Document:

Exhibit 10.91

 

AMENDED
AND RESTATED LOAN AGREEMENT

 

by
and between

 

U.S. BANK NATIONAL ASSOCIATION, a national banking association, and
EAST-WEST BANK, a California banking corporation,

 

“Banks”
or “Lenders,”

 

U.S. BANK NATIONAL ASSOCIATION, a national banking association, “Agent,”

 

and

 

KENNEDY-WILSON,
INC., a Delaware corporation,

 

“Borrower”

 

Dated
as of June 5, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
  DEFINITIONS
  AND CONSTRUCTION

  	
  1

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Accounting
  Terms

  	
  10

  
	
   

  	
  1.3

  	
  Code

  	
  10

  
	
   

  	
  1.4

  	
  Construction

  	
  10

  
	
   

  	
  1.5

  	
  Schedules
  and Exhibits

  	
  11

  
	
  2.
  LOAN AND TERMS OF PAYMENT

  	
  11

  
	
   

  	
  2.1

  	
  Revolving
  Advances

  	
  11

  
	
   

  	
  2.2

  	
  Interest
  Rates, Payments, and Calculations

  	
  11

  
	
   

  	
  2.3

  	
  Crediting
  Payments; Application of Collections

  	
  13

  
	
   

  	
  2.4

  	
  Designated
  Account

  	
  14

  
	
   

  	
  2.5

  	
  Maintenance
  of Loan Accounts; Statements of Obligations

  	
  14

  
	
   

  	
  2.6

  	
  Fees,
  Costs, and Charges

  	
  14

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT

  	
  15

  
	
   

  	
  3.1

  	
  Conditions
  Precedent to the Initial Advance

  	
  15

  
	
   

  	
  3.2

  	
  Conditions
  Precedent to all Advances

  	
  16

  
	
   

  	
  3.3

  	
  [Intentionally
  Omitted.]

  	
  17

  
	
   

  	
  3.4

  	
  Term

  	
  17

  
	
   

  	
  3.5

  	
  Early
  Termination by Borrower

  	
  17

  
	
  4.

  	
  RIGHT OF INSPECTION

  	
  17

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  17

  
	
   

  	
  5.1

  	
  No
  Encumbrances

  	
  17

  
	
   

  	
  5.2

  	
  Equipment

  	
  17

  
	
   

  	
  5.3

  	
  Intentionally
  Omitted

  	
  18

  
	
   

  	
  5.4

  	
  Schedule
  of Indebtedness

  	
  18

  
	
   

  	
  5.5

  	
  Location
  of Chief Executive Office; FEIN

  	
  18

  
	
   

  	
  5.6

  	
  Due
  Organization and Qualification; Subsidiaries

  	
  18

  
	
   

  	
  5.7

  	
  Due
  Authorization; No Conflict

  	
  18

  
	
   

  	
  5.8

  	
  Litigation

  	
  19

  
	
   

  	
  5.9

  	
  No
  Material Adverse Change

  	
  19

  
	
   

  	
  5.10

  	
  Solvency

  	
  19

  
	
   

  	
  5.11

  	
  Employee
  Benefits

  	
  19

  
	
   

  	
  5.12

  	
  Maximum
  Balance Sheet Leverage

  	
  20

  
	
   

  	
  5.13

  	
  Minimum
  Rent Adjusted Fixed Charge Coverage Ratio

  	
  20

  
	
  6.

  	
  AFFIRMATIVE COVENANTS

  	
  20

  
	
   

  	
  6.1

  	
  Accounting
  System

  	
  20

  
	
   

  	
  6.2

  	
  Financial
  Covenants

  	
  20

  
	
   

  	
  6.3

  	
  Financial
  Statements, Reports, Certificates

  	
  20

  

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  6.4

  	
  Chairman;
  CEO

  	
  22

  
	
   

  	
  6.5

  	
  Title
  to Equipment

  	
  22

  
	
   

  	
  6.6

  	
  Maintenance
  of Equipment

  	
  22

  
	
   

  	
  6.7

  	
  Taxes

  	
  22

  
	
   

  	
  6.8

  	
  Insurance

  	
  22

  
	
   

  	
  6.9

  	
  No
  Setoffs or Counterclaims

  	
  23

  
	
   

  	
  6.10

  	
  Dispositions
  at Fair Market Consideration

  	
  23

  
	
   

  	
  6.11

  	
  CompliancewithLaws

  	
  23

  
	
   

  	
  6.12

  	
  Employee
  Benefits

  	
  23

  
	
   

  	
  6.13

  	
  Compliance
  with Leases

  	
  24

  
	
  7.
  NEGATIVE COVENANTS

  	
  24

  
	
   

  	
  7.1

  	
  Indebtedness

  	
  24

  
	
   

  	
  7.2

  	
  Liens

  	
  25

  
	
   

  	
  7.3

  	
  Restrictions
  on Fundamental Changes

  	
  25

  
	
   

  	
  7.4

  	
  Disposal
  of Assets

  	
  25

  
	
   

  	
  7.5

  	
  Change
  Name

  	
  25

  
	
   

  	
  7.6

  	
  Guaranty

  	
  25

  
	
   

  	
  7.7

  	
  Nature
  of Business

  	
  25

  
	
   

  	
  7.8

  	
  Prepayments
  and Amendments

  	
  25

  
	
   

  	
  7.9

  	
  Change
  of Control

  	
  26

  
	
   

  	
  7.10

  	
  Intentionally
  Omitted

  	
  26

  
	
   

  	
  7.11

  	
  Accounting
  Methods

  	
  26

  
	
   

  	
  7.12

  	
  Investments

  	
  26

  
	
   

  	
  7.13

  	
  Transactions
  with Affiliates

  	
  26

  
	
   

  	
  7.14

  	
  Suspension

  	
  26

  
	
   

  	
  7.15

  	
  Intentionally
  Omitted

  	
  26

  
	
   

  	
  7.16

  	
  Use
  of Proceeds

  	
  27

  
	
   

  	
  7.17

  	
  Change
  in Location of Chief Executive Office Equipment with Bailees

  	
  27

  
	
   

  	
  7.18

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7.19

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7.20

  	
  Downstreaming
  of Funds

  	
  27

  
	
   

  	
  7.21

  	
  Excessive
  Acquisitions

  	
  27

  
	
   

  	
  7.22

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7,23

  	
  Dividends

  	
  27

  
	
   

  	
  7.24

  	
  Stock
  Repurchases

  	
  27

  
	
  8.

  	
  EVENTS OF DEFAULT

  	
  27

  
	
   

  	
  8.1

  	
  Failure
  to Make Payment

  	
  28

  
	
   

  	
  8.2

  	
  Failure
  to Perform

  	
  28

  
	
   

  	
  8.3

  	
  Material
  Adverse Change

  	
  28

  
	
   

  	
  8.4

  	
  Attachment
  or Other Process

  	
  28

  

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  8.5

  	
  Insolvency
  Proceeding by Borrower

  	
  28

  
	
   

  	
  8.6

  	
  Insolvency
  Proceeding Against Borrower

  	
  28

  
	
   

  	
  8.7

  	
  Injunction
  or Other Process

  	
  28

  
	
   

  	
  8.8

  	
  Lien
  or Other Process

  	
  28

  
	
   

  	
  8.9

  	
  Judgment
  or Claim, Lien

  	
  28

  
	
   

  	
  8.10

  	
  Defaults
  in Material Agreement

  	
  28

  
	
   

  	
  8.11

  	
  Payment
  on Subordinated Indebtedness

  	
  29

  
	
   

  	
  8.12

  	
  Misstatements
  and Misrepresentations

  	
  29

  
	
   

  	
  8.13

  	
  Other
  Events of Default

  	
  29

  
	
   

  	
  8.14

  	
  Cure
  Period, Notice to Cure

  	
  29

  
	
  9.

  	
  BANKS
  RIGHTS AND REMEDIES

  	
  30

  
	
   

  	
  9.1

  	
  Rights
  and Remedies

  	
  30

  
	
   

  	
  9.2

  	
  Remedies
  Cumulative

  	
  31

  
	
   

  	
  10.

  	
  TAXES
  AND EXPENSES

  	
  31

  
	
   

  	
  11.

  	
  WAIVERS; INDEMNIFICATION

  	
  31

  
	
   

  	
  11.1

  	
  Demand; Protest; etc

  	
  31

  
	
   

  	
  11.2

  	
  Intentionally
  Omitted

  	
  31

  
	
   

  	
  11.3

  	
  Jndeninification

  	
  31

  
	
  12.

  	
  NOTICES

  	
  32

  
	
  13.

  	
  CHOICE
  OF LAW AND VENUE; JURY TRIAL WAIVER

  	
  33

  
	
  14.

  	
  DESTRUCTION
  OF BOflOWERS DOCUMENTS

  	
  34

  
	
  15.

  	
  AGENCY
  AND GOVERNANCE PROVISIONS

  	
  34

  
	
   

  	
  15.1

  	
  Actions

  	
  34

  
	
   

  	
  15.2

  	
  Exculpation

  	
  34

  
	
   

  	
  15.3

  	
  Successors

  	
  35

  
	
   

  	
  15.4

  	
  Other
  Transactions by U.S. Bank

  	
  35

  
	
   

  	
  15.5

  	
  Independent
  Credit Decision

  	
  35

  
	
   

  	
  15.6

  	
  Copies

  	
  35

  
	
   

  	
  15.7

  	
  Payments
  to be Made to Agent

  	
  36

  
	
   

  	
  15.8

  	
  Reimbursement
  by Lenders

  	
  36

  
	
   

  	
  15.9

  	
  Collateral
  and Guarantees Held by Agent

  	
  36

  
	
   

  	
  15.10

  	
  Lenders’
  Commitments Independent

  	
  36

  
	
   

  	
  15.11

  	
  Borrower
  to deal with Agent

  	
  37

  
	
   

  	
  15.12

  	
  Loans
  to be Funded Through Agent

  	
  37

  
	
  16.

  	
  ASSIGNMENTS
  AND PARTICIPATIONS

  	
  38

  
	
   

  	
  16.1

  	
  Assignments

  	
  38

  
	
   

  	
  16.2

  	
  Participations

  	
  39

  
	
  17.

  	
  GENERAL
  PROVISIONS

  	
  39

  

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  17.1

  	
  Effectiveness

  	
  39

  
	
   

  	
  17.2

  	
  Successors
  and Assigns

  	
  39

  
	
   

  	
  17.3

  	
  SectionHeadings

  	
  39

  
	
   

  	
  17.4

  	
  Interpretation

  	
  40

  
	
   

  	
  17.5

  	
  Severability
  of Provisions

  	
  40

  
	
   

  	
  17.6

  	
  Amendments
  in Writing

  	
  40

  
	
   

  	
  17.7

  	
  Counterparts;
  Telefacsimile Execution

  	
  40

  
	
   

  	
  17.8

  	
  Revival
  and Reinstatement of Obligations

  	
  40

  
	
   

  	
  17.9

  	
  Integration

  	
  40

  
	
   

  	
  17.10

  	
  Attomeys’
  Fees

  	
  40

  

 

 

AMENDED AND RESTATED LOAN AGREEMENT

 

THIS LOAN AGREEMENT (this “Agreement”), is entered into as of June 5,
2008, between U.S. BANK NATIONAL ASSOCIATION, a national banking association (“jj~
Bank”), with a place of business located at 633 W. Fifth Street, 30°’ Floor,
Los Angeles, California 90071 and EAST-WEST BANK, a California banking
corporation (“East-West Bank”), with its chief place of business located
at 135 N. Los Robles Ave., 2~ Floor, Pasadena, California 91101 (individually,
a “Bank” or a “Lender,” and collectively, “Banks” or “Lenders”),
U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for
the Banks (“Agent”), and KENNEDY-WILSON, INC., a Delaware corporation (“Borrower’),
with its chief place of business located at 9601 Wilshire Boulevard, Suite 220,
Beverly Hills, California 90210. This Agreement amends and restates in its
entirety that certain Loan Agreement between Borrower and Banks dated June 13,
2002, as amended by that (i) Amendment Number One to Promissory Notes and
Loan Agreement dated December 30, 2002, (ii) First Amendment to Loan
Agreement dated March 30, 2004, (iii) Second Amendment to Loan
Agreement dated November 10, 2004, and (iv) Third Amendment to Loan
Agreement dated June 16, 2005.

 

The parties agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

 

1.1                  Definitions.
As used in this Agreement, the following terms shall have the following
definitions:

 

“Account Debtor” means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.

 

“Accounts” means all currently existing and hereafter arising
accounts (as that term is defined from time to time in the Code), contract
rights, and all other forms of obligations owing to Borrower, and any and all
credit insurance, guaranties, or security therefor, and specifically includes
all of Borrower’s rights to payments of every kind under all license agreements
under which Borrower is a licensor.

 

“Advances” has the meaning set forth in Section 2.1(a).

 

 

“Affiliate” means, as applied to any Person, any other Person
who directly or indirectly controls, is controlled by, is under common control
with or is a director or officer of such Person. For purposes of this
definition, “control” means the possession, directly or indirectly, of the
power to vote 10% or more of the securities having ordinary voting power for
the election of directors or the direct or indirect power to direct the
management and policies of a Person.

 

“Agent” has the meaning set forth in Section 15.1.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“Asset Access Agreement” means a landlord
waiver, mortgagee waiver, acknowledgment agreement of any Person in possession
of, having a Lien upon, or having rights or interests in any asset of Borrower,
in each case, in form and substance satisfactory to Agent.

 

“Authorized Person” means any officer or other employee of
Borrower listed on Schedule A-1, as amended from time to time. Borrower
shall furnish, from time to time, a resolution of its Board of Directors, in a
form acceptable to Lenders, confirming its initial appointment of, and any
change in, such Authorized Persons.

 

“Bank” and “Banks” have the meaning set forth in the
preamble to this Agreement.

 

“Bankruptcy Code” means the United States Bankruptcy Code (11
U.S.C. § 101, et seq.), as amended, and any successor statute.

 

“Bank Expenses” means, without limitation, all: reasonable costs
or expenses required to be paid by Borrower under any of the Loan Documents
that are paid or incurred by Banks or by Agent; fees, charges, taxes, and
insurance premiums paid or incurred by Banks or by Agent in connection with
Banks’ transactions with Borrower, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record
searches (including tax lien, litigation, and UCC searches and including
searches with any Governmental Agencies, filing, recording, publication,
appraisals, costs and expenses incurred by Banks or by Agent in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Banks or by Agent resulting from the dishonor of checks; costs
and expenses paid orincurred by Banks or by Agent to correct any default or
enforce any provision of the Loan Documents; costs and expenses paid or
incurred by Banks or by Agent in examining Borrower’s Books; costs and expenses
of third party claims or any other suit paid or incurred by Banks or by Agent
in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or Banks’ relationship with
Borrower and its Affiliates or Subsidiaries, and Banks’ or Agent’s reasonable
attorneys’ fees and expenses incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing, defending, or
concerning the Loan Documents (including attorneys’ fees and expenses incurred
in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Borrower or any guarantor of the Obligations), irrespective of
whether suit is brought. All Bank Expenses charged by Banks shall be deemed
reasonable in the absence of compelling circumstances to the contrary.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35)
of ERISA) for 

 

2

 

which Borrower, any Subsidiary of Borrower, or any
ERISA Affiliate has been an “employer” (as defined in Section 3(5) of
ERISA) within the past six (6) years.

 

“Borrower” has the meaning set forth in the preamble to this
Agreement.

 

“Borrower’s Books” means all of Borrower’s books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower’s
properties or assets or liabilities; all information relating to Borrower’s
business operations or financial condition; and all computer programs, disk,
tape, or other media files, printouts, runs, or other computer- prepared
information.

 

“Business Day” means any day that is not a
Saturday, Sunday, or other day on which national banks are authorized or
required to close in New York City or San Francisco, California, and if the
Business Day relates to a determination of the LIBOR Rate applicable to an
Advance under the credit facilities under this Agreement, it also means a day
on which dealings are carried on in the London interbank market.

 

“Change of Control” shall be deemed to have occurred at such
time as there is (a) any change in the Chief Executive Officer (currently
William McMorrow) of the Borrower, or (b) change of ownership (whether by
transfer of existing shares, issuance of new shares, or a combination, or
otherwise) of more than 50% in the aggregate of the common stock of the
Borrower.

 

“Closing Date” means the date all conditions precedent set forth
in Section 3.1 of this Agreement have been satisfied in Agent’s
sole determination.

 

“Code” means the California Uniform Commercial Code as it may be
amended from time to time.

 

“Collections” means all cash, checks, notes, instruments, and
other items of payment (including, insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).

 

“Commitment” means the agreement of each of the Lenders to
extend its Pro-Rata Share of the credit facilities called for under the terms
and conditions of this Agreement and, depending upon the context, all or
specified rights of such Lender in such credit facilities.

 

“Compliance Certificate” means a certificate substantially in
the form of Schedule 6.3 and delivered by the Chief Financial Officer of
Borrower to Agent.

 

“Daily Balance” means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.

 

“deems itself insecure” means that the Person deems itself
insecure in accordance with the provisions of Section 1208 of the Code.

 

“Default” means an event, condition, or default that, with the
giving of notice, the 

 

3

 

passage of time, or both, would be an Event of
Default, except and then solely to the extent provided in Section 8.14.

 

“Advance Request Form and Disbursement Letter” means an
instructional letter in the form of Schedule 1.1-1 executed and
delivered by Borrower to Agent for each Advance, the form and substance of
which shall be satisfactory to Agent.

 

“Dollars or $”  means dollars
of the United States of America.

 

“EBITDA” means the net income of Borrower (excluding
extraordinary items), for the applicable period, plus all interest expense,
income tax expense, depreciation and amortization (including amortization of
any goodwill or other intangibles) for the period.

 

“Effective Tangible Net Worth” means
stockholders’ equity, less Intangible Assets.

 

“Equipment” means all of Borrower’s present and hereafter
acquired machinery, office and other equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), and tools, and
goods, wherever located, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1000, et seq., amendments thereto, successor
statutes, and regulations or guidance promulgated thereunder.

 

“ERISA Affiliate” means (a) any corporation subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of Borrower under IRC Section 4 14(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group
of which Borrower is a member under IRC Section 4 14(m), or (d) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
party subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section 4
14(o).

 

“ERISA Event” means (a) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower,
any of its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan
year in which it was a “substantial employer” (as defined in Section 4001
(a)(2) of ERISA), (c) the providing of notice of intent to terminate
a Benefit Plan in a distress termination (as described in Section 404 1(c) of
ERISA), (d) the institution by the PBGC of proceedings to terminate a
Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that
provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for
the termination of, or the appointment of a trustee to administer, any Benefit
Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section 40l(a)(29)
of the IRC by Borrower or its 

 

4

 

Subsidiaries or any of their ERISA Affiliates.

 

“Equity Infusion” shall mean and refer to Bank-funded investment
capital to be used by Borrower for investments and! or acquisitions.

 

“Event of Default” has the meaning set forth in Section 8.

 

“Facility A” means a credit facility in the maximum amount of
Twenty Five Million Dollars ($25,000,000), to be furnished to Borrower by Banks
under the terms of this Agreement for purposes of financing Borrower’s
acquisition of real property. In no event shall U.S. Bank be required to make
Advances totaling more than Twelve Million Five Hundred Thousand Dollars
($12,500,000) of such facility. In no event shall East-West Bank be required to
make Advances totaling more than Twelve Million Five Hundred Thousand Dollars
($12,500,0000) of such facility.

 

“Facility B” means a credit facility in the maximum amount of
Five Million Dollars ($5,000,000), to be furnished to Borrower by Banks under
the terms of this Agreement for purposes of providing working capital to
Borrower. In no event shall U.S. Bank be required to make Advances totaling
more than Two Million Five Hundred Thousand Dollars ($2,500,000) of such
facility. In no event shall East-West Bank be required to make Advances
totaling more than Two Million Five Hundred Thousand Dollars ($2,500,0000) of
such facility.

 

“FEIN” means Federal Employer Identification Number.

 

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

 

“General Intangibles” means all of Borrower’s present and future
general intangibles (as that term is defined from time to time in the Code),
payment intangibles and other personal property (including without limitation
contract rights, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill, patents, trade names, trademarks, service
marks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
software, computer programs, information contained on computer disks, tapes, or
other media, literature, reports, catalogs, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), other than goods, Accounts, and
Negotiable Collateral as applicable.

 

“Governing Documents” means the certificate or articles of
incorporation, by-laws, operating agreement, partnership agreement, or other
organizational or governing documents of any Person.

 

“Governmental Authority” means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory, or administrative functions of or
pertaining to government.

 

5

 

“Indebtedness” means: (a) all obligations of Borrower for
borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (e) all obligations of Borrower under
capital leases, (d) all obligations or liabilities of others secured by a
Lien on any property or asset of Borrower, irrespective of whether such
obligation or liability is assumed, and (e) any obligation of Borrower
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made,
discounted, or sold with recourse to Borrower) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other Person.

 

“Indenmified Liabilities” has the meaning set forth in Section 11.3.

 

“Indemnified Person” has the meaning set forth in Section 11.3.

 

“Insolvency Proceeding” means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code, Title 11, United
States Code, or under any other bankruptcy or insolvency law of any jurisdiction,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.

 

“Intangible Assets” means, with respect to any Person, that
portion of the book value of all of such Person’s assets, net of amortization,
that would be treated as intangibles under GAAP, including, without limitation,
property management contracts, capitalized loan fees, and Affiliate or
stockholder loans.

 

“Investment Property” means all of Borrower’s presently existing
and hereafter acquired or arising investment property (as that term is defined
form time to time in the Code).

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

 

“Lender” and “Lenders” have the meaning set forth in the preamble to this Agreement.

 

“LIBOR Notice” means the written notice from Borrower to Agent
indentifying the Advances that are to bear interest at the LIBOR Rate for the
Loan Period selected in the form set forth on Schedule 2.2 hereto, the
terms and conditions of which supplement and are made a part of this agreement.

 

“LIBOR Rate” means,
with respect to the Loan Period applicable to any Advance hereunder, the LIBOR
rate for such period quoted by Agent from Reuters Screen LIBOROI Page or
any successor thereto, adjusted for any reserve requirement and any subsequent
costs to Lenders arising from any change in government requirements. The LIBOR
Rate for the Loan Period for each such Advance shall be determined by Agent
prior to the first day of such Loan Period.

 

“LIBOR Rate Loan” has the meaning set forth in the Notes. No
more than five (5) 

 

6

 

LIBOR Rate Loans may be outstanding at any one time.

 

“Lien” means any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the Lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes.

 

“Loan Accounts” has the meaning set forth in Section 2.5.

 

“Loan Documents” means this Agreement, the Advance Request Form and
Disbursement Letter, any Note or Notes executed by Borrower and payable to
Banks, and any other agreement entered into, now or in the future, in
connection with this Agreement.

 

“Loan Period”
means the period commencing on the Advance date of the applicable LIBOR Rate
Loan and ending on the numerically corresponding day 1, 2, 3, 6, or 12 months thereafter
matching the interest rate term selected by the Borrower; provided, however, (a) if
any Loan Period would otherwise end on a day which is not a New York Banking
Day, then the Loan Period shall end on the next succeeding New York Banking Day
unless the next succeeding New York Banking Day falls in another calendar month,
in which case the Loan Period shall end on the immediately preceding New York
Banking Day; or (b) if any Loan Period begins on the last New York Banking
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of the Loan Period), then
the Loan Period shall end on the last New York Banking Day of the calendar
month at the end of such Loan Period.

 

“Loans” means the credit facilities to be extended by Lenders to
Borrower subject to the terms and conditions of this Agreement.

 

“Material Adverse Change” means (a) a material adverse
change in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, or (b) the
material impairment of Borrower’s ability to perform its obligations under the
Loan Documents to which it is a party or of Banks to enforce the Obligations.

 

“Maturity Date” means July 1, 2011, unless extended in
writing by Banks in their sole discretion. The Maturity Date is the date on or
before which all obligations of Borrower under the credit facilities to be
furnished under this Agreement shall be paid in full, subject to the terms and
conditions of this Agreement.

 

“Maximum Balance Sheet Leverage” means total debt divided by
Effective Tangible Net Worth.

 

“Maximum Revolving Amount” means, in the case of Facility A,
Twenty Five Million 

 

7

 

Dollars ($25,000,000), and in the case of Facility
B, Five Million Dollars ($5,000,000).

 

“Minimum Rent Adjusted Fixed Charge Coverage Ratio” means, as of
the end of the most recently concluded fiscal quarter of Borrower, and/or as of
any other date specified in this Agreement, as applicable, (i) EBITDA for
that portion of the fiscal year of Borrower then concluded, minus cash taxes,
cash dividends, cash used to repurchase corporate stock, and the higher of
un-financed capital expenditures or maintenance capital expenditures plus
rental/lease expense, divided by (ii) interest expense plus current
portion of long term debt (“CPLTD”) secured by any property held by Borrower in
excess of three (3) years (excluding those properties listed in Schedule
1.1-2) plus rental lease expense. CPLTD shall exclude balloon payments due
on real estate indebtedness of Borrower and lump sum principal payments
required by Facility A. (Borrower shall include in its financial statements, or
a side letter thereto, provided to Banks hereunder, in addition to all other
information required under this Agreement, information sufficiently detailed to
enable Banks to verify the financial elements described in this paragraph.)

 

“Multiemployer Plan” means a “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA) to which Borrower, any of its
Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to
contribute, within the past six (6) years.

 

“New York Banking Day” means any day (other
than a Saturday or Sunday) on which commercial banks are open for business in
New York, New York.

 

“Note” or “Notes” means the promissory note or notes to be
executed by Borrower in favor of Lenders to evidence the indebtedness incurred
pursuant to this Agreement.

 

“Obligstions” means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), liabilities (including all amounts charged to
Borrower’s Loan Accounts pursuant hereto), obligations, fees, charges, costs,
or Bank Expenses (including any fees or expenses that, but for the provisions
of the Bankruptcy Code, would have accrued), lease payments, guaranties,
covenants, and duties owing by Borrower to Banks of any kind and description
(whether pursuant to or evidenced by the Loan Documents or pursuant to any
other agreement between Banks and Borrower, and irrespective of whether for the
payment of money), whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including any debt,
liability, or obligation owing from Borrower to others that Banks may have
obtained by assignment or otherwise, and further including all interest not
paid when due and all Bank Expenses that Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.

 

“Participant” means any Person to which Banks or either of them
have at any time sold a participation interest in their or either of their
rights under the Loan Documents.

 

“PBGC” means the Pension Benefit Guaranty Corporation as defined
in Title IV of ERISA, or any successor thereto.

 

“Permitted Liens” means (a) Liens held by Banks or either
of them, (b) Liens for unpaid 

 

8

 

taxes that either (i) are not yet due and
payable or (ii) are the subject of Permitted Protests, (c) Liens set
forth on Schedule P-1, (d) the interests of lessors under operating
leases and purchase money security interests so long as the Lien only attaches
to the asset purchased or acquired and only secures the purchase price of the
asset, (e) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of business of Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due
and payable, or (ii) are the subject of Permitted Protests, (f) Liens
arising from deposits made in connection with obtaining worker’s compensation
or other unemployment insurance, (g) Liens or deposits to secure
performance of bids, tenders, or leases (to the extent permitted under this
Agreement), incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, (h) Liens arising by reason of
security for surety or appeal bonds in the ordinary course of business of
Borrower, and (i) Liens of or resulting from any judgment or award that
would not cause a Material Adverse Change and as to which the time for the
appeal or petition for rehearing of which has not yet expired, or in respect of
which Borrower is in good faith prosecuting an appeal or proceeding for a
review, and in respect of which a stay of execution pending such appeal or
proceeding for review has been secured.

 

“Permitted Protest”
means the right of Borrower to protest any Lien (other than any such Lien that
secures the Obligations), tax (other than payroll taxes or taxes that are the
subject of a United States federal tax Lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on the books of Borrower
in an amount that is reasonably satisfactory to Agent, (b) any such
protest is instituted and diligently prosecuted by Borrower in good faith, and (e) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Banks’
rights under or in connection with this Agreement.

 

“Person” means and
includes natural persons, corporations, limited liability companies, limited
partnerships, general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and Governmental Authorities
and agencies and political subdivisions thereof means any employee benefit plan,
program, or arrangement maintained or contributed to by Borrower or with
respect to which it may incur liability.

 

“Prime Rate” means the rate of interest announced from time to
time by U.S. Bank National Association in New York, New York as its “prime
rate.” In the event the Prime Rate is changed from time to time hereafter, the
applicable rate of interest hereunder and under the Notes automatically and
immediately shall be increased or decreased by an amount equal to such change
in the Prime Rate.

 

“Prime Rate Loan” has the meaning given in the Notes.

 

“Pro-Rata Share” means each Lender’s percentage share of the
total credit to be extended pursuant to the Loan Documents. Initially, U.S.
Bank’s Pro-Rata Share is 50% and East-West Bank’s Pro-Rata Share is 50%.

 

9

 

“Reportable Event” means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of thirty (30) days’ notice to the PBGC is waived under
applicable regulations.

 

“Retiree Health Plan” means an “employee welfare benefit plan”
within the meaning of Section 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by Section 601
of ERISA.

 

“Solvent” means, with
respect to any Person on a particular date, that on such date (a) at fair
valuations, all of the properties and assets of such Person are greater than
the sum of the debts, including contingent liabilities, of such Person, (b) the
present fair salable value of the properties and assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such
Person is able to realize upon its properties and assets and pay its debts and
other liabilities, contingent obligations, and other commitments as they mature
in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person’s ability to pay
as such debts mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that reasonably can be expected to become an actual or
matured liability.

 

“Subsidiary” of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors (or
appoint other comparable managers) of such corporation, partnership, limited
liability company, or other entity.

 

“Voidable Transfer” has the meaning set forth in Section 17.8.

 

1.2          Accounting Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrower” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Borrower on a consolidated basis unless the context clearly requires
otherwise.

 

1.3          Code. Any terms used
in this Agreement that are defined in the Code shall be construed and defined
as set forth in the Code, as it is amended from time to time, unless otherwise
defined herein.

 

1.4          Construction. Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural, the
term “including” is not limiting, and the term “or” has, except where otherwise

 

10

 

indicated, the inclusive meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall “continue”
or be “continuing” until such Event of Default has been waived in writing by
Agent. Section, subsection, clause, schedule, and exhibit references are to
this Agreement unless otherwise specified. Any reference in this Agreement or
in the Loan Documents to this Agreement or any of the Loan Documents shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable.

 

1.5                              Schedules
and Exhibits. All of the schedules and exhibits attached to

 

this Agreement shall be deemed incorporated herein by reference

 

2. LOAN AND TERMS OF PAYMENT.

 

2.1                               Revolving
Advances.

 

(a)           From the Closing Date to the Maturity Date (unless
extended in writing by Banks in their sole discretion), subject to the terms
and conditions of this Agreement, Banks agree to make advances (“Advances”) to
Borrower in an amount outstanding not to exceed at any one time (i) the
Maximum Revolving Amount of Facility A, and (ii) the Maximum Revolving
Amount of Facility B, determined separately for each such Facility A and B. No
Advance, or combination of Advances under Facility A for one purpose or
property, shall exceed Five Million Dollars ($5,000,000). Advances shall be made
by the Borrower’s delivery to the Agent of an Advance Request Form and
Disbursement Letter not later than 11:00 a.m. (Los Angeles time) on the
Business Day before the date on which the Borrower requests the Advance.

 

(b)          Amounts borrowed
pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.

 

(c)           No Advance shall be
made in an amount less than One Hundred Thousand Dollars ($100,000).

 

2.2                             Interest Rates,
Payments, and Calculations.

 

(a)           Facility A Interest
Rate. Except as provided in clause (c) below, Advances under Facility A
shall bear interest on the Daily Balance at a per annum rate equal to Borrower’s
choice of(A) the sum of 0.50% plus
the Prime Rate, or (B) the sum of(a) 3.00% and (b) the one (1),
two (2), three (3), six (6) or twelve (12) month LIBOR Rate. Borrower
shall identify in writing, from time to time, which of such interest rates
Borrower desires to apply with respect to all or any portion of the Facility A
outstanding balance by completing and submitting to Agent a LIBOR Notice.

 

(b)          Facility B Interest
Rate. Except as provided in clause (e) below, 

 

11

 

Advances under Facility B shall bear interest on the
Daily Balance at a per annum rate equal to Borrower’s choice of (A) the
Prime Rate, or (B) the sum of (a) 2.50%
and (b) the one (1), two (2), three (3), six (6) or twelve
(12) month LIBOR Rate. Borrower shall identify in writing, from time to time,
which of such interest rates Borrower desires to apply with respect to all or
any portion of the Facility B outstanding balance by completing and submitting
to Agent a LIBOR Notice.

 

(c)                              Default Rate.
Upon the occurrence and during the continuation of an Event of Default, all
Obligations shall bear interest on the Daily Balance at a per annum rate equal
to 5.00% above the Reference
Rate.

 

(d)                             Payments.

 

(i)                                 Interest
payable hereunder on each of Facility A and Facility B shall be due and
payable, in arrears, on the fifth (5th)
day of each calendar month during the term hereof Borrower hereby
authorizes Banks, at their option, without prior notice to Borrower, to charge
such interest, all Bank Expenses (as and when incurred), the fees and charges
provided for in Section 2.6 and elsewhere in this Agreement (as and
when accrued or incurred), and all other payments due under any Loan Document
to Borrower as an Advance under this Agreement, which amounts thereafter shall
accrue interest at the rate then applicable to Advances hereunder. Any interest
not paid when due shall be compounded and shall thereafter accrue interest at
the rate then applicable to Advances hereunder.

 

(ii)                              Advance Limits;
Principal Repayment. No Advance or combinations of Advances under
Facility A for one (1) purpose or property shall exceed the amount of Five
Million Dollars ($5,000,000) and shall be conditioned on and subject to a
repayment schedule (which includes the source and timing of such repayment)
mutually agreed upon by Borrower and Agent (the “Repayment Schedule”)
with respect to each Advance. Principal under the Facility A Note shall be
repaid on the earlier of:

 

(A)          The date required by
the applicable Repayment Schedule for each Advance;

 

(B)          Upon the closing of
any sale, refinance or Equity Infusion with respect to any asset purchased with
Facility A Advances in an amount equal to such Advances;

 

(C)          Twenty-four (24)
months after the date of each Advance made by Banks; or

 

(D)          The Maturity Date.

 

(iii)                           Without notice,
Borrower shall repay the entire principal balance of Facility B at least once
each calendar year and shall maintain such Facility B at a zero balance for at
least thirty (30) consecutive calendar days thereafter.

 

12

 

(iv) Prepayment. If a LIBOR Rate Loan is prepaid prior to the end
of the Loan Period for such loan, whether voluntarily or because prepayment is
required due to the Note maturing or due to acceleration of the Note upon
default or otherwise, the Borrower agrees to pay all of the Bank Costs,
expenses and Interest Differential (as determined by the Agent) incurred as a
result of such prepayment. The term “Interest Differential” shall mean
that sum equal to the greater of zero or the financial loss incurred by the
Banks resulting from prepayment, calculated as the difference between the
amount of interest the Banks would have earned (from like investments in the
money markets, as determined by Agent, as of the first day of the LIBOR Rate
Loan) had prepayment not occurred and the interest the Banks will actually earn
(from like investments in the money markets as of the date of prepayment) as a
result of the redeployment of funds from the prepayment. Because of the
short-term nature of this facility, the Borrower agrees that the Interest
Differential shall not be discounted to its present value. Any prepayment of a
LIBOR Rate Loan shall be in an amount equal to the remaining entire principal
balance of such Loan.

 

(e)                                LIBOR Rate
Unavailable or Unascertainable. If for any reason (i) deposits are not
available to the Lenders in the relevant market or, (ii) by reasons of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate, or (iii) it becomes unlawful or
impracticable to make or maintain Advances accruing interest at the LIBOR Rate,
or (iv) as a result of any change in law, the cost to any Lender of making
or maintaining Advances accruing at the LIBOR Rate is increased, or (v) at
any time that an Event of Default of exists, or (vi) an insufficient
number of days remain from the date the Advance is requested to be made or
continued until the Maturity Date to constitute a Loan Period, then in each
such ease, upon the Borrower’s receipt of notice thereof from the Agent, the
rate of interest thereafter applicable to outstanding Advances shall be, (x) with
respect to Facility A, the sum of 0.30% plus the Prime Rate, or (y) with
respect to Facility B, the Prime Rate.

 

(f)                             Computation.
All interest and fees chargeable under the Loan Documents shall be computed on
the basis of a three hundred sixty (360) day year for the actual number of days
elapsed.

 

(g)                          Intent to Limit
Charges to Maximum Lawful Rate. In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
Borrower and Banks, in executing and delivering this Agreement, intend legally
to agree upon the rate or rates of interest and manner of payment stated within
it; provided, however, that, anything contained herein to
the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and all payment received from
Borrower in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such
excess.

 

2.3          Crediting Payments;
Application of Collections. The receipt of any payments by Banks from Borrower
shall be applied provisionally to reduce the Obligations 

 

13

 

outstanding under Section 2.1, but shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds and is made to Banks in
accordance with wiring instructions issued by Banks to Borrower or unless and
until such payment is honored when presented for payment. Should any payment to
Banks not be honored when presented for payment, then Borrower shall be deemed
not to have made such payment, and interest shall be recalculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment shall be
deemed received by Banks only if it is received by Agent on a Business Day on
or before (i) 11:00 a.m. (Los Angeles time) for regular payments or
deposits and (ii) 9:30 a.m. California time for payments or deposits
covering overdrafts. If any payment is received by Agent on a non-Business Day
or after the time specified on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.

 

2.4                               Designated
Account. The Agent is authorized to make the Advances under this Agreement
based upon faxed or other written instructions received from anyone purporting
to be an Authorized Person, or without instructions if pursuant to Section 2.2(d).
Borrower agrees to establish and maintain an account with the Agent for the
purpose of receiving the proceeds of the Advances requested by Borrower and
made by the Agent hereunder. Unless otherwise agreed by the Agent and Borrower,
any Advance requested by Borrower and made by Banks hereunder shall be credited
to Borrower’s account with Agent.

 

2.5                                 Maintenance of
Loan Accounts; Statements of Obligations. Banks shall maintain accounts on
their books in the name of Borrower (the “Loan Accounts”) on which
Borrower will be charged with all Advances made by Banks to Borrower or for
Borrower’s account, including, accrued interest, Bank Expenses, and any other payment
Obligations of Borrower. In accordance with Section 2.3, the Loan
Accounts will be credited with all payments received by Banks from Borrower or
for Borrower’s account. Banks shall render statements regarding the Loan
Accounts to Borrower, including principal, interest, and fees, and including an
itemization of all charges and expenses constituting Bank Expenses owing, and
such statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Banks absent manifest error
and unless, within thirty (30) days after receipt thereof by Borrower, Borrower
shall deliver to Banks written objection thereto describing the error or errors
claimed to be contained in any such statements.

 

2.6                               Fees, Costs,
and Charges. Borrower shall pay to the Agent the following fees:

 

(a)          Annual
Fee. On the Closing Date, and, beginning July 1, 2009 and annually
thereafter on July 1 of each succeeding year during the term of this
Agreement, a fee equal to 0.50% of the Maximum Revolving Amount on each of
Facility A and Facility B.

 

(b)          Financial
Examination, and Documentation Fees. (i) Banks’ out of pocket expenses for
each auditor or other personnel, whether employed by or an independent
contractor to Banks or either of them, plus out-of-pocket expenses for each
financial analysis and examination (i.e., audits or otherwise) of Borrower and
its Subsidiaries or Affiliates in connection therewith.

 

14

 

(c)          Other
Costs and Charges. All Bank Expenses and other costs, fees, and charges of
every description payable by Borrower to Banks or either of them under this
Agreement.

 

3. CONDITIONS; TERM OF AGREEMENT.

 

3.1                               Conditions
Precedent to the Initial Advance. The obligation of Banks under this Agreement
is subject to the fulfillment, to the satisfaction of Banks and their counsel,
of each of the following conditions on or before July 1, 2008:

 

(a)                              Banks shall
have received each of the following documents, duly executed, and each such
document shall be in full force and effect:

 

(i)           this Agreement duly
executed by Borrower;

 

(ii)          the Advance Request Form and
Disbursement Letter;

 

(iii) any Notes required or provided by Banks for execution by
Borrower to document Facility A and/or Facility B; and

 

(iv) any other instruments required or provided by Banks for
execution by Borrower to document Facility A and/or Facility B.

 

(b)                             Banks shall
have received a certificate from an Authorized Person attesting to the
corporate authorization of Borrower authorizing the execution, delivery, and
performance of this Agreement and the other Loan Documents to which Borrower is
a party and authorizing specific individuals associated with and authorized by
Borrower to execute the same.

 

(c)                              Banks shall
have received copies of Borrower’s Governing Documents, as amended, modified,
or supplemented to the Closing Date, certified by an Authorized Person.

 

(d)                             Banks shall
have received a certificate of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Banks and their counsel;

 

(e)                              Banks shall
have received satisfactory evidence that all tax returns required to be filed
by Borrower have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including real property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest; such satisfactory evidence shall be
provided in the form of written certification by Borrower’s Chief Financial
Officer to the effect that the foregoing matters in this paragraph have been
fully satisfied, unless Banks in their discretion shall request further
evidence thereof

 

(f)                                  Borrower shall
have paid (i) the fees payable on the Closing Date 

 

15

 

and (ii) all expenses of Banks incurred in
connection with the transactions contemplated by this Agreement, including
without limitation asset searches, credit reports, and the fees and expenses of
its outside counsel, as of the Closing Date;

 

(g)          all other documents
and legal matters in connection with the transactions contemplated by this
Agreement shall have been delivered, executed, or recorded and shall be in form
and substance satisfactory to Banks and their counsel;

 

(h)          Banks shall have
given, in their sole discretion, final credit approval of the credit facilities
set forth in this Agreement;

 

(i)            Banks shall have
been satisfied, in their sole discretion, with the results of a review of
Borrower’s most recent interim financial statement;

 

(i)            No adverse changes
in Borrower’s most recent interim financial statement, or in Borrower’s
profits, property, business prospects, or financial condition, shall have
occurred since the Banks’ review of Borrower’s most recent financial statement
for the period ending March 31, 2008;

 

(k)           Banks shall have
completed and been satisfied, in Banks’ sole discretion, with Borrower’s trade,
credit, and background cheeks, conducted by or for Banks, utilizing resources
and data bases selected by Banks;

 

(1)           Banks shall have
received the written opinion of counsel for Borrower, in form and substance
satisfactory to Banks; and

 

3.2                             Conditions
Precedent to all Advances. The following shall be conditions precedent to all
Advances hereunder:

 

(a)           the representations
and warranties contained in this Agreement and the other Loan Documents shall
be true and correct in all respects on and as of the date of each such Advance,
as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);

 

(b)          no Default or Event
of Default shall have occurred and be continuing on the date of such Advance,
nor shall either result from the making thereof;

 

(e)          no
injunction, writ, restraining order, or other order of any nature prohibiting,
directly or indirectly, the extending of such credit shall have been issued and
remain in force by any governmental authority against Borrower, Banks, or any
of their Affiliates;

 

(d)          no Change of Control
shall have occurred after the date of this Agreement; and

 

(e)          With
respect to Advances under Facility A, Borrower shall have furnished to Banks,
as and when required, such documentation as may be specified by Banks, by 

 

16

 

notice given to Borrower, to be furnished in
connection with Advances, including without limitation the items set forth in Schedule
3.2.

 

3.3          Intentionally
Omitted.]

 

3.4          Term. This Agreement
shall become effective upon the execution and delivery hereof by Borrower and
Banks and shall continue in full force and effect for a term ending on the
Maturity Date, unless sooner terminated or extended in writing pursuant to the
terms hereof. The foregoing notwithstanding, Banks shall have the right to
terminate their obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.

 

3.5          Early Termination by
Borrower. Borrower has the option, at any time, upon thirty (30) days’ prior
written notice to Banks, to terminate this Agreement by paying to Banks, in
cash, the Obligations in full.

 

4.                                  RIGHT OF
INSPECTION.

 

Banks (through any of their respective officers, employees, or agents)
shall have the right, at any time and from time to time, during of the term of
the transactions contemplated by this Agreement and/or at any time there is any
balance owed to Banks under or in connection with such transactions, upon not
less than 24 hours’ advance written notice, to inspect Borrower’s Books and to
check, test, and evaluate Borrower’s assets in order to verify Borrower’s
financial condition or the amount, quality, value, condition of, or any other
matter relating to, Borrower’s assets of every description.

 

5. REPRESENTATIONS AND WARRANTIES.

 

In
order to induce Banks to enter into this Agreement, Borrower makes the
following representations and warranties which shall be true, correct, and
complete in all respects as of the date hereof, and as of the Closing Date, and
as of the date of the making of each Advance, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date) and such representations and warranties shall survive
the execution and delivery of this Agreement:

 

5.1          No Encumbrances.
Borrower has good and indefeasible title to or leasehold interest in, as the
case may be, its assets, free and clear of Liens except for Permitted Liens.

 

5.2          Equipment. All of the
Equipment is used or held for use in Borrower’s business and is fit for such
purposes.

 

17

 

5.3                               Intentionally
Omitted.

 

5.4                               Schedule of
Indebtedness. The Schedule of Indebtedness attached hereto as Schedule 5.4
contains a true, correct, and complete listing of Borrower’s unsecured
indebtedness and guarantees of unsecured indebtedness, including all secured
indebtedness and all guaranties of secured indebtedness for which the amount of
the debt exceeds the fair market value of the security property (i.e.,
partially secured indebtedness and guarantees of partially secured
indebtedness).

 

5.5                               Location of
Chief Executive Office; FEIN. The chief executive office of Borrower is located
at the address indicated in the preamble to this Agreement and Borrower’s FEIN
is 95-4364537.

 

5.6                               Due
Organization and Qualification; Subsidiaries.

 

(a)           Borrower is duly
organized and existing and in good standing under the laws of Delaware and is
qualified and licensed to do business in, and in good standing in, California
and all other states where such qualification and licensing is required andlor
where the failure to be so qualified or licensed reasonably could be expected
to cause a Material Adverse Change.

 

(b)          Set forth on Schedule
5.6, is a complete and accurate list of Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their incorporation or
formation; (ii) the number of shares of each class of common and preferred
stock authorized for each of such Subsidiaries; and (iii) the number and
the percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower. All of the outstanding capital stock or other capital
ownership interest of each such Subsidiary has been validly issued and is fully
paid and non-assessable.

 

(c)           Except as set forth
on Schedule 5.6, no capital stock (or any securities, instruments, warrants,
options, purchase rights, conversion or exchange rights, calls, commitments or
claims of any character convertible into or exercisable for capital stock) of
any direct or indirect Subsidiary of Borrower is subject to the issuance of any
security, instrument, warrant, option, purchase right, conversion or exchange
right, call, commitment or claim of any right, title, or interest therein or
thereto.

 

5.7                               Due
Authorization; No Conflict.

 

(a)           The execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which it is a party have been duly authorized by all necessary corporate
action.

 

(b)          The execution,
delivery, and performance by Borrower of this Agreement and the Loan Doeun1ents
to which it is a party do not and will not (i) violate any provision of
federal, state, or local law or regulation (including Regulations T, U, and X
of the Federal Reserve Board) applicable to Borrower, the Governing Documents
of Borrower, or any 

 

18

 

order, judgment, or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict with, result in
a breach of; or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation or material lease of Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of stockholders or any approval or consent of any Person under any
material contractual obligation of Borrower.

 

(e)           The execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which Borrower is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any federal,
state, foreign, or other Governmental Authority or other Person.

 

(d)          This Agreement and
the Loan Documents to which Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by Borrower will
be the legally valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’
rights generally.

 

5.8                               Litigation.
There are no actions or proceedings pending by or against Borrower or its
directors, officers, or senior executives before any court or administrative
agency and Borrower does not have knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving Borrower, any of its partners or
any guarantor of the Obligations, except for: (a) ongoing collection
matters in which Borrower is the plaintiff; (b) matters disclosed on Schedule
5.8 and (c) matters arising after the date hereof that, if decided
adversely to Borrower, would not cause a Material Adverse Change.

 

5.9                               No Material
Adverse Change. All financial statements relating to Borrower that have been
delivered by Borrower to Banks have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and fairly present
Borrower’s financial condition as of the date thereof and Borrower’s results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower since the date of the latest financial
statements submitted to Banks on or before the Closing Date.

 

5.10                         Solvency.
Borrower is Solvent. No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions contemplated
by this Agreement or the other Loan Documents with the intent to hinder, delay,
or defraud either present or future creditors of Borrower.

 

5.11                         Employee
Benefits. None of Borrower, any of its Subsidiaries, or any of their ERISA
Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.11. Borrower, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that 

 

19

 

may result in an ERISA Event that reasonably could
be expected to result in a Material Adverse Change. None of Borrower or its
Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject to
any direct or indirect liability with respect to any Plan under any applicable
law, treaty, rule, regulation, or agreement. None of Borrower or its
Subsidiaries or any ERISA Affiliate is required to provide security to any Plan
under Section 401(a)(29) of the IRC.

 

5.12                         Maximum Balance
Sheet Leverage. Borrower’s Maximum Balance Sheet Leverage was 0.97:1 as of December 31,2007.

 

5.13                         Minimum Rent
Adjusted Fixed Charge Coverage Ratio. Borrower’s Minimum Rent Adjusted Fixed
Charge Coverage Ratio was 2.74:1 as of December 31, 2007.

 

6. AFFIRMATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower
shall do all of the following:

 

6.1                               Accounting
System. Maintain a standard and modem system of accounting that enables
Borrower to produce financial statements in accordance with GAAP, and maintain
records pertaining to the assets of Borrower and its Subsidiaries or Affiliates
that contain information as from time to time may be requested by Banks.
Borrower also shall keep a modern asset reporting system that shows all purchases,
additions, sales, and dispositions of Borrower’s assets.

 

6.2                               Financial
Covenants. Borrower shall at all times maintain the following financial
covenants:

 

(a)           Minimum Rent
Adjusted Fixed Charge Coverage Ratio. A Minimum Rent Adjusted Fixed Charge
Coverage Ratio of not less than 1.75:1, measured on a four (4) quarter
rolling average basis;

 

(b)          Minimum Liquidity.
The Borrower shall maintain cash, cash equivalents and marketable securities in
the aggregate amount of at least Seven Million Five Hundred Thousand dollars ($7,500,000), tested quarterly;

 

(c)           Maximum Balance
Sheet Leverage. Maximum Balance Sheet leverage not greater than 2.50:1,
measured at the end of each calendar quarter; and

 

(d)          Minimum Net Worth. As
determined in accordance with GAAP, Net Worth equal to or greater than Thirty
Million Dollars ($30,000,000), measured at the end of each calendar quarter.

 

6.3                                                                         Financial
Statements, Reports, Certificates. Deliver or cause to be delivered, to Banks: (a) as
soon as available, but in any event within ninety (90) days after the end of
each fiscal year of Borrower, consolidated and separate financial statements
including a balance sheet, income statement, and statement of cash flow of
Borrower and its Subsidiaries or 

 

20

 

Affiliates during such period, prepared and audited
by a certified public accounting firm whose identity is approved in advance by
Banks; (b) as soon as available, but in any event within ninety (90) days
after the end of each fiscal quarter of Borrower, consolidated and separate
financial statements of Borrower and its Subsidiaries or Affiliates, prepared
by Borrower or by a certified public accountant firm whose identity is approved
in advance by Banks; (c) as soon as available, but in any event within
thirty (30) days prior to the commencement of each fiscal year of Borrower, an
annual financial projection for such succeeding fiscal year, including a
balance sheet, income statement, and statement of cash flow of Borrower and its
Subsidiaries, or Affiliates during such period, prepared by Borrower or by a
certified public accounting firm whose identity is approved in advance by
Banks; (d) as soon as available, but in any event within fifteen (15) days
after filing with the Securities Exchange Commission, copies of all filings
made by Borrower under the Securities Act of 1934 and the regulations and rules promulgated
thereunder, in electronic and paper form. Each of the items in subsections (a) through
(d), inclusive, above shall be accompanied by a certificate, without any
qualifications, by such accountants or by Borrower (as applicable to the each
document) to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Banks stating that such accountants
do not have knowledge of the existence of any Default or Event of Default. Such
audited financial statements shall include a balance sheet, profit and loss
statement, and statement of cash flow and, if prepared, such accountants’
letter to management. In addition to the financial statements referred to
above, Borrower agrees to deliver to Banks, within the specified time periods,
financial statements prepared on a consolidated basis so as to present Borrower
and each of Borrower’s Subsidiaries or Affiliates on a consolidated basis, and
each such related entity separately.

 

Each
quarter, together with the financial statements provided pursuant to this Section 6.3,
Borrower shall deliver to Banks a Compliance Certificate signed by its chief
financial officer to the effect that: (i) all financial statements
delivered or caused to be delivered to Banks hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements,
for the lack of footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date), (iii) Borrower is in compliance at the end of such period with the
applicable financial covenants contained in Section 7.19 (and
demonstrating such compliance in reasonable detail), and (iv) on the date
of delivery of such certificate to Banks there does not exist any condition or
event that constitutes a Default or Event of Default (or, in the case of
clauses (i), (ii), or (iii), to the extent of any non-compliance, describing
such non-compliance as to which he or she may have knowledge and what action
Borrower has taken, is taking, or proposes to take with respect thereto).

 

Borrower shall have issued written instructions to its independent
certified public accountants authorizing them to communicate with Banks and to
release to Banks whatever financial information concerning Borrower that Banks
may request. Borrower hereby irrevocably authorizes and directs all auditors,
accountants, or other third parties to deliver to Banks, at Borrower’s expense,
copies of Borrower’s financial statements, papers related thereto, and other 

 

21

 

accounting records of any nature in their
possession, and to disclose to Banks any information they may at any time have
regarding Borrower’s business affairs and financial conditions.

 

6.4                               Chairman; CEO.
William McMorrow shall at all times remain the Chairman of the Board and Chief
Executive Officer of Borrower.

 

6.5                               Title to
Equipment. Upon Banks’ request, Borrower immediately shall deliver to Banks,
properly endorsed, any and all evidences of ownership of, certificates of
title, or applications for title to any items of Equipment.

 

6.6                               Maintenance of
Equipment. Maintain the Equipment in good operating condition and repair
(ordinary wear and tear excepted), and make all necessary replacements thereto
so that the value and operating efficiency thereof shall at all times be
maintained and preserved. Other than those items of Equipment that constitute
fixtures on the Closing Date, Borrower shall not permit any item of Equipment
to become a fixture to real estate or an accession to other property, and such
Equipment shall at all times remain personal property.

 

6.7                               Taxes. Cause
all assessments and taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against, Borrower or any of its property to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest. Borrower shall make due and timely
payment or deposit of all such federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Banks, on
demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Borrower will make timely payment or deposit of all tax
payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Banks with proof
satisfactory to Banks indicating that Borrower has made such payments or
deposits.

 

6.8                               Insurance.

 

(a)           (i) At its
expense, keep the assets of Borrower and its Subsidiaries or Affiliates insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as are ordinarily insured against by
other owners in similar businesses. (ii) Borrower also shall maintain
business interruption, and product liability insurance relating to Borrower’s
ownership and use of such assets, as well as insurance against larceny,
embezzlement, and criminal misappropriation. (iii) Borrower shall also
maintain commercial general liability insurance with minimum limits of Ten
Million Dollars ($10,000,000) per occurrence and in the aggregate.

 

(b)          All such policies of
insurance shall be in such form, with such companies, with such deductibles or
retention amounts, and such endorsements, and in such amounts, as may be
reasonably satisfactory to Banks. All insurance required herein shall be
written by companies which are acceptable to Banks. Borrower shall deliver to
Banks certified copies of such policies of insurance, and all renewals and
replacements thereof, and evidence of 

 

22

 

the payment of all premiums therefore.

 

6.9                               No Setoffs or
Counterclaims. Make payments hereunder and under the other Loan Documents by or
on behalf of Borrower without setoff or counterclaim and free and clear of, and
without deduction or withholding for or on account of, any federal, state, or local
taxes.

 

6.10                         Dispositions at
Fair Market Consideration. Sell or otherwise dispose of property of the
Borrower only for fair market consideration.

 

6.11                         Compliance with
Laws. Substantially comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, would not have and could not reasonably be expected to cause a
Material Adverse Change.

 

6.12                         Employee
Benefits.

 

(a)          Deliver
to Banks: (i) promptly, and in any event within ten (10) Business
Days after Borrower or any of its Subsidiaries knows or has reason to know that
an ERISA Event has occurred that reasonably could be expected to result in a
Material Adverse Change, a written statement of the chief financial officer of
Borrower describing such ERISA Event and any action that is being taking with
respect thereto by Borrower, any such Subsidiary or ERJSA Affiliate, and any
action taken or threatened by the IRS, Department of Labor, or PBGC. Borrower
or such Subsidiary, as applicable, shall be deemed to know all facts known by
the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly,
and in any event within three (3) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate with respect
to such request, and (iii) promptly, and in any event within three (3) Business
Days after receipt by Borrower, any of its Subsidiaries or, to the knowledge of
Borrower, any ERISA Affiliate, of the PBGC’s intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice.

 

(b)           Cause to be delivered to Banks, upon
Banks’ or either of their request, each of the following: (i) a copy of
each Plan (or, where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof
and written descriptions thereof that have been distributed to employees or
former employees of Borrower or its Subsidiaries; (ii) the most recent
determination letter issued by the IRS with respect to each Benefit Plan; (iii) for
the three (3) most recent plan years, annual reports on Form 5500 Series required to be filed
with any governmental agency for each Benefit Plan; (iv) all actuarial
reports prepared for the last three (3) plan years for each Benefit Plan; (v) a
listing of all Multiemployer Plans, with the aggregate amount of the most
recent annual contributions required to be made by Borrower or any ERISA
Affiliate to each such plan and copies of the collective bargaining agreements
requiring such contributions; (vi) any information that has been provided to

 

23

 

Borrower or any ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan; and (vii) the aggregate
amount of the most recent annual payments made to former employees of Borrower
or its Subsidiaries under any Retiree Health Plan.

 

6.13                         Compliance with
Leases. Pay when due all rents and other amounts payable under any leases to
which Borrower is a party or by which Borrower’s properties and assets are
bound, unless such payments are the subject of a Permitted Protest. To the
extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases, Banks shall be entitled, in their
discretion, to reserve an amount equal to such unpaid amounts against Facility
A or Facility B.

 

7. NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrower will not do any of the following:

 

7.1                               Indebtedness.
Create, incur, assume, permit, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except:

 

(a) Indebtedness evidenced by this
Agreement;

 

(b) Indebtedness set forth on Schedule
5.4

 

(c)          Indebtedness
fully secured by Permitted Liens or by Liens described in Section 7.2(u)

 

(d)          a
guarantee obligation in connection with an exchange permitted under Section 1031
of the IRC;

 

(e)          refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b), (e), (f),
or (g) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Borrower, (ii) to
the extent that the Indebtedness that is refinanced was subordinated in right
of payment to the Obligations, then the subordination terms and conditions of
the refinancing Indebtedness must be at least as favorable to Banks as those
applicable to the refinanced Indebtedness, and (iii) if and to the extent
any such refinancings, renewals or extensions are for assets acquired, sold,
refinanced, or funded by an Equity Infusion, the original amount of the Advance
corresponding to such asset shall be repaid to Lender concurrently with such
refinancing, extension or renewal;

 

(1)          non-recourse
debt incurred by Borrower as a portion of Borrower’s purchase price of (i) real
property, or (ii) pools of notes fully secured by liens on real property;
and(g) debt which is recourse to or guaranteed by Borrower, where such
debt is incurred or assumed by Borrower or Borrower’s Subsidiaries or
Affiliates and fully secured by (i) real property, or (ii) pools of
notes fully secured by liens on real property;

 

(g)          financing
or refinancing of any real property or pool of notes now 

 

24

 

or hereafter owned by Borrower, and fully secured
thereby;

 

(h)         additional senior indebtedness up to One Million Dollars
($1,000,000), so long as all such additional senior indebtedness is for a term
which extends beyond the Maturity Date, provided, that all indebtedness
permitted by this paragraph shall satisfy all other applicable requirements of
this Agreement;

 

(i)          a guaranty of any indebtedness of any Person or Persons up
to One Million Dollars ($1,000,000) in the aggregate, provided, that all
guaranties permitted by this paragraph shall satisfy all other applicable
requirements of this Agreement; and

 

All indebtedness described in subsections (a) through (i) above
must also satisfy all other applicable requirements of this Agreement.

 

7.2          Liens. Create, incur,
or permit to exist, directly or indirectly, any Lien on or with respect to any
of its property or assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for (i) Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced under Section 7.1(e) and
so long as the replacement Liens only encumber those assets or property that
secured the original Indebtedness), or (ii) Liens given to vendors or
lenders to enable Borrower to acquire real property or pools of notes secured
by real property after the date of this Agreement and fully secured exclusively
by the property so acquired.

 

7.3          Restrictions on
Fundamental Changes. Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock, or liquidate, wind up, or
dissolve itself (or suffer any such event), or reincorporate in a different
jurisdiction or (except as otherwise provided in Section 7.4)
convey, sell, assign, lease, transfer, or otherwise dispose of, in a single
transaction or a series of transactions, all or any substantial part of its
property or assets.

 

7.4          Disposal of Assets.
Sell, lease, assign, transfer, or otherwise dispose of any of Borrower’s
properties or assets other than sales in the ordinary course of Borrower’s
business as currently conducted.

 

7.5          Change Name. Change
Borrower’s name, FEIN, corporate structure (within the meaning of the Code), or
identity.

 

7.6          Guaranty. Guaranty or
otherwise become in any way liable with respect to the obligations of any third
Person except (a) by endorsement of instruments or items of payment for
deposit to the account of Borrower or which are transmitted or turned over to
Banks, or (b) as permitted by Section 7.1.

 

7.7          Nature of Business.
Make any change in the principal nature of Borrower’s business.

 

7.8          Prepayments and
Amendments.

 

25

 

(a)           Except in connection
with (i) a refinancing permitted by Section 7.1(e), or (ii) a
purchase (for investment or sale) of pools of notes secured by real property,
prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in
accordance with this Agreement, and

 

(b)          Directly or
indirectly, amend, modify, alter, increase, or change, materially and
adversely, any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b), (c), (d\ or (e).

 

7.9                               Change of
Control. Cause, permit, or suffer, directly or indirectly, any Change of
Control.

 

7.10                         Intentionally
Omitted.

 

7.11                         Accounting
Methods. Modify or change its method of accounting or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower’s accounting records without said accounting firm or
service bureau agreeing to provide Banks information regarding the assets of
Borrower and its Subsidiaries or Affiliates or Borrower’s financial condition.
Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Banks pursuant to or in accordance with this
Agreement, and agrees that Banks may contact directly any such accounting firm
or service bureau in order to obtain such information.

 

7.12                         Investments.
Directly or indirectly make, acquire, or incur any liabilities (including
contingent obligations), other than those under this Agreement, for or in
connection with (a) the acquisition of the securities (whether debt or
equity) of, or other interests in, a Person, (b) loans, advances, capital
contributions, or transfers of property to a Person; provided, that such
loans, advances and capital contributions would be permitted so long as
immediately before and after each such loan, advance, or capital contribution
no Event of Default exists or results, or (c) the acquisition of all or
substantially all of the properties or assets of a Person.

 

7.13                         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 fully disclosed to Banks, and that are no less
favorable to Borrower than would be obtained in an arm’s length transaction
with a non-Affiliate.

 

7.14                         Suspension.
Suspend or go out of a substantial portion of its business.

 

7.15                         Intentionally
Omitted.

 

26

 

7.16                         Use of
Proceeds. Use the proceeds of the Advances made hereunder for any purpose other
than (i) on the Closing Date, to pay sums due the Banks for transactional
costs and expenses under or in connection with this Agreement, and (ii) thereafter,
consistent with the terms and conditions hereof, in the case of Facility A, to
finance Borrower’s acquisition of real property or pools of notes secured by
real property, and in the case of Facility B, to provide working capital for
Borrower.

 

7.17                         Change in
Location of Chief Executive Office Equipment with Bailees. Relocate its chief
executive office to a new location without providing thirty (30) days’ prior
written notification thereof to Banks and so long as, at the time of such
written notification, Borrower also provides to Banks an Asset Access Agreement
with respect to such new location. The Equipment shall not at any time now or
hereafter be stored with a bailee, warehouseman, or similar party without Banks’
prior written consent.

 

7.18 Intentionally Omitted.

 

7.19 Intentionally Omitted.

 

7.20        Downstreaming of
Funds. Borrower shall not (i) pay, apply, transfer, disburse, credit, or
otherwise permit any portion of Facility A or Facility B nor (ii) make or
extend any loan or guaranty, to or for the benefit of Kennedy-Wilson Japan and
subsidiaries (including without limitation Kennedy-Wilson Japan Co., Ltd. and
Kennedy-Wilson Japan K.K.).

 

7.21        Excessive Acquisitions.
Borrower shall make no corporate acquisitions without the prior written consent
of Banks; provided, that any such acquisitions approved by Banks shall satisfy
all other applicable requirements of this Agreement.

 

7.22        Intentionally Omitted.

 

7.23        Dividends. Borrower
shall not declare or pay corporate dividends without the prior written consent
of Banks; provided that any corporate dividends approved by Banks shall satisfy
all other applicable requirements of this Agreement.

 

7.24        Stock Repurchases. Borrower
shall not purchase or repurchase any corporate stock of Borrower or Borrower’s
Subsidiaries or Affiliates, unless, at the time of any such repurchase (i) there
exists no Event of Default, (ii) Borrower is in strict compliance with all
covenants contained herein, (iii) Borrower demonstrates, to the reasonable
satisfaction of Bank, that Borrower shall remain in compliance with the
covenants contained herein for the twelve (12) months following such
repurchase, and (iv) Borrower provides the Agent with such updated
financial projections as the Agent shall reasonably require, which projections
shall be reasonably satisfactory to the Agent in all material respects.

 

8. EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of
default (each, an “Event of  Default”) under this Agreement:

 

27

 

8.1                               Failure to Make
Payment. If Borrower fails to pay when due and payable, or when declared due
and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Banks, reimbursement
of Bank Expenses, or other amounts constituting Obligations);

 

8.2                               Failure to
Perform. If Borrower fails to perform, keep, or observe any material term,
provision, condition, covenant, or agreement contained in this Agreement, in
any of the Loan Documents, or in any other present or future agreement between
Borrower and Banks or either of them;

 

8.3                               Material
Adverse Change. If there is a Material Adverse Change;

 

8.4                               Attachment or
Other Process. If any material portion of Borrower’s properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any third Person;

 

8.5                               Insolvency
Proceeding by Borrower. If an Insolvency Proceeding is commenced by Borrower;

 

8.6                               Insolvency
Proceeding Against Borrower. If an Insolvency Proceeding is commenced against
Borrower and any of the following events occur: (a) Borrower consents to
the institution of the Insolvency Proceeding against it; (b) the petition
commencing the Insolvency Proceeding is not timely controverted; (c) the
petition commencing the Insolvency Proceeding is not dismissed within forty
five (45) calendar days of the date of the filing thereof; provided,  however,
that, during the pendency of such period, Banks shall be relieved of their
obligation to extend credit hereunder; (d) an interim trustee is appointed
to take possession of all or a substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Borrower;
or (e) an order for relief shall have been issued or entered therein;

 

8.7                               Injunction or
Other Process. If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;

 

8.8                               Lien or Other
Process. If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower’s properties or assets by the United States
Government, or any federal, state, local, or other Governmental Agency, or if
any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether choate or otherwise, upon any of Borrower’s
properties or assets and the same is not paid on the payment due date thereof;

 

8.9                               Judgment or
Claim, Lien. If a judgment or other claim becomes a material Lien or
encumbrance upon any portion of Borrower’s properties or assets;

 

8.10                         Defaults in
Material Agreement. If there is a default in any material

 

28

 

agreement to which Borrower is a party with
one or more third Persons and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by such
third Person(s), irrespective of whether exercised, to accelerate the maturity
of Borrower’s obligations thereunder;

 

8.11                         Payment on
Subordinated Indebtedness. If Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;
or

 

8.12                         Misstatements
and Misrepresentations. If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or report
made to Banks by Borrower or any officer, employee, agent, or director of
Borrower, or if any such warranty or representation is withdrawn.

 

8.13                         Other Events of
Default. If an Event of Default as defined elsewhere in the Loan Documents
shall occur.

 

8.14                         Cure Period,
Notice to Cure.

 

(a)          Notwithstanding
anything contained in this Article 8 to the contrary, Banks shall
refrain from exercising their rights and remedies and an Event of Default shall
not be deemed to have occurred by reason of the occurrence of any of the events
set forth in Sections 8.3, 8.4, 8.7. 8.8. 8.9, or 8.10 if, within
fifteen (15) calendar days from the date thereof (the “Cure Period”),
the same is released, discharged, dismissed, bonded against or satisfied.

 

(b)          In addition, with
respect to an Event of Default set forth in Sections 8.3. 8.4. 8.7, or
8.8, and provided the Borrower has given Notice (“Notice of Occurrence”)
to Banks not later than three (3) Business Days after the occurrence of
one or more of the Events of Default set forth in those subsections, the Cure
Period shall begin on the date the Agent or the Banks, or either of them, gives
to the Borrower a Notice to cure such Event of Default (the “Notice to Cure”).
Provided, however, that if Borrower fails for any reason to give such Notice of
Occurrence within such three (3) Business Day period, no Notice to Cure
shall be required and the Agent or the Banks, or either of them, may pursue all
available remedies without Notice.

 

(c)           No Notice to Cure
shall be applicable or required with respect to an Event of Default under this
Agreement except as specified in Section 8.14(b), and shall
specifically not be required with respect to an Event of Default specified in Section 8.1.
8.2. 8.5, 8.6, 8.9, 8,10, 8.11, or 8.12.

 

(d)          No Cure Period shall
be applicable or required with respect to any Event of Default under this
Agreement except as specified in Section 8.6 or 8.I4(b\ and
shall specifically not be applicable or required with respect to an Event of
Default specified in Section 8.1, 8.2, 8.5. 8.6 (except as
specified therein), 8.11, or

 

(e)          Notwithstanding
any other provision of this Agreement, any Event 

 

29

 

of Default specified in Section 8.1, 8.2.
8.4, 8.5. 8.6 (except as specified therein), or jfl shall conclusively be
deemed a material default.

 

(I)           With regard (i) the
date Notice to cure (“Notice to Cure Default”) is sent to Borrower by
Agent or Banks, or either of them, provided Borrower has given Notice (“Notice
of Occurrence”) to Banks not later than three (3) business days after
the occurrence of one or more of the events set forth in those subsections, the
fifteen (15) day period shall begin to run. In the event Borrower fails to give
such Notice of Occurrence within such three (3) day period, Agent and
Banks shall not be required to give Notice to Cure Default and may immediately
proceed with all available remedies.

 

9. BANKS’ RIGIITS AND REMEDIES.

 

9.1                               Rights and
Rcmedies. Upon the occurrence, and during the continuation, of an Event of
Default Banks may, at their or either of their election, without notice of such
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:

 

(a)          Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable;

 

(b)          Cease making Advances
or extending credit to or for the benefit of Borrower under this Agreement,
under any of the Loan Documents, or under any other agreement between Borrower
and Banks;

 

(c)          Terminate
this Agreement and any of the other Loan Documents as to any future liability
or obligation of Banks, but without affecting Banks’ rights and without
affecting the Obligations;

 

(d)          Settle or adjust
disputes and claims directly with Account Debtors for amounts and upon tenns
which Banks considers advisable, and in such cases, Banks will credit Borrower’s
Loan Accounts with only the net amounts received by Banks in payment of such
disputed Accounts after deducting all Bank Expenses incurred or expended in
connection therewith;

 

(e)          Without
notice to or demand upon Borrower or any guarantor, make such payments and do
such acts as Banks considers necessary or reasonable to protect Banks’ rights.
Borrower agrees to make available for inspection, at any time during regular
business hours on a Business Day, by Banks or Banks’ designees any of the
assets of Borrower and its Subsidiaries or Affiliates. With respect to any of
Borrower’s owned or leased properties, Borrower hereby grants Banks a license
to enter into and inspect any such premises and to exercise any of Banks’
rights or remedies provided herein, at law, in equity, or otherwise; and

 

(1)          Without
notice to Borrower (such notice being expressly waived), and without
constituting a retention of any collateral in satisfaction of an obligation
(within the meaning of the Code), set off and apply to the Obligations any and
all (i) balances and deposits 

 

30

 

of Borrower held by Banks, or (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by
Banks.

 

9.2                                 Remedies
Cumulative.      Banks’ rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
emulative. Banks shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Banks
of any right or remedy shall be deemed an election, and no waiver by Banks of
any Event of Default shall be deemed a continuing waiver. No delay by Banks
shall constitute a waiver, election, or acquiescence by them.

 

10. TAXES AND EXPENSES.

 

If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Banks
determine that such failure by Borrower could result in a Material Adverse
Change, in its discretion and without prior notice to Borrower, Banks may do
any or all of the following: (a) make payment of the same or any part
thereof~ (b) set up such reserves in Borrower’s Loan Accounts as Banks or
either of them deem necessary to protect Banks from the exposure created by
such failure; or (c) obtain and maintain insurance policies of the type
described in Section 6.8, and take any action with respect to such
policies as Banks deem prudent. Any such amounts paid by Banks shall constitute
Bank Expenses. Any such payments made by Banks shall not constitute an
agreement by Banks to make similar payments in the future or a waiver by Banks
of any Event of Default under this Agreement. Banks need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owthg.

 

11. WAIVERS; INDEMNIFICATION,

 

11.1        Demand;
Protest; etc. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by Banks
on which Borrower may in any way be liable.

 

11.2        Intentionally Omitted.

 

11.3        Indemnification.
Borrower shall pay, indemnify, defend, and hold Banks, each Participant, and
each of their respective officers, directors, employees, counsel, agents, and
attorneys-in-fact (each, an “Indemnified Person”) harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys’ fees and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or
related to the execution, delivery, enforcement, 

 

31

 

performance, and administration of this
Agreement and any other Loan Documents or the transactions contemplated herein,
and with respect to any investigation, litigation, or proceeding related to
this Agreement, any other Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event or circumstance in any manner
related thereto (all the foregoing, collectively, the “Indemnified
Liabilities”). Borrower shall have no obligation to any Indemnified Person
under this Section 11.3 with respect to any Indemnified Liability
that a court of competent jurisdiction finally determines to have resulted from
the gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations.

 

12. NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail postage prepaid, return
receipt requested), overnight courier, or telefacsimile to Borrower or to
Banks, as the case may be, at its address set forth below:

 

	
  If to Borrower:

  	
   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
   

  	
  9601
  Wilshire Boulevard, Suite 220

  
	
   

  	
   

  	
  Beverly
  Hills, California 90210

  
	
   

  	
   

  	
  Attn:
  Freeman Lyle, EVP/CFO/Seeretary

  
	
   

  	
   

  	
  Fax
  No. (310) 887-6454

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  KULLK,
  GOTTESMAN & MOUTON, LLP

  
	
   

  	
   

  	
  15303
  Ventura Boulevard, Suite 1400

  
	
   

  	
   

  	
  Sherman
  Oaks, California 91403

  
	
   

  	
   

  	
  Attn:
  Kent Y. Mouton, Esq.

  
	
   

  	
   

  	
  Fax
  No. (310) 557-0224

  
	
   

  	
   

  	
   

  
	
  If to U.S. Bank:

  	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
  633
  West 5th  Street

  
	
   

  	
   

  	
  30th Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90071

  
	
   

  	
   

  	
  Attn:
  Linda Morgan, Vice President

  
	
   

  	
   

  	
  Fax
  No. (213) 615-6792

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  RUTAN
  AND TUCKER LLP

  
	
   

  	
   

  	
  611 Anton Blvd., Suite 1400

  
	
   

  	
   

  	
  Costa Mesa, CA 92626

  
	
   

  	
   

  	
  Atm:
  Bob L. Hagle, Esq.

  
	
   

  	
   

  	
  Fax
  No. (714) 546-9035

  
	
   

  	
   

  	
   

  
	
  If to East-West Bank:

  	
   

  	
  EAST-WEST
  BANK

  
	
   

  	
   

  	
  135
  N. Los Robles Avenue

  
	
   

  	
   

  	
  2nd Floor

  
	
   

  	
   

  	
  Pasadena,
  CA 91101

  
	
   

  	
   

  	
  Atth: Kathy Kwan, Vice
  President

  
	
   

  	
   

  	
  Fax No. (626)
  817-8869

  

 

32

 

	
  with copies to:

  	
   

  	
  NEVERS,
  PALAZZO, MADDUX & PACKARD

  
	
   

  	
   

  	
  3
  1248 Oak Crest Drive, Suite 100

  
	
   

  	
   

  	
  Westlake
  Village, California 91361

  
	
   

  	
   

  	
  Attn:
  Carisle Packard, Esq.

  
	
   

  	
   

  	
  Fax No.: (818) 879-9680

  

 

The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other. All notices or demands sent in accordance with this Section 12
shall be deemed received on the earlier of the date of actual receipt or three (3) days
after the deposit thereof in the U.S. mail or, where applicable, two (2) days
after deposit with a nationally recognized overnight carrier, all with postage
and charges prepaid, or two (2) days after the latter of transmission by
telefacsimile with an electronic transmission receipt and deposit of a copy
into the U.S. mail by first class U.S. mail.

 

13.          CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER.

 

THE VALIDITY OF THIS AGREEMENT AND
THE OTHER LOAN  DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY
IN  ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND  ENFORCEMENT
HEREOF AND  THEREOF, AND THE RIGHTS OF THE PARTIES  HERETO AND  THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE  DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES HERETO  AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE  OTHER LOAN
DOCUMENTS SHALL BE  TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED  IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR,
AT THE SOLE  OPTION OF BANKS, IN
ANY OTHER COURT IN WHICH BANKS SHALL INITIATE  LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER  JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH OF BORROWER  AND BANKS WAIVES TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON  CONVENIENS
OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS  BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWER AND BANKS  HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM  OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY  OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,  AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF
BORROWER AND BANKS REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER  AND  EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL  RIGHTS  FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF  

 

33

 

LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN  CONSENT TO A
TRIAL BY THE COURT.  

 

14.                                   DESTRUCTION OF BORROWER’S DOCUMENTS.

 

All documents, schedules,
invoices, agings, or other papers delivered to Banks may be destroyed or otherwise disposed of by
Banks one (1) year after they are
delivered to or received by Agent or
Banks, unless Borrower requests, in writing, the return of said documents,
schedules, or other papers and makes arrangements, at Borrower’s expense, for their return.

 

15.                              AGENCY AND GOVERNANCE PROVISIONS.

 

15.1         Actions. Each Lender hereby appoints
U.S. BANK NATIONAL ASSOCIATION as its Agent (in such capacity, together
with its successors and assigns, “Agent”) under and for purposes of this
Agreement and each other Loan Document. Each Lender authorizes Agent to act on
behalf of such Lender under this Agreement and each other Loan Document and, in
the absence of other written instructions from the Lenders received from time
to time by Agent (with respect to which Agent agrees that it will comply,
except as otherwise provided in this Article 15 or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of Agent by the term is hereof and
thereof, together with such powers as may reasonably be incidental thereto.
Each Lender hereby indenmifies (which indemnity shall survive any termination
of this Agreement) Agent, pro rata according to such Lender’s Pro-Rata Share,
from and against any all liabilities, obligations, losses, damages, claims,
costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, Agent in any way relating to or
arising out of this Agreement and any other Loan Document, including reasonable
attorneys’ fees, and as to which Agent is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, claims, costs or expenses which
are determined by a court of competent jurisdiction in a final proceeding to
have resulted solely from Agent’s gross negligence or willful misconduct. Agent
shall not be required to take any action hereunder, or under any other Loan
Document, or prosecute or defend any suit in respect of this Agreement or any
other Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of Agent shall be or become, in Agent’s determination,
inadequate, Agent may call for additional indemnification from the Lenders and
cease to do the acts indenmified against hereunder until such additional
indemnity is given.

 

15.2        Exculpation. Neither
Agent nor any of its directors, officers, employees, or agents shall be liable
to any Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own willful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity, or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection, or priority of any Liens purported
to be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value, or sufficiency of any collateral security,
not to make any inquiry respecting the 

 

34

 

performance by Borrower or any of its Subsidiaries or
Affiliates of their respective obligations under the Loan Documents. Any such
inquiry which may be made by Agent shall not obligate it to make any further
inquiry or to take  any action. Agent shall be entitled
to rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement, or writing which Agent believes to be genuine
and to have been presented by a proper Person.

 

15.3        Successors. Agent may
resign as such at any time upon at least thirty (30) days’ prior notice to
Borrower and all Lenders. If Agent at any time shall resign, the Lenders may
appoint another Lender as a successor Agent which shall upon acceptance of such
appointment, thereupon become Agent hereunder. If no successor Agent shall have
been so appointed by the Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent’s giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a Lender or a commercial banking institution
organized under the laws of the United States (or any State thereof) or a U.S.
branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent’s resignation hereunder as Agent, the provisions of this Article 15
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

 

15.4        Other
Transactions by U.S. Bank. U.S. Bank shall have the same
rights and powers with respect to (x) Facility
A and Facility B made by it or any of its Affiliates, and (y) the Notes
held by it or any of its Affiliates as any other Lender and may
exercise the same as if it were
not Agent. U.S. Bank and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with Borrower, any of its Subsidiaries or any of their Affiliates as if U.S. Bank
were not Agent hereunder.

 

15.5        Independent
Credit Decision. Each Lender acknowledges that it has, independently of Agent
and each other Lender, and based on such Lender’s review of the financial information of
Borrower and its Subsidiaries and Affiliates, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigations as such Lender has
deemed appropriate, made its own credit decision in regard to Facility A and
Facility B. Each Lender also acknowledges that it will, independently of Agent
and each other Lender, and based on such other documents, information, and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.

 

15.6        Copies.
Agent shall give prompt notice to each Lender of each notice or request
required or permitted to be given to Agent by Borrower pursuant to the terms of
this Agreement (unless concurrently delivered to the Lenders by Borrower).
Agent will distribute to each Lender each document or instrument received for
its account and copies of all other 

 

35

 

communications received by Agent from Borrower for
distribution to the Lenders by Agent in accordance with the terms of this
Agreement.

 

15.7        Payments to be Made to
Agent. All payments of principal, interest, fees, costs, expenses, and other
amounts made by the Borrower pursuant to this Agreement and the other Loan Documents
shall be made by the Borrower to Agent, on behalf of the Lenders. Whenever
Agent receives any payment or prepayment from or on behalf of the Borrower pursuant
to this Agreement or any other Loan Document, Agent shall promptly pay over to
each Lender an amount equal to its Pro-Rata Share of such payment or repayment,
as the case may be. Any determination by Agent as to the allocation of any
payment or prepayment to a particular Loan, or to interest, principal, fees or
any other amount payable in respect of this Agreement or the other, Loan
Documents shall be final and conclusive absent manifest error.

 

15.8        Reimbursement by
Lenders. Each Lender shall on demand reimburse Agent for its Pro-Rata Share of
any and all costs, expenses and disbursements (other than normal overhead costs
and expenses) which Agent may incur or sustain in connection with the Loans or
any action which may be taken by Agent to administer or collect the same on
behalf of the Lenders and for which Agent is not otherwise reimbursed by the
Borrower, including, without limitation, all expenses incurred or sustained in
connection with the enforcement of rights or remedies against the Borrower, all
court costs, disbursements and accountants’ fees and disbursements, filing and
recording fees, title investigation and insurance charges, appraisal fees, and
expenses of special examinations and audits.

 

15.9       Collateral
and Guarantees Held by Agent. All collateral security mortgaged,
pledged, assigned, transferred, or in the possession of Agent and all
guarantees of the Borrower’s obligations under the Loan Documents which Agent
holds or which may hereafter come into its possession as collateral security
for or guarantees of the Loans shall be held by Agent in its own name for the
ratable benefit of the Lenders in accordance with their Pro-Rata Shares.
However, neither Agent (in its capacity as Agent) nor any Lender shall have any
interest in any property that may at any time be taken as collateral security
for any other loan or loans made to the Borrower by U.S. Bank, or in any
property now or hereafter in the possession or control of U.S. Bank which may
be or become collateral security for such loans by reason of the general
description contained in any general loan or collateral agreement or collateral
note held at any time by U.S. Bank, or by reason of any right or set-off,
counterclaim, banker’s lien, or otherwise, except that if such property or the
proceeds thereof are applied in reduction of any amounts outstanding under this
Agreement, the Notes, or any other Loan Document, then each Lender shall be
entitled to its Pro-Rata Share of such application.

 

15.10     Lenders’
Commitments Independent. All advances of loan funds under this Agreement
shall be made by the Lenders proportionately in accordance with their Pro-Rata
Shares, and no Lender shall be obligated to fund more than its Pro-Rata Share
of any requested Advance. All collateral security at any time mortgaged,
pledged, assigned, transferred, or in the possession of Agent and all guarantees
of the Borrower’s obligations under the Loan Documents which Agent at any time
holds as collateral security for or guarantees of the Loans shall be held by
Agent in its own name for the ratable benefit of the Lenders based upon their
respective Pro-Rata Shares. However, neither Agent (in its capacity as Agent)
nor any Lender shall have any 

 

36

 

interest in any property that may be taken as
collateral security for any other loan or loans made to the Borrower by U.S.
Bank, or in any property now or hereafter in the possession or control of U.S.
Bank which may be or become collateral security for such loans by reason of the
general description contained in any general loan or collateral agreement or
collateral note held by U.S. Bank or by
reason of any right or set-off, counterclaim,
banker’s lien, or otherwise, except that if such property or
the proceeds thereof are applied in reduction of any amounts outstanding under
this Agreement, the Notes, or any other Loan Document, then each Lender shall
be entitled to its Pro-Rata Share of such application.

 

15.11      Borrower
to deal with Agent. Borrower shall deal
solely and directly with Agent, as Agent for the Lenders, for all purposes
under the Loan Documents and shall deliver all notices, communications,
and other information required or desired to be delivered under the Loan
Documents, and make all payments due thereunder, directly to Agent.

 

15.12      Loans to be Funded
Through Agent. Promptly upon receipt of notice of each proposed Advance of Loan
funds, the Agent shall notify each Lender of the date and amount of each such
Advance and each Pro-Rata Share thereof and provide each Lender with a copy of
the Advance Request Form and Disbursement Letter reflecting the Borrower’s
request for such Advance. Each Lender shall, on or before 10:00 a.m.
California time on the date of each such Advance, pay to the Agent, at its
office at 633 West 5th Street, 30th Floor, Los Angeles, California 90071, Account No. 6517339330,
Reference: Kennedy-Wilson, Inc., Attention: Linda
Morgan, Vice President, Telephone (213) 615-6683, its Pro-Rata Share thereof in
lawful money of the United States of America and in immediately available
funds. All Advances of Loan funds shall be made by the Lenders simultaneously
and proportionately in accordance with their respective Pro-Rata Shares, but
each Lender may, at its option, fulfill its Commitments with respect to any
LIBOR Rate portion of such Loans, if applicable, by causing a foreign branch or
Affiliate to make the requested Advance, provided that any exercise of that
option does not result in increased costs to the Borrower. Subject to the
satisfaction of the conditions specified in Article 3 hereof, Agent
shall make the proceeds of the Advance available to the Borrower on the
required funding date by causing an amount equal to such proceeds to be
credited to Borrower’s Account; it is understood, however, that the Agent shall
only be required to credit to the Borrower’s Account such proceeds of such
Advance as are actually received by it from the Lenders. Unless the Agent has
been notified by a Lender prior to the required funding date that such Lender
will not make its Pro-Rata Share of the applicable Advance available to the
Agent, the Agent may assume that the Lender has made its portion available on
the funding date, and the Agent may in reliance upon such assumption make a
corresponding amount available to the Borrower. No Lender shall be relieved of
its obligation to make its Pro-Rata Share of any requested Advance under this
Agreement available to the Agent by the failure of any other Lender to make its
Pro-Rata Share of that Advance available to the Agent. However, no Lender shall
be responsible for any such default by any other Lender; nor shall the
Commitment of any Lender be increased as a result of any such default by any
other Lender; nor shall the Agent be responsible for any such default by a
Lender. If and to the extent a Lender does not make its Pro-Rata Share of a
requested Advance available to the Agent, that Lender shall repay to the Agent,
on demand, the amount of its Pro-Rata Share of that Advance together with
interest thereon at the Federal Funds Effective Rate for each day from the date
the amount is made available to the Borrower until the date the amount is
repaid to the Agent, and the Agent may exercise any and

 

37

 

all voting rights otherwise accorded to that Lender
under this Agreement until all required payments are received by the Agent. If
a Lender so repays its Pro-Rata Share of that Advance to the Agent, the amount
so repaid shall constitute that Lender’s Pro-Rata Share of the Advance for all
purposes of this Agreement. “Federal Funds Effective Rate” means the
rate per annum equal to the Agent’s cost of obtaining overnight funds in the
New York Federal Funds Market, as in effect from time to time.

 

16.                           ASSIGNMENTS AND PARTICIPATIONS.

 

16.1        Assignments. Either Bank may at any time, with notice to Borrower and Agent,
assign and delegate to one or more commercial banks or other financial
institutions

reasonably acceptable to Agent (each Person to whom such assignment and
delegation is to be made, being hereinafter referred to as an “Assignee
Lender”), all or any fraction of such Bank’s Commitment (which assignment
and delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender’s Commitment) (each Lender from whom such assignment and
delegation is to be made, being hereinafter referred to as an “Assignor
Lender”), but not less than an aggregate principal amount of Five Million
Dollars ($5,000,000) and an integral multiple of Five Hundred Thousand Dollars
($500,000) in excess thereof; provided,  however, that Borrower
and Agent shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to an
Assignee Lender until (a) written notice of such as assignment; and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to
Borrower and Agent by such Lender and such Assignee Lender, and (b) Agent
shall have received a processing fee of Three Thousand Dollars ($3,000) from
such Lender or Assignee Lender and an executed assignment agreement in form and
substance satisfactory to Agent.

 

From and after the date that an assignment becomes effective as
provided in the preceding paragraph, (a) the Assignee Lender thereunder
shall be deemed automatically to have become a party hereto and to the extent
that rights and obligations hereunder have been assigned and delegated to such
Assignee Lender in connection with such assignment, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (b) the
Assignor Lender, to the extent that rights and obligations hereunder have been
assigned and delegated by it in connection with such assignment, shall be
released from its obligations hereunder, and under the Loan Documents. Within
five (5) Business Days after its receipt of notice of such assignment and
associated documentation reasonably required by the Agent, Borrower shall
execute and deliver to Agent (for delivery to the relevant Assignee Lender) new
Notes (if requested by Agent in its sole discretion) evidencing such Assignee
Lender’s assigned Commitments and, if the Assignor Lender has retained any
portion of its Commitment hereunder, replacement Notes evidencing such Assignor
Lender’s retained portion of the Commitments (each such Note to be in exchange
for, but not in payment of, the Note then held by such Assignor Lender). Each
such replacement Note shall be dated the date of the predecessor Note. Accrued
interest on that part of the predecessor Note evidenced by the replacement
Note, and accrued fees, shall be paid as provided in the documentation
effecting the Assignment. Accrued interest on that part of the predecessor Note
shall be paid by the Agent, following its 

 

38

 

receipt from the Borrower, to the Assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 16.1
shall be null and void.

 

16.2                     Participations. Any Lender may at any time sell to one or more

commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a “Participant”) participating
interests in any of its Commitment; provided, however, that:

 

(a)          no participation contemplated in this Section 16.2
shall relieve such Lender from its Commitment or its other obligations
hereunder or under any other Loan Document;

 

(b)          such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;

 

(c)          Borrower and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and each of the other Loan Documents;

 

(d)          No Participant, unless such Participant is itself a Lender,
shall be entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document.

 

17.                           GENERAL
PROVISIONS.

 

17.1       Effectiveness. This Agreement shall
be binding and deemed effective when executed by Borrower and Banks.

 

17.2                         Successors and
Assigns. This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights or duties hereunder without Agent’s
prior written consent and any prohibited assignment shall be absolutely void.
No consent to an assignment by Banks shall release Borrower from its
Obligations hereunder. Banks may assign this Agreement and its rights and
duties hereunder and no consent or approval by Borrower is required in
connection with any such assignment. Banks and each of them reserve the right
to sell, assign, transfer, negotiate, or grant participations in all or any
part of, or any interest in Banks’ rights and benefits hereunder. In connection
with any such assignment or participation, Banks may disclose to a prospective
or actual purchaser or participant all documents and information which Banks
now or hereafter may have relating to Borrower or Borrower’s business. To the
extent that Banks or either of them assign their rights and obligations
hereunder to a third Person, Banks thereafter shall be released from such
assigned obligations to Borrower and such assignment shall effect a novation
between Borrower and such third Person.

 

17.3                         Section Headings.
Headings and numbers have been set forth herein for convenience only. Unless
the contrary is compelled by the context, everything contained in each 

 

39

 

section
applies equally to this entire Agreement.

 

17.4        Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Banks or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.

 

17.5        Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

 

17.6       Amendments
in Writing. This Agreement can only be amended by a writing signed by both
Banks and Borrower.

 

17.7        Counterparts;
Telefacsimile Execution. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement or of
any of the Loan Documents..

 

17.8       Revival
and Reinstatement of Obligations. If the incurrence or payment

of the Obligations by Borrower or any guarantor of the Obligations or
the transfer by either or both of such parties to Banks of any property of
either or both of such parties should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money
or transfers of property (collectively, a “Voidable Transfer”), and if
Banks are required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of their counsel, then,
as to any such Voidable Transfer, or the amount thereof that Banks or either of
them is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys’ fees of Banks related thereto, the liability of
Borrower or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.

 

17.9       Integration.
This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions
contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before the date hereof

 

17.10     Attorneys’
Fees. If any action or proceeding, at law, in equity, or 

 

40

 

otherwise, including any action for
declaratory relief, is brought by or on behalf of any party hereunder, or is
required by any court of competent jurisdiction, as the case may be, which is
in any manner related to this Agreement or any other Loan Document or its or
their breach, interpretation, or enforcement, the prevailing party in any final judgment or award shall be entitled to
recover from the non-prevailing party or parties to such and or proceeding the full amount of all reasonable
expenses, including all court costs and actual attorneys’ fees paid or incurred
in good faith (including, without limitation, fees incurred pursuant to Title
11, United States Code, by such prevailing party, in addition to any other
relief to which it may be entitled.

 

[SIGNATURE PAGE FOLLOWS]

 

41

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Los Angeles, California.

 

	
   

  	
   

  	
  Borrower:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENNEDY-WILSON, INC.,

  
	
   

  	
   

  	
  /s/  William J.
  McMorrow

  
	
   

  	
   

  	
  /s/  Freeman Lyle, CFO

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national banking association

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Linda Morgan

  
	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   East-West
  Bank:

  
	
   

  	
   

  
	
   

  	
  EAST-WEST BANK,

  
	
   

  	
  a California corporation

  
	
   

  	
  By

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Agent:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national banking association

  
	
   

  	
  By

  	
  /s/ Linda Morgan

  
	
   

  	
  Title: Vice
  President

  
					

 

42

 

Schedule A-1

 

Authorized
Persons

 

	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  William J. McMorrow

  	
   

  	
  Chairman and Chief
  Executive Officer

  
	
  Freeman Lyle

  	
   

  	
  Executive Vice President,
  Chief Financial Officer, and Secretary

  

 

 

Schedule P-1

 

Permitted Liens

None

 

 

Schedule 1.1-1

 

Advance Request Form and Disbursement Letter

 

[SEE
ATTACHED]

 

 

U.S. BANK

 

AD VANCE REQUEST FORM

 

(Advances made same day if request is’ received before 11:00 Am..
Monday through Friday, except holidays)

 

	
  BORROWER NAME:
  KENNEDY-WILSON, INC.

  	
  DATE:

  

 

	
  LOAN NUMBER

  	
   

  	
   

  	
  AMOUNT OF REQUEST:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADVANCE

  	
   

  	
  PAYOFF

  	
  PAYDOWN

  	
   

  

 

IF ADVANCE ON ACQUISITION
FACILITY, PLEASE DETAIL:

 

PROJECT
NAME DESCRIPTION:
                  

 

ASSOCIATED
DEBT TERMS:
                  

 

MATURITY OF ADVANCE:
                  

(not to exceed time periods set forth in Loan Documents)

 

FUNDS DEPOSITED TO! TAKEN FROM:  TO BE DETERMINED

 

ACCOUNT NUMBER:  TO BE DETERMINED

 

PERSON
AUTHORIZING REQUEST: (signature)

 

FOR QUESTIONS REGARDING THIS REQUEST, PLEASE
CALL:

 

NAME:  FREEMAN 
LYLE, EVP/CFO/ SECRETARY  PHONE NUMBER: (310) 887-6453

 

COMMENTS:

 

REQUESTS
RECEIVED AFTER 11:00 A.AL 
WILL BE PROCESSED THE NEXT BUSINESS DAY.

PLEASE FAX
REQUEST TO: (213) 615-6792

ATTN: LINDA
MORGAN

 

 

[Borrower’s letterhead]

 

DISBURSEMENT LETTER

 

U.S. Bank National
Association, as Agent

633 West 5th Street, 30th Floor

Los Angeles, California 90071

Attention: Linda Morgan

 

Re:                               Loan Agreement
dated as of June 5, 2008 among U.S. Bank National
Association and East-West Bank, U.S. Bank National
Association, as agent, and Kennedy-Wilson, Inc. (the “Loan Agreement”)

 

Dear Mr. Mitchell:

 

This is an ‘Advance Request Form and
Disbursement Letter” (as defined in the Loan Agreement). All capitalized
terms not otherwise defined are used in this Advance Request
Form and Disbursement Letter with the meanings given them in the Loan
Agreement.

 

Borrower requests an Advance
from Facility choose one: [A] [B] in the amount of $                                  .

 

Borrower certifies to the Banks as
follows with respect to the Advance requested above:

 

I.              The amount requested above, when
aggregated with all other Advances outstanding under Facility choose the
applicable Facility: [A] [B], does not exceed the amount available to be
advanced under the Loan Agreement;

 

2.             All of the representations and warranties contained in
the Loan Agreement and the other Loan Documents are true and correct in
all respects;

 

3.             No Default or Event of Default has occurred and is
continuing nor shall result from the making of the Advance requested above;

 

4.             All of the other conditions to
the Banks’ making the requested Advance set forth in the Loan Agreement have
been satisfied.

 

5.             If Borrower  has elected
that the Advance bear interest at an interest rate based on the LIBOR Rate,
Borrower has delivered to Agent an appropriately completed LIBOR Notice in the form of Schedule
2.2 to the Loan Agreement.

 

 

6.             The repayment date for the requested Advance in
accordance with Section 2.2(d) of the Loan Agreement is                             .

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENNEDY-WILSON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  

 

 

Schedule
1.1-2

Excluded
Properties

None

 

 

Schedule 2.2

LIBOR Notice

[SEE
ATTACHED]

 

 

Schedule 2.2

 

LIBOR NOTICE

 

	
  To:

  	
  U.S. Bank National
  Association

  
	
   

  	
  633 West 5th Street, 30Eh Floor

  
	
   

  	
  Los Angeles, California
  90071

  
	
   

  	
  Attn: Linda Morgan

  
	
   

  	
  Facsimile: (213) 615-6683

  

 

This LIBOR Notice is given pursuant to Section 2.2
of that certain Loan Agreement, dated as of June 5, 2008 (the “Agreement”),
between KENNEDY-WILSON, INC. (“Borrower”), EAST-WEST BANK and U.S. BANK
NATIONAL BANK (“Bank”). All initially capitalized terms used but not defined
in this Notice of Conversion or Continuation shall have the meanings assigned to
them in the Agreement.

 

In connection with the Advances, the undersigned hereby requests that
you:

 

1.            Convert $          
in principal amount of the Prime Rate Loans on                     200   ,
to a LIBOR Rate Loan with an Loan Period of               [1, 2 or 3] months and expiring on
                                , 200   
($500,000 minimum with incremental increases of $100,000 in excess thereof);

 

2.            Convert $              
in principal amount of LIBOR Rate Loans on the expiration of
the Loan Period applicable thereto, to a Prime Rate Loan;

 

3.            Continue as LIBOR
Rate Loans $                  
in principal amount of presently outstanding LIBOR Rate Loans
commencing on the expiration of the Loan Period applicable thereto, with a new
Loan Period of               [1, 2, 3, 6 or
12] months and expiring on                       ,
200   .

 

The undersigned certifies that, as of the date hereof:

 

(a)          the representations and warranties
of Borrower contained in the Agreement are true and correct on and
as of such date, except to the extent such representations and warranties
expressly relate solely to an earlier date;

 

(b)          no Event of Default
has occurred or is continuing;

 

(c)           after giving
effect to the continuation or conversion requested hereby, there
shall be no more than five (5) LIBOR Rate
Loans outstanding;

 

(d)          Borrower has
satisfied in all respects all conditions under the Agreement to be performed or
satisfied by it on or before such date.

 

 

	
  Dated:
                          , 200   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

Schedule 3.2

 

Documentation to Be Furnished to Banks in Connection with

Each Facility A or Facility B Advance

 

Document

 

1.             Advance
Request Form and Disbursement Letter, in the form attached as Schedule
1.1-1.

 

2.             Such
additional documentation as may from time to time be requested by Banks.

 

 

Schedule 5.4

Schedule of Indebtedness

None.

 

 

Schedule 5.6

Borrower Subsidiaries

 

Kennedy-Wilson, Inc.

K-W Properties

Kennedy-Wilson International

Kennedy-Wilson Properties, Ltd

Kennedy-Wilson Properties Ltd

Kennedy-Wilson Austin Inc.

Kennedy-Wilson International of New York Inc.

Kennedy Wilson Capital

Kennedy-Wilson Tech, Ltd

Techsource Services, Inc.

Kennedy-Wilson Properties Northwest, Ltd

Kennedy-Wilson Properties of Dallas

Kennedy-Wilson Florida Management Inc.

Kennedy-Wilson Nevada Management, Inc.

Kennedy-Wilson Ohio Management, Inc.

Kennedy-Wilson Pennsylvania Management, Inc.

Kennedy-Wilson Properties of Arizona Ltd.

Kennedy-Wilson Properties of Missouri Ltd.

Kennedy-Wilson Properties of Texas Ltd.

Kennedy-Wilson Virginia Management Inc.

Kennedy-Wilson Wisconsin Management, Inc.

KWP Financial, Inc.

KWP
Financial I

KWP
Financial II

KWP Financial IV

KWP Financial VI (formerly Falcon Crest)

KWP Servicer, LLC

KWP REO, LLC

KWP
Financial IX, Inc.

KWP Financial X, Inc. (formerly NLS 187
Corp)

KWP Financial XI LP, Inc.

KW Seattle Fund I, LLC

KWP Marina Club, LP

KWP Marina Club, UP, Inc.

KWP Marina Club Executives, LLC

K-W Santiago Inc.

KW Ravenswood LLC

KW Ravenswood Member LLC

KW Ravenswood Equity LLC

KW Ravenswood Executives LLC

KW/WDC Vista, LLC

 

 

KW Vista Land Partners LLC

KW Vista Executives LLC

KW Napa LLC

KW Napa Equity LLC

KW Davis LLC

KW Davis Equity LLC

KW Davis Executives, LLC

KW Pinole LLC

KW Pinole Equity LLC

KW Pinole Executives, LLC

KW-MSK San Jose LLC

KW San Jose Member LLC

KW San Jose Executives, LLC

KW/WDC La
Mesa, LLC

KW La Mesa
Land Partners, LLC

Japan Ventures, LLC

Chipwell, LLC

Kennedy Wilson Overseas Investments, LLC

Kennedy Wilson Overseas Investments, Inc

KW
Multi-Family Management Group Ltd

Fairways 340,LLC

Fairways 340 Corp

Hokkaido Apartments LLC

1KW Hawaii Development LLC

KW Hawaii Executives LLC

KW/WDC Apartment
Portfolio LLC

KW/WDC
Portfolio Member LLC

KW/WDC Beaverton LLC

KW/WDC Norwalk LLC

KW/WDC Sacramento LLC

KW/WDC Vallejo LLC

KW/WDC
Executives LLC

KW-M5K Anaheim LLC

KW Anaheim Manager LLC

KW Anaheim Land Partners LLC

KW Anaheim
Executives LLC

KW Hidden
Creek, LLC

KW Western
Fund II, LLC

KW Western
Fund Manager, LLC

KW Western Fund Executives, LLC

KW Federal
Way, LLC

KW Federal Way Equity, LLC

1KW Federal Way Executives

Kenedix UP, LLC

KW/HFC Paramount, LP

 

 

KW Paramount GP, LLC

KW/HFC Paramount, LLC

KW
Paramount Member, LLC

KW Paramount Investors, LLC

Dillingham Ranch Ama LLC

68-540 Farrington LLC

1KW
Dillingham Ama LLC

KW
Dillingham Ama Investors LLC

Mokuleia Water LLC

North Shores Water company LLC

Mokuleia Farmington shores, LLC

Mokuleia shores Holder LLC

Panako LLC

Kennedy Capital Trust I

KW Palisades Center, LLC

1KW Palisades Center Manager, LLC

1KW
Palisades Executives, LLC

KWI America Multifamily, LLC

KW America Multifamily Manager, LLC

1KW America Multifamily Executives, LLC

KW/WDC Westmoreland, LLC

KW/WDC West Campus, LLC

900 Fourth Avenue Property
LLC

KW Portfolio XI Manager, LLC

1KW Portfolio 900 Fourth Property Manager,
LLC

KW 900 Fourth Property Executives, LLC

Fifth and Madison LLC

KW Portfolio XII Manager, LLC

KW Portfolio Fifth and Madison
Property Manager, LLC

KW Fifth and Madison Property Executives, LLC

300 California Partners LLC

KW 300 California Manager LLC

KW 300 California LLC

1KW Fund II
300 California, LLC

KW
Portfolio XIII, LLC

KW Portfolio XIII Manager, LLC

KW Portfolio XIII Executives, LLC

KW - RAR3 Mill Creek, LLC

KW - RAR3 Mill Creek Manager, LLC

KW Mill
Creek Property Manager, LLC

1KW Mill Creek Executives, LLC

KW Fruitdale, LLC

KW Fruitdale Equity, LLC

KW Fruitdale Executives, LLC

 

 

Glendora Partners

KW James Street, LLC

1KW James Street Manager, LLC

1KW James
Street Executives, LLC

KW Fund I - I Carlsbad,
General Partner LLC

KW Fund I - 1 Carlsbad, LP

KW Fund I - Hegenberger
General Partner LLC

1KW Fund I - Hegenberger LP

1KW Fund I - Fifth and
Madison, LLC

KW Fund I - 900 Fourth LLC

1KW Fund I - 300 California

KW Fund I - Baxter Way LLC (Formely 201
Figueroa)

KW Fund I - One Tech LLC

Kennedy-Wilson Property Services, Inc.

Kennedy-Wilson Property Equity, Inc.

Kennedy-Wilson Property Special Equity, Inc

KWI Property Fund I, LP

KWI Continental Building, General Partner LLC

KWI Briareroft Building, General Partner LLC

KWI Briarcroft Building, LP

KWI
Continental Building, LP

KWI Ashford Westchase Buildings General
Partner LLC

KWT Ashford Westchase Buildings, LP

1KW
Property Fund II LP

Kennedy-Wilson Property Services II, Inc.

Kennedy-Wilson Property Special Equity II, Inc.

Kennedy-Wilson Property Equity II, Inc.

1KW Fund II
Executives LLC

1KW Fund II
Howe CC LP

KW Fund II
Howe CC General Partner LLC

1860 Howe Avenue Corp

1KW Fund II - 1860 Howe LP

1KW Fund II - 1860 Howe General Partner
LLC

KW Fund II Metro Center General Partner

KW Fund II Metro Center LP

KW Fund II - 300 California LLC

KW Fund II -303 North Glenoaks, LLC

1KW Fund II - 333 North Glenoaks, LLC

1KW Fund II - 7060 Hollywood, LLC

1KW Fund IT - Burbank Executive Plaza, LLC

KW Fund II
Executives LLC

1KW Fund II - One Tech LLC

1KW Fund III - 333 North Glenoaks, LLC

 

 

KW Fund III - Burbank Executive Plaza, LLC

KW Fund II- Baxter Way LLC

1KW Fund II- Palm desert LLC

1KW Fund III - 303 North Glenoaks, LLC

1KW Funds - Burbank Executive Plaza LLC

1KW Fund III-Woodstone, LLC

KW Fund III-Woodstone Manager, LLC

1KW Funds - 303 North Glenoaks, LLC

1KW Funds - 333 North Glenoaks, LLC

KW BASGF II Manager LLC

 

 

Schedule 5.8

Litigation

None.

 

 

Schedule  5.11

 

Benefit Plans

 

KENNEDY-WILSON. INC. 1992 INCENTIVE
AND NONSTATUTORY STOCK OPTION PLAN

 

 

Schedule 6.3

Compliance Certificate

[To Be Furnished]Exhibit 10.92

 

Execution Copy

 

JUNIOR
SUBORDINATED INDENTURE

between

 

KENNEDY-WILSON,
INC.

 

and

 

THE
BANK OF NEW YORK TRUST COMPANY,
NATIONAL ASSOCIATION,

 

as
Trustee
 Dated as of January 31, 2007

 

 

SCHEDULES

 

Schedule A—Determination of LIBOR

 

Exhibit A—Form of Officer’s Financial
Certificate

 

 

JUNIOR SUBORDINATED INDENTURE, dated as of January 31, 2007,
between KENNEDY-WILSON, INC., a Delaware corporation (the “Company”), and THE BANK OF NEW
YORK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as Trustee (in such
capacity, the “Trustee”).

 

RECITALS
OF THE COMPANY

 

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

 

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

 

Now, THEREFORE, this Indenture Witnesseth:

 

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

 

ARTICLE I

 

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

SECTION 1.1               Definitions.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

“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.

 

“Breakage Costs” means any and all reasonable costs and
fees of any holder of Preferred Securities (including, without limitation, the
reasonable fees and expenses of any counsel engaged by such holder to enforce
the obligations of the Company hereunder) (as determined by such holder)
directly associated or incurred in connection with the unwinding, terminating,
modifying or otherwise breaking of any interest rate swap or other interest
rate hedging arrangement entered into with respect to the interest rate on the
Preferred Securities prior to the expiration of the Fixed Rate Period where
such unwinding, termination, modification or breaking is
caused by the
payment of principal on the Securities prior to the expiration of the Fixed
Rate Period.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Company Request” and “Company
Order” mean,
respectively, the written request or order signed in the name of the Company by
its Chairman of the Board of Directors, its Vice Chairman of the Board of
Directors, its Chief Executive Officer, President or a Vice President, and by
its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.  Notwithstanding the foregoing, a Company
Order for the purposes of authentication and delivery of the Securities
pursuant to Section 3.3(a) shall require the signature of only
one of the above referenced officers of the Company.

 

“Corporate Trust Office” means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of this Indenture is located at 601
Travis, 16th Floor, Houston, Texas 77002 Attn.:  Global Corporate Trust—CDO Group.  Initially, all notices and correspondence
shall be addressed to Mudassir Mohamed, telephone number (713) 483-6029.

 

“Debt” means, with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, whether
currently existing or hereafter incurred and whether or not contingent and
without duplication, (i) every obligation of such Person for money
borrowed; (ii) 

 

3

 

every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of such Person with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of such Person; (iv) every
obligation of such Person issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable or other accrued
liabilities arising in the ordinary course of business); (v) every capital
lease obligation of such Person; (vi) all indebtedness of such Person,
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity forward contracts, options and swaps
and similar, arrangements; (vii) every obligation of the type referred to
in clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor or
otherwise; and (viii) any renewals, extensions, refundings, amendments or
modifications of any obligation of the type referred to in clauses (i) through
(vii).

 

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

 

“Defeasance” has the meaning specified in Section 13.1.

 

“Defeasance Election” has the meaning specified in Section 13.1.

 

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

 

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

 

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

 

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

 

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

 

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

 

“EBITDA” means, for any period, all as determined
in accordance with GAAP on a consolidated basis for the Company and its consolidated
subsidiaries, without duplication:

 

4

 

(a)                                  the sum of the following amounts
attributable to such period:  (i) Net
Income, plus (ii) interest expense, (iii) charges against income for
all federal, state and local taxes, (iv) depreciation expense, (v) amortization
expense, (vi) other non-cash charges and expenses (including non-cash
charges resulting from accounting changes), and (vii) any losses arising
outside of the ordinary course of
business which have been included in the determination of Net Income, minus

 

(b)                                 any gains arising outside the ordinary
course of business which have been included in the determination of Net Income.

 

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

 

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

 

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

 

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

 

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

 

“FIN 46(R)”  shall mean Interpretation No. 46(R) of
the Financial Accounting Standards Board (“Consolidation
of Variable Interest Entities”),

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

“Interest Charges” means for any period, without duplication, the
aggregate amount of interest which, in accordance with GAAP, would be included
on an income statement for the Company and its consolidated subsidiaries on a
consolidated basis as interest expense, together with all interest capitalized
or deferred during such period.

 

“Interest Payment Date” means January 30, April 30, July 30 and
October 30 of each year, commencing on April 30, 2007, during the
term of this Indenture.

 

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

 

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

 

“LIBOR” has the meaning specified in Schedule A.

 

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

 

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

 

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

 

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

 

“Net Income” means, with reference to any period, the net income
(or loss) of the Company and its consolidated subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Company and its
consolidated subsidiaries and all other items required to be eliminated in the 

 

6

 

course of the preparation of consolidated financial
statements of the Company and its consolidated subsidiaries in accordance with
GAAP.

 

“Net Worth” means, at any time,

 

(a)                                  the total assets of the Company and its
consolidated subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its consolidated subsidiaries as of such time
prepared in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
subsidiaries, minus

 

(b)                                 Total Liabilities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

provided, that in determining whether the Holders
of the requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be 

 

7

 

Outstanding unless the Company shall hold all
Outstanding Securities, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities that a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor.  Notwithstanding anything herein to the
contrary, Securities initially issued to the Trust that are owned by the Trust
shall be deemed to be Outstanding. 
notwithstanding the ownership by the Company or an Affiliate of any
beneficial interest in the Trust.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Senior Debt” means the principal of and any premium and interest on
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company, whether or not such
claim for post-petition interest is allowed in such proceeding) all Debt of the
Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless it is provided in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right
of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt
or (ii) other debt securities (and guarantees, if any, in respect of such
debt securities) issued to any trust other than the Trust (or a trustee of any
such trust), partnership or other entity affiliated with the Company that is a
financing vehicle of the Company (a “financing entity”) in connection with the
issuance by such financing entity of equity securities or other securities, in
each case of (1) or (ii) pursuant to an instrument that ranks pari passe with or junior in right of
payment to this Indenture.

 

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

 

9

 

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

 

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

 

“Stated Maturity” means April 30, 2037.

 

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

 

“Tangible
Net Worth” means,
at any time,

 

(a)                                  the total assets of the Company and its
consolidated subsidiaries which would be shown as assets on .a  consolidated
balance sheet of the Company and its consolidated subsidiaries as of such time
prepared in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
subsidiaries, minus

 

(b)                                 Total Liabilities, minus

 

(c)                                  the net book value of all assets, after
deducting any reserves applicable thereto, which would be treated as intangible
under GAAP, including, without limitation, good will, trademarks, trade names,
service marks, brand names, copyrights, patents and amortized debt discount and
expense, and organizational expenses.

 

“Tax Event” means the receipt by the Company of an Opinion of
Counsel experienced in such matters to the effect that, as a result of (a) any
amendment to or change (including any announced prospective change) in the laws
or any regulations thereunder of the United States or any political subdivision
or taxing authority thereof or therein or (b) any judicial decision or any
official administrative pronouncement (including any private letter ruling, technical
advice memorandum or field service advice) or regulatory procedure, including
any notice or announcement of intent to adopt any such pronouncement or
procedure (an “Administrative Action”),  regardless of whether such
judicial decision or Administrative Action is issued to or in connection with a
proceeding involving the Company or the Trust and whether or not subject to
review or appeal, which amendment, change, judicial decision or Administrative
Action is enacted, promulgated or announced, in each case, on or after the date
of issuance of the Securities, there is more than an insubstantial risk that (1) the
Trust is, or will be within ninety (90) days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Securities, (ii) interest payable by the Company on the
Securities is not, or within ninety (90) days of the date of such opinion, will
not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is,  or will be within ninety (90) days of the
date of such opinion, subject to more than a de minimis
amount of other
taxes, duties or other governmental charges.

 

10

 

“Total Debt” means the total debt of the Company and
its consolidated subsidiaries which would be shown as liabilities on a
consolidated balance sheet of the Company and its consolidated subsidiaries as
of such time prepared in accordance with GAAP.

 

“Total Liabilities” means the total liabilities of the
Company and its consolidated subsidiaries which would be shown as liabilities
on a consolidated balance sheet of the Company and its consolidated
subsidiaries as of such time prepared in accordance with GAAP.

 

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

 

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

 

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

 

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

 

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

 

SECTION 1.2                                             Compliance
Certificate and Opinions.

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

SECTION 1.3               Forms of Documents
Delivered to Trustee.

 

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

 

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

 

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

 

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

 

SECTION 1.4                                             Acts of
Holders.

 

(a)                                  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given to or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in
person or by an agent thereof duly appointed in writing; and, except as herein
otherwise 

 

12

 

expressly provided, such action shall become effective when such
instrument or instruments (including any appointment of an agent) is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company.  Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the Holders signing such instrument or
instruments.  Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 1.4.

 

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

 

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

 

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

 

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

 

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

 

13

 

action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6.

 

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

 

(h)                                 With respect to any record date set
pursuant to paragraph (0 or (g) of this Section 1.4, the party
hereto that sets such record date may designate any day as the “Expiration Date”
and from time to time may change the Expiration Date to any earlier or later
day; provided, that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6,
on or prior to the existing Expiration Date. 
If an Expiration Date is not designated with respect to any record date
set pursuant to this Section 1.4, the party hereto that set such record
date shall be deemed to have initially designated the ninetieth (90th) day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph.  Notwithstanding
the foregoing, no Expiration Date shall be later than the one hundred eightieth
(180th) day after the applicable record date.

 

SECTION 1.5                                             Notices,
Etc. to Trustee and Company.

 

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

 

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

 

(b)                                 the Company by the Trustee, any Holder or
any holder of Preferred Securities shall be sufficient for every purpose
hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at 9601 Wilshire Blvd., Suite 220, Beverly Hills,
CA 90210 or at any other address previously furnished in writing to the Trustee
by the Company.

 

14

 

SECTION 1.6                                             Notice
to Holders; Waiver.

 

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

 

SECTION 1.7                                             Effect
of Headings and Table of Contents.

 

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

 

SECTION 1.8                                             Successors
and Assigns.

 

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

 

SECTION 1.9                                             Separability
Clause.

 

If any
provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.

 

SECTION 1.10                                       Benefits
of Indenture.

 

Nothing
in this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors and assigns, the
holders of Senior Debt, the Holders of the Securities and, to the extent
expressly provided in Sections 5.2, 5.8, 5.9, 5.11,
5.12, 5.13, 9.2 and 10.7, the holders of Preferred
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

 

15

 

SECTION 1.11                                       Governing
Law.

 

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

 

SECTION 1.12                                       Submission
to Jurisdiction.

 

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

 

SECTION 1.13                                       Non-Business
Days.

 

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

 

ARTICLE II

 

SECURITY FORMS

 

SECTION 2.1                                             Form of
Security.

 

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

 

16

 

KENNEDY-WILSON, INC.

 

Junior Subordinated Note due 2037

 

	
  No.                               

  	
  $                       

  

 

Kennedy-Wilson, Inc.,
a corporation organized and existing under the laws of Delaware (hereinafter
called the “Company,” which term includes any successor Person
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to The Bank of New York Trust Company, National Association,
not in its individual capacity, but solely as Property Trustee for Kennedy-Wilson
Capital Trust I, or registered assigns, the principal sum of                         
or such other principal amount represented hereby as may be set forth in the
records of the Securities Registrar hereinafter referred to in accordance with
the Indenture on April 30, 2037. 
The Company further promises to pay interest on said principal sum from January 31,
2007, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly in arrears on January 30, April 30,
July 30 and October 30 of each year, commencing April 30, 2007
or if any such day is not a Business Day, on the next succeeding Business Day
(and no interest shall accrue in respect of the amounts whose payment is so
delayed for the period from and after such Interest Payment Date until such
next succeeding Business Day), except that, if such Business Day falls in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on the Interest Payment Date, at a fixed rate equal to 9.06% per annum through
the interest payment date in April 2017 (“Fixed Rate Period”) and thereafter at a variable rate equal
to LIBOR plus 3.70% per annum, together with Additional Tax Sums, if any, as
provided in Section 10.5  of the Indenture, until the principal hereof is paid
or duly provided for or made available for payment; provided, further, that
any overdue principal, premium, if any, or Additional Tax Sums and any overdue
installment of interest shall bear Additional Interest a fixed rate equal to
9.06% per annum during the Fixed Rate Period and thereafter at a variable rate
equal to LIBOR plus 3.70% per annum (to the extent that the payment of such
interest shall be legally enforceable), compounded quarterly, from the dates
such amounts are due until they are paid or made available for payment, and
such interest shall be payable on demand.

 

During
the Fixed Rate Period, the amount of interest payable shall be computed on the
basis of a 360-day year of twelve 30-day months and the amount payable for any
partial period shall be computed on the basis of the number of days elapsed in
a 360-day year of twelve 30-day months. 
Upon expiration of the Fixed Rate Period, the amount of interest payable
for any interest payment period will be computed on the basis of a 360-day year
and the actual number of days elapsed in the relevant interest period.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date shall, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest installment. 
Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall 

 

17

 

be given to Holders of Securities not less than ten (10) days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.

 

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

 

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

 

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

 

[FORM OF
REVERSE OF SECURITY]

 

This
Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated
Indenture, dated as of January 31, 2007 (the “Indenture”), between the Company and The Bank of New York Trust
Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Debt, the Holders of the Securities and the
holders of the Preferred Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered.

 

18

 

All
terms used in this Security that are defined in the Indenture or in the Amended
and Restated Trust Agreement, dated as of January 31, 2007 (as modified,
amended or supplemented from time to time, the “Trust Agreement”), relating
to the Kennedy-Wilson Capital Trust I (the “Trust”) among the
Company, as Depositor, the Trustees named therein and the Holders from time to
time of the Trust Securities issued pursuant thereto, shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case may be.

 

The
Company may, on any Interest Payment Date, at its option, upon not less than
thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders
of the Securities (unless a shorter notice period shall be satisfactory to the
Trustee) on or after April 30, 2012 and subject to the terms and
conditions of Article XI  of the Indenture, redeem this Security in whole at any
time or in part from time to time at a Redemption Price equal to one hundred
percent (100%) of the principal amount hereof; together, in the case of any
such redemption, with accrued interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date.

 

In
addition, upon the occurrence and during the continuation of a Special Event,
the Company may, at its option, upon not less than thirty (30) days’ nor more
than sixty (60) days’ written notice to the Holders of the Securities (unless a
shorter notice period shall be satisfactory to the Trustee), redeem this
Security, in whole but not in part, subject to the terms and conditions of Article XI  of the Indenture at a Redemption Price
equal to one hundred seven and one half percent (107.5%) of the principal
amount hereof; together, in the case of any such redemption, with accrued
interest, including any Additional Interest, through but excluding the date
fixed as the Redemption Date.

 

In the
event of redemption of this Security in part only, a new Security or Securities
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.  If
less than all the Securities are to be redeemed, the particular Securities to
be redeemed shall be selected not more than sixty (60) days prior to the
Redemption Date by the Trustee from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security.

 

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

 

No
reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay 

 

19

 

the principal of and any premium, if any, and
interest, including any Additional Interest (to the extent legally
enforceable), on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

 

As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is restricted to transfers to (1) the
Company, (ii) “Qualified Institutional Buyers” (as defined in Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”)) who
are also “Qualified Purchasers” (as such term is darned in the Investment
Company Act of 1940, as amended), (iii) outside the United States in an
offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant
to an effective registration statement under the Securities Act or (v) pursuant
to another exemption from registration under the Securities Act and is
registrable in the Securities Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar and
duly executed by, the Holder hereof or such Holder’s attorney duly authorized
in writing, and thereupon one or more new Securities, of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

 

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

 

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

 

The
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

 

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

 

20

 

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

 

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

 

 

	
   

  	
  KENNEDY-WILSON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

SECTION 2.2                                             Restricted Legend.

 

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

 

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

 

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

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH
SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION 

 

21

 

OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF ANY SECURITIES IS HEREBY
NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A UNDER THE SECURITIES ACT.

 

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

 

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

 

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

 

22

 

REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT
IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN,
OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE.”

 

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

 

SECTION 2.3                                             Form of Trustee’s
Certificate of Authentication.

 

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

 

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

 

 

	
  Dated:

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Authenticating Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

SECTION 2.4                                             Temporary Securities.

 

(a)                                  Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as evidenced by their
execution of such Securities.

 

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

 

23

 

SECTION 2.5                                             Definitive Securities.

 

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

 

ARTICLE III

 

THE SECURITIES

 

SECTION 3.1                                             Payment of Principal and
Interest.

 

(a)                                  The unpaid principal amount of the
Securities shall bear interest at a fixed rate equal to 9.06% per annum through
the interest payment date in April 2017 and thereafter at a variable rate
of LIBOR plus 3.70% per annum until paid or duly provided for, such interest to
accrue from the Original Issue Date or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, and any overdue
principal, premium, if any, or Additional Tax Sums and any overdue installment
of interest shall bear Additional Interest at the rate equal to a fixed rate
equal to 9.06% per annum through the interest payment date in April 20.17
and thereafter at a variable rate of LIBOR plus 3.70% per annum compounded
quarterly from the dates such amounts are due until they are paid or funds for
the payment thereof are made available for payment.  If the Company prepays the principal amount
of the Securities prior to the expiration of the Fixed Rate Period, the Company
shall pay to the applicable Holders all Breakage Costs resulting from such
prepayment.

 

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

 

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

 

(i)                                     The Company may elect to make payment of
any Defaulted Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on a
special record date for the payment of such Defaulted Interest (a 

 

24

 

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

 

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

 

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

 

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

 

25

 

interest (including any overdue installment of interest and Additional
Tax Sums, if any) on this Security will be made at such place and to such
account as may be designated by the Property Trustee.

 

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

 

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

 

SECTION 3.2                                             Denominations.

 

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

 

SECTION 3.3                                             Execution, Authentication,
Delivery and Dating.

 

(a)                                  At any time and from time to time after
the execution and delivery of this Indenture, the Company may deliver
Securities in an aggregate principal amount (including all then Outstanding
Securities) not in excess of Forty-One Million Two Hundred Forty Thousand
Dollars ($41,240,000) executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities.  In authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon:

 

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

 

(ii)                                  an Opinion of Counsel stating that:  (1) such Securities, when authenticated
and delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute, and the Indenture constitutes, valid and legally binding
obligations of the Company, each enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and simil8r laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; (2) the Securities
have been duly authorized and executed by the Company and have been delivered
to the Trustee for authentication in accordance with this Indenture; (3) the
Securities are not required to be registered under the Securities Act; and (4) the
Indenture is not required to be qualified under the Trust Indenture Act.

 

26

 

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

 

(c)                                  No Security shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. 
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.8, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.

 

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

 

SECTION 3.4               Global Securities.

 

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

 

(b)                                 Notwithstanding any other provision in
this Indenture, no Global Security may be exchanged in whole or in part for
registered Securities, and no transfer of a Global Security in whole or in part
may be registered in the name of any Person other than the Depositary for such
Global Security or a nominee thereof, unless (1) such Depositary advises
the Trustee and the Company in writing that such Depositary is no longer
willing or able to properly discharge its responsibilities as Depositary with
respect to such Global Security, and no qualified successor is appointed by the
Company within ninety (90) days of receipt by the Company of such notice, (ii) such
Depositary ceases to be a clearing agency registered under the Exchange Act and
no successor is appointed by the Company within ninety (90) days after
obtaining knowledge of such event, (iii) the Company executes and delivers
to the Trustee a Company Order stating that the Company elects to terminate the
book-entry system through the Depositary or (iv) an Event of Default shall
have occurred and be continuing.  Upon
the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above,
the Trustee shall notify the Depositary and instruct the Depositary to notify
all owners of beneficial interests in such Global Security of the occurrence of
such event and of the availability of Securities to such owners of beneficial
interests requesting the same.  The
Trustee may conclusively rely, and be protected in relying, upon the 

 

27

 

written identification of the owners of beneficial interests furnished
by the Depositary, and shall not be liable for any delay resulting from a delay
by the Depositary.  Upon the issuance of
such Securities and the registration in the Securities Register of such Securities
in the names of the Holders of the beneficial interests therein, the Trustees
shall recognize such holders of beneficial interests as Holders.

 

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

 

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

 

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

 

(f)                                    The Depositary or its nominee, as the
registered owner of a Global Security, shall be the Holder of such Global
Security for all purposes under this Indenture and the Securities, and owners
of beneficial interests in a Global Security shall hold such interests pursuant
to the Applicable Depositary Procedures. 
Accordingly, any such owner’s beneficial interest in a Global Security
shall be shown only on, and the transfer of such interest shall be effected
only through, records maintained by the Depositary or its nominee or its
Depositary Participants.  The Securities
Registrar and the Trustee shall be entitled to deal with the Depositary for all
purposes of this Indenture relating to a Global Security (including the payment
of principal and interest thereon and the giving of instructions or directions
by owners of beneficial interests therein and the giving of notices) as the
sole Holder of the Security and shall have no obligations to the 

 

28

 

owners of beneficial interests therein. 
Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.

 

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

 

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

 

SECTION 3.5                                             Registration, Transfer and Exchange
Generally.

 

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

 

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

 

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

 

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

 

(e)                                  Every Security presented or surrendered
for transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written 

 

29

 

instrument of transfer in form satisfactory to the Company and the
Securities Registrar, duly executed by the Holder thereof or such Holder’s
attorney duly authorized in writing.

 

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

 

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

 

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

 

(i)                                     The Securities may only be transferred to
(i) the Company, (ii) a “qualified institutional buyer” (as defined
in Rule 144A of the Securities Act) who is also a “Qualified Purchaser” as
such term is defined in Section 2(a)(51) of the Investment Company Act, (iii) outside
the United States in an offshore transaction in accordance with Regulation S
under the Securities Act, (iv) pursuant to an effective registration
statement under the Securities Act or (v) pursuant to another exemption
form registration under the Securities Act.

 

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

 

SECTION 3.6                                             Mutilated, Destroyed, Lost and
Stolen Securities.

 

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

 

30

 

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

 

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

 

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

 

(e)                                  Every new Security issued pursuant to
this Section 3.6 in lieu of any mutilated, destroyed, lost or
stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Securities duly issued hereunder.

 

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

 

SECTION 3.7                                             Persons Deemed Owners.

 

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

 

SECTION 3.8                                             Cancellation.

 

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

 

31

 

customary practices and the Trustee shall deliver to
the Company a certificate of such disposition,

 

SECTION 3.9                                             Reserved.

 

SECTION 3.10                                       Reserved.

 

SECTION 3.11                                       Agreed Tax Treatment.

 

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

 

SECTION 3.12                                       CUSIP Numbers.

 

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

 

ARTICLE IV

 

SATISFACTION AND DISCHARGE

 

SECTION 4.1                                             Satisfaction and Discharge of
Indenture.

 

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

 

(a)                                  either

 

(i)                                     all Securities theretofore authenticated
and delivered (other than (A) Securities that have been mutilated,
destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6  and (B) Securities for whose payment
money has theretofore been deposited in trust or segregated and held in trust
by the Company and thereafter repaid to the 

 

32

 

Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for
cancellation; or

 

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

 

(A)                              have become due and payable, or

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 4.2                                             Application of Trust Money.

 

Subject
to the provisions of Section 10.2(d), all money deposited with the
Trustee pursuant to Section 4.1 shall be held in trust and applied
by the Trustee, in accordance with the provisions of the Securities and this
Indenture, to the payment in accordance with Section 3.1, either
directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal and any premium and interest
(including any Additional Interest) for the 

 

33

 

payment of which such money or obligations have been
deposited with or received by the Trustee. 
Moneys held by the Trustee under this Section 4.2 shall not
be subject to the claims of holders of Senior Debt under Article XII.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.1                                             Events of Default.

 

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

 

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

 

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

 

(c)                                  default in the performance, or breach, of
any covenant or warranty of the Company in this Indenture or the Purchase
Agreement and continuance of such default or breach for a period of thirty (30)
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least twenty-five percent (25%) in aggregate principal amount of the
Outstanding Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder;

 

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

 

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

 

34

 

its inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt or insolvent, or the taking of
corporate action by the Company in furtherance of any such action; or

 

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

 

SECTION 5.2                                             Acceleration of Maturity;
Rescission and Annulment.

 

(a)                                  If an Event of Default occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than twenty-five percent (25%) in aggregate principal amount of the Outstanding
Securities may declare the principal amount of all the Securities to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided, that if, upon an Event of Default, the Trustee
or the Holders of not less than twenty-five percent (25%) in principal amount
of the Outstanding Securities fail to declare the principal of all the
Outstanding Securities to be immediately due and payable, the holders of at
least twenty-five percent (25%) in aggregate Liquidation Amount of the Preferred
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Property Trustee, the Company and the Trustee; and
upon any such declaration the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable.

 

(b)                                 At any time after such a declaration of
acceleration with respect to Securities has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter provided in this Article V, the Holders of a majority
in aggregate principal amount of the Outstanding Securities, by written notice
to the Indenture Trustee, or the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities, by written notice to the Property Trustee,
the Company and ‘the Trustee, may rescind and annul such declaration and its
consequences if:

 

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

 

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

 

(B)                                any accrued Additional Interest on all
Securities,

 

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

 

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

 

35

 

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

 

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

 

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

 

(a)                                  The Company covenants that if:

 

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

 

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

 

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

 

(b)                                 If the Company fails to pay such amounts
forthwith upon such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, and may prosecute such proceeding to judgment or final
decree, and may enforce the same against the Company or any other obligor upon
such Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.

 

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

 

SECTION 5.4                                             Trustee
May File Proofs of Claim.

 

In
case of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or similar judicial proceeding relative to
the Company (or any other obligor upon the Securities), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions 

 

36

 

authorized hereunder in order to have claims of the
Holders and the Trustee allowed in any such proceeding.  In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to first pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other amounts
owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.

 

SECTION 5.5                                             Trustee
May Enforce Claim Without Possession of Securities.

 

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

 

SECTION 5.6               Application
of Money Collected.

 

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

 

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

 

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

 

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

 

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

 

SECTION 5.7                                             Limitation
on Suits.

 

Subject
to Section 5.8, no Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a 

 

37

 

custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 5.9                                             Restoration
of Rights and Remedies.

 

If the
Trustee, any Holder or any holder of Preferred Securities has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, such Holder or such holder of Preferred
Securities, then and in every such case the Company, the Trustee, such Holders
and such holder of Preferred Securities shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, 

 

38

 

and thereafter all rights and remedies of the Trustee,
such Holder and such holder of Preferred Securities shall continue as though no
such proceeding had been instituted.

 

SECTION 5.10                                       Rights
and Remedies Cumulative.

 

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

 

SECTION 5.11                                       Delay
or Omission Not Waiver.

 

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

 

SECTION 5.12                                       Control
by Holders.

 

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

 

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

 

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

 

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

 

SECTION 5.13                                       Waiver
of Past Defaults.

 

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

 

39

 

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

 

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

 

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

 

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

 

SECTION 5.14                                       Undertaking
for Costs.

 

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

 

SECTION 5.15                                       Waiver
of Usury, Stay or Extension Laws.

 

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

 

40

 

ARTICLE VI

 

THE TRUSTEE

 

SECTION 6.1                                             Corporate
Trustee Required.

 

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

 

SECTION 6.2                                             Certain
Duties and Responsibilities.

 

Except
during the continuance of an Event of Default:

 

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

 

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

 

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

 

(c)                                  Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.  Whether or not therein expressly so
provided, every provision of this Indenture relating to the conduct or
affecting the liability of or 

 

41

 

affording protection to the Trustee shall be subject to the provisions
of this Section 6.2.  To the
extent that, at law or in equity, the Trustee has duties and liabilities
relating to the Holders, the Trustee shall not be liable to any Holder or any
holder of Preferred Securities for the Trustee’s good faith reliance on the
provisions of this Indenture.  The
provisions of this Indenture, to the extent that they restrict the duties and
liabilities of the Trustee otherwise existing at law or in equity, are agreed
by the Company and the Holders and the holders of Preferred Securities to
replace such other duties and liabilities of the Trustee.

 

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

 

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

 

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

 

(iii)                               the Trustee shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed
in writing with the Company and money held by the Trustee in trust hereunder
need not be segregated from other funds except to the extent required by law.

 

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

 

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

 

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

 

(f)                                    Notwithstanding Section 1.10,
the Trustee shall not, and shall not be deemed to, owe any fiduciary duty to
the holders of any of the Trust Securities issued by the Trust and shall not be
liable to any such holder (other than for the willful misconduct or negligence
of the Trustee) if the Trustee in good faith (i) pays over or distributes
to a registered Holder of the 

 

42

 

Securities or to the Company or to any other Person, cash, property or
securities to which such holder of such Trust Securities shall be entitled or (ii) takes
any action or omits to take any action at the request of the Holder of such
Securities.  Nothing in this paragraph
shall affect the obligation of any other such Person to hold such payment for
the benefit of, and to pay such amount over to, such holders of Preferred
Securities or Common Securities or their representatives.

 

SECTION 6.3                                             Notice
of Defaults.

 

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

 

SECTION 6.4                                             Certain
Rights of Trustee.

 

Subject
to the provisions of Section 6.2:

 

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

 

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

 

43

 

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

 

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

 

(e)                                  the Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders or any holder of Preferred
Securities pursuant to this Indenture, unless such Holders (or such holders of
Preferred Securities) shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses (including reasonable
attorneys’ fees and expenses) and liabilities that might be incurred by it in
compliance with such request or direction, including reasonable advances as may
be requested by the Trustee;

 

(f)                                    the Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, indenture, note or other paper or document,
but the Trustee in its discretion may make such inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;

 

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

 

(h)                                 whenever in the administration of this
Indenture the Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action with
respect to enforcing any remedy or right hereunder, the Trustees (1) may
request instructions from the Holders (which instructions may only be given by
the Holders of the same aggregate principal amount of Outstanding Securities as
would be entitled to direct the Trustee under this Indenture in respect of such
remedy, right or action), (ii) may refrain from enforcing such remedy or
right or taking such action until such instructions are received and (iii) shall
be protected in acting in accordance with such instructions;

 

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

 

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

 

44

 

compensation for
such services are intended to constitute expenses of administration under any
bankruptcy laws or law relating to creditors rights generally;

 

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

 

(l)                                     the Trustee shall not be charged with
knowledge of any Event of Default unless either (1) a Responsible Officer
of the Trustee shall have actual knowledge or (ii) the Trustee shall have
received written notice thereof from the Company or a Holder; and

 

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

 

SECTION 6.5                                             May Hold
Securities.

 

The Trustee, any Authenticating Agent, any Paying
Agent, any Securities Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar
or such other agent.

 

SECTION 6.6                                             Compensation;
Reimbursement; Indemnity.

 

(a)                                  The Company agrees:

 

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

 

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

 

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

 

45

 

costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder.

 

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

 

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

 

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

 

(e)                                  In no event shall the Trustee be liable
for any failure or delay in the performance of its obligations hereunder
because of circumstances beyond its control, including, but not limited to,
acts of God, flood, war (whether declared or undeclared), terrorism, fire,
riot, embargo, government action, including any laws, ordinances, regulations,
governmental action or the like which delay, restrict or prohibit the providing
of the services contemplated by this Indenture.

 

SECTION 6.7                                             Resignation
and Removal; Appointment of Successor.

 

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

 

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

 

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

 

(d)                                 If the Trustee shall resign, be removed
or become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any reason, at a time when no Event of Default shall have occurred
and be continuing, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee, and such successor Trustee and the retiring Trustee shall
comply with the applicable requirements of Section 6.8.  If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any reason, at a time when an Event of Default shall have occurred
and be continuing, the Holders, by Act of the Holders of a majority in aggregate principal
amount of the Outstanding Securities, shall promptly appoint a successor
Trustee, and such successor Trustee and the retiring Trustee shall 

 

46

 

comply with the
applicable requirements of Section 6.8.  If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment within sixty
(60) days after the giving of a notice of resignation by the Trustee or the
removal of the Trustee in the manner required by Section 6.8, any
Holder who has been a bona fide Holder of a Security for at least six months
(or, if the Securities have been Outstanding for less than six (6) months, the entire
period of such lesser time) may, on behalf of such Holder and all others
similarly situated, and any resigning Trustee may, at the expense of the
Company, petition any court of competent jurisdiction for the appointment of a
successor Trustee.

 

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

 

SECTION 6.8                                             Acceptance
of Appointment by Successor.

 

(a)                                  In case of the appointment hereunder of a
successor Trustee, each successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.

 

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

 

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

 

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

 

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

 

47

 

successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.

 

SECTION 6.10                                       Not Responsible
for Recitals or Issuance of Securities.

 

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

 

SECTION 6.11                                       Appointment
of Authenticating Agent.

 

(a)                                  The Trustee may appoint an Authenticating
Agent or Agents with respect to the Securities, which shall be authorized to
act on behalf of the Trustee to authenticate Securities issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture
to the authentication and delivery of Securities by the Trustee or the Trustee’s
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent.  Each Authenticating Agent shall
be acceptable to the Company and shall at all times be a corporation organized
and doing business under the laws of the United States of America, or of any
State or Territory thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or state authority.  If such
Authenticating Agent publishes reports of condition at least annually pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 6.11 the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section 6.11,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 6.11.

 

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

 

(c)                                  An Authenticating Agent may resign at any
time by giving written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the 

 

48

 

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

 

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

 

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

 

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

 

	
  Dated:

  	
  THE
  BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, not in its
  individual capacity, but solely as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authenticating
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

ARTICLE
VII

 

HOLDER’S
LISTS AND REPORTS BY COMPANY

 

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

 

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

 

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

 

(b)                                 at such other times as the Trustee may
request in writing, within thirty (30) days after the receipt by the Company of
any such request, a list of similar form and content as of a date not more than
fifteen (15) days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Company and has
not otherwise been received by the Trustee in its capacity as Securities
Registrar.

 

49

 

SECTION 7.2                                             Preservation
of Information, Communications to Holders.

 

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

 

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

 

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

 

SECTION 7.3                                             Reports
by Company.

 

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

 

(b)                                 The Company shall furnish to each of (1) the
Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Taberna
Capital Management, LLC, 450 Park Avenue, 11th Floor, New York, New York 10022,
Attn:  Thomas Bogal (or such other
address as designated by Taberna Capital Management, LLC) and (iv) any
beneficial owner of the Securities reasonably identified to the Company (which
identification may be made either by such beneficial owner or by Taberna
Capital Management, LLC), a duly completed and executed certificate
substantially and substantively in the form attached hereto as Exhibit A,
including the financial statements referenced in such Exhibit, which
certificate and financial statements shall be so furnished by the Company not
later than forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company and not later than ninety (90) days
after the end of each fiscal year of the Company.  The delivery requirements under this Section 7.3(b) may
be satisfied by compliance with Section 8.16(b) of the Trust
Agreement.

 

(c)                                  If the Company intends to file its annual
and quarterly information with the Securities and Exchange Commission (the “Commission”)  in electronic form pursuant to
Regulation S-T of the Commission using the Commission’s Electronic Data
Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall
notify the Trustee in the manner prescribed herein of each such annual and
quarterly filing.  The Trustee is hereby
authorized and directed to access the EDGAR system for purposes of retrieving
the financial information so filed. 
Compliance with the foregoing shall constitute delivery by the Company
of its financial statements to
the Trustee in compliance with the provisions of Section 314(a) of
the Trust Indenture Act, if applicable. 
The Trustee shall have no duty to search for or obtain any electronic or
other filings that the Company makes with the Commission, regardless of whether

 

50

 

such filings are
periodic, supplemental or otherwise. 
Delivery of reports, information and documents to the Trustee pursuant
to this Section 7.3(c) shall be solely for purposes of compliance
with this Section 7.3(c) and, if applicable, with Section 314(a) of
the Trust Indenture Act.  The Trustee’s
receipt of such reports, information and documents shall not constitute notice
to it of the content thereof or any matter determinable from the content
thereof, including the Company’s compliance with any of its covenants
hereunder, as to which the Trustee is entitled to rely upon Officers’
Certificates.

 

ARTICLE
VIII

 

CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE

 

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

 

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

 

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

 

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

 

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

 

SECTION 8.2                                             Successor
Company Substituted.

 

(a)                                  Upon any consolidation or merger by the
Company with or into any other Person, or any conveyance, transfer or lease by
the Company of its properties and assets substantially as an entirety to any
Person in accordance with Section 8.1  and the execution and delivery to the
Trustee of the supplemental indenture described in Section 8.1(a), the successor entity formed by 

 

51

 

such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and, be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; and in the event of
any such conveyance or transfer, following the execution and delivery of such
supplemental indenture, the Company shall be discharged from all obligations
and covenants under the Indenture and the Securities.

 

(b)                                 Such successor Person may cause to be
executed, and may issue either in its own name or in the name of the Company,
any or all of the Securities issuable hereunder that theretofore shall not have
been signed by the Company and delivered to the Trustee; and, upon the order of
such successor Person instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities that previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities that such successor Person thereafter shall
cause to be executed and delivered to the Trustee on its behalf.  All the Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of
this Indenture.

 

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

 

ARTICLE
IX

 

SUPPLEMENTAL
INDENTURES

 

SECTION 9.1                                             Supplemental
Indentures without Consent of Holders,

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

SECTION 9.2               Supplemental
Indentures with Consent of Holders.

 

(a)                                  Subject to Section 9.1, with the consent of the Holders of not
less than a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company and the Trustee,
the Company, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in, any manner the rights of the
Holders of Securities under this Indenture; provided, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding
Security,

 

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

 

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

 

(iii)                               modify any of the provisions of this Section 9.2, Section 5.13
or Section 1.07, except to increase any percentage in aggregate
principal amount of the Outstanding Securities, the consent of whose Holders is
required for any reason, or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each Security;

 

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

 

53

 

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

 

SECTION 9.3                                             Execution
of Supplemental Indentures.

 

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

 

SECTION 9.4                                             Effect
of Supplemental Indentures.

 

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

 

SECTION 9.5                                             Reference
in Securities to Supplemental Indentures.

 

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

 

ARTICLE
X

 

COVENANTS

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

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

 

55

 

SECTION 10.3                                       Statement
as to Compliance.

 

The Company shall deliver to the Trustee, within
ninety (90) days after the end of each fiscal year of the Company ending after
the date hereof, an Officers’ Certificate covering the preceding calendar year,
stating whether or not to the knowledge of the signers thereof the Company is
in default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder), and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they
may have knowledge.  The delivery
requirements of this Section 10.3  may be satisfied by compliance with Section 8.16(a) of
the Trust Agreement.

 

SECTION 10.4                                       Calculation
Agent.

 

(a)                                  The Company hereby agrees that for so
long as any of the Securities remain Outstanding, there will at all times be an
agent appointed to calculate LIBOR in respect of each Interest Payment Date in
accordance with the terms of Schedule A, (the “Calculation Agent”).  The Company has initially appointed
the Property Trustee as Calculation Agent for purposes of determining LIBOR for
each Interest Payment Date, The Calculation Agent may be removed by the Company
at any time.  Notwithstanding the foregoing,
so long as the Property Trustee holds any of the Securities, the Calculation
Agent shall be the Property Trustee.  If
the Calculation Agent is unable or unwilling to act as such or is removed by
the Company, the Company will promptly appoint as a replacement Calculation
Agent the London office of a leading bank which is engaged in transactions in
Eurodollar deposits in the international Eurodollar market and which does not
control or is not controlled by or under common control with the Company or its
Affiliates.  The Calculation Agent may
not resign its duties without a successor having been duly appointed,

 

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

 

56

 

SECTION 10.5                                       Additional
Tax Sums.

 

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

 

SECTION 10.6                                       Additional
Covenants.

 

(a)                                  The Company covenants and agrees with
each Holder of Securities that if an Event of Default shall have occurred and
be continuing, it shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company’s Equity Interests, (ii) vote in favor
of or permit or otherwise allow any of its Subsidiaries to declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a liquidation
payment with respect to or otherwise retire, any shares of any such Subsidiary’s
preferred stock or other Equity Interests entitling the holders thereof to a
stated rate of return (for the avoidance of doubt, whether such preferred stock
or other Equity Interests are perpetual or otherwise), or (iii) make any
payment of principal of or any interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior
in interest to the Securities.

 

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

 

57

 

SECTION 10.7                                       Waiver
of Covenants.

 

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

 

SECTION 10.8                                       Treatment
of Securities.

 

The Company will treat the Securities as indebtedness,
and the amounts, other than payments of principal, payable in respect of the
principal amount of such Securities as interest, for all United States federal
income tax purposes.  All payments in
respect of the Securities will be made free and clear of United States
withholding tax to any beneficial owner thereof that has provided an Internal
Revenue Service Form W-9 or W-8BEN (or any substitute or successor form)
establishing its U.S. or non-U.S. status for United States federal income tax
purposes, or any other applicable form establishing a complete exemption from
United States withholding tax.

 

SECTION 10.9                                       Financial
Covenants

 

(a)                                  The Company shall not permit Tangible Net
Worth, at any time, to be less than the sum of (i) $15 million, plus  (ii) 60% of any Net Income (but only
if a positive, number) for each completed fiscal quarter beginning with the
fiscal quarter ended March 31, 2007 until such time as the Company’s Net
Worth shall equal or exceed $75 million and then 50% of any Net Income for each
completed fiscal quarter thereafter, plus  (iii) 50% of all proceeds of Equity
Interests issued by the Company or its subsidiaries after the date hereof.

 

(b)                                 The Company shall riot permit Net Worth,
at any time, to be less than the sum of (i) $40 million, plus  (ii) 60% of any Net Income (but only
if a positive number) for each completed fiscal quarter beginning with the
fiscal quarter ended March 31, 2007 until such time as the Company’s Net
Worth shall equal or exceed $75 million
and then 50% of any Net Income for each completed fiscal quarter thereafter, plus  (iii) 50% of all proceeds of Equity
Interests issued by the Company or its subsidiaries after the date hereof.

 

(c)                                  The Company shall not permit, at any
time, the ratio of (i) EBITDA for the period consisting of the preceding
four (4) fiscal quarters ending on, or most recently ended prior to, such
time to (ii) Interest Charges for such period, to be less than 1.75 to 1;
provided, however, that such ratio shall be calculated without the effect of
the consolidation of variable interest entities pursuant to FIN 46(R).

 

(d)                                 The Company shall not permit, at any
time, the ratio of (i) Total Debt to (ii) Net Worth, to exceed 3.0 to
1; provided, however, that such ratio shall be calculated without the effect of
the consolidation of variable interest entities pursuant to FIN 46(R).

 

58

 

ARTICLE
XI

 

REDEMPTION
OP SECURITIES

 

SECTION 11.1                                       Optional
Redemption.

 

The Company may, at its option, on any Interest
Payment Date, on or after April 30, 2012, redeem the Securities in whole
at any time or in part from time to time, at a Redemption Price equal to one hundred
percent (100%) of the principal amount thereof (or of the redeemed portion
thereof, as applicable), together, in the case of any such redemption, with
accrued and unpaid interest, including any Additional Interest, through but
excluding the date fixed as the Redemption Date (the “Optional Redemption Price”).

 

SECTION 11.2                                       Special
Event Redemption.

 

Prior to April 30, 2012, upon the occurrence and
during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in
whole but not in part, at a Redemption Price equal to one hundred seven and one
half percent (107.5%) of the principal amount thereof, together, in the case of
any such redemption, with accrued interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date (the “Special
Redemption Price”).

 

SECTION 11.3                                       Election
to Redeem; Notice to Trustee.

 

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

 

SECTION 11.4                                       Selection
of Securities to be Redeemed.

 

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

 

(b)                                 The Trustee shall promptly notify the
Company in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the 

 

59

 

principal amount
thereof to be redeemed.  For all purposes
of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any
Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security that has been or is to be redeemed.

 

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

 

SECTION 11.5                                       Notice
of Redemption.

 

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

 

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

 

(i)                                     the Redemption Date;

 

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

 

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

 

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

 

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

 

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

 

60

 

or any defect in
the notice to the Holder of any Security designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any other Security.

 

SECTION 11.6                                       Deposit
of Redemption Price.

 

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

 

SECTION 11.7                                       Payment
of Securities Called or Redemption.

 

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

 

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

 

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

 

ARTICLE
XII

 

SUBORDINATION
OF SECURITIES

 

SECTION 12.1                                       Securities
Subordinate to Senior Debt.

 

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

 

61

 

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

 

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

 

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

 

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

 

62

 

Debt at the time
outstanding in accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt (including any interest thereon
accruing, after the commencement of any Proceeding) in full.  In the event of the failure of the Trustee or
any Holder to endorse or assign any such payment, distribution or security,
each holder of Senior Debt is hereby irrevocably authorized to endorse or
assign the same.

 

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

 

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

 

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

 

SECTION
12.3             Payment
Permitted If No Default.

 

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

 

SECTION
12.4             Subrogation
to Rights of Holders of Senior Debt.

 

Subject to the payment in
full of all amounts due or to become due on all Senior Debt, or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, the Holders of the Securities shall
be subrogated to the extent of the payments or distributions made to the
holders of such Senior Debt pursuant to the provisions of this Article XII
(equally and ratably with the holders of all indebtedness of the Company that
by its express terms is subordinated to Senior Debt of the Company to
substantially the same extent as the Securities are subordinated to the Senior
Debt and is entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Debt) to the rights of the holders
of such Senior Debt to receive payments and distributions of cash, 

 

63

 

property
and securities applicable to the Senior Debt until the principal of and any
premium and interest (including any Additional Interest) on the Securities
shall be paid in full.  For purposes of
such subrogation, no payments or distributions to the holders of the Senior
Debt of any cash, property or securities to which the Holders of the Securities
or the Trustee would be entitled except for the provisions of this Article XII,
and no payments made pursuant to the provisions of this Article XII
to the holders of Senior Debt by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior Debt,
and the Holders of the Securities, be deemed to be a payment or distribution by
the Company to or on account of the Senior Debt.

 

SECTION
12.5             Provisions
Solely to Define Relative Rights.

 

The provisions of this Article XII
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Securities on the one hand and the holders of Senior Debt on
the other hand.  Nothing contained in
this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Securities the principal of and any premium and interest
(including any Additional Interest) on the Securities as and when the same
shall become due and payable in accordance with their terms, (b) affect
the relative rights against the Company of the Holders of the Securities and creditors of the
Company other than their rights in relation to the holders of Senior Debt or (c) prevent
the Trustee or the Holder of any Security (or to the extent expressly provided
herein, the holder of any Preferred Security) from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
including filing and voting claims in any Proceeding, subject to the rights, if
any, under this Article XII of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.

 

SECTION
12.6             Trustee to
Effectuate Subordination.

 

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

 

SECTION
12.7             No Waiver of
Subordination Provisions.

 

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

 

(b)           Without in any way
limiting the generality of paragraph (a) of this Section 12.7,
the holders of Senior Debt may, at any time and from to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to such Holders of 

 

64

 

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

 

SECTION
12.8             Notice to
Trustee.

 

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

 

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

 

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

 

Upon any payment or
distribution of assets of the Company referred to in this Article XII,
the Trustee and the Holders of the Securities shall be entitled to conclusively
rely upon any order or decree entered by any court of competent jurisdiction in
which such Proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the 

 

65

 

benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article XII.

 

SECTION
12.10           Trustee Not
Fiduciary for Holders of Senior Debt.

 

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

 

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

 

The Trustee in its
individual capacity shall be entitled to all the rights set forth in this Article XII
with respect to any Senior Debt that may at any time be held by it, to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.

 

SECTION
12.12           Article
Applicable to Paying Agents.

 

If at any time any Paying
Agent other than the Trustee shall have been appointed by the Company and be
then acting hereunder, the term “Trustee” as used in this Article XII
shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article XII in addition to or in
place of the Trustee.  For the avoidance
of doubt, the Company shall not be permitted to appoint itself or any Affiliate
as a Paying Agent hereunder.

 

ARTICLE
XIII

 

DEFEASANCE SECTION

 

SECTION
13.1             Defeasance
and Discharge.

 

Upon notification by the
Company to the Trustee, on or prior to April 30, 2012, of its election to
cause the Defeasance of the Securities (the “Defeasance Election”), the
Company shall, within thirty (30) days following receipt of the Defeasance
Election by the Trustee (the “Defeasance Maturity Date”), satisfy
the conditions set forth in Section 13.2.  The Company shall be deemed to have been
discharged from its obligations with respect to the Securities as provided in
this Section 13.1 on and after the date the conditions set forth in
Section 13.2 are satisfied (hereinafter called “Defeasance”).  For this purpose, such Defeasance
means that the Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Securities and to have satisfied all of its other
obligations under the Securities and this Indenture (and the Trustee, upon
request and at the expense of the Company, shall execute proper 

 

66

 

instruments
acknowledging the same), subject to the following, which shall survive until
otherwise terminated or discharged hereunder: 
(1) the rights of Holders to receive, solely from the trust fund
described in Section 13.2 and as more fully set forth in such Section 13.2,
payments in respect of the principal of, premium, if any, and interest on such
Securities when payments are due through April 30, 2012, (2) the
Company’s obligations with respect to such Securities under Sections  2.4,
3.5, 3.6, 10.2, (3) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (4) this Article XIII.

 

SECTION
13.2             Conditions
to Defeasance.

 

The
following shall be the conditions to application of Section 13.1 to
the Securities:

 

(a)           The Company shall
irrevocably have deposited or caused to be deposited with the Trustee (or
another trustee that satisfies the requirements contemplated by Section 6.1
and agree to comply with the provisions of this Article XIII
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders, (A) money in an
amount in Dollars, (B) Government Obligations that through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount in Dollars, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the Trustee
(or any such other qualifying Trustee) to pay and discharge, one hundred
percent (100%) of the principal amount of the Securities on April 30,
2012, plus interest on the Securities due and payable on the Interest Payment
Dates occurring prior to and including April 30, 2012 and Breakage Costs,
if any, in accordance with the terms of this Indenture and the Securities,

 

(b)           Such Defeasance
shall not cause the Trustee to have a conflicting interest within the meaning
of the Trust Indenture Act.

 

(c)           Such Defeasance
shall not result in the trust arising from such deposit constituting an “investment
company” within the meaning of the Investment Company Act of 1940, unless such
trust shall be qualified or exempt from regulation thereunder.

 

(d)           The Company shall
have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent with respect to such
Defeasance have been complied with.

 

SECTION
13.3             Deposited
Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous
Provisions.

 

Subject to the provisions
of Section 10.2(d), all money and Government Obligations (including
the proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section 13.3 and Section 13.4,
the Trustee and any such other trustee are referred to collectively as the “Trustee”)
pursuant to Section 13.2 in respect of the Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of this Indenture, to the payment, either directly or through any such Paying
Agent (including the 

 

67

 

Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
the Securities, of all sums due and to become due thereon in respect of
principal, premium, if any, and interest, but money so held in trust need not
be segregated from other fluids except to the extent required by law.

 

The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the Government Obligations deposited pursuant to Section 13.2
or the principal and interest received in respect thereof other than any
such tax, fee or other charge that by law is for the account of the Holders of
the Securities.

 

Anything in this Article XIII
to the contrary notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon Company Request any money or Government
Obligations held by it as provided in Section 13.2 with respect to
the Securities that, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then
be required to be deposited to effect an equivalent Defeasance with respect to
the Securities.

 

SECTION
13.4             Reinstatement.

 

If the Trustee or the
Paying Agent is unable to apply any money in accordance with this Article XIII
with respect to the Securities by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company’s obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article XIII with respect to Securities until such
time as the Trustee or Paying Agent is permitted to apply all money held in
trust pursuant to Section 13.3 with respect to the Securities in
accordance with this Article XIII; provided, however, that if the
Company makes any payment of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of Securities to receive such payment
from the money so held in trust.

 

*
* *

 

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

 

*
* *

 

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

 

	
   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Freeman Lyle

  
	
   

  	
   

  	
  Freeman
  Lyle

  
	
   

  	
   

  	
  Executive Vice
  President and Chief Financial Officer

  

 

68

 

	
   

  	
  THE
  BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Shelly A. Sterling

  
	
   

  	
   

  	
  Shelly
  A. Sterling

  
	
   

  	
   

  	
  Vice President

  

 

69

 

Schedule A

 

DETERMINATION OF LIBOR

 

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

 

(1)           On
the second LIBOR Business Day (as defined below) prior to a Distribution Date
(each such day, a “LIBOR Determination Date”), LIBOR for any given security
shall for the following interest payment period equal the rate (expressed as a
percentage per annum) for U.S. dollar deposits in Europe, for a three (3) month
period, that appears on Dow Jones Telerate (as defined in the International
Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency
Exchange Definitions) Page 3750, or such other page as may replace
such Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date, as reported by Bloomberg Financial Market Commodities News
or any successor service.  If such rate
is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon
(London time) on such LIBOR Determination Date, the corrected rate as so
substituted will be LIBOR for such LIBOR Determination Date.

 

(2)           If
on any LIBOR Determination Date such rate does not appear on Dow Jones Telerate
Page 3750 or such other page as may replace such Page 3750, the
Calculation Agent shall determine the arithmetic mean of the offered quotations
(expressed as a percentage per annum) of the Reference Banks (as defined below)
to leading banks in the London interbank market for U.S. dollar deposits in
Europe, for a three (3) month period, for an amount determined by the
Calculation Agent (but not less than U.S. $1,000,000) by reference to requests
for quotations as of approximately 11:00 A.M. (London time) on the LIBOR
Determination Date made by the Calculation Agent to the Reference Banks.  If on any LIBOR Determination Date at least
two of the Reference Banks provide such quotations, LIBOR shall equal such
arithmetic mean of such quotations.  If
on any LIBOR Determination Date only one or none of the Reference Banks provide
such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered
quotations (expressed as a percentage per annum) that two (2) leading
banks in The City of New York selected by the Calculation Agent are quoting on
the relevant LIBOR Determination Date for U.S. dollar deposits in Europe, for a
three (3) month period, for an amount determined by the Calculation Agent
(but not less than U.S. $1,000,000); provided, that if the Calculation Agent is
required but is unable to determine a rate in accordance with at least one of
the procedures provided above, LIBOR shall be LIBOR as determined on the
previous LIBOR Determination Date.

 

(3)           As
used herein:  “Reference Banks” means
four major banks in the London interbank market selected by the Calculation
Agent; and “LIBOR Business Day” means a day (a) on which
commercial banks are open for business (including dealings in foreign exchange
and foreign currency deposits) in London and (b) is not a Saturday, Sunday
or other day on which commercial banking institutions in New York, New York or
Wilmington, Delaware are authorized or obligated by law or executive order to
be closed.

 

70

 

Schedule A

 

Form of Officer’s
Financial Certificate

 

The undersigned, the
[Chairman/Vice Chairman/Chief Executive Officer/President/Vice President/Chief
Financial Officer/Treasurer/Assistant Treasurer], hereby certifies, pursuant to
Section 7.3(b) of the Junior Subordinated Indenture, dated as
of January 31, 2007, among Kennedy-Wilson, Inc. (the “Company”) and The Bank of New York Trust Company, National
Association, as trustee, that, as of [date], [20    ],
the Company, if applicable, and its subsidiaries had the following ratios and
balances:

 

As of [Quarterly/Annual Financial Date], 20    

 

	
  Senior secured indebtedness for borrowed money
  (“Debt”)

  	
   

  	
  $         

  
	
   

  	
   

  	
   

  
	
  Senior unsecured Debt

  	
   

  	
  $         

  
	
   

  	
   

  	
   

  
	
  Subordinated Debt

  	
   

  	
  $         

  
	
   

  	
   

  	
   

  
	
  Total Debt

  	
   

  	
  $         

  
	
   

  	
   

  	
   

  
	
  Ratio of (x) senior secured and unsecured Debt
  to (y) total Debt 

  	
   

  	
           %

  

 

* A table describing the quarterly report calculation
procedures is provided on page

 

[FOR FISCAL YEAR END:  Attached hereto are the audited
consolidated financial statements (including the balance sheet, income
statement and statement of cash flows, and notes thereto, together with the
report of the independent accountants thereon) of the Company and its
consolidated subsidiaries for the three years ended [date], 20    
and all required Financial Statements (as defined in the Purchase Agreement)
for the year ended [date], 20    ]

 

[FOR FISCAL QUARTER END: 
Attached
hereto are the unaudited consolidated and consolidating financial statements
(including the balance sheet and income statement) of the Company and its
consolidated subsidiaries and all required Financial Statements (as defined in
the Purchase Agreement) for the year ended [date], 20    ]
for the fiscal quarter ended [date], 20    .]

 

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

 

There
has been no monetary default with respect to any indebtedness owed by the
Company and/or its subsidiaries (other than those defaults cured within 30 days
of the occurrence of the same).

 

71

 

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

 

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

 

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

 

	
   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Kennedy-Wilson, Inc.

  
	
   

  	
  9601
  Wilshire Blvd., Suite 220

  
	
   

  	
  Beverly
  Hills, CA 90210

  
	
   

  	
  (310)
  887-6453

  

 

72

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