JUNIOR SUBORDINATED INDENTURE





                                     Between





                         STANDARD MANAGEMENT CORPORATION





                                       and





                              BANKERS TRUST COMPANY

                                  (as Trustee)





                                   dated as of





                            ___________________, 2001

























================================================================================





{PAGE}   2





                              SMAN CAPITAL TRUST I



         Certain Sections of this Junior Subordinated Indenture relating

                       to Sections 310 through 318 of the

                          Trust Indenture Act of 1939:



{TABLE}

{CAPTION}



Trust Indenture                                                                   Junior Subordinated

  Act Section                                                                     Indenture Section

---------------                                                                   -------------------



{S}                 {C}                                                                 {C}

Section 310         (a)(1)..........................................................    6.9

                    (a)(2)..........................................................    6.9

                    (a)(3)..........................................................    Not Applicable

                    (a)(4)..........................................................    Not Applicable

                    (a)(5)..........................................................    6.9

                    (b).............................................................    6.8, 6.10

Section 311         (a).............................................................    6.13

                    (b).............................................................    6.13

                    (b)(2)..........................................................    7.3(a)

Section 312         (a).............................................................    7.1, 7.2(a)

                    (b).............................................................    7.2(b)

                    (c).............................................................    7.2(c)

Section 313         (a).............................................................    7.3(a)

                    (a)(4)..........................................................    7.3(a)

                    (b).............................................................    7.3(b)

                    (c).............................................................    7.3(a)

                    (d).............................................................    7.3(c)

Section 314         (a).............................................................    7.4

                    (b).............................................................    7.4

                    (c)(1)..........................................................    1.2

                    (c)(2)..........................................................    1.2

                    (c)(3)..........................................................    Not Applicable

                    (e).............................................................    1.2

Section 315         (a).............................................................    6.1(a)

                    (b).............................................................    6.2, 7.3

                    (c).............................................................    6.1(b)

                    (d).............................................................    6.1(c)

                    (e).............................................................    5.14

Section 316         (a).............................................................    5.12

                    (a)(1)(A).......................................................    5.12

                    (a)(1)(B).......................................................    5.13

                    (a)(2)..........................................................    Not Applicable

                    (b).............................................................    5.8

                    (c).............................................................    1.4(f)

Section 317         (a)(1)..........................................................    5.3

                    (a)(2)..........................................................    5.4

                    (b).............................................................    10.3

Section 318         (a).............................................................    1.7

{/TABLE}



Note: This reconciliation and tie shall not, for any purpose, be deemed to be a

      part of the Indenture.





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                                TABLE OF CONTENTS

{TABLE}

{CAPTION}

                                                                                                      Page

                                                                                                      ----





{S}                        {C}                                                                          {C}

ARTICLE I                  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................1

         Section 1.1.      Definitions...................................................................1

         Section 1.2.      Compliance Certificate and Opinions..........................................10

         Section 1.3.      Forms of Documents Delivered to Trustee......................................10

         Section 1.4.      Acts of Holders..............................................................11

         Section 1.5.      Notices, Etc. to Trustee and Company.........................................13

         Section 1.6.      Notice to Holders; Waiver....................................................13

         Section 1.7.      Conflict with Trust Indenture Act............................................13

         Section 1.8.      Effect of Headings and Table of Contents.....................................14

         Section 1.9.      Successors and Assigns.......................................................14

         Section 1.10.     Separability Clause..........................................................14

         Section 1.11.     Benefits of Indenture........................................................14

         Section 1.12.     Governing Law................................................................14

         Section 1.13.     Non-Business Days............................................................14



ARTICLE II                 SECURITY FORMS...............................................................15

         Section 2.1.      Forms Generally..............................................................15

         Section 2.2.      Form of Face of Security.....................................................15

         Section 2.3.      Form of Reverse of Security..................................................19

         Section 2.4.      Additional Provisions Required in Global Security............................22

         Section 2.5.      Form of Trustee's Certificate of Authentication..............................22



ARTICLE III                THE SECURITIES...............................................................23

         Section 3.1.      Title and Terms..............................................................23

         Section 3.2.      Denominations................................................................23

         Section 3.3.      Execution, Authentication, Delivery and Dating...............................24

         Section 3.4.      Temporary Securities.........................................................25

         Section 3.5.      Global Securities............................................................25

         Section 3.6.      Registration, Transfer and Exchange Generally; Certain

                           Transfers and Exchanges; Securities Act Legends..............................26

         Section 3.7.      Mutilated, Lost and Stolen Securities........................................29

         Section 3.8.      Payment of Interest and Additional Interest; Interest Rights Preserved.......30

         Section 3.9.      Persons Deemed Owners........................................................31

         Section 3.10.     Cancellation.................................................................31

         Section 3.11.     Computation of Interest......................................................32

         Section 3.12.     Deferrals of Interest Payment Dates..........................................32

         Section 3.13.     Right of Set-Off.............................................................33

         Section 3.14.     Agreed Tax Treatment.........................................................33

         Section 3.15.     CUSIP Numbers................................................................33

         Section 3.16.     Shortening of Stated Maturity................................................34

{/TABLE}





                                       i

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{TABLE}



                                                                                                      Page

                                                                                                      ----



{S}                        {C}                                                                         {C}

ARTICLE IV                 SATISFACTION AND DISCHARGE...................................................34

         Section 4.1.      Satisfaction and Discharge of Indenture......................................34

         Section 4.2.      Application of Trust Money...................................................35



ARTICLE V                  REMEDIES.....................................................................35

         Section 5.1.      Events of Default............................................................35

         Section 5.2.      Acceleration of Maturity; Rescission and Annulment...........................36

         Section 5.3.      Collection of Indebtedness and Suits for Enforcement by Trustee..............37

         Section 5.4.      Trustee May File Proofs of Claim.............................................38

         Section 5.5.      Trustee May Enforce Claim Without Possession of Securities...................38

         Section 5.6.      Application of Money Collected...............................................39

         Section 5.7.      Limitation on Suits..........................................................39

         Section 5.8.      Unconditional Right of Holders to Receive Principal,

                           Premium and Interest; Direct Action by Holders of Preferred

                           Securities...................................................................40

         Section 5.9.      Restoration of Rights and Remedies...........................................40

         Section 5.10.     Rights and Remedies Cumulative...............................................40

         Section 5.11.     Delay or Omission Not Waiver.................................................40

         Section 5.12.     Control by Holders...........................................................41

         Section 5.13.     Waiver of Past Defaults......................................................41

         Section 5.14.     Undertaking for Costs........................................................42

         Section 5.15.     Waiver of Usury, Stay or Extension Laws......................................42



ARTICLE VI                 THE TRUSTEE..................................................................42

         Section 6.1.      Certain Duties and Responsibilities..........................................42

         Section 6.2.      Notice of Defaults...........................................................43

         Section 6.3.      Certain Rights of Trustee....................................................44

         Section 6.4.      Not Responsible for Recitals or Issuance of Securities.......................45

         Section 6.5.      May Hold Securities..........................................................45

         Section 6.6.      Money Held in Trust..........................................................45

         Section 6.7.      Compensation and Reimbursement...............................................45

         Section 6.8.      Disqualification; Conflicting Interests......................................46

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