such payment duly provided for or other provision made therefor in a manner satisfactory to the holders of such Senior Debt, before any payment is made
(i) on account of principal of or interest on 

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any of the Securities or (ii) to acquire any of the Securities for cash or property other than capital stock of the Company. 

        (b)  Upon
the happening of and during the continuance of any event of default (or if an event of default would result upon any payment with respect to any of the Securities)
with respect to any Senior Debt, as such event of default is defined therein or in the instrument under which it is outstanding, permitting the holders to immediately accelerate the maturity thereof
beyond any applicable grace period and (if the default is other than (i) a default in payment of the principal of or interest on or other amount due in connection with such Senior Debt or
(ii) a default for which notice is required to be sent under the terms of such Senior Debt by the holders thereof or their Representative) upon written notice thereof given to the Company and
the Trustee by the holders of such Senior Debt or their Representative, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, no payment or
distribution of any assets of the Company of any kind or character (excluding any payment from the trust described under Article Eight below) shall be made by the Company with respect to the principal
of, premium, if any, or interest on any of the Securities or to acquire any of the Securities for cash or property other than capital stock of the Company;  provided, however, that if such default is a default other than a default referred to in
clause (i) of this Section 3.02(b), nothing contained in this Section 3.02(b) shall prevent the Company from making payments of interest, when due, on any of the Securities. 

        (c)  In
the event that notwithstanding the provisions of this Section 3.02 the Company shall make any payment to the Trustee on account of the principal of or interest
on any of the Securities (other than as permitted by Section 3.02(b)) after the happening of an event of default of the type specified in clauses (i) or (ii) of
Section 3.02(b) above or after receipt by the Company and the Trustee of written notice as provided in Section 3.02(b) above of any other event of default with respect to any Senior
Debt, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 3.06 and 3.07) shall be held by
the Trustee in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Debt (pro rata as to each of such holders on the basis of the respective amounts of
Senior Debt held by them as certified by the Company) or their Representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of all Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. The Company shall give prompt written
notice to the Trustee of any default under any Senior Debt or under any agreement pursuant to which Senior Debt may have been issued. 

        SECTION
3.03.    Securities Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of
Company.

        Upon
any distribution of assets of the Company pursuant to any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership or
similar proceedings relating to the Company or its property or upon an assignment for the benefit of creditors or other marshalling of assets or liabilities of the Company or otherwise, whether
voluntary or otherwise): 

        (a)  the
holders of all Senior Debt shall first be entitled to receive payment in full of the principal and interest due thereon and other amounts due in connection therewith
before the Holders are entitled to receive any payment or distribution (excluding any payment from the trust described under Article Eight below) on account of the principal of, premium, if any, or
interest on any of the Securities; 

        (b)  any
payment or distributions of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of
the Holders would 

-17-

 

be entitled except for the provisions of this Article Three shall be paid by the liquidating trustee or agent or other Person making such a payment or distribution directly to the holders of Senior
Debt or their Representative to the extent necessary to make payment in full of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to
the holders of such Senior Debt; and 

        (c)  in
the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities,
shall be received by the Trustee or the Holders or any Paying Agent (or, if the Company is acting as its own Paying Agent, money for any such payment or distribution shall be segregated or held in
trust) on account of principal of or interest on any of the Securities before all Senior Debt is paid in full, or effective provision made for its payment, such payment or distribution (subject to the
provisions of Sections 3.06 and 3.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Debt remaining unpaid or unprovided for or to their Representative for
application to the payment of such Senior Debt until all such Senior Debt shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the
holders of such Senior Debt. 

        The
Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company or any assignment for the benefit of the
Company's creditors. 

        SECTION
3.04.    Securityholders To Be Subrogated to Rights of Holders of Senior Debt.

        Subject
to the payment in full in cash of all Senior Debt, the Holders of the Securities shall be subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Company applicable to the Senior Debt until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no such payments or
distributions to the holders of Senior Debt by or on behalf of the Company or by or on behalf of the Holders of the Securities by virtue of this Article Three that otherwise would have been made to
the Holders of the Securities shall, as between the Company and the Holders of the Securities, be deemed to be payment by the Company to or on account of the Senior Debt, it being understood that the
provisions of this Article Three are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of Senior Debt, on the
other hand. 

        SECTION
3.05.    Obligations of the Company Unconditional.

        Nothing
contained in this Article Three or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Three of the holders of Senior Debt
in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Article Three, the Trustee,
subject to the provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding
up, liquidation, reorganization or similar proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for
the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Debt of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Three. 

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        SECTION 3.06.    Trustee and Paying Agent Entitled To Assume Payments Not Prohibited in Absence of Notice.

        The
Trustee and Paying Agent shall not at any time be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee or the
Paying Agent unless and until a Responsible Officer of the Trustee or the Paying Agent shall have received written notice thereof from the Company or from one or more holders of Senior Debt or from
any Representative therefor and, prior to the receipt of any such written notice, the Trustee and Paying Agent, subject to the provisions of Sections 7.01 and 7.02, shall be entitled in all respects
conclusively to assume that no such fact exists. 

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

        SECTION
3.07.    Application by Trustee of Monies Deposited with It.

        Any
deposit of monies by the Company with the Trustee or any Paying Agent (whether or not in trust) for the payment of principal of or interest on any of the Securities shall be subject
to the provisions of Sections 3.01, 3.02, 3.03 and 3.04 except that, if prior to the date on which by the terms of this Indenture any such monies may become payable for any purpose (including, without
limitation, the payment of either principal of or interest on any Security) a Responsible Officer of the Trustee or such Paying Agent shall not have received with respect to such monies the notice
provided for in Section 3.06, then the Trustee or such Paying Agent shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received by it on or after such date. Nothing herein shall be construed to relieve any Holders from duties imposed upon them under
Section 3.03(c) with respect to monies received in violation of the provisions of this Article Three. 

        SECTION
3.08.    Subordination Rights Not Impaired By Acts or Omissions of Company or Holders of Senior Debt.

        No
right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The holders of Senior Debt may extend, renew, modify or amend the terms of the Senior Debt or any security therefor and release,
sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders of the Securities. No
provision in any supplemental indenture which affects the superior position of the holders of the Senior Debt shall be effective against the holders of the Senior Debt who have not consented thereto. 

        SECTION
3.09.    Securityholders Authorize Trustee To Effectuate Subordination of Securities.

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        Each
Holder of the Securities by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate
the subordination provided in this Article Three and appoints the Trustee his attorney-in-fact for such purpose, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its or his Securities in the form required in said proceedings and
cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of Senior Debt are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of
said Securities. 

        SECTION
3.10.    Right of Trustee and Paying Agent To Hold Senior Debt; Preservation of Trustee's Rights.

        The
Trustee and the Paying Agent shall be entitled to all of the rights set forth in this Article Three in respect of any Senior Debt at any time held by either of them to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall be construed to deprive the Trustee or the Paying Agent of any of its rights as such holder. 

        Nothing
in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. 

        SECTION
3.11.    Article Three Not To Prevent Events of Default.

        The
failure of the Company to make a payment on account of principal of or interest on the Securities when due or within any applicable grace period by reason of any provision of this
Article Three shall not be construed as preventing the occurrence of an Event of Default under Section 6.01. 

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

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

ARTICLE FOUR

COVENANTS  

        SECTION
4.01.    Payment of Securities. 

        The
Company shall pay by 10:00 a.m. New York City time, the principal of and interest on the Securities on the dates and in the manner provided in the Securities. An installment
of principal of or interest on the Securities shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay the
installment; provided, however, that money held by the Trustee for the benefit of holders of Senior Debt
pursuant to the provisions of Article Three hereof shall not be considered paid within the meaning of this Section 4.01. 

        The
Company shall pay interest on overdue principal at the rate borne by the Securities; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 

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        SECTION
4.02.    Corporate Existence. 

        Subject
to Article Five, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership
or other existence of each subsidiary in accordance with the respective organizational documents of each subsidiary and 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, with respect to
itself, any right, license or franchise, and with respect to the subsidiaries, any such existence, right, license or franchise, if the Board of Directors, or the board of directors or managing
partners of the subsidiary concerned, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or any subsidiary and that the loss thereof is
not disadvantageous in any material respect to the Holders. 

        SECTION
4.03.    Payment of Taxes and Other Claims. 

        The
Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed
upon the Company or any subsidiary or upon the income, profits or property of the Company or any subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings; and provided, further, that the Company shall not be required to cause to be
paid or discharged any such tax, assessment, charge or claim if the Board of Directors, or the board of directors or managing partners of the subsidiary concerned, shall determine that such payment is
not advantageous to the conduct of the business of the Company or any subsidiary and that the failure so to pay or discharge is not disadvantageous in any material respect to the Holders. 

        SECTION
4.04.    Maintenance of Properties. 

        The
Company will cause all properties used in the conduct of its business or the business of any subsidiary to be maintained and kept in such condition, repair and working order as in
the judgment of the Company may be necessary, so that the business carried on in connection therewith may be properly and advantageously conducted at all times;  provided, however, that nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Board of Directors or of the board of directors or
managing partners of the subsidiary concerned, desirable in
the conduct of the business of the Company or any subsidiary and not disadvantageous in any material respect to the Holders; and provided,  further, that
property may be disposed of in the ordinary course of the business of the Company or its subsidiaries at the discretion of the appropriate
officers of the Company and its subsidiaries. 

        SECTION
4.05.    Maintenance of Office or Agency. 

        The
Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. Unless the Trustee serves as
Paying Agent or Registrar, the Company will 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 address
of the Trustee set forth in Section 12.02. 

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        The
Company may also from time to time designate one or more other offices or agencies where the Securities 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. 

        SECTION
4.06.    Compliance Certificate; Notice of Default.

        The
Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate (one of the signers of which shall be the
principal executive officer, principal financial officer or principal accounting officer of the Company) stating whether or not the signers know of any default by the Company in performing its
covenants hereunder, without regard to notice requirements or periods of grace, in Sections 4.02, 4.03, 4.04, 4.05, 4.09 and 4.10. If they do know of such a default, the certificate shall describe the
default in detail. 

        The
Company shall deliver to the Trustee, as soon as possible and in any event within five days after the Company becomes aware of the occurrence of any Event of Default or an event
which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto. 

        SECTION
4.07.    Reports. 

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

        So
long as any of the Securities remain outstanding the Company shall cause to be mailed to the Holders at their addresses appearing in the register of Securities maintained by the
Registrar all annual, quarterly or other reports which the Company mails or causes to be mailed to its stockholders generally, concurrently with such mailing to stockholders, and will cause to be
disclosed in such annual reports as of the date of the most recent financial statements in each such report the amount available for dividends and other payments pursuant to the most restrictive
covenant therefor as of such date. 

        Delivery
of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates). 

        SECTION
4.08.    Waiver of Stay, Extension of Usury Laws.

        The
Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in an manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Company from paying all or any portion of the interest
on the Securities as contemplated herein, whenever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 

        SECTION
4.09.    Limitation on Liens. 

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        Nothing
in this Indenture or in the Securities shall in any way restrict or prevent the Company or any of its subsidiaries from incurring any Debt;  provided, however, that neither the Company nor any of its subsidiaries may issue, assume or guarantee
any Debt secured by a Lien upon any Consolidated Property without securing the Securities equally and ratably with (or prior to) such Debt so long as such Debt shall be so secured, except that this
restriction will not apply to: 

        (a)  Liens
existing on the date of issuance of the Securities; 

        (b)  Liens
affecting property of a corporation or other entity existing at the time it becomes a subsidiary of the Company or at the time of acquisition through a merger,
consolidation or otherwise by the Company or any subsidiary of the Company; 

        (c)  Liens
on property existing at the time of acquisition thereof or incurred to secure payment of all or a part of the purchase price thereof or to secure Debt incurred
prior to, at the time of or within 24 months after the acquisition thereof, for the purpose of financing all or part of the purchase price thereof; 

        (d)  Liens
on any property to secure all or part of the cost of improvements or construction thereon or Debt incurred to provide funds for that purpose in a principal amount
not exceeding the cost of those improvements or construction; 

        (e)  Liens
to secure Debt of a subsidiary of the Company to the Company or to a subsidiary of the Company; 

        (f)    Liens
to secure Debt of the Company, the proceeds of which are used substantially simultaneously with the incurrence of such Debt to retire Funded Debt; 

        (g)  purchase
money security Liens on personal property; 

        (h)  Liens
securing Debt of the Company, the proceeds of which are used within 24 months of the incurrence of such Debt for the Project Cost of the construction and
development or improvement of a Resort Property; 

        (i)    Liens
on the stock, partnership or other equity interest of the Company or any subsidiary in any Joint Venture or any subsidiary which owns an equity interest in the
Joint Venture to secure Debt, provided the amount of such Debt is contributed and/or advanced solely to such Joint Venture; 

        (j)    Liens
securing any Senior Debt; 

        (k)  Liens
in favor of any government or governmental body, including the United States or any state thereof, or any department, agency, instrumentality or political
subdivision of any such jurisdiction, including, without limitation, Liens to secure Debt of the pollution control or industrial revenue bond type; 

        (l)    Liens
required by any contract or statute in order to permit the Company or a subsidiary of the Company to perform any contract or subcontract made by it or any
subsidiary with or at the request of a governmental entity, including the United States or any state, or any department, agency or instrumentality or political subdivision of any such jurisdiction; 

        (m)  mechanic's,
materialman's, carrier's or other like Liens, arising in the ordinary course of business; 

        (n)  Liens
for taxes or assessments and similar charges either (i) not delinquent or (ii) contested in good faith by appropriate proceedings and as to which the
Company or a subsidiary of the Company shall have set aside adequate reserves on its books; 

-23-

 

        (o)  zoning
restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property and minor irregularities of title incident thereto which do
not in the aggregate materially detract from the value of the property or assets of the Company and its subsidiaries taken as a whole or impair the use of such property in the operation of the
Company's or any of its subsidiaries business; and 

        (p)  any
extension, renewal, replacement or refinancing of any Lien referred to in the foregoing clauses (a) through (j) inclusive or of any Debt secured
thereby; provided that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt so secured at the time of such
extension, renewal, replacement or refinancing, and that such extension, renewal, replacement or refinancing Lien shall be limited to all or part, of substantially the same property which secured the
Lien extended, renewed, replaced or refinanced (plus improvements on such property). 

        Notwithstanding
the foregoing provisions of this Section 4.09, the Company and any one or more of its subsidiaries may, without securing the Securities, issue, assume or guarantee
Debt which would otherwise be subject to the foregoing restrictions in an aggregate principal amount which, together with all other such Debt of the Company and its subsidiaries which would otherwise
be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (a) through (j) inclusive above) and the aggregate Value of Sale and
Lease-Back Transactions (other than those in connection with which the Company has voluntarily retired Funded Debt) does not at any one time exceed 15% of Consolidated Net Tangible Assets
of the Company and its consolidated subsidiaries. 

        SECTION
4.10.    Limitation on Sale and Lease-Back Transactions.

        Neither
the Company nor any of its subsidiaries shall enter into any Sale and Lease-Back Transaction unless either (a) the Company or such subsidiary would be
entitled, pursuant to the provisions of Section 4.09, to incur Debt in a principal amount equal to or exceeding the Value of such Sale and Lease-Back Transaction, secured by a Lien
on the property to be leased, without equally and ratably securing the Securities or (b) the Company (and in any such case the Company covenants and agrees that it will do so) within
120 days after the effective date of such Sale and Lease-Back Transaction (whether made by the Company or a subsidiary of the Company) applies to the voluntary retirement of its
Funded Debt an amount equal to the Value of the Sale and Lease-Back Transaction less the principal amount of other Funded Debt voluntarily retired by the Company within four months after
the effective date of such arrangement, excluding retirements of Funded Debt as a result of conversions or pursuant to mandatory sinking fund or prepayment provisions or by payment at maturity. 

        SECTION
4.11.    Defeasance of Certain obligations. 

        The
Company may omit to comply with any term, provision or condition set forth in Sections 4.03, 4.04, 4.09, 4.10, 4.12 and 4.13 and Article Five and Section 6.01(3) and
(7) (with respect to Sections 4.03, 4.04, 4.09, 4.10, 4.12 and 4.13 and Article Five) and, in each case with respect to any series of Securities, such omission shall be deemed not to be an
Event of Default; provided that the following conditions have been satisfied with respect to such series: 

        (1)  the
Company has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of the Securities, (A) money in an amount, or (B) U.S. Government obligations which through the payment of interest and principal in respect thereof in
accordance with their terms will, without consideration of any reinvestment of such interest, provide not later than the opening of business on the relevant due date, money in an amount, or
(C) a combination thereof, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee at
the expense of the Company, sufficient to 

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pay and discharge the principal of, and each installment of interest on, such series of Securities then outstanding on the date of maturity of such principal or installment of interest or on the
redemption date, as the case may be; 

        (2)  such
deposit shall not cause the Trustee with respect to the Securities to have a conflicting interest for purposes of the TIA with respect to the Securities; 

        (3)  such
deposit will not result in a breach or violation of, or constitute a default under, this Indenture; 

        (4)  no
Event of Default or event that with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit and no Event of Default under Section 6.01(5) or Section 6.01(6) or event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 6.01(5) or Section 6.01(6) shall have occurred and be continuing at any time during the period ending on the 91st day after such date
or, if longer, ending on the day following the expiration of the longest preference period applicable to the Company in respect of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period); 

        (5)  the
deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940; 

        (6)  the
Company has delivered to the Trustee an Opinion of Counsel, reasonably satisfactory to the Trustee, to the effect that (i) Holders of the Securities will not
recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such deposit and defeasance had not occurred and (ii) (A) the trust funds will not be subject to any rights of holders
of Senior Debt, including, without limitation, those arising under Article Three of this Indenture and (B) after the passage of 90 days following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; provided that if a
court were to rule under any such law in any case or proceeding that the trust funds remained property of the Company, no opinion need be given as to the effect of such laws on the trust funds except
the following: (x) assuming such trust funds remained in the Trustee's possession prior to such court ruling to the extent not paid to Holders of the Securities, the Trustee will hold, for the
benefit of the Holders of the Securities, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise and (y) no property, rights in property or
other interests granted to the Trustee for the benefit of the Holders of the Securities or to the Holders of the Securities in exchange for or with respect to any of such trust funds will be subject
to any prior rights of holders of Senior Debt, including without limitation those arising under Article Three of this Indenture; and 

        (7)  the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to
the defeasance contemplated by this Section have been complied with. 

        SECTION
4.12.    Limitation on Layering Debt. 

        The
Company may not create, incur, assume or suffer to exist any Debt that is subordinate in right of payment to any other Debt of the Company, unless, by its terms or the terms of the
instrument creating or evidencing it, such Debt is subordinate in right of payment to, or ranks pari passu with, the Securities. 

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        SECTION
4.13.    Change of Control. 

        (a)  Following
the occurrence of a Change of Control (the date of such occurrence being the "Change of Control Date"), the Company shall, within 30 days after the
Change of Control Date, make an offer to purchase (a "Change of Control Offer") all of the then outstanding Securities at a purchase price (the "Change of Control Purchase Price") in cash equal to
101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the purchase date. The Company shall be required to purchase all Securities properly tendered in the Change
of Control Offer and not withdrawn. The Change of Control Offer shall remain open for 20 days and until the close of business on the Change of Control Payment Date (as defined below). 

        (b)  Within
45 days following the date upon which the Change of Control occurred, the Company shall mail, or cause the Trustee to mail, by first class mail, a notice
to each Holder at such Holder's last registered address, with a copy to the Trustee, if applicable, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Change of Control Offer. Such notice shall state: 

        (i)    that
the Change of Control Offer is being made pursuant to this Section 4.13 and that all Securities tendered and not withdrawn shall be accepted for payment; 

        (ii)  the
purchase price (including the amount of accrued interest) and the purchase date (which shall be no earlier than 30 days nor later than 45 days from
the date such notice is mailed, other than as may be required by law) (the "Change of Control Payment Date"); 

        (iii)  that
any Security not tendered shall continue to accrue interest; 

        (iv)  that,
unless the Company defaults in making payment therefor, any Security accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date; 

        (v)  that
Holders electing to have a Security purchased pursuant to a Change of Control Offer shall be required to surrender the Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed, 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; 

        (vi)  that
Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the second business day prior to the Change of Control Payment
Date, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; 

        (vii)that
Holders whose Securities are purchased only in part shall be issued new Securities in a principal amount equal to the unpurchased portion of the Securities
surrendered; provided, however, that each Security purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples thereof; and 

        (viii)the
circumstances and relevant facts regarding such Change of Control. 

        On
the Change of Control Payment Date, the Company shall, to the extent permitted by law, (i) accept for payment all Securities or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Securities or portions thereof so tendered and
(iii) deliver, or cause to be delivered, to the Trustee for cancellation the Securities so accepted together with an Officers' Certificate stating that such Securities or portions thereof have
been tendered to and purchased by the 

-26-

 

Company. The Paying Agent will promptly either (x) pay to the Holder against presentation and surrender (or, in the case of partial payment, endorsement) of the Global Securities or
(y) in the case of Certificated Securities, mail to each Holder of Securities the Change of Control Payment for such Securities, and the Trustee will promptly authenticate and deliver to the
Holder of the Global Securities a new Global Security or Securities or, in the case of Certificated Securities, mail to each Holder new Certificated Securities, as applicable, equal in principal
amount to any unpurchased portion of the Securities surrendered, if any, provided that each new Certificated Security will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will notify the Trustee and the Holders of the results of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. 

        Neither
the Board of Directors of the Company nor the Trustee may waive the provisions of this Section 4.13 relating to the Company's obligation to make a Change of Control Offer
or a Holder's right to redemption upon a Change of Control. 

        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 Securities pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict
with the provisions of this Section 4.13, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under the
provisions of this Section 4.13 by virtue thereof. 

ARTICLE FIVE

SUCCESSOR CORPORATION  

        The Company shall not consolidate with or merge into any other Person or sell, assign, transfer or convey its properties and assets substantially as an entirety
to any Person unless: 

        (1)  either
the Company shall be the continuing corporation, or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or to
which the properties and assets of the Company substantially as an entirety are transferred shall be a corporation, partnership or trust organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Securities and this Indenture; 

        (2)  immediately
after giving effect to such transaction, no Default or Event of Default exists; and 

        (3)  the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 

        The
successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter the predecessor corporation shall
be relieved of all obligations and covenants under the Indenture and the Securities, and in the event of such transfer any such predecessor corporation may be dissolved and liquidated. 

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ARTICLE SIX

DEFAULTS AND REMEDIES  

        SECTION
6.01.    Events of Default. 

        An
"Event of Default" with respect to the Securities occurs if: 

        (1)  the
Company defaults in the payment of interest on the Securities when the same becomes due and payable and the default continues for a period of 30 days (whether
or not prohibited by Article Three); or 

        (2)  the
Company defaults in the payment of principal of or premium, if any, on the Securities when due at maturity, upon redemption, pursuant to an offer to purchase
required under this Indenture pursuant to Section 4.13 or otherwise by acceleration or otherwise (whether or not prohibited by Article Three); or 

        (3)  the
Company fails to perform, or breaches, any covenant in this Indenture and the default continues for the period and after the notice specified below; or 

        (4)  an
event or events of default, as defined in any one or more mortgages, indentures or instruments under which there may be issued, or by which there may be secured or
evidenced, any Debt of the Company or a subsidiary, whether such Debt now exists or shall hereafter be created, shall happen and shall entitle the holders of such Debt to declare an aggregate
principal amount of at least $10,000,000 of such Debt due and payable and such event of default shall not have been cured or waived in
accordance with the provisions of such instrument, or such Debt shall not have been discharged, within a period of 30 days after there shall have been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of such series of Securities then outstanding a written notice specifying such event or
events of default and requiring the Company to cause such event of default to be cured or such Debt to be discharged and stating that such notice is a "Notice of Default" hereunder;  provided,
however, that the Company is not in good faith contesting in appropriate proceedings the
occurrence of such an event of default; or 

        (5)  a
court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Subsidiary in an involuntary case or proceeding under
any Bankruptcy Law which shall (A) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any subsidiary,
(B) appoint a Custodian of the Company or any subsidiary or for any substantial part of its property or (C) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or any bankruptcy or insolvency petition or application is filed, or any bankruptcy or insolvency
proceeding is commenced, against the Company or any subsidiary and such petition, application or proceeding is not dismissed within 60 days; or any warrant of attachment is issued against any
substantial portion of the property of the Company or any subsidiary which is not released within 60 days of service; or 

        (6)  the
Company or any subsidiary shall (A) become insolvent, (B) generally fail to pay its debts as they become due, (C) make any general assignment
for the benefit of creditors, (D) admit in writing its inability to pay its debts generally as they become due, (E) commence a voluntary case or proceeding under any Bankruptcy Law,
(F) consent to the entry of a judgment, decree or order for relief in an involuntary case or proceeding under any Bankruptcy Law, (G) consent to the institution of bankruptcy or
insolvency against it, (H) apply for, consent to or acquiesce in the appointment of or taking possession by a Custodian of the Company or any subsidiary or for any 

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substantial part of its property or (I) take any corporate action in furtherance of any of the foregoing; or 

        (7)  the
Company fails to comply with its obligations described in Section 4.13 of this Indenture. 

        The
term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. 

        A
default under clause (3) (other than a Default under Section 4.02 or Article Five which Default shall be an Event of Default without the notice or passage of time
specified in this paragraph) is not an Event of Default with respect to the Securities until the Trustee or the Holders of at least 25% in principal amount of the Securities then outstanding notify
the Company (with a copy to the Trustee) of the default and the Company does not cure the default within 30 days after receipt of the notice. The
notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." 

        SECTION
6.02.    Acceleration. 

        If
an Event of Default (other than as specified in clauses (5) and (6) of Section 6.01 above) relating to the Securities occurs and is continuing, the Trustee by
notice in writing to the Company, or the Holders of not less than 25% in principal amount of the Securities then outstanding by notice in writing to the Company and the Trustee, may declare the unpaid
principal (but in no event more than the maximum amount of principal and interest thereon allowed by law) to be due and payable immediately. Upon any such declaration such principal and interest shall
be payable immediately. If an Event of Default specified in Section 6.01(5) or (6) occurs, the principal amount and accrued interest on the Notes shall 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 such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the Securities then outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration as to the
Securities and its consequences if: 

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

        (A)  the
principal of the Securities that has become due otherwise than by such declaration of acceleration (together with interest, if any, payable thereon); and 

        (B)  all
sums paid by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents, attorneys and counsel; and 

        (2)  all
existing Events of Default relating to the Securities have been cured or waived and the rescission would not conflict with any judgment or decree. 

        SECTION
6.03.    Other Remedies. 

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

        The
Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or 

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remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. 

        SECTION
6.04.    Waiver of Past Defaults. 

        Subject
to Section 9.02, the Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may waive an existing Default or Event of
Default with respect to the Securities and its consequences. When a Default or Event of Default is waived, it is cured and stops continuing. 

        SECTION
6.05.    Control by Majority. 

        The
Holders of a majority in principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it with respect to any default under the Securities. However, subject to Section 7.01, the Trustee may refuse to follow any direction that
conflicts with any rule of law or this Indenture, that is unduly prejudicial to the rights of another Holder of the Securities, or that would involve the Trustee in personal liability. 

        SECTION
6.06.    Limitation on Suits. 

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

        (1)  the
Holder gives to the Trustee written notice of a continuing Event of Default with respect to such series; 

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

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

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

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

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

        SECTION
6.07.    Rights of Holders To Receive Payment. 

        Notwithstanding
any other provision of this Indenture, but subject to the provisions of Article Three, the right of any Holder of a Security to receive payment of principal of or
interest on the Security on or after the respective due dates expressed in the Security or to bring suit for the enforcement of any such payment on or after such respective dates shall not be impaired
or affected without the consent of the Holder. 

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        SECTION 6.08.    Collection Suit by Trustee. 

        If
an Event of Default in payment of interest or principal specified in Section 6.01(1) or (2) occurs and is continuing with respect to the Securities, the Trustee may
recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal (or such portion of the principal as may be specified as due upon acceleration
at that time in the terms of the Securities) and interest, if any, remaining unpaid on the Securities then outstanding. 

        SECTION
6.09.    Trustee May File Proofs of Claim. 

        The
Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any
judicial proceedings relative to the Company, its creditors or its property. 

        SECTION
6.10.    Priorities. 

        Subject
to the provisions of Article Three, if the Trustee collects any money pursuant to this Article with respect to the Securities, it shall pay out the money in the following order: 

        First:
to the Trustee for amounts due under Section 7.07; 

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

        Third:
to the Company. 

        The
Trustee may fix a record date and payment date for any payment to Holders of the Securities pursuant to this Section. The Trustee shall notify the Company in writing reasonably in
advance of any such record date and payment date. 

        SECTION
6.11.    Undertaking for Costs. 

        In
any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys'
fees and expenses, 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 pursuant to Section 6.07, or a suit by Holders of more than 10% in principal amount of the Securities then outstanding. 

ARTICLE SEVEN

TRUSTEE  

        The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. 

        SECTION
7.01.    Duties of Trustee. 

        (a)  If
an Event of Default has occurred and is known to the Trustee (and is not cured), the Trustee shall exercise its rights and powers and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. 

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

        (1)  The
Trustee need perform only those duties that are specifically set forth in this Indenture or in the TIA and no covenants or obligations shall be implied in this
Indenture which bind the Trustee. 

        (2)  In
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other facts stated therein). 

        (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: 

        (1)  This
paragraph does not limit the effect of paragraph (b) of this Section; 

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

        (3)  The
Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to
Section 6.05. 

        (4)  The
Trustee shall, subject to Section 7.08, comply with any order or directive of a Gaming Authority that the Trustee submit an application for any license,
finding of suitability or other approval pursuant to any Gaming Law and will cooperate fully and completely in any proceeding related to such application;  provided, however, that if the Trustee's resignation is pending, the failure to comply with this
Section 7.01(b)(4) shall not be a violation of this Indenture. 

        (d)  Every
provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. 

        (e)  The
Trustee may refuse to perform any duty or exercise any right or power unless it receives security and 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. 

        SECTION
7.02.    Rights of Trustee. 

        (a)  The
Trustee may conclusively 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. 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 its attorneys or agents (which shall not include its employees) 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 which it believes to be authorized or within its rights or power. 

        (e)  No
provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the 

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exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or satisfactory indemnity against such risk or liability is not reasonably
assured to it. 

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

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

        (h)  The
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall determine to make such matter inquiry or investigation, it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at the
sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. 

        (i)    The
Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the Trustee at the principal corporate trust office of the Trustee, and such notice references the Securities and this
Indenture. 

        (j)    The
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall
be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. 

        (k)  The
Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to
take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any Person authorized to sign an Officers' Certificate, including any Person specified as so authorized
in any such certificate previously delivered and not superseded. 

        SECTION
7.03.    Individual Rights of Trustee. 

        The
Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its subsidiaries or Affiliates with the same
rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. 

        SECTION
7.04.    Trustee's Disclaimer. 

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

        SECTION
7.05.    Notice of Defaults. 

        If
a Default occurs with respect to the Securities and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Holder of the Securities,
notice of the Default
within 90 days after it occurs. Except in the case of a default in the payment of principal of or interest on the Securities, the Trustee may withhold the notice if and so long as a committee
of its 

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Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Securities. 

        SECTION
7.06.    Reports by Trustee. 

        Within
60 days after each June 15 beginning with the June 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated
as of such June 15 that complies with TIA Section 313(a) if required by such Section 313(a). The Trustee also shall comply with TIA Section 313(b). 

        A
copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall promptly
notify the Trustee when the Securities are listed on any stock exchange or of any delisting thereof. 

        To
the extent reasonably requested in writing by the Company, the Trustee shall cooperate with the Gaming Authorities in order to provide such Gaming Authorities with any information and
documentation that they may request and as otherwise required by law. 

        SECTION
7.07.    Compensation and Indemnity. 

        The
Company shall pay to the Trustee from time to time such compensation for its services as shall be agreed in writing by the Company and the Trustee. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expense may include the reasonable compensation and expenses of the Trustee's agents and
counsel. The Company shall indemnify each of the Trustee and any predecessor Trustee against any and all loss, damage, claim (whether asserted by the Company, a Holder or any other Person), liability
or expense, including taxes (other than taxes based on the income of the Trustee) incurred by it, without negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration of this trust. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel of its selection and the Company shall pay the reasonable 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 or liability incurred by the Trustee through negligence or bad faith. 

        To
secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Securities. 

        When
the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(5) or Section 6.01(6), the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency
or other similar law. 

        The
provisions of this Section shall survive the termination of this Indenture. 

        SECTION
7.08.    Replacement of Trustee. 

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

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

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

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

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        (4)  the
Trustee becomes incapable of acting. 

        If,
as to the Securities, 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 for
that series. 

        A
successor Trustee as to any series of Securities shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall, upon payment of its charges, promptly transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture as to the Securities. A successor Trustee shall mail notice of its succession to the Holders
of the Securities. 

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

        If
the Trustee fails to comply with Section 7.10 with respect to the Securities, any Holder of the Securities who satisfies the requirements of TIA Section 310(b) may
petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee for the Securities. 

        In
case of appointment hereunder of a successor Trustee with respect to the Securities, the Company, the retiring Trustee and each successor Trustee with respect to the Securities shall
execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) shall contain such provisions as shall be necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or
change any of the provisions of this Indenture as shall be necessary or desirable to provide for or facilitate the administration of the trusts hereunder by more than one Trustee;  provided, however, that nothing herein or in such supplemental Indenture shall constitute such Trustee
co-trustees of the same trust and that each such Trustee shall be a trustee of a trust hereunder separate and apart from any trust hereunder and administered by any other such Trustee. 

        Upon
the execution and delivery of such supplemental Indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates. 

        SECTION
7.09.    Successor Trustee by Merger, Etc. 

        If
the Trustee as to the Securities consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the
resulting, surviving or transferee corporation shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, without any further act, be the successor Trustee as to
the Securities. 

        SECTION
7.10.    Eligibility; Disqualification. 

        The
Securities shall always have a Trustee who satisfies the requirements of TIA Section 310(a). The Trustee as to the Securities shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA 

-35-

 

Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9). 

        SECTION
7.11.    Preferential Collection of Claims Against Company.

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

        SECTION
7.12.    Authenticating Agent. 

        If
the Company so requests, there shall be an Authenticating Agent appointed by the Trustee with power to act on its behalf and subject to its direction in the authentication and
delivery of the Securities in connection with the exchange or registration of transfer thereof as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by
the relevant Sections hereof to authenticate and deliver the Securities, and such Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as though authenticated by the Trustee hereunder, and for all purposes of this Indenture, the authentication and delivery of such Securities by the Authenticating Agent pursuant to this
Section shall be deemed to be the authentication and delivery of such Securities "by the Trustee." Notwithstanding anything to the contrary contained in Section 2.02, or in any other Section
hereof, all authentication in connection with exchange or registration of transfer thereof shall be effected either by the Trustee or an Authenticating Agent and such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the United States or of any State, with a combined capital and surplus of at least $5,000,000 and authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by federal or state authority. If at any time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with the effect herein specified in this Section. If such corporation publishes reports of condition at least annually
pursuant to law or the requirements of such authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 

        Any
corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the
successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation. 

        Any
Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any
time any Authenticating Agent shall cease to be eligible under this Section, the Trustee shall promptly appoint a successor Authenticating Agent, shall give written notice of such appointment to the
Company and shall mail notice of such appointment to all Holders of the Securities as the names and addresses of such Holders appear on the register of Securities, and shall publish notices of such
appointment at least once in a newspaper of general circulation in the place where such successor Authenticating Agent has its principal office. 

        Any
Authenticating Agent by the acceptance of its appointment shall be deemed to have agreed with the Trustee that: it will perform and carry out the duties of an Authenticating Agent as
herein set forth, including, without limitation, the duties to authenticate and deliver the Securities when presented 

-36-

 

to it in connection with exchanges or registrations of transfer thereof; it will furnish from time to time, as requested by the Trustee, appropriate records of all transactions carried out by it as
Authenticating Agent and will furnish the Trustee such other information and reports as the Trustee may reasonably require; it is eligible for appointment as Authenticating Agent under this Section
and will notify the Trustee promptly in writing if it shall cease to be so qualified; and it will indemnify the Trustee against any loss, liability or expense incurred by the Trustee and will defend
any claim asserted against the Trustee by reason of any act or failure to act of the Authenticating Agent but it shall have no liability for any action taken by it at the specific written direction of
the Trustee. 

        The
Company agrees that it will pay to the Authenticating Agent from time to time reasonable compensation for its services. 

        The
provisions of Sections 7.02, 7.03 and 7.04 shall bind and inure to the benefit of any Authenticating Agent to the same extent that they bind and inure to the benefit of the Trustee. 

        If
an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of
authentication in the following form: 

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

	

 	
 	

THE BANK OF NEW YORK,

as Trustee	
 	

 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
 As Authenticating Agent	 	 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
 Authorized Signatory	 	 
	 	 	 	 	 	 	 

ARTICLE EIGHT

DISCHARGE OF INDENTURE  

        SECTION
8.01.    Termination of Company's obligations. 

        The
Company may terminate its obligations under the Securities and this Indenture, except those obligations referred to in the immediately succeeding paragraph, if: 

        (a)  all
Securities previously authenticated and delivered (other than mutilated, destroyed, lost or stolen Securities which have been replaced or the Securities which are
paid for pursuant to Section 4.01 or the Securities for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in
Section 8.03) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder with respect to such series; or 

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        (b)  (1)
the Securities mature within one year or all of them are to be called for redemption within one year after arrangements satisfactory to the Trustee for giving the
notice of redemption; and 

        (b)  (2)
the Company has irrevocably deposited or caused to be deposited with the Trustee, during such one-year period, as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of such series of Securities, (A) money in an amount, or (B) U.S. Government obligations which through the
payment of interest and principal in respect thereof in accordance with their terms will, without consideration of any reinvestment of such interest, provide not later than the opening of business on
the relevant due date, money in an amount, or (C) a combination thereof, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, sufficient to pay and discharge the principal of, and each installment of interest on, such series of Securities then outstanding on the date of
maturity of such principal or installment of interest or the redemption date, as the case may be; or 

        (c)  (1)
the Company has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities, (A) money in an amount, or (B) U.S. Government obligations which through the payment of interest and principal in respect thereof in
accordance with their terms will, without consideration of any reinvestment of such interest, provide not later than 10:00 a.m., New York City time, on the relevant due date, money in an
amount, or (C) a combination thereof, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the
Trustee, sufficient to pay and discharge the principal of and each installment of interest on such series of Securities then outstanding on the date of maturity of such principal or installment of
interest, or, on the redemption date, as the case may be; and 

        (2)  the
Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in clause (c) and
in Section 4.11 relating to the satisfaction and discharge of this Indenture with respect to such series of Securities have been complied with. 

        Notwithstanding
the foregoing clause (c), prior to the end of the 90-day period referred to in clause (6)(ii) of Section 4.11, none of the
Company's obligations under this Indenture shall be discharged, and subsequent to the end of the 90-day period only the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
4.01, 4.02, 7.07, 7.08, 8.03 and 8.04 shall survive until such series of Securities are no
longer outstanding. Thereafter, the Company's obligations in Sections 7.07, 8.03 and 8.04 shall survive; provided, that the Company shall pay any taxes
or other costs and expenses incurred by any trust created pursuant to this Article Eight. 

        After
any such irrevocable deposit and after satisfaction of all the conditions of this Section 8.01, the Trustee, upon the Company's request, shall acknowledge in writing the
discharge of the Company's obligations under the Securities and this Indenture, except for those surviving obligations specified above. The Trustee shall not be responsible for any calculations made
by the Company in connection with the deposit of funds pursuant to clauses (b)(2) or (c)(1) of this Section 8.01. 

        The
Company may make an irrevocable deposit pursuant to this Section 8.01 only if at such time it is not prohibited from doing so under the provisions of Article Three and the
Company shall have delivered to the Trustee and any such Paying Agent an Officers' Certificate to that effect. 

        The
Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government obligations deposited pursuant to this
Section 8.01 or the 

-38-

 

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 outstanding Securities. 

        SECTION
8.02.    Application of Trust Money. 

        The
Trustee or Paying Agent shall, with respect to the Securities, hold in trust money or U.S. Government obligations deposited with it pursuant to Section 8.01, and shall apply
the deposited money and the money from U.S. Government obligations in accordance with this Indenture, to the payment of principal of and interest on the Securities. Money so held in trust, to the
extent allocated for the payment of the Securities, shall not be subject to the provisions of Article Three. 

        SECTION
8.03.    Repayment to the Company. 

        Subject
to Section 8.02, the Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess money or U.S. Government obligations held by them at
any time and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the
payment of principal or interest that remains unclaimed for two years; provided, however, that the
Company shall, if requested by the Trustee or such Paying Agent, give the Trustee or such Paying Agent satisfactory indemnification against any and all liability which may be incurred by it by reason
of such payment; and provided, further, that the Trustee or such Paying Agent before being required to
make any payment
shall at the expense of the Company cause to be published once in a newspaper or newspapers printed in the English language, customarily published at least five days a week and of general circulation
in the City of Las Vegas, Nevada and in the Borough of Manhattan, The City of New York and mail to each Securityholder entitled to such money notice that such money remains unclaimed and that, after a
date specified therein which shall be at least 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After
payment to the Company, Securityholders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person. 

        SECTION
8.04.    Reinstatement. 

        If
the Trustee or Paying Agent is unable to apply any money or U.S. Government obligations in accordance with Section 8.01 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 Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government
obligations in accordance with Section 8.01; provided, however, that if the Company has made any
payment of interest on or principal of the Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of the Securities to receive such
payment from the money or U.S. Government obligations held by the Trustee or Paying Agent. 

ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS  

        SECTION
9.01.    Without Consent of Holders. 

        The
Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Holder: 

        (1)  to
cure any ambiguity, defect or inconsistency; 

        (2)  to
comply with Article Five; 

-39-

 

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

        (4)  to
comply with any requirements of the SEC in connection with the qualification of this Indenture under the TIA; or 

        (5)  to
make any change that does not adversely affect the rights of any Securityholder. 

        SECTION
9.02.    With Consent of Holders. 

        The
Company and the Trustee may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities affected by such amendment or supplement. The Holders of a majority delivered to the Trustee in principal amount of the Securities then
outstanding may also waive compliance in a particular instance by the Company with any provision of this Indenture with respect to the Securities;  provided, however, that without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may not: 

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

        (2)  reduce
the rate, or extend the time for payment of interest on, any Security in a manner adverse to the Holders thereof; 

        (3)  reduce
the principal of, or extend the fixed maturity or fixed redemption date of any Securities, in a manner adverse to the Holders thereof; 

        (4)  waive
a default in the payment of the principal of, or interest on, any Security; 

        (5)  waive
a default upon the occurrence of a Change of Control under Section 4.13; 

        (6)  modify
the provisions of Article Three (Subordination) in a manner adverse to the Holders or in a manner which will cause any Security to be senior to any other Security
in right of payment; 

        (7)  make
any Security payable in money other than that stated in the Security; or 

        (8)  make
any changes in Section 6.04, 6.07 and 9.02. 

        An
amendment or waiver under this Section may not make any change that adversely affects the rights under Article Three of any holder of an issue of Senior Debt unless such holder
consents to such amendment or waiver. 

        It
shall not be necessary for the consent of the Holders under this Section 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 or waiver under this Section becomes effective, the Company shall mail to Holders of the Securities affected thereby a notice briefly describing the amendment or
waiver. 

        SECTION
9.03.    Compliance with Trust Indenture Act. 

        Every
amendment to or supplement of this Indenture or the Securities shall comply 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 such amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, 

-40-

 

even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives
notice of revocation before the date the amendment, supplement or waiver becomes effective. 

        The
Company may, but shall not be obligated to, set a record date for the purpose of determining the identity of Holders entitled to consent to any amendment, supplement or waiver
permitted by this Indenture. If a record date is fixed, the Holders of the Securities outstanding on such record date, and no other Holders, shall be entitled to consent to such amendment, supplement
or waiver or revoke any consent previously given, whether or not such Holders remain Holders after such record date. No consent shall be valid or effective for more than 90 days after such
record date unless consents from Holders of the principal amount of the Securities required hereunder for such amendment, supplement or waiver to be effective shall have also been given and not
revoked within such 90-day period. 

        After
an amendment, supplement or waiver becomes effective, it shall bind the Holder of every Security unless it makes a change described in clause (1), (2), (3), (4), (5),
(6) or (7) of Section 9.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security
or portion of a Security that evidences the same debt as the consenting Holder's Security. 

        SECTION
9.05.    Notation on or Exchange of Securities. 

        If
an amendment, supplement or waiver changes the terms of a Security, the Company may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms. 

        SECTION
9.06.    Trustee To Sign Amendments, Etc. 

        The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if the amendment, supplement or waiver does not adversely affect the rights of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an amendment or supplement until the Board of Directors approves it. The Trustee, subject to Sections 7.01 and 7.02, shall be
fully protected in relying on an Opinion of Counsel and an Officers' Certificate, each stating that any amendment, supplement or waiver is authorized by this Indenture and complies with the provisions
of this Article Nine. 

-41-

   ARTICLE TEN

MEETINGS OF SECURITYHOLDERS  

        SECTION
10.01.    Purposes for Which Meetings May Be Called.

        A
meeting of Holders of the Securities may be called at any time and from time to time pursuant to the provisions of this Article Ten for any of the following purposes: 

        (a)  to
give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to waive or to consent to the waiving of any Default or Event of
Default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Six; 

        (b)  to
remove the Trustee or appoint a successor Trustee pursuant to the provisions of Article Seven; 

        (c)  to
consent to an amendment, supplement or waiver pursuant to the provisions of Section 9.02; or 

        (d)  to
take any action (i) authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of such series of Securities under any
other provision of this Indenture, or authorized or permitted by law or (ii) which the Trustee deems necessary or appropriate in connection with the administration of this Indenture. 

        SECTION
10.02.    Manner of Calling Meetings. 

        The
Trustee may at any time call a meeting of Holders of the Securities to take any action specified in Section 10.01, to be held at such time and at such place in the City of Las
Vegas, Nevada, or in the Borough of Manhattan, The City of New York, as the Trustee shall determine. Notice of every meeting of Holders of the Securities, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to the Company, and to the Holders of the Securities at their
last addresses as they shall appear on the registration books of the Registrar, not less than ten nor more than 60 days prior to the date fixed for the meeting. 

        Any
meeting of Holders of the Securities shall be valid without notice if all Holders of the Securities then outstanding are present in Person or by proxy, or if notice is waived before
or after the meeting by all Holders of the Securities then outstanding, if the Company and the Trustee are either present by duly authorized representative or have, before or after the meeting waived
notice. 

        SECTION
10.03.    Call of Meetings by Company or Holders.

        In
case at any time the Company, pursuant to resolution of its Board of Directors, or the Holders of not less than 25% in aggregate principal amount of the Securities then outstanding
shall have requested the Trustee to call a meeting of Securityholders, either separately or jointly, to take any action specified in Section 10.01, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days for receipt of such request, then the Company
or the Holders of such series of Securities in the amount above specified may determine the time and place in the City of Las Vegas, Nevada, or in the Borough of Manhattan, The City of New York, for
such meeting and may call such meeting for the purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 10.02, or by causing notice thereof to be
published at least once in each of two successive calendar weeks (on any day of the week) in a newspaper or newspapers printed in the English language, customarily published at least five days a week
and of general circulation in the City 

-42-

 

of Las Vegas, Nevada and in the Borough of Manhattan, The City of New York, the first such publication to be not less than 10 nor more than 60 days prior to the date fixed for the meeting. 

        SECTION
10.04.    Who May Attend and Vote at Meetings. 

        To
be entitled to vote at any meeting of Securityholders, a Person shall (a) be a registered Holder of one or more Securities, or (b) be a Person appointed by an instrument
in writing as proxy for the registered Holder or Holders of Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled
to vote at such meeting and their counsel and any representative of the Trustee and its counsel and any representatives of the Company and its counsel. 

        SECTION
10.05.    Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment.

        Notwithstanding
any other provision of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of
the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think appropriate. Such regulations may fix a record date and time for determining the Holders
of record of Securities entitled to vote at such meeting, in which case those and only those Persons who are Holders of Securities at the record date and time so fixed, or their proxies, shall be
entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. 

        The
Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in
Section 10.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote. 

        At
any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him;  provided, however, that no vote shall be cast or counted at any meeting in respect of any Securities
challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. At any meeting of Securityholders, the presence of Persons holding or representing
any number of Securities shall be sufficient for a quorum. Any meeting of Securityholders duly called pursuant to the provisions of Section 10.02 or Section 10.03 may be adjourned from
time to time by vote of the Holders of a majority in aggregate principal amount of the Securities represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without
further notice. 

        SECTION
10.06.    Voting at the Meeting and Record To Be Kept.

        The
vote upon any resolution submitted to any meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their
representatives by proxy and the principal amount of the Securities voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in
duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts, setting forth 

-43-

 

a copy of the notice of the meeting and showing that such notice was mailed as provided in Section 10.02 or published as provided in Section 10.03. The record shall be signed and
verified by the affidavits of the permanent chairman and the secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting. 

        Any
record so signed and verified shall be conclusive evidence of the matters therein stated. 

        SECTION
10.07.    Exercise of Rights of Trustee or Securityholders May Not Be Hindered or Delayed by Call of Meeting.

        Nothing
in this Article Ten contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities. 

ARTICLE ELEVEN

REDEMPTION  

        SECTION
11.01.    Notices to Trustee. 

        If
the Company elects to redeem the Securities pursuant to any optional redemption provisions thereof, it shall notify the Trustee of the redemption date and the principal amount of the
Securities to be redeemed. 

        The
Company shall give each notice provided for in this Section in an Officers' Certificate at least 45 days before the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee), which notice shall specify the provisions of such Security pursuant to which the Company elects to redeem such Securities. 

        If
the Company elects to reduce the principal amount of the Securities to be redeemed pursuant to mandatory redemption provisions thereof, it shall notify the Trustee of the amount of,
and the basis for, any such reduction. If the Company elects to credit against any such mandatory redemption Securities it has not previously delivered to the Trustee for cancellation, it shall
deliver such Securities with such notice. 

        SECTION
11.02.    Selection of Securities To Be Redeemed.

        If
less than all of the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed by a method that complies with the requirements of any exchange on which the
Securities are listed, or, if the Securities are not listed on an exchange, on a pro rata basis or by lot. The Trustee shall make the selection not more than 75 days and not less than
30 days before the redemption date from the Securities outstanding and not previously called for redemption. Securities and portions thereof that the Trustee selects shall be in amounts equal
to the minimum authorized denomination for the Securities to be redeemed or any integral multiple thereof. Provisions of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the Company promptly in writing of the Securities or portions of Securities to be called for redemption. 

        SECTION
11.03.    Notice of Redemption. 

        Except
as otherwise provided as to the Securities, at least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption to
each Holder with a copy to the Trustee whose Securities are to be redeemed. 

-44-

 

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

        (1)  the
redemption date; 

        (2)  the
redemption price fixed in accordance with the terms of the Securities to be redeemed, plus accrued interest, if any, to the date fixed for redemption (the
"redemption price"); 

        (3)  if
any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date, upon surrender of
such Security, a new Security or Securities in principal amount equal to the unredeemed portion will be issued; 

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

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

        (6)  that,
unless the Company defaults in payment of the redemption price, interest on Securities called for redemption ceases to accrue on and after the redemption date; 

        (7)  the
paragraph of the Securities pursuant to which such Securities called for redemption are being redeemed; and 

        (8)  the
CUSIP number, if any, of the Securities to be redeemed. 

        At
the Company's 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 delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting
that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice of the Holder of any Security
shall not affect the validity of the proceeding for the redemption of any other Security. 

        SECTION
11.04.    Effect of Notice of Redemption. 

        Once
notice of redemption is mailed in accordance with Section 11.03 hereof, Securities called for redemption become due and payable on the redemption date for the redemption
price. Upon surrender to the Paying Agent, such Securities will be paid at the redemption price. 

        SECTION
11.05.    Deposit of Redemption Price. 

        On
or before 10:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or any subsidiary is the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the redemption price of all Securities called for redemption on that date other than Securities which have previously been delivered by the
Company to the Trustee for cancellation. The Paying Agent shall return to the Company any money not required for that purpose. 

        SECTION
11.06.    Securities Redeemed in Part. 

        Upon
surrender of a Security that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Security of like
series equal in principal amount to the unredeemed portion of the Security surrendered. 

-45-

 

ARTICLE TWELVE

MISCELLANEOUS  

        SECTION
12.01.    Trust Indenture Act Controls. 

        If
any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA or the TIA as amended after the
date hereof, the required provision shall control. 

        SECTION
12.02.    Notices. 

        Any
notice or communication shall be sufficiently given if in writing and delivered in Person or mailed by first-class mail postage prepaid, addressed as follows: 

	 	 	if to the Company:
	

	
 	

 	
 	

Mandalay Resort Group

3950 Las Vegas Boulevard South

Las Vegas, Nevada 89119

Attention: General Counsel
	

 	
 	

if to the Trustee:
	

 	
 	

 	
 	

The Bank of New York

101 Barclay Street, Floor 21W

New York, New York 10286

Attention: Corporate Trust Administration

Re: Mandalay Resort Group

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

        Any
notice or communication mailed to a Securityholder shall be mailed by first-class mail, postage prepaid, to such Holder at such Holder's address as it appears on the register
maintained by the Registrar and shall be sufficiently given to such Holder if so mailed within the time prescribed. 

        Failure
to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it shall be deemed to have been duly given two days after the date of mailing, whether or not the addressee receives it. 

        SECTION
12.03.    Communication by Holders with Other Holders.

        Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). 

        SECTION
12.04.    Certificates and Opinion as to Conditions Precedent.

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

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

        (2)  an
Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. 

-46-

 

        SECTION
12.05. Statements Required in Certificate or Opinion.

        Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: 

        (1)  a
statement that the Person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition; 

        (2)  a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate of Opinion
of Counsel are based; 

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

        (4)  a
statement as to whether or not in the opinion of such Person, such condition or covenant has been complied with;  provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an Officers'
Certificate. 

        SECTION
12.06.    When Treasury Securities Disregarded. 

        In
determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by an Affiliate
shall be disregarded, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which a Responsible Officer
of the Trustee actually knows are so owned shall be so disregarded. 

        SECTION
12.07.    Rules by Paying Agent, Registrar. 

        The
Paying Agent or Registrar each may make reasonable rules for its functions. 

        SECTION
12.08.    Legal Holidays. 

        A
"Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 

        SECTION
12.09.    Governing Law. 

        This
Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof. 

        SECTION
12.10.    No Adverse Interpretation of Other Agreements.

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

        SECTION
12.11.    No Recourse Against Others. 

        A
past, present or future director, officer, employee, stockholder or incorporator, as such, of the Company or any successor corporation shall not have any liability for any obligations
of the Company
under the Securities or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration of issuance of the Securities. The waiver may not be effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy. 

-47-

 

        SECTION
12.12.    Successors. 

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

        SECTION
12.13.    Duplicate Originals. 

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

        SECTION
12.14.    Severability. 

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

        SECTION
12.15.    Effect of Headings, Table of Contents, Etc.

        The
Article and Section headings herein and the table of contents are for convenience only and shall not affect the construction thereof. 

        IN
WITNESS WHEREOF, the Company and the Trustee have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above
written. 

	

 	
 	

SIGNATURES
	

 	
 	

MANDALAY RESORT GROUP
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	/s/  GLENN SCHAEFFER      

	 	 	 	 	Name:	 	Glenn Schaeffer
	 	 	 	 	Title:	 	President
	

 	
 	

THE BANK OF NEW YORK,

as Trustee
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	/s/  STACEY B. POINDEXTER      

	 	 	 	 	Name:	 	Stacey B. Poindexter
	 	 	 	 	Title:	 	Assistant Treasurer

-48-

  

EXHIBIT A

	REGISTERED

PRINCIPAL AMOUNT

$                  	 	 	 	CUSIP NO.              

NO.

 
 
 

MANDALAY RESORT GROUP
  93/8% SERIES A SENIOR SUBORDINATED
  NOTE DUE 2010    
  

        THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF MANDALAY RESORT GROUP (THE "COMPANY") THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT OR
(d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE. 

        UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL 

A-1

 

INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

        TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING THIS NOTE. 

        MANDALAY
RESORT GROUP, a Nevada corporation (the "Company," which term shall include any successor under the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of $300,000,000 on February 15, 2010, and to pay interest thereon at the rate of 93/8% per annum, until the
entire principal amount hereof is paid or duly provided for. This Note is one of a duly authorized series issued by the Company designated as the "93/8% Series A Senior
Subordinated Notes due 2010" (herein called the "Notes"). 

	1.
	Interest.

        The
Company will pay interest semiannually on February 15 and August 15 of each year (each, an "Interest Payment Date") commencing August 15, 2002. Interest on the
Notes will accrue from the most recent date to which interest has been paid, unless the date hereof is a date to which interest has been
paid, in which case from the date of the Note, or, if no interest has been paid, from December 20, 2001. Notwithstanding the foregoing, when there is no existing default in the payment of
interest on the Notes, if the date hereof is after a Record Date, as that term is defined below, and before the next succeeding Interest Payment Date, this Note shall bear interest from such Interest
Payment Date; provided, however, that if the Company shall default in the payment of interest due on
such Interest Payment Date, then this Note shall bear interest from the next preceding Interest Payment Date to which interest has been paid, or, if no interest has been paid on the Notes, from
December 20, 2001. 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 February 1 or
August 1 preceding the February 15 or August 15, as the case may be, on which the Interest Payment Date occurs (each, a "Record Date"). Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and any interest by its check payable in such money. It may mail an interest check to a holder's registered address. 

	3.
	Paying
Agent and Registrar. 

        Initially,
the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its
subsidiaries may act as Paying Agent, Registrar or co-registrar. 

	4.
	Indenture. 

        The
Company issued the Notes under an Indenture dated as of December 20, 2001, between the Company and the Trustee (the "Indenture"). 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 (15 U.S. Code 77aaa-77bbbb), as amended, as in effect on the date of the Indenture.
The Notes are subject to all such terms and Holders are referred to the Indenture and such Act for a statement of them. 

A-2

 

Terms used herein which are defined in the Indenture shall have the respective meanings assigned to them in the Indenture. 

	5.
	Redemption.

        a.    Optional
Redemption. Except as provided below, the Company may not redeem the Notes prior to maturity. Prior to maturity, upon not less than 30 nor more than
60 days' notice, the Company may redeem the Notes in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Make-Whole Premium, together
with accrued and unpaid interest thereon to the applicable redemption date. 

        "Make-Whole-Premium"
means, with respect to any Note at any redemption date, the excess, if any, of (a) the present value of the sum of the principal amount that would
be payable at maturity of such Note and all remaining interest payments to and including February 15, 2010, discounted on a semi-annual bond equivalent basis from
February 15, 2010 to the redemption date at a per annum interest rate equal to the sum of the Treasury Yield (determined on the Business Day immediately preceding the date of such redemption),
plus 50 basis points, over (b) the aggregate principal amount of the Note being redeemed. 

        "Treasury
Yield" means the yield to maturity at the time of computation of Treasury Securities with a constant maturity (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15 (519) which has become publicly available at least two business days prior to the date fixed for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar data)) most nearly equal to the then remaining average life of the Notes, provided that if the average life of the
Notes is not equal to the constant maturity of a Treasury Security for which a weekly average yield is given, the Treasury yield shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of Treasury Securities for which such yields are given, except that if the average life of the Notes is less than one year, the weekly
average yield on actually traded Treasury Securities adjusted to a constant maturity of one year shall be used. 

        b.    Mandatory
Redemption. The Company will not be required to make any mandatory sinking fund payments in respect of the Notes. 

	6.
	Offers
to Purchase. 

        Section 4.13
of the Indenture provides that upon the occurrence of a Change of Control (as defined in the Indenture) and subject to further limitations contained therein, the
Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 

	7.
	Denominations,
Transfer, Exchange. 

        The
Notes are in registered form without coupons in denominations of $1,000 and in integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar
may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 

	8.
	Persons
Deemed Owners. 

        The
Holder of a Note may be treated as the owner of it for all purposes. 

	9.
	Unclaimed
Money. 

        If
money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request. After that,
Holders entitled to the money must look to the Company for payment unless an abandoned property law 

A-3

 

designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. 

	10.
	Discharge
Prior to Maturity. 

        Subject
to certain conditions, if the Company deposits with the Trustee money or U.S. Government obligations sufficient to pay principal of and accrued interest on the Notes to maturity,
the Company will be discharged (to the extent provided in the Indenture) from the Indenture and the Notes. 

	11.
	Amendment,
Supplement, Waiver. 

        Subject
to certain exceptions requiring the consent of the Holders of each of the affected Notes, the Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding affected by such amendment, supplement or waiver, and any past default or compliance with any provision as to the Notes
may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement
the Indenture of the Notes to, among other things, cure any ambiguity, defect or inconsistency or to provide that the obligations of the Company hereunder may be represented solely in the records of
the Company in addition to or in place of the issue of Notes or to make any change that does not materially adversely affect the rights of any Holder. 

	12.
	Restrictive
Covenants. 

        The
Notes are general unsecured obligations of the Company limited to the aggregate principal amount of $300,000,000. The Indenture does not limit the Company from incurring unsecured
Debt other than the aggregate principal amount of debt to be issued pursuant to the Indenture. It does limit the ability of the Company and its subsidiaries to grant certain security interests in
their property without equally and ratably securing the Notes and to engage in certain sales and leaseback transactions, subject to certain important exceptions described therein. Once a year the
Company must report to the Trustee with respect to its compliance with such limitations. 

	13.
	Successor
Corporation. 

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

	14.
	Defaults
and Remedies. 

        An
Event of Default is any one of the following: (i) failure of the Company to pay interest when the same becomes due and payable and default continues for a period of
30 days on the Notes (whether or not prohibited by the subordination provisions); (ii) failure of the Company to pay the principal of or premium, if any, on the Notes when due at
maturity, upon redemption, pursuant to an offer to purchase pursuant to the change of control provision or otherwise by acceleration or otherwise (whether or not prohibited by the subordination
provisions); (iii) failure of the Company to comply with Section 4.13 in the Indenture; (iv) failure to perform any other covenant contained in the Indenture for 30 days
after notice (other than a Default under Section 4.02 or Article Five which Default shall be an Event of Default without the notice or passage of time specified in this clause); (v) the
occurrence of an event of default, as defined in any one or more mortgages, indentures or instruments under which there may be issue, or by which there may be secured or evidenced, any Debt of the
Company or a subsidiary whether such Debt now exists or shall hereafter be created and shall entitle the holders of such Debt to declare an aggregate principal amount of at least $10,000,000 of such
Debt due and payable, which event of default is not cured or waived in accordance with the provisions of such instrument, or such Debt is not discharged, within 30 days after the receipt by the
Company of notice from the Trustee or the Holders of at least 25% in principal amount of such series of Securities then outstanding of such event of default and requiring the Company to cause such
event 

A-4

 

of default to be cured or such Debt to be discharged; and (vi) certain events of bankruptcy, insolvency or reorganization. If an Event of Default occurs and is continuing, the Trustee or the
Holders of not less than 25% in principal amount of the Notes then outstanding may declare all the Notes to be due and payable immediately in accordance with Section 6.02 of the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require security and indemnity satisfactory to it before it enforces the Indenture or the Notes.
Subject to certain limitations,
Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. 

	15.
	Trustee
Dealings with Company. 

        The
Bank of New York, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its
subsidiaries or Affiliates, and may otherwise deal with the Company or its subsidiaries or Affiliates, as if it were not Trustee. 

	16.
	No
Recourse Against Others. 

        A
past, present or future director, officer, employee, stockholder or incorporator, as such, of the company or any successor corporation 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 released all
such liability. The waiver and release are part of the consideration for the issue of the Notes. 

	17.
	Authentication.

        This
Note shall not be valid until the Trustee signs the certificate of authentication at the end of this Note. 

	18.
	Copies
of the Indenture. 

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

	 	 	Mandalay Resort Group

3950 Las Vegas Boulevard South

Las Vegas, Nevada 89119

Attention: General Counsel

	19.
	Abbreviations
and Defined Terms. 

        Customary
abbreviations may be used in the name of a Holder of a Note 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). 

	20.
	CUSIP
Numbers. 

        Pursuant
to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience
to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 

	21.
	Registration
Rights. 

A-5

 

        Pursuant
to a registration rights agreement by and among the Company and the Initial Purchasers, the Company will be obligated to consummate an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note for Exchange Securities (as defined in the Indenture), which have been registered under the Securities Act, in like principal amount and
having terms identical in all material respects as the Notes. The Holders of the Notes shall be entitled to receive certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the registration rights agreement. 

	22.
	Governing
Law. 

        This
Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. 

(Signature
Page To Follow) 

A-6

        IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its duly authorized officers. 

	

 	
 	

SIGNATURES
	

 	
 	

MANDALAY RESORT GROUP
	

 	
 	

By:	
 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	

 	
 	

By:	
 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

TRUSTEE'S CERTIFICATE OF AUTHENTICATION  

        This is one of the Notes of the series designated "93/8% Senior Subordinated Notes due 2010," pursuant to the Indenture. 

	

 	
 	

THE BANK OF NEW YORK,

as Trustee
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Authorized Signatory

Date
of Authentication: 

ASSIGNMENT FORM  

        If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed by an Eligible Guarantor Institution (bank, stock broker,
savings and loan association or credit union) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15: 

        I
or we assign and transfer this Note to: 

(Print
or type name, address and zip code and social security or tax ID number of assignee) 

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

	Dated:	 	 	 	Signed:	 	 
	 	 	
	 	 	 	
 (Sign exactly as your name

appears on the other side of

this Note)

	

Signature Guarantee:	 	 
	 	 	

        In
connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the Commission of the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date
of the transfer) and (ii) the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer: 

[Check One] 

	

(1)	
 	

      	
 	

to the Company or a subsidiary thereof; or
	

(2)	
 	

      	
 	

pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or
	

(3)	
 	

      	
 	

to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended) that has furnished to the Trustee a signed letter containing certain representations and agreements
(the form of which letter can be obtained from the Trustee); or
	

(4)	
 	

      	
 	

pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended; or
	

(5)	
 	

      	
 	

pursuant to an effective registration statement under the Securities Act of 1933, as amended; or
	

(6)	
 	

      	
 	

pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended.
	

 	
 	

 	
 	

 

and
unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933,
as amended (an "Affiliate"): 

        / /
The transferee is an Affiliate of the Company. 

        Unless
one of the items is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof;  provided, however, that if item (3), (4) or (6) is checked, the Company or the Trustee may
require, prior to registering any such transfer of the Notes, in their sole discretion, such written legal opinions, certifications (including an investment letter in the case of box (3)) and other
information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended. 

        If
none of the foregoing items are checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until
the conditions to any such transfer of registration set forth herein and in Section 2.16 of the Indenture shall have been satisfied. 

	

 	
 	

 	
 	

 	
 	

 
	

Dated:	
 	

 	
 	

Signed:	
 	

 
	

 	
 	

	
 	

 	
 	

 (Sign exactly as your name

appears on the other side of

this Note)
	

 	
 	

 	
 	

 	
 	

 

	

Signature Guarantee:	
 	

 
	

 	
 	

	

 	
 	

 

TO
BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED 

        The
undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and
any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. 

	

 	
 	

 	
 	

 
	

Dated:	
 	

 	
 	

 
	

 	
 	

	
 	

 NOTICE: To be executed by an executive officer
	

 	
 	

 	
 	

 

  

EXHIBIT B

	REGISTERED

PRINCIPAL AMOUNT

$                  	 	 	 	CUSIP NO.              

NO.

 
 
 

MANDALAY RESORT GROUP
  93/8% SERIES B SENIOR SUBORDINATED
  NOTE DUE 2010    
  

        UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY ("DTC"), 55 WATER STREET, NEW YORK, NEW YORK TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

        UNLESS
AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A
NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. 

        MANDALAY
RESORT GROUP, a Nevada corporation (the "Company," which term shall include any successor under the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of $300,000,000 on February 15, 2010, and to pay interest thereon at the rate of 93/8% per annum, until the
entire principal amount hereof is paid or duly provided for. This Note is one of a duly authorized series issued by the Company designated as the "93/8% Series B Senior
Subordinated Notes due 2010" (herein called the "Notes"). 

	1.
	Interest.

        The
Company will pay interest semiannually on February 15 and August 15 of each year (each, an "Interest Payment Date") commencing August 15, 2002. Interest on the
Notes will accrue from the most recent date to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of the Note, or, if no
interest has been paid, from December 20, 2001. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Notes, if the date hereof is after a Record
Date, as that term is defined below, and before the next succeeding Interest Payment Date, this Note shall bear interest from such Interest Payment Date;  provided, however, that if the Company shall default in the payment of interest due on such Interest
Payment Date, then this Note shall bear interest from the next preceding Interest Payment Date to which interest has been paid, or, if no interest has been paid on the Notes, from December 20,
2001. 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 February 1 or
August 1 preceding the February 15 or August 15, as the case may be, on which the Interest Payment Date occurs (each, a 

B-1

 

"Record Date"). Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may pay principal and any interest by its check payable in such money. It may mail an interest check to a holder's registered
address. 

	3.
	Paying
Agent and Registrar. 

        Initially,
the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its
subsidiaries may act as Paying Agent, Registrar or co-registrar. 

	4.
	Indenture.

        The
Company issued the Notes under an Indenture dated as of December 20, 2001, between the Company and the Trustee (the "Indenture"). 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 (15 U.S. Code 77aaa-77bbbb), as amended, as in effect on the date of the Indenture.
The Notes are subject to all such terms and Holders are referred to the Indenture and such Act for a statement of them. Terms used herein which are defined in the Indenture shall have the respective
meanings assigned to them in the Indenture. 

	5.
	Redemption.

        a.    Optional
Redemption. Except as provided below, the Company may not redeem the Notes prior to maturity. Prior to maturity, upon not less than 30 nor more than
60 days' notice, the Company may redeem the Notes in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Make-Whole Premium, together
with accrued and unpaid interest thereon to the applicable redemption date. 

        "Make-Whole-Premium"
means, with respect to any Note at any redemption date, the excess, if any, of (a) the present value of the sum of the principal amount that would
be payable at maturity of such Note and all remaining interest payments to and including February 15, 2010, discounted on a semi-annual bond equivalent basis from
February 15, 2010 to the redemption date at a per annum interest rate equal to the sum of the Treasury Yield (determined on the Business Day immediately preceding the date of such redemption),
plus 50 basis points, over (b) the aggregate principal amount of the Note being redeemed. 

        "Treasury
Yield" means the yield to maturity at the time of computation of Treasury Securities with a constant maturity (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15 (519) which has become publicly available at least two business days prior to the date fixed for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar data)) most nearly equal to the then remaining average life of the Notes, provided that if the average life of the
Notes is not equal to the constant maturity of a Treasury Security for which a weekly average yield is given, the Treasury yield shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of Treasury Securities for which such yields are given, except that if the average life of the Notes is less than one year, the weekly
average yield on actually traded Treasury Securities adjusted to a constant maturity of one year shall be used. 

        b.    Mandatory
Redemption. The Company will not be required to make any mandatory sinking fund payments in respect of the Notes. 

	6.
	Offers
to Purchase. 

        Section 4.13
of the Indenture provides that upon the occurrence of a Change of Control (as defined in the Indenture) and subject to further limitations contained therein, the
Company will make 

B-2

 

an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 

	7.
	Denominations,
Transfer, Exchange. 

        The
Notes are in registered form without coupons in denominations of $1,000 and in integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 

	8.
	Persons
Deemed Owners. 

        The
Holder of a Note may be treated as the owner of it for all purposes. 

	9.
	Unclaimed
Money. 

        If
money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request. After that,
Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease. 

	10.
	Discharge
Prior to Maturity. 

        Subject
to certain conditions, if the Company deposits with the Trustee money or U.S. Government obligations sufficient to pay principal of and accrued interest on the Notes to maturity,
the Company will be discharged (to the extent provided in the Indenture) from the Indenture and the Notes. 

	11.
	Amendment,
Supplement, Waiver. 

        Subject
to certain exceptions requiring the consent of the Holders of each of the affected Notes, the Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding affected by such amendment, supplement or waiver, and any past default or compliance with any provision as to the Notes
may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement
the Indenture of the Notes to, among other things, cure any ambiguity, defect or inconsistency or to provide that the obligations of the Company hereunder may be represented solely in the records of
the Company in addition to or in place of the issue of Notes or to make any change that does not materially adversely affect the rights of any Holder. 

	12.
	Restrictive
Covenants. 

        The
Notes are general unsecured obligations of the Company limited to the aggregate principal amount of $300,000,000. The Indenture does not limit the Company from incurring unsecured
Debt other than the aggregate principal amount of debt to be issued pursuant to the Indenture. It does limit the ability of the Company and its subsidiaries to grant certain security interests in
their property without equally and ratably securing the Notes and to engage in certain sales and leaseback transactions, subject to certain important exceptions described therein. Once a year the
Company must report to the Trustee with respect to its compliance with such limitations. 

	13.
	Successor
Corporation. 

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

	14.
	Defaults
and Remedies. 

B-3

 

        An
Event of Default is any one of the following: (i) failure of the Company to pay interest when the same becomes due and payable and default continues for a period of
30 days on the Notes (whether or not prohibited by the subordination provisions); (ii) failure of the Company to pay the principal of or premium, if any, on the Notes when due at
maturity, upon redemption, pursuant to an offer to
purchase pursuant to the change of control provision or otherwise by acceleration or otherwise (whether or not prohibited by the subordination provisions); (iii) failure of the Company to
comply with Section 4.13 in the Indenture; (iv) failure to perform any other covenant contained in the Indenture for 30 days after notice (other than a Default under
Section 4.02 or Article Five which Default shall be an Event of Default without the notice or passage of time specified in this clause); (v) the occurrence of an event of default, as
defined in any one or more mortgages, indentures or instruments under which there may be issued, or by which there may be secured or evidenced any Debt of the Company or a subsidiary whether such Debt
now exists or shall hereafter be created and shall entitle the holders of such Debt to declare an aggregate principal amount of at least $10,000,000 of such Debt due and payable, which event of
default is not cured or waived in accordance with the provisions of such instrument, or such Debt is not discharged, within 30 days after the receipt by the Company of notice from the Trustee
or the Holders of at least 25% in principal amount of such series of Securities then outstanding of such event of default and requiring the Company to cause such event of default to be cured or such
Debt to be discharged; and (vi) certain events of bankruptcy, insolvency or reorganization. If an Event of Default occurs and is continuing, the Trustee or the Holders of not less than 25% in
principal amount of the Notes then outstanding may declare all the Notes to be due and payable immediately in accordance with Section 6.02 of the Indenture. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may require security and indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any
continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. 

	15.
	Trustee
Dealings with Company. 

        The
Bank of New York, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its
subsidiaries or Affiliates, and may otherwise deal with the Company or its subsidiaries or Affiliates, as if it were not Trustee. 

	16.
	No
Recourse Against Others. 

        A
past, present or future director, officer, employee, stockholder or incorporator, as such, of the company or any successor corporation 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 released all
such liability. The waiver and release are part of the consideration for the issue of the Notes. 

	17.
	Authentication.

        This
Note shall not be valid until the Trustee signs the certificate of authentication at the end of this Note. 

	18.
	Copies
of the Indenture. 

B-4

 

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

	 	 	Mandalay Resort Group

3950 Las Vegas Boulevard South

Las Vegas, Nevada 89119

Attention: General Counsel

	19.
	Abbreviations
and Defined Terms. 

        Customary
abbreviations may be used in the name of a Holder of a Note 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). 

	20.
	CUSIP
Numbers. 

        Pursuant
to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience
to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 

	21.
	Governing
Law 

        This
Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. 

(Signature
Page To Follow) 

B-5

        IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its duly authorized officers. 

	

 	
 	

SIGNATURES
	

 	
 	

MANDALAY RESORT GROUP
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

TRUSTEE'S CERTIFICATE OF AUTHENTICATION  

        This is one of the Notes of the series designated "93/8% Senior Subordinated Notes due 2010," pursuant to the Indenture. 

	

 	
 	

THE BANK OF NEW YORK,

as Trustee
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Authorized Signatory

Date
of Authentication: 

ASSIGNMENT FORM  

        If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed by an Eligible Guarantor Institution (bank, stock broker,
savings and loan association or credit union) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15: 

        I
or we assign and transfer this Note to: 

(Print
or type name, address and zip code and social security or tax ID number of assignee) 

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

	Dated:	 	 	 	Signed:	 	 
	 	 	
	 	 	 	
 (Sign exactly as your name

appears on the other side of

this Note)

	

Signature Guarantee:	 	 
	 	 	

  

EXHIBIT C  

 
 

Form of Certificate To Be
  Delivered in Connection with
  Transfers to Non-QIB Accredited Investors    
  

        [                        ],
[        ] 

Registrar

[                                         
       ]

[                                         
       ]

[                                         
       ] 

Ladies
and Gentlemen: 

        In
connection with our proposed purchase of Series A 93/8% Senior Subordinated Notes due 2010 (the "Notes") of Mandalay Resort Group, a Nevada corporation (the
"Company"), we confirm that: 

        1.    We
have received a copy of the Offering Memorandum (the "Offering Memorandum"), dated December 13, 2001, relating to the Notes and such other information as we
deem necessary in order to make our investment decision. We acknowledge that we have read and agreed to the matters stated in the section entitled "Transfer Restrictions" of such Offering Memorandum. 

        2.    We
understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture relating to the Notes (the
"Indenture") as described in the Offering Memorandum and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities Act"), and all applicable State securities laws. 

        3.    We
understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. Persons except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only (i) to the Company or any subsidiary thereof, (ii) inside the United States in accordance with Rule 144A
under the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A promulgated under the Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a signed letter
containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee), (iv) outside the United
States in accordance with Rule 904 of Regulation S promulgated under the Securities Act to non-U.S. Persons, (v) pursuant to the exemption from registration provided
by Rule 144 under the Securities Act (if available), or (vi) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person
purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 

        4.    We
understand that, on any proposed resale of any Notes, we will be required to furnish to the Trustee and the Company such certification, legal opinions and other
information as the Trustee and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect. 

C-1

 

        5.    We
are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment, as the case may be. 

        6.    We
are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion. 

        You,
the Company, the Trustee and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the matters covered hereby. 

	

 	
 	

Very truly yours,

[Name of Transferee]
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

C-2

  

EXHIBIT D  

 
 

Form of Certificate To Be Delivered
  in Connection with Transfers
  Pursuant to Regulation S    
  

        [                        ],
[        ] 

[                                         
       ]

[                                         
       ]

[                                         
       ] 

	 	 	Re:	 	Mandalay Resort Group (the "Company")

Series A 93/8% Senior Subordinated Notes

due 2010 (the "Notes")

Ladies and Gentlemen: 

        In
connection with our proposed sale of $300,000,000 aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: 

        (1)  the
offer of the Notes was not made to a Person in the United States; 

        (2)  either
(a) at the time the buy offer was originated, the transferee was outside the United States or we and any Person acting on our behalf reasonably believed
that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we
nor any Person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; 

        (3)  no
directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable; 

        (4)  the
transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and 

        (5)  we
have advised the transferee of the transfer restrictions applicable to the Notes. 

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

	

 	
 	

Very truly yours,

[Name of Transferor]
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Authorized Signature

D-1

QuickLinks

INDENTURE Dated as of December 20, 2001

SERIES A SENIOR SUBORNDINGATED NOTE DUE 2010

SERIES B SENIOR SUBORNDINGATED NOTE DUE 2010

Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors

Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S

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