Document:

Exhibit 10.11

 

Execution Copy

 

ESCROW AGREEMENT

 

This Escrow
Agreement, dated as of December 18, 2003 (this “Agreement”), is by and among
Jefferies & Company, Inc. and Citigroup Global Markets Inc., as the initial
purchasers under the Purchase Agreement (together, the “Depositors”),
Wilmington Trust Company, a Delaware banking corporation, both in its capacity
as trustee under the Indenture (“Trustee”) and as Escrow Agent under this
Agreement (“Escrow Agent”), Ship Finance International Limited, a Bermuda exempted
company (the “Company”), and Frontline Ltd., a Bermuda exempted company
(“Frontline”).

 

RECITALS

 

WHEREAS,
this Agreement is being entered into in connection with (a) the Purchase
Agreement dated December 11, 2003, between the Company, Frontline and the
Depositors (the “Purchase Agreement”), and (b) the Indenture dated as of
December 18, 2003 (the “Indenture”), between the Trustee and the Company,
governing the Company’s 81/2% Senior Notes due 2013 (the
“Securities”); and

 

WHEREAS,
this Agreement is being entered into for the benefit of the holders from time
to time of the Securities; and

 

WHEREAS,
the Escrow Funds (as defined herein) will be released at the direction of
Trustee either to the Company upon satisfaction of the conditions specified
herein or to Trustee to fund a Special Mandatory Redemption of the Securities,
each as provided in Section 5 of this Agreement.

 

STATEMENT OF
AGREEMENT

 

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

1.                                       Definitions.

 

(a)                                  The
following terms have the following meanings when used in this Agreement.  Capitalized terms that are used but not
defined in this Agreement have the meanings set forth in the Indenture.

 

“Escrow Funds” means the net proceeds of the offering of the Securities
of $565,500,000, which will be deposited by the Depositors with Escrow Agent in
the Escrow Account (as defined below) under this Agreement, together with any
interest and other income thereon, all investments therefrom, and all proceeds
of the foregoing, all of which shall be credited to and carried in the Escrow
Account by the Escrow Agent, and such term shall also include all security
entitlements and financial assets carried in or credited to the Escrow Account
from time to time.

 

“Federal Book Entry Regulations” means (a) the federal regulations
contained in Subpart B (“Treasury/Reserve Automated Debt Entry System
(TRADES)”) governing

 

1

 

book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D of
31 C.F.R. Part 357, 31 C.F.R. §357.2, §357.10 through §357.14 and §357.41 
through §357.44 and (b) to the extent substantially identical to the federal
regulations referred to in clause (a) above (as in effect from time to
time), the federal regulations governing other book-entry securities.

 

“New York UCC” means the Uniform Commercial Code as in effect from time
to time in the State of New York.

 

“Opinion of Counsel” means an opinion of Seward & Kissel LLP
substantially in the form of Exhibit B to this Agreement.

 

“Release Certificate” means an officers’ certificate substantially in
the form of Exhibit A to this Agreement, signed by two officers of the
Company (one of whom shall be the Chief Executive Officer or the President and
one of whom shall be the Chief Financial Officer or the Chief Accounting
Officer), the contents and delivery of which shall have been approved by a duly
adopted resolution of the Board of Directors of the Company, certifying to
Trustee as to the matters specified in Exhibit A.

 

“Special Mandatory Redemption” means the mandatory redemption of the
Securities contemplated by Section 5.9 of the Indenture.

 

(b)  Other terms that are defined in Article 8 or Article 9
of the New York UCC and/or the Federal Book Entry Regulations (including,
without limitation, as applicable, “securities account,” “securities
intermediary,” “security entitlement,” “financial asset,” “entitlement holder,”
“entitlement order” and “control”) have the same meaning when used herein
unless the context otherwise requires.

 

2.                                       Appointment
of and Acceptance by Escrow Agent. 
Trustee hereby appoints Escrow Agent to serve as escrow agent
hereunder.  Escrow Agent hereby accepts
such appointment and, upon receipt by wire transfer of the initial Escrow Funds
in accordance with Section 3 below, agrees to hold, invest and disburse
the Escrow Funds in accordance with this Agreement.  Escrow Agent undertakes to perform only such duties expressly set
forth herein and no implied duties or obligations shall be read into this
Agreement against Escrow Agent.  In
acting hereunder, Escrow Agent shall not be liable for any act done, or omitted
to be done, by it in the absence of gross negligence or willful misconduct.

 

3.                                       Creation
of Escrow Account.

 

(a)                                  On December 18, 2003,
the Depositors will transfer the sum of $565,500,000, by wire transfer of
immediately available funds, to the following account (the “Escrow Account”):

 

2

 

	
   

  	
  Wilmington
  Trust Company, as Escrow Agent

  
	
   

  	
  for Ship Finance Limited Notes

  
	
   

  	
  ABA No.
  031100092

  
	
   

  	
  Account No.
  64626-0

  
	
   

  	
  Account
  Name:  Ship Finance International
  Limited 81/2 % Senior Notes

  
	
   

  	
  Attention:  Mary St. Amand

  

 

Escrow Agent hereby acknowledges and agrees
that it has established, on the books and records of its office in Wilmington,
Delaware, the Escrow Account in the name of the Trustee on behalf of the
holders of the Securities and that the Escrow Account is under the sole
dominion and control of the Trustee.

 

(b)                                 Notwithstanding
anything in this agreement to the contrary, the parties hereto hereby agree
that:

 

(i)                                     the
Escrow Account is and shall be maintained by Escrow Agent as a securities
account;

 

(ii)                                  Escrow
Agent shall be and at all times shall act as a securities intermediary in
maintaining the Escrow Account and shall by appropriate book entry credit to
the Escrow Account each financial asset to be held in or credited to the Escrow
Account pursuant to this Agreement;

 

(iii)                               the
Escrow Agent’s jurisdiction, as securities intermediary, for purposes of this
Agreement, the Escrow Account and Article 8 of the New York UCC is the State of
New York;

 

(iv)                              all
property in the Escrow Account from time to time, including cash, will be
treated by Escrow Agent as a financial asset;

 

(v)                                 the
entitlement holder with respect to the Escrow Account and each security
entitlement credited thereto or carried therein shall be the Trustee for the
benefit of the holders of the Securities;

 

(vi)                              any
financial asset in registered form or payable to or to the order of a person
and credited to Escrow Account shall be registered in the name of, payable to
or to the order or, or specially indorsed to, Trustee or carried in or credited
to another securities account in the name of Escrow Agent as securities
intermediary; and

 

(vii)                           Escrow
Agent shall not change the name or account number of the Escrow Account without
the prior written consent of the Trustee and shall not change the entitlement
holder.

 

(c)                                  Notwithstanding
anything in this agreement to the contrary, Escrow Agent agrees that it shall
comply with entitlement orders and instructions originated by the Trustee and
relating to the Escrow Account and all securities entitlements and financial

 

3

 

assets carried in or credited to the Escrow Account, including any
entitlement order or instructions contemplated by Section 5,
without further consent by the Company, Frontline or any other person or entity
so long as this Agreement is in effect. 
Escrow Agent hereby represents that it has not, and it hereby agrees
that it will not, enter into any agreement or take any action which gives any
person or entity other than the Trustee control over the Escrow Account or any
security entitlement or financial asset carried therein or credited
thereto.  The parties hereto agree that
Trustee shall have exclusive control, and sole dominion and control, over the
Escrow Account and each security entitlement and financial asset carried
therein or credited thereto, and Escrow Agent shall not accept or comply with
instructions or entitlement orders given by any person other than Trustee.

 

(d)                                 The parties hereto
acknowledge that, until the release of the Escrow Funds to the Company in
accordance with the terms of this Agreement (subject to Trustee’s rights and
remedies set forth in Section 5), the Escrow Funds shall be held by
Trustee as entitlement holder of the Escrow Account for the benefit of the
holders of the Securities and do not constitute property or an asset of the
Company, and the Company shall have only a contingent right to receive payment
of the Escrow Funds at the direction of Trustee on the terms and subject to the
conditions set forth in this Agreement.

 

(e)                                  In the event that
Escrow Agent has or subsequently obtains by agreement, operation of law or
otherwise a security interest in the Escrow Account, or any financial asset
carried therein or credited thereto, or any securities entitlement with respect
thereto, Escrow Agent hereby agrees that such security interest shall be
subordinate to the security interest of Trustee.  Except as contemplated by Sections 8, 10 and 11 with respect to
the reimbursement of Escrow Agent’s indemnification, fees and expenses, the
financial assets or any securities entitlement with respect thereto standing to
the credit of the Escrow Account will not be subject to deduction, set-off,
banker’s lien or any other right in favor of any person or entity other than
Trustee.

 

(f)                                    There are no other
agreements entered into among the parties hereto with respect to the Escrow
Account.  Except as expressly set forth
in this Section 3, in the event of any conflict between this Section 3 or any
portion hereof, any other provision of this Agreement or any other agreement
now existing or hereafter entered into, the terms of this Section 3 shall
prevail.

 

4.                                       Recharacterization.  In the event this Agreement is ever
determined to constitute a security agreement or other pledge or security
arrangement, or if it is ever determined that the Company has any right, title
or interest in the Escrow Account or the Escrow Funds, the Company hereby
grants to Trustee a present and continuing first priority security interest in
the Escrow Account, the Escrow Funds and any proceeds therefrom (subject only
to Escrow Agent’s right of reimbursement of indemnification, fees and expenses
from the Escrow Funds, as contemplated by Sections 8, 10 and 11)
to secure the Company’s obligations under the Indenture (including without
limitation its obligation to pay the redemption price and premium and any
accrued and unpaid interest on the Securities to the redemption date with
respect to the Special Mandatory Redemption pursuant to Section 5.9 of the
Indenture).  The Company agrees that it
shall do, execute, acknowledge, deliver, record, file and register any and all
such acts, deeds,

 

4

 

certificates, assurances,
agreements and other instruments (including without limitation security
agreements, collateral agreements, financing statements, and lien and pledge
instruments) as are in the opinion of Trustee reasonably necessary to give
effect to the foregoing sentence. 
Without limitation to the foregoing, the Company hereby authorizes
Trustee, without the signature of or further authorization or consent from the
Company, to file such financing statements in such jurisdictions as are in the
opinion of Trustee reasonably necessary to further perfect the security
interests granted herein.  Upon the
disbursement of the Escrow Funds in accordance with Section 5(a),
Trustee and the Company shall file such termination statements in such
jurisdictions as are in the opinion of the Company reasonably necessary to
terminate the security interests granted herein.

 

5.                                       Disbursement
of Escrow Funds.  Trustee and the
Company agree (solely as between themselves) that Trustee shall direct Escrow
Agent to disburse the Escrow Funds only in accordance with the following
provisions:

 

(a)                                  Completion of Fleet
Acquisition.  If, at or prior to
5:00 p.m., Eastern Time, on March 17, 2004 (the “Completion Deadline”),
the Company delivers to Trustee a Release Certificate and an Opinion of
Counsel, Trustee will direct Escrow Agent to disburse the Escrow Funds to the
Company according to the payment instructions contained in the Release
Certificate.

 

(b)                                 Special Mandatory
Redemption.  If (i) Trustee has not
received a Release Certificate and an Opinion of Counsel or (ii) Trustee has
not delivered a Default Instruction (as defined below), in each case at or
prior to the Completion Deadline, then Trustee will direct Escrow Agent to
disburse all the Escrow Funds directly to Trustee for use in completing the
Special Mandatory Redemption on or before 10:00 a.m., New York City time,
on the date fixed for the Special Mandatory Redemption specified in the notice
of such Special Mandatory Redemption given pursuant to Section 5.9 of the
Indenture.  The Company shall deliver to
Trustee and Escrow Agent a copy of such notice when it is mailed.

 

(c)                                  Event of Default
under the Indenture.  If, at any
time prior to the Completion Deadline, there is an Event of Default under the
Indenture, Trustee will direct Escrow Agent to disburse all the Escrow Funds
directly to Trustee for use in accordance with the Indenture (a “Default
Instruction”).

 

Notwithstanding the foregoing provisions of this Section 5, if
(i) Trustee has not received a Release Certificate and an Opinion of Counsel or
(ii) Trustee has not delivered a Default Instruction, in each case at or prior
to the Completion Deadline and if the provisions of Section 4 become
operative, Trustee shall have, and is hereby presently granted, in addition to
any other rights and remedies specified herein, all rights and remedies of a
secured party under the New York UCC. 
The foregoing provisions of this Section 5 are between Trustee
and the Company and shall in no way limit Escrow Agent’s obligation to follow
entitlement orders of Trustee with respect to the Escrow Account and any
security entitlements and financial assets carried therein or credited thereto,
without the consent of the Company, Frontline or any other person.

 

5

 

6.                                       Frontline
Payment Obligation.  If the Escrow
Funds are disbursed to the Trustee in accordance with, or pursuant to
instructions or directions received under, Section 5(b) above, and the
amount of such Escrow Funds shall be insufficient to fully fund the redemption
price and premium and any accrued and unpaid interest on the Securities to the
redemption date with respect to the Special Mandatory Redemption pursuant to
Section 5.9 of the Indenture, then Frontline shall promptly provide to the
Trustee, for the benefit of the holders of the Securities, by wire transfer of immediately
available funds to the Escrow Account, cash in U.S. dollars in an amount that,
taken together with the Escrow Funds, shall be sufficient to fully fund the
redemption price and premium and any accrued and unpaid interest on the
Securities to the redemption date with respect to the Special Mandatory
Redemption.

 

7.                                       Investment
of Funds.

 

(a)                                  Escrow
Agent will hold in, and credit by appropriate book entry to, the Escrow Account
the initial deposit and all subsequent deposits to the Escrow Account, together
with all investments thereof and all interest accumulated thereon and proceeds
from the foregoing, upon the terms and conditions set forth in this Escrow
Agreement and shall not disburse funds from the Escrow Account except as
provided herein.  Trustee hereby directs
Escrow Agent to invest the funds in the Escrow Account initially in the Service
class shares of the U.S. Government Portfolio of the Wilmington Funds, a mutual
fund managed by Rodney Square Management Corporation, a subsidiary of Escrow Agent.  The parties acknowledge that (i) shares
in this mutual fund are not obligations of Wilmington Trust Company, are not
deposits and are not insured by the FDIC, (ii) Escrow Agent or its
affiliates are compensated by this mutual fund for services rendered in its
capacity as investment advisor, custodian and/or transfer agent,
(iii) Wilmington Trust Company, or its affiliates, are also compensated by
these mutual funds for providing shareholder services and (iv) such
compensation is both described in detail in the prospectus for the fund, and is
in addition to the compensation, if any, paid to Wilmington Trust Company in
its capacity as Escrow Agent hereunder.

 

(b)                                 Trustee
and the Company agree (solely as between themselves) that, unless and until an
Event of Default has occurred under the Indenture, the Company shall be
entitled to direct Trustee in writing to instruct Escrow Agent to invest the
funds in the Escrow Account in any other Cash Equivalent, and Trustee shall
instruct Escrow Agent accordingly.

 

(c)                                  Notwithstanding
anything to the contrary contained herein, the Company agrees that Trustee may,
even if no Event of Default has occurred under the Indenture, without notice to
any person, direct Escrow Agent to sell or liquidate any of the foregoing investments
at any time if the proceeds thereof are required for any release of funds
permitted or required hereunder, and Escrow Agent will not be liable or
responsible for any loss, cost or penalty resulting from any such sale or
liquidation.

 

(d)                                 The
provisions of Section 7(b) and Section 7(c) are between Trustee
and the Company and shall in no way limit Escrow Agent’s obligation to follow
entitlement orders of Trustee with respect to the Escrow Account and any
security entitlements and

 

6

 

financial
assets carried therein or credited thereto, without the consent of the Company,
Frontline or any other person.

 

8.                                       Resignation
of Escrow Agent.  Escrow Agent may
resign from the performance of its duties hereunder at any time by giving ten
days’ prior written notice to Trustee and Frontline.  Such resignation will take effect upon the appointment of a
successor Escrow Agent as provided below. 
Upon any such notice of resignation, Frontline will appoint a successor
Escrow Agent hereunder, which shall be a commercial bank, trust company or
other financial institution with a combined capital and surplus in excess of
$500,000,000, and which shall have the legal capacity to act as, and which
shall act as, a securities intermediary hereunder.  On the acceptance in writing of any appointment as Escrow Agent
hereunder by a successor Escrow Agent, such successor Escrow Agent will succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent will be discharged from
its duties and obligations under this Agreement, but will not be discharged
from any liability for actions taken as Escrow Agent hereunder prior to such
succession.  After any retiring Escrow
Agent’s resignation, the provisions of this Agreement will inure to its benefit
as to any actions taken or omitted to be taken by it while it was Escrow Agent
under this Agreement.  The retiring
Escrow Agent will transmit all records pertaining to the Escrow Funds and will
pay the Escrow Funds to the successor Escrow Agent, after making copies of such
records as the retiring Escrow Agent deems advisable.  In the event Frontline shall not have delivered to Escrow Agent a
written designation of a successor Escrow Agent within a thirty (30) day
period, together with the consent to such designation by the successor Escrow
Agent, the Escrow Agent may apply to a court of competent jurisdiction to
appoint a successor Escrow Agent, and the costs of obtaining such appointment
shall be reimbursable by Frontline and from the Escrow Funds.

 

9.                                       Liability
of Escrow Agent.

 

(a)                                  Escrow
Agent will have no liability or obligation with respect to the Escrow Funds
except for Escrow Agent’s willful misconduct or gross negligence, and Escrow
Agent will be fully protected in acting upon the directions of Trustee given in
accordance with this Agreement.  In no
event shall Escrow Agent be liable to the Company, Frontline or any other person
for acting on instructions or entitlement orders given by Trustee.  Escrow Agent’s sole responsibility will be
for the safekeeping, investment and disbursement of the Escrow Funds in
accordance with Trustee’s directions and the other terms of this Agreement.  Escrow Agent will have no implied duties or
obligations and will not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein.  Escrow Agent may rely upon any instrument, not only as to its due
execution, validity and effectiveness, but also as to the truth and accuracy of
any information contained therein, which Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by the person or
parties purporting to sign the same and to conform to the provisions of this
Agreement, and Escrow Agent may assume that any person purporting to give any
writing, notice, advice or instruction on behalf of Trustee in connection with
the provisions hereof has been duly authorized to do so.  In no event will Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages.  Escrow Agent will not be obligated to take
any legal action or commence any proceeding in connection with the Escrow
Funds, any account in which Escrow Funds are deposited or this Agreement, or to
appear

 

7

 

in, prosecute
or defend any such legal action or proceeding. 
Escrow Agent may consult legal counsel selected by it in connection with
the construction of any of the provisions hereof or of any of its duties as
Escrow Agent and securities intermediary hereunder and will incur no liability
in acting in accordance with the opinion or instruction of such counsel.

 

(b)                                 Escrow
Agent is authorized, in its sole discretion, to comply with orders issued or
process entered by any court with respect to the Escrow Funds, without
determination by Escrow Agent of such court’s jurisdiction in the matter.  If any portion of the Escrow Funds is at any
time attached, garnished or levied upon under any court order, or in case the
payment, assignment, transfer, conveyance or delivery of any of the Escrow
Funds shall be stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court affecting the Escrow
Funds or any part thereof, then and in any such event, Escrow Agent is
authorized, in its sole discretion, to rely upon and comply with any such
order, writ, judgment or decree which it is advised by legal counsel selected
by it is binding upon it without the need for appeal or other action; and if
Escrow Agent complies with any such order, writ, judgment or decree, it will
not be liable to any of the parties hereto or to any other person or entity by
reason of such compliance even though such order, writ, judgment or decree may
be subsequently reversed, modified, annulled, set aside or vacated.

 

(c)                                  Escrow
Agent shall not be required to use its own funds in the performance of any of
its obligations or duties or the exercise of any of its rights or powers, and
shall not be required to take any action which, in Escrow Agent’s sole and
absolute judgment, could involve it in expense or liability unless furnished
with security and indemnity which it deems, in its sole and absolute
discretion, to be satisfactory.

 

(d)                                 Escrow
Agent shall be authorized (but not required) to seek confirmation of all funds
transfer instructions by telephone callback, and Escrow Agent may rely upon
such confirmation of anyone purporting to be the person designated in the
instructions.  The parties acknowledge
that such security procedure is commercially reasonable.  The Escrow Agent may, however, disburse any
funds in the Escrow Fund without any separate instructions, if such
disbursements are in accordance with the terms of this Escrow Agreement.

 

10.                                 Indemnification
of Escrow Agent.  From and at all
times after the date of this Agreement, Frontline  and the Company (together,
the “Indemnifying Parties”) shall, on a joint and several basis, to the fullest
extent permitted by law and to the extent provided in this Agreement, indemnify
and hold harmless each of Escrow Agent and Trustee and each of their respective
directors, officers, employees, attorneys, agents and affiliates (collectively,
the “Indemnified Parties”) against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorneys’ fees, costs and
expenses) incurred by or asserted against any of the Indemnified Parties from and
after the date of this Agreement, whether direct, indirect or consequential
(collectively, “Damages”), as a result of or arising from or in any way
relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person, including without limitation Frontline
or the Company, whether threatened or initiated,

 

8

 

asserting a claim for any legal
or equitable remedy against any person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Agreement or any transactions contemplated hereby, whether or not any such
Indemnified Party is a party to any such action, proceeding, suit or the target
of any such inquiry or investigation; provided, however, that no Indemnified
Party shall have the right to be indemnified hereunder for any liability
finally determined by a court of competent jurisdiction, subject to no further
appeal, to have resulted solely from the gross negligence or willful misconduct
of such Indemnified Party; provided further, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
Damages to the extent that such Damages are a result of, arise from or are
related to any act or omission by any Indemnified Party that causes Escrow
Agent not to be a securities intermediary under Article 8 of the New York UCC
for purposes of this Agreement, the Escrow Account and the Escrow Funds.  If any such action or claim shall be brought
or asserted against any Indemnified Party, such Indemnified Party shall
promptly notify the Indemnifying Parties in writing, and the Indemnifying
Parties shall assume the defense thereof, including the employment of counsel
reasonably acceptable to the Indemnified Party and the payment of all
expenses.  Such Indemnified Party shall,
in its sole discretion, have the right to employ separate counsel (who may be
selected by such Indemnified Party in its sole discretion) in any such action
and to participate in the defense thereof, and the fees and expenses of such
counsel shall be paid by such Indemnified Party, except that the Indemnifying
Parties shall be required to pay such fees and expenses if (a) the Indemnifying
Parties agree to pay such fees and expenses, (b) the Indemnifying Parties shall
fail to assume the defense of such action or proceeding, (c) either of the
Indemnifying Parties is the plaintiff in any such action or proceeding or (d)
the named or potential parties to any such action or proceeding (including any
potentially impleaded parties) include both such Indemnified Party and either
of the Indemnifying Parties, and such Indemnified Party shall have been advised
by counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Indemnifying
Parties.  The Indemnifying Parties shall
be liable to pay fees and expenses of counsel pursuant to the preceding
sentence. All such fees and expenses payable by the Indemnifying Parties
pursuant to the foregoing sentence shall be paid from time to time as incurred,
both in advance of and after the final disposition of such action or
claim.  All of the foregoing losses,
damages, costs and expenses of the Indemnified Parties shall be payable by the
Indemnifying Parties upon demand by such Indemnified Party. 
If the Indemnifying Parties shall fail to pay such losses,
damages, costs and expenses within 10 days of such demand, such losses,
damages, costs and expenses shall be reimbursable from the Escrow Funds unless
such amounts shall not have been paid when the Escrow Funds are to be disbursed
in accordance with Section 5, in which case any such unpaid amounts
shall then be reimbursable from the Escrow Funds.  The obligations of the Indemnifying Parties under this Section 10
shall survive any termination of this Agreement, and any resignation of Escrow
Agent under this Agreement.

 

11.                                 Fees
and Expenses of Escrow Agent. 
Frontline shall pay to Escrow Agent compensation for its services
hereunder in accordance with the terms of a separate fee agreement between the
parties.  In the event Escrow Agent
renders any extraordinary services in connection with the Escrow Account at the
request of the parties, Escrow Agent shall be entitled to additional
compensation therefor to be agreed upon by Escrow Agent and Frontline.  In addition, Frontline shall reimburse
Escrow Agent for all of its reasonable out-of-pocket expenses incurred

 

9

 

in its capacity as Escrow Agent
under this Agreement, including attorneys’ fees, travel expenses, telephone and
facsimile transmission costs, postage (including express mail and overnight
delivery charges), copying charges and the like.  All of the compensation and reimbursement obligations set forth
in this Section 11 shall be payable by Frontline upon demand by the
Escrow Agent.  If Frontline shall fail
to pay any portion of such compensation or out-of-pocket expenses within 10
days of demand by the Escrow Agent, such unpaid portion shall be reimbursable
from the Escrow Funds unless such amounts shall not have been paid when the
Escrow Funds are to be disbursed in accordance with Section 5, in which
case any such unpaid amounts shall then be reimbursable from the Escrow
Funds.  The obligations of Frontline
under this Section 11 shall survive any termination of this Agreement
and any resignation of Escrow Agent under this Agreement.

 

12.                                 Notice.  Unless otherwise provided herein, any
notice, request, consent, instruction or other document to be given hereunder
by any party hereto to another party hereto shall be in writing and will be
deemed given (a) when received if delivered personally or by courier; or
(b) on the date receipt is acknowledged if delivered by certified mail,
postage prepaid, return receipt requested or (c) on the day of
transmission if sent by facsimile transmission and receipt thereof is
confirmed, as follows:

 

	
  If to
  Trustee, addressed to:

  
	
   

  
	
  Wilmington Trust Company, as Trustee

  
	
  Rodney Square North

  
	
  1100 North Market Street

  
	
  Wilmington, Delaware 19890

  
	
  Attention:

  	
  Mary St.
  Amand

  
	
   

  	
  Assistant
  Vice President

  
	
  Facsimile: (302) 636-4145

  
	
   

  
	
  If to Escrow
  Agent, addressed to:

  
	
   

  
	
  Wilmington Trust Company,

  
	
  as Escrow Agent

  
	
  Rodney Square North

  
	
  1100 North Market Street

  
	
  Wilmington, Delaware 19890

  
	
  Attention:

  	
  Mary St.
  Amand

  
	
   

  	
  Assistant
  Vice President

  
	
  Facsimile: 
  (302) 636-4145

  
			

 

10

 

	
  If to the
  Company, addressed to:

  
	
   

  
	
  Ship Finance International Limited

  
	
  Par-La-Ville Place

  
	
  14 Par-La-Ville Road

  
	
  Hamilton, Bermuda HM 08

  
	
  Attention: 
  Finance Department

  
	
  Facsimile: 
  +1 (441) 295-3494

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Seward &
  Kissel LLP

  
	
  One Battery
  Park Plaza

  
	
  New York,
  New York 10004

  
	
  Attention:  Gary Wolfe

  
	
  Facsimile:  (212) 480-8421

  
	
   

  
	
  If to Frontline, addressed to:

  
	
   

  
	
  Frontline
  Ltd.

  
	
  Par-La-Ville
  Place

  
	
  14
  Par-La-Ville Road

  
	
  Hamilton,
  Bermuda HM 08

  
	
  Attention: 
  Finance Department

  
	
  Facsimile:  +1 (441) 295-3494

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Seward &
  Kissel LLP

  
	
  One Battery
  Park Plaza

  
	
  New York,
  New York 10004

  
	
  Attention:  Gary Wolfe

  
	
  Facsimile:  (212) 480-8421

  

 

or to such other place and with
such other copies as any party hereto may designate as to itself by written
notice to the others in accordance with this Section 12.

 

13.                                 No
Third-Party Beneficiaries; Amendment or Waiver.  This Agreement is for the exclusive benefit of the parties hereto
and their respective successors hereunder, and shall not be deemed to give any
legal or equitable right, remedy, or claim, either express or implied, to any
other entity or person whatsoever.  This
Agreement may be changed, waived, discharged or terminated only by a writing
signed by each of the parties hereto; provided, that any amendment to Section 5
or Section 6 also will require the consent of Holders of all the
then outstanding Securities.  No delay
or omission by any party in exercising any right with respect to this Agreement
will operate as a waiver.  A waiver on
any one occasion will not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.

 

11

 

14.                                 Severability.  To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

15.                                 Governing
Law.  This Agreement shall be
interpreted, construed, enforced and administered in accordance with the laws
of the State of New York.  The Company
and Frontline hereby submit to the personal jurisdiction of and each agrees
that all proceedings relating hereto shall be brought in courts located within
the City and State of New York.  The
Company and Frontline hereby waive the right to trial by jury in any such
proceedings.  To the extent that in any
jurisdiction the Company or Frontline may be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment (whether before or after
judgment) or other legal process, each hereby irrevocably agrees not to claim,
and hereby waives, such immunity.  The
Company and Frontline waive personal service of process and consent to service
of process by certified or registered mail, return receipt requested, directed
to them c/o Seward & Kissel LLP, One Battery Park Plaza, New York, New York
10004, the authorized agent of each of the Company and Frontline, and such
service shall be deemed completed 10 calendar days after the same is so mailed.

 

16.                                 Entire
Agreement.  Except as set forth in
the first sentence of Section 11, this Agreement constitutes the entire
agreement of the parties hereto relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written,
relating to the matters contained herein.

 

17.                                 Binding
Effect.  All of the terms of this
Agreement, as amended from time to time, shall be binding upon, inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.

 

18.                                 Execution
in Counterparts.  This Agreement may
be executed in two or more counterparts, which when so executed shall
constitute one and the same agreement or direction.

 

19.                                 Termination.  Upon the disbursement of all amounts in the
Escrow Funds under Section 5 of this Agreement, this Agreement will
terminate (other than Section 6 and Section 9 through Section
21) and Escrow Agent will have no further obligation or liability
whatsoever with respect to this Agreement or the Escrow Funds (provided,
however, that the termination of this Agreement shall not impair or affect any
rights or obligations of any party hereto arising hereunder prior to such
termination).

 

20.                                 Dealings.  Escrow Agent and any stockholder, director,
officer or employee of Escrow Agent may buy, sell, and deal in any of the
securities of the Company or Frontline and become pecuniarily interested in any
transaction in which the Company or Frontline may be interested, and contract
and lend money to the Company or Frontline and otherwise act as fully and
freely as though it were not Escrow Agent under this Agreement.  Nothing in this Agreement will preclude
Escrow Agent from acting in any other capacity for the Company, Frontline or
for any other entity.

 

12

 

21.                                 No
Depositor Liability or Further Obligation. 
The Company, Frontline, Escrow Agent and Trustee acknowledge and agree
that depositing the Escrow Funds with Escrow Agent is the only obligation of
the Depositors under this Agreement. 
Frontline and the Company agree, on a joint and several basis, to hold
the Depositors harmless with respect to any claim, liability or cause of action
under this Agreement.

 

13

 

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

 

	
   

  	
  DEPOSITORS

  
	
   

  	
   

  	
   

  
	
   

  	
  JEFFERIES
  & COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W.
  Sinders Jr

  	
   

  
	
   

  	
  Name:

  	
  John W.
  Sinders Jr

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CITIGROUP
  GLOBAL MARKETS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark
  Rhodes

  	
   

  
	
   

  	
  Name:

  	
  Mark Rhodes

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President & Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J. McGinley

  	
   

  
	
   

  	
  Name:

  	
  James J. McGinley

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ESCROW AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J. McGinley

  	
   

  
	
   

  	
  Name:

  	
  James J. McGinley

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  SHIP FINANCE
  INTERNATIONAL LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kate
  Blankenship

  	
   

  
	
   

  	
  Name:

  	
  Kate
  Blankenship

  	
   

  
	
   

  	
  Title:

  	
  Director,
  Secretary and Attorny-in-Fact

  	
   

  
					

 

14

 

	
   

  	
  FRONTLINE

  
	
   

  	
   

  	
   

  
	
   

  	
  FRONTLINE
  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kate
  Blankenship

  	
   

  
	
   

  	
  Name:

  	
  KATE
  BLANKENSHIP

  	
   

  
	
   

  	
  Title:

  	
  DIRECTOR

  	
   

  

 

15

 

EXHIBIT A

 

FORM
OF

SHIP
FINANCE INTERNATIONAL LIMITED

OFFICERS’
CERTIFICATE

 

This Officers’ Certificate is being delivered
to Trustee under Section 5(a) of the Escrow Agreement (the “Agreement”),
dated as of December 18, 2003, by and among Jefferies & Company, Inc. and
Citigroup Global Markets Inc., as Depositors, Wilmington Trust Company,  a
Delaware banking corporation, as trustee under the Indenture (“Trustee”) and as
escrow agent under the Agreement (“Escrow Agent”), Ship Finance International
Limited, a Bermuda exempted company (the “Company”), and Frontline Ltd., a
Bermuda exempted company (“Frontline”). 
This Officers’ Certificate is being delivered concurrently to
Trustee.  Capitalized terms that are
used but not defined herein have the meanings set forth in the Agreement.

 

The undersigned officers of the Company hereby certify that each of the
following statements is true and correct or will be true and correct
simultaneously with the release of the Escrow Funds contemplated hereby:

 

(1)                                  the
Company has completed the purchase, directly or indirectly, of at least 45 of
the Vessel Owning Subsidiaries (as defined in the Fleet Purchase Agreement
dated as of December 11, 2003 between the Company and Frontline (the “Fleet
Purchase Agreement”)) set forth in Schedule 3.19 to the Fleet Purchase
Agreement, as contemplated by the Fleet Purchase Agreement or, in the event
there was a Total Loss (as defined in the Indenture) of a Vessel (as defined in
the Fleet Purchase Agreement) prior to the acquisition by the Company of the
Vessel Owning Subsidiary that owns that Vessel, Frontline has either (a)
irrevocably transferred to the Company its right to receive all insurance
proceeds, damages, indemnities or other amounts it has received or may receive
in connection with such Total Loss or (b) substituted a vessel of similar age,
size and classification and the Company has completed the purchase of the
entity that owns such substituted vessel for a similar purchase price, in each
case in accordance with the terms of the Fleet Purchase Agreement in all
material respects;

 

(2)                                  the
Charter Ancillary Agreement (as defined in the Fleet Purchase Agreement) has
been duly authorized, executed and delivered by all parties thereto and is in
full force and effect;

 

(3)                                  Frontline
has complied with its obligations under the Charter Ancillary Agreement in all
material respects, including without limitation its obligation to capitalize
the Charterer (as defined in the Fleet Purchase Agreement) with at least U.S.
$250 million in cash in accordance with the terms thereof, and there are
no defaults thereunder that are continuing;

 

(4)                                  the
Charters and the Management Agreements (each as defined in the Fleet Purchase
Agreement) with respect to the Vessel Owning Subsidiaries that have been
acquired have been duly authorized, executed and delivered by all parties
thereto and are in full force and effect (subject to any exceptions expressly
contemplated by the

 

A-1

 

Fleet Purchase Agreement), on substantially the terms described in the
Offering Circular for the offering of the Securities dated December 11,
2003 (the “Offering Circular”), and there are no defaults thereunder that are
continuing;

 

(5)                                  the
Frontline Performance Guarantee (as defined in the Fleet Purchase Agreement)
has been duly authorized, executed and delivered by all parties thereto and is
in full force and effect;

 

(6)                                  all
of the Restricted Subsidiaries (as defined in the Indenture) that have been
acquired by the Company have executed and delivered Subsidiary Guarantees (as
defined in the Indenture) in accordance with the Indenture, and such Subsidiary
Guarantees are in full force and effect; and

 

(7)                                  the
terms of the transactions entered into and the operations and assets and
liabilities acquired and assumed in connection with the foregoing conform in
all material respects to the descriptions thereof contained in the Offering
Circular, subject to any changes provided for, discussed or contemplated in the
Offering Circular.

 

The undersigned officers of the Company hereby further certify that (a)
the Company will use the Escrow Funds as described in the Offering Circular
under the caption “Use of Proceeds,” (b) no Default or Event of Default under
the Indenture has occurred and is continuing or will occur as a result of the
foregoing transactions and (c) attached to this Officers’ Certificate as Annex
I is a true and correct copy, certified by the Secretary or any Assistant
Secretary of the Company, of resolutions duly adopted unanimously by the Board
of Directors of the Company on
                        ,
2004, approving the contents and delivery of this Officers’ Certificate, which
resolutions have not since been amended or rescinded in any respect and remain
in full force and effect as of the date hereof.

 

In accordance
with Section 5(a) of the Agreement, Trustee is hereby instructed to direct
Escrow Agent to disburse immediately all Escrow Funds to the Company by wire
transfer of immediately available funds, to the following account:

 

[insert wire transfer instructions]

 

A-2

 

IN WITNESS WHEREOF, the undersigned officers
have signed this Officers’ Certificate this
           day of
                                  ,
2004.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

A-3

 

ANNEX I

TO OFFICERS’
CERTIFICATE

 

CERTIFIED RESOLUTIONS
OF BOARD OF DIRECTORS

 

A-4

 

EXHIBIT B

 

FORM
OF OPINION OF SEWARD & KISSEL LLP

 

                          ,
2004

 

Wilmington Trust Company, as Trustee

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

 

Re:                             Ship
Finance International Limited

 

Ladies and Gentlemen:

 

We have acted as special counsel to Ship Finance International Limited,
a Bermuda exempted company (the “Company”), Frontline Shipping Limited,
a Bermuda exempted company (the “Charterer”), Frontline Management
(Bermuda) Ltd., a Bermuda exempted company (“Frontline Management”),
Frontline Ltd., a Bermuda exempted company (“Frontline” and together
with the Company, the Charterer and Frontline Management, collectively, the “Frontline
Parties”) on matters of the laws of the State of New York and the laws of
the United States of America, in relation to, among other things, the Company’s
offering of an aggregate of up to $580,000,000 of Senior Notes due 2013 (the “Securities”),
and the negotiation, execution and delivery of the Transaction Documents (as
defined below) to which the Company and the other Frontline Parties are
parties.  We are delivering this opinion
pursuant to Section 5(a) of the Escrow Agreement (the “Escrow Agreement”),
dated as of December 18, 2003, by and among the Company, Frontline and
Wilmington Trust Company, as Escrow Agent (in such capacity, the “Escrow
Agent”).  Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed
thereto in the Escrow Agreement unless the context otherwise requires.

 

In rendering this opinion, we have examined and relied on originals or
copies of the following:

 

(i)                                     the Company’s
Offering Circular, dated December 11, 2003, relating to the offering of the
Securities (the “Offering Circular”);

 

(ii)                                  the Indenture, dated
as of December 18, 2003, by and between the Company and Wilmington Trust
Company, as Trustee (the “Indenture”);

 

(iv)                              the guarantees by each of
the Subsidiaries under the Indenture (the “Guarantees”);

 

(v)                                 the Escrow Agreement;

 

B-1

 

(vi)                              the Fleet Purchase
Agreement, dated as of December 11, 2003, by and between the Company and
Frontline (the “Fleet Purchase Agreement”);

 

(vii)                           the Charter Ancillary
Agreement (as defined in the Fleet Purchase Agreement);

 

(viii)                        the Charters (as defined in the
Fleet Purchase Agreement);

 

(ix)                                the Management
Agreements (as defined in the Fleet Purchase Agreement);

 

(x)                                   the Performance
Guarantee (as defined in the Fleet Purchase Agreement) (and together with the
Indenture, the Guarantees, the Escrow Agreement, the Fleet Purchase Agreement,
the Charter Ancillary Agreement, the Charters and the Management Agreements,
collectively, the “Transaction Documents”); and

 

(xi)                                the constitutive
documents of each Frontline Party.

 

We have also examined and relied, as to factual matters, upon
originals, or copies certified to our satisfaction, of such records, documents,
certificates of officers of the Frontline Parties and of public officials and
other instruments, and made such other inquiries, as, in our judgment, are
necessary or appropriate to enable us to render the opinion expressed below.  As to questions of fact material to this
opinion, we have, with your approval, where relevant facts were not
independently established, relied without investigation upon, among other
things, the representations made in the Transaction Documents and certificates
of officers of the Frontline Parties. 
Insofar as our opinions pertain to matters of Bermuda law, Bahamian law,
the law of the Isle of Man, Singapore law or English law, we have relied
exclusively and without independent investigation upon the opinions of various
local counsel to the Frontline Parties.

 

For the purpose of this opinion, we have further assumed:

 

(a)                                  the power, authority
and legal right of all parties to the Transaction Documents (other than the
Frontline Parties) to enter into and to perform their respective obligations
thereunder and that the Transaction Documents have been duly authorized,
executed and delivered by each of the parties thereto (other than the Frontline
Parties);

 

(b)                                 the genuineness of all
signatures on all documents and the completeness, and the conformity to
original documents, of all copies submitted to us;

 

(c)                                  due compliance of the
Transaction Documents with all matters of, and the validity and enforceability
thereof under, all such laws as govern or relate to them (other than the laws
of the jurisdictions as to which we are opining);

 

(d)                                 that each of the
parties to the Transaction Documents (other than the

 

B-2

 

Frontline Parties) has complied with all legal requirements pertaining
to its status as such status relates to its rights to enforce the Transaction
Documents against any of the Frontline Parties; and

 

(e)                                  that any required
consents, licenses, permits, approvals, exemptions or authorizations of or by,
and any required registrations or filings with, any governmental authority or
regulatory body of any jurisdiction (other than the jurisdictions as to which
we are opining) in connection with the transactions contemplated by the
Transaction Documents have been duly obtained or made.

 

Based upon and subject to the foregoing and to the qualifications and
limitations expressed herein, we are of the opinion that:

 

1.                                       All
conditions necessary for the Company to complete the purchase of at least 45 of
the Vessel Owning Subsidiaries (as defined in the Fleet Purchase Agreement), as
contemplated by the Fleet Purchase Agreement, have been satisfied or waived
(other than the release of the Escrow Funds to the Company).  [In the event there was a Total Loss (as defined
in the Indenture) of a Vessel (as defined in the Fleet Purchase Agreement)
prior to the acquisition by the Company of the Vessel Owning Subsidiary that
owns that Vessel, Frontline has either (a) irrevocably transferred to the
Company its right to receive all insurance proceeds, damages, indemnities or
other amounts it has received or may receive in connection with such Total Loss
or (b) substituted a vessel of similar age, size and classification and the
Company has completed the purchase of the entity that owns such substituted
vessel for a similar purchase price, in each case in accordance with the terms
of the Fleet Purchase Agreement in all material respects.]

 

2.                                       The
Charter Ancillary Agreement (as defined in the Fleet Purchase Agreement) has
been duly authorized, executed and delivered by all parties thereto and is in
full force and effect.

 

3.                                       To
our knowledge (a) Frontline has complied with its obligations under the Charter
Ancillary Agreement in all material respects, including its obligation to
capitalize the Charterer (as defined in the Fleet Purchase Agreement) with at
least U.S. $250 million in cash in accordance with the terms thereof and
(b) there are no defaults thereunder that are continuing.

 

4.                                       The
Charters and the Management Agreements (each as defined in the Fleet Purchase
Agreement) with respect to the Vessel Owning Subsidiaries that have been
acquired have been duly authorized, executed and delivered by all parties
thereto and are in full force and effect (subject to any exceptions expressly
contemplated by the Fleet Purchase Agreement), on substantially the terms
described in the Offering Circular and, to our knowledge, there are no defaults
thereunder that are continuing.

 

5.                                       The
Frontline Performance Guarantee (as defined in the Fleet Purchase Agreement)
has been duly authorized, executed and delivered by Frontline and is in full
force and effect.

 

B-3

 

6.                                       All
of the Restricted Subsidiaries (as defined in the Indenture) that have been
acquired by the Company have executed and delivered Subsidiary Guarantees (as
defined in the Indenture) in accordance with the Indenture, and such Subsidiary
Guarantees are in full force and effect.

 

The above opinions are subject to the following additional limitations,
qualifications and exceptions:

 

(a)                                  the enforceability of
the rights and remedies provided for in the Transaction Documents is subject to
bankruptcy, reorganization, insolvency, fraudulent conveyance, fraudulent
transfer, moratorium and other similar laws affecting generally the
enforceability of creditors’ rights from time to time in effect;

 

(b)                                 the enforceability of
the Transaction Documents may be limited by application of the principles of
good faith, fair dealing, commercial reasonableness, materiality and
unconscionability;

 

(c)                                  the enforceability of
the Transaction Documents is subject to general principles of equity with
respect to the enforceability of any of the remedies, covenants or other
provisions of the Transaction Documents and to the availability of specific performance
or injunctive relief or other equitable remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law;

 

(d)                                 any provision in the
Transaction Documents specifying that the provisions thereof may only be waived
in writing may not be enforceable to the extent that an oral agreement or
agreement implied by trade practice or course of conduct is created modifying
provisions of the Transaction Documents;

 

(e)                                  we express no opinion
as to the legality, validity, binding effect or enforceability of any
provisions of the Transaction Documents relating to indemnification,
contribution or exculpation (i) in connection with violations of any applicable
laws, statutory duties or public policy by the indemnified or exculpated party,
or (ii) in connection with willful, reckless or unlawful acts or gross
negligence of the indemnified or exculpated party or the party receiving
contribution, or (iii) under circumstances involving the negligence of the
indemnified or exculpated party or the party receiving contribution in which a
court might determine the provision to be unfair or insufficiently explicit;

 

(f)                                    we express no
opinion as to the legality, validity, binding effect or enforceability of any
provision of the Transaction Documents related to choice of governing law to
the extent that the legality, validity, binding effect or enforceability of any
such provision is to be determined by any court other than a court of the State
of New York or a federal district court sitting in the State of New York
applying the choice of law principles of the State of New York;

 

B-4

 

(g)                                 with respect to the
submission to the jurisdiction of the United States District Courts contained
in the Transaction Documents, we note the limitations of 28 U.S.C. §1332 on
federal court jurisdiction in cases where diversity of citizenship is lacking,
and we also note that such submissions and the waivers contained in such
sections cannot supersede those courts’ discretion in determining whether to
transfer an action from one federal court to another under 28 U.S.C.§1404(a);
and

 

(h)                                 the opinions expressed
herein are given as of the date hereof, and we undertake no obligation to
supplement this letter if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof or for any other reason.

 

Whenever we
have asserted above that a matter is “to our knowledge” or “known to us”, our
knowledge is limited to actual knowledge of those attorneys in our office who
have participated in the representation of the Frontline Parties.

 

This opinion
is limited to matters of law of the State of New York and the United States of
America.  We express no opinion with
respect to the law of any other jurisdiction.

 

The opinions
in this letter are rendered only to the Trustee with respect to the
above-referenced transaction.  The
opinions may not be relied upon for any other purpose, or relied upon by any
other person, firm or entity for any purpose.

 

	
   

  	
  Very truly yours,

  

 

B-5Exhibit 4.1

 

 

 

iSTAR FINANCIAL INC.

 

5.70% SENIOR NOTES DUE 2014

 

INDENTURE

 

Dated as of March 9, 2004

 

U.S. BANK TRUST NATIONAL

ASSOCIATION

 

Trustee

 

 

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust Indenture

  Act Section

  	
   

  	
  Indenture Section

  
	
  310(a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.10

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  11.03

  
	
   

  	
  (c)

  	
   

  	
  11.03

  
	
  313(a)

  	
   

  	
  7.06

  
	
   

  	
  (b)(2)

  	
   

  	
  7.07

  
	
   

  	
  (c)

  	
   

  	
  7.06;11.02

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
  314(a)

  	
   

  	
  4.03;11.02

  
	
   

  	
  (c)(1)

  	
   

  	
  11.04

  
	
   

  	
  (c)(2)

  	
   

  	
  11.04

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
  11.05

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05,11.02

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.11

  
	
  316(a) (last
  sentence)

  	
   

  	
  2.09

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  2.13

  
	
  317(a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.09

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
  318(a)

  	
   

  	
  11.01

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)

  	
   

  	
  11.01

  

 

N.A. means not applicable.

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

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  1

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01. Definitions

  	
   

  
	
  Section 1.02. Other Definitions

  	
   

  
	
  Section
  1.03. Incorporation by Reference of Trust Indenture Act

  	
   

  
	
  Section
  1.04. Rules of Construction

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  2

  	
   

  
	
   

  	
   

  
	
  THE
  NOTES

  	
   

  
	
   

  	
   

  
	
  Section
  2.01. Form and Dating

  	
   

  
	
  Section
  2.02. Execution and Authentication

  	
   

  
	
  Section
  2.03. Registrar and Paying Agent

  	
   

  
	
  Section
  2.04. Paying Agent to Hold Money in Trust

  	
   

  
	
  Section
  2.05. Holder Lists

  	
   

  
	
  Section
  2.06. Transfer and Exchange

  	
   

  
	
  Section
  2.07. Replacement Notes

  	
   

  
	
  Section
  2.08. Outstanding Notes

  	
   

  
	
  Section
  2.09. Treasury Notes

  	
   

  
	
  Section
  2.10. Temporary Notes

  	
   

  
	
  Section
  2.11. Cancellation

  	
   

  
	
  Section
  2.12. Defaulted Interest

  	
   

  
	
  Section
  2.13. Record Date

  	
   

  
	
  Section
  2.14. CUSIP Numbers

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  3

  	
   

  
	
   

  	
   

  
	
  REDEMPTION AND PREPAYMENT

  	
   

  
	
   

  	
   

  
	
  Section
  3.01. Notices to Trustee

  	
   

  
	
  Section
  3.02. Selection of Notes to Be Redeemed

  	
   

  
	
  Section
  3.03. Notice of Redemption

  	
   

  
	
  Section
  3.04. Effect of Notice of Redemption

  	
   

  
	
  Section
  3.05. Deposit of Redemption Price

  	
   

  
	
  Section
  3.06. Notes Redeemed in Part

  	
   

  
	
  Section
  3.07. Optional Redemption

  	
   

  
	
  Section
  3.08. Mandatory Redemption

  	
   

  

 

i

 

	
  ARTICLE
  4

  	
   

  
	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section
  4.01. Payment of Notes

  	
   

  
	
  Section
  4.02. Maintenance of Office or Agency

  	
   

  
	
  Section
  4.03. Reports to Holders

  	
   

  
	
  Section
  4.04. Compliance Certificate

  	
   

  
	
  Section
  4.05. Taxes

  	
   

  
	
  Section
  4.06. Stay, Extension and Usury Laws

  	
   

  
	
  Section
  4.07. Limitation on Restricted Payments

  	
   

  
	
  Section
  4.08. Limitation on Dividend and Other Payment Restrictions Affecting
  Subsidiaries

  	
   

  
	
  Section
  4.09. Limitation on Incurrence of Additional Indebtedness

  	
   

  
	
  Section
  4.10. Limitation on Transactions with Affiliates

  	
   

  
	
  Section
  4.11. Limitation on Liens

  	
   

  
	
  Section
  4.12. Corporate Existence

  	
   

  
	
  Section
  4.13. Offer to Repurchase Upon Change of Control

  	
   

  
	
  Section
  4.14. Limitation on Preferred Stock of Subsidiaries

  	
   

  
	
  Section
  4.15. Conduct of Business

  	
   

  
	
  Section
  4.16. Limitation of Guarantees by Subsidiaries

  	
   

  
	
  Section
  4.17. Maintenance of Total Unencumbered Assets

  	
   

  
	
  Section
  4.18. Termination of Certain Covenants In Event of Investment Grade Rating

  	
   

  
	
  Section
  4.19. Maintenance of Properties; Books and Records; Compliance with Law

  	
   

  
	
  Section
  4.20. Registration Rights

  	
   

  
	
  Section
  4.21. Additional Interest

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  5

  	
   

  
	
   

  	
   

  
	
  SUCCESSORS

  	
   

  
	
   

  	
   

  
	
  Section
  5.01. Merger, Consolidation, or Sale of Assets

  	
   

  
	
  Section
  5.02. Successor Corporation Substituted

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  6

  	
   

  
	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section
  6.01. Events of Default

  	
   

  
	
  Section
  6.02. Acceleration

  	
   

  
	
  Section
  6.03. Other Remedies

  	
   

  
	
  Section
  6.04. Waiver of Past Defaults

  	
   

  

 

ii

 

	
  Section
  6.05. Control by Majority

  	
   

  
	
  Section
  6.06. Limitation on Suits

  	
   

  
	
  Section
  6.07. Rights of Holders of Notes to Receive Payment

  	
   

  
	
  Section
  6.08. Collection Suit by Trustee

  	
   

  
	
  Section
  6.09. Trustee May File Proofs of Claim

  	
   

  
	
  Section
  6.10. Priorities

  	
   

  
	
  Section
  6.11. Undertaking for Costs

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  7

  	
   

  
	
   

  	
   

  
	
  TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section
  7.01. Duties of Trustee

  	
   

  
	
  Section
  7.02. Rights of Trustee

  	
   

  
	
  Section
  7.03. Individual Rights of Trustee

  	
   

  
	
  Section
  7.04. Trustee’s Disclaimer

  	
   

  
	
  Section
  7.05. Notice of Defaults

  	
   

  
	
  Section
  7.06. Reports by Trustee

  	
   

  
	
  Section
  7.07. Compensation and Indemnity

  	
   

  
	
  Section
  7.08. Replacement of Trustee

  	
   

  
	
  Section
  7.09. Successor Trustee by Merger, etc

  	
   

  
	
  Section
  7.10. Eligibility; Disqualification

  	
   

  
	
  Section
  7.11. Preferential Collection of Claims

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  8

  	
   

  
	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  	
   

  
	
   

  	
   

  
	
  Section
  8.01. Option to Effect Legal Defeasance or Covenant Defeasance

  	
   

  
	
  Section
  8.02. Legal Defeasance and Discharge

  	
   

  
	
  Section
  8.03. Covenant Defeasance

  	
   

  
	
  Section
  8.04. Conditions to Legal or Covenant Defeasance

  	
   

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

  	
   

  
	
  Section
  8.06. Repayment to Company

  	
   

  
	
  Section
  8.07. Reinstatement

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  9

  	
   

  
	
   

  	
   

  
	
  AMENDMENT,
  SUPPLEMENT AND WAIVER

  	
   

  
	
   

  	
   

  
	
  Section
  9.01. Without Consent of Holders of Notes

  	
   

  
	
  Section
  9.02. With Consent of Holders of Notes

  	
   

  

 

iii

 

	
  Section
  9.03. Compliance with Trust Indenture Act

  	
   

  
	
  Section
  9.04. Revocation and Effect of Consents

  	
   

  
	
  Section
  9.05. Notation on or Exchange of Notes

  	
   

  
	
  Section
  9.06. Trustee to Sign Amendments, etc

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  10

  	
   

  
	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  
	
  Section 10.01. Satisfaction and Discharge

  	
   

  
	
  Section 10.02. Application of Trust Money

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  11

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 11.01. Trust Indenture Act Controls

  	
   

  
	
  Section 11.02. Notices

  	
   

  
	
  Section 11.03. Communication by Holders of Notes with Other Holders
  of Notes

  	
   

  
	
  Section 11.04. Certificate and Opinion as to Conditions Precedent

  	
   

  
	
  Section 11.05. Statements Required in Certificate or Opinion

  	
   

  
	
  Section 11.06. Rules by Trustee and Agents

  	
   

  
	
  Section 11.07. No Personal Liability of Directors, Officers,
  Employees and Stockholders

  	
   

  
	
  Section 11.08. Governing Law

  	
   

  
	
  Section 11.09. No Adverse Interpretation of Other Agreements

  	
   

  
	
  Section 11.10. Successors

  	
   

  
	
  Section 11.11. Severability

  	
   

  
	
  Section 11.12. Counterpart Originals

  	
   

  
	
  Section 11.13. Table of Contents, Headings, etc

  	
   

  

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  FORM OF NOTE

  	
   

  
	
  Exhibit B

  	
  FORM OF CERTIFICATE OF TRANSFER

  	
   

  
	
  Exhibit C

  	
  FORM OF CERTIFICATE OF EXCHANGE

  	
   

  
	
  Exhibit D

  	
  FORM OF CERTIFICATE OF ACQUIRING
  INSTITUTIONAL ACCREDITED INVESTOR

  	
   

  

 

iv

 

INDENTURE
dated as of March 9, 2004 between iStar Financial Inc., a Maryland corporation
(the “Company”),
and U.S. Bank Trust National Association, as trustee (the “Trustee”).

 

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

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY
REFERENCE

 

Section 1.01.  Definitions

 

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

 

“Additional
Interest” has the meaning given such term in the Registration Rights
Agreement.

 

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

 

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

 

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

 

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

 

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

 

 

or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Capital
Stock” means:

 

(1)           with respect to any
Person that is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting)

 

2

 

of corporate
stock, including each class of Common Stock and Preferred Stock of such Person;
and

 

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

 

“Cash
Equivalents” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

“Clearstream”
means Clearstream Banking, S.A.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

(1)           Consolidated Net
Income; and

 

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

 

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

 

(b)           Consolidated
Interest Expense; and

 

(c)           depreciation and
amortization;

 

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

 

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

 

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

 

(2)           any asset sales or
other dispositions or any asset originations, asset purchases, Investments and
Asset Acquisitions (including, without limitation, any Asset Acquisition

 

5

 

giving rise to
the need to make such calculation as a result of such Person or one of its
Subsidiaries (including any Person who becomes a Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro
forma expense and cost reductions calculated on a basis consistent with
Regulation S-X under the Exchange Act) attributable to the assets which
are originated or purchased, the Investments that are made and the assets that
are the subject of the Asset Acquisition or asset sale or other disposition
during the Four Quarter Period) occurring during the Four Quarter Period or at
any time subsequent to the last day of the Four Quarter Period and on or prior
to the Transaction Date, as if such asset sale or other disposition or asset
origination, asset purchase, Investment or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness)
occurred on the first day of the Four Quarter Period.  If such Person or any of its Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if such Person or
any Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness.

 

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

 

(1)           Consolidated
Interest Expense; plus

 

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

 

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

 

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

 

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

 

“Consolidated
Net Income” means, with respect to any Person, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries before the
payment of dividends on

 

6

 

Preferred Stock for such period on a
consolidated basis, determined in accordance with GAAP; provided that there shall be
excluded therefrom:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

each case, upon the occurrence of a Change of
Control) on or prior to the final maturity date of the Notes.

 

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

 

“Exchange
Notes” means the 5.70% Senior Notes due 2014 to be issued in
exchange for (1) the Initial Notes pursuant to the Registration Rights
Agreement and (2) the Additional Notes, if any, issued under Section 2.02
pursuant to a registration rights agreement substantially similar to the Registration
Rights Agreement.

 

“Exchange
Offer” means the Exchange Offer as defined in the Registration
Rights Agreement.

 

“Exchange
Offer Registration Statement” means the Exchange Offer Registration
Statement as defined in the Registration Rights Agreement.

 

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

 

“Euroclear”
means the Euroclear System.

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

“IAI Global
Note(s)” means one or more Global Notes in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

 

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

 

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

 

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

 

(3)           all Capitalized
Lease Obligations of such Person;

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

“Initial
Notes” means the $250.0 million principal amount of  5.70%
Senior Notes due 2014 of the Company issued on the Issue Date.

 

“Institutional
Accredited Investor” means an institution that is an “accredited
investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act that is not also a QIB.

 

“Interest
Payment Date” means March 1 and September 1 of each year commencing
September 1, 2004.

 

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

 

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

 

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

 

“Issue Date”
means March 9, 2004, the date of original issuance of the Initial Notes.

 

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

 

“Maturity”
when used with respect to the Notes means the date on which the principal of
the Notes becomes due and payable as therein provided or as provided in this
Indenture, whether

 

12

 

at Stated Maturity or on a redemption date or
pursuant to a Change of Control Offer, and whether by declaration of
acceleration, call for redemption, purchase or otherwise.

 

“Measurement
Date” means August 16, 2001.

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

“144A Global
Note(s)” means one or more Global Notes in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

 

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

 

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

 

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

 

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

 

(1)           Indebtedness
under:  (a) the Initial Notes, (b) the
Company’s $350.0 million aggregate principal amount of 4.875% Senior Notes due
2009 that were issued on January 23, 2004, (c) the Company’s $350.0 million
aggregate principal amount of 6.0% Senior Notes due 2010 that were issued on
December 12, 2003, (d) the Company’s $150.0 million aggregate principal amount
of 6.5% Senior Notes due 2013 that were issued on December 12, 2003, (e) the
Company’s $350.0 million aggregate principal amount of 83⁄4% Senior Notes due
2008 that were issued on the Measurement Date and (f)

 

14

 

the $185.0
million aggregate principal amount of 7.0% Senior Notes due 2008 that were issued
in March and April of 2003;

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

(8)           Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within two business days of incurrence;

 

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

 

(10)         Refinancing
Indebtedness; and

 

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

 

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

 

“Permitted
Liens” means the following types of Liens:

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(11)         Liens securing
Indebtedness under Currency Agreements.

 

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

 

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

 

17

 

“Private
Placement Legend” means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.

 

“QIB”
means a “qualified institutional buyer” as defined in Rule 144A.

 

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

 

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

 

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

 

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

 

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

 

“Registrable
Notes” has the meaning given such term in the Registration Rights
Agreement.

 

“Registration
Rights Agreement” means the Registration Rights Agreement dated as
of the date hereof by and among the Company and the initial purchasers named
therein as the same may be amended or supplemented from time to time.

 

“Regulation S”
means Regulation S promulgated under the Securities Act.

 

“Regulation S
Global Note(s)” means one or more Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or

 

18

 

on behalf of, and registered in the name of,
the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes sold in reliance on,
Regulation S.

 

“REIT”
means Real Estate Investment Trust.

 

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

 

“Restricted
Definitive Note” means a Definitive Note bearing the Private
Placement Legend.

 

“Restricted
Global Note” means a Global Note bearing the Private Placement Legend.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act.

 

“Rule 903”
means Rule 903 promulgated under the Securities Act.

 

“Rule 904”
means Rule 904 promulgated under the Securities Act.

 

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

 

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

 

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

 

“Shelf
Registration Statement” means the Shelf Registration Statement as
defined in the Registration Rights Agreement.

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Unrestricted
Definitive Note” means one or more Definitive Notes that do not bear
and are not required to bear the Private Placement Legend.

 

20

 

“Unrestricted
Global Note” means a Global Note in the form of Exhibit A attached
hereto that bears the Global Note Legend and that has the “Schedule of
Exchanges of Interests in the Global Note” attached thereto, but that does not
bear the Private Placement Legend, and that is deposited with or on behalf of,
and registered in the name of, the Depositary or its nominee.

 

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

 

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

 

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

 

Section 1.02.  Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.10

  
	
  “Authentication
  Order”

  	
   

  	
  2.02

  
	
  “Change of
  Control Date”

  	
   

  	
  4.13

  
	
  “Change of
  Control Payment Date”

  	
   

  	
  4.13

  
	
  “Change of
  Control Offer”

  	
   

  	
  4.13

  
	
  “Change of
  Control Purchase Date”

  	
   

  	
  4.13

  
	
  “Change of
  Control Purchase Price”

  	
   

  	
  4.13

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.03

  
	
  “DTC”

  	
   

  	
  2.03

  
	
  “Event of
  Default”

  	
   

  	
  6.01

  
	
  “incur”

  	
   

  	
  4.09

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.02

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Redemption
  Date”

  	
   

  	
  3.07

  
	
  “Restricted
  Payment”

  	
   

  	
  4.07

  
	
  “Surviving
  Entity”

  	
   

  	
  5.01

  

 

21

 

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

 

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

 

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

 

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

 

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

 

(c)           “or”
is not exclusive;

 

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

 

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

 

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

 

ARTICLE 2

THE NOTES

 

Section 2.01.  Form and Dating

 

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

 

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

 

22

 

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

 

(c)           Euroclear and Clearstream Procedures Applicable.  The provisions of the “Operating
Procedures of the Euroclear System” and “Terms and Conditions Governing Use of
Euroclear” and the “General Terms and Conditions of Clearstream” and “Customer
Handbook” of Cedel Bank (as adopted by Clearstream) and any alternative or
additional procedures from time to time adopted by Euroclear or Clearstream
shall be applicable to transfers of beneficial interests in the Regulation S
Global Notes that are held by Participants through Euroclear or Clearstream.

 

(d)           Book-Entry Provisions.  Participants and Indirect Participants shall
have no rights either under this Indenture or under any Global Note with
respect to such Global Note held on their behalf of the custodian for the
Depositary.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any Agent
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants, the operation of customary practices of the Depositary governing
the exercise of the rights of an owner of a beneficial interest in any Global
Note.

 

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

 

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

 

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

 

The Trustee
shall, upon a written order of the Company signed by one or more Officers (an “Authentication
Order”), authenticate Notes for original issue on the Issue Date in
aggregate principal amount not to exceed $250,000,000 (other than as provided
in Section 2.07).  The Trustee shall
authenticate Additional Notes thereafter (so long as permitted by the terms of
this Indenture)

 

23

 

for original issue upon one or more
Authentication Orders in aggregate principal amount as specified in such order
(other than as provided in Section 2.07). 
Each such Authentication Order shall specify the amount of Notes to be
authenticated, whether the Notes are to be Initial Notes, Additional Notes or
Exchange Notes and whether the Notes are to be issued as Definitive Notes or
Global Notes or such other information as the Trustee shall reasonably request.

 

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

 

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

 

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

 

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

 

Section 2.04.  Paying Agent to Hold Money in Trust.  The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal, premium, if any, or interest on the Notes,
and will notify the Trustee in writing of any default by the Company in making
any such payment.  While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee.  The Company at
any time may require a Paying Agent to pay all money held by it to the
Trustee.  Upon payment over to the
Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. 
If the Company or a Subsidiary acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.  Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Notes.

 

24

 

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

 

Section 2.06.  Transfer and Exchange

 

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

 

(b)           Transfer and Exchange of Beneficial Interests in the
Global Notes.  The transfer
and exchange of beneficial interests in the Global Notes shall be effected
through the Depositary, in accordance with the provisions of this Indenture and
the Applicable Procedures.  Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act.  Transfers of beneficial
interests in the Global Notes also shall require compliance with either subparagraph
(i) or (ii) below, as applicable, as well as one or more of the other following
subparagraphs, as applicable:

 

(i)            Transfer of
Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted
Global Note may be transferred to Persons who take delivery thereof in the form
of a beneficial interest in the same Restricted Global Note in accordance with
the transfer restrictions set forth in the Private Placement Legend.  Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery

 

25

 

thereof in the
form of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.06(b)(i).

 

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

 

(iii)          Transfer of
Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any
Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note
if the transfer complies with the requirements of Section 2.06(b)(ii) above and
the Registrar receives the following:

 

(A)          if the transferee
will take delivery in the form of a beneficial interest in the 144A Global
Note, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;

 

(B)           if the transferee
will take delivery in the form of a beneficial interest in the Regulation S
Global Note, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof; and

 

26

 

(C)           if the transferee
will take delivery in the form of a beneficial interest in the IAI Global Note,
then the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of Counsel required
by item (3)(d) thereof, if applicable.

 

(iv)          Transfer and Exchange of Beneficial
Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted
Global Note.  A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:

 

(A)          such exchange or
transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the
Company;

 

(B)           such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar receives
the following:

 

(1)           if the holder of
such beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or

 

(2)           if the holder of
such beneficial interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in item
(4) thereof;

 

and, in each
such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or
transfer

 

27

 

is in
compliance with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.

 

If any such
transfer or exchange is effected pursuant to this clause (iv) at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of
beneficial interests transferred or exchanged pursuant to this clause (iv).

 

Beneficial
interests in an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a beneficial
interest in a Restricted Global Note.

 

(c)           Transfer or Exchange of Beneficial Interests for Definitive
Notes.

 

(i)            Beneficial Interests
in Restricted Global Notes to Restricted Definitive Notes.  If any holder of a beneficial
interest in a Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Restricted
Definitive Note, then, upon receipt by the Registrar of the following
documentation:

 

(A)          if the holder of such
beneficial interest in a Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (2)(a)
thereof;

 

(B)           if such beneficial
interest is being transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;

 

(C)           if such beneficial
interest is being transferred to a Non-U.S. Person in an offshore transaction
in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications in
item (2) thereof;

 

(D)          if such beneficial
interest is being transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;

 

(E)           if such beneficial
interest is being transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through

 

28

 

(D)          above, a certificate
to the effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable;

 

(F)           if such beneficial
interest is being transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or

 

(G)           if such beneficial
interest is being transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,

 

the Trustee
shall cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person designated
in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c) shall be registered in such name or names and in such authorized denomination
or denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant.  The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered.  Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject
to all restrictions on transfer contained therein.

 

(ii)           Beneficial
Interests in Restricted Global Notes to Unrestricted Definitive Notes.  A holder of a beneficial interest
in a Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:

 

(A)          such exchange or
transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such beneficial interest, in
the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company;

 

(B)           such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

29

 

(D)          the Registrar receives
the following:

 

(1)           if the holder of
such beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b) thereof; or

 

(2)           if the holder of
such beneficial interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the form of
a Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

 

and, in each
such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

(iii)          Beneficial
Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.  If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount.  Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. 
The Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered.  Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.

 

(d)           Transfer and Exchange of Definitive Notes for Beneficial
Interests.

 

(i)            Restricted
Definitive Notes to Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive

 

30

 

Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the following
documentation:

 

(A)          if the Holder of such
Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

 

(B)           if such Restricted
Definitive Note is being transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

 

(C)           if such Restricted
Definitive Note is being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;

 

(D)          if such Restricted
Definitive Note is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;

 

(E)           if such Restricted
Definitive Note is being transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)(d)
thereof, if applicable;

 

(F)           if such Restricted
Definitive Note is being transferred to the Company or any of its Subsidiaries,
a certificate to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or

 

(G)           if such Restricted
Definitive Note is being transferred pursuant to an effective registration
statement under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c) thereof,

 

the Trustee
shall cancel the Restricted Definitive Note, increase or cause to be increased
the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A
Global Note, in the case of clause (C) above, the Regulation S Global Note, and
in all other cases, the IAI Global Note.

 

31

 

(ii)           Restricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of a Restricted Definitive
Note may exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:

 

(A)          such exchange or
transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;

 

(B)           such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           such transfer is
effected by a Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar receives
the following:

 

(1)           if the Holder of
such Definitive Notes proposes to exchange such Notes for a beneficial interest
in the Unrestricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(c) thereof; or

 

(2)           if the Holder of
such Definitive Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

 

and, in each
such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

Upon
satisfaction of the conditions of any of the subparagraphs in this Section
2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or
cause to be increased the aggregate principal amount of the Unrestricted Global
Note.

 

32

 

(iii)          Unrestricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time.  Upon receipt
of a request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.

 

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

 

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

 

(i)            Restricted
Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be transferred to
and registered in the name of Persons who take delivery thereof in the form of
a Restricted Definitive Note if the Registrar receives the following:

 

(A)          if the transfer will
be made pursuant to Rule 144A under the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

 

(B)           if the transfer will
be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item (2) thereof; and

 

(C)           if the transfer will
be made pursuant to any other exemption from the registration requirements of
the Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.

 

33

 

(ii)           Restricted
Definitive Notes to Unrestricted Definitive Notes.  Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted Definitive
Note if:

 

(A)          such exchange or
transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;

 

(B)           any such transfer is
effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           any such transfer is
effected by a Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar receives
the following:

 

(1)           if the Holder of
such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or

 

(2)           if the Holder of
such Restricted Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

 

and, in each
such case set forth in this subparagraph (D), if the Registrar so requests, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.

 

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

 

34

 

(f)            Exchange Offer. 
Upon the occurrence of the Exchange Offer in accordance with
the Registration Rights Agreement, the Company shall issue and, upon receipt of
an Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in
the applicable Letters of Transmittal that (x) they are not broker-dealers,
(y) they are not participating in a distribution of the Exchange Notes and
(z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer.  Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Company shall execute
and the Trustee shall authenticate and deliver to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.

 

(g)           Legends.  The
following legends shall appear on the face of all Global Notes and Definitive
Notes issued under this Indenture unless specifically stated otherwise in the
applicable provisions of this Indenture.

 

(i)            Private
Placement Legend.

 

(A)          Except as permitted
by subparagraph (B) below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:

 

“THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW.  BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS
DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN
“ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT,

 

35

 

PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS
SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.  IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES”
AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.”

 

(B)           Notwithstanding the
foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or substitution thereof)
shall not bear the Private Placement Legend.

 

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

 

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY
(AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH

 

36

 

NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV)
THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY.”

 

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

 

(i)            General Provisions Relating to Transfers and
Exchanges.

 

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

 

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

 

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

 

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

 

37

 

as the Global
Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

the special record date, the Company (or, upon the written request of
the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.

 

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

 

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

 

ARTICLE 3

REDEMPTION AND PREPAYMENT

 

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

 

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

 

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

 

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

 

No Notes of a
principal amount of $1,000 or less shall be redeemed in part.

 

40

 

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

 

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

 

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

 

(a)           the
redemption date;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

Section 3.07. 
Optional Redemption. 
At any time on or prior to March 1, 2014, the Notes may be redeemed or
purchased in whole but not in part at the Company’s option at a price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and accrued
but unpaid interest, if any, to, the date of redemption or purchase (the “Redemption
Date”) (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).

 

“Applicable
Premium” means, with respect to a Note at any Redemption Date, the
greater of:  (1) 1.0% of the
principal amount of such Note; and (2) the excess of (a) the present value
at such Redemption Date of (i) the principal amount of such Note on March
1, 2014 plus (ii) all required remaining scheduled interest payments due
on such Note through March 1, 2014, computed using a discount rate equal to the
Treasury Rate plus 50 basis points; over (b) the principal amount of such
Note on such Redemption Date. 
Calculation of the Applicable Premium will be

 

42

 

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

 

“Treasury
Rate” means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least
two Business Days prior to such Redemption Date (or, if such Statistical
Release is no longer published, any publicly available source of similar market
data)) most nearly equal to the period from such Redemption Date to March 1,
2014; provided,
however,
that if the period from such Redemption Date to March 1, 2014 is not equal to
the constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to March 1, 2014 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

 

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

 

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

 

ARTICLE 4

 

COVENANTS

 

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

 

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

 

Section 4.02.  Maintenance of Office or Agency.  The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may be an office of

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

45

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(y)                                 without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity

 

46

 

contribution received by the Company from a holder of the Company’s
Capital Stock.

 

The foregoing
provisions do not prohibit:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

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

 

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

 

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

 

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

 

(a)           applicable law;

 

(b)           this
Indenture;

 

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

 

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

 

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

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding
the foregoing, the Company shall not permit TriNet Corporate Realty
Trust, Inc. (“TriNet”) or any of its Subsidiaries to
incur Indebtedness (as defined in the indenture governing TriNet’s outstanding
publicly-held debt securities on the Measurement Date) if, immediately after
giving effect to the incurrence of such Indebtedness and the application of the
proceeds thereof, the aggregate principal amount of all outstanding
Indebtedness of TriNet and its Subsidiaries on a consolidated basis determined
in accordance with GAAP is greater than 55% of the sum of (without
duplication):  (1) the Total Assets
(as defined in the indenture governing TriNet’s outstanding publicly-held debt
securities on the Measurement Date) of TriNet and its Subsidiaries as of the
end of the calendar quarter covered in TriNet’s Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the

 

49

 

Commission (or, if such filing is not
permitted under the Exchange Act, with the Trustee) prior to the incurrence of
such additional Indebtedness; and (2) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce Indebtedness),
by TriNet or any Subsidiary of TriNet since the end of such calendar quarter,
including those proceeds obtained in connection with the incurrence of such
additional Indebtedness.  The above
limitation shall terminate immediately upon TriNet ceasing to exist as a Subsidiary
of the Company as a result of a merger or consolidation of TriNet with the
Company or the sale, transfer, disposition or distribution of all or
substantially all of TriNet’s assets to the Company.

 

Section 4.10.  Limitation on Transactions with Affiliates.  The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an “Affiliate
Transaction”), other than: 
(1) Affiliate Transactions permitted as described below; and
(2) Affiliate Transactions on terms that are no less favorable than those
that might reasonably have been obtained in a comparable transaction at such
time on an arm’s-length basis from a Person that is not an Affiliate of the Company
or such Subsidiary.

 

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

 

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

 

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

 

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

 

50

 

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

 

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

 

(5)           any agreement as in
effect as of the Measurement Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Measurement Date; and

 

(6)           Restricted Payments
permitted by Section 4.07.

 

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

 

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

 

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

 

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

 

(b)           Liens securing the
Notes;

 

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

 

(d)           Permitted Liens.

 

51

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.15.  Conduct of Business.  The Company and its Subsidiaries shall
engage primarily in the financing and real-estate related businesses
contemplated by Article III(b) of the

 

53

 

Company’s Amended and Restated Charter as in effect on the Measurement
Date and other activities related to or arising out of those activities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

Section 4.20.  Registration Rights.  (a)  The Company agrees that the
Holders (and any Person that has a beneficial interest in a Note) from time to
time of Registrable Notes are entitled to the benefits of the Registration
Rights Agreement.  Pursuant to the
Registration Rights Agreement, the Company has agreed for the benefit of the
Holders from time to time of Registrable Notes, at the Company’s expense, to
file an Exchange Offer Registration Statement with respect to an Exchange Offer
to exchange the Notes for Exchange Notes of the Company, which Exchange Notes
will have terms substantially identical in all material respects to the
Notes.  In certain circumstance, the Company
may be required by the terms of the Registration Rights Agreement to file a
Shelf Registration Statement covering resales of the Notes.

 

(b)           Any amounts of Additional Interest
due pursuant to the Registration Rights Agreement shall be payable in cash on
the regular Interest Payment Dates.

 

Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of, premium, if any, or interest on, or in respect of, any Note, such mention
shall be deemed to include mention of the payment of Additional Interest
provided for in this Section 4.20.

 

55

 

Section 4.21.  Additional Interest.  If Additional Interest is payable pursuant
to the Registration Rights Agreement, the Company shall deliver to the Trustee
a certificate to that effect stating the amount of such Additional Interest
that is payable.

 

ARTICLE 5

 

SUCCESSORS

 

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

 

(1)           either:

 

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

 

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

 

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

 

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

 

(2)           immediately after
giving effect to such transaction and the assumption contemplated by
clause (1)(b)(ii) above (including giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction), the Company or such Surviving Entity, as
the case may be:  (a) shall have a
Consolidated Net

 

56

 

Worth equal to
or greater than the Consolidated Net Worth of the Company immediately prior to
such transaction; and (b) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.09 hereof; provided, however, that this
clause (2) shall not apply in the event of a transaction between the Company
and TriNet;

 

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

 

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

 

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

 

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

 

57

 

ARTICLE 6

DEFAULTS AND
REMEDIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

(d)           the Company or any
Significant Subsidiary:

 

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

 

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

 

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

 

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

 

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

 

59

 

acceleration” (the “Acceleration Notice”), and the same shall
become immediately due and payable.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.04.  Waiver of Past Defaults.  Holders of not less than a majority in
aggregate principal amount of the then outstanding Notes by notice in writing
to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences

 

60

 

hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes (including
in connection with a Change of Control Offer or other offer to purchase) (provided,
however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Notes may rescind an acceleration and its consequences, including any
related payment default that resulted from such acceleration).  Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

Section 6.09.  Trustee May File Proofs of Claim.  The Trustee is authorized to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent in writing to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07
hereof.  To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.  Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

ARTICLE 7

 

TRUSTEE

 

Section 7.01.  Duties of Trustee.  (a)  If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

 

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

 

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

 

(ii)                                  the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture
in the absence of bad faith on the Trustee’s part; provided, however,
that the Trustee shall examine the certificates and opinions to determine
whether or not they substantially conform to the requirements of this
Indenture.

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                 The
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of
not less than a majority in principal amount of the Notes at the time
outstanding given pursuant to Section 6.05 of this Indenture, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee under this Indenture.

 

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

 

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

 

64

 

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

 

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

 

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

 

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

 

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise deal with the Company
or any Affiliate of the Company with the same rights it would have if it were
not Trustee.  Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like
rights.  However, the Trustee must
comply with Sections 7.10 and 7.11 hereof.

 

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

 

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

 

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

 

65

 

manner and to the extent provided in TIA § 313(c).  The Trustee also will comply with TIA
§ 313(b).

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.08.  Replacement of Trustee.  The Trustee may resign at any time by so
notifying the Company.  The Holders of a
majority in aggregate principal amount of the then

 

66

 

outstanding Notes may remove the Trustee by so notifying the Trustee
and the Company and may appoint a successor Trustee.  The Company may remove the Trustee if:

 

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

 

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

 

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

 

(d)                                 the
Trustee becomes incapable of acting.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

Section 7.10.  Eligibility; Disqualification.  The Trustee will at all times satisfy the requirements
of TIA § 310(a).  The Trustee will
at all times have (or shall be a member of a bank holding company system whose
parent corporation has) a combined capital and surplus of at least $50,000,000
as set forth in its most recently published annual report of condition, which
will be deemed for this paragraph to be its combined capital and surplus.  The Trustee will comply with TIA
§ 310(b).

 

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

 

ARTICLE 8

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

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

 

Section 8.02.  Legal Defeasance and Discharge.  Upon the Company’s exercise under
Section 8.01 hereof of the option applicable to this Section 8.02,
the Company shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be deemed to have been discharged from its obligations
with respect to all outstanding Notes on the date the conditions set forth
below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be “outstanding” only for the purposes of Section 8.05 hereof
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all its other obligations under such Notes and this Indenture
(and the Trustee, on written demand of and at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder:  (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set

 

68

 

forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (b) the
Company’s obligations with respect to such Notes under Article 2 and
Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company’s obligations in connection therewith
and (d) this Article 8.  Subject to
compliance with this Article 8, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

 

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

 

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

 

In order to exercise either Legal Defeasance or Covenant Defeasance:

 

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

 

69

 

(b)                                 in
the case of an election under Section 8.02 hereof, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
(ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;

 

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

 

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

 

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

 

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

 

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

 

(h)                                 the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that, assuming no intervening bankruptcy of the Company between the date of
deposit and the 91st day following the date of deposit and that no Holder is an
insider of the Company, after the 91st day following the date of deposit, the
trust funds will not be

 

70

 

subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally.

 

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

 

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

 

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

 

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

 

Section 8.06.  Repayment to Company.  Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its written request or (if then
held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided,
however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
New York
Times and The Wall Street Journal

 

71

 

(national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.

 

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

 

ARTICLE 9

 

AMENDMENT, SUPPLEMENT AND WAIVER

 

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

 

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

 

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

 

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

 

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

 

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

 

72

 

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

 

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

 

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

 

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

 

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

 

After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amended or supplemental Indenture or waiver.  Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in

 

73

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

74

 

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

 

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

 

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

 

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

 

ARTICLE 10

 

SATISFACTION AND DISCHARGE

 

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

 

(a)                                  either:

 

(i)                                     all
the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for whose payment
money has theretofore been deposited in trust or segregated and held in trust
by the Company and thereafter repaid to the Company or discharged from such
trust) have been delivered to the Trustee for cancellation; or

 

(ii)                                  all
Notes not theretofore delivered to the Trustee for cancellation have become due
and payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the

 

75

 

Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be;

 

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

 

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

 

Section 10.02.  Application of Trust Money.  Subject to the provisions of
Section 8.06, all money deposited with the Trustee pursuant to
Section 10.01 shall be held in trust and applied by it, in accordance with
the provisions of the Notes and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

 

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

 

ARTICLE 11

 

MISCELLANEOUS

 

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

 

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

 

76

 

If to the Company:

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

Facsimile:  (212) 930-9494

Attention:  Chief Executive Officer

 

With a copy to:

Clifford Chance US LLP

200 Park Avenue, 52nd Floor

New York, NY  10166-0153

Facsimile:  (212) 878-8375

Attention:  Kathleen L. Werner, Esq.

 

If to the Trustee:

U.S. Bank Trust National Association

100 Wall Street, 19th Floor

New York, NY 10005

Attention:  Angelita Pena, Corporate
Trust Department

 

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

 

All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given:  at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.

 

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

 

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

 

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

 

77

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 11.07.  No Personal Liability of Directors,
Officers, Employees and Stockholders.  No past, present or future director, officer, employee,
incorporator or stockholder of the

 

78

 

Company, as such, shall have any liability for any obligations of the
Company under the Notes, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and
releases all such liability.  The waiver
and release are part of the consideration for issuance of the Notes.

 

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

 

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

 

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

 

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

 

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

 

Section 11.13.  Table of Contents, Headings, etc.  The Table of Contents, Cross-Reference Table
and Headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a part of this
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.

 

[Signatures on following page]

 

79

 

SIGNATURES

 

Dated as of March 9, 2004

 

	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK TRUST NATIONAL ASSOCIATION, not
  in its individual capacity, but solely as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

[Face of Note]

 

[Insert the Global
Note Legend and/or Private Placement Legend, if applicable pursuant to the
provisions of the Indenture]

 

CUSIP/CINS
[                    ]

 

5.70% Senior Notes due 2014

 

	
  No.         

  	
   

  	
  $                       

  

 

iSTAR FINANCIAL INC.

 

promises to
pay to
                                ,
or registered assigns, the principal sum of       Dollars
on March 1, 2014.

 

Interest Payment Dates:  March 1 and September 1

 

Record Dates:  February 15 and August 15

 

Dated: 
[                    ]

 

	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

SEAL

 

This is one of the Notes
referred to

in the within-mentioned Indenture:

 

	
   

  
	
  U.S. BANK
  TRUST NATIONAL ASSOCIATION

  as Trustee

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  

 

 

[Back of Note]

5.70% Senior Notes due 2014

 

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

 

1.  INTEREST. 
iStar Financial Inc., a Maryland corporation (the “Company”), promises to pay
interest on the principal amount of this Note at 5.70% per annum from March 9,
2004 until maturity.  The Company will
pay interest semi-annually in arrears on March 1 and September 1 of each year,
or if any such day is not a Business Day, on the next succeeding Business Day
(each an “Interest
Payment Date”).  Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from March 9, 2004; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment
Date shall be September 1, 2004.  The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

 

2.  METHOD OF PAYMENT.  The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the February 15 and August 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest.  The Notes will be payable as to principal, premium, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, and premium, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. 
Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  The Company reserves the
right to pay interest to Holders of Notes by check mailed to such Holders at
their registered addresses or by wire transfer to Holders of at least $5
million aggregate principal amount of Notes.

 

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

 

A-2

 

4.  INDENTURE.  The Company issued the Notes under an Indenture dated as of March
9, 2004 (the “Indenture”) between the Company and the Trustee.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.  The Notes are obligations of the
Company.  The Company is issuing $250.0
million in aggregate principal amount on the Issue Date and may issue Additional
Notes in accordance with the terms of the Indenture.

 

5.  OPTIONAL REDEMPTION.

 

At any time on
or prior to March 1, 2014, the Notes may be redeemed or purchased in whole but
not in part at the Company’s option at a price equal to 100% of the principal
amount thereof plus the Applicable Premium as of, and accrued but unpaid
interest, if any, to, the date of redemption or purchase (the “Redemption
Date”) (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date).  Such redemption or purchase may
be made upon notice mailed by first-class mail to each Holder’s registered
address, not less than 30 nor more than 60 days prior to the Redemption
Date.

 

“Applicable
Premium” means, with respect to a Note at any Redemption Date, the
greater of:  (1) 1.0% of the
principal amount of such Note; and (2) the excess of (a) the present value
at such Redemption Date of (i) the redemption price of such Note on March
1, 2014 plus (ii) all required remaining scheduled interest payments due
on such Note through March 1, 2014, computed using a discount rate equal to the
Treasury Rate plus 50 basis points; over (b) the principal amount of such
Note on such Redemption Date. 
Calculation of the Applicable Premium will be made by the Company or on
behalf of the Company by such Person as the Company shall designate; provided,
however,
that such calculation shall not be a duty or obligation of the Trustee.

 

“Treasury
Rate” means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least
two Business Days prior to such Redemption Date (or, if such Statistical
Release is no longer published, any publicly available source of similar market
data)) most nearly equal to the period from such Redemption Date to March 1,
2014; provided,
however,
that if the period from such Redemption Date to March 1, 2014 is not equal to
the constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are given,
except that if the period from such Redemption Date to March 1, 2014 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

 

A-3

 

6.  MANDATORY REDEMPTION.

 

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

 

7.  REPURCHASE AT OPTION OF HOLDER.

 

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

 

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

 

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

 

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

 

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

 

A-4

 

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

 

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

 

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

 

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

 

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

 

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

 

A-5

 

18.  ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have all the rights set forth in the Registration Rights Agreement dated
as of March 9, 2004, between the Company and the parties named on the signature
pages thereof (the “Registration Rights Agreement”).

 

A-6

 

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

 

iStar Financial Inc.

1114 Avenue of the Americas,
27th Floor

New York, NY  10036

Attention:  Investor Relations

 

A-7

 

ASSIGNMENT
FORM

 

To assign this
Note, fill in the form below:

 

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

  	
   

  
	
  (Insert assignee’s legal name)

  
	
   

  
	
   

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

  
	
   

  
	
   

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

  
	
   

  
	
  and
  irrevocably appoint                                                                                                                                                                                  

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

  

 

	
  Date: 

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on the face of this Note)

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  	
   

  
						

 

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

 

A-8

 

OPTION OF HOLDER TO ELECT PURCHASE

 

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

 

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

 

$                

 

	
  Date: 

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on the face of this Note)

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  	
   

  
							

 

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

 

A-9

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

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

 

	
  Date of Exchange

  	
   

  	
  Amount of

  decrease in

  Principal Amount

  of this Global Note

  	
   

  	
  Amount of

  increase in

  Principal Amount

  of this Global Note

  	
   

  	
  Principal
  Amount

  of this Global Note

  following such de-

  crease

  (or increase)

  	
   

  	
  Signature
  of au-

  thorized officer of

  Trustee or Note

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-10

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

 

[Registrar address block]

 

Re:                               5.70%
Senior Notes due 2014

 

Reference is
hereby made to the Indenture, dated as of March 9, 2004 (the “Indenture”),
between iStar Financial Inc., a Maryland corporation, as issuer (the “Company”)
and U.S. Bank Trust National Association, as trustee.  Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

 

                             ,
(the “Transferor”)
owns and proposes to transfer the Note[s] or interest in such Note[s] specified
in Annex A hereto, in the principal amount of
$                     
in such Note[s] or interests (the “Transfer”), to
                                                    
(the “Transferee”),
as further specified in Annex A hereto. 
In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.  o  Check if Transferee will take delivery of a beneficial
interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A.  The Transfer is being effected pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Definitive Note for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is
a “qualified institutional buyer” within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the
United States.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the applicable 144A Global Note and/or the applicable Definitive Note and in
the Indenture and the Securities Act.

 

2.  o  Check if Transferee will take delivery of a beneficial
interest in the Regulation S Global Note or a Definitive Note pursuant to
Regulation S.  The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and,

 

B-1

 

accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither such Transferor nor any
Person acting on its behalf knows that the transaction was prearranged with a
buyer in the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act.  Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the applicable Regulation
S Global Note and/or the applicable Definitive Note and in the Indenture and
the Securities Act.

 

3.  o  Check and complete if Transferee will take delivery of
a beneficial interest in the IAI Global Note or a Definitive Note pursuant to
any provision of the Securities Act other than Rule 144A or Regulation S.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Notes and Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any
state of the United States, and accordingly the Transferor hereby further
certifies that (check one):

 

(a)           o  such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)           o  such Transfer is being effected to the
Company or a subsidiary thereof;

 

or

 

(c)           o  such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act;

 

or

 

(d)           o  such Transfer is being effected to an
Institutional Accredited Investor and pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, Rule 144
or Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D under
the Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate

 

B-2

 

executed by the Transferee in the form of Exhibit D to the Indenture
and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act.  Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the applicable IAI Global Note and/or the applicable Definitive Notes and in
the Indenture and the Securities Act.

 

4.  o  Check if Transferee will take delivery of a beneficial
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

 

(a)  o  Check if Transfer is pursuant to Rule 144.  (i) The Transfer is being effected pursuant
to and in accordance with Rule 144 under the Securities Act and in compliance
with the transfer restrictions contained in the Indenture and any applicable
blue sky securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities
Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(b)  o  Check if Transfer is Pursuant to Regulation S.  (i) The Transfer is being effected pursuant
to and in accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any state of the United States and (ii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act.  Upon consummation of
the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(c)  o  Check if Transfer is Pursuant to Other Exemption.  (i) The Transfer is being effected pursuant
to and in compliance with an exemption from the registration requirements of
the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance
with the transfer restrictions contained in the Indenture and any applicable
blue sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities
Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the

 

B-3

 

Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

 

This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

 

	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
  Dated: 

  	
   

  	
   

  
					

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.             The Transferor owns and proposes to
transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)  o  a beneficial interest in the:

 

(i)            o  144A Global Note (CUSIP
             ),
or

 

(ii)           o  Regulation S Global Note (CUSIP
             ),
or

 

(iii)          o  IAI Global Note (CUSIP
             );
or

 

(b)  o  a Restricted Definitive Note.

 

2.             After the Transfer the Transferee
will hold:

 

[CHECK ONE]

 

(a)  o  a beneficial interest in the:

 

(i)            o  144A Global Note (CUSIP
             ),
or

 

(ii)           o  Regulation S Global Note (CUSIP
             ),
or

 

(iii)          o  IAI Global Note (CUSIP
             ),
or

 

(iv)          o  Unrestricted Global Note (CUSIP
             );
or

 

(b)  o  a Restricted Definitive Note; or

 

(c)  o  an Unrestricted Definitive Note,

 

in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

 

[Registrar address block]

 

Re:                               5.70%
Senior Notes due 2014

 

(CUSIP
               )

 

Reference is
hereby made to the Indenture, dated as of March 9, 2004 (the “Indenture”),
between iStar Financial Inc., a Maryland corporation, as issuer (the “Company”)
and U.S. Bank Trust National Association, as trustee.  Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

 

                                              ,
(the “Owner”)
owns and proposes to exchange the Note[s] or interest in such Note[s] specified
in Annex A hereto, in the principal amount of
$                           
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:

 

1.             Exchange of Restricted Definitive
Notes or Beneficial Interests in a Restricted Global Note for Unrestricted
Definitive Notes or Beneficial Interests in an Unrestricted Global Note

 

(a)  o  Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note.  In connection with the Exchange of the
Owner’s beneficial interest in a Restricted Global Note for a beneficial interest
in an Unrestricted Global Note in an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended
(the “Securities
Act”), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

 

(b)  o  Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note.  In connection with the Exchange of the
Owner’s

 

C-1

 

beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

 

(c)  o  Check if Exchange is from Restricted Definitive Note
to beneficial interest in an Unrestricted Global Note.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for a beneficial interest in an Unrestricted Global
Note, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

 

(d)  o  Check if Exchange is from Restricted Definitive Note
to Unrestricted Definitive Note. 
In connection with the Owner’s Exchange of a Restricted Definitive Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Unrestricted Definitive Note is being acquired for the Owner’s own account
without transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

 

2.             Exchange of Restricted Definitive
Notes or Beneficial Interests in Restricted Global Notes for Restricted
Definitive Notes or Beneficial Interests in Restricted Global Notes

 

(a)  o  Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive
Note with an equal principal amount, the Owner hereby certifies that the
Restricted Definitive Note is being acquired for the Owner’s own account
without transfer.  Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Definitive
Note and in the Indenture and the Securities Act.

 

C-2

 

(b)  o  Check if Exchange is from Restricted Definitive Note
to beneficial interest in a Restricted Global Note.  In connection with the Exchange of the
Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
 ̈ 144A Global Note,  ̈ Regulation S Global Note,   ̈ IAI Global Note with an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in compliance
with any applicable blue sky securities laws of any state of the United
States.  Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Note and
in the Indenture and the Securities Act.

 

C-3

 

This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

 

	
   

  	
  [Insert Name of Owner]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
  Dated: 

  	
   

  	
   

  
					

 

C-4

 

ANNEX A TO
CERTIFICATE OF EXCHANGE

 

1.             The Owner currently owns and
proposes to exchange the following:

 

[CHECK ONE]

 

(a)           o            a beneficial interest in the:

 

(i)            o            144A Global Note (CUSIP
                ),
or

 

(ii)           o            Regulation S Global Note (CUSIP
                ),
or

 

(iii)          o            IAI Global Note (CUSIP
                ),
or

 

(b)           o            a Restricted Definitive Note.

 

2.             After the exchange the Owner will
hold:

 

[CHECK ONE]

 

(a)           a beneficial interest in the:

 

(i)            o            144A Global Note (CUSIP
                ),
or

 

(ii)           o            Regulation S Global Note (CUSIP
                ),
or

 

(iii)          o            IAI Global Note (CUSIP                 ),
or

 

(iv)          o                            Unrestricted Global
Note (CUSIP
                ),
or

 

(b)           o            a Restricted Definitive Note; or

 

(c)           o            an Unrestricted Definitive Note.

 

3.             The Owner requests that Definitive
Notes be registered in the following name:

 

                           

 

                           

 

and sent to
the Owner at the following address:

 

                           

 

                           

 

C-5

 

EXHIBIT D

 

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

iStar Financial Inc.

1114 Avenue of the Americas, 27th Floor

New York, NY  10036

 

[Registrar address block]

 

Re:          5.70% Senior Notes due 2014

 

Reference is
hereby made to the Indenture, dated as of March 9, 2004 (the “Indenture”),
between iStar Financial Inc., a Maryland corporation, as issuer (the “Company”)
and U.S. Bank Trust National Association, as trustee.  Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

In connection
with our proposed purchase of
$                     
aggregate principal amount of:

 

(a)  o  a beneficial interest in a Global Note, or

 

(b)  o  a Definitive Note,

 

we confirm
that:

 

1.             We understand that any subsequent
transfer of the Notes or any interest therein is subject to certain
restrictions and conditions set forth in the Indenture and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Notes or any interest therein except in compliance with, such restrictions and
conditions and the United States Securities Act of 1933, as amended (the “Securities
Act”).

 

2.             We understand that the offer and
sale of the Notes have not been registered under the Securities Act, and that
the Notes and any interest therein may not be offered or sold except as
permitted in the following sentence.  We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest
therein, we will do so only (A) to the Company or any subsidiary thereof, (B)
in accordance with Rule 144A under the Securities Act to a “qualified
institutional buyer” (as defined therein), (C) to an institutional “accredited
investor” (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to the Company a
signed letter substantially in the form of this letter and, if such transfer is
in respect of a principal amount of Notes, at the time of transfer of less than
$250,000, an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such transfer is in compliance with the Securities Act, (D)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the provisions of Rule 144(k) under the
Securities Act or (F)

 

D-1

 

pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.

 

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

 

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

 

5.             We are acquiring the Notes or
beneficial interest therein purchased by us for our own account or for one or
more accounts (each of which is an institutional “accredited investor”) as to
each of which we exercise sole investment discretion.

 

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

 

	
   

  	
  [Insert Name of Accredited Investor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
  Dated: 

  	
   

  	
   

  
					

 

D-2

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