Document:

exv10w1

 

EXECUTION
VERSION

MASTER AGREEMENT AND PLAN OF MERGER

among

HOST MARRIOTT CORPORATION,

HOST MARRIOTT, L.P.,

HORIZON SUPERNOVA MERGER SUB, L.L.C.,

HORIZON SLT MERGER SUB, L.P.,

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,

STARWOOD HOTELS & RESORTS,

SHERATON HOLDING CORPORATION

and

SLT REALTY LIMITED PARTNERSHIP

DATED AS OF NOVEMBER 14, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1. THE MERGERS; CONVERSION OF SECURITIES	 	 	2	 
	 

	 	Section 1.1
	 	The Mergers
	 	 	2	 
	 

	 	Section 1.2
	 	Closing
	 	 	3	 
	 

	 	Section 1.3
	 	Effective Time
	 	 	3	 
	 

	 	Section 1.4
	 	Effects of the Mergers; Declaration of Trust and Bylaws; SLT Limited
Partnership Agreement
	 	 	3	 
	 

	 	Section 1.5
	 	Trustees and Officers of Trust
	 	 	4	 
	 

	 	Section 1.6
	 	Effect on Shares of Beneficial Interest
	 	 	4	 
	 

	 	Section 1.7
	 	Effect on Partnership Units
	 	 	6	 
	 

	 	Section 1.8
	 	Appraisal or Dissenters Rights
	 	 	8	 
	 

	 	Section 1.9
	 	Exchange of Certificates; Pre-Closing Dividends; Fractional Shares
	 	 	8	 
	 

	 	Section 1.10
	 	Certain Adjustments
	 	 	13	 
	 

	 	Section 1.11
	 	Tax Treatment
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2. OTHER CLOSING TRANSACTIONS	 	 	13	 
	 

	 	Section 2.1
	 	Other Closing Transactions
	 	 	13	 
	 

	 	Section 2.2
	 	Other Closing Transactions; Consideration
	 	 	16	 
	 

	 	Section 2.3
	 	[Intentionally Omitted.]
	 	 	17	 
	 

	 	Section 2.4
	 	Other Closing Transactions; Closing Deliveries
	 	 	17	 
	 

	 	Section 2.5
	 	Purchase Price Allocations
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SUN AND TRUST	 	 	19	 
	 

	 	Section 3.1
	 	Organization, Standing and Power
	 	 	19	 
	 

	 	Section 3.2
	 	Capital Structure
	 	 	20	 
	 

	 	Section 3.3
	 	Other Capitalization Matters
	 	 	22	 
	 

	 	Section 3.4
	 	Authority; Noncontravention; Consents
	 	 	22	 
	 

	 	Section 3.5
	 	SEC Documents; Financial Statements; Corporate Governance
	 	 	24	 
	 

	 	Section 3.6
	 	Absence of Certain Changes or Events
	 	 	27	 
	 

	 	Section 3.7
	 	Litigation
	 	 	27	 
	 

	 	Section 3.8
	 	Properties
	 	 	28	 
	 

	 	Section 3.9
	 	Environmental Matters
	 	 	30	 
	 

	 	Section 3.10
	 	Affiliate Transactions; Intercompany Liabilities
	 	 	32	 
	 

	 	Section 3.11
	 	Employee Benefits
	 	 	33	 
	 

	 	Section 3.12
	 	Employment and Labor Matters
	 	 	33	 
	 

	 	Section 3.13
	 	Intellectual Property
	 	 	34	 
	 

	 	Section 3.14
	 	Taxes
	 	 	34	 
	 

	 	Section 3.15
	 	No Brokers
	 	 	38	 
	 

	 	Section 3.16
	 	Compliance with Laws; Permits
	 	 	38	 
	 

	 	Section 3.17
	 	Contracts
	 	 	39	 
	 

	 	Section 3.18
	 	Guarantees; Letters of Credit
	 	 	42	 
	 

	 	Section 3.19
	 	Assets
	 	 	42	 
	 

	 	Section 3.20
	 	Insurance
	 	 	43	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 3.21
	 	[Intentionally Omitted
	 	 	43	 
	 

	 	Section 3.22
	 	Opinion of Financial Advisor
	 	 	43	 
	 

	 	Section 3.23
	 	State Takeover Statutes
	 	 	43	 
	 

	 	Section 3.24
	 	No Vote Required
	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE HORIZON PARTIES	 	 	44	 
	 

	 	Section 4.1
	 	Organization, Standing and Power
	 	 	44	 
	 

	 	Section 4.2
	 	Horizon Subsidiaries
	 	 	44	 
	 

	 	Section 4.3
	 	Capital Structure
	 	 	45	 
	 

	 	Section 4.4
	 	Other Interests
	 	 	46	 
	 

	 	Section 4.5
	 	Authority; Noncontravention; Consents
	 	 	46	 
	 

	 	Section 4.6
	 	SEC Documents; Financial Statements; Corporate Governance
	 	 	48	 
	 

	 	Section 4.7
	 	Absence of Certain Changes or Events
	 	 	49	 
	 

	 	Section 4.8
	 	Taxes
	 	 	49	 
	 

	 	Section 4.9
	 	No Brokers
	 	 	51	 
	 

	 	Section 4.10
	 	Litigation
	 	 	51	 
	 

	 	Section 4.11
	 	Opinion of Financial Advisor
	 	 	51	 
	 

	 	Section 4.12
	 	Horizon Stockholder Approval
	 	 	51	 
	 

	 	Section 4.13
	 	Ownership of REIT Merger Sub and SLT Merger Sub; No Prior Activities
	 	 	52	 
	 

	 	Section 4.14
	 	Compliance with Laws; Permits
	 	 	52	 
	 

	 	Section 4.15
	 	Environmental Matters
	 	 	53	 
	 

	 	Section 4.16
	 	Contracts.
	 	 	54	 
	 

	 	Section 4.17
	 	Insurance.
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5. COVENANTS	 	 	54	 
	 

	 	Section 5.1
	 	Conduct of the Sun Parties Pending the Closing
	 	 	54	 
	 

	 	Section 5.2
	 	Conduct of the Horizon Parties’ Business Pending the Closing
	 	 	59	 
	 

	 	Section 5.3
	 	No Solicitation
	 	 	61	 
	 

	 	Section 5.4
	 	Control of Other Party’s Business
	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6. ADDITIONAL COVENANTS	 	 	63	 
	 

	 	Section 6.1
	 	Proxy Statement/Prospectus; Registration Statement; Horizon Stockholders Meeting
	 	 	63	 
	 

	 	Section 6.2
	 	Access to Information; Confidentiality; Monthly Meetings
	 	 	65	 
	 

	 	Section 6.3
	 	Support of Transaction; Notification
	 	 	67	 
	 

	 	Section 6.4
	 	Further Assurances; Books and Records
	 	 	68	 
	 

	 	Section 6.5
	 	Intercompany Accounts
	 	 	69	 
	 

	 	Section 6.6
	 	Guarantees; Letters of Credit
	 	 	70	 
	 

	 	Section 6.7
	 	Delivery of Financial Statements
	 	 	71	 
	 

	 	Section 6.8
	 	Non-Assignment
	 	 	72	 
	 

	 	Section 6.9
	 	Public Announcements
	 	 	76	 
	 

	 	Section 6.10
	 	Listing
	 	 	77	 
	 

	 	Section 6.11
	 	Reserved
	 	 	77	 
	 

	 	Section 6.12
	 	Comfort Letters
	 	 	77	 
	 

	 	Section 6.13
	 	Cooperation with Financing
	 	 	77	 

iii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 6.14
	 	Auditor’s Consent and Cooperation
	 	 	78	 
	 

	 	Section 6.15
	 	Ground Lease Estoppel Certificates
	 	 	79	 
	 

	 	Section 6.16
	 	Ancillary Agreements
	 	 	79	 
	 

	 	Section 6.17
	 	[Intentionally Omitted]
	 	 	80	 
	 

	 	Section 6.18
	 	Deferral Triggers; Deferred Assets
	 	 	80	 
	 

	 	Section 6.19
	 	Indebtedness
	 	 	87	 
	 

	 	Section 6.20
	 	Interest Total Certificate
	 	 	88	 
	 

	 	Section 6.21
	 	Liquor Licenses
	 	 	89	 
	 

	 	Section 6.22
	 	Sun Indenture
	 	 	89	 
	 

	 	Section 6.23
	 	Title Insurance and Surveys
	 	 	89	 
	 

	 	Section 6.24
	 	Rule 145 Affiliate Agreements
	 	 	90	 
	 

	 	Section 6.25
	 	Horizon Common Stock Transactions
	 	 	90	 
	 

	 	Section 6.26
	 	Sun Restructuring
	 	 	91	 
	 

	 	Section 6.27
	 	Employment Matters
	 	 	91	 
	 

	 	Section 6.28
	 	Sun Intellectual Property
	 	 	91	 
	 

	 	Section 6.29
Section 6.30
	 	Certain Contribution Agreements

Increased Share Amount
	 	 	92

92	 
	 

	 	Section 6.31
	 	SLT Provisions.
	 	 	93	 
	 

	 	Section 6.32
	 	Recapture Provisons.
	 	 	93	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7. CONDITIONS	 	 	95	 
	 

	 	Section 7.1
	 	Conditions to Each Party’s Obligation to Effect the Closing Transactions
	 	 	95	 
	 

	 	Section 7.2
	 	Conditions to Obligations of Horizon and Horizon OP
	 	 	96	 
	 

	 	Section 7.3
	 	Conditions to Obligations of Sun and Trust
	 	 	99	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8. CERTAIN ADJUSTMENTS AND EXPENSES.	 	 	101	 
	 

	 	Section 8.1
	 	Sun Capital Budget
	 	 	101	 
	 

	 	Section 8.2
	 	Casualty and Condemnation
	 	 	102	 
	 

	 	Section 8.3
	 	Transaction Expenses
	 	 	103	 
	 

	 	Section 8.4
	 	Closing Working Capital; Adjusted Indebtedness; Determination of
Adjustments
	 	 	104	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9. TERMINATION, AMENDMENT AND WAIVER	 	 	108	 
	 

	 	Section 9.1
	 	Termination
	 	 	108	 
	 

	 	Section 9.2
	 	Effect of Termination
	 	 	110	 
	 

	 	Section 9.3
	 	Deferral Provisions to Insure Compliance with REIT Gross Income Tests
	 	 	111	 
	 

	 	Section 9.4
	 	Amendment
	 	 	112	 
	 

	 	Section 9.5
	 	Extension; Waiver
	 	 	112	 
	 

	 	Section 9.6
	 	Procedure for Termination
	 	 	113	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10. GENERAL PROVISIONS	 	 	113	 
	 

	 	Section 10.1
	 	Definitions
	 	 	113	 
	 

	 	Section 10.2
	 	Survival of Representations, Warranties and Covenants
	 	 	124	 
	 

	 	Section 10.3
	 	Notices
	 	 	125	 
	 

	 	Section 10.4
	 	Interpretation
	 	 	126	 

iv

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 10.5
	 	Counterparts; Facsimile
	 	 	127	 
	 

	 	Section 10.6
	 	Entire Agreement; No Third-Party Beneficiaries
	 	 	127	 
	 

	 	Section 10.7
	 	Governing Law; Consent to Jurisdiction
	 	 	127	 
	 

	 	Section 10.8
	 	Assignment
	 	 	128	 
	 

	 	Section 10.9
	 	Specific Performance
	 	 	128	 
	 

	 	Section 10.10
	 	Severability
	 	 	128	 
	 

	 	Section 10.11
	 	Joint and Several Obligations
	 	 	129	 
	 

	 	Section 10.12
	 	Mutual Drafting
	 	 	129	 
	 

	 	Section 10.13
	 	Waiver of Jury Trial
	 	 	129	 
	 

	 	Section 10.14
	 	No Agreement Until Executed
	 	 	129	 
	 

	 	Section 10.15
	 	Bulk Transfer Laws
	 	 	129	 

v

 

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	—
	 	Sun Restructuring Steps and Restructuring Parameters
	 
	 	 	 	 
	Exhibit B

	 	—
	 	Closing Restructuring Steps
	 
	 	 	 	 
	Exhibit C

	 	—
	 	Form of REIT Articles of Merger
	 
	 	 	 	 
	Exhibit D

	 	—
	 	Form of Assumption Agreement
	 
	 	 	 	 
	Exhibit E

	 	—
	 	Allocation Schedule
	 
	 	 	 	 
	Exhibit F

	 	—
	 	Examples of Revisions to the Allocation Schedule
	 
	 	 	 	 
	Exhibit G

	 	—
	 	Form of Registration Rights Agreement
	 
	 	 	 	 
	Exhibit H

	 	—
	 	Form of Right of First Offer Agreement
	 
	 	 	 	 
	Exhibit I

	 	—
	 	Form of Indemnification Agreement
	 
	 	 	 	 
	Exhibit J

	 	—
	 	Form of Sublease Agreement
	 
	 	 	 	 
	Exhibit K

	 	—
	 	Form of Lease Agreement
	 
	 	 	 	 
	Exhibit L

	 	—
	 	Form of Master Reserve Fund Agreement
	 
	 	 	 	 
	Exhibit M

	 	—
	 	Form of Operating Agreement
	 
	 	 	 	 
	Exhibit N

	 	—
	 	Form of License Agreement
	 
	 	 	 	 
	Exhibit O

	 	—
	 	Form of Working Capital Concentration Account Agreement
	 
	 	 	 	 
	Exhibit P

	 	—
	 	Form of Compensating Balance Agreement
	 
	 	 	 	 
	Exhibit Q

	 	—
	 	Form of Termination Upon Sale Agreement
	 
	 	 	 	 
	Exhibit R

	 	—
	 	Form of Tax Sharing and Indemnification Agreement
	 
	 	 	 	 
	Exhibit S

	 	—
	 	Form of Financing Cooperation Indemnification Agreement
	 
	 	 	 	 
	Exhibit T

	 	—
	 	Form of Corporate-Level Agreement
	 
	 	 	 	 
	Exhibit U

	 	—
	 	Form of Growth Plan Agreement
	 
	 	 	 	 
	Exhibit V

	 	—
	 	Form of Interim Liquor Agreement

vi

 

	 	 	 	 	 
	Exhibit W

	 	—
	 	Form of Rule 145 Affiliate Agreement
	 
	 	 	 	 
	Exhibit X

	 	—
	 	Horizon Transactions
	 
	 	 	 	 
	Exhibit Y-1

	 	—
	 	Form of Local Purchase Agreement (Westin Palace Madrid)
	 
	 	 	 	 
	Exhibit Y-2

	 	—
	 	Form of Local Purchase Agreement (Westin Europa & Regina)
	 
	 	 	 	 
	Exhibit Y-3

	 	—
	 	Form of Local Purchase Agreement (Sheraton Roma Hotel &
Convention Centre / Westin Palace Milan)

vii

 

SCHEDULES

	 	 	 	 	 
	Schedule 1.7(a)(ii)

	 	—
	 	Class A RP Units
	 
	 	 	 	 
	Schedule 2.1(a)

	 	—
	 	Global Entity Sellers
	 
	 	 	 	 
	Schedule 2.1(b)

	 	—
	 	Global Asset Sellers
	 
	 	 	 	 
	Schedule 2.1(c)

	 	—
	 	Local Entity Sellers; Local Stock Transfer Shares
	 
	 	 	 	 
	Schedule 2.1(d)

	 	—
	 	Local Asset Sellers
	 
	 	 	 	 
	Schedule 2.5

	 	—
	 	Purchase Price Allocations
	 
	 	 	 	 
	Schedule 6.2(d)

	 	—
	 	Transitional Working Group Members
	 
	 	 	 	 
	Schedule 6.3(a)(i)

	 	—
	 	International Filings and Other Actions
	 
	 	 	 	 
	Schedule 6.3(a)(ii)

	 	—
	 	Non-Transferable Permits
	 
	 	 	 	 
	Schedule 6.5

	 	—
	 	Intercompany Accounts
	 
	 	 	 	 
	Schedule 6.16(vi)

	 	—
	 	Deviations from Form of Operating Agreement
	 
	 	 	 	 
	Schedule 6.16(vii)

	 	—
	 	Deviations from Form of License Agreement
	 
	 	 	 	 
	Schedule 6.18(a)(i)

	 	—
	 	Identified Consents
	 
	 	 	 	 
	Schedule 6.18(a)(vi)

	 	—
	 	Canadian Tax Treatment
	 
	 	 	 	 
	Schedule 6.19(b)

	 	—
	 	SHC Indebtedness
	 
	 	 	 	 
	Schedule 6.23

	 	—
	 	Form of Title Affidavit
	 
	 	 	 	 
	Schedule 6.31

	 	—
	 	Required Amendments to SLT Agreements
	 
	 	 	 	 
	Schedule 7.2(a)

	 	—
	 	Certain Financial Statement Line Items
	 
	 	 	 	 
	Schedule 7.2(e)(1)

	 	—
	 	Single-Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 7.2(e)(2)

	 	—
	 	Double-Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 7.3(f)

	 	—
	 	Sun Deferral Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 8.4(a)

	 	—
	 	Closing Working Capital
	 
	 	 	 	 
	Schedule 10.1(c)

	 	—
	 	Acquired Entities

viii

 

	 	 	 	 	 
	Schedule 10.1(d)

	 	—
	 	Acquired Hotels
	 
	 	 	 	 
	Schedule 10.1(e)

	 	—
	 	Acquired Hotel Agreed Amounts
	 
	 	 	 	 
	Schedule 10.1(y)

	 	—
	 	Excluded Assets
	 
	 	 	 	 
	Schedule 10.1(aa)

	 	—
	 	Excluded Hotels
	 
	 	 	 	 
	Schedule 10.1(kk)

	 	—
	 	Specified Fixtures
	 
	 	 	 	 
	Schedule 10.1(ccc)

	 	—
	 	Acquired Names
	 
	 	 	 	 
	Schedule 10.1(ddd)

	 	—
	 	Post-Closing Deferral Deadlines
	 
	 	 	 	 
	Schedule 10.1(mmm)

	 	—
	 	Specified Retained Liabilities
	 
	 	 	 	 
	Schedule 10.1(ttt)

	 	—
	 	Specified Indebtedness
	 
	 	 	 	 
	Schedule 10.1(vvv)

	 	—
	 	2005 Sun Capital Budget

ix

 

INDEX OF DEFINED TERMS

	 	 	 
	2004 10-K

	 	 3.5(b) 
	2005 Audited Financial Statements

	 	 6.7(d) 
	2015 SHC Indebtedness

	 	 8.3(b) 
	2025 SHC Indebtedness

	 	 8.3(b) 
	Acquired Assets

	 	 10.1(a) 
	Acquired Business

	 	 10.1(b) 
	Acquired Business Credit Support

	 	 3.18(a) 
	Acquired Entities

	 	 10.1(c) 
	Acquired Hotel

	 	 10.1(d) 
	Acquired Hotel Agreed Amount

	 	 10.1(e) 
	Acquired Hotels

	 	 10.1(d) 
	Acquired Names

	 	 10.1(bbb) 
	Acquired Properties

	 	 10.1(f) 
	Acquired Property

	 	 10.1(f) 
	Acquisition Proposal

	 	 5.3(a)(i) 
	Actual EBITDA Amount

	 	 6.32(d) 
	Additional EBITDA Amount

	 	 6.32(b), 6.32(a)(ii) 
	Adjusted Indebtedness

	 	 8.4(g) 
	Affiliate

	 	 3.10 
	Agreement

	 	 Preamble 
	AICPA

	 	 6.7(b) 
	Allocation Schedule

	 	 2.5 
	Alternative Tax Letter

	 	 9.3 
	Ancillary Agreements

	 	 6.16 
	Apportionment Time

	 	 10.1(g) 
	Asset Sellers

	 	 Recitals 
	Assets

	 	 10.1(h) 
	Assignee

	 	 2.1(f) 
	Assumed Liabilities

	 	 10.1(i) 
	Assumption Agreement

	 	 2.1(e) 
	Audited Combined Historical Financial Statements

	 	 3.5(c) 
	Baseline Restructuring Steps

	 	 Recitals 
	Bear, Stearns

	 	 3.15 
	Books and Records

	 	 6.4(a) 
	C Corporation Earnings and Profits

	 	 10.1(j) 
	Cash Amount

	 	 2.2(a) 
	Casualty Adjustment Amount

	 	 8.4(a) 
	CERCLA

	 	 3.9(a) 
	Certificates

	 	 1.9(a) 
	Change in Recommendation

	 	 6.1(b) 
	Class A Cash Consideration

	 	 10.1(k) 
	Class A EPS

	 	 1.6(a)(iii) 
	Class A EPS Horizon Cash Amount

	 	 1.6(a)(iii)(A) 
	Class A EPS Sun Cash Amount

	 	 1.6(a)(iii)(A) 

x

 

	 	 	 
	Class A RP Units

	 	 1.7(a)(ii) 
	Class A Shares

	 	 1.6(a)(i) 
	Class A Stock Consideration Per Share

	 	 1.6(a)(i) 
	Class B Cash Amount

	 	 1.6(a)(ii) 
	Class B Cash Consideration

	 	 10.1(l) 
	Class B EPS

	 	 3.2(b) 
	Class B Excess Dividend Amount

	 	 10.1(m) 
	Class B Share Total

	 	 1.6(a)(i) 
	Class B Shares

	 	 1.6(a)(ii) 
	Closing

	 	 1.2 
	Closing Date

	 	 1.2 
	Closing Net Adjustment Amount

	 	 8.4(a) 
	Closing Notice

	 	 1.2 
	Closing Restructuring Steps

	 	 10.1(n) 
	Closing Statement Principles

	 	 10.1(o) 
	Closing Transactions

	 	 2.1 
	Closing Working Capital

	 	 8.4(a) 
	CMBS Indebtedness

	 	 10.1(p) 
	Code

	 	 10.1(q) 
	Commitment

	 	 5.1(j) 
	Compensating Balance Agreement

	 	 6.16 
	Confidentiality Agreement

	 	 6.2(a)(ii) 
	Consent Costs

	 	 8.3(b) 
	Consolidated Group

	 	 10.1(r) 
	Contract

	 	 10.1(s) 
	Contribution Agreement

	 	 3.14(e) 
	Corporate-Level Agreement

	 	 6.16 
	Deferral Trigger

	 	 6.18(a) 
	Deferred Asset

	 	 6.18(d) 
	Deferred International Hotels

	 	 6.18(a)(ix) 
	Department

	 	 1.3 
	Determination Time

	 	 1.6(a)(i) 
	Directly Acquired Assets

	 	 10.1(t) 
	Directly Acquired Assets Owner

	 	 10.1(u) 
	DRULPA

	 	 1.1(b) 
	E&Y

	 	 3.5(c) 
	EAT

	 	 2.1(f) 
	EC Merger Regulations

	 	 10.1(v) 
	Effective Times

	 	 1.3 
	Employee Plan

	 	 3.11 
	Encumbrance

	 	 10.1(w) 
	Entity Sellers

	 	 Recitals 
	Environmental Law

	 	 3.9(a) 
	Environmental Permits

	 	 3.9(b)(v) 
	Environmental Reports

	 	 3.9(a) 
	Equity Awards

	 	 1.6(c) 

xi

 

	 	 	 
	Equity Plans

	 	 1.6(c) 
	ERISA

	 	 3.11 
	Estimated Adjustment Amount

	 	 8.4(b) 
	Estimated Closing Statement

	 	 8.4(b) 
	Estimated EBITDA Amount

	 	 6.32(b) 
	Excess Dividend Amount

	 	 10.1(x) 
	Excess Preferred Shares

	 	 3.2(b) 
	Excess Shares

	 	 3.2(b) 
	Excess Trust Shares

	 	 3.2(b) 
	Exchange Act

	 	 3.4(c) 
	Exchange Agent

	 	 1.9(a) 
	Exchange Fund

	 	 1.9(b)(iii) 
	Exchange Ratio

	 	 1.6(a)(ii) 
	Excluded Assets

	 	 10.1(y) 
	Excluded Business

	 	 10.1(z) 
	Excluded Hotel

	 	 10.1(aa) 
	Excluded Hotels

	 	 10.1(aa) 
	Existing Survey

	 	 3.8(a) 
	Existing Surveys

	 	 3.8(a) 
	Existing Title Policies

	 	 3.8(a) 
	Existing Title Policy

	 	 3.8(a) 
	FF&E

	 	 10.1(ccc) 
	FF&E Agreement

	 	 6.16 
	FF&E Reserves

	 	 10.1(bb) 
	Filed Trust SEC Documents

	 	 3.5(a) 
	Final Adjustment Amount

	 	 8.4(e) 
	Final Closing Statement

	 	 8.4(e) 
	Financing Indemnification Agreement

	 	 6.16 
	Financings

	 	 6.13 
	Form S-4

	 	 6.1(a) 
	GAAP

	 	 3.5(a) 
	Global Asset Sellers

	 	 2.1(b) 
	Global Directly Acquired Assets

	 	 2.1(b) 
	Global Entity Sellers

	 	 2.1(a) 
	Global Other Closing Transaction Purchase Price

	 	 2.2(a) 
	Global Stock Transfer Shares

	 	 2.1(a) 
	Governmental Entity

	 	 10.1(cc) 
	Ground Leases

	 	 3.8(e) 
	Growth Plan Agreement

	 	 6.16 
	GS&Co.

	 	 4.9 
	Guest Ledger

	 	 10.1(dd) 
	Hazardous Materials

	 	 3.9(a) 
	Horizon

	 	 Preamble 
	Horizon Bylaws

	 	 4.1(b) 
	Horizon Charter

	 	 4.1(a) 
	Horizon Class C Preferred Stock

	 	 4.3(a) 

xii

 

	 	 	 
	Horizon Class E Preferred Stock

	 	 4.3(a) 
	Horizon Common Stock

	 	 1.6(a)(i) 
	Horizon Convertible Preferred Securities

	 	 4.3(a) 
	Horizon Deferral Triggers

	 	 6.18(c) 
	Horizon Disclosure Letter

	 	 Article 4 
	Horizon Equity Plan

	 	 4.3(a) 
	Horizon Exchangeable Debentures

	 	 4.3(a) 
	Horizon Financial Statement Date

	 	 4.7 
	Horizon Foreign Currency REIT

	 	 10.1(ee) 
	Horizon Material Adverse Effect Horizon
Material Contract

	 	 10.1(ff)  4.16 
	Horizon OP

	 	 Preamble 
	Horizon OP Agreement

	 	 4.2(b) 
	Horizon OP Units

	 	 4.2(b) 
	Horizon Other Interests

	 	 4.4 
	Horizon Parties

	 	 Preamble 
	Horizon Preferred Stock

	 	 4.3(a) 
	Horizon Property

	 	 4.15(a) 
	Horizon Representatives

	 	 6.2(a)(i) 
	Horizon SEC Documents

	 	 4.6(a) 
	Horizon Senior Executive

	 	 6.2(a)(iii) 
	Horizon Series A Preferred Stock

	 	 4.3(a) 
	Horizon Stock Options

	 	 4.3(a) 
	Horizon Stock Rights

	 	 4.3(a) 
	Horizon Stockholder Approval

	 	 6.1(b) 
	Horizon Stockholders Meeting

	 	 6.1(b) 
	Horizon Subject Foreign Currency REIT

	 	 10.1(gg) 
	Horizon Subsidiaries

	 	 10.1(hh) 
	Horizon Taxpayer

	 	 4.8(a) 
	Horizon Transactions

	 	 10.1(ii) 
	Hotel

	 	 10.1(jj) 
	Hotel EBITDA

	 	 6.32(a)(i) 
	HSR Act

	 	 3.4(c) 
	Improvements

	 	 10.1(kk) 
	Increased Share Amount

	 	 6.30(a) 
	Indebtedness

	 	 10.1(ll) 
	Indemnification Agreement

	 	 6.16 
	Independent Accounting Firm

	 	 8.4(e) 
	Intellectual Property

	 	 10.1(mm) 
	Interests

	 	 10.1(nn) 
	Interim Liquor Agreement

	 	 6.21 
	Intermediary

	 	 2.1(f) 
	JAMS

	 	 6.18(c) 
	Knowledge

	 	 10.1(oo) 
	KPMG

	 	 6.12(a) 
	Land

	 	 10.1(pp) 

xiii

 

	 	 	 
	Laws

	 	 10.1(qq) 
	Lease Agreement

	 	 6.16 
	Liabilities

	 	 10.1(rr) 
	License Agreement

	 	 6.16 
	Liquor Licenses

	 	 6.21 
	Local Asset Sellers

	 	 2.1(d) 
	Local Directly Acquired Assets

	 	 2.1(d) 
	Local Entity Sellers

	 	 2.1(c) 
	Local Other Closing Transaction Purchase Price

	 	 2.2(b) 
	Local Purchase Agreements

	 	 10.1(ss) 
	Local Stock Transfer Shares

	 	 2.1(c) 
	Losses

	 	 6.8(g) 
	Market Price

	 	 10.1(tt) 
	Material Contracts

	 	 3.17(a) 
	Material Sun Space Lease

	 	 10.1(uu) 
	Maximum Share Amount

	 	 1.6(a)(i) 
	Mergers

	 	 Recitals 
	Minority Equity Interest

	 	 3.2(a) 
	Miscellaneous Hotel Assets

	 	 10.1(vv) 
	Multiemployer Plan

	 	 3.11 
	National/Regional Operating Agreements

	 	 10.1(ww) 
	No Gross Income Opinion

	 	 9.3 
	Not Commenced Capital Budget Amount

	 	 8.1 
	NYSE

	 	 1.9(g)(ii) 
	Operating Agreement

	 	 6.16 
	Options

	 	 1.6(c) 
	Ordinary Course

	 	 10.1(xx) 
	Organizational Documents

	 	 10.1(yy) 
	Other Closing Transactions

	 	 2.1 
	Other Share Consideration

	 	 10.1(zz) 
	Paired Share

	 	 1.9(a) 
	Paired Share Proposal

	 	 10.1(aaa) 
	Percentage Interest

	 	 1.7(b)(ii) 
	Permits

	 	 3.16 
	Permitted Title Exceptions

	 	 3.8(a) 
	Person

	 	 10.1(bbb) 
	Personal Property

	 	 10.1(ccc) 
	Plan Modifications

	 	 Recitals 
	Post-Closing Acquisition Notice

	 	 6.18(f)(ii) 
	Post-Closing Deferral Deadline

	 	 10.1(ddd) 
	Post-Closing Horizon Transactions

	 	 10.1(eee) 
	Post-Closing Notices

	 	 6.18(f)(iii) 
	Post-Closing Sale Notice

	 	 6.18(f)(iii) 
	Post-Restructuring Time

	 	 3.2(a) 
	Pre-Closing Cap Amount

	 	 9.1(j) 
	Preliminary Adjustment Amount

	 	 8.4(c) 

xiv

 

	 	 	 
	Preliminary Closing Statement

	 	 8.4(c) 
	Pre-Merger Share Amount

	 	 1.6(a)(i) 
	Preparation Principles

	 	 3.5(b) 
	Primary Hotels

	 	 3.17(a)(iv) 
	Primary International Hotels

	 	 6.18(a)(ix) 
	Privacy Laws

	 	 10.1(fff) 
	Proxy Statement/Prospectus

	 	 6.1(a) 
	Purchaser Indemnified Parties

	 	 6.6(a) 
	Qualified Capital Expenditure Amount

	 	 8.1 
	Qualified Transfer

	 	 6.8(b) 
	Qualifying Accounting Firm

	 	 10.1(ggg) 
	Qualifying Asset

	 	 6.8(b) 
	Qualifying Income

	 	 6.8(b) 
	Reduction

	 	 6.32(b) 
	Registration Rights Agreement

	 	 6.16 
	REIT

	 	 3.14(a) 
	REIT Articles of Merger

	 	 1.3 
	REIT Entity

	 	 3.14(a) 
	REIT Merger

	 	 Recitals 
	REIT Merger Consideration

	 	 1.6(a)(iv) 
	REIT Merger Effective Time

	 	 1.3 
	REIT Merger Sub

	 	 Preamble 
	Related Property

	 	 10.1(hhh) 
	Release

	 	 3.9(a) 
	Remaining Capital Budget Amount

	 	 8.1 
	Replacement Hotels

	 	 2.1(f) 
	Representatives

	 	 10.1(iii) 
	Required Antitrust Approvals

	 	 10.1(jjj) 
	Required Capital Expenditure Amount

	 	 8.4(a) 
	Restricted Stock

	 	 1.6(c) 
	Restricted Stock Unit Awards

	 	 1.6(c) 
	Restructuring Parameters

	 	 10.1(lll) 
	Restructuring Plan

	 	 Recitals 
	Retained Liabilities

	 	 10.1(mmm) 
	Retained Subsidiary

	 	 10.1(nnn) 
	Retained Sun Business

	 	 10.1(ooo) 
	Revised EBITDA Amount

	 	 6.32(a)(iv) 
	Right of First Offer Agreement

	 	 6.16 
	RP Units

	 	 1.7(a)(i) 
	Rule 145 Affiliates

	 	 6.24 
	Rules

	 	 6.18(c) 
	Sarbanes-Oxley Act

	 	 3.5(e) 
	Satisfaction Date

	 	 1.2 
	SEC

	 	 3.4(c) 
	SEC Filings

	 	 6.14(a) 
	Secondary Hotels

	 	 3.17(a) 

xv

 

	 	 	 
	Securities Act

	 	 3.2(g) 
	Seller Indemnified Parties

	 	 6.6(a) 
	Sellers

	 	 Recitals 
	Share Value

	 	 10.1(ppp) 
	SHC

	 	 Preamble 
	SHC Indebtedness

	 	 8.3(b) 
	SLC

	 	 10.1(qqq) 
	SLC LP Agreement

	 	 10.1(rrr) 
	SLC Units

	 	 10.1(sss) 
	SLT

	 	 Preamble 
	SLT Agreements

	 	 6.31 
	SLT Cash Amount

	 	 2.2(a) 
	SLT Certificate

	 	 1.4(d) 
	SLT Certificate of Merger

	 	 1.3 
	SLT LP Agreement

	 	 1.4(d) 
	SLT Merger

	 	 Recitals 
	SLT Merger Consideration

	 	 1.7(a)(iii) 
	SLT Merger Effective Time

	 	 1.3 
	SLT Merger Sub

	 	 Preamble 
	SLT Unitholder Approvals

	 	 3.24 
	SLT Units

	 	 1.7(a)(ii) 
	Specified Indebtedness

	 	 10.1(ttt) 
	Specified REIT Requirements

	 	 9.3 
	Stated Net Adjustment Amount

	 	 8.4(a) 
	Stock Transfer Shares

	 	 Recitals 
	Structural Mold

	 	 3.9(a) 
	Subject Change

	 	 7.3(g) 
	Subject Taxes

	 	 2.1(f) 
	Sublease Agreement

	 	 6.16 
	Subsidiary

	 	 10.1(uuu) 
	Sun

	 	 Preamble 
	Sun Bylaws

	 	 3.1(b) 
	Sun Capital Budget

	 	 10.1(vvv) 
	Sun Charter

	 	 3.1(a) 
	Sun Common Share Amount

	 	 1.9(c) 
	Sun Common Stock

	 	 1.6(a)(iii)(A) 
	Sun Common Stock Value

	 	 10.1(www) 
	Sun Credit Support

	 	 3.18(b) 
	Sun Deferral Triggers

	 	 6.18(c) 
	Sun Disclosure Letter

	 	 Article 3 
	Sun Employee Plan

	 	 3.11 
	Sun Employer

	 	 3.12(a) 
	Sun Financial Statement Date

	 	 3.6 
	Sun Indenture

	 	 10.1(xxx) 
	Sun Intellectual Property

	 	 10.1(yyy) 
	Sun Material Adverse Effect

	 	 10.1(zzz) 

xvi

 

	 	 	 
	Sun Material Impairment

	 	 10.1(aaaa) 
	Sun Parties

	 	 Preamble 
	Sun Representative

	 	 5.3(a)(ii) 
	Sun Restructuring Steps

	 	 10.1(bbbb) 
	Sun Rights Agreement

	 	 10.1(cccc) 
	Sun Space Lease

	 	 10.1(dddd) 
	Sun Subsidiary

	 	 2.1(e) 
	Sun Taxpayer

	 	 3.14(a) 
	Sun Trademarks

	 	 10.1(eeee) 
	Superior Proposal

	 	 10.1(ffff) 
	Surveys

	 	 6.23 
	Surviving Partnership

	 	 1.1(b) 
	Surviving Trust

	 	 1.1(a) 
	Takeover Statute

	 	 3.23 
	Target EBITDA Amount

	 	 6.32(a)(iii) 
	Tax Return

	 	 3.14(a) 
	Tax Sharing and Indemnification Agreement

	 	 6.16 
	Tax-Deferred Exchange

	 	 10.1(gggg) 
	Taxes

	 	 3.14(a) 
	Termination Date

	 	 9.1(e) 
	Termination on Sale Agreement

	 	 6.16 
	Title 4A

	 	 1.1(a) 
	Title 8

	 	 1.1(a) 
	Title Policies

	 	 6.23 
	Title Policy

	 	 6.23 
	Transaction Costs

	 	 8.3(b) 
	Transfer

	 	 5.3(a)(i) 
	Transfer Taxes

	 	 8.3(b) 
	Trust

	 	 Preamble 
	Trust Bylaws

	 	 1.4(b) 
	Trust Declaration of Trust

	 	 1.4(b) 
	Trust Preferred Shares

	 	 3.2(b) 
	Trust SEC Documents

	 	 3.5(a) 
	Trust Share Rights

	 	 3.2(c) 
	Trust Shares

	 	 3.2(b) 
	Unaudited 2005 Interim Financial Statements

	 	 6.7(a) 
	Unaudited 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Combined Interim Financial Statements

	 	 6.7(e) 
	Unaudited First Quarter 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Second Quarter 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Stub Period Financial Statements

	 	 6.7(c) 
	Uniform System of Accounts

	 	 10.1(ccc) 
	WD Parent

	 	 10.1(iiii) 
	Westin Transaction Agreement

	 	 10.1(hhhh) 
	Working Capital

	 	 10.1(jjjj) 
	Working Capital Concentration Account Agreement

	 	 6.16 

xvii

 

MASTER AGREEMENT AND PLAN OF MERGER

     THIS MASTER AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of November 14,
2005, among HOST MARRIOTT CORPORATION, a Maryland corporation (“Horizon”), HOST MARRIOTT,
L.P., a Delaware limited partnership (“Horizon OP”), HORIZON SUPERNOVA MERGER SUB, L.L.C.,
a Maryland limited liability company wholly owned by Horizon OP (“REIT Merger Sub”),
HORIZON SLT MERGER SUB, L.P., a Delaware limited partnership wholly owned by REIT Merger Sub, its
general partner, and Horizon OP (“SLT Merger Sub” and, together with Horizon, Horizon OP
and REIT Merger Sub, the “Horizon Parties”), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (“Sun”), STARWOOD HOTELS & RESORTS, a Maryland real estate investment
trust (“Trust”), SHERATON HOLDING CORPORATION, a Nevada corporation (“SHC”), and
SLT REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (“SLT” and, together with
Sun, Trust and SHC, the “Sun Parties”).

RECITALS:

     A. Each of the Board of Directors of Horizon (including in its capacity as the sole general
partner of Horizon OP, Horizon OP acting individually and as sole member of REIT Merger Sub, REIT
Merger Sub acting individually and as sole general partner of SLT Merger Sub), the Board of
Directors of Sun and the Board of Trustees of Trust (including in its capacity as the sole general
partner of SLT) deems it advisable and in the best interests of its respective companies and
stockholders, shareholders, member or partners, as applicable, upon the terms and subject to the
conditions contained herein and in the Local Purchase Agreements, as applicable, that the following
transactions be consummated:

     (i) the Sun Parties shall, and shall cause the Sun Subsidiaries to (A)
complete, subject to Section 6.18, the Baseline Restructuring Steps (as
such term is defined in Exhibit A), as modified in accordance with
Exhibit A (as modified, the “Restructuring Plan”; such permitted
modifications, if any, the “Plan Modifications”) and (B) satisfy the
Restructuring Parameters to the extent contemplated by Exhibit A;

     (ii) REIT Merger Sub shall merge (the “REIT Merger”) with and into
Trust, with Trust being the Surviving Trust;

     (iii) subject to any Plan Modifications, Sun shall transfer or cause to be
transferred certain mortgage receivables to SHC;

     (iv) subject to any Plan Modifications, SHC shall distribute to Sun all
equity interests in Sheraton LLC, a limited liability company into which The
Sheraton Corporation, a Delaware corporation, shall have been converted prior to
such distribution;

     (v) Horizon OP and/or one or more Horizon Subsidiaries shall acquire from the
Global Entity Sellers and the Local Entity Sellers (together the “Entity
Sellers”), and the Entity Sellers shall sell to Horizon OP and/or one or more
Horizon Subsidiaries, all of the outstanding Interests of the Acquired Entities,

 

 

other than (a) the Interests owned beneficially and of record by other Acquired
Entities, (b) the Minority Equity Interests (other than SLT Units converted in the
SLT Merger in accordance with Section 1.7(a)) and (c) the Interests in
Trust and SLT (such Interests, other than as set forth in clauses (a),
(b) and (c), the “Stock Transfer Shares”);

     (vi) Horizon OP and/or one or more Horizon Subsidiaries shall acquire from
the Global Asset Sellers and the Local Asset Sellers (together the “Asset
Sellers”; the Entity Sellers and the Asset Sellers collectively referred to
herein as the “Sellers”), and the Asset Sellers shall sell to Horizon OP
and/or one or more Horizon Subsidiaries, all of the right, title and interest of
the Asset Sellers in and to the Directly Acquired Assets; and

     (vii) SLT Merger Sub shall merge (the “SLT Merger” and, together with
the REIT Merger, the “Mergers”) with and into SLT, with SLT being the
Surviving Partnership.

     B. The Horizon Parties and the Sun Parties desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated by this Agreement and the
Local Purchase Agreements and the Horizon Transactions.

     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and intending to be bound hereby, the parties hereto
hereby agree as follows:

ARTICLE 1.

THE MERGERS; CONVERSION OF SECURITIES

     Section 1.1 The Mergers.

          (a) Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with Title 4A of the Corporations and Associations Article of the Annotated Code of
Maryland, as amended (“Title 4A”), and Title 8 of the Corporations and Associations Article
of the Annotated Code of Maryland, as amended (“Title 8”), at the REIT Merger Effective Time, REIT Merger Sub shall be merged with and into
Trust, with Trust as the surviving real estate investment trust (the “Surviving Trust”),
and the separate limited liability company existence of REIT Merger Sub shall cease. Immediately
following the REIT Merger, Trust shall continue its real estate investment trust existence under
the laws of the State of Maryland under the name “Horizon Supernova Merger Sub Trust”.

          (b) Upon the terms and subject to the conditions of this Agreement, and in accordance with the
Delaware Revised Uniform Limited Partnership Act, as amended (the “DRULPA”), at the SLT
Merger Effective Time, SLT Merger Sub shall be merged with and into SLT, with SLT as the surviving
limited partnership (the “Surviving Partnership”) and the separate limited partnership
existence of SLT Merger Sub shall cease. SLT shall continue its limited partnership existence
under the laws of the State of Delaware under the name “Supernova Realty Partnership, L.P.”.

2

 

     Section 1.2 Closing. The closing of the Closing Transactions (the “Closing”)
will, subject to the satisfaction or waiver of the conditions set forth in Article 7, take
place at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022,
commencing at 7:00 a.m., local time, on a date to be mutually agreed upon by Horizon OP and Sun;
provided that, in the event Horizon OP and Sun are unable to mutually agree upon such a
date within two (2) business days following the date on which the conditions set forth in
Article 7 (other than (x) those conditions that, by their terms, are to be satisfied on the
Closing Date and (y) Section 7.2 with respect to the Restructuring Parameters that are
contemplated by the Restructuring Plan to be satisfied, or the Sun Restructuring Steps or the
Closing Restructuring Steps that are required to be completed by the Restructuring Plan, on or
promptly before the Closing Date) have been satisfied or waived (such date, or if after any such
date any such conditions are no longer satisfied, the first subsequent date on which all such
conditions are satisfied or waived, the “Satisfaction Date”), then such date shall be as
specified by Horizon OP in a written notice delivered to Sun (the “Closing Notice”), which
date shall be the first Monday (or, if such Monday is not a business day, the next business day)
that is at least three (3) business days following the date on which the Closing Notice is
delivered to Sun. Horizon OP shall deliver the Closing Notice no later than four (4) business days
following the Satisfaction Date. The date on which the Closing actually occurs is referred to
herein as the “Closing Date”.

     Section 1.3 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, (i) Horizon OP, REIT Merger Sub and Trust shall cause to be filed
with the State Department of Assessments and Taxation of Maryland (the “Department”)
articles of merger substantially in the form of Exhibit C (the “REIT Articles of
Merger”), duly executed and so filed in accordance with Title 4A and Title 8, (ii) the
Surviving Partnership shall file with the Secretary of State of the State of Delaware a certificate
of merger in a form to be mutually agreed upon by Horizon OP and Sun (the “SLT Certificate of Merger”), duly executed and so filed in accordance with the DRULPA and
(iii) the Horizon Parties and the Sun Parties shall make all other filings and recordings required
under Title 4A and Title 8 to effect the REIT Merger, and under the DRULPA to effect the SLT
Merger. The Mergers shall become effective at such times (with respect to the REIT Merger, the
“REIT Merger Effective Time” and, with respect to the SLT Merger, the “SLT Merger
Effective Time” and, collectively, the “Effective Times”) as are provided for in this
Agreement, as further specified in the REIT Articles of Merger and the SLT Certificate of Merger or
as Horizon OP and Sun shall otherwise agree (not to exceed thirty (30) days after the REIT Articles
of Merger are accepted for record by the Department).

     Section 1.4 Effects of the Mergers; Declaration of Trust and Bylaws; SLT Limited
Partnership Agreement.

          (a) The REIT Merger shall have the effects set forth in the applicable provisions of Maryland
law.

          (b) The declaration of trust of Trust (the “Trust Declaration of Trust”) shall be
amended in accordance with the REIT Articles of Merger. The bylaws of Trust (the “Trust
Bylaws”), as in effect immediately prior to the REIT Merger Effective Time, shall be the bylaws
of the Surviving Trust until duly amended as provided for therein or under Title 8.

3

 

          (c) The SLT Merger shall have the effects set forth in the applicable provisions of the
DRULPA. The Surviving Trust shall be the sole general partner of the Surviving Partnership.

          (d) The certificate of limited partnership of SLT, as in effect immediately prior to the SLT
Merger Effective Time (the “SLT Certificate”), except as amended pursuant to the SLT
Certificate of Merger, shall be the certificate of limited partnership of the Surviving Partnership
until thereafter duly amended as permitted for in the SLT LP Agreement or under the DRULPA. The
Third Amended and Restated Limited Partnership Agreement of SLT, as in effect immediately prior to
the SLT Merger Effective Time (the “SLT LP Agreement”), shall be the limited partnership
agreement of the Surviving Partnership, until thereafter duly amended as provided for therein or
under the DRULPA. The limited partnership agreement of SLT Merger Sub, as in effect immediately
prior to the SLT Merger Effective Time, shall terminate at the SLT Merger Effective Time.

     Section 1.5 Trustees and Officers of Trust. The managers of REIT Merger Sub
immediately prior to the REIT Merger Effective Time shall be the trustees of the Surviving Trust,
until the earlier of their death, resignation or removal or until their respective successors are
duly elected and qualified, as the case may be. The officers of REIT Merger Sub immediately prior
to the REIT Merger Effective Time shall be
the officers of the Surviving Trust, until the earlier of their death, resignation or removal
or until their respective successors are duly elected and qualified, as the case may be.

     Section 1.6 Effect on Shares of Beneficial Interest. At the REIT Merger Effective
Time, by virtue of the REIT Merger and without any action on the part of any party to this
Agreement or the holders of any of the following securities:

          (a) Shares of Beneficial Interest of Trust. Except as provided in Sections
1.6(b) and 1.6(c):

     (i) Each issued and outstanding Class A Share (as such term is defined in the
Trust Declaration of Trust), par value $0.01 per share, of Trust (“Class A
Shares”), shall be converted into the right to receive (A) that number of
fully paid and nonassessable shares of common stock, par value $0.01 per share, of
Horizon (“Horizon Common Stock”), if any, equal to (the “Class A Stock
Consideration Per Share”) (1) the number of shares of Horizon Common Stock
equal to (x) 133,529,412, subject to adjustment pursuant to Section 1.10
(the “Maximum Share Amount”) minus (y) the sum (the “Pre-Merger Share
Amount”) of (i) the number of shares of Horizon Common Stock, if any, included
in the Other Share Consideration and (ii) the number equal to (a) the Exchange
Ratio multiplied by (b) the sum (the “Class B Share Total”) of (I) the
number of Class B Shares outstanding immediately prior to the REIT Merger
Effective Time (the “Determination Time”) other than Restricted Stock
converted in accordance with Section 1.6(c), (II) the number of Class B
Shares, if any, issuable upon exchange of any and all Class A EPS outstanding as
of the Determination Time (whether or not such shares of Class A EPS are then
exchangeable) and (III) the number of Class B Shares issuable upon exchange,

4

 

exercise, conversion or redemption of any and all Trust Share Rights (other than
SLT Units) outstanding as of the Determination Time (whether or not such Trust
Share Rights are then exchangeable, exercisable, convertible or redeemable), if
any, divided by (2) the number of Class A Shares outstanding as of the
Determination Time and (B) that amount of cash equal to (1) the Class A Cash
Consideration divided by (2) the number of Class A Shares outstanding as of the
Determination Time.

     (ii) Each issued and outstanding Class B Share (as such term is defined in
the Trust Declaration of Trust), par value $0.01 per share, of Trust (“Class B
Shares”) shall be converted into the right to receive (A) 0.6122 fully paid
and nonassessable shares of Horizon Common Stock, subject to adjustment pursuant
to Section 1.10 (the “Exchange Ratio”) and (B) an amount of cash,
without interest, equal to the sum (“Class B Cash Amount”) of (1) $0.503
and (2) the Class B Excess Dividend Amount, subject to adjustment pursuant to
Section 1.10.

     (iii) Each issued and outstanding Class A Exchangeable Preferred Share (as
such term is defined in the Trust Declaration of Trust), par value $0.01 per
share, of Trust (“Class A EPS”) shall be converted into the right to
receive:

     (A) (1) from Sun, cash in the amount equal to (x) the number of shares
of common stock, par value $0.01 per share, of Sun (“Sun Common
Stock”) issuable upon conversion of such Class A EPS as of the
Determination Time multiplied by (y) the Sun Common Stock Value (the
aggregate amount payable by Sun to all holders of Class A EPS as of the
Determination Time, the “Class A EPS Sun Cash Amount”) and (2) from
Horizon, cash, without interest, in the amount equal to (x) the number of
Class B Shares issuable upon exchange of such Class A EPS as of the
Determination Time multiplied by (y) the Class B Cash Amount (the aggregate
amount payable by Horizon to all holders of Class A EPS as of the
Determination Time, “Class A EPS Horizon Cash Amount”), and

     (B) that number of fully paid and nonassessable shares of Horizon
Common Stock equal to (1) the number of Class B Shares issuable upon
exchange of such Class A EPS as of the Determination Time multiplied by (2)
the Exchange Ratio.

     (iv) The shares of Horizon Common Stock and Sun Common Stock and cash to be
issued or paid pursuant to this Section 1.6(a) shall collectively be
referred to as the “REIT Merger Consideration”. All Trust Shares
converted pursuant to this Section 1.6(a) shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and each
Certificate to the extent previously representing any such Trust Shares shall
thereafter represent the right to receive certificates and cash, as applicable,
representing the REIT Merger Consideration into which such Trust Shares were

5

 

converted. No fractional shares of Horizon Common Stock or Sun Common Stock shall
be issued, and in lieu thereof, a cash payment shall be made pursuant to
Section 1.9(g) hereof.

          (b) Cancellation of Certain Trust Shares. Each Trust Share held by any Horizon Party
or any wholly owned Subsidiary of any Horizon Party or by Trust or any wholly owned Subsidiary of
Trust (except, in each case, for Trust Shares held on behalf of third parties) immediately prior to
the REIT Merger Effective Time shall be canceled and extinguished without any conversion thereof
and no payment shall be made with respect thereto.

          (c) Treatment of Certain Trust Share Rights. Prior to the Closing, Sun and Trust
shall (i) take all necessary action required under Sun’s 1995 Long-Term Incentive Plan, 1999
Long-Term Incentive Compensation Plan, 2002 Long-Term Incentive Compensation Plan and 2004
Long-Term Incentive Compensation Plan and Trust’s 1995 Long-Term Incentive Plan and any other
equity incentive plans or arrangements (collectively, the “Equity Plans”) to convert (A)
all options to purchase Class B Shares (including options to purchase Paired Shares) (the
“Options”) outstanding thereunder into options to purchase shares of Sun Common Stock only
and (B) all restricted stock unit awards with respect to Class B Shares (including such awards with
respect to Paired Shares) (the “Restricted Stock Unit Awards” and, together with the
Options, the “Equity Awards”) outstanding thereunder into restricted stock unit awards with
respect to shares of Sun Common Stock only and (ii) otherwise cause there to be no Trust Share
Rights outstanding as of the REIT Merger Effective Time other than (x) SLT Units that have not been
tendered for exchange in accordance with the applicable exchange rights agreement, and (y) SLC
Units with respect to which neither Horizon nor any Horizon Subsidiary (including the Acquired
Entities) will have any Liability. Sun shall assume all Liabilities, if any, of the Acquired
Entities or Sellers relating to any Trust Share Rights converted, or caused not to exist, pursuant
to this Section 1.6(c). Notwithstanding anything to the contrary in this Agreement, each
issued and outstanding Class B Share which is subject to transfer and/or vesting restrictions under
the terms of the Equity Plans (“Restricted Stock”) shall be converted into an award with
respect to Sun Common Stock only, in accordance with the applicable Equity Plan and/or the terms of
the award agreement evidencing such Restricted Stock and immediately prior to the REIT Merger
Effective Time there will be no Restricted Stock outstanding with respect to Class B Shares. Sun
shall assume all Liabilities, if any, of the Acquired Entities or Sellers relating to any
Restricted Stock converted pursuant to this Section 1.6(c).

          (d) Membership Interests of REIT Merger Sub. Each membership interest of REIT Merger
Sub outstanding immediately prior to the REIT Merger Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable Class A Share.

     Section 1.7 Effect on Partnership Units. At the SLT Merger Effective Time, by virtue
of the SLT Merger and without any action on the part of any party to this Agreement or the holders
of any of the following securities:

          (a) SLT Units. Except as provided in Section 1.7(b):

     (i) Each RP Unit (as such term is defined in Section 4.1(c) of the SLT LP
Agreement) of SLT (“RP Units”) outstanding immediately prior to the SLT

6

 

Merger Effective Time shall be converted into the right to receive cash, without
interest, in the amount equal to (A) that number of Class B Shares issuable upon
exchange of such RP Unit immediately prior to the REIT Merger Effective Time
multiplied by (B) the sum of (1) the Class B Cash Amount and (2) the Exchange
Ratio multiplied by the Share Value.

     (ii) Each Class A RP Unit (as such term is defined in Section 4.1(c) of the
SLT LP Agreement) of SLT (“Class A RP Units” and, together with the RP
Units, “SLT Units”) outstanding immediately prior to the SLT Merger
Effective Time shall be converted into the right to receive the consideration set
forth on Schedule 1.7(a)(ii).

     (iii) The cash to be paid pursuant to this Section 1.7(a) shall be
collectively referred to as the “SLT Merger Consideration”. Except as set
forth in Schedule 1.7(a)(ii), all SLT Units converted pursuant to this
Section 1.7(a) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate (if any)
previously representing any such SLT Units shall thereafter represent the right to
receive the SLT Merger Consideration into which such SLT Units were converted in
the SLT Merger.

          (b) Treatment of Certain SLT Units and General Partner Percentage Interest.

     (i) Each SLT Unit held by any Horizon Party or any wholly owned Subsidiary of
any Horizon Party (other than the Surviving Trust or any wholly owned Subsidiary
of the Surviving Trust) (except, in each case, for SLT Units held on behalf of
third parties) immediately prior to the SLT Merger Effective Time shall be
canceled and extinguished without any conversion thereof and no payment shall be
made with respect thereto.

     (ii) The Percentage Interest (as such term is defined in the SLT LP
Agreement) in SLT held by Trust or the Surviving Trust in its capacity as general
partner of SLT shall not be amended or modified in any respect by virtue of the
SLT Merger.

          (c) Partnership Interests in SLT Merger Sub. Each limited partnership unit of SLT
Merger Sub outstanding immediately prior to the SLT Merger Effective Time shall be converted into
and exchanged for that number of RP Units of the Surviving Partnership equal to the number of SLT
Units outstanding immediately prior to the SLT Merger Effective Time that are converted into cash
in the SLT Merger. The general partnership interest of REIT Merger Sub in SLT Merger Sub
outstanding immediately prior to the SLT Merger Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect thereto.

          (d) Appraisal or Dissenters Rights. No holder of SLT Units is entitled under
applicable Law or the SLT LP Agreement to appraisal, dissenters or other similar rights as a result
of the SLT Merger.

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     Section 1.8 Appraisal or Dissenters Rights. Except for Sun (as sole holder of Class A
Shares), which shall waive any appraisal, dissenters or similar rights to which it is entitled with
respect to such Class A Shares pursuant to its approval of the REIT Merger promptly after the
execution of this Agreement, no holder of
Trust Shares is entitled under applicable Law or the Trust Declaration of Trust to appraisal,
dissenters or similar rights as a result of the REIT Merger.

     Section 1.9 Exchange of Certificates; Pre-Closing Dividends; Fractional Shares.

          (a) Exchange Agent. Prior to the REIT Merger Effective Time, Horizon OP shall appoint
American Stock Transfer & Trust Company, or another bank or trust company mutually agreed upon by
Horizon OP and Sun, to act as exchange agent (the “Exchange Agent”) for the exchange of the
REIT Merger Consideration and the Sun Common Share Amount, as applicable, upon surrender of
certificates (the “Certificates”) representing issued and outstanding Class A EPS or units
(when paired or unpaired) consisting of Class B Shares and shares of Sun Common Stock (each such
unit, a “Paired Share”)).

          (b) Provision of REIT Merger Consideration.

     (i) Horizon OP shall deposit, or cause to be deposited, with the Exchange
Agent, for the benefit of the holders of Trust Shares on or before the REIT Merger
Effective Time, the REIT Merger Consideration (other than the Class A EPS Sun Cash
Amount and all REIT Merger Consideration payable pursuant to Section
1.6(a)(i)) issuable in exchange for such issued and outstanding Trust Shares
pursuant to Section 1.6(a), and, after the REIT Merger Effective Time from
time to time as needed, any cash required to make payments (1) of any dividends or
other distributions payable in respect of Horizon Common Stock pursuant to
Section 1.9(d) and (2) in lieu of any fractional shares of Horizon Common
Stock pursuant to Section 1.9(g).

     (ii) Sun shall deposit, or cause to be deposited, with the Exchange Agent,
for the benefit of the holders of Class A EPS on or before the REIT Merger
Effective Time, the Class A EPS Sun Cash Amount included in the REIT Merger
Consideration issuable in exchange for the issued and outstanding shares of Class
A EPS pursuant to Section 1.6(a) and, after the REIT Merger Effective Time
from time to time as needed, any cash required to make payments of any dividends
or other distributions payable in respect of Sun Common Stock pursuant to
Section 1.9(d).

     (iii) The REIT Merger Consideration, together with any dividends or
distributions with respect thereto and any cash in lieu of fractional shares,
deposited with the Exchange Agent are collectively referred to herein as the
“Exchange Fund”. The Exchange Agent (or other depository acting for the
benefit of the Exchange Agent) shall invest any cash included in the Exchange Fund
as directed by Horizon OP, on a daily basis. Any interest or other income
resulting from such investments shall be paid to Horizon OP other than interest

8

 

and other income to the extent
resulting from the investment of the Class A EPS Sun Cash Amount, which
interest and other income shall be paid to Sun.

          (c) Exchange Procedure. Horizon OP and Sun shall use commercially reasonable efforts
to cause the Exchange Agent, no later than the fifth business day after the Closing Date, to mail
to each holder of record of a Certificate or Certificates which immediately prior to the REIT
Merger Effective Time represented outstanding Class A EPS or Paired Shares (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in a form and have such other provisions as Horizon OP and Sun may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange for the REIT Merger
Consideration and a certificate representing the Sun Common Share Amount, as applicable, together
with any dividends or distributions to which such holder is entitled pursuant to Section
1.9(d) and cash, if any, payable in lieu of fractional shares pursuant to Section
1.9(g). Upon surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as may reasonably be required
by the Exchange Agent, (i) the holder of such Certificate shall be entitled to receive in exchange
therefor the REIT Merger Consideration into which Class A EPS or Class B Shares theretofore
represented by such Certificate shall have been converted pursuant to Section 1.6(a),
together with any dividends or other distributions to which such holder is entitled pursuant to
Section 1.9(d) and cash, if any, payable in lieu of fractional shares pursuant to
Section 1.9(g) and, in the case of Certificates for Paired Shares, a certificate
representing the number of shares of Sun Common Stock equal to the number of shares of Sun Common
Stock represented by such Certificate prior to the REIT Merger Effective Time (the “Sun Common
Share Amount”), (ii) Horizon OP and Sun shall use commercially reasonable efforts to cause the
Exchange Agent to mail (or make available for collection by hand if so elected by the surrendering
holder) such amount to such holder within five (5) business days after receipt thereof and (iii)
the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Class A EPS or Paired Shares which is not registered in the transfer records of Sun or
Trust, as applicable, payment of the REIT Merger Consideration or issuance of the Sun Common Share
Amount, as applicable, may be made to a Person other than the Person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment or issuance either shall pay any
transfer or other Taxes required by reason of such payment or issuance being made to a Person other
than the registered holder of such Certificate or establish to the satisfaction of Sun or Horizon
OP, as applicable, that such Taxes have been paid or are not applicable. Until surrendered as
contemplated by this Section 1.9, each Certificate shall be deemed at any time after the
REIT Merger Effective Time to represent only the right to receive upon such surrender the REIT
Merger Consideration into which Class A EPS or Class B Shares heretofore represented by such
Certificate shall have been converted pursuant to Section 1.6(a), any dividends or other
distributions to which such holder is entitled pursuant to Section 1.9(d), any cash payable
in lieu of fractional shares pursuant to Section 1.9(g) and, if applicable, the Sun Common
Share Amount. No interest will be paid or will accrue on the REIT Merger Consideration upon the
s
urrender of any Certificate or on any cash payable pursuant to Section 1.9(d) or
Section 1.9(g). The Exchange Agent shall be entitled, in its sole and absolute discretion,
subject to Section 1.9(f), to deduct and withhold from the cash, Horizon Common Stock or
Sun Common Stock, or any combination thereof, that otherwise is payable or issuable

9

 

pursuant to this Agreement to any holder of one or more Certificates such amounts as are
required to be deducted and withheld with respect to the making of such payment under the Code or
under any provision of Tax Law; provided that, notwithstanding anything in this Section
1.9(c) to the contrary, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller or any Subsidiary
thereof unless (i) in the case of any deduction or withholding other than under Section 1445 of the
Code, Horizon OP shall have furnished Sun, no later than fifteen (15) days prior to the applicable
payment date, with a written notice referring to this Section 1.9(c) and describing the
approximate amount of the deduction or withholding to be made (it being agreed that, in the event
of any such written notice and with respect to such deduction or withholding, (x) Sun and Horizon
OP shall promptly enter into discussions in good faith to determine if applicable circumstances
permit the lack of such deduction or withholding and (y) to the extent Horizon OP determines in
good faith that such deduction or withholding is required, and Sun determines in good faith that
such deduction or withholding is not required, there shall be no such deduction or withholding upon
an agreement by Sun in writing to indemnify Horizon OP against any such deduction, withholding,
interest, penalties and expenses that subsequently becomes borne, as a result of a challenge by the
applicable tax authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or
withholding under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an
affidavit as contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted
or withheld by the Exchange Agent shall be treated for all purposes of this Agreement as having
been paid or issued to the holder of the Certificates in respect of which such deduction and
withholding was made by the Exchange Agent.

          (d) Distributions with Record Date after the REIT Merger Effective Time. Dividends or
other distributions with respect to Horizon Common Stock or Sun Common Stock with a record date
after the REIT Merger Effective Time shall be paid by Horizon or Sun, as applicable, to the
Exchange Agent for the benefit of any holder of any unsurrendered Certificate with respect to the
Horizon Common Stock or Sun Common Stock, as applicable, represented thereby and shall only be paid
to a holder of any unsurrendered Certificate once such holder surrenders the Certificate in
accordance with this Section 1.9. No cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 1.9(g), in each case until the surrender of
such Certificate in accordance with this Section 1.9. Subject to the effect of applicable
escheat laws, following surrender of any such Certificate, there shall be paid to the holder of
such Certificate, without interest, (i) at the time of such surrender, (x) the amount of any cash
in lieu of any fractional Horizon Common Stock to which such holder is entitled pursuant to
Section 1.9(g) and (y) the amount of dividends or other distributions with a record date
after the REIT Merger Effective Time theretofore paid with respect to such whole share of Horizon
Common Stock or Sun Common Stock and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the REIT Merger Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with respect to such whole
share of Horizon Common Stock or Sun Common Stock.

          (e) No Further Ownership Rights in Trust Shares; Share Transfer Books. All REIT
Merger Consideration paid upon the surrender of Certificates in accordance with the terms of this
Section 1.9 (together with any dividends or other distributions paid pursuant to
Section 1.9(d)) shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Trust Shares theretofore represented by such Certificates; provided,
however, that Trust shall transfer

10

 

to its transfer agent cash sufficient to pay any dividends or make any other distributions
with a record date prior to the REIT Merger Effective Time which may have been declared or made by
Trust on such Trust Shares in accordance with the terms of this Agreement or prior to the date of
this Agreement and which remain unpaid at the REIT Merger Effective Time. At the REIT Merger
Effective Time, the share transfer books of Trust shall be closed and thereafter, there shall be no
further registration of transfers on the share transfer books of Trust of the Trust Shares which
were outstanding prior to the REIT Merger Effective Time, nor shall there be any further issuances
of Trust Shares or any Trust Share Rights. If, after the REIT Merger Effective Time, Certificates
are presented to Horizon OP or Sun for any reason, they shall be canceled and exchanged as provided
in this Section 1.9.

          (f) No Liability. None of Sun, Trust, Horizon OP or the Exchange Agent shall be
liable to any Person in respect of any REIT Merger Consideration, the Sun Common Share Amount, cash
payable in lieu of fractional shares pursuant to Section 1.9(g) or dividends or other
distributions delivered to a public official pursuant to any applicable abandoned property, escheat
or similar Law. Any portion of the Exchange Fund (other than dividends or distributions paid to
the Exchange Agent pursuant to Section 1.9(d), which the Exchange Agent shall retain in the
Exchange Fund, subject to applicable escheat and other similar Laws) delivered to the Exchange
Agent by Horizon OP pursuant to this Agreement that remains unclaimed for twelve (12) months after
the REIT Merger Effective Time shall be delivered by the Exchange Agent to Horizon OP, upon demand,
and any holders of Certificates who have not theretofore complied with Section 1.9(c) shall
thereafter, subject to the immediately preceding sentence, look only to Horizon OP for delivery of
the REIT Merger Consideration (other than the Class A EPS Sun Cash Amount) and any cash payable in
lieu of fractional shares of Horizon Common Stock pursuant to Section 1.9(g), subject to
applicable escheat and other similar Laws, but not the dividends or distributions paid to the
Exchange Agent pursuant to Section 1.9(d). Any portion of the Exchange Fund (other than
dividends or distributions paid to the Exchange Agent pursuant to Section 1.9(d), which the
Exchange Agent shall retain in the Exchange Fund, subject to applicable escheat and other similar
Laws) delivered to the Exchange Agent by Sun pursuant to this Agreement that remains unclaimed for
twelve (12) months after the REIT Merger Effective Time shall be delivered by the Exchange Agent to
Sun, upon demand, and any holders of Certificates who have not theretofore complied with
Section 1.9(c) shall thereafter, subject to the first sentence of this Section
1.9(f), look only to Sun, and Sun shall be solely responsible, for delivery of the REIT Merger
Consideration (other than the shares of Horizon Common Stock and the Class B Cash Consideration),
subject to applicable escheat and other similar Laws, but not the dividends or distributions paid
to the Exchange Agent pursuant to Section 1.9(d). At any time, Horizon OP shall be
entitled, in its reasonable discretion, to deduct and withhold, or cause the Exchange Agent to
deduct and withhold, from the REIT Merger Consideration such amounts as are required to be deducted
and withheld with respect to the payment of such REIT Merger Consideration under the Code or under
any provision of Tax Law; provided that, notwithstanding anything in this Section
1.9(f) to the contrary, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller or any Subsidiary
thereof unless (i) in the case of any deduction or withholding other than under Section 1445 of the
Code, Horizon OP shall have furnished Sun, no later than fifteen (15) days prior to the applicable
payment date, with a written notice referring to this Section 1.9(f) and describing the
approximate amount of the deduction or withholding to be made (it being agreed that, in the event
of any such written notice and with

11

 

respect to such deduction or withholding, (x) Sun and Horizon OP shall promptly enter into
discussions in good faith to determine if applicable circumstances permit the lack of such
deduction or withholding and (y) to the extent Horizon OP determines in good faith that such
deduction or withholding is required, and Sun determines in good faith that such deduction or
withholding is not required, there shall be no such deduction or withholding upon an agreement by
Sun in writing to indemnify Horizon OP against any such deduction, withholding, interest,
penalties, and expenses that subsequently becomes borne, as a result of a challenge by the
applicable tax authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or
withholding under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an
affidavit as contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted
or withheld by Horizon OP or the Exchange Agent shall be treated for all purposes of this Agreement
as having been paid or issued to the holder of the Certificates in respect of which such deduction
and withholding was made by the Exchange Agent.

          (g) No Fractional Shares.

     (i) No certificates or scrip representing fractional Horizon Common Stock or Sun Common
Stock or book-entry credit of the same, shall be issued upon the surrender for exchange of
Certificates or otherwise, and such fractional share interests will not entitle the owner
thereof to vote, to receive dividends or to any other rights of a stockholder of Horizon or
Sun, respectively.

     (ii) In lieu of the issuance of any fractional Horizon Common Stock, pursuant to this
Agreement, each holder of one or more Certificates shall be paid an amount in cash (without
interest), rounded to the nearest cent (with .5 of a cent rounded up), determined by
multiplying (A) the average closing price of one (1) share of Horizon Common Stock on the
New York Stock Exchange (the “NYSE”) on the twenty (20) consecutive trading days
immediately preceding the Closing Date by (B) the fraction of a share of Horizon Common
Stock which such holder would otherwise be entitled to receive under this Section
1.9.

          (h) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Horizon OP or Sun, as applicable, or the Exchange Agent,
the posting by such Person of a bond in such reasonable amount as Horizon OP or Sun, as applicable,
or the Exchange Agent reasonably may direct as indemnity against any claim that may be made against
them with respect to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the REIT Merger Consideration to which the holders thereof are
entitled pursuant to Section 1.6(a), the Sun Common Share Amount, if any, to which holders
thereof are entitled pursuant to Section 1.9(c), if applicable, any cash payable pursuant
to Section 1.9(g) to which the holders thereof are entitled and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 1.9(d).

          (i) Uncertificated Shares. In the case of any Class A EPS or Paired Shares that are
not represented by Certificates, the Exchange Agent shall issue at the REIT Merger Effective Time
the applicable REIT Merger Consideration, the Sun Common Share Amount, if

12

 

applicable, and any cash payable pursuant to Section 1.9(g), to the holders of such
Trust Shares without any action by such holders, and the parties hereto shall make appropriate
adjustments to this Section 1.9 to assure the equivalent treatment thereof.

          (j) SLT Merger Procedures. Sun and Horizon OP shall cooperate in good faith to
establish, prior to the Closing, appropriate procedures, consistent with this Section 1.9
to the extent applicable, with respect to the SLT Merger.

     Section 1.10 Certain Adjustments. If, between the date of this Agreement and the REIT
Merger Effective Time, the outstanding Horizon Common Stock, Sun Common Stock or Trust Shares shall
have been changed into a different number of shares, as applicable, or different class by reason of
any reclassification, recapitalization, stock split, split-up, combination or exchange of shares,
or a stock dividend or dividend payable in any other securities shall be declared with a record
date within such period, or any similar event shall have occurred, the Exchange Ratio, the Class A
Stock Consideration Per Share, the Class B Cash Amount (which shall be adjusted pursuant to this
sentence only in connection with an event relating to the Class B Shares), the Maximum Share Amount
and the Increased Share Amount (which Maximum Share Amount and Increased Share Amount shall be
adjusted pursuant to this sentence only in connection with an event relating to Horizon Common
Stock and not Sun Common Stock or Trust Shares) shall be appropriately adjusted to provide to the
holders of Horizon Common Stock, Trust Shares or SLT Units, as applicable, the same economic effect
as contemplated by this Agreement prior to such event.

     Section 1.11 Tax Treatment. The parties hereto (i) intend that for federal, and
applicable state and local, income tax purposes, the REIT Merger will be treated as a taxable
purchase by Horizon OP of all of Trust’s outstanding shares of beneficial interest and (ii) shall
prepare and file their applicable Tax Returns based on such treatment. The parties hereto intend
that for federal, and applicable state and local, income Tax purposes, the SLT Merger will be
treated as an acquisition by Horizon OP of SLT Units in exchange for the SLT Merger Consideration.
Each SLT Unitholder who participates in the SLT Merger shall be deemed, by such SLT Unitholder’s
act of receiving and accepting its share of the SLT Merger Consideration, to have agreed to the
characterization of the receipt of cash (including any cash deemed to be received pursuant to
Section 752 of the Code) as a taxable sale of all or a portion of its SLT Units, to the extent of
such cash received or deemed received, to Horizon OP.

ARTICLE 2.

OTHER CLOSING TRANSACTIONS

     Section 2.1 Other Closing Transactions. Upon the terms and subject to the conditions
set forth in this Agreement the following transactions (the “Other Closing Transactions”
and, together with the REIT Merger and the SLT Merger, the “Closing Transactions”) shall
occur at or immediately prior to the REIT Merger Effective Time (subject to Section
2.1(f)):

          (a) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(a) (the “Global
Entity Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
of the Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable
Horizon Subsidiaries shall purchase, acquire and accept from such Global Entity Sellers, all right,
title and interest of such Global Entity

13

 

Sellers in and to the Stock Transfer Shares other than the
Local Stock Transfer Shares, free and clear of all Encumbrances (the “Global Stock Transfer
Shares”).

          (b) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(b) (the “Global
Asset Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable Horizon
Subsidiaries shall purchase, acquire and accept from such Global Asset Sellers, all right, title
and interest of such Global Asset Sellers in and to the Directly Acquired Assets, free and clear of
all Encumbrances other than Permitted Title Exceptions (the “Global Directly Acquired
Assets”).

          (c) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(c) (the “Local
Entity Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
of the Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable
Horizon Subsidiaries shall purchase, acquire and accept from such Local Entity Sellers, pursuant to
the applicable Local Purchase Agreements, all right, title and interest of such Local Entity
Sellers in and to all of the Stock Transfer Shares of the Acquired Entities set forth on
Schedule 2.1(c), free and clear of all Encumbrances (the “Local Stock Transfer
Shares”).

          (d) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(d) (the “Local
Asset Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable Horizon
Subsidiaries shall purchase, acquire and accept from the Local Asset Sellers, pursuant to the
applicable Local Purchase Agreements, all right, title and interest of such Local Asset Sellers in
and to the Directly Acquired Assets, free and clear of all Encumbrances other than Permitted Title
Exceptions (the “Local Directly Acquired Assets”).

          (e) Horizon OP or one or more Horizon Subsidiaries designated by Horizon OP in writing shall
assume the Assumed Liabilities of the Asset Sellers pursuant to an instrument of assumption in all
material respects in the form of Exhibit D (the “Assumption Agreement”);
provided that, the assumption of Assumed Liabilities of Local Asset Sellers will be
pursuant to the applicable Local Purchase Agreements. It is expressly agreed to and understood by
the parties hereto that no Horizon Party or Horizon Subsidiary shall directly or indirectly assume
any Liability of Sun or any Subsidiary of Sun or
Trust (each, a “Sun Subsidiary”) as a result of the transactions contemplated by this
Agreement other than the Assumed Liabilities.

          (f) Notwithstanding anything contained herein to the contrary, Sun and Horizon OP agree to
cause such Acquired Hotels identified as the “1031 Hotels” on Schedule 10.1(d) as shall
have an aggregate Acquired Hotel Agreed Amount of at least $495,000,000 (but no more than is
necessary to achieve the minimum $495,000,000 amount) (such Acquired Hotels, the “Replacement
Hotels”) to be designated as replacement property to consummate a Tax-Deferred Exchange with
respect to property that Horizon OP will dispose of either prior to or within 180 days after the
Closing Date through the use of a qualified intermediary (the “Intermediary”) and/or
Exchange Accommodation Titleholder (“EAT”), pursuant to which Horizon OP shall assign all
of its right, title and interest (but not its liabilities or obligations) relating to the
Replacement Hotels under this Agreement and the Ancillary

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Agreements to either an Intermediary or
the EAT (either the Intermediary or the EAT referred to herein as the “Assignee”);
provided that (i) the Replacement Hotels shall be transferred on the Closing Date
immediately prior to the REIT Merger Effective Time and (ii) the transfer of the Replacement Hotels
is made directly by (I) Sun and/or (II) any Subsidiary of Sun that is neither an Acquired Entity
nor a Subsidiary of an Acquired Entity. The Sun Parties agree to cooperate with the Horizon
Parties in structuring such transaction as a Tax-Deferred Exchange for the benefit of Horizon and
its Subsidiaries. Horizon OP shall reimburse the Sun Parties for all liabilities, out-of-pocket
costs and expenses (other than Consent Costs and increased liability for income Taxes) reasonably
incurred by the Sun Parties in connection with the structuring and implementation of such
transaction as a Tax-Deferred Exchange (to the extent such costs and expenses would not have been
incurred by the Sun Parties but for such structuring or implementation). Without limiting the
generality of the immediately preceding sentence, any real property transfer, sales, use, transfer,
value added, stock transfer and stamp taxes, stamp duties, and any transfer, recording,
registration and other fees, charges, premiums and any similar taxes (such amounts, “Subject
Taxes”), in each case incurred by the Sun Parties as a result of the structuring and
implementation of such transactions as a Tax-Deferred Exchange (to the extent such amounts would
not have been incurred by the Sun Parties but for such structuring or implementation) shall be
borne by Horizon OP and shall not be treated as Transfer Taxes for purposes of Section
8.3(b). To the extent required in connection with the Tax-Deferred Exchanges, the Sun Parties
agree to render all required performance under this Agreement with respect to the Replacement
Hotels to the Assignee to the extent reasonably and timely directed by Horizon OP and to accept
performance of all of Horizon OP’s obligations with respect to the Replacement Hotels by the
Assignee. To the extent required in connection with the Tax-Deferred Exchanges, the Sun Parties
agree that performance by the Assignee with respect to the Replacement Hotels will be treated as
performance by Horizon OP and Horizon OP agrees that the Sun Parties’ performance to the Assignee,
to the extent timely requested by Horizon OP, will be treated as performance to Horizon OP.
Horizon OP shall unconditionally guarantee the full and timely performance by the Assignee of each
and every one of the representations, warranties, indemnities, obligations and undertakings of the
Horizon Parties under this Agreement (and any amendments or modifications hereto) that relate to
the Replacement Hotels. As such guarantor, Horizon OP shall be treated as a primary obligor with
respect to those representations, warranties, indemnities, obligations and undertakings, and, in
the event of a breach, the Sun Parties may proceed directly against Horizon
OP on this guarantee without the need to join the Assignee. Notwithstanding the
identification of the “1031 Hotels” on Schedule 10.1(d), if effecting a Tax-Deferred
Exchange including any such 1031 Hotel, would (x) result in a material Tax liability being incurred
by Sun that would not be incurred by Sun if such 1031 Hotel was not a Replacement Hotel (but was
otherwise an Acquired Hotel) or (y) require a consent, approval or authorization that would not be
required if such 1031 Hotel was not a Replacement Hotel (but was otherwise an Acquired Hotel) and
such consent, approval or authorization would result in material Consent Costs or has not been
obtained after the date of the Horizon Stockholders Meeting, Sun shall be entitled to cause one or
more Acquired Hotels identified on such Schedule to not be treated as a Replacement Ho
tel upon
informing Horizon OP in writing that Sun would like to utilize one or more other Acquired Hotels
(other than those Acquired Hotels identified as “Non-1031 Hotels” on Schedule 10.1(d))
which (A) would not impair the availability of a Tax-Deferred Exchange from Horizon OP’s
perspective and (B) have Acquired Hotel Agreed Amount(s) that (1) aggregate the Acquired Hotel
Agreed Amount(s) of the hotel(s) which are no

15

 

longer to be treated as a Replacement Hotel or (2)
result in the aggregate of the Acquired Hotel Agreed Amount(s) for all Acquired Hotels that will be
included in a Tax-Deferred Exchange (taking into account, for the avoidance of doubt, such
adjustments to the Acquired Hotels so included as are the subject of this sentence) being equal to
or greater than $495,000,000 (Acquired Hotels satisfying clauses (A) and (B),
thereafter being treated as Replacement Hotels); provided that, notwithstanding any
provision in this Section 2.1(f) to the contrary, Horizon OP shall bear all Subject Taxes
incurred in connection with treating Acquired Hotels satisfying clauses (A) and (B)
as Replacement Hotels up to $2,000,000 (less the aggregate amount of Subject Taxes for which
Horizon is otherwise responsible for under this Section 2.1(f)) and Sun shall bear all
Subject Taxes incurred in connection with treating Acquired Hotels satisfying clauses (A)
and (B) as Replacement Hotels in excess thereof. For the avoidance of doubt,
notwithstanding anything in this Section 2.1(f) to the contrary, the Sun Parties hereby
make no representation or warranty, and undertake no other obligation, in each case with respect to
the Tax consequences of the transactions referenced in this Section 2.1(f) (including
whether the transactions qualify under Section 1031 of the Code) and shall not be responsible for
any loss or liability relating to any Tax liability to the Horizon Parties from such transactions.

     Section 2.2 Other Closing Transactions; Consideration.

          (a) The aggregate purchase price to be paid by Horizon OP and the Horizon Subsidiaries under
this Agreement for the Global Stock Transfer Shares and the Global Directly Acquired Assets (the
“Global Other Closing Transaction Purchase Price”) shall consist of (i) the cash amount
equal to (1) $1.063 billion, subject to adjustment pursuant to Sections 6.18 and
6.30 and Article 8 (the “Cash Amount”) minus (2) the sum of (A) the
aggregate cash portion of the Local Other Closing Transaction Purchase Price, (B) the Class A Cash
Consideration, (C) the Class B Cash Consideration and (D) the sum of (x) the aggregate amount of
cash (other than amounts payable by Sun) included in the SLT Merger Consideration and (y) the
number of SLT Units outstanding following the SLT Merger Effective Time multiplied by the Exchange
Ratio multiplied by the closing price per share of Horizon Common Stock, as reported on the NYSE
Composite Transactions reporting system (as published in the Wall Street Journal or, if not
published therein, in another authoritative source mutually selected by Sun and Horizon OP) on
the business day immediately preceding the Closing Date (the “SLT Cash Amount”) and (ii)
the Other Share Consideration (other than any portion of the Other Share Consideration included in
the Local Other Closing Transaction Purchase Price), if any.

          (b) The aggregate purchase price to be paid by Horizon OP and the Horizon Subsidiaries under
the Local Purchase Agreements for the Local Stock Transfer Shares and the Local Directly Acquired
Assets shall consist of the cash amounts and the Other Share Consideration, if any, provided
therefor in the Local Purchase Agreements (the “Local Other Closing Transaction Purchase
Price”).

          (c) The Horizon Parties shall be entitled, in their reasonable discretion, to deduct and
withhold from the consideration that is otherwise payable pursuant to this Article 2 and
the Local Purchase Agreements to any Seller such amounts as are required to be deducted and
withheld with respect to the making of such payments under the Code or under any provision of Tax
Law; provided that, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller unless

16

 

(i) in the
case of any deduction or withholding other than under Section 1445 of the Code, Horizon OP shall
have furnished Sun, no later than fifteen (15) days prior to the applicable payment date, with a
written notice referring to this Section 2.2(c) and describing the approximate amount of
the deduction or withholding to be made (it being agreed that, in the event of any such written
notice and with respect to such deduction or withholding, (x) Sun and Horizon OP shall promptly
enter into discussions in good faith to determine if applicable circumstances permit the lack of
such deduction or withholding and (y) to the extent Horizon OP determines in good faith that such
deduction or withholding is required, and Sun determines in good faith that such deduction or
withholding is not required, there shall be no such deduction or withholding upon an agreement by
Sun in writing to indemnify Horizon OP against any such deduction, withholding, interest, penalties
and expenses that subsequently becomes borne, as a result of a challenge by the applicable tax
authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or withholding
under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an affidavit as
contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted or withheld
by the Horizon Parties shall be treated for all purposes of this Agreement and the Local Purchase
Agreements as having been paid to the applicable Seller.

     Section 2.3
[Intentionally Omitted.]

     Section 2.4
Other Closing Transactions; Closing Deliveries.

          (a) Closing Deliveries by Sun. At the Closing, Sun shall deliver or cause to be
delivered to Horizon OP and the Horizon Subsidiaries, as applicable, the following:

     (i) certificates, where applicable, evidencing the Stock Transfer Shares and
the Class A Shares, duly endorsed in blank, or accompanied by stock powers duly
endorsed in blank, in proper form for transfer, including any required stamps
affixed thereto;

     (ii) the minute books, corporate seal, stock transfer books, stock ledger,
shareholders’ register and records (and analogous records for partnerships,
limited liability companies and other entities) for each Acquired Entity, if any;

     (iii) such duly executed (A) deeds, assignments of leases, bills of sale and
other good and sufficient instruments of conveyance and transfer as shall be
effective to vest title to the Directly Acquired Assets in Horizon OP or the
applicable Horizon Subsidiary as provided in this Agreement and (B) such other
instruments as may be reasonably requested by Horizon OP to transfer the Directly
Acquired Assets to Horizon OP or the applicable Horizon Subsidiary, or to evidence
such transfer on the public records;

     (iv) a receipt for the Cash Amount (as set forth in the Estimated Closing
Statement) less the sum of the Class B Cash Consideration and the SLT Cash Amount
and any certificates delivered by the Horizon Parties pursuant to Section
2.4(b)(ii);

17

 

     (v) resignation letters signed by each of the directors, trustees and
officers of each of the Acquired Entities as of the REIT Merger Effective Time;

     (vi) an affidavit from each Seller that is a “United States Person” within
the meaning of Section 7701(a)(30) of the Code stating, under penalty of perjury,
that the indicated number is the transferor’s United States taxpayer
identification number and the transferor is not a foreign person, pursuant to
Section 1445(b)(2) of the Code;

     (vii) the Ancillary Agreements, duly executed by Sun and the Sun Subsidiaries
(to the extent each is a party thereto), to the extent not delivered prior to the
Closing;

     (viii) all other certificates and other documents required to be delivered at
the Closing by Sun or any Sun Subsidiary pursuant to this Agreement; and

     (ix) any deliveries required pursuant to a Local Purchase Agreement.

          (b) Closing Deliveries by the Horizon Parties. At the Closing, the Horizon Parties or
one or more Horizon Subsidiaries, as applicable, shall deliver or cause to be delivered to Sun the
following (except, in each case, to the extent delivered to Sun or another Seller at or prior to
the Closing pursuant to a Local Purchase Agreement):

     (i) the Cash Amount (as set forth in the Estimated Closing Statement) less
the sum of the Class B Cash Consideration and the SLT Cash Amount, by
wire transfer of immediately available funds, to the accounts designated by
Sun in writing at least five (5) business days prior to the Closing Date;

     (ii) one or more stock certificates evidencing the Class A Stock
Consideration Per Share in respect of each Class A Share delivered pursuant to
Section 2.4(a)(i) and the Other Share Consideration, if any;

     (iii) the Local Other Closing Transaction Purchase Price, in the form and
manner set forth in the Local Purchase Agreements;

     (iv) such duly executed instruments as may be reasonably requested by Sun to
effect the assumption by Horizon OP or the applicable Horizon Subsidiary of the
Assumed Liabilities;

     (v) the Ancillary Agreements, duly executed by Horizon OP and the Horizon
Subsidiaries (to the extent each is a party thereto), to the extent not delivered
prior to the Closing;

     (vi) all other certificates and other documents required to be delivered at
the Closing by Horizon or any Horizon Subsidiary pursuant to this Agreement; and

     (vii) any deliveries required pursuant to a Local Purchase Agreement.

18

 

     Section 2.5 Purchase Price Allocations. The consideration payable pursuant to this
Agreement and the Local Purchase Agreements shall be allocated among the Acquired Entities and the
Acquired Assets in accordance with the allocation schedule set forth on Exhibit E (the
“Allocation Schedule”). Except with respect to the items set forth on Schedule 2.5
(which items shall not be adjusted pursuant to this Section 2.5), the parties to this
Agreement shall revise the Allocation Schedule to take into account any variation or adjustment in
the consideration payable pursuant to this Agreement and the Local Purchase Agreements, including
any variation in the value of the Horizon Common Stock issuable in the Closing Transactions from
the value of such stock on the date hereof, as well as estimated and final adjustments pursuant to
Article 8. Any such variation or adjustment shall be allocated proportionately among the
Acquired Entities and Acquired Assets acquired with such consideration (such that the proportion of
the aggregate consideration allocated to each Acquired Entity and Acquired Asset remains the same
after such variation or adjustment, except that (i) the consideration allocable, directly or
indirectly, to the stock of WD Parent shall be equal to the face amount of the debt obligations
held by WD Parent and (ii) the consideration allocable, directly or indirectly, to the debt
obligation of Sun and its Affiliates held by SLT shall be equal to the face amount of such debt
obligation held by SLT); provided, however, that any variation or adjustment
pursuant to Section 6.18, Section 6.30, Article 8 or any other provision of
this Agreement, the Indemnification Agreement or the Tax Sharing and Indemnification Agreement, as
applicable, that relates to any extent to a particular Acquired Entity or Acquired Asset shall be
applied to such Acquired Entity or Acquired Asset to such extent. Attached hereto as Exhibit
F are examples of how the parties to this Agreement agree revisions to Exhibit E should
be made if
there are variations in the value of the Horizon Common Stock issuable in the Closing
Transactions from the value of such stock on the date hereof. Revisions to the Allocation Schedule
shall be made in a manner consistent with the methodology used in the examples set forth in
Exhibit F. The parties hereto shall report the transactions contemplated by this Agreement
and the Local Purchase Agreements on any Tax Return consistent with the Allocation Schedule, giving
effect to any mutually agreed adjustments.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF

SUN AND TRUST

     Except as set forth in the letter, dated as of the date hereof, delivered by the Sun Parties
to the Horizon Parties prior to the execution of this Agreement (the “Sun Disclosure
Letter”), Sun and Trust hereby jointly and severally represent and warrant to the Horizon
Parties as follows:

     Section 3.1 Organization, Standing and Power.

          (a) Each of the Sellers and the Acquired Entities is duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or organization, as
applicable.  Each of the Sellers (with respect to the Acquired Business) and the
Acquired Entities has all requisite corporate or other power and authority to own, operate, lease
and encumber its properties and carry on its business as now being conducted. The articles of
incorporation, as amended and supplemented, of Sun (the “Sun Charter”) and the comparable
Organizational Documents of each other Seller and the Acquired Entities are in effect and, to the
Knowledge of Sun, no dissolution, revocation or forfeiture proceeding regarding any Seller or

19

 

any
Acquired Entity has been commenced. Section 3.1(a)(1) of the Sun Disclosure Letter sets
forth each Acquired Entity and its jurisdiction of incorporation or organization. Section
3.1(a)(2) of the Sun Disclosure Letter sets forth a correct and complete list of all
jurisdictions in which the respective Sellers (with respect to the Acquired Business) and Acquired
Entities are duly qualified or licensed to do business as a foreign corporation or other limited
liability entity and are in good standing and, with respect to each such Seller and Acquired
Entity, such list includes all jurisdictions in which the nature of such Seller’s or Acquired
Entity’s business or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so qualified or
licensed, individually and in the aggregate, would not reasonably be expected to (i) have, and has
not had, a Sun Material Adverse Effect or (ii) prevent or delay, and has not prevented or delayed,
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent Sun or any Sun Subsidiary
from performing its obligations under this Agreement or the Ancillary Agreements in any material
respect.

          (b) Sun has delivered or made available to Horizon OP complete and correct copies of the Sun
Charter, the bylaws of Sun (the “Sun Bylaws”), the Trust Declaration of Trust, the Trust
Bylaws and the comparable Organizational Documents
of the other Sellers and Acquired Entities, in each case, as amended, restated or supplemented
to the date of this Agreement. No Seller (with respect to the Acquired Business) or Acquired
Entity is in violation in any material respect of any provision of the Sun Charter, the Sun Bylaws,
the Trust Declaration of Trust, the Trust Bylaws or such other Organizational Documents. Except as
set forth in Section 3.1(b) of the Sun Disclosure Letter, complete and correct copies of
all minute books of the Acquired Entities have been previously delivered or made available to
Horizon OP.

     Section 3.2 Capital Structure.

          (a) To the extent any Acquired Entity is not directly or indirectly wholly owned, beneficially
and of record, by Sun or Trust, Section 3.2(a)(1) of the Sun Disclosure Letter sets forth
the identity and Interest of each of the other owners of such Interests in such Acquired Entity.
Section 3.2(a)(2) of the Sun Disclosure Letter sets forth (i) the percentage of outstanding
Interests in each Acquired Entity to be held by Sun and its Subsidiaries upon the completion of the
Sun Restructuring Steps and immediately prior to the Closing Transactions (the
“Post-Restructuring Time”) and (ii) each Acquired Entity for which not all of the
beneficial and record Interests (other than the Class B Shares, Options, Restricted Stock Unit
Awards, Class A EPS and Class B EPS) in such Acquired Entity will be owned by Sun or a wholly owned
Subsidiary of Sun at the Post-Restructuring Time and, with respect to each such Acquired Entity,
the identity and Interest (each, a “Minority Equity Interest”) of each Person that will
hold an Interest in such Acquired Entity at the Post-Restructuring Time.

          (b) The authorized shares of beneficial interest of Trust consist of 1,350,005,000 shares, par
value $0.01 per share, of which 5,000 are designated as Class A Shares, 1,000,000,000 are
designated as Class B Shares, 200,000,000 are designated as Excess Trust Shares (“Excess Trust
Shares”), 30,000,000 are designated as Class A EPS, 15,000,000 are designated as Class B
Exchangeable Preferred Shares (as such term is defined in the Trust Declaration of Trust)
(“Class B EPS”; the Class A Shares, Class B
Shares, Class A EPS, Class B

20

 

EPS,
Excess Trust
Shares and Excess Preferred Shares collectively referred to as “Trust Shares”), 55,000,000
are designated as Trust Preferred Shares (“Trust Preferred Shares”) and 50,000,000 are
designated as Excess Preferred Shares (“Excess Preferred Shares” and together with Excess
Trust Shares, “Excess Shares”). As of September 30, 2005, (i) 100 Class A Shares are
issued and outstanding; (ii) 219,272,686 Class B Shares are issued and outstanding; (iii) 562,222
Class A EPS are issued and outstanding; (iv) 24,627 Class B EPS are issued and outstanding; and (v)
no Trust Preferred Shares or Excess Shares are issued and outstanding. At the Post-Restructuring
Time, there will be no Class B EPS issued and outstanding. Since September 30, 2005, Trust has not
issued any Class B Shares other than in connection with (I) the issuance of Paired Shares upon the
exercise of Equity Awards pursuant to any of the Equity Plans, (II) the issuance of Paired Shares
upon the conversion of securities convertible or exchangeable for Paired Shares or (III) the
redemption of Class B EPS for cash.

          (c) Section 3.2(c) of the Sun Disclosure Letter provides a correct and, in all
material respects, complete description of all warrants or other rights to acquire Trust Shares
(other than exchange and conversion rights of holders of Class A EPS and Class B EPS under the
Trust Declaration of Trust), including, all stock options, stock appreciation rights, restricted
stock, phantom shares, dividend equivalents, deferred compensation accounts, performance awards,
restricted stock units, partnership units, stock units and other awards or equity-like rights or
arrangements, and all bonds, notes, debentures and other indebtedness which are at any time
convertible into, or exchangeable or exercisable for, Trust Shares (“Trust Share Rights”)
in each case which are outstanding on the date of this Agreement.

          (d) Except as set forth in Section 3.2(d) of the Sun Disclosure Letter, all of the
outstanding Interests in each Acquired Entity have been duly authorized and validly issued and (A)
in the case of stock Interests, are fully paid and (in applicable jurisdictions) nonassessable and
free of preemptive or similar rights, (B) in the case of partnership, limited liability company or
other Interests, are not subject to any Indebtedness, capital calls or other obligations
(contingent or otherwise) to contribute monies or property in respect thereof and (C) in all cases,
are owned free and clear of (i) Encumbrances and (ii) preemptive or other similar rights under Law,
any applicable Organizational Document and any Contract or instrument to which Sun or an Acquired
Entity is a party or by which it is bound.

          (e) Except as set forth in Section 3.2(e)(1) of the Sun Disclosure Letter, and except
for Class A EPS (which are exchangeable for Class B Shares in accordance with the Trust Declaration
of Trust) and Class B EPS (which are convertible into Class A EPS, at the option of Trust in
accordance with the Trust Declaration of Trust), as of the date of this Agreement there are not (i)
issued, reserved for issuance or outstanding any Interests of any Acquired Entity or (ii) any
Contracts to which any Acquired Entity is a party or by which such entity is bound, obligating any
Acquired Entity to issue, deliver, sell, transfer, redeem, repurchase or otherwise acquire, or
cause to be issued, delivered, sold, transferred, redeemed, repurchased or otherwise acquired
additional Interests of any Acquired Entity or obligating any Acquired Entity to issue, grant,
extend or enter into any such Contract. All Trust Shares subject to issuance in respect of Class A
EPS or Trust Share Rights, upon issuance prior to the REIT Merger Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Set forth
in Section 3.2(e)(2) of the Sun Disclosure Letter is the “Exchange Ratio” (as such term is

21

 

defined in Section 6.15.5(d) of the Trust Declaration of Trust) as of the date of this Agreement
with respect to each share of Class A EPS.

          (f) Except as set forth in Section 3.2(f) of the Sun Disclosure Letter and except for
restrictions under applicable Law, there are no restrictions of any kind which prevent the payment
of dividends by any of the Acquired Entities and no Acquired Entity is subject to any obligation or
requirement to provide funds for or to make any investment (in the form of a loan or capital
contribution) to or in any Person. All dividends and distributions on Trust Shares that have been
declared prior to the date of this Agreement have been paid in full.

          (g) Except as set forth in Section 3.2(g) of the Sun Disclosure Letter, there are no
(i) registration rights agreements or other agreements between Sun and/or a Sun Subsidiary,
on the one hand, and one or more other parties, on the other hand, which set forth the rights
of any such other party or parties to cause the registration of any securities of any Acquired
Entity pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and (ii)
voting trust, proxy or other agreements or understandings to which Sun or any Sun Subsidiary is a
party or is bound with respect to the voting of any Interests in any Acquired Entity.

     Section 3.3 Other Capitalization Matters.

          (a) Except for (i) Interests in Acquired Entities and certain other entities as set forth in
Section 3.3(a) of the Sun Disclosure Letter and (ii) such other Interests that are permitted by the
Restructuring Plan to be transferred out of the Acquired Entities, as of the date of this
Agreement, no Acquired Entity owns directly any Interest in any Person other than (x) investments
in short-term investment securities and (y) Interests that can be assigned to a Retained Subsidiary
without the consent, approval, order or authorization of any Governmental Entity or other Person.

          (b) Except for Interests in Acquired Entities, at the Post-Restructuring Time no Acquired
Entity will own directly or indirectly any Interest in any Person (other than investments in
short-term investment securities).

          (c) Except as set forth in Section 3.3(c) of the Sun Disclosure Letter, the Acquired Entities
(directly and not through any Subsidiary or other Interest) do not own, operate or lease any (i)
hotel or (ii) other commercial property or business (in each case other than hotels) as of the date
of this Agreement, except (in the case of clause (ii)) for commercial properties or other
businesses that, individually and in the aggregate, do not have and would not reasonably be
expected to have, Liabilities in excess of $5,000,000.

          (d) Set forth in Section 3.3(d) of the Sun Disclosure Letter is the “Stated Value” and
the “Class B Liquidation Preference” (as such terms are defined in Sections 6.16.2 and 6.16.4(b),
respectively, of the Trust Declaration of Trust) as of the date of this Agreement with respect to
each share of Class B EPS.

     Section 3.4 Authority; Noncontravention; Consents.

          (a) Sun and each applicable Sun Subsidiary has all necessary corporate or other power and
authority to execute and deliver this Agreement (in the case of the Sun Parties)

22

 

and each Ancillary
Agreement to which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by Sun or such
Subsidiary. The execution and delivery by each Sun Party or other Sun Subsidiary of this Agreement
(in the case of the Sun Parties) and each Ancillary Agreement to which it is a party, the
performance of its obligations hereunder and thereunder, and the consummation by it of the
transactions contemplated hereby and thereby to be consummated by it have been duly and validly
authorized by all necessary action and no other proceedings on the
part of Sun or any such Sun Subsidiary and no votes by any holder of Interests in Sun or any
such Sun Subsidiary are necessary to authorize this Agreement or any Ancillary Agreement or to
consummate the transactions contemplated hereby and thereby, other than as provided in Section
3.24. This Agreement and each Ancillary Agreement has been duly authorized and validly
executed and delivered by Sun, as applicable, each Sun Subsidiary party thereto and, constitutes a
legal, valid and binding obligation of each such Sun Party or other Sun Subsidiary, enforceable
against such Sun Party or other Sun Subsidiary in accordance with its respective terms.

          (b) Except as set forth in Section 3.4(b) of the Sun Disclosure Letter, the execution
and delivery of this Agreement by the Sun Parties and the Ancillary Agreements by the applicable
Sun Subsidiaries do not, and the consummation of the transactions contemplated by, and the
performance of their respective obligations under, this Agreement and the Ancillary Agreements and
compliance by Sun and the Sun Subsidiaries with the provisions hereof and thereof, and the
consummation of the Horizon Transactions, will not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Encumbrance upon any of the Assets of Sun or any Sun Subsidiary
under, (i) the Sun Charter, Sun Bylaws, Trust Declaration of Trust or Trust Bylaws, or the other
Organizational Documents of any Sun Subsidiary, each as amended or supplemented, (ii) (A) (1) any
Permit required for the businesses, activities or operations of the Acquired Business or (2) any
Material Contract or Ground Lease or (B) any loan or credit agreement, note, bond, mortgage,
indenture, merger or other acquisition agreement, reciprocal easement agreement, lease or other
Contract, instrument, permit, concession, franchise or license applicable to Sun or any Sun
Subsidiary or their respective Assets or (iii) subject to the governmental filings and other
matters referred to in Section 3.4(c), any Laws applicable to Sun or any Sun Subsidiary or
their respective Assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights, losses or Encumbrances that, individually and in the
aggregate, would not reasonably be expected to (x) result in, and has not resulted in, a Sun
Material Impairment (provided that this clause (x) shall not apply to clause
(ii)(B) above) or (y) prevent or materially impair the ability of Sun or any Sun Subsidiary to
perform its respective obligations hereunder or under the Ancillary Agreements or prevent or delay
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions.

          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Sun or any Sun Subsidiary in
connection with the execution and delivery of this Agreement and the Ancillary Agreements by the
Sun Parties or the consummation by Sun and the Sun Subsidiaries of the transactions contemplated by
this Agreement and the Ancillary Agreements, except for (i) the filing with the Securities and
Exchange Commission (the “SEC”) (x) the Proxy

23

 

Statement/Prospectus and (y) of such reports
and filings under the Securities Act and Section 13(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) as may be required in connection with this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby, (ii) the filing and
acceptance for record of the REIT Articles of Merger by the Department and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and filings (A) as are set
forth in Section 3.4(c) of the Sun Disclosure Letter; (B) as may be required under (t) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (u) the
EC Merger Regulations or any other antitrust or competition Laws of other jurisdictions, (v) the
rules and regulations of the NYSE, (w) any applicable Laws governing the sale or service of liquor,
(x) Laws requiring transfer, recordation or gains tax filings, (y) Environmental Laws or (z) the
“blue sky” Laws of various states, to the extent applicable; or (C) which, if not obtained or made,
would not prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions or otherwise
prevent Sun or any Sun Subsidiary from performing its respective obligations under this Agreement
or the Ancillary Agreements in any material respect or, individually or in the aggregate, result
in, or reasonably be expected to result in, a Sun Material Impairment.

     Section 3.5 SEC Documents; Financial Statements; Corporate Governance.

          (a) Trust has filed all reports, schedules, forms, statements, certifications and other
documents required to be filed with the SEC since December 31, 2002 (collectively, including all
exhibits thereto, the “Trust SEC Documents”). Except as set forth in Section
3.5(a) of the Sun Disclosure Letter, all of the Trust SEC Documents, as of their respective
filing dates and, as applicable, effective times, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and, in each case, the rules
and regulations promulgated thereunder applicable to such Trust SEC Documents as of the applicable
filing date or effective time. None of the Trust SEC Documents, at the time of filing or, as
applicable, of becoming effective, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. Except as set
forth in Section 3.5(a) of the Sun Disclosure Letter, each of the consolidated financial
statements (including the related notes) of Trust included in the Trust SEC Documents filed prior
to the date hereof (the “Filed Trust SEC Documents”) (i) complied in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) has been prepared in accordance with United States generally accepted
accounting principles (“GAAP”) (except, in the case of unaudited statements, to the extent
permitted by Form 10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and (iii) fairly presented in all
material respects in accordance with the applicable requirements of GAAP and the applicable rules
and regulations of the SEC, the consolidated financial position of Trust as of the dates thereof
and the consolidated results of operations and cash flows for the periods then ended. Except as
set forth in Section 3.5(a) of the Sun Disclosure Letter, Trust does not have any
Subsidiary (i) that is not consolidated for accounting purposes or (ii) that is required to file
any form, report or other document with the SEC. No Acquired Entity (other than Trust) is required
to file any form, report or other document with the SEC. As used in this Section 3.5(a)
and Section 4.6(a), the term “file”, and words of similar import, shall be broadly
construed to include any manner in

24

 

which a document or information is furnished, supplied or
otherwise made available to the SEC, in each case in accordance with SEC rules.

          (b) Each of the Unaudited Combined Interim Financial Statements and the Unaudited Stub Period
Financial Statements (i) when delivered will be prepared in all material respects in accordance
with (x) GAAP consistent with the accounting principles and practices applied in the preparation of
the financial statements included in Sun’s Annual Report on Form 10-K for the year ended December
31, 2004, as filed prior to the date of this Agreement (the “2004 10-K”), applied on a
consistent basis for the periods involved (except for changes required by GAAP as expressly
disclosed therein and except for the absence of footnotes to the extent permitted by Regulation S-X
of the Exchange Act (accompanied by a duly executed certificate of Sun, delivered in accordance
with Section 6.7(b), attached thereto), (y) Regulation S-X of the Exchange Act and (z) the
principles set forth in Section 3.5(b)(1) of the Sun Disclosure Letter (the
“Preparation Principles”), (ii) when delivered will fairly present in all material respects
the combined financial position, results of operations and cash flows, as of the dates and for the
periods presented therein, of the Acquired Business and (iii) except as set forth in Section
3.5(b)(2) of the Sun Disclosure Letter, when delivered will be prepared from, and in accordance
with, the books and records relating thereto, which books and records have been or (when delivered)
will have been, as applicable, regularly kept and maintained in all material respects in accordance
with normal and customary practices and were the basis for Sun’s and Trust’s financial statements
included in the applicable SEC Filings.

          (c) Each of the audited financial statements of the Acquired Business for the years ended
December 31, 2004, 2003 and 2002 (containing combined balance sheets of the Acquired Business as of
December 31, 2004 and 2003 and combined statements of operations and cash flows of the Acquired
Business for the years ended December 31, 2004, 2003 and 2002), together with all related notes and
schedules thereto, accompanied by the audit report of Ernst & Young LLP (“E&Y”) without
qualification or exception (the “Audited Combined Historical Financial Statements”) and, if
applicable, the 2005 Audited Financial Statements, when delivered, (i) will comply in all material
respects with (x) GAAP consistent with the accounting principles and practices applied in
preparation of the financial statements included in the 2004 10-K, applied on a consistent basis
for the periods involved, (y) Regulation S-X of the Exchange Act and (z) the Preparation
Principles, (ii) will fairly present in all material respects the combined financial position,
results of operations and cash flows, as of the dates and for the periods presented therein of the
Acquired Business and (iii) will have been prepared from, and in accordance with, the books and
records relating thereto, which books and records will have been regularly kept and maintained in
all material respects in accordance with normal and customary practices and were the basis for
Sun’s and Trust’s audited financial statements included in the applicable SEC Filings.

          (d) As of the date of this Agreement, other than the Indebtedness set forth in Section
3.17(a)(1)(ix) of the Sun Disclosure Letter, the Acquired Entities and (to the extent
constituting Assumed Liabilities) the Asset Sellers have no Indebtedness.

          (e) Trust has been and is in compliance in all material respects with the applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder
(the “Sarbanes-Oxley Act”). Section 3.5(e) of the Sun Disclosure Letter

25

 

sets
forth, as of the date hereof, the name of each
officer or director of any Acquired Entity that is currently indebted to an Acquired Entity,
as well as the amount and material terms of any such Indebtedness. There has been no default on,
or forgiveness or waiver of, in whole or in part, any Indebtedness required to be disclosed in
Section 3.5(e) of the Sun Disclosure Letter.

          (f) Each of Sun (as to the Acquired Business) and Trust has designed and maintains disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure
that material information relating to it and its consolidated Subsidiaries is made known to the
principal executive officer and the principal financial officer of it by others within those
entities. Each of Sun’s and Trust’s principal executive officer and principal financial officer
have made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or Sections
302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC.

          (g) Each of Sun (as to the Acquired Business) and Trust has designed and maintains a system of
internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP
(within the meaning of such terms under the Sarbanes-Oxley Act). Each of Sun and Trust has
disclosed, based on its most recent evaluation to its respective auditors and the audit committee
of its Board of Directors or Trustees (as applicable) (A) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect in any material respect Trust’s or Sun’s (as to the Acquired
Business) or, after the REIT Merger Effective Time, Horizon’s ability to record, process, summarize
and report financial information and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in its internal controls over financial
reporting. Each of Sun and Trust has delivered to Horizon any such disclosures (i) prior to the
date of this Agreement or (ii) with respect to evaluations after the date of this Agreement,
promptly following the disclosures to the applicable auditors and audit committee. For purposes of
this Section 3.5(g) and Section 4.6(d), the terms “significant deficiency” and
“material weakness” shall have the meanings assigned to them in the Public Company Accounting
Oversight Board Auditing Standard No. 2, as in effect on the date hereof.

          (h) As of the date of this Agreement, since the Sun Financial Statement Date and other than as
set forth in Section 3.5(h) of the Sun Disclosure Letter, with respect to the Acquired
Business, Sun’s Global Compliance Group has not received for investigation, or investigated, any
allegation or assertion of a violation or alleged violation of Sun’s Code of Conduct and Business
Ethics.

          (i) The draft combined statement of operations of the Acquired Hotels for the eight months
ended August 31, 2005 set forth in Section 3.5(i)(1) of the Sun Disclosure Letter (i)
fairly presents in all material respects the combined results of operations of the Acquired Hotels
for the period presented therein and (ii) except as set forth in Section 3.5(i)(2) of the
Sun Disclosure Letter, has been prepared from, and in accordance with, the books and records
relating thereto, which books and records have been or (when delivered) will have been, as
applicable, regularly kept and maintained in all material respects in accordance with normal and

26

 

customary practices and were (or will be) the basis for Sun’s and Trust’s financial statements
included in the applicable SEC Filings. The revenue and EBITDA of the Acquired Hotels for the
eight months ended August 31, 2005, in each case as reflected in or derivable from, as the case may
be, the Unaudited 2005 Interim Financial Statements (when delivered), shall not reflect any
variance that is in any material respect adverse to the Acquired Business, from such revenue and
EBITDA reflected in Section 3.5(i)(1) of the Sun Disclosure Letter.

          (j) The draft combined balance sheet and combined statement of operations of the Acquired
Hotels as of and for the year ended December 31, 2004 set forth in Section 3.5(j)(1) of the
Sun Disclosure Letter (i) fairly present in all material respects the combined financial position
and combined results of operations of the Acquired Hotels as of and for the period presented
therein and (ii) except as set forth in Section 3.5(j)(2) of the Sun Disclosure Letter,
have been prepared from, and in accordance with, the books and records relating thereto, which
books and records have been or (when delivered) will have been, as applicable, regularly kept and
maintained in all material respects in accordance with normal and customary practices and were (or
will be) the basis for Sun’s and Trust’s financial statements included in the applicable SEC
Filings. The financial statement line items of the Acquired Hotels as of and for the year ended
December 31, 2004, in each case as reflected in or derivable from, as the case may be, the Audited
Combined Historical Financial Statements (when delivered), shall not reflect any variance (other
than with respect to the line items set forth on Schedule 7.2(a)) that is in any material
respect adverse to the Acquired Business, from such financial statement line items reflected in
Section 3.5(j)(1) of the Sun Disclosure Letter.

     Section 3.6 Absence of Certain Changes or Events. Except as disclosed in Section
3.6(a) of the Sun Disclosure Letter, since December 31, 2004 (the “Sun Financial Statement
Date”), the Acquired Entities and, with respect to the Acquired Business, the Sellers have
conducted their business in the Ordinary Course. Except as disclosed in Section 3.6(b) of
the Sun Disclosure Letter, since the Sun Financial Statement Date there has not been (a) any
circumstance, event, occurrence, change or effect that, individually or in the aggregate, has had
or would reasonably be expected to have a Sun Material Adverse Effect, (b) on or prior to the date
of this Agreement, any split, combination or reclassification of Trust Shares or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu of or in
substitution for, or giving the right to acquire by exchange or exercise, shares of beneficial
interest of Trust or any issuance of any other Interest in, an Acquired Entity (other than
issuances of Equity Awards or Paired Shares) or (c) on or prior to the date of this Agreement, any
other action or omission by Sun or any Sun Subsidiary which, if occurring during the period from
the date of this Agreement through the Closing, would constitute a breach of any of the following
subsections of Section 5.1: (b), (f), (q), (s),
(t), (u)(i) and, with respect to any of the foregoing, (x).

     Section 3.7 Litigation. Except as disclosed in Section 3.7(a) of the Sun
Disclosure Letter, there is no suit, action, investigation or proceeding pending or, to the
Knowledge of Sun, threatened against or affecting Sun or any Sun Subsidiary directly relating to or
involving the Acquired Business, any Acquired Hotels or any Acquired Entity or any of their
respective Assets, or any of the directors,
officers, employees or agents thereof who may be subject to indemnification by Sun or any Sun
Subsidiary that, individually or in the aggregate, if determined or resolved adversely, would
reasonably be expected to (i) result in, or has resulted

27

 

in, a liability exceeding $500,000 (after
taking into consideration any insurance or third party proceeds which have been or would reasonably
be expected to be received in connection with such suit, action, investigation or proceeding) or
(ii) prevent or materially impair the ability of Sun or any Sun Subsidiary to perform any of its
respective obligations hereunder or under any Ancillary Agreement or prevent or delay in any
material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against Sun or any Sun
Subsidiary or any of the Acquired Hotels that has had or would reasonably be expected to have any
effect set forth in clause (i) or (ii) above. Except as disclosed in Section
3.7(b) of the Sun Disclosure Letter, there is no suit, action, investigation or proceeding
pending or, to the Knowledge of Sun, threatened against or affecting Sun or any Sun Subsidiary
directly relating to or involving the Acquired Business, any Acquired Hotels or any Acquired Entity
or any of their respective Assets, or any of the directors, officers, employees or agents thereof
who may be subject to indemnification by Sun or any Sun Subsidiary that, individually or in the
aggregate, if determined or resolved adversely, would reasonably be expected to have, or has had, a
Sun Material Adverse Effect.

     Section 3.8 Properties.

          (a) Section 3.8(a) of the Sun Disclosure Letter sets forth (i) a complete and correct
list of the Acquired Properties, (ii) whether each Acquired Property is owned in fee simple or held
pursuant to a ground leasehold or other interest and (iii) the Sun Party or other Sun Subsidiary
that owns fee simple title to or a ground leasehold or other interest in each Acquired Property.
Except as set forth in Section 3.8(a) of the Sun Disclosure Letter, Sun or a Sun Subsidiary
owns fee simple title to or holds a valid leasehold interest in the Acquired Properties as of the
date of this Agreement, in each case free and clear of Encumbrances (except for Permitted Title
Exceptions). Except as set forth in Section 3.8(a) of the Sun Disclosure Letter, an Asset
Seller or an Acquired Entity will own fee simple title to or hold a valid leasehold interest in
each of the Acquired Properties immediately prior to the Closing, in each case free and clear of
Encumbrances (except for the Permitted Title Exceptions). For purposes of this Agreement,
“Permitted Title Exceptions” means: (i) Encumbrances for current real estate taxes and
assessments not yet due and payable; (ii) Encumbrances relating to Indebtedness included in the
Assumed Liabilities; (iii) Encumbrances, rights or obligations created by or resulting from the
acts or omission of any Horizon Party or any of its Affiliates and their respective lenders,
employees, officers, directors, agents, representatives, contractors, invitees or licensees or any
Person claiming by, through or under any of the foregoing; (iv) Encumbrances (A) created by any of
the documents to be executed in connection with this Agreement or any of the Ancillary Agreements
or (B) otherwise disclosed on Schedules or Exhibits to, or expressly permitted pursuant to, this
Agreement or the Ancillary Agreements; (v) all matters disclosed in the Existing Title Policies,
the Existing Surveys or any current title commitments or title reports (or, with respect to
Acquired Properties located outside of the United States and Canada, certificates, abstracts or
similar evidence of title) with respect
to the Acquired Properties delivered or made available to, or which have otherwise been
obtained directly by, Horizon OP prior to the date of this Agreement; (vi) all matters disclosed in
any zoning reports, surveys, written instruments or written agreements (whether recorded or
otherwise) delivered or made available to Horizon OP or which have otherwise been obtained directly
by Horizon OP prior to the date of this Agreement; (vii) any Encumbrance for which either title
insurance coverage, bonding or an

28

 

indemnification reasonably satisfactory to Horizon OP has been
obtained; (viii) any mechanic’s, workmen’s, repairmen’s, carrier’s, warehousemen’s or other like
liens (A) for amounts not yet due or (B) which are being contested in good faith and by appropriate
proceedings or are otherwise covered by clause (vii) above; (ix) liens created by or
resulting from any litigation or legal or administrative proceeding which is not otherwise a
violation of Section 3.7; (x) any other restrictions or title matters imposed or
promulgated by Law or any Governmental Entity with respect to real property (including zoning and
building Laws and regulations); (xi) without limiting the effect of Sections 3.8(d),
6.18 and 8.2(b), any claim, action or proceeding for condemnation or eminent domain
against any of the Acquired Properties; (xii) any Encumbrances which are not otherwise included in
the definition of Permitted Title Exceptions pursuant to any of the clauses of this definition, to
the extent such Encumbrances are incurred or created in the Ordinary Course and, individually and
in the aggregate, do not result in, and would not reasonably be expected to result in, a Sun
Material Impairment; and (xiii) any other easements, leases, rights-of-way, restrictions,
covenants, licenses or other Encumbrances, whether or not of record, or any encroachments or other
survey defects which would be disclosed by a current accurate survey or physical inspection of the
Acquired Property or otherwise, to the extent not otherwise included under clauses (i)
through (xii), but which, individually and in the aggregate (but without including any
other Encumbrances otherwise included as Permitted Title Exceptions pursuant to any other clauses
of this definition), do not result in, and would not reasonably be expected to result in, a Sun
Material Impairment. As used herein, “Existing Title Policy” means, with respect to each
Acquired Property, the existing policy of title insurance (if any) insuring the applicable Sun
Subsidiary’s fee simple title or leasehold estate, as the case may be, to such Acquired Property as
set forth in Section 3.8(a) of the Sun Disclosure Letter and which have been delivered or
made available to Horizon OP prior to the date of this Agreement (collectively, with respect to all
Acquired Properties, the “Existing Title Policies”). As used herein, “Existing
Survey” means, with respect to each Acquired Property, the existing survey (if any) covering
such Acquired Property as set forth in Section 3.8(a) of the Sun Disclosure Schedule and
which have been delivered or made available to Horizon OP prior to the date of this Agreement
(collectively, with respect to all Acquired Properties, the “Existing Surveys”).

          (b) To the Knowledge of Sun, neither Sun nor any Sun Subsidiary is in violation of any
material Permitted Title Exceptions, except for such violations which have been cured or which,
individually and in the aggregate, have not resulted in, and would not reasonably be expected to
result in, a Sun Material Impairment.

          (c) To the Knowledge of Sun, no material claim has been made against any Existing Title Policy
to the Acquired Properties.

          (d) Except as set forth in Section 3.8(d) of the Sun Disclosure Letter, neither Sun
nor any Sun Subsidiary has received any written notice to the effect that any condemnation event or
involuntary rezoning proceedings are pending or threatened with respect to any of the Acquired
Properties which, individually or in the aggregate, have resulted in, or would reasonably be
expected to result in, a Sun Material Impairment.

          (e) Set forth in Section 3.8(e)(1) of the Sun Disclosure Letter is a complete and
correct list of all ground leases relating to the Acquired Properties (the “Ground
Leases”). Except as set forth in Section 3.8(e)(2) of the Sun Disclosure Letter,
through the date hereof, Sun

29

 

has no Knowledge of delivery or receipt of any written notice of
termination under any Ground Lease that remains uncured. Except as, individually and in the
aggregate, has not resulted in and would not reasonably be expected to result in a Sun Material
Impairment, neither Sun nor any Sun Subsidiary has received a written notice that it is in
violation of or in default under (nor, to the Knowledge of Sun, does there exist any such violation
or default or any condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any Ground Lease that remains uncured. Each Ground
Lease is in full force and effect and is binding and enforceable against the Sellers or Acquired
Entities, as applicable, and, to the Knowledge of Sun, each other party thereto, except as,
individually and in the aggregate, has not resulted in and would not reasonably be expected to
result in a Sun Material Impairment. Sun has delivered or made available to Horizon OP correct and
complete copies of all Ground Leases, including all amendments, modifications, supplements,
renewals, extensions and guarantees related thereto, in effect as of the date hereof.

          (f) Neither Sun nor any Sun Subsidiary owns any real property adjacent to or adjoining the
Acquired Property associated with the Acquired Hotels identified as the “Sheraton Centre Toronto”
and “Sheraton Hamilton Hotel” on Schedule 10.1(d) of the Merger Agreement.

     Section 3.9 Environmental Matters.

          (a) “Environmental Law” means any and all Laws, permits, restrictions and licenses,
including any binding plans, other criteria, or guidelines promulgated pursuant to such Laws,
relating to noise control, the protection of human health, safety and natural resources, animal
health or welfare or the environment, including Laws relating to the use, manufacturing,
production, generation, installation, recycling, reuse, sale, storage, handling, transport,
treatment, release, threatened release or disposal of any Hazardous Materials (including the
Comprehensive Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. ss
9601 et seq. (“CERCLA”)). “Environmental Reports” means those environmental
reports and assessments set forth in Section 3.9(a) of the Sun Disclosure Letter.
“Hazardous Materials” means substances, wastes, radiation or materials (whether solids,
liquids or gases) (i) which have been determined, pursuant to Environmental Law, to be hazardous,
toxic, infectious, explosive, radioactive, carcinogenic, or mutagenic, (ii) which are listed,
regulated or defined under any Environmental Law, and shall include “hazardous wastes,” “hazardous
substances,” “hazardous materials,” “pollutants,” “contaminants,” “toxic substances,” “radioactive
materials” or “solid wastes,” (iii) the presence
of which on property cause or, in their current form or condition, threaten to cause a
nuisance pursuant to applicable Law upon the property or to adjacent properties, (iv) which contain
without limitation polychlorinated biphenyls (PCBs), asbestos or asbestos-containing materials,
lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including
crude oil or any fraction thereof) or (v) which, in their current form or condition, pose a hazard
to human health, safety, natural resources, industrial hygiene, or the environment, or an
impediment to working conditions. “Release” shall have the meaning set forth in Section
101 of CERCLA, without regard to the exclusions set forth therein, unless the Environmental Law
applicable to the Acquired Property shall contain a definition or concept comparable to such term
but more broadly defined, in which case the definition or concept in such Environmental Law shall
apply and be included in the meaning of “Release” in respect to such Acquired Property.
“Structural Mold” means the presence of active mold growth within interior building
components (including drywall, insulation and ventilation

30

 

systems) that cannot be effectively
controlled through the application of routine periodic cleaning measures.

          (b) Except as disclosed in the Environmental Reports, or as set forth in Section
3.9(b) of the Sun Disclosure Letter,

     (i) neither Sun nor any Sun Subsidiary nor, to the Knowledge of Sun, any other Person
has caused or permitted the presence of any Hazardous Materials at, on or under any of the
Acquired Properties and, to the Knowledge of Sun, no Hazardous Materials are present at, on
or under any of the Acquired Properties, in each of the foregoing cases, in such quantities
or under such conditions that the presence of such Hazardous Materials (including the
presence of Structural Mold or asbestos in any buildings or improvements at the Acquired
Properties), individually or in the aggregate, has resulted in, or would reasonably be
expected to result in, a Sun Material Impairment;

     (ii) there have been no Releases of Hazardous Materials at, on, under or from the
Acquired Properties and, to the Knowledge of Sun, any Land underlying any Ground Lease,
during the period of ownership, operation or tenancy, and, to the Knowledge of Sun, no
Releases of Hazardous Materials have occurred or are presently occurring at, on, under or
from the Acquired Properties, which, individually or in the aggregate, have resulted in, or
would reasonably be expected to result in, a Sun Material Impairment, and neither Sun nor
any Sun Subsidiary nor, to the Knowledge of Sun, any other Person, has received any notice
of alleged, actual or potential responsibility for, or any inquiry or investigation
regarding, any such Releases or threatened Releases of Hazardous Materials, nor, to the
Knowledge of Sun, is there any information which might form the basis of any such notice or
any claim;

     (iii) the Acquired Entities and, with respect to the Acquired Business, the Sellers
have not failed to comply with any Environmental Law, and no Acquired Entity or, with
respect to the Acquired Business, Seller has received notice of any liability under the
Environmental Laws, except to the extent that any such failure to comply or any such
Liability, individually and in the aggregate, has not resulted in, and would not reasonably
be expected to result in, a Sun Material Impairment;

     (iv) neither Sun nor any Sun Subsidiary nor, to the Knowledge of Sun, any other Person,
has transported or arranged for the transport of Hazardous Materials from the Acquired
Properties which, to the Knowledge of Sun, is or would reasonably be expected to become the
subject of any environmental action;

     (v) the Acquired Entities and, with respect to the Acquired Business, the Sellers have
been duly issued, and currently have and will maintain through the Closing Date, all
permits, licenses, certificates and approvals required under any Environmental Law
(collectively, the “Environmental Permits”) necessary to operate their businesses as
currently operated except where the failure to obtain and maintain such Environmental
Permits, individually and in the aggregate, has not resulted in, and would not reasonably be
expected to result in, a Sun Material Impairment; and

31

 

     (vi) there is no suit, action, investigation or proceeding pending or, to the Knowledge
of Sun, threatened against or affecting Sun or any Sun Subsidiary directly relating to or
involving the Acquired Business, any Acquired Hotels or any Acquired Entity or any of their
respective Assets, or any of the directors, officers, employees or agents thereof who may be
subject to indemnification by Sun or any Sun Subsidiary relating to any Environmental Law
that, individually or in the aggregate, if determined or resolved adversely, would
reasonably be expected to (A) result in, or has resulted in, a liability exceeding $500,000
(after taking into consideration any insurance or third party proceeds which have been or
may be received in connection with such suit, action, investigation or proceeding) or (B)
otherwise have, or has had, a Sun Material Adverse Effect.

          (c) To the Knowledge of Sun, correct and, in all material respects, complete copies of all
material information, documents and reports, including environmental investigations and testing or
analysis, that are in the possession or custody of Sun or any Sun Subsidiary which relate to
compliance with Environmental Laws by any of them or to the past or current environmental condition
of the Acquired Properties (i) have been delivered or made available to Horizon OP and (ii) are set
forth in Section 3.9(a) of the Sun Disclosure Letter.

          (d) The representations and warranties contained in this Section 3.9 constitute the
sole and exclusive representations and warranties of Sun and Trust with respect to any
Environmental Laws, Hazardous Materials, Environmental Permits or litigation relating thereto.
Further, the parties hereto agree that for any matter or condition to be considered “disclosed” in
an Environmental Report for purposes of Section 3.9(b), the description of such matter or
condition in such Environmental Report must contain reasonable detail and/or explanation such that
the relevance and potential implications of such matter or condition in relation to Section
3.9(b) would be reasonably ascertainable to a sophisticated reviewer of environmental
assessment reports.

     Section 3.10 Affiliate Transactions; Intercompany Liabilities.

     Except as set forth in Section 3.10 of the Sun Disclosure Letter, there are no
understandings, arrangements or Contracts, including those providing for sales, purchases, leasing,
subleasing, licensing or sublicensing of goods, services, tangible or intangible property or joint
activities (including any Indebtedness), of the type described in Item 404 of Regulation S-K of the
Exchange Act between any of the Acquired Entities or (to the extent such Contracts constitute
Acquired Assets or Assumed Liabilities) the Asset Sellers, on the one hand, and Sun or any Retained
Subsidiary (other than any Asset Seller to the extent such Contracts constitute Acquired Assets or
Assumed Liabilities) or any of their respective current directors, officers or other Affiliates or
any other individuals who were named executive officers (as such term is used in Regulation S-K of
the Exchange Act) of Sun at any time since December 31, 2003 or any relative of any of the
foregoing (other than the Acquired Entities), on the other hand. Complete and correct copies of
all such understandings, arrangements and Contracts marked with an ‘*’ on Section 3.10 of
the Sun Disclosure Letter have previously been delivered or made available to Horizon OP. As used
in this Agreement, the term “Affiliate” shall have the same meaning as such term is defined
in Rule 405 promulgated under the Securities Act.

32

 

     Section 3.11 Employee Benefits. As used herein, the term “Employee Plan”
includes any pension, retirement, savings, disability, medical, dental, health, life, death
benefit, executive compensation, change of control benefit, savings, group insurance, profit
sharing, deferred compensation, equity compensation, bonus, incentive, vacation pay, tuition
reimbursement, severance pay, fringe benefit or other employee benefit plan, trust, Contract,
agreement, policy or commitment (including any employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder (“ERISA”), and any welfare plan as defined in Section 3(1) of ERISA,
whether or not covered by ERISA), whether any of the foregoing is funded, insured or self-funded,
written or oral. Section 3.11 of the Sun Disclosure Letter sets forth a correct and
complete list of all Employee Plans sponsored, maintained, contributed to or required to be
contributed to by Sun or any Sun Subsidiary for the benefit of employees of, or for employees
performing services primarily for, the Acquired Business (each, a “Sun Employee Plan”), as
well as each multiemployer plan (as such term or any similar term is defined in Section 3(37) of
ERISA or under applicable Law) that is a Sun Employee Plan (a “Multiemployer Plan”). Each
Sun Employee Plan has been established, registered, operated, invested, funded and administered in
compliance with its terms, all applicable employment agreements and applicable Law, except for such
instances of non-compliance which, individually and in the aggregate, would not reasonably be
expected to result in a Sun Material Impairment; provided, however, that, in the
case of any Multiemployer Plan, this representation is limited to matters within the Knowledge of
Sun. No Acquired Entity maintains or sponsors an Employee Plan. No Acquired Entity has been
assessed any current Liability under Title IV of ERISA, and the transactions contemplated by this
Agreement shall not trigger any Liability under Title IV of ERISA with respect to any Employee
Plan, other than a Multiemployer Plan. Sun and each Sun Subsidiary has made all contributions
required under applicable collective bargaining agreements and, in jurisdictions outside of the
United States, paid all interest and penalties claimed to each Multiemployer Plan, except for any
contribution which is not yet due and payable. To the Knowledge of Sun, the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions will
not trigger or cause a withdrawal, whether complete or partial, from any Multiemployer Plan under
Section 4201, 4203 or 4205 of ERISA or under the terms of any Multiemployer Plan.

     Section 3.12 Employment and Labor Matters.

          (a) No Acquired Entity formed in the United States (or any subdivisioin thereof) or Canada (or
any subdivision thereof) directly employs any employees and all services performed for the Acquired
Entities and, with respect to the Acquired Business, the Asset Sellers, are performed by Sun or a
Sun Subsidiary other than an Acquired Entity (each, a “Sun Employer”) or independent contractors.

          (b) Except as set forth in Section 3.12(b) of the Sun Disclosure Letter, (i) there are
no suits, charges, grievances or attorney demand letters, pending or threatened, involving Sun or
any Sun Subsidiary and any employee of the Acquired Business, that, individually or in the
aggregate, if determined or resolved adversely to Sun or such Sun Subsidiary, has resulted in, or
would reasonably be expected to result in, a Sun Material Impairment, (ii) neither Sun nor any Sun
Subsidiary is a party to any collective bargaining agreement, labor union contract or legally
binding commitment to any labor union applicable to any employees of the Acquired Business, and, to
the Knowledge of Sun, there are no activities or

33

 

proceedings involving any labor union to organize
or represent any such employees, that, individually or in the aggregate, if successful, would
result in, or would reasonably be expected to result in, a Sun Material Impairment, (iii) there are
no unfair labor practice charges or other applications or proceedings before a labor relations
board or any similar authority currently pending or, to the Knowledge of Sun, threatened, involving
Sun or any Sun Subsidiary and any employee of the Acquired Business, that, individually or in the
aggregate, if determined or resolved adversely to Sun or any Sun Subsidiary, would result in, or
would reasonably be expected to result in, a Sun Material Impairment, (iv) neither Sun nor any Sun
Subsidiary is a party to, or otherwise bound by, any consent decree with, or citation or other
order by, any Governmental Entity relating to employment practices with respect to any employees of
the Acquired Business, except to the extent any such consent decree, citation or order,
individually and in the aggregate, has not resulted in and would not reasonably by expected to
result in a Sun Material Impairment and (v) each of Sun and the Sun Subsidiaries is in compliance
in all material respects with all applicable Laws, Contracts and employment policies relating to
employment practices, wages, hours and other terms and conditions of employment, employment
standards, human rights, occupational safety, workers’ compensation, language of work and plant
closing Laws with respect to employees of the Acquired Business, except in each case to the extent
that any noncompliance therewith, individually and in the aggregate, has not resulted in and would
not reasonably be expected to result in a Sun Material Impairment.

     Section 3.13 Intellectual Property. Except as set forth in Section 3.13 of
the Sun Disclosure Letter or as, individually and in the aggregate, have not had and would not
reasonably be expected to have a Sun Material Adverse Effect, (i) Sun and the Sun Subsidiaries own
or have a valid right to use all Sun
Intellectual Property that is used in the operation of the Acquired Business in the manner in
which it is currently used, (ii) no Acquired Entity or, with respect to the Acquired Business,
Seller has misappropriated or is infringing upon the Intellectual Property of others, (iii) Sun and
the Sun Subsidiaries have taken reasonable actions to protect and maintain the Sun Intellectual
Property that is used in the Acquired Business and (iv) there are no claims, suits or other actions
pending or, to the Knowledge of Sun, threatened that seek to limit or challenge the validity,
enforceability, ownership, or right to use, sell or license the Sun Intellectual Property owned by
Sun or any of its Affiliates, or the right to use or license any Sun Intellectual Property that Sun
or any of its Affiliates use or holds for use but does not own, that is used in the Acquired
Business, nor, to the Knowledge of Sun, is there any valid basis therefor.

     Section 3.14 Taxes.

          (a) Each of the Sun Parties, the Acquired Entities and each member of any affiliated,
consolidated, combined or unitary group of which any Sun Party or any Sun Subsidiary is (or, during
any taxable year either beginning on or after January 1, 1998 or for which the statute of
limitations has not expired, was) a member (each such entity, a “Sun Taxpayer”) (A) has
filed (or has had filed on its behalf) all material Tax Returns required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental Entity having authority to
do so) and all such Tax Returns are accurate and complete in all material respects, (B) has paid
(or Sun or Trust has paid on its behalf) all material Taxes of it (whether or not shown on any Tax
Return) that are due and payable and (C) has complied in all material respects with all applicable
Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442, 1445, 1446, 3121, and 3402 of the Code

34

 

or any similar provision of Law) and
has, within the time period prescribed by Law, withheld and paid over to the proper Governmental
Entities all material amounts required to be so withheld and paid over under applicable Laws. The
most recent audited financial statements of Sun and Trust contained in the Filed Trust SEC
Documents, the Unaudited Combined Interim Financial Statements and the Unaudited Stub Period
Financial Statements reflect or (when delivered) will reflect, as applicable, an adequate reserve
(excluding any reserve for deferred Taxes established to reflect timing differences between book
and Tax income) for all material unpaid Taxes of the Sun Taxpayers for all taxable periods and
portions thereof through the date of such financial statements. From the Sun Financial Statement
Date through the date of this Agreement, no Sun Taxpayer has incurred any material liability for
Taxes other than in the Ordinary Course. From the date of this Agreement through Closing, no
Acquired Entity will have incurred any material liability for Taxes other than (i) in the Ordinary
Course or (ii) pursuant to the Baseline Restructuring Steps (as modified in accordance with
Exhibit A). Since January 1, 1995 or, if later, the acquisition by Trust of a direct or
indirect interest therein, none of Trust, W&S Denver Corp., W&S Lauderdale Corp. or W&S Seattle
Corp. (each such entity, a “REIT Entity”) has incurred any material liability for Taxes
under Sections 857(b), 860(c) or 4981 of the Code, including any Tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code. No Acquired Entity is the subject of any
audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of Sun,
no audit, examination or other proceeding in respect of material Taxes involving any Acquired
Entity is being considered by
any Tax authority. No deficiencies for any material Taxes have been proposed, asserted or
assessed against any Acquired Entity, Sun (to the extent that any Acquired Entity could be held
liable for such Taxes) or any Sun Affiliate (to the extent that any Acquired Entity could be held
liable for such Taxes) that will not have prior to the Closing Date been fully paid (including any
applicable interest charges, penalties or other additions to Taxes), and no requests for waivers of
the time to assess any such Taxes are pending. No Acquired Entity has received written notice from
any Governmental Entity in a jurisdiction in which such entity does not file a Tax Return stating
that such entity is or may be subject to taxation by that jurisdiction. As of the completion of
the Closing, (i) no Acquired Entity (other than Trust) that is domestic and is treated as a
corporation for United States federal income tax purposes will have any C Corporation Earnings and
Profits and (ii) the aggregate amount of C Corporation Earnings and Profits of the Acquired
Entities that are foreign and are treated as corporations for United States federal income tax
purposes will not exceed $50,000,000 (taking into account only the earnings and profits of such
entities that have positive earnings and profits). As used in this Agreement: (i) “Taxes”
means (A) all taxes, charges, fees, levies and other assessments, including income, gross receipts,
excise, real or personal property, sales, withholding (including dividend withholding and
withholding required pursuant to Sections 1445 and 1446 of the Code), social security, occupation,
use, service, license, payroll, franchise, transfer and recording taxes, fees and charges,
including estimated taxes, imposed by the United States or any taxing authority (domestic or
foreign), whether computed on a separate, consolidated, unitary, combined or any other basis, and
any interest, fines, penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments and (B) any liability for
amounts described in clause (A) of another Person under Treasury Regulation Section
1.1502-6 (or any similar provision of Law), as a result of transferee liability, by Law, by
Contract or otherwise and (ii) “Tax Return” means any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority or jurisdiction
(foreign

35

 

or domestic) with respect to Taxes, including any schedule or attachment thereto and any
amendment thereof, any information returns, any documents with respect to or accompanying payments
of estimated Taxes, or with respect to or accompanying requests for the extension of time in which
to file any such report, return, document, declaration or other information. Notwithstanding
anything in this Section 3.14 to the contrary, any references to “Taxes” for purposes of
this Section 3.14(a) shall exclude any Taxes (within the meaning of clause (A) of
the definition of “Taxes”) of Sun or any Retained Subsidiary, other than Taxes for which
any Acquired Entity or Horizon Party could be held liable post-Closing or the non-payment of which
could result in the Acquired Assets being subject to a material Encumbrance.

          (b) Since January 1, 1995 or, if later, the acquisition by Trust of a direct or indirect
interest therein, Trust and each other REIT Entity (i) has elected to be subject to taxation as a
real estate investment trust (a “REIT”) within the meaning of Section 856 of the Code (and
any similar provision of state Tax Law) and has satisfied all requirements to qualify as a REIT for
all taxable years since and including 1995 or, if later, the acquisition by Trust of a direct or
indirect interest therein, (ii) has operated since and including January 1, 2005 to the date of
this representation, and intends to continue to operate through and including the Closing Date, in
such a manner as to qualify as a REIT and (iii) has received no written notice that a challenge to
its status as a REIT is pending or threatened. Each Acquired Entity that is a partnership, joint
venture or limited liability company has been treated since its
formation and continues to be treated for federal and state income tax purposes as a
partnership or as an entity that is disregarded for federal income tax purposes and not as a
corporation or an association taxable as a corporation. In addition, each Subsidiary of Trust or
any other REIT Entity that is a partnership, joint venture or limited liability company has not,
since the latest of January 1, 1995, its formation or the acquisition by Trust or such other REIT
Entity, as applicable, of a direct or indirect interest therein, owned any Assets (including
securities) that would cause Trust or such other REIT Entity to violate Section 856(c)(4) of the
Code. SLT is not a publicly traded partnership within the meaning of Section 7704(b) of the Code
that is taxable as a corporation pursuant to Section 7704(a) of the Code. For all taxable years
beginning on or after January 1, 1995 (in the case of Trust) or January 1, 1998 (in the case of
other REIT Entities) and ending on or before December 31, 2000, each Subsidiary of Trust or any
other REIT Entity which is a corporation (for federal income tax purposes) has been on the last day
of each calendar quarter during which Trust or such other REIT Entity has owned an interest in such
corporation representing more than 10% of the outstanding voting securities of such corporation, a
qualified REIT subsidiary under Section 856(i) of the Code or a REIT. For all taxable years
beginning on or after January 1, 2001, each Subsidiary of Trust or any other REIT Entity which is a
corporation (for federal income tax purposes) has been, on the last day of each calendar quarter
during which Trust or such other REIT Entity has owned an interest in such corporation representing
more than 10% of the value of the outstanding securities of such corporation or more than 10% of
the outstanding voting securities of such corporation, a qualified REIT subsidiary under Section
856(i) of the Code, a taxable REIT subsidiary of Trust or such REIT Entity under Section 856(l) of
the Code, a REIT, or a corporation which qualifies under the transitional rules set forth in
Section 546(b) of the Tax Relief Extension Act of 1999. Each Subsidiary of Trust that is a
“qualified REIT subsidiary” under Section 856(i) of the Code is set forth in Section
3.14(b) of the Sun Disclosure Letter. No Acquired Entity that is either a REIT Entity or a
Subsidiary of a REIT Entity will hold, as of the Closing, any Asset (x) the disposition of which
would be subject to rules similar to Section 1374 of the Code as a result of an election

36

 

under IRS
Notice 88-19, Temporary Treas. Reg. §1.337(c)-5T, Treas. Reg. §1.337(d)-5, Treas. Reg. §1.337(d)-6
or not making an election under Treas. Reg. §1.337(d)-7 or (y) which is subject to a consent filed
pursuant to Section 341(f) of the Code and the regulations thereunder.

          (c) To the Knowledge of Sun, as of the date hereof, each of the REIT Entities is a
“domestically-controlled” REIT within the meaning of Section 897(h) of the Code.

          (d) There are no Encumbrances for material Taxes (other than for current Taxes not yet due and
payable) on any Acquired Assets.

          (e) Section 3.14(e) of the Sun Disclosure Letter contains a list of each
tax-indemnity, tax-sharing or tax-allocation agreement that any Acquired Entity is a party to or
bound by (or, except for the Tax Sharing and Indemnification Agreement, will become a party to or
bound by). Section 3.14(e) of the Sun Disclosure Letter contains a list of all
Contribution Agreements that any Acquired Entity has entered into, is a party to, or is subject to.
As used herein, a “Contribution Agreement” means an agreement, oral or written, (A) that
has one of its purposes to permit a Person to take the position that such Person could defer
federal taxable income that otherwise might have been recognized upon a transfer of property or
contribution to any Acquired Entity that is treated as a partnership
for federal income tax purposes and that (i) prohibits or restricts in any manner the
disposition of any Assets of any Acquired Entity, (ii) requires that any Acquired Entity maintain,
put in place, or replace, indebtedness, whether or not secured by one or more Acquired Properties
or (iii) requires that any Acquired Entity offer to any Person at any time the opportunity to
guarantee or otherwise assume, directly or indirectly (including through a “deficit restoration
obligation,” guarantee (including a “bottom” guarantee), indemnification agreement or other similar
arrangement), the risk of loss for federal income Tax purposes for indebtedness or other
liabilities of any Acquired Entity, (B) that specifies or relates to a method of taking into
account book-tax disparities under Section 704(c) of the Code with respect to one or more Assets of
an Acquired Entity or (C) that requires a particular method for allocating one or more liabilities
of any Acquired Entity under Section 752 of the Code. As of the date hereof, no person has raised,
or to the Knowledge of Sun threatened to raise, a material claim against an Acquired Entity for any
breach of any Contribution Agreement. The transactions contemplated by this Agreement and the
Horizon Transactions will not result in a breach of any Contribution Agreement other than as set
forth in Section 3.14(e) of the Sun Disclosure Letter. The copies of the Contribution
Agreements provided to Horizon are complete and correct, and no such Contribution Agreement has
been amended or modified. Other than the Contribution Agreements identified in Section
3.14(e) of the Sun Disclosure Letter, there are no written or oral Contracts or similar
arrangements in effect which impose material obligations or restrictions on any Acquired Entity or
their affiliates with respect to the sale of properties or the maintenance of indebtedness or a
particular method for allocating one or more liabilities of any Acquired Entity under Section 752
of the Code or otherwise. For purposes of this Section 3.14(e), Contribution Agreements
shall exclude any agreements that otherwise meet the definition of such term, but that will expire
pursuant to their respective terms immediately upon the consummation of the transactions
contemplated by this Agreement other than any Contribution Agreement that will expire as a result
of a breach of such Contribution Agreement.

          (f) None of the Acquired Assets is property required to be treated as being owned by any other
person pursuant to the “safe harbor lease” provisions of former

37

 

Section 168(f)(8) of the Code.
None of the Acquired Assets directly or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code. None of the Acquired Assets is “tax-exempt use
property” within the meaning of Section 168(h) of the Code.

          (g) None of the Acquired Entities nor any predecessors of such entities by merger or
consolidation has within the past three years been a party to a transaction intended to qualify
under Section 355 of the Code or under so much of Section 356 of the Code as it relates to Section
355 of the Code.

          (h) Sun acquired SHC in a transaction constituting a reverse acquisition within the meaning of
Treasury Regulation Section 1.1502-75(d)(3), with the consolidated group of SHC being considered to
have continued for federal income tax purposes and with Sun and the members of its consolidated
group at the time of such acquisition being considered to have become members of the consolidated
group of SHC.

          (i) To the Knowledge of Sun, no gaming, wagering or other similar activities are conducted at
or in connection with any Acquired Hotel by any Person who is engaged in the
business of accepting wagers and who is legally authorized to engage in such business at or in
connection with such Acquired Hotel.

     Section 3.15 No Brokers. Except for Bear, Stearns & Co. Inc. (“Bear,
Stearns”) and Deutsche Bank AG, in each case whose fees are solely payable by Sun or any
Retained Subsidiary, no broker, investment banker, financial advisor or other Person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the
reimbursement of expenses, in connection with the transactions contemplated by this Agreement or
the Horizon Transactions based upon arrangements made by or on behalf of Sun or any Sun Subsidiary.

     Section 3.16 Compliance with Laws; Permits. Except as set forth in Section
3.16 of the Sun Disclosure Letter, since January 1, 2001, neither Sun nor any Sun Subsidiary
has violated or failed to comply with any Law (including Privacy Laws) applicable to the Acquired
Business, Acquired Hotels or Acquired Entities, except in each case to the extent that such
violation or failure, individually and in the aggregate, has not resulted in and would not
reasonably be expected to result in a Sun Material Impairment. Each of Sun, each Seller (with
respect to the Acquired Business), each Acquired Entity and each Sun Subsidiary that is a
management company of an Acquired Property owns and/or possesses all permits, licenses, variances,
authorizations, exemptions, orders, registrations and approvals of all Governmental Entities (the
“Permits”) which are required for the businesses, activities and operations of the Acquired
Business, except where the absence of such Permits, individually and in the aggregate, has not
resulted in, and would not reasonably be expected to result in, a Sun Material Impairment. Each of
Sun, each Seller (with respect to the Acquired Business), each Acquired Entity and each Sun
Subsidiary that is a management company of an Acquired Property has been in compliance in all
respects with the terms of its Permits, except for such instances of non-compliance which have been
cured or which, individually and in the aggregate, have not resulted in, and would not reasonably
be expected to result in, a Sun Material Impairment. All such Permits are in full force and effect
and neither Sun nor any Sun Subsidiary has received notice that any suspension, modification or
revocation of any of them is pending or, to the Knowledge of Sun, threatened nor, to the Knowledge
of Sun, do any grounds exist for any such action, except for such

38

 

suspensions, modifications or
revocations that, individually and in the aggregate, have not resulted in and would not reasonably
be expected to result in a Sun Material Impairment.

     Section 3.17 Contracts.

          (a) Except as set forth in Section 3.17(a)(1) of the Sun Disclosure Letter, neither
any Seller, nor any Acquired Entity (in each case, with respect to the Acquired Business) nor (in
the case of clause (xii) below) Sun or any Retained Subsidiary is a party to, and neither
any of such Persons nor their respective Assets are bound by, any Material Contracts as of the date
hereof. Notwithstanding the foregoing, neither Sun nor Trust shall bear any Liability to any
Horizon Party under Section 2(a)(i) of the Indemnification Agreement for the failure to list a
Material Contract in Section 3.17(a)(1) of the Sun Disclosure Letter or
(notwithstanding anything to the contrary in Section 3.17(b)) failure to provide or make
available to Horizon OP a correct and, in all material respects, complete copy of such undisclosed
Material Contract to the extent: (w) Sun did not have Knowledge of the existence of such Material
Contract as of the date of this Agreement, (x) such Material Contract relates exclusively to the
Acquired Hotels identified in Section 3.17(a)(2) of the Sun Disclosure Letter as “Secondary
Hotels” (the “Secondary Hotels”), (y) the impact of such Material Contract on the combined
financial position, results of operations and cash flows of the Acquired Business was fairly
presented in all material respects in the Audited Combined Historical Financial Statements and in
any projections with respect to the Acquired Business delivered or made available to Horizon OP
prior to the date of this Agreement and (z) such Material Contract contains no terms that, in the
event of a contingency that is reasonably likely to occur, would reasonably be expected to result,
individually or in the aggregate, in a material increase in the Liabilities, or a material decrease
in the benefits, under such Material Contract; or (2) in the case of Material Contracts which are
the subject in clauses (i), (ii), (vii) and (viii) below, any
Contract which is terminable by the applicable Acquired Entity or Directly Acquired Assets Owner
without any penalty, premium, termination payment or other Liabilities upon not more than ninety
(90) days notice. For purposes of this Agreement, “Material Contracts” means the following
Contracts:

     (i) Hotel management agreements, franchise agreements, golf course management
agreements, parking facility management agreements and health or spa facility
management agreements, in each case relating to any Acquired Hotel by any Person
other than an Acquired Entity;

     (ii) Contracts pursuant to which an Acquired Entity or, with respect to the
Acquired Business, a Seller manages or provides services with respect to any real
properties other than the Acquired Hotels involving annual payments of $150,000 or
more;

     (iii) license or other Contracts relating primarily to the Acquired Hotels
with respect to the names or marks under which the Acquired Hotels are operated;

     (iv) Contracts for any construction work (including any additions or
expansions) to be performed at any Acquired Hotel which are currently in effect
and under which any Acquired Entity or, with respect to the Acquired

39

 

Business, any
Seller currently has an obligation in excess of, with respect to the Acquired
Hotels identified in Section 3.17(a)(3) of the Sun Disclosure Letter as
“Primary Hotels” (the “Primary Hotels”), $250,000, and with respect to the
Secondary Hotels, $100,000, in each case in the aggregate;

     (v) Contracts providing for (A) the sale of, option to sell or right of first
refusal or offer with respect to any rights of Sun or any Sun Subsidiary in any
Acquired Property or, other than sales of inventory, consumables or FF&E in the
Ordinary Course of the Acquired Business, other material Asset of the
Acquired Business or (B) the purchase of (other than with respect to fixtures
and capital improvements), or option to purchase or right of first refusal or
offer for, any real estate by an Acquired Entity or, with respect to the Acquired
Business, a Seller involving (in the case of clause (B)) payments of
$250,000 or more;

     (vi) Contracts pursuant to which any Acquired Entity or, with respect to the
Acquired Business, any Seller has any material continuing contractual obligation
(A) for indemnification or otherwise under any agreements relating to the sale of
real estate, or any other business or material Assets, previously owned, whether
directly or indirectly, by an Acquired Entity or, with respect to the Acquired
Business, a Seller if such Contracts, to the Knowledge of Sun, are likely to
involve liability of $10,000,000 or more or (B) to pay additional purchase price
for any of the Acquired Properties;

     (vii) Material Sun Space Leases or leases for personal property relating to
any Acquired Property providing for annual rental payments of $100,000 or more;

     (viii) service or maintenance Contracts providing for annual payments by an
Acquired Entity or, with respect to the Acquired Business, a Seller of, with
respect to the Primary Hotels, $250,000 or more, and with respect to the Secondary
Hotels, $100,000, in each case in the aggregate;

     (ix) material loan or credit agreements, notes, bonds, mortgages, indentures
or any other Contracts (including capitalized leases involving annual payments in
excess of $50,000) pursuant to which any Indebtedness of any Acquired Entity or,
with respect to the Acquired Business, any Seller is outstanding or may be
incurred;

     (x) to the extent not disclosed pursuant to Section 3.17(a)(ix),
Contracts relating to interest rate caps, interest rate collars, interest rate
swaps, currency hedging transactions and other similar arrangements to which any
Acquired Entity or, with respect to the Acquired Business, any Seller is a party
or an obligor with respect thereto;

     (xi) partnership, limited liability company, joint venture or other similar
Contracts or arrangements with respect to the ownership or governance

40

 

of, or
otherwise with respect to the Interests representing ownership of, an Acquired
Entity;

     (xii) collective bargaining agreements or other material Contracts with any
labor union or other labor organization relating to wages, hours and other
conditions of employment in effect as of the date hereof, in each case with
respect to the Acquired Business (including any Contracts set forth or required to
be set forth in Section 3.12(b) of the Sun Disclosure Letter);

     (xiii) Contracts (other than this Agreement and the Ancillary Agreements)
that materially restrict the operations of the Acquired Business as currently
conducted or, at or after the Closing, would otherwise limit the freedom of
Horizon or any Horizon Subsidiary (including any Acquired Entity) to own or lease
any hotel or related facility in any geographic area;

     (xiv) Contracts set forth or required to be set forth in Section 3.10
or Section 3.14(e) of the Sun Disclosure Letter;

     (xv) Contracts to which any Acquired Entity or, with respect to the Acquired
Business, any Seller is a party to or bound by and which are required to be filed
as exhibits to the Filed Trust SEC Documents (other than Contracts required to be
disclosed solely pursuant to Item 601(b)(10)(ii)(A) or 601(b)(10)(iii) of
Regulation S-K of the Exchange Act) other than Contracts specified in clause
(ix) above;

     (xvi) all National/Regional Operating Agreements involving annual payments of
$2,000,000 relating to the Acquired Business; and

     (xvii) all Contracts providing for the sharing of mixed-use facilities,
including for the sharing of Taxes or maintenance or other costs and expenses
related to such facilities, which facilities are used in the operation of any
Acquired Hotel other than such Contracts required to be set forth in Section
3.10 of the Sun Disclosure Letter.

          (b) Except as set forth in Section 3.17(b) of the Sun Disclosure Letter and except as,
individually and in the aggregate, has not resulted in and would not reasonably be expected to
result in a Sun Material Impairment, neither Sun nor any Sun Subsidiary has received a written
notice that it is in violation of or in default under (nor to the Knowledge of Sun does there exist
any such violation or default or any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any Material Contract. Each
Material Contract is in full force and effect, except to the extent it has expired in the Ordinary
Course in accordance with its terms after the date of this Agreement, and is binding and
enforceable against the Sellers or Acquired Entities, as applicable, and, to the Knowledge of Sun,
each other party thereto, except as, individually and in the aggregate, has not resulted in and
would not reasonably be expected to result in a Sun Material Impairment. Correct and, in all
material respects, complete copies of each Material Contract have been

41

 

delivered or made available
to Horizon OP (except to the extent a complete and correct copy of such Material Contract has been
filed as an exhibit to a Filed Trust SEC Document).

          (c) Sun has delivered or made available to Horizon OP a correct and complete copy of the Sun
Rights Agreement.

     Section 3.18 Guarantees; Letters of Credit.

          (a) Set forth in Section 3.18(a) of the Sun Disclosure Letter is a correct and
complete list of all Liabilities (other than Assumed Liabilities) of Sun or any Retained Subsidiary
under any guaranty, letter of credit, comfort letter, surety bond and/or other credit support
provided by any of Sun or any Retained Subsidiary in support of an obligation in excess of $100,000
or, with respect to such items of credit support that do not involve any financial obligation, a
value of $250,000 of any of the Acquired Entities or, with respect to the Acquired Business, any of
the Asset Sellers (the “Acquired Business Credit Support”).

          (b) Set forth in Section 3.18(b) of the Sun Disclosure Letter is a correct and
complete list of all Assumed Liabilities and Liabilities of Acquired Entities under any guaranty,
letter of credit, comfort letter, surety bond and/or other credit support provided by any Acquired
Entity or, with respect to the Acquired Business, any Asset Seller in support of an obligation in
excess of $100,000 or, with respect to such items of credit support that do not involve any
financial obligation, a value of $250,000 of Sun or (other than, with respect to the Acquired
Business, any of the Asset Sellers) any Retained Subsidiary (the “Sun Credit Support”).

          (c) Except as set forth in any subsection of Section 3.18(c) of the Sun Disclosure
Letter, the Assumed Liabilities do not include any Liability under any (i) guarantees in support of
an obligation in excess of $100,000 or, with respect to such items of support that do not involve
any financial obligation, a value of $250,000 of third Persons (other than Sun or any Retained
Subsidiary) or (ii) letters of credit or surety bonds of third Persons.

     Section 3.19 Assets.

          (a) Immediately after the Closing, Horizon OP, the Horizon Subsidiaries and the Acquired
Entities, collectively, (i) will have good title to or, in the case of leased, subleased, licensed
or sublicensed Assets, possess valid and subsisting leased, subleased, licensed, or sublicensed
interest in, or otherwise have the legal right to use, all of the Acquired Hotels, free and clear
of all Encumbrances other than Permitted Title Exceptions; provided that, the foregoing
shall not apply to real estate and Intellectual Property, which are covered in Sections 3.8
and 3.13, respectively and (ii) subject to Section 6.8, will have no legal or
beneficial right, title or interest in or to any Excluded Asset.

          (b) Other than as set forth in Section 3.19(b) of the Sun Disclosure Letter, the
Acquired Assets, together with all Assets and services to the extent the benefit of which will be
provided to Horizon OP or the Horizon Subsidiaries pursuant to this Agreement, the Ancillary
Agreements and the Local Purchase Agreements, constitute in all material respects all right, title
and interest of Sun and the Sun Subsidiaries in and to personal and real property Assets owned,
used or held for use by Sun and the Sun Subsidiaries immediately prior to the Closing that are

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required for Horizon OP and the Horizon Subsidiaries to operate the Acquired Business in the manner
in which it is conducted immediately prior to Closing.

     Section 3.20 Insurance. Section 3.20(1) of the Sun Disclosure Letter contains a correct and complete list
as of the date of this Agreement of all material insurance policies (except title insurance) and
fidelity bonds owned or held by Sun or any Sun Subsidiary relating to the Acquired Business or the
Acquired Hotels and stating whether such policy is a claims-made or an occurrence-based policy.
There is no claim in excess of $100,000 by any Acquired Entity or, with respect to the Acquired
Business, Sun or any Retained Subsidiary pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or
in respect of which such underwriters have reserved their rights. All premiums payable under all
such policies and bonds have been timely paid. Sun and the Sun Subsidiaries have complied in all
material respects with the terms and conditions of all such policies and bonds. Such policies of
insurance and bonds (or other policies and bonds providing substantially similar insurance
coverage) have been in effect since January 1, 2005 and/or have been renewed at expiration and
remain in full force and effect as of the date hereof. Such policies and bonds, in the aggregate,
cover all of the Acquired Hotels and are of the type and in the amounts customarily carried by
Persons conducting businesses similar to those of the Acquired Business. Except as set forth in
Section 3.20(2) of the Sun Disclosure Letter, such policies and bonds are sufficient for
compliance in all material respects with all requirements under any Contracts or Laws to which any
Acquired Entity or, with respect to the Acquired Business, any Seller is a party or otherwise
bound, or to which any of the Acquired Hotels is subject. To the Knowledge of Sun, there is no
threatened termination any such policies or bonds. Except as set forth in Section 3.20(3)
of the Sun Disclosure Letter, the Acquired Entities and the Directly Acquired Assets Owner, as
applicable, shall, if Horizon OP so elects, continue (after the Closing through the term of such
policies) to have coverage under such policies and bonds that are occurrence-based policies with
respect to events occurring prior to the Closing.

     Section 3.21 [Intentionally Omitted.]

     Section 3.22 Opinion of Financial Advisor. Sun and Trust have received the opinion of
Bear, Stearns, their financial advisor, which has not been withdrawn or otherwise modified, to the
effect that as of the date of this Agreement, based upon and subject to the matters set forth in
such opinion, the consideration to be received pursuant to this Agreement is fair, from a financial
point of view, to Sun and Trust.

     Section 3.23 State Takeover Statutes. Each of Sun and Trust has taken all action
necessary to exempt the transactions contemplated by this Agreement and the Ancillary Agreements
and the Horizon Transactions from the operation of any “fair price,” “moratorium,” “control share
acquisition” or any other anti-takeover statute or Law (a “Takeover Statute” ).

     Section 3.24 No Vote Required. Except for (i) approvals set forth in Section
3.24 of the Sun Disclosure Letter (the “SLT Unitholder Approvals”) and (ii) the
approval of Sun (as majority holder of RP Units), Trust (as the sole general partner of SLT) and
Starwood Hotels
& Resorts Holdings, Inc., an Arizona corporation (as sole holder of Class A Shares), which
shall be given promptly after the execution of this Agreement, no vote or approval of any of the
holders of capital stock, beneficial interests or other Interests of Sun or any Sun Subsidiary with
respect

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to the adoption or approval of this Agreement or any Ancillary Agreement, or any
transaction contemplated hereby or thereby, shall be necessary or required.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF THE HORIZON PARTIES

     Except as set forth in the letter, dated as of the date hereof, delivered by the Horizon
Parties to the Sun Parties prior to the execution of this Agreement (the “Horizon Disclosure
Letter”), the Horizon Parties hereby jointly and severally represent and warrant to the Sun
Parties as follows:

     Section 4.1 Organization, Standing and Power.

          (a) Horizon is a corporation duly organized, validly existing and in good standing under the
laws of Maryland. Horizon has all requisite corporate power and authority to own, operate, lease
and encumber its properties and carry on its business as now being conducted. The articles of
incorporation of Horizon (the “Horizon Charter”) are in effect, and, to the Knowledge of
Horizon, no dissolution, revocation or forfeiture proceeding regarding Horizon has been commenced.
Horizon is duly qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually and in the aggregate, has not had
and would not reasonably be expected to (i) have a Horizon Material Adverse Effect or (ii) prevent
or delay in any material respect the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements or the Horizon Transactions or otherwise prevent Horizon from
performing its obligations under this Agreement or the Ancillary Agreements in any material
respect.

          (b) Horizon has made available to Sun complete and correct copies of the Horizon Charter and
the bylaws of Horizon (the “Horizon Bylaws”), in each case as amended, restated or
supplemented to the date of this Agreement. Horizon is not in violation in any material respect of
any provision of the Horizon Charter or the Horizon Bylaws.

     Section 4.2 Horizon Subsidiaries.

          (a) As of the date of this Agreement, Section 4.2(a) of the Horizon Disclosure Letter
sets forth (i) each Horizon Subsidiary, (ii) the Interest therein of Horizon and (iii) if not
directly or indirectly wholly owned by Horizon or Horizon OP, the identity and Interest of each of
the other owners of such Horizon Subsidiary (other than Horizon OP).

          (b) Except as set forth in Section 4.2(b) of the Horizon Disclosure Letter, all of the
outstanding Interests in each Horizon Subsidiary that is owned by Horizon or a Horizon Subsidiary
have been duly authorized and validly issued and (A) in the case of stock Interests, are fully paid
and (in applicable jurisdictions) nonassessable and free of preemptive or similar rights; (B) in
the case of partnership, limited liability company or other Interests, are not subject to any
Indebtedness, capital calls or other obligations (contingent or otherwise) to contribute monies in
respect thereof; and (C) in all cases, are owned free and clear of all Encumbrances. Each Horizon
Subsidiary is duly organized, validly existing and in good standing under the Laws

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of its
jurisdiction of incorporation or organization, as applicable, and has all requisite corporate or
other power and authority to own, operate, lease and encumber its properties and carry on its
business as now being conducted. Each Horizon Subsidiary is duly qualified or licensed to do
business as a foreign corporation or other limited liability entity and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed, individually and in the aggregate, has not had and would not
reasonably be expected to (i) have a Horizon Material Adverse Effect or (ii) prevent or delay in
any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent any Horizon Subsidiary from
performing its obligations under this Agreement or the Ancillary Agreements in any material
respect. Complete and correct copies of the Organizational Documents of Horizon OP and REIT Merger
Sub, in each case as amended, restated or supplemented to the date of this Agreement, have been
previously made available to Sun. The Organizational Documents of each Horizon Subsidiary that is
a Horizon Party are in effect and, to the Knowledge of Horizon, no dissolution, revocation or
forfeiture proceeding regarding any Horizon Party has been commenced. No amendment has been made
or modification or waiver granted to the Second Amended and Restated Agreement of Limited
Partnership of Horizon OP, dated as of December 30, 1998 (the “Horizon OP Agreement”),
since the amendment dated August 31, 2005, for the period ending June 30, 2005 (except to admit
substituted limited partners following transfers of Class A Units of Horizon OP (the “Horizon
OP Units”)).

     Section 4.3 Capital Structure.

          (a) The authorized shares of capital stock of Horizon consist of 750,000,000 shares of Horizon
Common Stock and 50,000,000 shares of preferred stock, par value $0.01 per share, of which, as of
the date of this Agreement, 650,000 are classified as Series A Junior Participating Preferred Stock
(the “Horizon Series A Preferred Stock”), 5,980,000 are classified as 10% Class C
Cumulative Redeemable Preferred Stock (the “Horizon Class C Preferred Stock”) and 8,000,000
are classified as 8 7/8% Class E Cumulative Redeemable Preferred Stock (the “Horizon Class E
Preferred Stock” and, together with the Horizon Series A Preferred Stock and the Horizon Class
C Preferred Stock, the “Horizon Preferred Stock”). As of November 9, 2005 (i)
353,816,070 shares of Horizon Common Stock were issued and outstanding; (ii) no shares of
Horizon Series A Preferred Stock were issued and outstanding; (iii)
5,980,000 shares of Horizon Class C Preferred Stock were issued and outstanding; (iv)
4,034,300 shares of Horizon Class E Preferred Stock were issued and outstanding; (v) 19,962,465
shares of Horizon Common Stock are reserved for issuance upon the redemption of Horizon OP Units;
(vi) 27,701,200 shares of Horizon Common Stock are reserved for issuance upon the exchange of the
3.25% Exchangeable Senior Debentures of Horizon OP (the “Horizon Exchangeable Debentures”);
(vii) 30,907,699 shares of Horizon Common Stock are reserved for issuance upon the conversion of
the 6.75% convertible preferred securities of Horizon Financial Trust, a Subsidiary of Horizon, and
the related conversion of the 6.75% convertible subordinated debentures of Horizon (the
“Horizon Convertible Preferred Securities”); (viii) 12,134,958 shares of Horizon Common
Stock are reserved for issuance under the Horizon and Horizon, L.P. Comprehensive Stock and Cash
Incentive Plan (the “Horizon Equity Plan”), under which stock options with respect to
1,959,842 shares of Horizon Common Stock (the “Horizon Stock Options”) have been granted
and are outstanding; (ix) 244,384 shares of Horizon Common Stock are reserved for issuance under
the

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Horizon Non-Employee Directors Stock Compensation Plan; and (x) (exclusive of shares reserved
for issuance pursuant to clauses (v) through (ix) above) warrants or other rights
to acquire Horizon Common Stock, stock appreciation rights, phantom shares, dividend equivalents,
deferred compensation accounts, performance awards, restricted stock unit awards or equity-like
rights or arrangements and other awards with respect to 7,009,213 shares of Horizon Common Stock
are outstanding (the “Horizon Stock Rights”).

          (b) All outstanding shares of Horizon Common Stock are duly authorized, validly issued, fully
paid and nonassessable and free of preemptive or similar rights under Law, the Horizon Charter or
Horizon Bylaws and any Contract or instrument to which Horizon is a party or by which it is bound.

          (c) Other than (i) as set forth in Section 4.3(a) of this Agreement or Section
4.3(c) of the Horizon Disclosure Letter and (ii) Horizon OP Units (which may be redeemed for
shares of Horizon Common Stock), Horizon Stock Options, the Horizon Exchangeable Debentures, the
Horizon Convertible Preferred Securities and Horizon Stock Rights, as of November 9, 2005, there
are not (A) issued, reserved for issuance or outstanding any Interests of Horizon or any Horizon
Subsidiary or (B) any Contracts to which Horizon or any Horizon Subsidiary is a party or by which
such entity is bound, obligating Horizon or any Horizon Subsidiary to issue, deliver, sell,
transfer, redeem, repurchase or otherwise acquire, or cause to be issued, delivered, sold,
transferred, redeemed, repurchased or otherwise acquired additional Interests of Horizon or any
Horizon Subsidiary or obligating Horizon or any Horizon Subsidiary to issue, grant, extend or enter
into any such Contract. All shares of Horizon Common Stock subject to issuance in respect of
Horizon Stock Options, Horizon OP Units or Horizon Stock Rights, upon issuance prior to the REIT
Merger Effective Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights.

          (d) The Horizon Common Stock to be issued by Horizon pursuant to this Agreement have been duly
authorized for issuance, and upon issuance will be duly and validly issued, fully paid and
nonassessable.

     Section 4.4 Other Interests. Except for Interests in the Horizon Subsidiaries and
certain other entities as set forth in Section 4.4 of the Horizon Disclosure Letter (the
“Horizon Other Interests”), as of the date of this Agreement, neither Horizon nor any
Horizon Subsidiary owns directly or indirectly any Interest in any Person (other than investments
in short-term investment securities).

     Section 4.5 Authority; Noncontravention; Consents.

          (a) Each of the Horizon Parties has all necessary corporate or other power and authority to
execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform
its obligations hereunder and thereunder and, subject to obtaining the Horizon Stockholder
Approval, to consummate the transactions contemplated hereby and thereby to be consummated by such
Horizon Party. The execution and delivery by each Horizon Party of this Agreement and each
Ancillary Agreement to which it is a party, the performance of its obligations hereunder and
thereunder, and the consummation by it of the transactions

46

 

contemplated hereby and thereby to be
consummated by it have been duly and validly authorized by all necessary action and no other
proceedings on the part of any Horizon Party and no votes by any holder of Interests in any Horizon
Party are necessary to authorize this Agreement or any Ancillary Agreement or to consummate the
transactions contemplated hereby and thereby, other than the Horizon Stockholder Approval. This
Agreement and each Ancillary Agreement has been duly authorized and validly executed and delivered
by each Horizon Party thereto and, subject to the Horizon Stockholder Approval, constitutes a
legal, valid and binding obligation of each such Horizon Party, enforceable against such Horizon
Party in accordance with its terms.

          (b) Except as set forth in Section 4.5(b) of the Horizon Disclosure Letter, the
execution and delivery of this Agreement and the Ancillary Agreements by the Horizon Parties do
not, and, subject to receipt of the Horizon Stockholder Approval and except as provided in
Section 4.12, the consummation of the transactions contemplated by, and performance of
their respective obligations under, this Agreement and the Ancillary Agreements and compliance by
Horizon and the Horizon Subsidiaries with the provisions hereof and thereof, and the consummation
of the Horizon Transactions, will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the
creation of any Encumbrance upon any of the Assets of Horizon or any Horizon Subsidiary under, (i)
the Horizon Charter or the Horizon Bylaws or the other Organizational Documents of any Horizon
Subsidiary, each as amended or supplemented, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, merger or other acquisition agreement, reciprocal easement agreement, lease or
other Contract, instrument, permit, concession, franchise or license applicable to Horizon or any
Horizon Subsidiary, or their respective Assets or (iii) subject to the governmental filings and
other matters referred to in Section 4.5(c), any Laws applicable to Horizon or any Horizon
Subsidiary or their respective Assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, losses or Encumbrances that,
individually and in the aggregate, have not had and would not reasonably be expected to (x) have a
Horizon
Material Adverse Effect or (y) prevent or materially impair the ability of Horizon or any
Horizon Subsidiary to perform its respective obligations hereunder or under the Ancillary
Agreements or prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions.

          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Horizon or any Horizon Subsidiary
in connection with the execution and delivery of this Agreement and the Ancillary Agreements by the
Horizon Parties or the consummation by Horizon and the Horizon Subsidiaries of the transactions
contemplated by this Agreement and the Ancillary Agreements or the Horizon Transactions, except for
(i) the filing with the SEC of (x) the Proxy Statement/Prospectus and the Form S-4 and the
declaration of the effectiveness thereof by the SEC and (y) such reports and filings under the
Securities Act and under the Exchange Act as may be required in connection with this Agreement and
the Ancillary Agreements and the transactions contemplated hereby and thereby and the Horizon
Transactions, (ii) the filing and acceptance for record of the REIT Articles of Merger by the
Department and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in Section 4.5(c) of the Horizon Disclosure
Letter; (B) as may be required under (t) the HSR Act, (u) the EC Merger Regulations or any other
antitrust or competition Laws of other

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jurisdictions, (v) the rules and regulations of the NYSE,
(w) any applicable Laws governing the sale or service of liquor, (x) Laws requiring transfer,
recordation or gains tax filings, (y) Environmental Laws or (z) the “blue sky” Laws of various
states, to the extent applicable; or (C) which, if not obtained or made would not prevent or delay
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent Horizon or any Horizon
Subsidiary from performing its respective obligations under this Agreement or the Ancillary
Agreements in any material respect or, individually or in the aggregate, have, or reasonably be
expected to have, a Horizon Material Adverse Effect.

     Section 4.6 SEC Documents; Financial Statements; Corporate Governance.

          (a) Each of Horizon and Horizon OP has filed all reports, schedules, forms, statements,
certifications and other documents required to be filed with the SEC since December 31, 2002
(collectively, including all exhibits thereto, the “Horizon SEC Documents”). All of the
Horizon SEC Documents, as of their respective filing dates and, as applicable, effective times,
complied in all material respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder applicable to such
Horizon SEC Documents as of the applicable filing date or effective time. None of the Horizon SEC
Documents, at the time of filing or, as applicable, of becoming effective, contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the consolidated financial statements (including the related
notes) of Horizon and the Horizon Subsidiaries included in the Horizon SEC Documents filed prior to
the date hereof (i) complied in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii) has been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q under
the Exchange Act) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and (iii) fairly presented in all material respects and in
accordance with the applicable requirements of GAAP and the applicable rules and regulations of the
SEC, the consolidated financial position of Horizon and the Horizon Subsidiaries, taken as a whole,
as of the dates thereof and the consolidated results of operations and cash flows for the periods
then ended.

          (b) Each of Horizon and Horizon OP has been and is in compliance in all material respects with
the applicable provisions of the Sarbanes-Oxley Act. No officer or director of Horizon is
currently indebted to Horizon or Horizon OP.

          (c) Each of Horizon and Horizon OP has designed and maintains disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that
material information relating to it and its consolidated Subsidiaries is made known to the
principal executive officer and the principal financial officer of it (or, in the case of Horizon
OP, the principal executive officer and the principal financial officer of Horizon, as its sole
general partner) by others within those entities. The principal executive officer and principal
financial officer of Horizon (including in their capacities as officers of the sole general partner
of Horizon OP) have made all certifications required by Rule 13a-14 or 15d-14 under the Exchange

48

 

Act or Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations
promulgated by the SEC.

          (d) Horizon has designed and maintains a system of internal controls over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP (within the meaning of such terms under
the Sarbanes-Oxley Act). Horizon has disclosed, based on its most recent evaluation to its
respective auditors and the audit committee of Horizon’s Board of Directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect in any material respect Horizon’s ability
to record, process, summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant role in its internal
controls over financial reporting. Horizon has delivered to Sun any such disclosures (i) prior to
the date of this Agreement or (ii) with respect to evaluations after the date of this Agreement,
promptly following the disclosures to the applicable auditors and audit committee.

     Section 4.7 Absence of Certain Changes or Events. Except as disclosed in Section
4.7 of the Horizon Disclosure Letter, since December 31, 2004 (the “Horizon Financial
Statement Date”), Horizon and Horizon OP have conducted their business in the Ordinary Course
and there has not been (a) any circumstance, event, occurrence, change or effect that, individually
or in the aggregate, has had or would reasonably be expected to have a Horizon Material Adverse
Effect or (b) on or prior to the date of this Agreement, any other action or omission by Horizon
or any Horizon Subsidiary which, if occurring during the period from the date of this
Agreement through the Closing, would constitute a breach of any of the following subsections of
Section 5.2: (b), (e) and, with respect to any of the foregoing,
(h).

     Section 4.8 Taxes.

          (a) Each of the Horizon Parties and each member of any affiliated, consolidated, combined or
unitary group of which any Horizon Party or any Horizon Subsidiary is or was a member (each such
entity, a “Horizon Taxpayer”) (A) has filed (or has had filed on its behalf) all material
Tax Returns required to be filed by it (after giving effect to any filing extension properly
granted by a Governmental Entity having authority to do so) and all such Tax Returns are accurate
and complete in all material respects; (B) has paid (or Horizon has paid on its behalf) all
material Taxes of it (whether or not shown on any Tax Return) that are due and payable; and (C) has
complied in all material respects with all applicable Laws relating to the payment and withholding
of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3121, and
3402 of the Code or any similar provision of any other Law) and has, within the time period
prescribed by Law, withheld and paid over to the proper Governmental Entities all material amounts
required to be so withheld and paid over under applicable Laws. The most recent audited financial
statements of Horizon contained in the Horizon SEC Documents reflect an adequate reserve (excluding
any reserve for deferred Taxes established to reflect timing differences between book and Tax
income) for all material unpaid Taxes of the Horizon Taxpayers for all taxable periods and portions
thereof through the date of such financial statements. Since the Horizon Financial Statement Date,
no Horizon Taxpayer

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has incurred any material liability for Taxes other than in the Ordinary
Course. Since January 1, 1999, Horizon has not incurred any material liability for Taxes under
Sections 857(b), 860(c) or 4981 of the Code, including any Tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code. No Horizon Taxpayer is the subject of any
audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of
Horizon, no audit, examination or other proceeding in respect of material Taxes involving any
Horizon Taxpayer is being considered by any Tax authority. No deficiencies for any material Taxes
have been proposed, asserted or assessed against any Horizon Taxpayer that have not been resolved,
and no requests for waivers of the time to assess any such Taxes are pending. No Horizon Taxpayer
has received written notice from any Governmental Entity in a jurisdiction in which such entity
does not file a Tax Return stating that such entity is or may be subject to taxation by that
jurisdiction.

          (b) Since January 1, 1999, Horizon (i) has elected to be subject to taxation as a REIT within
the meaning of Section 856 of the Code (and any similar provision of state Tax Law) and has
satisfied all requirements to qualify as a REIT for all taxable years since and including 1999,
(ii) has operated since, and intends to continue to operate on or before the Closing Date, in such
a manner as to qualify as a REIT and (iii) has received no written notice that a challenge to its
status as a REIT is pending or threatened. Each Horizon Subsidiary that is a partnership, joint
venture or limited liability company has been treated since its formation and continues to be
treated for federal and state income tax purposes as a partnership or as an entity that is
disregarded for federal income tax purposes and not as a corporation or an association
taxable as a corporation. In addition, each Horizon Subsidiary that is a partnership, joint
venture or limited liability company has not since the latest of January 1, 1999, its formation or
the acquisition by Horizon of a direct or indirect interest therein, owned any Assets (including
securities) that would cause Horizon to violate Section 856(c)(4) of the Code, unless any such
Asset was disposed of prior to the last day of the calendar quarter in which it was acquired or
within the applicable cure period provided for in Section 856(c)(4) of the Code. Horizon OP is not
a publicly traded partnership within the meaning of Section 7704(b) of the Code that is taxable as
a corporation pursuant to Section 7704(a) of the Code. For all taxable years beginning on or after
January 1, 1999 and ending on or before December 31, 2000, each Horizon Subsidiary which is a
corporation (for federal income tax purposes) has been on the last day of each calendar quarter
during which Horizon has owned an interest in such corporation representing more than 10% of the
outstanding voting securities of such corporation, a qualified REIT subsidiary under Section 856(i)
of the Code. For all taxable years beginning on or after January 1, 2001, each Horizon Subsidiary
which is a corporation (for federal income tax purposes) has been, on the last day of each calendar
quarter during which Horizon has owned an interest in such corporation representing more than 10%
of the value of the outstanding securities of such corporation or more than 10% of the outstanding
voting securities of such corporation, a qualified REIT subsidiary under Section 856(i) of the
Code, a taxable REIT subsidiary of Horizon under Section 856(l) of the Code, a REIT, or a
corporation which qualifies under the transitional rules set forth in Section 546(b) of the Tax
Relief Extension Act of 1999. Each Horizon Subsidiary that is a “qualified REIT subsidiary” under
Section 856(i) of the Code is set forth in Section 4.8(b) of the Horizon Disclosure Letter.

          (c) To the Knowledge of Horizon, as of the date hereof, Horizon is a “domestically-controlled”
REIT within the meaning of Section 897(h) of the Code.

50

 

          (d) There are no Encumbrances for material Taxes (other than current Taxes not yet due and
payable) on the assets of any Horizon Taxpayer.

          (e) No Horizon Taxpayer, or any predecessors of such entity by merger or consolidation, has
within the past three (3) years been a party to a transaction intended to qualify under Section 355
of the Code or under so much of Section 356 of the Code as it relates to Section 355 of the Code.

     Section 4.9 No Brokers. Except for Goldman Sachs & Co. (“GS&Co.”), whose fees
are solely payable by Horizon or any Horizon Subsidiary, no broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar
fee or commission, or the reimbursement of expenses, in connection with the transactions
contemplated by this Agreement or the Horizon Transactions based upon arrangements made by or on
behalf of Horizon or any Horizon Subsidiary.

     Section 4.10 Litigation. Except as disclosed in Section 4.10 of the Horizon
Disclosure Letter, there is no suit, action, investigation or proceeding pending or, to the
Knowledge of Horizon, threatened against
or affecting Horizon or any Horizon Subsidiary directly relating to or involving any of their
respective Assets, or any of the directors, officers, employees or agents thereof who may be
subject to indemnification by Horizon or any Horizon Subsidiary that, individually or in the
aggregate, if determined or resolved adversely, would reasonably be expected to (i) have, or has
had, a Horizon Material Adverse Effect or (ii) prevent or materially impair the ability of any
Horizon Party to perform any of its respective obligations hereunder or under any Ancillary
Agreement or prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Horizon or any Horizon Subsidiary that has had or would reasonably be expected
to have any such effect.

     Section 4.11 Opinion of Financial Advisor. Horizon has received the opinion of
GS&Co., its financial advisor, which has not been withdrawn or otherwise modified, to the effect
that as of the date of this Agreement, based upon and subject to the matters set forth in such
opinion, the Consideration (as such term is defined in such opinion) in the aggregate to be paid by
Horizon and certain of its Subsidiaries pursuant to this Agreement is fair from a financial point
of view to Horizon.

     Section 4.12 Horizon Stockholder Approval. The affirmative vote with respect to the
issuance of the shares of Horizon Common Stock in the Closing Transactions, of a majority of the
votes cast by holders of shares of Horizon Common Stock; provided that, the total vote cast
represents over 50% of the Horizon Common Stock issued, outstanding and entitled to vote, is the
only vote of the holders of any class or series of capital stock or equity interest of any Horizon
Party necessary or required to adopt or approve this Agreement and the Ancillary Agreements and the
transactions contemplated by this Agreement and the Ancillary Agreements and the Horizon
Transactions, except for the approval of (x) Horizon OP, as the sole member of REIT Merger Sub, and
(y) REIT Merger Sub, as the general partner of SLT Merger Sub. The approval by Horizon, which has
already been granted, is the only vote of any partner of Horizon

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OP necessary or required to
approve this Agreement and the Ancillary Agreements and the transactions contemplated hereby and
thereby and the Horizon Transactions.

     Section 4.13 Ownership of REIT Merger Sub and SLT Merger Sub; No Prior Activities.

          (a) Each of REIT Merger Sub and SLT Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement and the Ancillary Agreements.

          (b) All of the outstanding membership interests of REIT Merger Sub are owned directly by
Horizon OP. All of the outstanding limited partnership interests of SLT Merger Sub are owned by
REIT Merger Sub, its general partner, and Horizon OP. There are no options, warrants or other
rights (including registration rights), agreements, arrangements or commitments to which either
REIT Merger Sub or SLT Merger Sub is a party of any character
relating to the issued or unissued membership interests of, or other equity interests in, REIT
Merger Sub or SLT Merger Sub, respectively, or obligating REIT Merger Sub or SLT Merger Sub,
respectively, to grant, issue or sell any membership interests of, or other equity interests in,
REIT Merger Sub or SLT Merger Sub, respectively, by sale, lease, license or otherwise. There are
no obligations, contingent or otherwise, of REIT Merger Sub or SLT Merger Sub, respectively, to
repurchase, redeem or otherwise acquire any membership interests of REIT Merger Sub or SLT Merger
Sub, respectively.

          (c) Except for agreements, obligations or Liabilities incurred in connection with its
organization and the transactions contemplated by this Agreement and the Ancillary Agreements, REIT
Merger Sub has not and will not have incurred, and SLT Merger Sub has not and will not have
incurred, directly or indirectly, through any Subsidiary or Affiliate, any obligations or
Liabilities or engaged in any business activities of any type or kind whatsoever or entered into
any agreements or arrangements with any Person.

     Section 4.14 Compliance with Laws; Permits. Except as set forth in Section
4.14 of the Horizon Disclosure Letter, neither Horizon nor, to the Knowledge of Horizon, any
Horizon Subsidiary has violated or failed to comply with any Law (including Privacy Laws)
applicable to their business, except in each case to the extent that such violation or failure,
individually and in the aggregate, has not had and would not reasonably be expected to have a
Horizon Material Adverse Effect. Horizon and the Horizon Subsidiaries own and/or possess all
Permits which are required for the businesses, activities and operations of their business, except
where the absence of such Permits, individually and in the aggregate, has not had and would not
reasonably be expected to have a Horizon Material Adverse Effect. Horizon and each Horizon
Subsidiary has been in compliance in all respects with the terms of its Permits, except for such
instances of non-compliance which have been cured or which, individually and in the aggregate, has
not had and would not reasonably be expected to have a Horizon Material Adverse Effect. All such
Permits are in full force and effect and neither Horizon nor any Horizon Subsidiary has received
notice that any suspension, modification or revocation of any of them is pending or, to the
Knowledge of Horizon, threatened nor, to the Knowledge of Horizon, do any grounds exist for any
such action, except for such suspensions, modifications or revocations that, individually and in
the

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aggregate, have not had and would not reasonably be expected to have a Horizon Material Adverse
Effect.

     Section 4.15 Environmental Matters. Except as set forth in Section 4.15 of the
Horizon Disclosure Letter:

          (a) neither Horizon nor any Horizon Subsidiary nor, to the Knowledge of Horizon, any other
Person has caused or permitted the presence of any Hazardous Materials at, on or under any hotel
property of Horizon or any Horizon Subsidiary (each, a “Horizon Property”) and, to the
Knowledge of Horizon, no Hazardous Materials are present at, on or under any of the Horizon
Properties, in each of the foregoing cases, in such quantities or under such conditions that the
presence of such Hazardous Materials (including the presence of Structural Mold or asbestos in any
buildings or
improvements at the Horizon Properties), individually or in the aggregate, has had or would
reasonably be expected to have a Horizon Material Adverse Effect;

          (b) there have been no Releases of Hazardous Materials at, on, under or from any of the
Horizon Properties during the period of ownership or tenancy, and, to the Knowledge of Horizon, no
Releases of Hazardous Materials have occurred or are presently occurring at, on, under or from the
Horizon Properties, which, individually or in the aggregate, have had or would reasonably be
expected to have a Horizon Material Adverse Effect, and neither Horizon nor any Horizon Subsidiary
nor, to the Knowledge of Horizon, any other Person, has received any notice of alleged, actual or
potential responsibility for, or any inquiry or investigation regarding, any such Releases or
threatened Releases of Hazardous Materials, nor, to the Knowledge of Horizon, is there any
information which might form the basis of any such notice or any claim;

          (c) Horizon and the Horizon Subsidiaries have not failed to comply with any Environmental Law
and neither Horizon nor any Horizon Subsidiary has any liability under the Environmental Laws,
except to the extent that any such failure to comply or any such Liability, individually and in the
aggregate, has not had and would not reasonably be expected to have a Horizon Material Adverse
Effect;

          (d) Neither Horizon nor any Horizon Subsidiary nor, to the Knowledge of Horizon, any other
Person, has transported or arranged for the transport of Hazardous Materials from the Horizon
Properties which, to the Knowledge of Horizon, has or would reasonably be expected to have a
Horizon Material Adverse Effect;

          (e) Horizon and the Horizon Subsidiaries have been duly issued, and currently have and will
maintain through the Closing Date, all Environmental Permits necessary to operate their businesses
as currently operated except where the failure to obtain and maintain such Environmental Permits,
individually and in the aggregate, has not had and would not reasonably be expected to have a
Horizon Material Adverse Effect; and

          (f) there is no suit, action, investigation or proceeding pending or, to the Knowledge of
Horizon, threatened against or affecting Horizon or any Horizon Subsidiary directly relating to or
involving their respective businesses, any of their respective Assets or any of the directors,
officers, employees or agents thereof who may be subject to indemnification by

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Horizon or any
Horizon Subsidiary relating to any Environmental Law that, individually or in the aggregate, if
determined or resolved adversely, would reasonably be expected to have, or has had, a Horizon
Material Adverse Effect.

          (g) The representations and warranties contained in this Section 4.15 constitute the sole and
exclusive representations and warranties of the Horizon Parties with respect to any Environmental
Laws, Hazardous Materials, Environmental Permits or litigation relating thereto.

          (h) Horizon has delivered to Sun a correct and, in all material respects, complete copy of all
environmental assessments commissioned by any Horizon Party with respect to any Acquired Property.

     Section 4.16 Contracts.

     As of the date hereof, except as set forth in the Horizon SEC Documents, neither Horizon nor
any Horizon Subsidiary is a party to or bound by any “material contracts” (as defined in Item
601(b)(10) of Regulation S-K of the Exchange Act, except for agreements required to be filed by
Item 601(b)(10)(iii) thereof) (each such “material contract” to which Horizon or any Horizon
Subsidiary is a party to or bound by, a “Horizon Material Contract”). Except as,
individually and in the aggregate, has not had or would not reasonably be expected to have a
Horizon Material Adverse Effect, neither Horizon nor any Horizon Subsidiary has received a written
notice that it is in violation of or in default under any Horizon Material Contract. Each Horizon
Material Contract is in full force and effect, except to the extent it has expired in accordance
with its terms, and is binding and enforceable against Horizon or such Horizon Subsidiary, as
applicable, except as, individually or in the aggregate, has not had or would not reasonably be
expected to have a Horizon Material Adverse Effect.

     Section 4.17 Insurance.

     Except as, individually and in the aggregate, has not had or would not reasonably be expected
to have a Horizon Material Adverse Effect, (i) Horizon and the Horizon Subsidiaries maintain
insurance policies that, in the aggregate, are of the type and in the amounts customarily carried
by Persons conducting businesses similar to the business conducted by Horizon and the Horizon
Subsidiaries and (ii) such policies are sufficient for compliance in all material respects with all
requirements under any Contracts or Laws to which Horizon or any of the Horizon Subsidiaries is a
party to or bound by, or to which any of the Horizon Properties is subject.

ARTICLE 5.

COVENANTS

     Section 5.1 Conduct of the Sun Parties Pending the Closing. During the period from
the date of this Agreement to the Closing (and with respect to each Deferred Asset, to the earlier
of (i) the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any,
under Section 6.18), except (A) with respect to subsections (a), (i),
(j), (k), (l), (m), (n), (t) and (with respect to
any of the foregoing subsections) (x) of this Section 5.1, as necessary to comply
with this Agreement and the Ancillary Agreements in accordance with the terms hereof or thereof or
(B) as consented to in writing by Horizon OP, which consent shall not be

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unreasonably withheld,
conditioned or delayed (provided that in any event with respect to Section 5.1(r),
Horizon OP shall respond to each of Sun’s requests for its consent no later than ten (10) business
days following its receipt of such request), Sun and Trust shall, and shall cause each of the other
Sun Subsidiaries to:

          (a) use commercially reasonable efforts to preserve intact the business organizations and
goodwill of the Acquired Business as a whole and conduct the operations (including with respect to
maintenance and repairs) of each Acquired Hotel, and the business of each Acquired Entity, in the
Ordinary Course;

          (b) promptly notify Horizon OP of the occurrence of any loss, breakage or damage to an
Acquired Hotel in excess of $1,000,000 (irrespective of any insurance or third
party proceeds which have been or may be received in connection with such loss, breakage or
damage);

          (c) provide Horizon OP with (i) copies of all material notices and reports regarding the
Acquired Hotels (including financial reports, capital expenditure reports and any material notices
or reports received from any third party (or any Affiliate of Sun that is a hotel manager) with
respect to an Acquired Hotel), including reports required by Section 6.7, and (ii) as
reasonably requested by Horizon OP, copies of all reports with respect to all bookings for the use
and occupancy of the guest rooms and the meeting, restaurant and banquet facilities of each
Acquired Hotel; provided that, such reports may be redacted to exclude all information
identifying the particular Persons holding such bookings;

          (d) (i) deliver to Horizon OP, based on information available to Sun and its Affiliates, as
soon as reasonably practicable following receipt of such information, preliminary monthly operating
results for each of the Acquired Hotels and (ii) use commercially reasonable efforts to deliver to
Horizon OP, based on information available to Sun and its Affiliates, within twenty (20) days after
month end, reasonably detailed monthly operating reports (in a format substantially similar to
operating reports provided by Sun or its Affiliates for other hotels operated by them and, in any
event, in electronic format) that reflect the operational results of each Acquired Hotel and
include (1) a balance sheet including current month and prior year-end comparisons and differences
in reasonable detail, (2) an income and expense statement for such month and for the elapsed
portion of the current year through the end of such month, (3) a statement of net cash flow from
operations in reasonable detail for such month and such elapsed portion of the current year through
the end of such month and (4) a schedule of capital expenditures for all Routine Capital
Improvements, and any Building Capital Improvements and Renovations (each as defined in the form of
the Operating Agreement), if applicable, showing in reasonable detail, items budgeted, actual
expenditures to date and the amount of expenditures projected for completion;

          (e) (i) use commercially reasonable efforts to pursue the completion of capital expenditure
projects in accordance with the Sun Capital Budget and (ii) not undertake any capital expenditures
not in accordance with the Sun Capital Budget unless (in the case of clause (ii)) such
expenditures (A) are related to life safety, compliance with Laws or maintenance and repair in the
Ordinary Course, (B) are substantially completed prior to the Closing or (C) would be

55

 

permitted to
be undertaken without Horizon OP’s consent under the form of Operating Agreement or Sublease
Agreement, as applicable, after the Closing;

          (f) not change in any material manner any of its methods, principles or practices of
accounting in effect at the Sun Financial Statement Date, except as may be required by the SEC,
applicable Law or GAAP;

          (g) with respect to the Acquired Business or any Acquired Entity, duly and timely file all
material reports, Tax Returns and other documents required to be filed with Governmental Entities,
subject to extensions permitted by Law;

          (h) with respect to the Acquired Business, maintain in full force and effect insurance
coverage substantially similar to insurance coverage maintained on the date hereof
(unless such coverage is not maintained due to a material increase in premiums levels since
the date of this Agreement, in which case insurance coverage shall be maintained in full force and
effect to the extent it is maintained at similar hotels owned by Sun or by any Sun Subsidiary), and
pay all insurance premiums as and when they become due;

          (i) with respect to any Acquired Entity, not make or rescind any express or deemed material
election relative to Taxes that either (I) materially adversely affects such Acquired Entity’s Tax
liabilities in taxable years following Closing as a result of a reduction in the tax basis of an
asset or a change with respect to depreciation (it being understood that “Taxes” for purposes of
this Section 5.1(i) shall refer to Taxes within the meaning of clause (A) of the
definition of “Taxes”) or (II) could reasonably be expected to cause a significant risk that any
REIT Entity, or, after the Closing, SHC, Horizon or the Horizon Subject Foreign Curency REITs would
fail to qualify as a REIT under the Code. Subject to clause (II) of this Section
5.1(i), any Sun Party or a Subsidiary thereof shall be entitled, in Sun’s sole discretion, to
make (A) an election under Section 965 of the Code or (B) any election permitted under (x) the
consolidated return rules as currently set forth in Section 1502 of the Code or other Treasury
Regulations applicable to one or more members of a Consolidated Group, or (y) any other United
States state or local Tax Law comparable to those described in the foregoing clause (x) (it being
understood that, in the event that any election described in clause (A) or clause
(B) of this sentence is made and results in an effect described in clause (I) of this
Section 5.1(i), Sun shall indemnify Horizon against the increase (if any) in such Acquired
Entity’s Tax Liabilities that is described in such clause (I));

          (j) except with respect to Indebtedness (other than Specified Indebtedness) with respect to
which all Liabilities are fully discharged at or prior to the Closing or that does not constitute
an Assumed Liability at Closing, not, with respect to an Acquired Entity, (A) incur, or enter into
any commitment or contractual obligation (each a “Commitment”) to incur, Indebtedness
(secured or unsecured) other than Specified Indebtedness or (B) modify, amend or terminate, or
enter into any Commitment to modify, amend or terminate, any Indebtedness (secured or unsecured),
including indirectly through the acquisition of any Person;

          (k) not amend or modify or grant any waiver with respect to the Organizational Documents of
any Acquired Entity, except to the extent necessary to reflect transactions permitted by
Section 5.1(l) that can be made without a vote of limited partners;

56

 

          (l) not classify or re-classify any, grant or issue, combine, split, subdivide, redeem or
otherwise make any change in the number of issued and outstanding, shares of beneficial interest,
capital stock, membership interests, units of limited partnership interest, or other Interests
(other than (x) the issuance or repurchase of Paired Shares or securities convertible or
exchangeable for Paired Shares or (y) the redemption of Class B EPS for cash in accordance with
this Agreement and the Restructuring Plan) of any Acquired Entity other than the redemption or
cancellation of Interests in Acquired Entities pursuant to the Sun Restructuring Steps, upon the
terms and subject to the conditions of the Restructuring Plan;

          (m) not sell, lease, mortgage, subject to Encumbrance (other than Permitted Title Exceptions)
or otherwise dispose of any of the Acquired Entities or Acquired Assets, except for disposals of
inventories, consumables and FF&E, in each case in the Ordinary Course;

          (n) with respect to the Acquired Business or any equity holder claims arising out of or
relating to the transactions contemplated by this Agreement or the Horizon Transactions, not pay,
discharge, settle or satisfy any claims or Liabilities other than the payment, discharge,
settlement or satisfaction (A) in the Ordinary Course, (B) in full of claims or Liabilities which
involve an amount no greater than $150,000 (or $1,000,000 where such claims or Liabilities relate
to injury or damage to an Acquired Hotel and are covered by one or more property insurance
policies) with respect to an individual claim or Liability, or one or more related claims or
Liabilities, and do not impose any material Liability other than the payment of money, (C) with
respect to equity holder claims, if, after such payment, discharge, settlement or satisfaction,
such equity holder does not hold any Interest in an Acquired Entity or (D) in accordance with their
terms disclosed pursuant to Section 3.17(a)(1) of the Sun Disclosure Letter, of liabilities
reflected or reserved against in, the most recent quarterly consolidated financial statements (or
the notes thereto) furnished to Horizon OP prior to the date of this Agreement;

          (o) with respect to an Acquired Entity or an Acquired Hotel, not guarantee the Indebtedness of
another Person, enter into any “keep well” or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the economic effect of any of the
foregoing unless such guarantee or other arrangement terminates (with no surviving Liability) at or
prior to the Closing;

          (p) not enter into any Commitment between any Acquired Entity or, with respect to the Acquired
Business, any Seller, on the one hand, and any officer or director of Sun or a Retained Subsidiary,
on the other hand, unless such Commitment relates solely to a change in the compensation or
benefits payable to an officer or director employed in connection with the Acquired Business
located outside of the United States not otherwise prohibited by any other subsection of this
Section 5.1;

          (q) except in the Ordinary Course, as required by any agreement set forth in Section
3.12(b) of the Sun Disclosure Letter or as would be permitted without Horizon OP’s consent
under the form of Operating Agreement or Sublease Agreement, as applicable, after the Closing, not
materially increase any aggregate compensation and benefits payable to employees of a Sun Employer
with

57

 

respect to the Acquired Business, adopt or become liable for any Employee Plan that would
materially increase the Liability of any Acquired Entity or, with respect to the Acquired Business,
any Asset Seller, enter into, or renegotiate, any collective bargaining agreement with
respect to
employees of a Sun Employer, or incur any withdrawal liability under any Multiemployer Plan which
could result in a Liability to Horizon, any Horizon Subsidiary, any Acquired Entity or otherwise
with respect to the Acquired Business;

          (r) not materially amend or terminate (except for terminations pursuant to Section
6.5) or waive compliance with the terms of or breaches under, any Ground Lease or Material
Contract (other than a National/Regional Operating Agreement, except to the extent Horizon OP or
any Horizon Subsidiary would have a consent right with respect thereto under the
form of Operating Agreement or Sublease Agreement, as applicable) unless, except in the case
of any Ground Lease, such amendment or waiver would not reasonably be expected to result in a
material increase in any Assumed Liability or otherwise adversely affect the Acquired Business or
any Acquired Entity in any material respect in each case after the Closing, or enter into a new
Contract or other arrangement (other than a National/Regional Operating Agreement, except to the
extent Horizon OP or any Horizon Subsidiary would have a consent right with respect thereto under
the form of Operating Agreement or Sublease Agreement, as applicable) that would constitute a
Ground Lease or Material Contract unless, except in the case of any Ground Lease, such new Contract
is terminable by the applicable Acquired Entity or Directly Acquired Assets Owner without any
penalty, premium, termination payment or other Liabilities upon not more than ninety (90) days
notice; provided that, with respect to Material Contracts (and not Ground Leases), this
clause (r) shall not restrict any action that would be permitted without Horizon OP’s
consent under the form of Operating Agreement or Sublease Agreement, as applicable, after the
Closing;

          (s) with respect to any Acquired Entity, not settle or compromise any material Tax Liability
to the extent such settlement or compromise would reasonably be expected to materially reduce the
tax basis of Horizon or any Horizon Subsidiary in an Acquired Asset without notifying and obtaining
input from Horizon;

          (t) not take any action, or omit to take any action which has been reasonably requested in
writing by Horizon, in each case which could reasonably be expected to cause a significant risk
that any REIT Entity, or after the Closing, SHC, Horizon or any Horizon Foreign Currency REIT would
fail to qualify as a REIT under the Code; provided that, in its sole discretion, Sun may
choose to inform Horizon OP in writing of an action which Sun proposes to take, to inquire as to
whether Horizon OP considers such action to comply with this Section 5.1(t), to which
Horizon OP shall promptly respond in writing (it being understood that (x) any response by Horizon
OP regarding non-compliance, or any decision by Sun to not inform Horizon OP in writing pursuant to
this Section 5.1(t), shall have no effect on whether or not Sun shall be treated as having
actually complied with this Section 5.1(t) and (y) Horizon OP agrees to not assert,
following any Horizon OP response confirming compliance, that the particular action of which it was
so informed results in a breach of this Section 5.1(t), except if the information provided
by Sun to Horizon OP with respect to the applicable action was not accurate and complete in all
material respects);

          (u) not (i) approve any Operating Plan (as such term is defined in the form of the Operating
Agreement) for calendar year 2006 or (ii) hire any general manager of an Acquired Hotel without
affording to the Horizon Parties the review, consultation and consent rights which

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Horizon OP or
the applicable Acquired Entity or other Horizon Subsidiary would have under the form of Operating
Agreement or Sublease Agreement, as applicable, after the Closing;

          (v) except as is necessary to comply with the Baseline Restructuring Steps and any Plan
Modifications, not (A) acquire or agree to acquire (by merger, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership or other business organization or any division
thereof or any equity interest therein or asset thereof or enter into any other business
combination or (B) sell or otherwise dispose of any material portion of its business, including
pursuant to a Paired Share Proposal, if (in the case of clauses (A) or (B))
such acquisition, combination, sale or other disposition is reasonably likely to prevent or
delay, in any material respect, the consummation of the transactions contemplated by this Agreement
or the Horizon Transactions;

          (w) provide Horizon OP with written notice describing in reasonable detail any allegation of
any violation of Sun’s Code of Conduct and Business Ethics with respect to the Acquired Business
that Sun’s Global Compliance Group receives for investigation after the date of this Agreement; and

          (x) not enter into any Contract or other agreement, commitment or arrangement to do any of the
foregoing prohibited actions.

     Section 5.2 Conduct of the Horizon Parties’ Business Pending the Closing. During the
period from the date of this Agreement to the Closing (and, with respect to the restrictions in
clause (g) of this Section 5.2 on issuances of equity interests in Horizon or
Horizon OP, to the sixtieth (60th) day after the Closing Date), except (x) with respect
to subsections (a), (d), (e), (g) and, with respect to any of the
foregoing subsections, (h) of this Section 5.2, as necessary to comply with this
Agreement and the Ancillary Agreements in accordance with the terms hereof or thereof, to
facilitate the consummation of the Horizon Transactions or (y) as consented to in writing by Sun,
which consent shall not be unreasonably withheld, conditioned or delayed, Horizon and Horizon OP
shall, and shall cause each of the other Horizon Subsidiaries to:

          (a) use commercially reasonable efforts to preserve intact its business organizations and
goodwill as a whole, except in connection with the sale or disposition of any of its Assets or
Subsidiaries in a manner that is not otherwise prohibited by any other subsection of this
Section 5.2;

          (b) not change in any material manner any of its methods, principles or practices of
accounting in effect at the Horizon Financial Statement Date, except as may be required by the SEC,
applicable Law or GAAP;

          (c) duly and timely file all material reports, Tax Returns and other documents required to be
filed with Governmental Entities, subject to extensions permitted by Law, provided such extensions
do not adversely affect Horizon’s status as a REIT under the Code;

          (d) not amend the Horizon Charter, the Horizon Bylaws or the Horizon OP Agreement, except to
the extent necessary to (i) authorize or designate additional shares or classes of capital stock or
other equity interests or (ii) reflect the admission of additional limited

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partners and other
amendments in connection therewith that can be made by Horizon without a vote of limited partners;

          (e) not (A) acquire or agree to acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization or any division
thereof or any equity interest therein or asset thereof or enter into any other business
combination or (B) sell or otherwise dispose of any material portion of its business if (in the
case of clause (A) or (B)) such acquisition, combination, sale or other disposition
is reasonably likely
to prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement or the Horizon Transactions;

          (f) not enter into any reorganization of Horizon or Horizon OP;

          (g) except in connection with the use of Horizon Common Stock to pay the exercise price or tax
withholding in connection with equity-based employee benefit plans by the participants therein, not
(i) authorize, declare, set aside or pay any dividend or make any other distribution or payment
with respect to any Horizon Common Stock or Horizon OP Units or (ii) directly or indirectly
combine, split, subdivide, exchange, redeem, purchase or otherwise acquire or issue any, or
otherwise make any change in the number or issued and outstanding shares of capital stock,
membership interests or units of partnership interest or any option, warrant or right to acquire,
or security convertible into, shares of capital stock, membership interests, or units of
partnership interest of Horizon or Horizon OP, except for (A) redemptions of Horizon Common Stock
required under Section 8.2 of the Horizon Charter in order to preserve the status of Horizon as a
REIT under the Code, (B) declarations or payments of a dividend or other distribution (or an
increase in such dividend or distribution) by Horizon or Horizon OP (1) reasonably believed by
Horizon to be necessary to maintain REIT status, avoid the incurrence of any taxes under Section
857 of the Code, avoid the imposition of any excise taxes under Section 4981 of the Code, or avoid
the need to make one or more extraordinary or disproportionately larger dividends or distributions
to meet any of the three preceding objectives (or to any corresponding distributions or increases
in distributions paid by Horizon OP), (2) except for any special or extraordinary dividend, any
quarterly dividends contemplated by Horizon’s dividend policy as described in its Report on Form
10-Q for the quarterly period ended June 17, 2005, or (3) with respect to Horizon Preferred Stock,
at their respective stated dividend or distribution rates, (C) redemptions of Horizon OP Units,
whether or not outstanding on the date of this Agreement, under the Horizon OP Agreement in which
shares of Horizon Common Stock are utilized, (D) redemptions, exchanges or conversions of Interests
in Horizon or any Horizon Subsidiary in accordance with the terms of those Interests that are in
effect as of the date of this Agreement (or, in the case of Interests issued after the date of this
Agreement, as of such later date), (E) issuances of Horizon Common Stock or rights to acquire
Horizon Common Stock (1) to employees, officers or directors pursuant to benefit or compensation
plans, (2) pursuant to Contracts or Interests described in Section 4.3 or in Section
4.3(c) of the Horizon Disclosure Letter or (3) to any Person in consideration for the sale by
such Person or its Affiliates of any assets to Horizon or any Horizon Subsidiary; provided
that, in the case of clause (3), such Horizon Common Stock will be subject to a lock-up for
at least sixty (60) days after the Closing Date, (F) issuances of Horizon OP Units subject to a
lock-up for at least sixty (60) days after the Closing Date and (G) issuances of shares of Horizon
Preferred Stock or other

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preferred securities that are not convertible into Horizon Common Stock
prior to the sixtieth (60th) day after the Closing Date; and

          (h) not enter into any Contract or other agreement, commitment or arrangement to do any of the
foregoing prohibited actions.

     Section 5.3 No Solicitation.

          (a) On and after the date hereof, each of the Sun Parties agrees that:

     (i) neither Sun nor any Sun Subsidiary shall invite, initiate, solicit or
encourage, directly or indirectly, any inquiries, or the making or submission of
any proposal or offer (including any proposal or offer to its equity holders) with
respect to any transaction or series of transactions that would reasonably be
expected to result, directly or indirectly, in any (i) merger, consolidation,
business combination, reorganization, recapitalization, liquidation, dissolution
or similar transaction involving any Acquired Entity, (ii) sale, acquisition,
tender offer, exchange offer (or the filing of a registration statement under the
Securities Act in connection with such an exchange offer), offering, spin-off,
share exchange or other transaction or series of related transactions that, if
consummated, would result in the issuance of securities representing, or the sale,
exchange or transfer of, 10% or more of the outstanding voting equity securities
or other Interests (measured by voting power or economic interest) of any Acquired
Entity or (iii) except as set forth in Section 5.3(a) of the Sun
Disclosure Letter, sale, lease, exchange, mortgage, license, pledge, transfer or
other disposition (“Transfer”) of any of the Acquired Assets in one or a
series of related transactions, other than the transactions contemplated by this
Agreement and the Ancillary Agreements and the Horizon Transactions (any such
inquiry, proposal or offer being hereinafter referred to as an “Acquisition
Proposal”); provided that, any inquiry, proposal or offer that relates
to a merger, consolidation, share exchange, or other similar business combination
that relates solely to Excluded Assets and Retained Subsidiaries shall not
constitute an Acquisition Proposal, or engage in any discussions or negotiations
with or provide any confidential or non-public information or data to, or afford
access to properties, books or records to, any Person relating to, or that may
reasonably be expected to lead to, an Acquisition Proposal, or enter into any
letter of intent, agreement in principle or agreement relating to an Acquisition
Proposal, or the abandonment, termination or other failure to consummate the
transactions contemplated by this Agreement or the Horizon Transactions, or
propose publicly to agree to do any of the foregoing, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; provided,
however, that if, at any time after the date hereof and prior to February
12, 2006, Sun or any Sun Subsidiary receives an unsolicited bona fide written
Acquisition Proposal from any Person, which is determined in good faith by the
Board of Trustees of Trust or the Board of Directors of Sun, as applicable, to be,
or to be reasonably likely to result in, a Superior Proposal, Sun and the Sun
Subsidiaries may (i) furnish information with respect to the Acquired Entities,

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Acquired Assets and the Acquired Business to the Person making such Acquisition
Proposal (and its representatives) pursuant to a customary confidentiality
agreement not materially less restrictive of such person than the Confidentiality
Agreement (all such information furnished to such Person pursuant to clause
(i) of the proviso to the preceding sentence shall, in substance, be provided
to Horizon by Sun and the Sun Subsidiaries promptly after it is provided to such
Person, to the extent it has not been
previously provided or made available to Horizon) and (ii) participate in
discussions or negotiations with the Person making such Acquisition Proposal (and
its representatives) regarding such Acquisition Proposal.

     (ii) each Sun Party shall promptly inform each officer, director, trustee,
employee, agent, investment banker, financial advisor, attorney, accountant,
broker, consultant or other agent or representative of Sun and each Sun Subsidiary
(each, a “Sun Representative”), as appropriate, of its obligations not to
engage in any of the activities described in Section 5.3(a)(i);

     (iii) if any activities, discussions or negotiations with any Person are
currently existing or ongoing with respect to any of the foregoing (including any
Acquisition Proposal), Sun and the Sun Subsidiaries shall, and shall cause each
Sun Representative, as applicable, to (A) immediately cease and cause to be
terminated any such activities, discussions or negotiations and (B) promptly
request each Person, if any, that has received confidential information of the
Acquired Business (or any portion thereof) under a confidentiality agreement
within the thirty (30) days prior to the date hereof in connection with its
consideration of any Acquisition Proposal to return or destroy all confidential
information heretofore furnished to such Person by or on behalf of Sun and the Sun
Subsidiaries (and Sun shall not, and shall cause its Subsidiaries not to,
terminate, amend, modify or grant any waiver with respect to any such
confidentiality agreement with respect to confidential information of the Acquired
Business (or any portion thereof)); and

     (iv) it shall notify Horizon OP as promptly as practicable (but in any event
within twenty-four (24) hours), orally and in writing, if Sun, any Sun Subsidiary
or any Sun Representative (1) receives an Acquisition Proposal or any amendment or
change in any previously received Acquisition Proposal or any request for
confidential or nonpublic information or data relating to, or for access to any
properties, books or records of, the Acquired Business (or any portion thereof) by
any Person that has made, or to Sun’s Knowledge may be considering making, an
Acquisition Proposal and (2) engages in any discussions or negotiations with, or
provides confidential information to, such Person with respect to an Acquisition
Proposal, and include in such notice the identity of such Person. Sun shall keep
Horizon OP reasonably informed as to the material terms of any such Acquisition
Proposal, indication, request or expression and, if in writing, shall promptly
deliver to Horizon OP copies of any Acquisition Proposal or material amendment or
change to such Acquisition Proposal.

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          (b) Nothing contained in this Section 5.3 shall prohibit Sun or any Sun Subsidiary
from complying with Rules 14d-9 or 14e-2 promulgated under the Exchange Act with respect to an
Acquisition Proposal.

     Section 5.4 Control of Other Party’s Business. Nothing contained in this Agreement shall give Horizon OP, directly or indirectly, the
right to control or direct the operations of Sun or any Sun Subsidiary in violation of applicable
Law prior to the REIT Merger Effective Time or any of the Other Closing Transaction Effective
Times, as applicable. Nothing contained in this Agreement shall give Sun or Trust, directly or
indirectly, the right to control or direct the operations of Horizon or any Horizon Subsidiary in
violation of applicable Law.

ARTICLE 6.

ADDITIONAL COVENANTS

     Section 6.1 Proxy Statement/Prospectus; Registration Statement; Horizon Stockholders
Meeting.

          (a) As promptly as practicable after execution of this Agreement, Horizon shall, and the Sun
Parties shall cooperate in all respects with Horizon’s efforts to, prepare and file with the SEC
one or more registration statements on Form S-4 (such registration statement(s), together with any
amendments or supplements thereto, the “Form S-4”), in connection with the registration
under the Securities Act of the Horizon Common Stock be issued in the Closing Transactions which
shall include one or more proxy statements/prospectuses, forms of proxies or information statements
(such proxy statement(s)/prospectus(es) or information statement(s), together with any amendments
or supplements thereto, the “Proxy Statement/Prospectus”) relating to the Horizon
Stockholders Meeting and the required votes of the stockholders of Horizon with respect to the
issuance of Horizon Common Stock in the Closing Transactions. Horizon shall cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder. Each of the Sun Parties shall furnish all information about itself and its
business and operations and all financial information to the Horizon Parties as may reasonably be
requested in connection with the preparation of the Proxy Statement/Prospectus and the Form S-4.
Each of the Horizon Parties shall use its commercially reasonable efforts, and the Sun Parties
shall cooperate with the Horizon Parties, to have the Form S-4 declared effective by the SEC as
promptly as practicable (including clearing the Proxy Statement/Prospectus with the SEC) and kept
effective as long as is necessary to complete the REIT Merger and the issuance of Horizon Common
Stock pursuant to the other Closing Transactions. Each of Horizon, Sun and Trust agrees to
promptly notify the others if and to the extent that any information provided by it for use in the
Proxy Statement/Prospectus and the Form S-4 shall have become false or misleading in any material
respect, and each of Horizon, Sun and Trust further agrees to cooperate with the others to take all
steps necessary to amend or supplement the Proxy Statement/Prospectus and the Form S-4 and to cause
the Proxy Statement/Prospectus and the Form S-4, as amended or supplemented, to be filed with the
SEC and to be disseminated to its stockholders or shareholders, as applicable, in each case as and
to the extent required by applicable securities Laws. Each of Horizon, Sun and Trust represents
and warrants that the information provided by it for inclusion in the Proxy Statement/Prospectus
and the Form S-4 and

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each amendment or supplement thereto at the time of mailing thereof (in the
case of the Proxy Statement/Prospectus), at the time it becomes
effective (in the case of the Form S-4) and at the time of the Horizon Stockholders Meeting,
will not include an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Horizon will advise and deliver copies (if any) to Sun
promptly after it receives notice of any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto or requests by the
SEC for additional information, in each case to the extent such requests relate to the Sun Parties.
Horizon shall not file with the SEC any amendment to the Form S-4 without allowing Sun the
opportunity to review and comment on any such amendment. Horizon shall promptly notify Sun, if
applicable, of (i) the time when the Form S-4 has become effective, (ii) the filing of any
supplement or amendment thereto, (iii) the issuance of any stop order and (iv) the suspension of
the qualification and registration of the Horizon Common Stock issuable in connection with the
Closing Transactions. Sun also shall use commercially reasonable efforts (including by provision
of customary representations and certifications) to cause Sidley Austin Brown & Wood LLP or other
counsel reasonably satisfactory to Horizon to have delivered an opinion, which opinion shall be
filed as an exhibit to the Form S-4, as to federal income tax matters as are required to be
addressed in the Form S-4. Horizon shall use commercially reasonable efforts (including by
provision of customary representations and certifications) to cause Hogan & Hartson L.L.P. or other
counsel reasonably satisfactory to Sun to have delivered an opinion, which opinion shall be filed
with the SEC as an exhibit to the Form S-4, as to federal income tax matters as are required to be
addressed in the Form S-4. Such opinions shall contain customary exceptions, assumptions and
qualifications and be based upon customary representations. Each of Horizon, Sun and Trust shall
mail the Proxy Statement/Prospectus to its stockholders or shareholders, as applicable, as promptly
as practicable after the Form S-4 shall have become effective.

          (b) Horizon shall, as soon as practicable following the date of this Agreement, duly call,
give notice of, convene and hold a meeting of its stockholders (the “Horizon Stockholders
Meeting”) for the purpose of obtaining from its stockholders approval of the issuance of shares
of Horizon Common Stock in the Closing Transactions (the “Horizon Stockholder Approval”).
Horizon shall, through its Board of Directors, recommend to its stockholders that they approve the
issuance of shares of Horizon Common Stock in the Closing Transactions (and include its
recommendations in the Proxy Statement/Prospectus), and not withdraw, modify, amend or qualify its
recommendation in any manner adverse to Sun (a “Change in Recommendation”);
provided that, the foregoing shall not prohibit accurate and complete public disclosure
(and such disclosure shall not be deemed to be a Change in Recommendation) by Horizon of factual
information regarding the business, Assets, financial condition or results of operations of
Horizon, Trust or the Acquired Business (so long as the Board of Directors of Horizon does not
expressly withdraw, modify, amend or qualify in any manner adverse to Sun the recommendation of the
Board of Directors of Horizon) in the Proxy Statement/Prospectus or the Form S-4, in each case, to
the extent that Horizon determines in good faith, on the basis of advice of outside legal counsel,
that such factual information is required to be disclosed under applicable Law in order to comply
with Rule 14a-9 of the Exchange Act or Section 11 or 12 of the Securities Act. Subject to the
foregoing, Horizon shall include its recommendation set forth above in the Proxy
Statement/Prospectus, and submit a proposal to approve the issuance of shares of Horizon
Common Stock in the Closing

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Transactions to its stockholders at the Horizon Stockholders
Meeting for the purpose of obtaining the Horizon Stockholder Approval; provided that, such
proposal shall not be required to be submitted to the stockholders of Horizon at the Horizon
Stockholders Meeting if this Agreement has been terminated pursuant to Section 9.1.

          (c) If on the date for the Horizon Stockholders Meeting, Horizon has not received duly
executed proxies for a sufficient number of votes to obtain the Horizon Stockholder Approval, then
Horizon may, in its sole discretion, adjourn the Horizon Stockholders Meeting until one or more
later dates.

     Section 6.2 Access to Information; Confidentiality; Monthly Meetings.

          (a)

     (i) Subject to the requirements of applicable Law, each of the Sun Parties
shall, and shall cause each of the Acquired Entities and Asset Sellers to, afford
to Horizon OP and to the directors, officers, employees, agents, investment
bankers, brokers, consultants, accountants, attorneys, financial advisors and
other agents or representatives of Horizon or any Horizon Subsidiary (the
“Horizon Representatives”) reasonable access during normal business hours
prior to the Closing (and with respect to each Deferred Asset, prior to the
earlier of (A) the applicable Post-Closing Deferral Deadline and (B) the
applicable closing date, if any, under Section 6.18(f)) to all properties,
offices, other facilities, books, Contracts, commitments, personnel (including
hotel managers) and records and other information relating to the Acquired
Business as Horizon OP may reasonably request. No investigation conducted
pursuant to this Section 6.2(a)(i) shall affect or be deemed to modify or
limit any representation or warranty made in this Agreement.

     (ii) Horizon OP shall hold any nonpublic information in confidence in
accordance with the letter agreement dated January 3, 2005, between Sun and
Horizon (the “Confidentiality Agreement”), which shall remain in full
force and effect pursuant to the terms thereof, notwithstanding the execution and
delivery of this Agreement, the termination hereof or the Closing. Horizon OP
shall cause its Subsidiaries and the Horizon Representatives to comply with the
Confidentiality Agreement.

     (iii) Horizon OP shall give written notice to Sun within five (5) business
days after Horizon obtains Knowledge of any event, circumstance or condition that
would reasonably be expected to give rise to any indemnification claim by the
Horizon Parties with respect to any breach of representation or warranty of Sun or
Trust under Article 3; provided, however, that Horizon OP
shall have no liability to the Sun Parties with respect to any failure of Horizon
OP to give
such notice except to the extent the Sun Parties are actually prejudiced as a
result of such failure.

          (b)

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     (i) Subject to the requirements of applicable Law and Contracts, each of the
Horizon Parties shall, and shall cause each of its Subsidiaries to, afford to Sun
and the Sun Representatives reasonable access during normal business hours prior
to the Closing to all properties, offices, other facilities, books, Contracts,
commitments, personnel and records and other information relating to Horizon or
Horizon OP as Sun may reasonably request to the extent reasonably necessary solely
to investigate whether (x) a Horizon Material Adverse Effect has occurred or (y) a
representation, warranty, covenant or agreement made by any of the Horizon Parties
in this Agreement has become inaccurate or untrue or has not been performed or
complied with, as applicable. No investigation conducted pursuant to this
Section 6.2(b)(i) shall affect or be deemed to modify or limit any
representation or warranty made in this Agreement.

     (ii) Sun shall hold any nonpublic information in confidence in accordance
with the Confidentiality Agreement. Sun shall cause its Subsidiaries, and the Sun
Representatives, to comply with the Confidentiality Agreement.

     (iii) Sun shall give written notice to Horizon OP within five (5) business
days after Sun obtains Knowledge of any event, circumstance or condition that
would reasonably be expected to give rise to any indemnification claim by the Sun
Parties with respect to any breach of representation or warranty of Horizon or
Horizon OP under Article 4; provided, however, that Sun
shall have no liability to the Horizon Parties with respect to any failure of Sun
to give such notice except to the extent the Horizon Parties are actually
prejudiced as a result of such failure.

          (c) To the extent, if any, that the Tax Sharing and Indemnification Agreement does not permit
Horizon OP or the Horizon Representatives (or Sun or the Sun Representatives) to receive access to
Tax items or matters (including books, records and other information relating to Taxes), the Tax
Sharing and Indemnification Agreement shall control notwithstanding anything in this Article
6 to the contrary.

          (d) Horizon OP and Sun shall form a transitional working group, comprised of the persons set
forth on Schedule 6.2(d), which shall meet monthly prior to the Closing to discuss
transitional matters relating to the Acquired Hotels. The Sun Parties shall provide Horizon OP the
opportunity to attend monthly meetings with existing hotel managers to discuss operations of the
Acquired Hotels. Each meeting will be held at a time and location mutually agreeable to Sun and
Horizon OP. As part of such meetings, subject to Section 5.4 and the requirements of
applicable Law, Horizon OP shall be permitted to inquire as to, and management of the Acquired
Business and Sun shall undertake commercially reasonable efforts to respond with respect to, all
material matters relating to the Acquired Business, including: approval of, or variations
from, budgets, forecasts and material transactions relating to the Acquired Business which have
been entered into or have been proposed to be entered into and the financial and operating results,
conditions, plans and prospects of the Acquired Hotels.

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     Section 6.3 Support of Transaction; Notification.

          (a) Subject to the terms and conditions herein provided, each of the parties hereto shall:
(i) use commercially reasonable efforts and cooperate with one another in (A) determining which
filings are required to be made prior to the Closing with, and which consents, approvals, waivers,
permits or authorizations are required to be obtained prior to the Closing from, Governmental
Entities and any third parties in connection with the execution and delivery of this Agreement and
the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby
and the Horizon Transactions, including any filing required under the HSR Act, the EC Merger
Regulations, any applicable antitrust or competition Laws or foreign investment review, and (B)
timely making all such filings and timely seeking all such consents, approvals, waivers, permits
and authorizations; (ii) use reasonable best efforts to obtain in writing any consents, approvals,
waivers, permits and authorizations required from Governmental Entities and any third parties to
effectuate the transactions contemplated by this Agreement and the Ancillary Agreements and the
Horizon Transactions, such consents, approvals, waivers, permits and authorizations to be in form
reasonably satisfactory to each of the parties hereto; and (iii) without limiting the foregoing,
use commercially reasonable efforts to take, or cause to be taken, all other action and to do, or
cause to be done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement and the Ancillary Agreements and the
Horizon Transactions, including (w) the satisfaction of the conditions precedent to the obligations
of the other party hereto, (x) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement, the Ancillary Agreements or the performance
of the obligations hereunder and thereunder or the transactions contemplated hereby or thereby or
the Horizon Transactions, (y) the cooperation with the other parties to effect the filings and
other actions set forth on Schedule 6.3(a)(i) and (z) the execution and delivery of such
other documents, instruments and conveyances, and the taking of such other actions, as the other
party hereto may reasonably require in order to carry out the intent of this Agreement and the
Ancillary Agreements. Notwithstanding the foregoing, Horizon and the Horizon Subsidiaries shall be
responsible for applying for and obtaining any and all Permits of the type set forth on
Schedule 6.3(a)(ii) required for the ownership and operation of the Acquired Hotels that
are needed in connection with the execution and delivery of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated hereby and thereby and the
Horizon Transactions. Sun and the Sun Subsidiaries shall reasonably cooperate with Horizon, the
Horizon Subsidiaries and their Representatives in connection with obtaining such Permits required
for the ownership and operation of the Acquired Hotels.

          (b) Each of Sun and Trust shall use commercially reasonable efforts to obtain from E&Y access
for the Horizon Parties and the Horizon Representatives to work papers relating to audits of Sun
and Trust performed by E&Y to the extent they relate directly to the
Acquired Business, including, to the extent they relate directly to the Acquired Business, any
work papers used in the preparation or review of the Audited Combined Historical Financial
Statements or the other financial statements of the Acquired Business contemplated by this
Agreement, and the continued cooperation of E&Y with regard to the preparation of financial
statements for, or with respect to the Acquired Business; provided, however, that
the foregoing shall be subject to professional standards and E&Y’s firm policy, which may include
the

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requirement that prior to receiving access to any materials prepared by E&Y Horizon and its
Representatives sign an indemnification letter in a form customarily accepted by E&Y.

          (c) Each of Sun and Trust shall give prompt notice to Horizon OP, and Horizon OP shall give
prompt notice to Sun and Trust, (i) if any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becomes untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becomes untrue or inaccurate in any
material respect or (ii) of any event, circumstance or condition which would reasonably be expected
to result in the failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties hereto or the conditions to the obligations of
the parties under this Agreement.

     Section 6.4 Further Assurances; Books and Records.

          (a) Subject to the terms and conditions of this Agreement, from and after the Closing, each of
Horizon OP and Sun shall take all appropriate actions and execute and deliver to the other such
further assurances, documents, instruments or conveyances of any kind as may be necessary, proper
or advisable under applicable Laws or otherwise to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements and the Horizon Transactions. Without
limiting the generality of the foregoing, subject to the terms and conditions of this Agreement (i)
to the extent any of the Books and Records or other Acquired Assets are in the possession, custody
or control of one or more of the Sellers or their Affiliates after the Closing Date, the Sun
Parties shall promptly deliver or cause to be delivered to Horizon OP or the applicable Horizon
Subsidiary all such Books and Records (which, if maintained by Sun or its Affiliates in an
electronic format, Sun or such Affiliates shall deliver to Horizon OP or the applicable Horizon
Subsidiary in an electronic format reasonably requested by Horizon OP or such Subsidiary) and other
Acquired Assets, (ii) to the extent any Excluded Assets are in the possession, custody or control
of one or more of the Horizon Parties or their Affiliates after the Closing Date, the Horizon
Parties shall, at Sun’s sole expense, use reasonable best efforts to promptly deliver or cause to
be delivered to Sun or the applicable Retained Subsidiary such Excluded Assets and (iii) each Sun
Party shall, and shall cause the other Retained Subsidiaries to, promptly deliver to Horizon OP any
mail (physical, electronic or otherwise), facsimile or other correspondence or communication
received by such Sun Party or Retained Subsidiary following the Closing Date with respect to the
Acquired Business. For the purposes of this Agreement, “Books and Records” means all books
of account, documents, records, lists, ledgers, general, financial, legal, regulatory, Tax,
accounting, files, correspondence, manuals, data, papers, reports, drawings and other operating or
ownership
information of any kind (whether in hard copy or computer or other format, including any
offline or archived data) to the extent relating to the Acquired Assets, the Acquired Entities or
the Acquired Business. Notwithstanding the foregoing provisions of this Section 6.4(a),
each party hereto may refuse to deliver any books or records if it believes in good faith (after
consultation with outside counsel), that doing so is reasonably likely to cause an attorney-client
or work product privilege which such party would be entitled to assert to be undermined with
respect to such books or records and such undermining of privilege could in such party’s good faith
judgment (after consultation with outside counsel) adversely affect in any material respect such
party’s position in any pending, or

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what such party believes in good faith (after consultation with
outside counsel) is reasonably likely to be, future litigation (other than amongst the parties
hereto); provided that, the parties hereto shall cooperate in seeking to find a way to
allow disclosure of such books or records to the extent doing so would not (in the good faith
belief of the party attempting to disclose such books or records (after consultation with outside
counsel)) reasonably be likely to cause such privilege to be undermined with respect to such books
or records; provided, further, that the disclosing party shall (i) notify the other
party that such disclosures are reasonably likely to cause such privilege to be undermined and (ii)
communicate to the other party in reasonable detail (A) the facts giving rise to such notification
and (B) the subject matter of such books or records. Notwithstanding anything in this Section
6.4, Section 2.4(a)(ii) or Section 3.1(b) to the contrary, Sun and the Sun
Subsidiaries shall not be required to provide Books and Records (or any other information) relating
to Tax matters to the extent the Tax Sharing and Indemnification Agreement expressly provides such
information is not to be disclosed.

          (b) After the Closing, upon reasonable written request, the Sun Parties shall furnish or cause
to be furnished to Horizon OP and the Horizon Representatives reasonable access, during normal
business hours, to such information and assistance relating to the Acquired Business, Acquired
Hotels or the Acquired Entities as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any Tax Returns, reports or forms or the defense of any Tax
audit, claim or assessment. After the Closing, upon reasonable written request, the Horizon
Parties shall furnish or cause to be furnished to Sun and the Sun Representatives reasonable
access, during normal business hours, to such information and assistance relating to the Retained
Sun Business, Sun or the Sun Subsidiaries as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any Tax Returns, reports or forms or the defense
of any Tax audit, claim or assessment. The requesting party will reimburse out-of-pocket expenses
reasonably incurred by the furnishing party pursuant to this Section 6.4(b).

          (c) After the Closing, (i) if Sun or any of its Affiliates receives any payment of cash or
other property that is an Acquired Asset or is otherwise properly due and owing to Horizon OP or
any of its Affiliates under this Agreement, Sun shall promptly remit, or cause to be remitted, such
cash or other property to Horizon OP and (ii) if Horizon OP or any of its Affiliates receives any
payment of cash or other property that is an Excluded Asset or is otherwise properly due and owing
to Sun or any of its Affiliates under this Agreement, Horizon OP shall promptly remit, or cause to
be remitted, such cash or other property to Sun.

     Section 6.5 Intercompany Accounts. Except for this Agreement, the Ancillary Agreements and the agreements set forth on
Schedule 6.5, all Contracts providing for sales, purchases, leasing, subleasing, licensing
or sublicensing of goods, services, tangible or intangible property or joint activities (including
any receivables, payables, loans, notes, advances or other Indebtedness) between any of the
Acquired Entities or (to the extent such Contracts would, but for the termination pursuant to this
Section 6.5, constitute Acquired Assets or Assumed Liabilities) the Asset Sellers, on the
one hand, and Sun or any Retained Subsidiary (other than any Asset Seller to the extent such
Contracts would, but for the termination pursuant to this Section 6.5, constitute Acquired
Assets or Assumed Liabilities), on the other hand, shall be terminated and of no further force and
effect after the Closing and all Liabilities thereunder shall be settled, offset or discharged with
no further Liabilities on the part of any party thereto.

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Without limiting the foregoing, such
settlements, offsets, discharges and terminations shall be effected as to certain accounts and
agreements in the manner and at such times as set forth on Schedule 6.5.

     Section 6.6 Guarantees; Letters of Credit.

          (a) The Horizon Parties and the Sun Parties shall use commercially reasonable efforts to
obtain from the respective counterparty, in form and substance reasonably satisfactory to the Sun
Parties, on or before the Closing, valid and binding written complete and unconditional releases of
Sun or the applicable Retained Subsidiary from any Liability (other than any Retained Liability),
whether arising before, on or after the Closing Date, under any Acquired Business Credit Support in
effect as of the Closing, including by providing substitute guarantees with terms that are at least
as favorable to the counterparty as the terms of the applicable Acquired Business Credit Support
and by furnishing letters of credit, instituting escrow arrangements, posting surety or performance
bonds or making other arrangements as the counterparty may reasonably request. If any item of
Acquired Business Credit Support has not been released as of the Closing Date, then the Horizon
Parties and the Sun Parties shall use commercially reasonable efforts after the Closing to cause
each such unreleased item of Acquired Business Credit Support to be released promptly and prior to
such release the Horizon Parties shall indemnify and hold harmless the Sun Parties from any
Liability, except to the extent any Purchaser Indemnified Party (as such term is defined in the
Indemnification Agreement) would be entitled to indemnification with respect thereto pursuant to
the Indemnification Agreement, incurred by the Sun Parties under such Acquired Business Credit
Support. Notwithstanding anything to the contrary herein, the Horizon Parties and Sun Parties
acknowledge and agree that at no time after the Closing Date, shall Horizon OP or any of its
Affiliates renew or extend the term of, increase any of the Seller Indemnified Parties’ (as such
term is defined in the Indemnification Agreement) obligations under, or transfer to another third
party, any item of, subject to or under, any Acquired Business Credit Support.

          (b) The Sun Parties shall use commercially reasonable efforts to obtain from the respective
counterparty, in form and substance reasonably satisfactory to the Horizon Parties, on or before
the Closing, valid and binding written complete and unconditional releases of the applicable
Acquired Entity or, with respect to the Acquired Business, Asset Seller, from any Liability,
whether arising before, on or after the Closing Date, under any Sun Credit Support in
effect as of the Closing, including by providing substitute guarantees with terms that are at
least as favorable to the counterparty as the terms of the applicable Sun Credit Support and by
furnishing letters of credit, instituting escrow arrangements, posting surety or performance bonds
or making other arrangements as the counterparty may reasonably request. If any item of Sun Credit
Support has not been released as of the Closing Date, then the Horizon Parties and the Sun Parties
shall use commercially reasonable efforts after the Closing to cause each such unreleased item of
Sun Credit Support to be released promptly and prior to such release the Sun Parties shall
indemnify and hold harmless the Horizon Parties from any Liability incurred by any Purchaser
Indemnified Party under such Sun Credit Support. Notwithstanding anything to the contrary herein,
the Horizon Parties and Sun Parties acknowledge and agree that at no time after the Closing Date,
shall Sun or any of its Affiliates renew or extend the term of, increase any of the Purchaser
Indemnified Parties’ obligations under, or transfer to another third party, any item of, subject to
or under, any Sun Credit Support.

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     Section 6.7 Delivery of Financial Statements.

          (a) Sun shall deliver on or before November 21, 2005 to Horizon OP, (i) an unaudited
comparative combined balance sheet of the Acquired Business at August 31, 2005 and unaudited
comparative combined statements of operations and cash flows of the Acquired Business for the
eight-month period ending on August 31, 2005 (including for the comparable eight-month period for
the prior year), together with all related notes and schedules thereto (the “Unaudited 2005
Interim Financial Statements”) and (ii) the Audited Combined Historical Financial Statements.

          (b) With respect to each of the Unaudited Combined Interim Financial Statements and the
Unaudited Stub Period Financial Statements required under Section 6.7(a) or Section
6.7(e) and Section 6.7(c), respectively, to be delivered by Sun, Sun shall (i) use
reasonable best efforts to cause E&Y to perform a SAS 100 review with respect thereto and to orally
confirm to Horizon OP that (A) such review was conducted in accordance with the standards of the
American Institute of Certified Public Accountants (the “AICPA”) and (B) the certificate
delivered by Sun pursuant to clause (ii) below is accurate in all material respects and
(ii) deliver to Horizon OP, upon completion of the review contemplated by clause (i) above,
a certificate, duly executed by the controller of Sun solely in his capacity as an officer of Sun,
(A) stating, if true and correct, that E&Y has informed him that it has completed a SAS 100 review
with respect thereto in accordance with the standards of the AICPA and (B) setting forth a
description of all material modifications, if any, to such financial statements that E&Y informed
him should be made thereto for such financial statements to conform with GAAP. Horizon OP shall
reimburse the Sun Parties for any reasonable, out-of-pocket expenses incurred by them and, to the
extent not paid by Sun or a Retained Subsidiary, pay to E&Y directly its fees and expenses in
respect of (x) E&Y’s conducting of such SAS 100 review and (y) E&Y’s audit of the Audited Combined
Historical Financial Statements and the 2005 Audited Financial Statements.

          (c) Unless the Closing Date is December 31, 2005, Sun shall use reasonable best efforts to
deliver on or before the date that is thirty (30) days after the Closing Date (and
shall in any event deliver on or before the date that is forty-four (44) days after the
Closing Date) to Horizon OP, an unaudited combined balance sheet of the Acquired Business at the
Closing Date and unaudited combined statements of operations and cash flows of the Acquired
Business for the period beginning on September 1, 2005 (or, if the Closing Date is after December
31, 2005, January 1, 2006) and ending on the Closing Date and the year-to-date period then ending,
together with all related notes and schedules thereto (the “Unaudited Stub Period Financial
Statements”).

          (d) If the Closing Date is on or after December 31, 2005, Sun shall use reasonable best
efforts to deliver on or before February 28, 2006 (and shall in any event deliver on or before
March 14, 2006) to Horizon OP (whether or not the Closing occurs prior to, on or after March 14,
2006), an audited combined balance sheet of the Acquired Business at December 31, 2005 and audited
combined statements of operations and cash flows of the Acquired Business for the year ending
December 31, 2005 (the “2005 Audited Financial Statements”), together with a report without
qualification or exception of E&Y with respect thereto.

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          (e) If the Closing Date is on or after (i) February 28, 2006, Sun shall use reasonable best
efforts to deliver on or before March 30, 2006 (and shall in any event deliver on or before April
14, 2006) to Horizon OP, an unaudited comparative combined balance sheet of the Acquired Business
at February 28, 2006 and unaudited comparative combined statements of operations and cash flows of
the Acquired Business for the two-month period ending on February 28, 2006 (including for the
comparable period for the prior year), together with all related notes and schedules thereto (the
“Unaudited First Quarter 2006 Interim Financial Statements”) and (ii) May 31, 2006, Sun
shall use reasonable best efforts to deliver on or before June 30, 2006 (and shall in any event
deliver on or before July 15, 2006) to Horizon OP an unaudited comparative combined balance sheet
of the Acquired Business at May 31, 2006 and unaudited comparative combined statements of
operations and cash flows of the Acquired Business for the three-month period ending on May 31,
2006 (including for the comparable period for the prior year), together with all related notes and
schedules thereto (the “Unaudited Second Quarter 2006 Interim Financial Statements” and,
together with the Unaudited First Quarter 2006 Interim Financial Statements (the “Unaudited
2006 Interim Financial Statements” and, together with the Unaudited 2005 Interim Financial
Statements, the “Unaudited Combined Interim Financial Statements”).

     Section 6.8 Non-Assignment.

          (a) Notwithstanding anything else in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign, license, sublicense, lease, sublease, convey or transfer at
Closing any Acquired Asset, including any Acquired Entity, Permit, Contract or any claim or right
or any benefit arising thereunder or resulting therefrom, as to which consent or approval to
assignment, license, sublicense, lease, sublease, conveyance or
transfer thereof or amendment thereof (including consents and approvals of Governmental
Entities) is required but has not been obtained as of the Closing Date unless and until such
consent, approval or amendment is no longer required or has been obtained. Each of the parties
hereto shall use, and cause each of their respective Subsidiaries to use, reasonable best efforts
to obtain any such consent, approval or amendment, including after the Closing Date. Upon
obtaining any such consent, approval or amendment after the Closing, such consent, approval or
amendment to be in a form reasonably satisfactory to Horizon OP, the Horizon Parties and Sun shall
cause any applicable Acquired Asset to be transferred to Horizon OP or one or more Horizon
Subsidiaries (as designated by Horizon OP and permitted by such consent, approval or amendment) on
the terms that would have applied to such transfer had it occurred in the transactions as
contemplated by this Agreement or the Horizon Transactions.

          (b) Subject to Section 6.21, in the event and to the extent that the parties hereto
are unable to obtain any such required consent, approval or amendment to transfer, license,
sublicense, lease, sublease, convey or assign any Acquired Asset to Horizon OP or one or more
Horizon Subsidiaries (as designated by Horizon OP), the parties hereto shall cooperate to agree to
a mutually agreeable arrangement under which Horizon OP or one or more Horizon Subsidiaries (as
designated by Horizon OP) shall obtain the economic claims, rights and benefits under the Acquired
Asset, in the manner set forth below, with respect to which such consent, approval or amendment has
not been obtained in accordance with this Agreement. Notwithstanding any failure of the parties
hereto to agree to such a mutually agreeable arrangement, Sun shall, and shall cause the Retained
Subsidiaries to (i) continue to hold, and to

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the extent required by the terms applicable to such
Asset, operate the Asset, in the case of real or personal property, and to be bound thereby in the
case of Contracts, (ii) cooperate in any reasonable and lawful arrangement proposed by Horizon OP
to provide to Horizon OP or the designated Horizon Subsidiaries the benefits arising under any such
Acquired Asset which were to arise out of its transfer pursuant to this Agreement, the structure of
which is such that such Acquired Asset shall qualify as a real estate asset within the meaning of
Section 856(c)(5)(B) of the Code (a “Qualifying Asset”) and the income derived therefrom
shall qualify as income described in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
(“Qualifying Income”) (such transfer a “Qualified Transfer”), including accepting
such reasonable and lawful direction as Horizon OP shall request of Sun and (iii) enforce at
Horizon OP’s request, or allow Horizon OP and the Horizon Subsidiaries to enforce (in which case,
solely for such purpose, Sun shall constitute and appoint Horizon OP or the subject Horizon
Subsidiaries as its true and lawful attorney-in-fact), any rights of Sun and the Retained
Subsidiaries as to such Acquired Asset against the issuer thereof or the other party or parties
thereto (including the right to elect to terminate such of the foregoing in accordance with the
terms thereof upon the request of Horizon OP). Sun shall, and shall cause the Retained
Subsidiaries to, without further consideration therefor, and without right of set-off (except for
actually incurred costs and expenses to the extent Horizon OP is responsible therefor under this
Section 6.8), pay and remit to Horizon OP promptly all monies, rights and other
considerations received in respect of such Qualifying Asset, net of any costs and expenses incurred
by Sun and the Retained Subsidiaries in connection with such Qualifying Asset to the extent such
costs and expenses would have been borne by Horizon OP if such Qualifying Asset had been properly
transferred to Horizon OP pursuant to Article 2 at the Closing. For the avoidance of
doubt, unless an arrangement under
this Section 6.8(b) shall in its entirety constitute a Qualified Transfer, no such
arrangement shall be established or be deemed to have been given effect in whole or in part.

          (c) To the extent that Horizon OP or the Horizon Subsidiaries are provided the benefits of any
Acquired Asset pursuant to Section 6.8(b), Horizon OP or such Horizon Subsidiary shall,
subject to Section 6.8(h), (i) be responsible for the Assumed Liabilities, if any, arising
under or related to such Acquired Asset, (ii) perform for the benefit of the counterparty or
counterparties thereto, the obligations of Sun or the Retained Subsidiary, as the case may be,
thereunder or in connection therewith, but only to the extent (x) that such performance by Horizon
OP or the Horizon Subsidiaries would not result in any default thereunder or in connection
therewith and (y) such performance pertains to the Acquired Business and the benefits provided to
Horizon OP or the Horizon Subsidiaries in the Qualified Transfer; provided,
however, that if Horizon OP or the Horizon Subsidiaries shall fail to perform to the extent
required herein and such failure continues for ten (10) business days following notice thereof to
Horizon OP, Sun and the Retained Subsidiaries shall thereafter cease to be obligated under this
Section 6.8 to maintain the Qualified Transfer which is the subject of such failure to
perform unless and until such situation is remedied and (iii) reimburse Sun for, and hold it
harmless from, all Liabilities (not already used to set-off monies, rights or other consideration
paid to Horizon OP or a Horizon Subsidiary pursuant to Section 6.8(b)) incurred or asserted
as a result of any actions (or omissions to act) of Sun or any Retained Subsidiary taken at the
direction of, and in all material respects in the manner prescribed by, Horizon OP or any of its
Subsidiaries pursuant to Section 6.8(b), in each case in clause (i), (ii)
or (iii) only to the extent such Liabilities would have been borne by Horizon OP if such
Acquired Asset had been properly transferred to Horizon OP pursuant to Article 2 at the
Closing.

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          (d) If any consent, approval or amendment is required to assign, license, sublicense, lease,
sublease, convey or transfer any Excluded Asset from any Acquired Entity to Sun or any Retained
Subsidiary, Sun shall use, and cause each of the Sun Subsidiaries to use, reasonable best efforts
to obtain any such consent, approval or amendment, including after the Closing Date. The Horizon
Parties, at Sun’s expense, shall cooperate with Sun and the Sun Subsidiaries in obtaining any such
consent, approval or amendment. Upon obtaining any such consent, approval or amendment after the
Closing, the Horizon Parties and Sun shall cause any applicable Excluded Asset to be transferred to
Sun, or a Retained Subsidiary designated by Sun in writing, without further consideration therefor.

          (e) Subject to Section 6.21, in the event and to the extent that Sun is unable to
obtain any such required consent, approval or amendment required in order for an Acquired Entity to
transfer, license, sublicense, lease, sublease, convey or assign any Excluded Asset to Sun or one
or more of the Retained Subsidiaries, the parties hereto shall cooperate to agree to a mutually
agreeable arrangement under which Sun or one or more Sun Subsidiaries shall obtain the economic
claims, rights and benefits under the Excluded Asset, in the manner set forth below, with respect
to which such consent, approval or amendment has not been obtained in accordance with this
Agreement. Notwithstanding any failure of the parties hereto to agree to such a mutually agreeable
arrangement, but subject to Section 7.2(e)(i), Horizon OP shall, and shall cause the
Acquired Entities, from and after the Closing, to (i) continue to hold and to be bound thereby, in
the case of Contracts, (ii) cooperate in any reasonable and lawful arrangement proposed by Sun to
provide to Sun or the Sun Subsidiaries the benefits arising under any such
Excluded Asset, including accepting such reasonable and lawful direction as Sun shall request
of Horizon OP and (iii) enforce at Sun’s request, or allow Sun and its Affiliates to enforce, any
rights of the applicable Acquired Entity under any such Excluded Asset against the issuer thereof
or the other party or parties thereto (including the right to elect to terminate such of the
foregoing in accordance with the terms thereof upon the request of Sun). Any incremental Taxes
payable with respect to an Excluded Asset by any taxable REIT subsidiary to which such Excluded
Asset has been transferred, including all Taxes payable on any payments received under this
Section 6.8(e) and all Taxes payable on the distribution or transfer of, if any, such
Excluded Asset out of such taxable REIT subsidiary and the expenses of the transfer of such
Excluded Asset to such taxable REIT subsidiary shall be borne by Sun. The reasonable costs and
expenses (including reasonable professional fees and expenses) incurred by Horizon OP or the
Horizon Subsidiaries (including the Acquired Entities) at Sun’s request, or incurred by Sun or the
Retained Subsidiaries, in each case with respect to any of the actions contemplated under
clause (iii) above, shall be borne solely by Sun. Horizon OP shall, and shall cause the
Acquired Entities to, without further consideration therefor, remit to Sun promptly all monies,
rights and other considerations received in respect of such Excluded Asset, net of any costs and
expenses incurred by Horizon or any Horizon Subsidiaries in connection with such Excluded Asset.
The parties hereto agree for tax purposes to report the actual transfer of such Assets to Sun or
one or more of the Retained Subsidiaries on the Closing Date.

          (f) In the case of an Asset described in Section 6.8(e), Sun shall, and shall cause
its Retained Subsidiaries to, perform for the benefit of the issuer thereof, or the other party or
parties thereto, the obligations of Horizon OP or its relevant Affiliate, as the case may be,
thereunder or in connection therewith.

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          (g) In the event that Sun cannot convey, transfer, assign or deliver, directly or indirectly,
as contemplated by this Agreement, any Excluded Asset at Closing by reason of the failure or
inability to obtain a required consent, approval or amendment, and, at any time thereafter, Horizon
OP, in its good faith judgment, after consultation with its outside tax counsel, determines that
the Excluded Asset or the income generated by such Excluded Asset would reasonably be expected to
cause a significant risk that Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any
Horizon Foreign Currency REIT would fail to qualify as a REIT under the Code, then Horizon OP and
the Horizon Subsidiaries (including the Acquired Entities) shall no longer have any obligation with
respect to such Excluded Asset, except pursuant to this Section 6.8(g). Without limiting
the foregoing, if, in the good faith judgment of Horizon OP, after consultation with its outside
tax counsel, the holding of such Excluded Asset by the applicable Horizon Subsidiary would not
reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp., W&S Denver Corp.,
Horizon, SHC or any Horizon Foreign Currency REIT would fail to qualify as a REIT under the Code,
in such event, Horizon OP shall give prompt notice to Sun thereof and continue to allow Sun to use
its reasonable best efforts to obtain such required consent, approval or amendment in accordance
with Section 6.8(d) until the date that is ten (10) business days after such notice is
delivered to Sun. In the event Sun fails to obtain such required consent, approval or amendment
prior to such date, Horizon OP shall thereafter cause the applicable Horizon Subsidiary to, at
Sun’s election, (i) use commercially reasonably efforts to transfer such Excluded Asset to Sun, or
a Retained Subsidiary designated by Sun in writing, without further consideration therefor (unless,
in the good faith judgment of Horizon OP, after consultation with its outside tax counsel, the
transfer of such Excluded Asset
would reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp., W&S
Denver Corp., Horizon, SHC or any Horizon Foreign Currency REIT would fail to qualify as a REIT
under the Code, in which case this clause (i) may not be elected by Sun), (ii) in the event
that, in the good faith judgment of Horizon OP, the transfer of such Excluded Asset by the Acquired
Entity that holds such Excluded Asset to a taxable REIT subsidiary of Horizon, and the holding of
such Excluded Asset by such taxable REIT subsidiary, would not reasonably be expected to cause a
significant risk that Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any Horizon
Foreign Currency REIT would fail to qualify as a REIT under the Code, use commercially reasonable
efforts to cause such Excluded Asset to be transferred to such taxable REIT subsidiary, or (iii)
use commercially reasonable efforts (A) to sell such Excluded Asset to one or more third parties in
one or more arms-length transactions and (B) taking into account all potential Losses to Horizon OP
described in clause (i), to maximize the net proceeds of any such sale. In the event Sun
elects clause (i) of the immediately preceding sentence, Sun shall indemnify the Purchaser
Indemnified Parties for any Losses arising out of Third Party Claims (as such term is defined in
the Indemnification Agreement) with respect to the transfer of such Excluded Asset to Sun. Horizon
OP shall cause the applicable Horizon Subsidiaries to remit to Sun the net proceeds of any such
sale, after setting off all costs, expenses and other Losses (as such term is defined in the
Indemnification Agreement) of Horizon OP and the applicable Horizon Subsidiaries in connection with
such transactions. Upon receipt
by Sun of such payment in full, neither Sun nor Horizon OP nor any
Horizon Subsidiary shall have any further obligation under this Section 6.8(g) with respect
to such Excluded Asset.

          (h) Notwithstanding anything to the contrary in this Agreement, Sun shall indemnify the
Purchaser Indemnified Parties for any Losses arising out of (i) any gross negligence or willful
misconduct by Sun or a Retained Subsidiary in connection with this Section

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6.8, and any
arrangements pursuant thereto, (ii) any claim by a third party that there had occurred any default
or breach (or alleged default or breach) by Sun or Horizon OP or any of their respective
Subsidiaries to the extent it arises by reason of the fact that (in accordance with Section
6.8) (A) in the case of an Acquired Asset, Horizon OP or one of its Subsidiaries, rather than
Sun or one of its Subsidiaries, is, or has been, performing Sun’s or its Subsidiary’s obligations
under, or obtaining Sun’s or its Subsidiaries’ benefits under, an Acquired Asset that has not been
assigned, licensed, sublicensed, leased, subleased, conveyed or transferred to Horizon OP or one of
its Subsidiaries, but excluding from the foregoing any default or breach (or alleged default or
breach) to the extent related to any defect in the performance by Horizon OP or its Subsidiary
itself or (B) in the case of an Excluded Asset, Sun or one of its Subsidiaries, rather than Horizon
or one of its Subsidiaries, is performing Horizon OP’s or its Subsidiary’s obligations under, or
obtaining Horizon OP’s or its Subsidiaries’ benefits under, an Excluded Asset that has not been
assigned, licensed, sublicensed, leased, subleased, conveyed or transferred, as applicable, to Sun
or one of its Subsidiaries or (iii) except to the extent arising out of any gross negligence or
willful misconduct by Horizon OP or its Affiliates, and subject (in the case of an Acquired Asset)
to Section 6.8(c), any arrangements or actions contemplated by this Section 6.8.

          (i) Nothing in this Section 6.8 shall (i) be deemed to constitute an agreement to
exclude from the transactions contemplated by this Agreement and the Local Purchase Agreements or
the Horizon Transactions any Acquired Asset, or any claim, right or benefit arising hereunder or
thereunder, (ii) be deemed to constitute an agreement to include in the
transactions contemplated by this Agreement and the Local Purchase Agreements or the Horizon
Transactions any Excluded Asset, or any claim, right or benefit arising hereunder or thereunder,
(iii) qualify the obligations of the parties hereto to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements or the Horizon Transactions or (iv) obligate the
parties hereto to consummate the Closing Transactions unless the conditions to their respective
obligations set forth in Article 7 have been satisfied or waived.

          (j) Nothing in this Section 6.8 shall permit or require any act, omission or
arrangement which, in the reasonable determination of Horizon, could adversely affect the REIT
status of Horizon or, after the Closing, W&S Seattle Corp., W&S Denver Corp., SHC or any Horizon
Foreign Currency REIT.

     Section 6.9 Public Announcements. The parties hereto shall use commercially
reasonable efforts to develop, and shall cooperate with respect to, a joint communications plan
with respect to this Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby. Without limiting the foregoing, (i) the initial press release to be issued
with respect to the transactions contemplated by this Agreement and the Ancillary Agreements will
be in the form agreed to by the parties hereto prior to the execution of this Agreement and (ii)
the Horizon Parties, on the one hand, and the Sun Parties, on the other hand, will consult with Sun
and Horizon OP, respectively, before issuing, and provide Sun and Horizon OP, respectively,
reasonable opportunity to review and comment upon, any press release or other material written
public statement, including any press release or other written public statement which addresses in
any manner the transactions contemplated by this Agreement and the Ancillary Agreements, and shall
not issue any such press release or make any such written public statement prior to such

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consultation, except as may be required by applicable Law, court process or by obligations pursuant
to any listing agreement with any national securities exchange.

     Section 6.10 Listing. Horizon shall use reasonable best efforts to cause the Horizon
Common Stock to be issued in the Closing Transactions to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the REIT Merger Effective Time.

     Section 6.11 Reserved.

     Section 6.12 Comfort Letters.

          (a) If requested by Sun, Horizon shall use commercially reasonable efforts to cause to be
delivered to Sun and Trust comfort letters of KPMG LLP (“KPMG”), Horizon’s independent
public accountants, dated approximately the date on which the Form S-4 shall become effective and
as of the Closing Date, and addressed to Sun and Trust, in form reasonably satisfactory to Sun and
Trust and customary in scope and substance for letters
delivered by independent public accountants in connection with transactions such as those
contemplated by this Agreement.

          (b) If requested by Horizon, Sun shall use commercially reasonable efforts to cause to be
delivered to Horizon comfort letters of E&Y, Sun’s and Trust’s independent public accountants,
dated approximately the date on which the Form S-4 shall become effective and as of the Closing
Date, and addressed to Horizon, in form reasonably satisfactory to Horizon and customary in scope
and substance for letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.

     Section 6.13 Cooperation with Financing. The Sun Parties shall, and shall cause their
Subsidiaries to, reasonably cooperate with the Horizon Parties and their Representatives, and shall
use commercially reasonable efforts to cause their respective Representatives, including the
independent accounting firm(s) retained by the Sun Parties, to cooperate with the Horizon Parties
and their Representatives, in connection with efforts to obtain high yield bond financing and any
other debt and equity financings and related arrangements (“Financings”) undertaken by the
Horizon Parties or their Subsidiaries, in connection with the Closing Transactions, including in
connection with the review of written offering materials used to complete such Financings and
materials for rating agency presentations, to the extent information contained therein relates to
the Sun Parties, including to any Assets, Liabilities, or operations of the Acquired Entities.
Without limiting the foregoing, the Sun Parties shall: (i) use commercially reasonable efforts to
provide the Horizon Parties and their Representatives with historical, comparative and pro forma
financial information and data, projections, and other information and data reasonably requested in
connection with such Financings; (ii) cause appropriate Representatives of the Sun Parties to (x)
be available to answer questions in due diligence sessions customarily involved in Financing
efforts and (y) assist in reviewing offering materials and other documents prepared by the Horizon
Parties and their Representatives as may be reasonably requested in connection with such
Financings; provided that, the foregoing activities would not unreasonably interfere with
the performance of such Sun Representatives’ duties in connection with the Acquired Business or the
Retained Sun Business; and (iii) use commercially reasonable efforts (including by delivering
customary representation letters and certificates) to obtain accountants’ comfort letters

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and
consents as reasonably requested by Horizon OP; provided that, in the case of any of
clauses (i)-(iii) above, Horizon OP shall reimburse Sun for any out-of-pocket expenses
incurred by the Sun Parties and their Subsidiaries in connection with their compliance with this
Section 6.13. The obligations of the Sun Parties under this Section 6.13 shall be
subject to the Horizon Parties first entering into the Financing Indemnification Agreement.

     Section 6.14 Auditor’s Consent and Cooperation.

          (a) The Sun Parties shall use commercially reasonable efforts to cause E&Y to deliver to
Horizon a duly executed letter in which E&Y: (i) acknowledges that it understands that Horizon and
one or more of its Subsidiaries intend to include the Audited Combined Historical Financial
Statements, certain Unaudited Combined Interim Financial Statements and,
if applicable, the 2005 Audited Financial Statements in statements and reports required
pursuant to the Securities Act and the Exchange Act to be filed by Horizon and Horizon OP and their
respective successors from time to time with the SEC (“SEC Filings”); (ii) subject to E&Y’s
usual procedures and professional standards and after being given reasonable opportunity to review
such SEC Filings and documents incorporated by reference therein at Horizon’s sole cost and
expense, agrees that it shall consent to the references in such SEC Filings to E&Y as experts and
the inclusion of any of its audit reports on the Audited Combined Historical Financial Statements
and, if applicable, the 2005 Audited Financial Statements in any SEC Filing, until such financial
statements and consents are no longer required to be included in such SEC Filing by the Securities
Act or the Exchange Act; and (iii) acknowledges that Horizon will be providing the Audited Combined
Historical Financial Statements, certain Unaudited Combined Interim Financial Statements and, if
applicable, the 2005 Audited Financial Statements to potential lenders for the transactions
contemplated hereby and will be including such financial statements in the offering materials used
in connection with a private or exempt offering under the Securities Act. The Sun Parties shall
use commercially reasonable efforts to cause E&Y, including by providing customary representation
letters and other customary documents and instruments, subject to E&Y’s usual procedures and
professional standards and E&Y being given reasonable opportunity to review such SEC Filings or
offering documents and documents incorporated by reference therein at Horizon’s sole cost and
expense, (A) to consent to the inclusion of any of its audit reports on the Audited Combined
Historical Financial Statements and, if applicable, the 2005 Audited Financial Statements in any
SEC Filing (and to the references therein to E&Y as experts) and (B) to issue customary comfort
letters (concerning matters which are the subject of the Audited Combined Historical Financial
Statements, the Unaudited Combined Interim Financial Statements or, if applicable, the 2005 Audited
Financial Statements) that may be required in connection with any offering of debt or equity
securities by Horizon or any of its Subsidiaries or their respective successors.

          (b) If E&Y fails, for any reason whatsoever, to consent to the inclusion of any such audit
reports on the Audited Combined Historical Financial Statements or, if applicable, the 2005 Audited
Financial Statements in any SEC Filing (and to the references therein to E&Y as experts) or to
provide such comfort letters, Sun shall, and shall cause each of its Subsidiaries to, (i) provide
Horizon’s independent accountants reasonable access to its books and records and personnel
reasonably required in order to audit the Audited Combined Historical Financial Statements and, if
applicable, 2005 Audited Financial Statements and to conduct a SAS 100 review of the Unaudited
Combined Interim Financial Statements so that Horizon may

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expeditiously cause any or all of such
financial statements to be reaudited, again reviewed or to be so confirmed by “comfort” letters as
the case may be, (ii) use commercially reasonable efforts to cause E&Y to cooperate with the
auditors engaged by Horizon to conduct such audit or review and (iii) provide customary
representation letters and other customary documents and instruments; provided,
however, that the foregoing shall be subject to Horizon’s auditors agreeing not to disclose
to Horizon any of the Sun information made available to such auditors that is not directly related
to the Acquired Business or the Acquired Assets. Sun acknowledges that if E&Y fails to consent to
the inclusion of any such audit reports in any SEC Filing (and to the references therein to E&Y as
experts) or to provide such comfort letters, and Horizon or any of its successors is denied in any
manner whatsoever the access provided for in this Section 6.14, Horizon and its successors
(if any) will suffer irreparable injury and damage. Therefore, Sun agrees that, if Horizon or its
successors is denied access provided for in this Section 6.14 in any
manner whatsoever, Horizon and its Affiliates and their respective successors (if any) will be
entitled, without posting of bond, to, in addition to all other remedies available to it,
injunctive relief and specific performance to prevent the breach of and to secure the enforcement
of this Section 6.14.

          (c) Horizon OP shall reimburse Sun for any reasonable out-of-pocket expenses incurred by the
Sun Parties and their Subsidiaries in connection with their compliance with this Section
6.14.

     Section 6.15 Ground Lease Estoppel Certificates. Sun shall use commercially
reasonable efforts to cooperate with Horizon OP in Horizon OP’s efforts to obtain from the
applicable landlord under each Ground Lease a ground lease estoppel certificate relating to each
such Ground Lease, in a form reasonably acceptable to Horizon OP.

     Section 6.16 Ancillary Agreements. At or prior to the Closing, each Sun Party and
Horizon Party shall, and shall cause their applicable Affiliates to, as the case may be, execute
and deliver to the other parties thereto each of the following, to the extent contemplated thereby
to be a party: (i) a registration rights agreement, in all material respects in the form of
Exhibit G (the “Registration Rights Agreement”); (ii) a right of first offer
agreement in all material respects in the form of Exhibit H (the “Right of First Offer
Agreement”); (iii) an indemnification agreement in all material respects in the form of
Exhibit I (the “Indemnification Agreement”); (iv) (a) a separate sublease agreement
for each applicable Acquired Hotel in all material respects consistent with the terms set forth on
Exhibit J (the “Sublease Agreement”) and (b) a separate lease agreement for each
applicable Acquired Hotel in all material respects consistent with the terms set forth in
Exhibit K (the “Lease Agreement”); (v) a Master Reserve Fund agreement in all
material respects in the form of Exhibit L (the “Master Reserve Fund Agreement”);
(vi) a separate operating agreement for each applicable Acquired Hotel in all material respects in
the form of Exhibit M, subject to the deviation schedule attached hereto as Schedule
6.16(vi) (the “Operating Agreement”); (vii) a separate license agreement for each
applicable Acquired Hotel in all material respects in the form of Exhibit N, subject to the
deviation schedule attached hereto as Schedule 6.16(vii) (the “License Agreement”);
(viii) a working capital concentration account agreement in all material respects in the form of
Exhibit O (the “Working Capital Concentration Account Agreement”); (ix) a
compensating balance agreement in all material respects in the form of Exhibit P (the
“Compensating Balance Agreement”); (x) a termination upon sale agreement in all material
respects in the form of Exhibit Q (the “Termination Upon Sale

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Agreement”); (xi) a
tax sharing and indemnification agreement in all material respects in the form of Exhibit R
(the “Tax Sharing and Indemnification Agreement”); (xii) a financing
cooperation and indemnification agreement in all material respects in the form of Exhibit
S (the “Financing Indemnification Agreement”); (xiii) a corporate-level amendment to
the Operating Agreements and the License Agreements in all material respects in the form of
Exhibit T (the “Corporate-Level Agreement”); (xiv) a growth plan agreement in all
material respects in the form of Exhibit U (the “Growth Plan Agreement”); and (xv)
the Local Purchase Agreements. The Registration Rights Agreement, the Right of First Offer
Agreement, the Indemnification Agreement, the Sublease Agreements, the Lease Agreements, the Master
Reserve Fund Agreement, the Operating Agreements, the License Agreements, the Working Capital
Concentration Account Agreement, the Compensating Balance Agreement, the Termination Upon Sale
Agreement, the Tax Sharing and Indemnification Agreement, the Financing Indemnification Agreement,
the Corporate Level Agreement, the Growth Plan Agreement, the Assumption Agreement and the Local
Purchase Agreements collectively, are referred to in this Agreement as the “Ancillary
Agreements”.

     Section 6.17 [Intentionally Omitted].

     Section 6.18 Deferral Triggers; Deferred Assets.

          (a) With respect to any Acquired Hotel or Acquired Entity, a “Deferral Trigger” shall
be deemed to have occurred if any of the following circumstances, events, occurrences, changes or
effects has occurred and is continuing at or prior to the Closing:

     (i) after the date of the the Horizon Stockholders Meeting, any consent, approval or
authorization of any Governmental Entity or other third party required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements or the Horizon
Transactions and set forth on Schedule 6.18(a)(i) has not been obtained;

     (ii) in the case of an Acquired Hotel, any portion thereof has been damaged by fire or
other casualty event and the cost of repair or restoration with respect to any one or more
such casualties (without taking into consideration any insurance or third party proceeds
which have been or may be received in connection with such casualties), individually or in
the aggregate, exceed, or would reasonably be expected to exceed, (x) in the case of an
Acquired Hotel, 25% of the applicable Acquired Hotel Agreed Amount or (y) in the case of an
Acquired Entity, 25% of the aggregate Acquired Hotel Agreed Amounts of the Acquired Hotels
held by such Acquired Entity;

     (iii) in the case of an Acquired Hotel, any condemnation events are commenced against
any portion thereof and the economic impact (without taking into consideration any
condemnation award or other proceeds) of any such condemnation events, individually or in
the aggregate, exceed, or would reasonably be expected to
exceed, (x) in the case of an Acquired Hotel, 25% of the applicable Acquired Hotel
Agreed Amount or (y) in the case of an Acquired Entity, 25% of the aggregate Acquired Hotel
Agreed Amounts of the Acquired Hotels held by such Acquired Entity;

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     (iv) (A) (1) after the date of the Horizon Stockholders Meeting, any consent, approval
or authorization of any Governmental Entity or other third party required in connection with
the transactions contemplated by this Agreement or the Horizon Transactions has not been
obtained or (2) the condition set forth in Section 7.2(a) would not be satisfied
with respect to breaches, inaccuracies or failures to be true of representations or
warranties set forth in Section 3.1(a) (Organization, Standing and Power),
3.2 (Capital Structure), 3.4 (Authority; Noncontravention; Consents),
3.6 (Absence of Changes), 3.7 (Litigation), 3.8 (Properties) (but
only subsections (a), (b) and (e) thereof), 3.9
(Environmental Matters), 3.16 (Compliance with Laws; Permits), 3.17
(Contracts) (but only with respect to clauses (v), (vi) and (xii) of
Section 3.17(a) and Section 3.17(b) as it relates to those clauses) or
3.19 (Assets) (in each case, disregarding all qualifications and exceptions
contained in Section 7.2(a), itself, relating to materiality, Sun Material Adverse
Effect, Sun Material Impairment or specified numerical threshold and continuing to disregard
the qualifications and exceptions set forth in Article 3 that are disregarded by
Section 7.2(a)) and (B) the economic impact (without taking into account any
indemnification, insurance or third party proceeds) of any state of facts, change,
development, effect, condition or occurrence set forth in Section 6.18(a)(iv)(A),
individually or in the aggregate, exceeds, or would reasonably be expected to exceed, (x) in
the case of an Acquired Hotel, 25% of the applicable Acquired Hotel Agreed Amount or (y) in
the case of an Acquired Entity, 25% of the aggregate Acquired Hotel Agreed Amounts of the
Acquired Hotels held by such Acquired Entity; provided, however, that no
state of facts, change, development, effect, condition or occurrence associated with any
breach, inaccuracy or failure to be true of any representation or warranty set forth in
Section 3.4 (other than clause (a)), 3.6, 3.7, 3.8
(other than clauses (a), (b) or (e)), 3.9, 3.16,
3.17 or 3.19 (except to the extent also associated with any breach,
inaccuracy or failure to be true of any representation or warranty set forth in Section
3.1(a), 3.2, 3.4(a) or Section 3.8(a), (b) or
(e)) shall be taken into account in determining such economic impact if the economic
impact relating thereto, together with the economic impact relating to any other matters
arising out of the same, or any related, facts, events or circumstances, is less than
$500,000 (or, with respect to breaches, inaccuracies or failures to be true of Section
3.19, $100,000), but, if such economic impact is $500,000 (or, as applicable $100,000)
or more, then the entire economic impact shall be taken into account;

     (v) after the date of Horizon Stockholders Meeting, any Restructuring Parameter (within
the meaning of Exhibit A) would not be satisfied in any material respect if such
Acquired Hotel or Acquired Entity is included in, but would be satisfied if such Acquired
Hotel or Acquired Entity were excluded from, the transactions contemplated by this
Agreement;

     (vi) after the date of the Horizon Stockholders Meeting, Sun shall not have received a
favorable ruling regarding the Tax treatment as set forth on Schedule 6.18(a)(vi) with respect to any one or more Acquired Hotels or Acquired
Entities set forth on such Schedule;

     (vii) (A) after the date of the Horizon Stockholders Meeting, any Required Antitrust
Approvals have not been obtained (or any required waiting periods in

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connection with the
Required Antitrust Approvals have not expired or been terminated), (B) a temporary
restraining order, preliminary or permanent injunction or other order has been issued by any
court of competent jurisdiction which is then in effect making illegal or otherwise
preventing, in material part, the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements or the Horizon Transactions or (C) there has been any
action taken, or any Law enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement and the Ancillary Agreements or the Horizon Transactions, by
any Governmental Entity of competent jurisdiction that makes, in material part, the
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements
or the Horizon Transactions illegal or prevents their consummation;

     (viii) on or after the date of the Horizon Stockholders Meeting, Horizon OP determines
in good faith that (A) the sum of (1) in the case of any Acquired Hotel in Italy and Spain
(or any applicable Acquired Entity), Horizon’s and the Horizon Subsidiaries’ share of any
Transaction Costs included in clause (iii) of Section 8.3(b) in connection
with the Sublease Agreements arising from the works council review and (2) the
indemnification Liabilities payable by Horizon or any Horizon Subsidiary under Section
2.04(iii) of the Compensating Balance Agreement, if any, applicable to such Acquired Hotel
or Acquired Entity would reasonably be expected to exceed (B) 10% of the EBITDA that would
(but for the costs and Liabilities described in clause (A) above) otherwise be
received by Horizon and the Horizon Subsidiaries with respect to such Acquired Hotel or
Acquired Entity during the twelve months immediately following Closing; or

     (ix) on the date on which the conditions set forth in Sections 7.1 and
7.2 (other than (x) those conditions that, by their terms, are to be satisfied on
the Closing Date and (y) Section 7.2 with respect to the Restructuring Parameters
that are contemplated by the Restructuring Plan to be satisfied, or the Sun Restructuring
Steps or the Closing Restructuring Steps that are required to be completed by the
Restructuring Plan, on or promptly before the Closing Date) have been satisfied or waived,
if any Horizon Deferral Trigger exists with respect to one or more of the Acquired Hotels
identified as the “Westin Europa & Regina”, the “Westin Palace Madrid” and the “Westin
Palace Milan” on Schedule 10.1(d) (collectively, the “Primary International
Hotels”) or one or more Acquired Entities in which a Primary International Hotel is
held, then a Horizon Deferral Trigger shall be deemed to exist with respect to all Acquired
Hotels located outside the United States, Canada and Poland (the “Deferred International
Hotels”) and each of the Acquired Entities in which one or more Deferred International
Hotels is held. Notwithstanding anything to the contrary contained in this Agreement, the
Horizon Deferral Trigger under this Section 6.18(a)(ix) shall be deemed to exist
with respect to each Deferred International Hotel at any time,
and from time to time, thereafter that any other Horizon Deferral Trigger (under any
other provision of Section 6.18(a)) exists with respect to one or more Primary
International Hotels.

     Nothwithstanding anything to the contrary in this Section 6.18, if a Deferral Trigger
shall be deemed to have occurred with respect either of the Acquired Hotels identified as the

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“Sheraton Royal Denarau Resort” or “Sheraton Fiji Resort” on Schedule 10.1(d), a Deferral
Trigger shall be deemed to have occurred with respect to both such Acquired Hotels.

          (b) Without limiting the Sun Parties’ or the Horizon Parties’ obligations under this
Agreement, including under Section 6.3, upon receiving any Knowledge or other notice of the
existence of any Deferral Trigger, (i) Sun or Horizon OP, as applicable, shall promptly give notice
to Horizon OP or Sun, as applicable, of the existence of such Deferral Trigger and (ii) the Sun
Parties, or the Sun Parties and the Horizon Parties, in the case of a Deferral Trigger referred to
in Section 6.18(a)(i), Section 6.18(a)(iv)(A)(1) or Section 6.18(a)(vii),
shall use reasonable best efforts to cause such Deferral Trigger to be cured prior to the Closing
Date; provided that, the Sun Parties shall not be required to use reasonable best efforts
to cure any Deferral Trigger arising from a casualty event or condemnation event.

          (c) From time to time prior to the Closing, (A) in the event that one or more of the Deferral
Triggers described in clause (i), (ii), (iii), (iv), (v),
(vii), (viii) or (ix) of Section 6.18(a) (the “Horizon Deferral
Triggers”) has occurred with respect to any one or more Acquired Hotels or Acquired Entities,
Horizon OP may elect, in its sole discretion, and (B) in the event that one or more of the Deferral
Triggers described in clause (i), (vi) or (vii) of Section 6.18(a)
(the “Sun Deferral Triggers”) has occurred with respect to any one or more Acquired Hotels
or Acquired Entities, Sun may elect, in its sole discretion, to exclude (subject to Section
6.18(f)) any one or more of such Acquired Hotels or Acquired Entities, as applicable, from the
transactions contemplated by this Agreement and the Ancillary Agreements; provided that,
(I) any such election must be made by written notice from a Sun Party to Horizon OP, or from a
Horizon Party to Sun, as applicable, (II) such notice must identify the Acquired Hotels and
Acquired Entities to be excluded and (III) subject to Section 6.18(d), the exclusion of
the Acquired Hotels and Acquired Entities identified in any such notice will be effective on the
earlier of (1) the Closing Date and (2) the later of (x) the date that is twenty (20) business days
after such notice is delivered to Sun or Horizon OP, as applicable, and (y) the date set forth in
such notice as the effective date of such exclusion; provided, further, that no
Acquired Hotel or Acquired Entity will be excluded pursuant to any such notice if all of the
Horizon Deferral Triggers, in the case of a notice delivered by a Horizon Party, or all of the Sun
Deferral Triggers, in the case of a notice delivered by a Sun Party, identified in such notice as
relating to such Acquired Hotel or Acquired Entity have been cured prior to the date on which such
exclusion otherwise would have been effective pursuant to this Section 6.18(c). In any
event in which (i) Horizon OP makes an election with respect to an alleged Horizon Deferral Trigger
or Sun makes an election with respect to an alleged Sun Deferral Trigger and (ii) within five (5)
business days of receiving notice of such Deferral Trigger, Sun or Horizon OP, as applicable,
delivers written notice to the other party claiming that such a Deferral Trigger has not occurred
or is not continuing, the parties hereto shall cooperate to reach an agreement with respect thereto
and, if no such agreement is reached, the dispute shall be submitted to, and resolved exclusively
pursuant to, arbitration in accordance with the Comprehensive Arbitration Rules and Procedures
(the “Rules”) of Judicial Arbitration and Mediation Services, Inc. (“JAMS”). This
clause shall not preclude the parties hereto from seeking equitable or provisional remedies in aid
of arbitration or to preserve the status quo from a court of competent jurisdiction, pending a
decision by the arbitrator. All arbitration shall take place in the County of Montgomery, State of
Maryland, with one mutually acceptable arbitrator experienced in the hotel industry presiding at
such arbitration proceeding. If after ten (10) business days the parties cannot agree on an

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acceptable arbitrator, then JAMS shall appoint an arbitrator in accordance with the Rules. The
arbitrator shall render a written decision stating reasons therefor in reasonable detail within 30
days after being appointed. Decisions pursuant to such arbitration shall be final, conclusive and
binding on the parties hereto for purposes of this Section 6.18. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction over the subject matter
and the party against whom enforcement is sought. The fees and expenses of such arbitration
(including the fees of the arbitrator and reasonable attorneys’ fees, costs and expenses) and of
any action to enforce an arbitration award shall be paid by the party that does not prevail in such
arbitration, and may be assessed in the arbitration award or the judgment entered on such award, as
the case may be. The parties hereto expressly waive all rights whatsoever to file an appeal in the
arbitration forum against any award by the arbitrator hereunder; provided, however,
that the foregoing shall not limit the rights of either party to bring a judicial proceeding in any
applicable jurisdiction to confirm, enforce or enter judgment upon such award or to vacate, modify
or correct the award. Except as necessary in judicial proceedings involving this arbitration
provision or an award rendered hereunder, or to obtain interim relief pending an award, or as
reasonably determined by the disclosing party to be required by applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration hereunder without the
prior written consent of all parties. Any disputed Deferral Trigger shall be deemed to have
occurred and be continuing (which the parties hereto shall be deemed to have elected to exclude
from the transactions contemplated by this Agreement and the Ancillary Agreements);
provided that, such Deferral Trigger shall be deemed to be not continuing at such time, if
ever, that (i) upon final conclusion of the arbitration referred to in this Section 6.18(c)
with respect thereto, it is determined that no such Deferral Trigger is continuing or (ii) the
parties hereto otherwise agree that such Deferral Trigger is not continuing.

          (d) With respect to each Acquired Hotel and Acquired Entity to be excluded pursuant to
Section 6.18(c) (a “Deferred Asset”):

     (i) the Sun Parties shall cause such Deferred Asset to be transferred, prior to
Closing, to a Retained Subsidiary in which no Acquired Entity has any direct or indirect
Interest; provided that, the Sun Parties shall have the right to delay the Closing
to the extent reasonably necessary to effect such transfer (such delay shall not exceed five
(5) business days after the date on which the election is made to exclude such Deferred
Asset from the transactions contemplated by this Agreement and the Ancillary Agreements and
the Horizon Transactions); provided, further, that Sun will not be entitled
to terminate this Agreement pursuant to Section 9.1(e) for a number of days
following the Termination Date equal to the number of days by which the Closing was delayed
pursuant to the immediately preceding proviso; and

     (ii) subject to Section 6.18(f), as of and subject to the Closing, such
Deferred Asset shall be deemed to be an Excluded Asset or Retained Subsidiary, as
applicable, and the representations, warranties, covenants and conditions in this Agreement
and the Ancillary Agreements (other than Section 6.18(f) and, for the purposes of
Section 6.18(f), the defined terms and Sections used or referenced therein), and any
applicable Schedules, Exhibits or sections of any disclosure letter shall, as of and subject
to the Closing, be modified accordingly with respect to such Deferred Asset.

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          (e) The Cash Amount shall be reduced by the aggregate Acquired Hotel Agreed Amounts for all
Deferred Assets; provided, however, that if the Acquired Hotel identified as the
“Sheraton Centre Toronto Hotel” on Schedule 10.1(d) (or one or more Acquired Entities in
which such Acquired Hotel is held) is a Deferred Asset, then the Cash Amount shall be reduced
further by $5,600,000.

          (f) Post-Closing Actions.

     (i) Notwithstanding anything to the contrary in this Agreement, with respect to each
Deferred Asset, Sun (or, in the case of a Deferral Trigger described in Section
6.18(a)(i), 6.18(a)(iv)(A)(1) or Section 6.18(a)(vii), Sun and Horizon)
shall be required, whether before, on or after the Closing, until the applicable
Post-Closing Deferral Deadline to use reasonable best efforts to cure each Deferral Trigger
with respect to each Deferred Asset; provided that, Sun shall not be required to use
reasonable best efforts to cure any Deferral Trigger arising from a casualty event or
condemnation event.

     (ii) With respect to any Deferred Asset, in the event that all of the Sun Deferral
Triggers, if any, applicable to such Deferred Asset have been cured (or there are otherwise
no Sun Deferral Triggers then occurring), Horizon OP may elect to acquire such Deferred
Asset by delivering to Sun, at any time, and from time to time, on or prior to the
Post-Closing Deferral Deadline for such Deferred Asset, a written notice (the
“Post-Closing Acquisition Notice”) setting forth the Deferred Asset to be acquired
and the Horizon Subsidiary that will acquire such Deferred Asset; provided,
however, that Horizon OP may not deliver a Post-Closing Acquisition Notice with
respect to any Deferred International Hotel so long as the Horizon Deferral Trigger under
Section 6.18(a)(ix) is continuing, unless such Post-Closing Acquisition Notice
elects the acquisition of all the Deferred International Hotels not then subject to a
Horizon Deferral Trigger (other than the Horizon Deferral Trigger under Section
6.18(a)(ix)) and at least one (1) of the Primary International Hotels. Horizon OP shall
acquire such Deferred Asset on a business day agreed upon by Sun and Horizon which shall be
no more than sixty (60) days after the date of such notice.

     (iii) With respect to any Deferred Asset, in the event that all of the Horizon Deferral
Triggers, if any, applicable to such Deferred Asset have been cured (or there are otherwise
no Horizon Deferral Triggers then occurring), Sun may elect to require Horizon OP (or a
Horizon Subsidiary designated by Horizon OP) to acquire such Deferred Asset by delivering to
Horizon OP, at any time, and from time to time, on or prior to the Post-Closing Deferral
Deadline for such Deferred Asset, a written notice (the
“Post-Closing Sale Notice” and together with the Post-Closing Acquisition
Notice, the “Post-Closing Notices”) setting forth the Deferred Asset to be acquired.
Horizon OP shall acquire such Deferred Asset on a business day agreed upon by Sun and
Horizon which shall be no more than sixty (60) days after the date of such Post-Closing Sale
Notice; provided that, Horizon OP’s obligations to acquire any Deferred Asset
pursuant to this Section 6.18(f)(iii) shall be subject to the following conditions,
any one or more of which may be waived by Horizon OP in its sole discretion: (A) no Horizon
Deferral Trigger has occurred and is continuing with respect to such Deferred Asset
(provided

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that, for purposes of this Section 6.18(f)(iii), all references to
the Closing and the Closing Date included or referenced in the definition of “Deferral
Trigger”, and in the other Sections of this Agreement that are incorporated or referenced
therein, shall be deemed to refer to the applicable closing or applicable closing date, as
the case may be, with respect to such Deferred Asset); (B) there shall not be or have been
any state of facts, change, development, effect, condition or occurrence that, individually
or in the aggregate, has resulted in, or would be reasonably expected to result in, a
Horizon Deferral Trigger with respect to such Deferred Asset; (C) Sun and Trust shall have
complied in all material respects with the covenants set forth in Sections 5.1,
6.2, 6.19(c) and 6.19(d) with respect to such Deferred Asset until
and including the applicable closing date; and (D) all lenders, trustees, agents and other
applicable third parties with respect to any Specified Indebtedness associated with such
Deferred Asset shall have provided all consents, waivers, approvals or other documents
required for such Specified Indebtedness to be assumed, or remain in place at the applicable
Acquired Entity, in connection with the acquisition of such Deferred Asset contemplated by
this Section 6.18(f), in each case without resulting in any violation of or default
(with or without notice or lapse of time, or both) under, or giving rise to a right of
termination, cancellation or acceleration of any material obligation or to the loss of a
material benefit under any material Specified Indebtedness.

     (iv) On the closing date set forth in any Post-Closing Notice (subject to the
conditions set forth in clause (iii) of this Section 6.18(f)), (A) Sun
shall, or shall cause its applicable Subsidiaries to, sell, convey, assign, transfer and
deliver to Horizon OP or one or more Horizon Subsidiaries designated by Horizon OP, and
Horizon OP or the applicable Horizon Subsidiaries shall purchase, acquire and accept from
Sun or its applicable Subsidiaries, all right, title and interest of Sun and the Sun
Subsidiaries in and to such Deferred Asset, (B) Sun or its applicable Subsidiaries, on the
one hand, and Horizon OP or its applicable Subsidiaries, on the other hand, shall execute
and deliver all Ancillary Agreements and other certificates, instruments and deliveries that
would have been delivered at Closing if such Deferred Asset had been transferred on the
Closing Date as an Acquired Hotel or Acquired Entity, as applicable, (C) without limiting
the deliveries required by clause (B), Horizon OP or one or more Horizon
Subsidiaries shall deliver or cause to be delivered, by wire transfer of immediately
available funds to an account designated by Sun in writing at least five (5) business days
prior to the applicable closing date, an amount equal to the sum of the Acquired Hotel
Agreed Amounts (in each case as adjusted pursuant to clause (v) of this Section
6.18(f)) for the Deferred Assets (plus $5,600,000 in the event the Acquired Hotel
identified as the “Sheraton Centre Toronto Hotel” on Schedule 10.1(d) (or the
Acquired Entities in which such Acquired
Hotel is held) is included in such Deferred Assets) being transferred to Horizon OP or
its Subsidiaries at such closing and (D) from and after that closing, each Deferred Asset
transferred to Horizon OP or its subsidiaries shall be deemed as of the Closing to have been
an Acquired Hotel or an Acquired Entity, as applicable, and the representations, warranties,
covenants and conditions in this Agreement and the Ancillary Agreements, and, with respect
thereto, any applicable Schedules, Exhibits or sections of any disclosure letter shall be
deemed to have reverted to their form prior to modification pursuant to Section
6.18(d)(ii).

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     (v) For the purposes of clause (iv) of this Section 6.18(f), Sun and
the Horizon Parties (including indirectly through the Acquired Entities and the Directly
Acquired Assets Owners) shall receive debits and credits against the Acquired Hotel Agreed
Amounts for the Deferred Assets in the manner set forth in Article 8 (other than
with respect to Adjusted Indebtedness); provided that, notwithstanding anything to
the contrary in Article 8, (A) the “Apportionment Time” with respect to any Deferred
Asset, including for the purposes of Adjusted Indebtedness, shall be based on the applicable
closing date under this Section 6.18(f), rather than the Closing Date and (B) the
applicable Horizon Parties shall receive a credit in the amount of any Adjusted Indebtedness
with respect to each Deferred Asset. All disputes with respect to adjustments with respect
to any Deferred Assets shall be resolved in the manner set forth in Section 8.4;
provided that, notwithstanding anything to the contrary in Article 8, the
time periods set forth therein shall run from the applicable closing date under this
Section 6.18 rather than the Closing Date.

          (g) In the event that one or more Acquired Hotels or Acquired Entities is designated a
Deferred Asset pursuant to this Section 6.18, the Sun Parties shall use commercially
reasonable efforts to provide Horizon OP as promptly as practicable with any revised financial
statements or other financial information reasonably requested, from time to time, by Horizon OP
with respect to the Acquired Business (excluding the Deferred Assets), including Audited Combined
Historical Financial Statements, 2005 Audited Financial Statements and Unaudited Combined Interim
Financial Statements. For the avoidance of doubt, (x) once such revised financial statements are
delivered, the representations and warranties in Section 3.5, the covenants in Sections
6.3(b) and 6.14, and (y) the conditions in Section 7.2 shall apply to such
revised financial statements in the same manner as such previously delivered financial statements.

     Section 6.19 Indebtedness.

          (a) Except as provided in Section 6.19(b), Sun shall use reasonable best efforts, and
Horizon OP shall cooperate with Sun, to obtain, prior to the Closing, all consents, waivers,
approvals or other documents from any lenders, trustees, agents and other applicable third parties
that are required for the Specified Indebtedness to be assumed by Horizon OP, or remain in place at
the applicable Acquired Entity.

          (b) The Sun Parties shall use commercially reasonable efforts, and Horizon OP and Sun shall
cooperate with each other, to effect a consent solicitation seeking the consent described in
Schedule 6.19(b), which consent shall be effective as of the Closing. Without limiting the
foregoing, each of the Horizon Parties, on the one hand, and the Sun Parties, on the other hand,
shall furnish all information about itself and its business and operations and all financial
information to the other parties as may be required to be included in the consent solicitation
materials to be circulated by the Sun Parties, or any prospectus, registration statement or other
materials or documents to be circulated, or filed with the SEC by, the Horizon Parties. The Sun
Parties shall afford Horizon OP a reasonable opportunity to review and comment on any applicable
consent solicitation materials and shall, in good faith, take such comments into consideration.
Each of Horizon, Sun and Trust promptly will notify the others if and to the extent that any
information provided by it for use in any such materials or filings shall have

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become false or
misleading in any material respect. Each of Horizon, Sun and Trust will cooperate with the others
to take all steps reasonably necessary to amend or supplement such materials or filings, and, as
applicable, to cause such materials or filings, as amended or supplemented, to be filed with the
SEC and disseminated to the holders of SHC Indebtedness. Each of Horizon, Sun and Trust represents
and warrants that the information provided by it for inclusion in such materials or filings, and
each amendment or supplement thereto, at the time of mailing thereof (in the case of any consent
solicitation materials or prospectus or similar documents) and at the time it becomes effective (in
the case of any registration statement filed with the SEC) will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary in this Agreement, if the applicable consent described in
this Section 6.19(b) is not obtained with respect to either tranche of SHC Indebtedness, or
Horizon OP otherwise notifies Sun prior to the mailing of the consent solicitation materials that
it elects to exclude the 2025 SHC Indebtedness, then such tranche of SHC Indebtedness will be
deemed not to be Specified Indebtedness for any and all purposes of this Agreement, including
Section 6.19(c) and the definition of Retained Liabilities in Section 10.1(mmm).

          (c) At or prior to the Closing (or, with respect to any Deferred Asset, prior to the earlier
of (i) the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any,
under Section 6.18(f)), the Sun Parties shall, at the sole expense of Sun, pay, or cause to
be paid, in full and cause to be terminated (or assumed by a Person other than an Acquired Entity)
all Indebtedness of the Acquired Entities, and shall cause to be removed all Encumbrances on any of
the Acquired Assets securing such Indebtedness, other than Specified Indebtedness.

          (d) Prior to the Closing (or, with respect to any Deferred Asset, prior to the earlier of (i)
the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any, under
Section 6.18(f)), the Sun Parties shall (x) use reasonable best efforts to avoid any
violation of or default (with or without notice or lapse of time, or both) under, or any
circumstance, condition or event that would reasonably be expected to give rise to a right of
termination, cancellation or acceleration of any material obligation or to the loss of a material
benefit under any Specified Indebtedness and (y) upon obtaining Knowledge of any such violation,
default or right, shall give prompt notice thereof to Horizon OP and shall cause such
violation, default or right, and the circumstances, conditions or events giving rise to such
violation, default or right, to be cured or prevented, as applicable.

     Section 6.20 Interest Total Certificate. Promptly following the close of business on
the business day immediately preceding the Closing Date, Sun shall deliver to Horizon OP a
certificate signed on behalf of Sun by the chief executive officer or chief financial officer of
Sun, in such capacity, to the effect that (i) the number of Class B Shares set forth on such
certificate will represent the precise Class B Share Total, (ii) the number of RP Units and Class A
RP Units (each as defined in the Third Amended and Restated Limited Partnership Agreement of SLT)
set forth on such certificate will represent precisely the number of issued and outstanding RP
Units and Class A RP Units, respectively, as of immediately prior to the Closing and (iii) no
Interests in SLT (other than the RP Units and Class A RP Units identified pursuant to clause
(ii)) will exist immediately prior to the Closing. Sun shall cause (i) the Class B Share Total
to be identical

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to the amount identified as the Class B Share Total in the certificate delivered
pursuant to this Section 6.20, (ii) the number of RP Units and Class A RP Units issued and
outstanding as of immediately prior to the Closing to be identical to the number of RP Units and
Class A RP Units identified in the certificate to be delivered pursuant to this Section
6.20 and (iii) there to be no Interests in SLT (other than such RP Units and Class A RP Units)
as of immediately prior to the Closing.

     Section 6.21 Liquor Licenses. As promptly as practicable after the date of this
Agreement, Horizon OP, at its sole cost and expense, shall make all necessary applications for, and
shall thereafter diligently pursue, issuance of all licenses and approvals, if any, required under
any Laws for the continued sale or service of alcoholic beverages at each Acquired Hotel from and
after the Closing Date (including temporary permits, to the extent available) consistent with the
practices and procedures in effect as of the date hereof (collectively, “Liquor Licenses”).
In respect of each Acquired Hotel located outside of the United States and Canada, if the Law and
practices and procedures in effect as of the date of this Agreement require that the holder of a
Liquor License be a Sun Affiliate (or an individual employee thereof) which is intended to operate
such Acquired Hotel pursuant to an Operating Agreement or a Sublease Agreement, as applicable,
Horizon OP and Sun shall consult and mutually agree on the appropriate licensee, which shall make
all necessary applications for, and shall thereafter diligently pursue, issuance of such Liquor
License. Each of Sun and Horizon OP shall keep the other informed of the status of such
applications, and shall promptly respond to the other’s inquiries regarding the status of the same.
If a Liquor License has not been issued with respect to any Acquired Hotel as of the Closing Date,
then Sun shall, or shall cause the applicable Acquired Entity or Asset Seller to, or shall use
commercially reasonable effort to cause the applicable operating manager of such Acquired Hotel to,
as applicable, enter into an interim liquor agreement in all material respects in the form of
Exhibit V (the “Interim Liquor Agreement”); provided that, the Interim
Liquor Agreement for each Acquired Hotel shall be modified, prior to its execution, in a manner
reasonably satisfactory to Horizon OP and Sun, to reflect applicable Law and local custom or
practice. For the purposes of this Section 6.21, “Closing Date” means, with
respect to any Deferred Asset, the applicable closing date under Section 6.18(f). Prior
to, at and after the Closing, each of Sun and Horizon OP shall cooperate
with the other in its efforts to obtain the issuances or transfers, as applicable, of the
Liquor Licenses in connection with the transactions contemplated by this Agreement.

     Section 6.22 Sun Indenture. The Sun Parties shall take all action necessary to ensure
that (i) no Trust Assumption Event (as such term is defined in Section 11.21(b) of the Sun
Indenture) shall occur and (ii) after the Closing, neither Horizon nor any Horizon Subsidiary
(including any Acquired Entity) shall have any obligation with respect to the Sun Indenture.

     Section 6.23 Title Insurance and Surveys. Sun, at no cost or expense to Sun other
than de minimis costs and expenses, shall use commercially reasonable efforts to cooperate with
Horizon OP in Horizon OP’s efforts to induce one or more title insurance companies (and, in respect
to any Acquired Property located outside of the United States and Canada, registered legal counsel
or notaries or other customary providers of title assurances, as appropriate for the respective
jurisdiction) reasonably satisfactory to Horizon OP and its counsel, to issue a policy of title
insurance or a date down endorsement for an existing policy of title insurance, or (with respect to
any Acquired Property located outside of the United States and Canada), render a title

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opinion or
title certificate or other customary evidence of title assurance, as appropriate for the respective
jurisdiction, showing good and indefeasible title to such Acquired Property in fee simple or valid
leasehold estate or its respective equivalent, as the case may be, vested in the applicable
Acquired Entity or Directly Acquired Assets Owner as of the Closing (each such policy or date down
endorsement, or title opinion or title certificate or other customary evidence of title assurance,
as appropriate for the respective jurisdiction, a “Title Policy” and collectively the
“Title Policies”), subject only to the Permitted Title Exceptions. Prior to Closing, Sun,
at no cost or expense to Sun other than de minimis costs and expenses, shall use commercially
reasonable efforts to cooperate with Horizon OP in any reasonable effort to remove Encumbrances
from the Title Policies, provided that Sun shall not be obligated to remove any such Encumbrances
and the removal of such Encumbrances shall not be a condition to Closing. Sun, at no cost or
expense to Sun other than de minimis costs and expenses, shall, and shall cause its Subsidiaries
to, cooperate with Horizon OP if Horizon OP, in its sole and absolute discretion, determines to
request from one or more title companies (and, with respect to any Acquired Property located
outside of the United States and Canada, registered surveyors or other licensed land survey
professionals, as appropriate and customary for the respective jurisdiction) a new ALTA survey, or
with respect to any Acquired Property located outside of the United States and Canada, the
customary survey utilized in the relevant jurisdiction, or an update or recertification of any
existing survey reflecting the total area of the applicable Acquired Property, the location of all
improvements, recorded easements and encroachments, if any, located thereon and all building and
setback lines and other matters of record typically reflected on a survey with respect thereto and
such matters as are customarily included in such surveys (the “Surveys”). In connection
with the foregoing, neither Sun nor any Sun Subsidiary shall be required to execute or deliver any
affidavits, indemnities or similar documents to any title companies, surveyors or other third
parties, except that prior to or at the Closing, Sun shall execute and deliver or cause any Sun
Subsidiary to execute and deliver to the applicable title insurance companies title affidavits in
substantially the form set forth in Schedule 
6.23 (without, in any event, indemnification by Sun or any Sun Party). As a condition
to Sun’s obligation to deliver such attached affidavit, Horizon agrees that it will date down each
applicable title commitment or preliminary date-down endorsement to a date that is as close as
reasonably practicable to the Closing Date, but in any event such date down shall not be dated more
than thirty (30) days prior to the Closing Date.

     Section 6.24 Rule 145 Affiliate Agreements. Prior to the REIT Merger Effective Time,
Trust shall cause to be prepared and delivered to Horizon OP a list identifying all Persons who, as
of the Horizon Stockholders Meeting, may be deemed to be “affiliates” of Trust, in each case as
that term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the “Rule 145
Affiliates”). Each of Sun and Trust shall use commercially reasonable efforts to cause each
Person who is identified as a Rule 145 Affiliate in such list to deliver to Horizon OP at or prior
to the REIT Merger Effective Time a written agreement executed by such Person, substantially in the
form of Exhibit W.

     Section 6.25 Horizon Common Stock Transactions. Without the prior written consent of
Horizon OP, from the date hereof until the Closing, each Sun Party shall not, and shall cause their
respective Affiliates not to, directly, or indirectly, sell, transfer, pledge, or otherwise dispose
of, including through any hedging or derivative transactions or otherwise, any shares of Horizon
Common Stock or Interests therein.

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     Section 6.26 Sun Restructuring. The Sun Parties shall, and shall cause the Sun
Subsidiaries to, at or prior to the Closing, complete the Sun Restructuring Steps (and satisfy the
Restructuring Parameters) in all respects in accordance with the terms and subject to the
conditions of the Restructuring Plan. The parties to this Agreement shall amend the Restructuring
Plan in accordance with any Plan Modifications.

     Section 6.27 Employment Matters.

          (a) Employees. Sun shall, and shall cause the Sun Subsidiaries to, take all necessary
actions such that, immediately prior to the Closing, none of the Acquired Entities will employ any
employees.

          (b) Employee Plans. Sun shall, and shall cause the Sun Subsidiaries, including the
Acquired Entities, to take all necessary actions, such that immediately prior to the Closing, none
of the Acquired Entities shall sponsor, maintain, participate in, contribute to or have an
obligation to contribute to any Sun Employee Plan (other than by reason of payments to Sun pursuant
to the Operating Agreements, the Sublease Agreements or by operation of Law). Immediately prior to
the Closing, a Sun Employer shall employ the employees covered under applicable collective
bargaining agreements and shall be obligated to make any required contribution to each
Multiemployer Plan.

          (c) Employee Liabilities. Sun shall, and shall cause the Sun Subsidiaries to, take
all necessary actions such that immediately prior to the Closing, none of the Acquired Entities,
Horizon or any Horizon Subsidiary shall have any Liability, except pursuant to the terms of an
Operating Agreement, Sublease Agreement or by operation of Law with respect to any (i) Sun Employee
Plan, (ii) employee or former employee of Sun or any Sun Subsidiary, or the Acquired Business,
including any employee covered by an Operating Agreement or Sublease Agreement, as applicable, for
any amount payable as a result of employment, including any wages, incentive compensation, vacation
pay, expense reimbursement, statutory deductions or withholdings, employment termination costs or
benefits with respect to any Sun Employee Plan or (iii) collective bargaining agreement covering
any employee of Sun or any Sun Subsidiary.

          (d) Collective Bargaining Agreements. Notwithstanding any other provision in this
Agreement, prior to Closing, if required by the provisions of the collective bargaining agreements
in effect as of Closing at the Acquired Hotels identified as the “Sheraton Boston Hotel”, “Sheraton
Braintree”, “Sheraton New York Hotel & Towers” and “W New York” on Schedule 10.1(d), Sun
shall take such action as is necessary in relation to the transactions contemplated by this
Agreement under the terms of such collective bargaining agreements, including providing such notice
as may be required to the applicable collective bargaining representatives of such Acquired Hotels,
and Horizon OP or an appropriate Horizon Subsidiary shall agree to assume and be bound by and shall
cause any successor to agree to assume and be bound by such collective bargaining agreements. Sun
and Horizon OP’s respective duties and liabilities under the collective bargaining agreements shall
be as set forth in the applicable Operating Agreements or Sublease Agreements.

     Section 6.28 Sun Intellectual Property.

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          (a) Horizon OP, for itself and its Affiliates, acknowledges and agrees that, except as
provided in the Ancillary Agreements, and except for any Sun Intellectual Property that is covered
by a license agreement between Horizon OP or any of its Affiliates and Sun or any of its Affiliates
in effect immediately prior to the Closing, (x) Horizon OP and its Affiliates (including the
Acquired Entities) will have no, and will not assert any, right, title or interest in, or any
authority or license to use in any manner whatsoever, any Sun Intellectual Property as of the
Closing and (y) any right, title, interest, authority or license of any Acquired Entity to any Sun
Intellectual Property existing immediately prior to the Closing shall automatically terminate
simultaneously and effective with the Closing.

          (b) If, after the Closing Date, Horizon or Sun identifies any Sun Intellectual Property owned
of record by an Acquired Entity or included in any of the Directly Acquired Assets that as of the
Closing Date should have been but was not previously transferred by such Acquired Entity to Sun or
a Retained Subsidiary or that should have been but was not included in the Excluded Assets, then
Horizon shall, or shall cause such Acquired Entity or other Horizon Subsidiary that acquired such
Sun Intellectual Property to, transfer such Sun Intellectual Property to Sun or such Retained
Subsidiary designated by Sun as promptly as practicable and for no consideration.

          (c) Horizon OP shall cause each of the Acquired Entities to change its name, effective as of
the Closing or as promptly thereafter as is practicable (but in no event later than eight (8) weeks
after the Closing Date), and thereafter to cease to use any name or trademark of Sun or any of its
Affiliates, including the Sun Trademarks, or any confusingly similar name, mark or variation
thereof, in each case except as permitted under the License Agreements.

     Section 6.29 Certain Contribution Agreements. From and after the Closing Date, the
Horizon Parties shall, and shall cause any applicable Affiliates to, comply with such Contribution
Agreements as remain in effect.

     Section 6.30 Increased Share Amount.

          (a) The Sun Parties shall take, and shall cause their Subsidiaries to take, all actions
necessary to cause the Pre-Merger Share Amount to be less than or equal to the sum of (i) the
Maximum Share Amount and (ii) 11,764,706 shares, subject to adjustment pursuant to Section
1.10 (the sum of clauses (i) and (ii) being referred to herein as the
“Increased Share Amount”). Without limiting the generality of the foregoing, Sun shall
purchase (in a manner that would not constitute or be deemed to constitute a tender offer) such
number of Class B Shares (including as part of Paired Shares), and cause Class B Shares to be
contributed to the Trust, to the extent required to comply with the requirements of the immediately
preceding sentence. If the Pre-Merger Share Amount is greater than the Maximum Share Amount but
less than or equal to the Increased Share Amount, then the Cash Amount and the Class A Cash
Consideration shall be reduced by the amount equal to (i) $17.00 multiplied by (ii) the amount by
which the Pre-Merger Share Amount exceeds the Maximum Share Amount.

          (b) Notwithstanding anything to the contrary in this Agreement, if the Pre-Merger Share Amount
exceeds the Increased Share Amount, Horizon OP, in it sole and absolute discretion, can elect, in
whole or in part, to waive compliance with Section 6.30 and the Cash

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Amount and the Class A
Cash Consideration shall be reduced by the amount equal to (i) $17.00 multiplied by (ii) the amount
by which the Pre-Merger Share Amount exceeds the Increased Share Amount.

     Section 6.31 SLT Provisions.

          Prior to any redemption, repurchase or other transfer of any SLT Units held by Sun or any Sun
Subsidiary, Sun shall, and shall cause the Sun Subsidiaries to, use commercially reasonable efforts
to (i) obtain all consents, authorizations and approvals from any holders of Interests in SLT
(including those set forth on Section 3.24 of the Sun Disclosure Letter and contemplated by
Section 3.24 hereof) that are required in connection with the consummation of the
transactions contemplated by this Agreement, the Ancillary Agreements and the Horizon Transactions,
including the SLT Merger, and (ii) cause to be made all amendments with respect to the SLT LP
Agreement, the Exchange Rights Agreements (as defined in the SLT LP Agreement) and any other
Contracts with respect to SLT Units or SLC Units applicable to Sun or any Sun Subsidiary or their
respective Assets (collectively, the “SLT Agreements”) in order to reflect such
transactions, as set forth on Schedule 6.31. Subject to the terms and conditions herein
provided, each of the parties hereto shall cooperate in good faith with respect to all consents,
approvals and authorizations to be obtained and all other actions to be taken pursuant to this
Section 6.31. Prior to the Closing, notwithstanding any Plan Modification, Sun shall, and
shall cause the Sun Subsidiaries to, take all actions necessary to effect the redemption or
repurchase by SLT in full of all limited partnership interests in SLT held by Sun or any Sun
Subsidiary.

     Section 6.32 Recapture Provisons.

          (a) For purposes of this Section 6.32:

     (i) “Hotel EBITDA” means, with respect to any Acquired Hotel (other
than the Sheraton Royal Denarau Resort), for any specified period, EBITDA
calculated in a manner consistent with the accounting principles and practices
applied by Sun in the preparation of its financial statements and adjusted to
reflect (i) the fees under the License Agreements and the Operating Agreements and
(ii) European regional costs historically charged to the related Acquired Hotels
that will no longer be charged to such Acquired Hotels after the Closing Date.

     (ii) “Additional EBITDA Amount” means the annualized net amount of
any increase in the aggregate amount of Hotel EBITDA of the Acquired Hotels (other
than the Sheraton Royal Denarau Resort) as a result of any additional compensation
to be paid to (or any reduction in the current allocation of costs and expenses
currently paid by) such Acquired Hotels under the License Agreements and Operating
Agreements relating to certain uses or activities currently engaged in by Sun and
its Affiliates at certain of such Acquired Hotels, which uses and activities are
more specifically identified as the “Affiliate Transactions” on Section 3.10 of
the Sun Disclosure Letter, to the extent such uses or activities (i) do not
currently reflect payment of arm’s

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length compensation, and/or (ii) are for
corporate, regional or other purposes not for the direct benefit of the subject
Acquired Hotels, and/or (iii) do not currently reflect appropriate allocations of
costs and expenses on a fair and consistent basis among all hotels or other
parties benefiting from such use or activities. The parties hereto shall use
their reasonable efforts to agree on appropriate amounts of additional
compensation or allocations of costs and expenses, as the case may be, for such
disclosed Affiliate Transactions no later than December 15, 2005.

     (iii) “Target EBITDA Amount” means the sum of the amounts set forth
in the column titled “Target EBITDA Amount” opposite the name of each Acquired
Hotel (other than the Sheraton Royal Denarau Resort) in Schedule 6.32.

     (iv) “Revised EBITDA Amount” means the sum of the amounts set forth
in the column titled “Revised EBITDA Amount” opposite the name of each Acquired
Hotel (other than the Sheraton Royal Denarau Resort) in Schedule 6.32.

          (b) Sun shall prepare in good faith and deliver to Horizon OP no later than January 31, 2006
(but in any event at least ten (10) business days prior to the Closing Date), a statement, based on
the Operating Reports (as such term is defined in Article 10.2 of the form of Operating Agreement),
that shall set forth Sun’s good faith calculation of the amount of the actual Hotel EBITDA for
Operating Year 2005 for all Acquired Hotels (other than the Sheraton Royal Denarau Resort) (in the
aggregate and on an individual hotel-by-hotel basis) (as so estimated, the “Estimated EBITDA
Amount”). If Horizon OP notifies Sun within fifteen (15) business days after receiving such
statement, but in any event prior to the Closing Date, that it disagrees with the Estimated EBITDA
Amount, the parties hereto shall cooperate in good faith to reach an agreement as to the Estimated
EBITDA Amount and the Estimated EBITDA Amount will be revised to reflect such agreement, if any.
In the event that the sum of (i) the Estimated EBITDA Amount (or, if known, the Actual EBITDA
Amount) and (ii) the Additional EBITDA Amount is less than the Target EBITDA Amount, the aggregate
amount of all Transfer Taxes and Transaction Costs up to the $50 million payable by Horizon OP and
the Horizon Subsidiaries, in the aggregate, pursuant to Section 8.3 at Closing shall be
decreased (the “Reduction”) in an amount (but not by a number less than zero) equal to (I)
the lesser of (x) the Target EBITDA Amount less the sum of the Estimated EBITDA Amount (or, if
known, the Actual EBITDA Amount) plus the Additional EBITDA Amount and (y) the Target EBITDA Amount
less the sum of the Revised EBITDA Amount plus the Additional EBITDA Amount multiplied by (II)
12.8.

          (c) In the event one or more Acquired Hotels or Acquired Entities is excluded from the
transactions contemplated by this Agreement and the Ancillary Agreements pursuant to Section
6.18, the calculations set forth in Section 6.32(b) shall be revised as follows: (i)
the Estimated EBITDA Amount (or, if known, the Actual EBITDA Amount) associated with each such
excluded Acquired Hotel or Acquired Entity shall be disregarded; (ii) the Target EBITDA Amount
shall be reduced by the amount set forth in the column titled “Target EBITDA Amount” opposite the
name of such Acquired Hotel in Schedule 6.32; and (iii) the Revised EBITDA

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Amount shall be
reduced by the amount set forth in the column titled “Revised EBITDA Amount” opposite the name of
such Acquired Hotel in Schedule 6.32; provided, however, that if any such
Acquired Hotel or Acquired Entity is later acquired in accordance with this Agreement, the
adjustments calculated above shall be promptly revised and settled as if such acquisition had taken
place on the Closing Date.

     (d) The procedure set forth in this Section 6.32(d) shall be available upon request of
either party made within 15 business days after the delivery by Horizon OP of a notice of
disagreement pursuant to Section 6.32(b). As promptly as practicable following the
delivery of the 2005 Audited Financial Statements but in no event later than thirty (30) days
thereafter, the parties shall use the supporting schedules thereto to calculate the amount of the
actual Hotel EBITDA for Operating Year 2005 for all Acquired Hotels (other than the Sheraton Royal
Denarau Resort) (in the aggregate and on an individual hotel-by-hotel basis) (the “Actual
EBITDA Amount”). In the event the Closing has
already occurred, no more than five (5) business days after the determination of the Actual
EBITDA Amount in accordance with this Section 6.32(d), (i) if the Actual EBITDA Amount
exceeds the Estimated EBITDA Amount, Horizon OP shall deliver to Sun, by wire transfer of
immediately available funds, a U.S. dollar amount equal to such difference (but no more than the
lesser of (x) the amount of the Reduction and (y) the amount of the additional Transfer Taxes and
Transaction Costs actually paid by Sun as a consequence of the application of the Reduction) and
(ii) if the Estimated EBITDA Amount exceeds the Actual EBITDA Amount, Sun shall deliver to Horizon
OP, by wire transfer of immediately available funds, a U.S. dollar amount equal to such difference
(up to the amount of Transfer Taxes and Transaction Costs that would not have been paid by Horizon
had the Actual EBITDA Amount been applied instead of the Estimated EBITDA Amount), together with,
in each case of clause (i) and (ii), interest on such difference accrued at a
variable rate equal to the rate of interest from time to time announced publicly by Citibank, N.A.,
at its principal office in New York, New York, as its annual base rate, calculated on the basis of
the actual number of days elapsed over 365, from the Closing Date to the date such amount is
payable pursuant to this Section 6.32(d).

ARTICLE 7.

CONDITIONS

     Section 7.1 Conditions to Each Party’s Obligation to Effect the Closing Transactions.
The obligations of each party to consummate the Closing Transactions shall be subject to the
fulfillment at or prior to the Closing of the following conditions:

          (a) Horizon Stockholder Approval. The Horizon Stockholder Approval shall have been
obtained.

          (b) Required Antitrust Approvals. Any Required Antitrust Approvals shall have been
made or obtained, as applicable, and any required waiting periods in connection with the Required
Antitrust Approvals shall have expired or been terminated.

          (c) Listing of Shares. The NYSE shall have approved for listing the Horizon Common
Stock to be issued in the Closing Transactions, subject to official notice of issuance.

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          (d) Form S-4. The Form S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order suspending its effectiveness issued by the SEC, and no
proceedings seeking such a stop order shall have been initiated or, to the Knowledge of Horizon,
threatened by the SEC.

          (e) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order shall have been issued by any court of competent
jurisdiction which is then in effect making illegal or otherwise preventing, in material part, the
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements or the
Horizon Transactions. There shall not be any action taken, or any Law enacted, entered, enforced
or deemed applicable to the transactions contemplated by this Agreement and the Ancillary
Agreements or the Horizon Transactions, by any Governmental Entity of competent jurisdiction that
makes, in material part, the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements or the Horizon
Transactions illegal or prevents their consummation.

          (f) REIT Articles of Merger. The REIT Articles of Merger shall have been accepted for
record by the Department.

     Section 7.2 Conditions to Obligations of Horizon and Horizon OP. The obligations of
the Horizon Parties to consummate the Closing Transactions are further subject to the following
conditions, any one or more of which may be waived by Horizon OP:

          (a) Representations and Warranties. The representations and warranties of Sun and
Trust set forth in this Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality, Sun Material Adverse Effect, Sun Material Impairment, or specified
numerical threshold, shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent that such
representations and warranties are expressly limited by their terms to another date, in which case
such representations and warranties shall be true and correct as of such other date), except where
the failure of such representations and warranties to be true and correct would not, individually
or in the aggregate, reasonably be expected to (A) have a Sun Material Adverse Effect or (B) result
in a material default by Sun or any Sun Subsidiary under any of the Operating Agreements, License
Agreements or Sublease Agreements; provided, however, that each of the
representations and warranties of Sun and Trust set forth in Sections 3.1(a) (Organization,
Standing and Power) (with respect to Sun, Trust, SHC and SLT), 3.4(a) (Authority) (with
respect to Sun, Trust, SHC and SLT), 3.5(b), (c), (i) and (j)
(Financial Statements) (other than with respect to the line items set forth on Schedule
7.2(a)) and 3.23 (State Takeover Statutes) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date (in each case, except to the
extent that such representations and warranties are expressly limited by their terms to another
date, in which case such representations and warranties shall be true and correct as of such date).

          (b) Performance of Obligations of the Sun Parties. The Sun Parties shall have
performed in all material respects (and, with respect to Section 6.30, in all respects) all
obligations required to be performed by them under this Agreement at or prior to the Closing (other
than any obligations of Sun and Trust under Section 6.7).

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          (c) Material Adverse Effect. Since the date of this Agreement, there shall not be or
have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Sun Material
Adverse Effect.

          (d) Tax Opinions Relating to REIT Status and Partnership Status. Horizon OP shall
have received an opinion of Sidley Austin Brown & Wood LLP or other counsel to Sun reasonably
satisfactory to Horizon OP, dated as of the Closing Date and in form and substance reasonably
satisfactory to Horizon OP, to the effect that (i) commencing with its taxable year ended December
31, 1998, and through the REIT Merger Effective Time, W&S Seattle Corp.
was organized and has operated in conformity with the requirements for qualification as a REIT
under the Code, (ii) commencing with its taxable year ended December 31, 1998, and through the REIT
Merger Effective Time, W&S Denver Corp. was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code and (iii) SLT has been since the date (for
federal income tax purposes) it was formed, and continues to be, treated for federal income tax
purposes as a partnership and not as a corporation or publicly traded partnership or association
taxable as a corporation (in the case of each of clauses (i), (ii) and (iii), with
customary exceptions, assumptions and qualifications and based upon customary representations and
with such additional exceptions, assumptions, qualifications and representations as are set forth
in writing and are reasonably satisfactory to Horizon OP).

          (e) Excluded Assets; No Deferral Triggers.

     (i) With respect to each Excluded Asset that Horizon OP is required to hold
pursuant to Section 6.8(e), (A) Horizon OP shall not have determined, in
its good faith judgment, after consultation with its outside tax counsel, that
such Excluded Asset or the income generated by such Excluded Asset could
reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp.,
W&S Denver Corp., Horizon, SHC or any Horizon Foreign Currency REIT would fail to
qualify as a REIT under the Code or (B) the assignment, license, sublicense,
lease, sublease, conveyance or transfer from the Acquired Entity that holds such
Excluded Asset to a taxable REIT subsidiary of Horizon and the holding of such
Excluded Asset by such taxable REIT subsidiary (x) would not require a consent or
approval which has not been obtained and (y) in the good faith judgment of Horizon
OP, after consultation with its outside tax counsel, would not reasonably be
expected to cause Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any
Horizon Foreign Currency REIT to qualify as a REIT under the Code.

     (ii) The Acquired Hotels with respect to which (x) one or more Horizon
Deferral Triggers shall have occurred (including the Acquired Hotels owned by
Acquired Entities with respect to which one or more Horizon Deferral Triggers
shall have occurred) and not have been cured or (y) Sun has made an effective
election to exclude pursuant to Section 6.18, shall not, in either case,
include: (A) any one Acquired Hotel set forth on Schedule 7.2(e)(1); (B)
any two or more of the Acquired Hotels set forth on Schedule 7.2(e)(2); or
(C) Acquired Hotels (other than the Deferred

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International Hotels deferred
pursuant to Section 6.18(a)(ix)) for which the sum of the applicable
Acquired Hotel Agreed Amounts exceeds $1,000,000,000.

          (f) E&P Study. Horizon OP shall have received a copy of a study prepared for Sun by a
Qualifying Accounting Firm, dated no later than the Closing Date, to the effect that, (1)
immediately after the Closing and taking into account all of the transactions contemplated by this
Agreement to be consummated through the Closing, no Acquired Entity (other than Trust) that is
domestic and is treated as a corporation for United States federal income tax purposes will have
any C Corporation Earnings and Profits and (2) immediately after the Closing and taking into
account all of the transactions contemplated by this Agreement to be consummated through
the Closing, the aggregate amount of C Corporation Earnings and Profits of the Acquired
Entities that are foreign and are treated as corporations for United States federal income tax
purposes will not exceed $50,000,000 (taking into account only the C Corporation Earnings and
Profits of such entities that have positive C Corporation Earnings and Profits); provided
that (i) prior to the issuance of such study, each of Sun and Horizon OP shall have furnished the
applicable Qualifying Accounting Firm with an access letter substantially in the form of the
document previously reviewed by Sun or Horizon OP, respectively, and (ii) for purposes of such
study, the applicable Qualifying Accounting Firm shall be permitted to utilize such other
assumptions and other methods as are customarily utilized in studies of its type.

          (g) Horizon Transactions.

     (i) The Horizon Transactions (other than the Post-Closing Horizon
Transactions) shall have been completed on the Closing Date; provided
that, the Horizon Parties shall have used their reasonable best efforts to
complete the Horizon Transactions (other than the Post-Closing Horizon
Transactions).

     (ii) No material consent, approval, order or authorization of, or
registration, declaration or filing (other than any applicable certificates or
articles of merger or similar documents that are effective immediately upon filing
or acceptance for record) with, any Governmental Entity or other Person shall be
required for the Post-Closing Horizon Transactions to be effected.

          (h) No Assumption of Sun Indenture. There shall not have occurred any Trust
Assumption Event (as such term is defined in Section 11.21(b) of the Sun Indenture) and there shall
not be or have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, would reasonably be expected to result in a Trust Assumption
Event occurring.

          (i) Delivery of Financial Statements. All financial statements and certificates
required to be delivered by Sun pursuant to Section 6.7 (other than Section 6.7(c)
and, if the Closing Date is prior to February 28, 2006, Section 6.7(d) and, if the Closing
Date is prior to March 30, 2006, Section 6.7(e)) of this Agreement shall have been
delivered prior to the Closing Date.

          (j) Restructuring Parameters. The Restructuring Parameters shall have been satisfied.

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          (k) Assumption of Specified Indebtedness. All lenders, trustees, agents and other
applicable third parties with respect to any Specified Indebtedness shall have provided all
consents, waivers, approvals or other documents required for such Specified Indebtedness to be
assumed, or remain in place at the applicable Acquired Entity, in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements and the Horizon Transactions, in each
case without resulting in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or acceleration of any material
obligation or to the loss of a material benefit under any material Specified Indebtedness;
provided that, this condition shall be deemed satisfied if the failure to obtain such
consents, waivers, approvals or other documents resulted from the failure of any Horizon Party
to fulfill its obligations under this Agreement.

          (l) Officer’s Certificate. Horizon and Horizon OP shall have received a certificate
of the chief executive officer or chief financial officer of each of Sun and Trust, in such
capacity, certifying that the conditions set forth in clauses (a), (b),
(c), (e), (h), (j), (k) and (m) of this Section
7.2 have been satisfied.

          (m) Ancillary Agreements. There shall not be or have been any state of facts, change,
development, effect, condition or occurrence that, individually or in the aggregate, with notice or
passage of time or both, would reasonably be expected to result in a material default by Sun or any
of its Subsidiaries under any of the Operating Agreements, License Agreements or Sublease
Agreements.

          (n) Share Value. The Share Value shall be not less than $13.60.

     Section 7.3 Conditions to Obligations of Sun and Trust. The obligations of Sun and
Trust to consummate the Closing Transactions are further subject to the following conditions, any
one or more of which may be waived by Sun and Trust:

          (a) Representations and Warranties. The representations and warranties of Horizon and
Horizon OP set forth in this Agreement, disregarding all qualifications and exceptions contained
therein relating to materiality, Horizon Material Adverse Effect or specified numerical threshold,
shall be true and correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that such representations and warranties
are expressly limited by their terms to another date, in which case such representations and
warranties shall be true and correct as of such other date), except where the failure of such
representations and warranties to be true and correct would not, individually or in the aggregate,
reasonably be expected to (A) have a Horizon Material Adverse Effect or (B) result in a material
default by Horizon or any Horizon Subsidiary under any of the Operating Agreements, License
Agreements or Sublease Agreements; provided, however, that each of the
representations and warranties of Horizon and Horizon OP set forth in Sections 4.1(a)
(Organization, Standing and Power) and 4.5(a) (Authority) (with respect to Horizon and
Horizon OP) shall be true and correct in all material respects as of the date of this Agreement and
as of the Closing Date (in each case, except to the extent that such representations and warranties
are expressly limited by their terms to another date, in which case such representations and
warranties shall be true and correct as of such date).

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          (b) Performance of Obligations of the Horizon Parties. The Horizon Parties shall have
performed in all material respects all obligations required to be performed by them under this
Agreement at or prior to the Closing.

          (c) Material Adverse Effect. Since the date of this Agreement, there shall not be or
have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Horizon
Material Adverse Effect.

          (d) Tax Opinion Relating to REIT Status. Sun shall have received the opinion of Hogan
& Hartson LLP or other counsel to Horizon reasonably satisfactory to Sun, dated as of the Closing
Date, in form and substance reasonably satisfactory to Sun, that, commencing with its taxable year
ended December 31, 1999, Horizon was organized and has operated in conformity with the requirements
for qualification as a REIT under the Code and that, after giving effect to the REIT Merger,
Horizon’s proposed method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code (with customary exceptions, assumptions and
qualifications and based upon customary representations and with such additional exceptions,
assumptions, qualifications and representations as are set forth in writing and are reasonably
satisfactory to Sun).

          (e) Officer’s Certificate. Sun shall have received a certificate of the chief
executive officer, chief financial officer or chief operating officer of Horizon, in such capacity,
certifying that the conditions set forth in clauses (a), (b), and (c) of
this Section 7.3 have been satisfied.

          (f) No Deferral Triggers. The Acquired Hotels or Acquired Entities with respect to
which (x) one or more Sun Deferral Triggers shall have occurred (including the Acquired Hotels
owned by Acquired Entities with respect to which any Sun Deferral Trigger shall have occurred) and
not have been cured or (y) Horizon OP has made an effective election to exclude pursuant to
Section 6.18 shall not include (i) SHC, (ii) any one of the Acquired Hotels identified as
the “Sheraton New York Hotel & Towers”, “Sheraton Boston Hotel” and “Sheraton San Diego Hotel &
Marina” on Schedule 10.1(d), (iii) any five (5) or more of the Acquired Hotels set forth on
Schedule 7.3(f) or (iv) Acquired Hotels owned, directly or indirectly, by Trust for which
the sum of the applicable Acquired Hotel Agreed Amounts exceeds $400,000,000, in the case of
clause (iii) or (iv) other than the Deferred International Hotels deferred pursuant
to Section 6.18(a)(ix).

          (g) Substantial Detriment. Since the date of this Agreement, there shall not be
enacted, promulgated, issued or proposed any Tax Law (or any amendment, modification, expiration or
written interpretation of any Tax Law) by any Governmental Entity with respect to the consolidated
return rules as currently set forth in Section 1502 of the Code and the Treasury Regulations
promulgated thereunder, or with respect to other Treasury Regulations applicable to one or more
members of a Consolidated Group, which, individually or in the aggregate, has resulted in, or would
reasonably be expected to result in, a material risk of Sun incurring an economic cost of more than
$200,000,000 that Sun did not expect, as of the time this Agreement was signed, to bear from the
transactions contemplated by this Agreement; provided that, prior to any termination of
this Agreement arising from the failure of the condition set forth in this

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Section 7.3(g)
to be satisfied: (A) Sun shall have delivered to Horizon OP, at least twenty (20) business days
prior to such termination (or, if there are no more than twenty-one (21) business days to a
potential Closing Date at the time of the Subject Change (as defined below), then no later than the
later of (I) five (5) business days prior to such termination and (II) the day following the date
of the Subject Change), (i) a written notice identifying the applicable enactment, promulgation,
issuance, proposal, amendment, modification, expiration or interpretation (the “Subject
Change”), and (ii) a copy of a written letter furnished by a Qualifying Accounting Firm to Sun
to the effect that the Subject Change meets the standard set forth in this Section 7.3(g)
(applied without taking into account
this proviso to Section 7.3(g)); and (B) each of the Sun Parties and the Horizon
Parties shall have used commercially reasonable efforts, for at least ten (10) business days (or
such fewer number of days as is reasonable, in view of the number of days remaining, at the time of
the Subject Change, to a potential Closing Date) following Sun’s provision of the notice described
in Section 7.3(g)(A)(i), to restructure the transactions contemplated by this Agreement in
a manner that (x) is mutually satisfactory to the Sun Parties and the Horizon Parties, and (y)
results in the restructured transactions not meeting the standard set forth in this Section
7.3(g) (applied without taking into account this proviso to Section 7.3(g)).

          (h) Ancillary Agreements. There shall not be or have been any state of facts, change,
development, effect, condition or occurrence that, individually or in the aggregate, with notice or
the passage of time or both, would reasonably be expected to result in a material default by
Horizon or any of its Subsidiaries under any of the Operating Agreements, License Agreements or
Sublease Agreements.

          (i) Share Value. The Share Value shall be not less than $13.60.

ARTICLE 8.

CERTAIN ADJUSTMENTS AND EXPENSES.

     Section 8.1 Sun Capital Budget. As provided in Section 8.4, (i) Horizon OP or
one or more Horizon Subsidiaries shall receive a credit for the amount, if any, by which (x) the
sum (the “Remaining Capital Budget Amount”) of (A) the amount budgeted in the Sun Capital
Budget for 2005 for capital expenditure projects with respect to the Acquired Hotels that have not
been started prior to the Closing Date (the “Not Commenced Capital Budget Amount”) and (B)
the amount equal to five percent (5%) of the revenue of the Acquired Business during the period, if
any, beginning January 1, 2006 and ending on the Closing Date, calculated in accordance with the
Closing Statement Principles exceeds (y) the sum (the “Qualified Capital Expenditure
Amount”) of the aggregate dollar amount of capital expenditures made by Sun with respect to the
Acquired Hotels in accordance with the Sun Capital Budget for 2006 (other than with respect to
projects contemplated by the Sun Capital Budget for 2005) at any time prior to the Apportionment
Time and (ii) Sun shall receive a credit for the amount, if any, by which the Qualified Capital
Expenditure Amount exceeds the Remaining Capital Budget Amount. Sun shall complete each of the
projects contemplated to be completed by the Sun Capital Budget for 2005 (other than those 2005
capital expenditure projects with respect to the Acquired Hotels that have not been started prior
to the Closing Date) at its own expense prior to or as promptly as commercially reasonable after
the Closing (notwithstanding anything to the contrary in this Agreement or any Ancillary
Agreement).

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     Section 8.2 Casualty and Condemnation.

          (a) Casualty Events. If any portion of an Acquired Hotel is damaged by fire or other
casualty prior to the Closing (with respect to such Acquired Hotel, a “casualty event”)
and such Acquired Hotel shall not be deemed an Excluded Asset pursuant to Section
6.18, then (i) at the Closing or, in the case of a Deferred Asset, at the applicable closing
date under Section 6.18, (A) the applicable Acquired Entity or Directly Acquired Assets
Owner shall receive the aggregate insurance proceeds then collected or received by Sun and the Sun
Subsidiaries with respect to such casualty event, less the amount of the actual and reasonable
unreimbursed, out-of-pocket expenses incurred by Sun and the Sun Subsidiaries in connection with
collecting such proceeds and making any repairs to such Acquired Hotel occasioned by such casualty
event pursuant to any Contract approved by Horizon OP, such approval not to be unreasonably
withheld, conditioned or delayed (except no such approval shall be necessary to repair or restore
any emergency or hazardous condition) or as required by any applicable third party Contract in
existence prior to the date of such casualty event (“net casualty insurance proceeds”), (B) Sun
shall, and shall cause the applicable Sun Subsidiaries to, assign its rights to all then unpaid net
casualty insurance proceeds with respect to such casualty event to the applicable Acquired Entity
or Directly Acquired Assets Owner and (C) the applicable Acquired Entity or Directly Acquired
Assets Owner shall receive a credit for the sum of (1) the amount of any deductible under
applicable insurance policies and (2) the amount of any casualty that is uninsured or by which the
cost of repair exceeds the coverage limitations of the applicable insurance policies;
provided that, such credit does not exceed the amount by which the Acquired Hotel Agreed
Amount for such Acquired Hotel exceeds the net casualty insurance proceeds received with respect to
such casualty event and (ii) Sun and the other Sun Parties shall not adjust or settle any insurance
claim with respect to such casualty event without the prior written consent of Horizon OP, which
consent shall not be unreasonably withheld, conditioned or delayed, and Horizon OP shall be
entitled to participate in all negotiations with third parties in respect of any such adjustment or
settlement.

          (b) Condemnation Events. If condemnation proceedings are commenced against any
portion of an Acquired Hotel prior to the Closing (with respect to such Acquired Hotel, a
“condemnation event”) and such Acquired Hotel shall not be deemed an Excluded Asset pursuant to
Section 6.18, then (i) at the Closing or, in the case of a Deferred Asset, at the closing
date under Section 6.18, (A) the applicable Acquired Entity or Directly Acquired Assets
Owner shall receive the proceeds of the condemnation award then collected or received by Sun and
the Sun Subsidiaries with respect to such condemnation event, less the amount of the actual and
reasonable unreimbursed, out-of-pocket expenses incurred by Sun and the Sun Subsidiaries in
connection with any appeal of such award (it being understood that no Sun Party shall be under any
obligation to appeal any such award) and (B) Sun shall, and shall cause the applicable Sun
Subsidiaries to, assign its rights to all then unpaid condemnation proceeds with respect to such
condemnation event to the applicable Acquired Entity or Directly Acquired Assets Owner (or such
Acquired Entity or Directly Acquired Assets Owner shall become the substitute party thereto, if
applicable) and (ii) Sun and the Sun Parties shall not, and shall not permit any Sun Subsidiary to,
adjust or settle any condemnation award with respect to such condemnation event without the prior
written consent of Horizon OP, which consent shall not be unreasonably withheld, conditioned or
delayed, and Horizon OP shall be entitled to participate in all negotiations with third parties in
respect of any such adjustment or settlement. Notwithstanding

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anything to the contrary contained
in this Agreement, the foregoing shall not require any Sun Party to pay over to any Horizon Party
any funds in excess of proceeds actually received by such Sun Party in respect of any condemnation
event.

     Section 8.3 Transaction Expenses.

          (a) Subject to Section 8.3(b) and any other express allocation of expenses or other
Losses in this Agreement, the Horizon Parties and the Sun Parties shall each pay their own legal,
investment banking and other fees and expenses (including expenses of their respective
Subsidiaries) incurred in connection with the transactions contemplated by this Agreement and the
Ancillary Agreements or the Horizon Transactions, whether or not any such transactions are
consummated.

          (b) Each party shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added stock transfer and stamp taxes, stamp duties, any transfer,
recording, registration and other fees, charges, premiums and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement (excluding the Ancillary
Agreements) and the Local Purchase Agreements or the Horizon Transactions (together with any
related interests, penalties or additions to tax, “Transfer Taxes”). At and after the
Closing, notwithstanding the language of any Local Purchase Agreement stating that a particular
party thereto is to pay any amounts otherwise addressed by this Section 8.3(b), Horizon OP
and Sun each shall, or shall cause their respective Subsidiaries to, pay or cause to be paid an
amount equal to 50% of the aggregate amount of (A) Transfer Taxes (which term shall not in any
event be construed to include for these purposes any Tax imposed under the Code or any other income
Tax) and (B) (i) any income taxes payable with respect to the transfer of Westin Indianapolis,
Westin Cincinnati and Westin South Coast Plaza in the transactions contemplated by this Agreement
or the Horizon Transactions (including pursuant to Section 1374 of the Code and the Treasury
Regulations promulgated under Section 337 of the Code), (ii) any Losses incurred in connection with
obtaining consents, waivers or amendments from any Person in connection with the transactions
contemplated by this Agreement and the Local Purchase Agreements or the Horizon Transactions,
including the net present value (using a 10% discount rate) of any future economic impact resulting
in connection with such consents, waivers or amendments (all Losses described in this clause
(ii), “Consent Costs”), (iii) any Losses incurred in connection with severance or other
similar payment obligations to employees in connection with the direct or indirect purchase by
Horizon OP or any Horizon Subsidiary of any Acquired Hotels not located in the United States or the
related Horizon Transactions, (iv) mortgage transfer costs or mortgage transfer expenses in
connection with the transactions contemplated by this Agreement and the Local Purchase Agreements
or the Horizon Transactions, (v) costs associated with the defeasance of Sun’s CMBS Indebtedness,
and (vi) any Losses (other than (A) the amount of any associated Adjusted Indebtedness included in
the Final Adjustment and (B) any Losses expressly allocated to Sun or Horizon OP pursuant to
Section 6.19) incurred in connection with respect (x) the 7 3/8% debentures due November
15, 2015 issued by SHC (the “2015 SHC Indebtedness”) or (y) the 7 3/4% debentures due
November 15, 2025 issued by SHC (the “2025 SHC Indebtedness” and, together with the 2015
SHC Indebtedness, the “SHC Indebtedness”), in each case in connection with the transactions
contemplated by this Agreement or the Horizon Transactions (the items described in clause
(B)

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collectively, “Transaction Costs”); provided, however, that in no
event shall the aggregate amount of all Transfer Taxes and Transaction Costs payable by Horizon OP
and the Horizon Subsidiaries, in the aggregate, pursuant to this Section 8.3 be greater
than $50 million (other than with respect to any Transaction Costs (included in clause
(iii) above) in connection with the Sublease Agreements arising from the works council review
with respect to the Acquired Hotels in Italy and Spain, which Transaction Costs shall not be
subject to such limitation). At and after the Closing, Sun shall be responsible for all Transfer
Taxes and Transaction Costs not payable by Horizon OP and the Horizon Subsidiaries pursuant to this
Section 8.3.

          (c) At and after the Closing, Sun shall, or shall cause its Subsidiaries to, pay the aggregate
amount of the costs of any non-imputation endorsements to the Title Policies to be issued to
Horizon OP (or its Subsidiaries) by one or more title insurance companies at Closing;
provided that, Sun shall not be obligated to pay in excess of $25,000 in the aggregate with
respect thereto. Horizon OP shall, or shall cause its Subsidiaries to, pay or cause to be paid an
amount equal to (w) the aggregate amount of the premium for the Title Policies to be issued to
Horizon OP (or its Subsidiaries) by one or more title insurance companies at Closing, (x) the
aggregate amount of the costs of any endorsements, other than non-imputation endorsements, thereto,
(y) the aggregate amount of the cost of the Surveys and (z) the fees for recording the deed
conveying each Acquired Hotel to Horizon OP or its applicable Subsidiaries. Notwithstanding the
foregoing, with respect to the date-down endorsements to the Existing Title Policies with Stewart
Title Guaranty Company (“Stewart”) and LandAmerica (“LandAmerica”) title insurance
companies which Horizon OP contemplates receiving at Closing for the Acquired Hotels identified on
Schedule 10.1(d) of the Merger Agreement as the “Sheraton San Diego Hotel & Marina”
(Stewart), the “Sheraton Tucson Hotel & Suites” (LandAmerica), the “Sheraton Stamford Hotel”
(LandAmerica), the “Capital Hill Suites DC” (LandAmerica) and the “Sheraton Providence Airport
Hotel” (LandAmerica), to the extent Sun is unable to obtain the agreement of Stewart or LandAmerica
to a form of title affidavit acceptable to Sun and otherwise sufficient for such title companies to
provide Horizon OP with a non-imputation endorsement in connection with the foregoing date-down
endorsements, then, to the extent Horizon OP obtains new title insurance policies (in lieu of such
date-down endorsements), Sun shall at and after the Closing pay an amount toward the cost of such
new title policies equal to the difference between (i) the actual premium cost of the basic title
coverage (without endorsements) for the new title policies required and (ii) the premium cost that
Horizon OP would otherwise have paid for the basic title coverage of the date-down endorsements
(without endorsements), such amount not to the exceed, in the aggregate, the sum of $250,000. For
purposes of this Agreement, the costs and fees set forth in this Section 8.3(c) shall not
be included in the Transaction Costs.

     Section 8.4 Closing Working Capital; Adjusted Indebtedness; Determination of
Adjustments.

          (a) The aggregate purchase price for the Closing Transactions was determined on the assumption
that, the sum of (i) the Working Capital of the Acquired Business at the Apportionment Time
determined in accordance with Schedule 8.4(a) (the “Closing Working Capital”), (ii)
the Adjusted Indebtedness at the Appointment Time, (iii) the Remaining Capital Budget Amount less
the Qualified Capital Expenditure Amount (such difference, the “Required Capital Expenditure
Amount”) and (iv) the aggregate credits to the Acquired Entities and Directly Acquired Assets
Owners under Section 8.2 (the “Casualty Adjustment Amount”) would

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be negative $704
million. In the event that the Closing Working Capital, less the Adjusted Indebtedness, less the
Required Capital Expenditure Amount (such net amount, the “Closing Net Adjustment Amount”),
is greater than negative $704 million (the “Stated Net Adjustment Amount”) (and for the
avoidance of doubt a Closing Net Adjustment Amount of negative $1.00 is greater than a Closing Net
Adjustment Amount of negative $2.00), the Cash Amount shall be increased by the difference between
the Closing Net Adjustment Amount and the Stated Net Adjustment Amount, and in the event that the
Closing Net Adjustment Amount is less than the Stated Net Adjustment Amount (and for the avoidance
of doubt a Closing Net Adjustment Amount of negative $2.00 is less than a Closing Net Adjustment
Amount of negative $1.00), the Cash Amount shall be decreased by the difference between the Closing
Net Adjustment Amount and the Stated Net Adjustment Amount.

          (b) At least ten (10) business days prior to the Closing Date, Sun shall prepare in good faith
and deliver to Horizon OP a statement, together with reasonable documentation supporting such
estimated calculation (collectively, the “Estimated Closing Statement”), that shall set
forth Sun’s good faith calculation of (i) the Closing Working Capital (in the aggregate and on an
individual Hotel-by-Hotel basis), (ii) the Adjusted Indebtedness (in the aggregate and on an
individual Hotel-by-Hotel basis), (iii) the Required Capital Expenditure Amount (in the aggregate
and on an individual Hotel-by-Hotel basis), (iv) the Casualty Adjustment Amount (in the aggregate
and on an individual Hotel-by-Hotel basis) and (v) the Closing Net Adjustment Amount (as so
estimated, the “Estimated Adjustment Amount”). The Estimated Closing Statement shall be
accompanied by a written certification of the controller of Sun (solely in his capacity as an
officer of Sun) to the effect that the Estimated Closing Statement and the calculation of the
Estimated Adjustment Amount have been prepared in good faith in accordance with the Closing
Statement Principles and this Article 8. If Horizon OP notifies Sun, at least three (3)
business days prior to the Closing Date, that it disagrees with the Estimated Adjustment Amount,
the parties hereto shall cooperate in good faith to reach an agreement as to the Estimated
Adjustment Amount and the amount of the Estimated Adjustment Amount will be revised to reflect any
such agreement, if any. The Cash Amount payable by Horizon OP at Closing shall be (x) increased in
the amount by which the Estimated Adjustment Amount exceeds the Stated Net Adjustment Amount or (y)
decreased in the amount by which the Stated Net Adjustment Amount exceeds the Estimated Adjustment
Amount, as applicable.

          (c) As promptly as practicable following the Closing Date but in no event later than ninety
(90) days thereafter, Sun shall deliver to Horizon OP a statement, together with reasonable
documentation supporting such calculation (collectively, the “Preliminary Closing
Statement”), that shall set forth Sun’s calculation of (i) the Closing Working Capital (in the
aggregate and on an individual Hotel-by-Hotel basis), (ii) the Adjusted Indebtedness (in the
aggregate and on an individual Hotel-by-Hotel basis), (iii) the Required Capital Expenditure Amount
(in the aggregate and on an individual Hotel-by-Hotel basis), (iv) the Casualty Adjustment Amount
(in the aggregate and on an individual Hotel-by-Hotel basis) and (v) the Closing Net Adjustment
Amount based on the Preliminary Closing Statement (the “Preliminary Adjustment Amount”).

          (d) Horizon OP shall have forty-five (45) days (unless Sun and Horizon OP mutually agree to an
extension; provided, however, that Sun shall not unreasonably withhold its
agreement to such an extension of an additional forty-five (45) days) following delivery to

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Horizon
OP of the Preliminary Closing Statement and the calculation of the Preliminary Adjustment Amount
during which to review the Preliminary Closing Statement and such calculations, and to notify Sun
if it believes that (i) the Preliminary Closing Statement was not prepared in accordance with the
Closing Statement Principles, as applicable, and this Article 8 (in which case such
notification shall be accompanied by a report of KPMG stating that it concurs with Horizon OP’s
position that the Preliminary Closing Statement was not prepared in accordance with the Closing
Statement Principles, as applicable, and this Article 8), (ii) the Preliminary Closing
Statement contains mathematical error or (iii) the calculation of the Preliminary Adjustment was
not in accordance with this Article 8. In connection with such review, Horizon OP and its
Representatives shall have the right to communicate with E&Y, and Sun shall use commercially
reasonable efforts to cause E&Y to permit Horizon OP to review all work papers, schedules,
memoranda and other documents prepared or reviewed by Sun or E&Y during the course of its review,
and such access shall be provided promptly after request by Horizon OP or its Representatives;
provided that, the foregoing shall be subject to professional standards and E&Y’s firm
policy, which may include the requirement that Horizon OP and its Representatives sign an
“indemnification letter” in a form customarily accepted by E&Y prior to receiving access to any
materials prepared by E&Y. If Horizon OP fails to properly notify Sun of any such dispute within
such 45-day (or extended period) period, the Preliminary Closing Statement and the calculation of
the Preliminary Adjustment Amount shall be deemed final. In the event that Horizon OP shall so
notify Sun of any dispute, Horizon OP and Sun shall cooperate in good faith to resolve such dispute
as promptly as possible, and upon such resolution, if any, any adjustments to the Preliminary
Closing Statement and the Preliminary Adjustment Amount shall be made in accordance with the
agreement of Horizon OP and Sun.

          (e) If Horizon OP and Sun are unable to resolve any such dispute within fifteen (15) days (or
such longer period as Horizon OP and Sun shall mutually agree in writing) of Horizon OP’s delivery
of such notice, such dispute shall be resolved by the accounting firm selected in the manner set
forth below (the “Independent Accounting Firm”), and such determination shall be final and
binding on the parties hereto; provided, however, that (i) the calculation of the
aggregate amount of adjustments to be made pursuant to this Section 8.4 (the “Final
Adjustment Amount”) shall be based on the Final Closing Statement and the definitions and terms
contained herein and (ii) unless the Independent Accounting Firm determines that the Preliminary
Closing Statement was not prepared in accordance with the Closing Statement Principles, as
applicable, and this Section 8.4 or contains mathematical errors, the Preliminary Closing
Statement shall be the Final Closing Statement. Sun and Horizon OP shall mutually select the
Independent Accounting Firm, but if Sun and Horizon OP cannot mutually agree on the identity of the
Independent Accounting Firm, then Sun and Horizon OP shall each submit to the other party’s
independent auditor the name of a national accounting firm other than E&Y and KPMG, and the
Independent Accounting Firm shall be selected by lot from these two firms by the independent
auditors of the two parties. If no national accounting firm shall be willing to serve as the
Independent Accounting Firm, then a nationally recognized (in the United States) expert in public
accounting shall be selected to serve as such, such selection to be according to the above
procedures. Any expenses relating to the engagement of the Independent Accounting Firm in respect
of its services pursuant to this Section 8.4(e) shall be shared equally by Sun and Horizon
OP. The Independent Accounting Firm shall be instructed to use every commercially reasonable
effort to perform its services within thirty (30) days of submission of the Preliminary Statement
to it and, in any case, as promptly as practicable after such submission. The Final

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Closing
Statement and the calculation of the Final Adjustment Amount shall then be prepared by Sun based on
the determination of the Independent Accounting Firm. For purposes of this Section 8.4(e),
the “Final Closing Statement” shall mean (i) the Preliminary Closing Statement if deemed
final pursuant to Section 8.4(d) or this Section 8.4(e), (ii) any closing statement
deemed by mutual agreement of Sun and Horizon OP to be the Final Closing Statement or (iii) the
statement determined by the Independent Accounting Firm to be the Final Closing Statement in
accordance with this Section 8.4(e), whichever shall first occur.

          (f) No more than five (5) business days after the determination of the Final Adjustment in
accordance with Section 8.4(e), (i) if the Estimated Adjustment Amount exceeds the Final
Adjustment Amount, the Cash Amount shall be decreased by the amount of such difference, and Sun or
the applicable Seller shall deliver to the applicable Horizon Parties (including the Acquired
Entities and the Directly Acquired Assets Owners), by wire transfer of immediately available funds,
a U.S. dollar amount equal to such difference and (ii) if the Final Adjustment Amount exceeds the
Estimated Adjustment Amount, the Cash Amount shall be increased by the amount of such difference,
and the applicable Horizon Parties (including the Acquired Entities and the Directly Acquired
Assets Owners) shall deliver to Sun or the applicable Seller, by wire transfer of immediately
available funds, a U.S. dollar amount equal to such difference, together with, in each case of
clauses (i) and (ii), interest on such difference accrued at a variable rate equal
to the rate of interest from time to time announced publicly by Citibank, N.A., at its principal
office in New York, New York, as its annual base rate, calculated on the basis of the actual number
of days elapsed over 365, from the Closing Date to the date such amount is payable pursuant to this
Section 8.4(f) (and, thereafter, accrued at such annual base rate plus 3% per annum,
calculated on the basis of the actual number of days elapsed over 365).

          (g) For the purposes of this Section 8.4, “Adjusted Indebtedness” means all
Indebtedness included in the Assumed Liabilities as of the Apportionment Time after giving effect
to the completion of the transactions contemplated by this Agreement to take place at or prior to
the Closing and as determined in accordance with the Closing Statement Principles;
provided, however, that (i) the Adjusted Indebtedness shall not in any event
include (A) any Retained Liabilities or (B) any amount of Indebtedness to the extent all rights to
receive payment in respect of, and each other right with respect to, such amount is an Acquired
Asset (except to the extent such rights are included in the Closing Working Capital) and (ii) the
adjustments for Adjusted Indebtedness described in this Section 8.4 are not intended to be
duplicative of any adjustments provided for elsewhere in this Section 8.4 and there shall
be no double counting of adjustments.

          (h) Except as otherwise expressly set forth in this Section 8.4, all adjustments shall
be on an accrual basis in accordance with the Closing Statement Principles, and based on the actual
number of days in the applicable period.

          (i) All references to “Acquired Business” in this Section 8.4 shall mean the Acquired
Business excluding any Deferred Assets, and Closing Working Capital as used in this Section
8.4 shall be deemed not to include Working Capital to the extent associated with any Deferred
Asset.

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          (j) For purposes of determining the Closing Working Capital set forth on the Final Closing
Statement, Sun and Horizon OP shall recalculate and readjust (in accordance with the Closing
Statement Principles) any current Acquired Assets and current Assumed Liabilities (i) which were
not included on the Estimated Closing Statement or Preliminary Closing Statement because of the
unavailability of information or (ii) which were included on the Estimated Closing Statement or
Preliminary Closing Statement based upon estimated information. The Closing Working Capital set
forth on the Final Closing Statement shall be final and, except as otherwise expressly set forth in
this Article 8, there shall be no further adjustment under this Article 8 between
Sun and Horizon OP for Closing Working Capital; provided, however, if, after the
determination of the Final Adjustment pursuant to Section 8.4(e) but within 12 months of
the Closing Date, the actual amount of any one or more of the items described in clause
(iii) above, individually or in the aggregate, is asserted in good faith by Horizon OP or Sun
to vary from the amount reflected in the Final Adjustment by more than $500,000, the Final
Adjustment shall be recalculated to equal the actual amount of such item, subject to determination
as promptly as practicable thereafter in a manner consistent with the determination of the Final
Adjustment, and the parties hereto shall promptly thereafter make the appropriate payments and
adjustments to the Cash Amount.

ARTICLE 9.

TERMINATION, AMENDMENT AND WAIVER

     Section 9.1 Termination. This Agreement may be terminated at any time prior to the
REIT Merger Effective Time:

          (a) by mutual written consent of Horizon OP and Sun;

          (b) by Horizon OP, if (1) (A) any Sun Party has breached any covenant or agreement set forth
in this Agreement (other than Section 6.7(a), (c), (d) or (e)
thereof unless Sun failed to use its reasonable best efforts to deliver the Unaudited 2005 Interim
Financial Statements or, if applicable, the Unaudited Stub Period Financial Statements, the 2005
Audited Financial Statements or Unaudited 2006 Interim Financial Statements, in any case within the
applicable time periods specified therein) or (B) any representation or warranty of Sun or Trust
shall have become untrue, (2) such breach or misrepresentation is incapable of being cured or, if
capable of being cured, is not cured within twenty (20) business days after written notice thereof
and (3) such breach or misrepresentation would cause the conditions set forth in Section
7.2(a) or 7.2(b) not to be satisfied;

          (c) by Sun, if (1) (A) either Horizon or Horizon OP has breached any covenant or agreement set
forth in this Agreement or (B) any representation or warranty of Horizon or Horizon OP shall have
become untrue, (2) such breach or misrepresentation is incapable of being cured or, if capable of
being cured, is not cured within twenty (20) business days after written notice thereof and (3)
such breach or misrepresentation would cause the conditions set forth in Sections 7.3(a) or
7.3(b) not to be satisfied;

          (d) by either Horizon OP or Sun, if any Governmental Entity shall have issued a judgment,
injunction, order, decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement or the

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Horizon Transactions,
and such judgment, injunction, order, decree, ruling or other action shall have become final and
nonappealable (which judgment, injunction, order, decree, ruling or other action the terminating
party and its Affiliates shall have used their reasonable best efforts to resist, resolve or lift,
as applicable);

          (e) by either Horizon OP or Sun, if the Closing Transactions shall not have been consummated
prior to April 17, 2006 (such date, as extended pursuant to this Section 9.1(e), the
“Termination Date”); provided, however, that (i) if the Closing Notice is
delivered on or prior to the Termination Date, then neither Horizon OP nor Sun may terminate this
Agreement pursuant to this Section 9.1(e) until the first Monday (or, if such Monday is not
a business day, the next business day) that is at least three (3) business days following the date
on which the Closing Notice is delivered to Sun, (ii) the right to terminate this Agreement under
this Section 9.1(e) shall not be available to any party whose failure, or the failure of
whose Affiliate, to fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing Transactions to occur on or before such date and (iii) Sun shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(e) if the announcement
or pendency of a Paired Share Proposal, or discussions, negotiations or other activities with
respect thereto, has been the cause of, or resulted in, the failure of the Closing Transactions to
occur on or before such date;

          (f) by either Horizon OP or Sun if, upon a vote at a duly held Horizon Stockholders Meeting or
any adjournment thereof, the Horizon Stockholder Approval shall not have been obtained as
contemplated by Section 6.1;

          (g) by either Horizon OP or Sun upon written notice to the other if the Share Value is less
than $13.60;

          (h) by either Horizon OP or Sun, upon written notice to the other, if any condition to the
obligation of such party to consummate the Closing Transactions becomes incapable of satisfaction
prior to the Termination Date; provided, however, that the right to terminate this
Agreement under this Section 9.1(h) shall not be available to any party whose failure, or
the failure of whose Affiliate, to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of such conditions;

          (i) by Sun or Trust prior to February 12, 2006 in accordance with Section 9.6;

          (j) by Sun if (i) Sun (A) delivers to Horizon OP a written notice (1) describing in reasonable
detail actual or alleged breaches or failures to be true of one or more of its representations or
warranties in this Agreement, including the estimated Losses arising therefrom, and (2) requesting
that Horizon OP agree to limit the Purchaser Indemnified Parties’ rights to indemnification under
clause (i) of Section 2(a) of the Indemnification Agreement with respect to the breaches and
failures described in reasonable detail in such notice to an amount no greater than $50 million
(the “Pre-Closing Cap Amount”) and (B) provides Horizon OP with reasonably detailed
responses to inquiries from Horizon OP with respect to the matters described in Sun’s notice and
(ii) Horizon OP does not, at least five (5) business days prior to the date the Closing would
otherwise occur (except for the existence of such acts, failures and events), deliver written
notice to Sun agreeing to the indemnification limitations set forth in

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clause (i)(A)(2);
provided, however, that (I) if Sun delivers the notice set forth in
clause
(i) to Horizon OP less than fifteen (15) business days prior to the date scheduled to be the
Closing Date, Horizon OP shall have the right to extend the Closing by the number of business days
equal to fifteen (15) minus the number of business days prior to such scheduled Closing Date on
which such notice is delivered to Horizon OP and (II) Sun shall not be entitled to receive any
limitation under this Section 9.1(j) with respect to (a) its obligations under any
provision of the Indemnification Agreement other than clause (i) of Section 2(a) thereof or (b) any
breaches or failures to be true of representations and warranties contained in Section
3.1(a) (Organization, Standing and Power), Section 3.2 (Capital Structure), Section
3.4(a) (Authority), Section 3.15 (No Brokers) and Section 3.24 (No Vote
Required);

          (k) by Horizon OP if (A) Sun enters into any definitive agreement relating to a Paired Share
Proposal or (B) any transaction contemplated by any Paired Share Proposal is consummated; or

          (l) by Horizon OP if (i) Horizon OP (A) delivers to Sun a written notice (1) describing in
reasonable detail actual or alleged breaches or failures to be true of one or more of its
representations or warranties in this Agreement that would be subject to the Cap (as defined in the
Indemnification Agreement), including the estimated Losses arising therefrom, the sum of Sun’s
liability for which under the Indemnification Agreement (giving effect to all limitations on
liability in the Indemnification Agreement other than the Cap) could reasonably be expected to
exceed the Cap and (2) requesting that Sun agree that the Cap shall not apply with respect to the
breaches and failures described in reasonable detail in such notice and (B) provides Sun with
reasonably detailed responses to inquiries from Sun with respect to the matters described in
Horizon OP’s notice and (ii) Sun does not, at least five (5) business days prior to the date the
Closing would otherwise occur (except for the existence of such actual or alleged breaches or
failures to be true), deliver written notice to Horizon OP agreeing that the Cap shall not apply
with respect to such breaches and failures as set forth in clause (i)(A)(2);
provided, however, that if Horizon OP delivers the notice set forth in clause
(i) to Sun less than fifteen (15) business days prior to the date scheduled to be the Closing
Date, Sun shall have the right to extend the Closing by the number of business days equal to
fifteen (15) minus the number of business days prior to such scheduled Closing Date on which such
notice is delivered to Sun.

     Section 9.2 Effect of Termination.

          (a) In the event of termination of this Agreement by either Sun or Horizon OP as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any Horizon Party or Sun Party, other than Section
3.15 (No Brokers), clause (ii) of each of Section 6.2(a) and (b)
(Access to Information; Confidentiality), Section 8.3 (Transaction Expenses), this
Section 9.2 (Effect of Termination) and Article 10 (General Provisions), and except
to the extent that such termination results from a breach (or, solely for purposes of Section
9.2(e), a willful or intentional breach) by any party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.

          (b) If this Agreement is terminated by either Horizon OP or Sun pursuant to Section
9.1(f), then Horizon OP shall, on the date of such termination, reimburse Sun for all of the
out-of-pocket expenses reasonably incurred by the Sun Parties directly related to this

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Agreement
and the transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of
$20 million.

          (c) If this Agreement is terminated by Sun or Trust pursuant to Section 9.1(i), then
Sun shall, at or prior to such termination, (A) reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million and (B) pay Horizon OP a cash fee of $100 million.

          (d) If this Agreement is terminated by Sun or Horizon OP as a result of the failure or alleged
failure of the conditions set forth in Section 7.3(g) to be satisfied or waived, then Sun
shall at or prior to, and as a condition of, such termination by Sun (or within five (5) business
days of any such termination by Horizon OP) (A) reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million and (B) pay Horizon OP a cash fee of $25 million.

          (e) If this Agreement is terminated pursuant to Section 9.1(j) then, without limiting
the recourse of the Horizon Parties under Section 9.2(a), Sun shall, within five (5)
business days of the date of such termination, reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million.

          (f) All payments under this Section 9.2 shall be made by wire transfer of same day
funds. Each of Sun and Horizon acknowledges that the agreements contained in this Section
9.2 are an integral part of the transactions contemplated by this Agreement, and that, without
these agreements, each of the parties hereto would not enter into this Agreement; accordingly, if
any party fails to promptly pay the amount due pursuant to this Section 9.2, and, in order
to obtain such payment, the other party commences a suit which results in a judgment against such
party for any of the amounts set forth in this Section 9.2, such party shall pay to the
other party its costs and expenses (including attorneys’ fees) in connection with such suit,
together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.

     Section 9.3 Deferral Provisions to Insure Compliance with REIT Gross Income Tests.
Notwithstanding any other provisions in this Agreement, any payments otherwise to be made by Sun to
Horizon OP under Section 9.2 for any calendar year shall not exceed the sum of (a) the
amount that it is determined should not be gross income of Horizon for purposes of the requirements
of Sections 856(c)(2) and (3) of the Code, with such determination to be set forth in a No Gross
Income Opinion (as such term is defined in the Tax Sharing and Indemnification Agreement) plus (b)
such additional amount that it is estimated can be paid to Horizon in such taxable year without
creating a risk that the payment would cause Horizon to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code, determined as if the payment of such amount did not constitute
Qualifying Income, which determination shall be made by independent tax accountants to Horizon and
(c) in the event Horizon receives an Alternative Tax Letter (as such term is defined in the Tax
Sharing and Indemnification Agreement) indicating that Horizon

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has received a ruling from the
Internal Revenue Service holding that Horizon’s receipt of the additional amount otherwise to be
paid under Section 9.2 either would constitute Qualifying Income or would be excluded from
gross income of Horizon for purposes of Sections 856(c)(2) and (3) of the Code, the aggregate
payments otherwise required to be made under this Agreement (determined without regard to this
Section 9.3) less the amount otherwise previously paid under clauses (a) and
(b) above. The obligation of Sun to pay any unpaid portion of any payment otherwise
required under this Agreement that remains unpaid solely by reason of this Section 9.3
shall terminate five years from the date such payment otherwise would have been made but for this
Section 9.3. Sun shall place the full amount of any payments otherwise to be made by Sun
to Horizon OP under Section 9.2 in a mutually agreed escrow account upon mutually
acceptable terms which shall provide that any portion thereof shall not be released to Horizon OP
unless and until Sun receives any of the following: (x) a letter from Horizon’s independent tax
accountants indicating the amount that it is estimated can be paid at that time to Horizon OP
without creating a risk that the payment would cause Horizon to fail to meet the Specified REIT
Requirements (as such term is defined in the Tax Sharing and Indemnification Agreement) for the
taxable year in which the payment would be made, which determination shall be made by such
independent tax accountants, (y) an Alternative Tax Letter or (z) an opinion of outside tax counsel
selected by Horizon, which such opinion shall be reasonably satisfactory to Horizon, to the effect
that, based upon a change in law after the date on which payment was first deferred hereunder,
receipt of the additional amount otherwise to be paid under this Agreement either would be excluded
from gross income of Horizon for purposes of the Specified REIT Requirements or would constitute
Qualifying Income, in any of which events Sun shall pay to Horizon OP the lesser of the unpaid
amounts due under this Agreement (determined without regard to this Section 9.3) or the
maximum amount stated in the letter referred to in clause (x) above. At the end of the
five year period referred to above in this Section 9.3 with respect to any amount placed in
such escrow, if none of the events referred to in clauses (x), (y) or (z)
of the preceding sentence shall have occurred, such amount shall be released from such escrow to be
used as determined by Sun in its sole and absolute discretion.

     Section 9.4 Amendment. This Agreement may be amended by the parties hereto in writing
by action of the Board of Directors of Horizon (or any duly constituted committee thereof with
proper authority as to such matters), the Board of Trustees of the Trust and the Board of Directors
of Sun (or any duly constituted committee thereof with proper authority as to such matters). The
parties hereto agree to amend this Agreement in the manner provided in the immediately preceding
sentence to the extent required to continue the status of Horizon and each applicable Horizon
Subsidiary as a REIT.

     Section 9.5 Extension; Waiver. At any time prior to the Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance with any of the agreements or conditions of the other party contained in this Agreement.
Any such extension or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby, and such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.

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     Section 9.6 Procedure for Termination. Sun or Trust may terminate this Agreement
pursuant to Section 9.1(i) only if (i) Sun, Trust or any Sun Subsidiary has received a
Superior Proposal, (ii) in light of such Superior Proposal a majority of the Board of Trustees of
Trust or a majority of the Board of Directors of Sun, as applicable, shall have determined in good
faith, after consulting with outside counsel, that a termination of this Agreement would be
consistent with its duties to holders of Trust Shares or Sun Common Stock, as applicable, under
applicable Law, (iii) Trust has notified Horizon in writing of the determination described in
clause (ii) above, (iv) at least five (5) business days following receipt by Horizon of the
notice referred to in clause (iii) above, and taking into account any revised proposal made
by Horizon since receipt of the notice referred to in clause (iii) above, the Board of
Trustees of Trust or the Board of Directors of Sun, as applicable, has determined in good faith,
after consultation with its outside financial advisor, that any such revised proposal made by
Horizon is less favorable, after taking into account the likelihood of consummation of such
transaction on the terms set forth therein, taking into account all legal, financial (including the
financing terms of any such proposal), regulatory and other aspects of such proposal and any other
relevant factors permitted under applicable law, to holders of Trust Shares or Sun Common Stock, as
applicable, than such Superior Proposal and (v) at or prior to such termination, Sun makes the
payment required by Section 9.2(c).

ARTICLE 10.

GENERAL PROVISIONS

     Section 10.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:

          (a) “Acquired Assets” means any and all right, title and interest of the Acquired
Entities and the Asset Sellers in and to (i) the Acquired Hotels and (ii) payment in respect of,
and any other rights under, Indebtedness to the extent such Indebtedness is an Assumed Liability.

          (b) “Acquired Business” means the business, operations and activities of (i) the
Acquired Hotels, including the ownership thereof, and (ii) the Acquired Entities to the extent
related to the ownership, operation and activities of the Acquired Hotels, excluding in each case
the Excluded Business.

          (c) “Acquired Entities” means Trust and the other Sun Subsidiaries set forth on
Schedule 10.1(c) as such Schedule may be amended from time to time in accordance with
permitted changes to the Restructuring Plan.

          (d) “Acquired Hotel” means each individual hotel set forth on Schedule
10.1(d), together with the Related Property with respect thereto; collectively, the
“Acquired Hotels”.

          (e) “Acquired Hotel Agreed Amount” means, with respect to each Acquired Hotel, as
adjusted (for the purposes of Section 6.18(f)) in accordance with clause (v) of
Section 6.18(f), the amount set forth on Schedule 10.1(e).

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          (f) “Acquired Property” means, with respect to each Acquired Hotel, each parcel of
Land and the associated Improvements; collectively, the “Acquired Properties”.

          (g) “Apportionment Time” means, with respect to any Hotel, 12:01 a.m. local time on
the Closing Date and, with respect to the Adjusted Indebtedness, 12:01 a.m. New York City time on
the Closing Date.

          (h) “Assets” means all assets, properties, claims, Contracts and businesses of every
kind, character and description, whether real, personal or mixed, tangible or intangible, whether
accrued, contingent or otherwise, and wherever located, in each case whether or not recorded or
reflected on the books and records or financial statements of any Person.

          (i) “Assumed Liabilities” means, other than the Retained Liabilities, (i) all
Liabilities of the Acquired Entities and the Asset Sellers to the extent relating to the Acquired
Business, (ii) the Specified Indebtedness and (iii) any Indebtedness of an Acquired Entity that can
be settled, offset or discharged in full by such Acquired Entity immediately following the Closing
without such Acquired Entity incurring any Liability in connection therewith, but only to the
extent all associated rights to receive payment in respect of such Indebtedness, and other rights
with respect to such Indebtedness, constitute Acquired Assets.

          (j) “C Corporation Earnings and Profits” means, with respect to an Acquired Entity,
earnings and profits (within the meaning of the Code) that have been accumulated in, or are
attributable to, any taxable period of such Acquired Entity for which such Acquired Entity was not
taxable as a REIT.

          (k) “Class A Cash Consideration” means, subject to Section 6.30, the sum of
(i) the portion of the Cash Amount allocated to the Class A Shares in the REIT Merger in accordance
with Section 2.5 and (ii) a cash amount equal to (A) the Excess Dividend Amount multiplied
by (B) the number of shares of Horizon Common Stock issuable in exchange for the Class A Shares
pursuant to Section 1.6(a)(i).

          (l) “Class B Cash Consideration” means the sum of (i) the aggregate Class B Cash
Amount payable by Horizon to all holders of Class B Shares as of the Determination Time and (ii)
the Class A EPS Horizon Cash Amount.

          (m) “Class B Excess Dividend Amount” means a cash amount equal to (i) the Excess
Dividend Amount multiplied by (ii) the Exchange Ratio.

          (n) “Closing Restructuring Steps” means the transactions referred to in Exhibit
A and Exhibit B as the Closing Restructuring Steps.

          (o) “Closing Statement Principles” means GAAP consistent with the accounting
principles and practices applied in the preparation of the Audited Combined Historical Financial
Statements, applied on a consistent basis for the periods involved, except as set forth in the
Preparation Principles and, with respect to Working Capital, Section 8.4 and Schedule
8.4(a).

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          (p) “CMBS Indebtedness”means the Indebtedness incurred under the Loan Agreement, dated
as of January 27, 1999, as amended, among the Borrowers named therein, as borrowers, Starwood
Operator I LLC, as operator, Starwood Operator II LLC, as manager, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.

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

          (r) “Consolidated Group” means an “affiliated group” within the meaning of Section
1504 of the Code.

          (s) “Contract” means any contract, agreement, lease, concession, license, sales order,
purchase order, note, instrument or other commitment, whether written or oral, that is binding on
any Person or entity or any part of its property under applicable Law, including any amendments
thereto.

          (t) “Directly Acquired Assets” means the Acquired Assets other than to the extent held
by an Acquired Entity immediately prior to the Closing.

          (u) “Directly Acquired Assets Owner” means, with respect to any Directly Acquired
Asset, Horizon OP or the Horizon Subsidiary designated by Horizon OP to acquire such Acquired Asset
from the applicable Asset Seller at the Closing.

          (v) “EC Merger Regulations” means Council regulation (EEC) No. 4064/89 of December 21,
1989 on the Control of Concentrations Between Undertakings, OJ (1989) L 395/1 and the regulations
and decisions of the Council or Commission of the European Community or other organs of the
European Union or European Community implementing such regulations.

          (w) “Encumbrance” means any pledge, claim, lien, security interest, privilege, charge,
option, mortgage, deed of trust, deed to secure debt, claim against title, right-of-way, easement,
covenant, condition or restriction, lease, license, right to occupy, right of first refusal or
offer, encroachment, building or use restriction, conditional sales agreement, license, restriction
on transfer of title or voting, or any other encumbrance of any nature whatsoever.

          (x) “Excess Dividend Amount” means a cash amount equal to the sum of the per-share
value of all dividends or distributions on Horizon Common Stock in excess of $0.15 per share in any
calendar quarter with a record date after the date of this Agreement and prior to the Closing Date.

          (y) “Excluded Assets” means: (i) all Assets of Sun and the Sun Subsidiaries to the
extent (x) used or held for use (other than at any Acquired Property, other than, with respect to
personal property, in a regional office described in Section 3.10 of the Sun Disclosure
Letter), in the general administration of the business of Sun or the Retained Subsidiaries or (y)
not used or held for use primarily in the Acquired Business, including, (A) with respect to each
Hotel, all Assets to the extent owned by Sun or any Sun Subsidiary in its capacity as a manager of
such Hotel and (B) all Sun Intellectual Property, including Hotel Guest Information and Guest Data
(in each case as defined in the form of Operating Agreement), but excluding any Hotel

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Guest
Information with respect to guests checking in or out of an Acquired Hotel on or after the Closing
Date; (ii) the Excluded Hotels; (iii) all National/Regional Operating Agreements; (iv) all Assets
of Sun and the Sun Subsidiaries identified on Schedule 10.1(y); (v) any Interests other
than Interests in the Acquired Entities; and (vi) subject to the terms and conditions of
Section 6.18, the Deferred Assets.

          (z) “Excluded Business” means (i) the hotel management and franchise business, (ii)
the business, operations and activities of Sun and the Sun Subsidiaries associated with or included
in the Excluded Assets, including the ownership thereof, and (iii) all terminated, divested or
discontinued businesses, hotels or other facilities which, at or prior to the time of termination,
divestiture or discontinuation, related to or otherwise would have been part of the Acquired
Business.

          (aa) “Excluded Hotel” means each individual hotel owned by Sun or any Sun Subsidiary
that is not an Acquired Hotel, including each individual hotel set forth on Schedule
10.1(aa), together with the Related Property with respect thereto; collectively, the
“Excluded Hotels”.

          (bb) “FF&E Reserves” means the account or accounts that hold funds comprising any
“FF&E reserve”, “reserve for replacements” or similar reserve under the applicable operating or
management agreement for a Hotel (including all funds deposited in the FF&E Reserves for the
portion of the final accounting period prior to the Apportionment Time).

          (cc) “Governmental Entity” means any federal, state, provincial, regional or local
government or any court, administrative or regulatory agency or commission or other governmental
authority, bureau or agency, domestic or foreign.

          (dd) “Guest Ledger” means, with respect to any Hotel, all charges accrued to the open
accounts of any guests or customers of such Hotel for (x) the use or occupancy of any guest rooms,
suites, banquet or meeting rooms, convention facilities or other facilities in such Hotel, (y) any
restaurant, bar, catering or banquet services and (z) any other goods or services provided by or on
behalf of the applicable owner at such Hotel.

          (ee) “Horizon Foreign Currency REIT” means any Subsidiary of Horizon OP that (i)
elects to be a REIT effective as of a time on the Closing Date, and (ii) acquires Acquired Assets
that are not located in the United States.

          (ff) “Horizon Material Adverse Effect” means any circumstance, event, occurrence,
change or effect that is materially adverse to the business, Assets, financial condition or results
of operations of Horizon, Horizon OP and the Horizon Subsidiaries, taken as a whole;
provided, however, any adverse effect arising out of or resulting primarily and
directly from any of the following shall be disregarded when determining whether there has been a
Horizon Material Adverse Effect: (1) any change in the market price or trading volume of Horizon
Common Stock (but not the underlying cause(s) of such change in market price or trading volume),
(2) changes in the United States economy generally which do not disproportionately affect Horizon
in any material respect, (3) the announcement and pendency of the transactions contemplated by this
Agreement, (4) seasonal fluctuations in the business of Horizon and the

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Horizon Subsidiaries, (5)
(A) changes in law or regulation generally affecting the hotel and leisure industry or (B) changes
in GAAP, except, in the case of this clause (5), to the extent Horizon is
disproportionately affected in any material respect; provided, further,
however, that changes resulting from (I) the commencement or material worsening of a war or
armed hostilities or other national or international calamity or (II) any terrorist activities
shall not be so disregarded..

          (gg) “Horizon Subject Foreign Currency REIT” means any Horizon Foreign Currency REIT
that acquires Acquired Assets that are located in Chile, Poland or Canada.

          (hh) “Horizon Subsidiaries” means the Subsidiaries of Horizon.

          (ii) “Horizon Transactions” means the transactions set forth in Exhibit X.

          (jj) “Hotel” means any Acquired Hotel or Excluded Hotel.

          (kk) “Improvements” means the buildings and other improvements (other than those
fixtures identified on Schedule 10.1(kk)) that are located on the Land.

          (ll) “Indebtedness” means (i) indebtedness for borrowed money, whether secured or
unsecured, (ii) obligations under notes, bonds, debentures or similar instruments, (iii)
obligations upon which interest charges are customarily paid, (iv) obligations under conditional
sale or other title retention agreements relating to property purchased by any Person, (v)
capitalized lease obligations, (vi) obligations under interest rate cap, swap, collar or similar
transaction or currency hedging transaction (valued at the termination value thereof), (vii) all
Liabilities with respect to any preference shares in Dubbo Limited, a company duly incorporated in
the Republic of Fiji, or Barton Limited, a a company duly incorporated in the Republic of Fiji, and
(viii) guarantees of any of the foregoing.

          (mm) “Intellectual Property” means all patents, copyrights, trademarks, trade names,
trade dress, brandmarks, brand names, domain names, service marks, designs, logos, slogans and
general intangibles of like nature, any registrations and applications for registration thereof,
trade secrets and all non-public or proprietary processes, formulae, methods, models, schematics,
technology, know-how, mailing lists, customer and guest lists, business plans, computer software
programs or applications and tangible or intangible proprietary information or material.

          (nn) “Interests” means, with respect to any Person, all rights, title and interests in
and to stock, shares, beneficial interests, limited liability company interests, membership
interests, partnership interests and other equity and other ownership interests, whether voting or
non-voting, including options, warrants, convertible Indebtedness and other derivative interests
(whether or not vested or unvested, or currently exercisable, exchangeable, redeemable or
convertible for the underlying Interest).

          (oo) “Knowledge” means (i) with respect to any Horizon Party, the actual knowledge of
those individuals identified in Section 10.1(oo)(1) of the Horizon Disclosure Letter and
(ii) with respect to any Sun Party, the actual knowledge of those individuals identified in
Section 10.1(oo)(2) of the Sun Disclosure Letter.

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          (pp) “Land” means those parcels of land of the Hotels, as more particularly described
on Section 3.8(a) of the Sun Disclosure Letter (with respect to Acquired Hotels) and
Schedule 10.1(aa) (with respect to Excluded Hotels), including all land lying in the bed of
any street or highway adjoining each such parcel to the center line thereof, all water and mineral
rights, development rights and all easements, rights and other interests appurtenant thereto.

          (qq) “Laws” means any judgment, order, court decision, rule of common or civil law,
injunction, decree, arbitral award, statute, law, ordinance, rule or regulation of any Governmental
Entity.

          (rr) “Liabilities” means any and all Indebtedness, liabilities and obligations,
whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance
sheet or otherwise.

          (ss) “Local Purchase Agreements” means the four Local Purchase Agreements and the
Schedules and Exhibits thereto to be entered into by the Local Entity Sellers and Local Asset
Sellers, as the case may be, on the one hand, and Horizon OP or its designated Horizon
Subsidiaries, on the other hand, providing for the sale, conveyance, assignment, transfer, delivery
and, as applicable, the license, sublicense, lease or sublease, of the Local Stock Transfer Shares
and the Local Directly Acquired Assets, as the case may be, in all material respects (including
with respect to the portion of the Local Other Closing Transaction Purchase Price set forth
therein), with respect to (A) the Acquired Hotel identified as the “Westin Palace Madrid” on
Schedule 10.1(d), in the form of Exhibit Y-1, (B) the Acquired Hotel identified as
the “Westin Europa & Regina” on Schedule 10.1(d), in the form of Exhibit Y-2 and
(C) the Acquired Hotels identified as the “Westin Palace Milan” and the “Sheraton Roma Hotel &
Convention Centre” on Schedule 10.1(d), in the form of Exhibit Y-3.

          (tt) “Market Price” means, with respect to a share of Horizon Common Stock or a Paired
Share, on any date, the average of the daily closing prices per share of Horizon Common Stock or
Paired Share, as applicable, as reported on the NYSE Composite Transactions reporting system (as
published in the Wall Street Journal or, if not published therein, in another authoritative source
mutually selected by Sun and Horizon OP) for the twenty (20) consecutive trading days immediately
preceding such date.

          (uu) “Material Sun Space Lease” means any Sun Space Lease where the annual base rent
collected thereunder exceeds $150,000.

          (vv) “Miscellaneous Hotel Assets” means, with respect to any Hotel, (i) all general
intangibles relating to design and development of such Hotel (other than, in the case of an
Acquired Hotel, elements of trade dress or other brand specific design elements associated with the
Sun Trademarks, which shall be within the definition of Sun Intellectual Property); (ii) all rights
and work product under construction, service, consulting, engineering, architectural and other
Contracts, receipts, accounting and business records, books and files relating solely to ownership
or operation of such Hotel; (iii) all keys and lock and safe combinations relating to such Hotel;
(iv) all surveys, architectural, consulting and engineering blueprints, plans and specifications
(together with architects’ certificates, if any, indicating that renovation and reconstruction to
such Hotel has been completed in accordance therewith), drawings and reports

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related to such Hotel;
(v) all books and records (financial and otherwise) with respect to such Hotel (including, in the
case of an Acquired Hotel, the associated Books and Records); and (vi) all telephone numbers for
such Hotel.

          (ww) “National/Regional Operating Agreements” means all operating agreements or
contracts pursuant to which goods, services, licenses or other items are provided to other hotels
which are owned, leased or operated by Sun or any Sun Subsidiary in addition to the Acquired
Hotels.

          (xx) “Ordinary Course” means the ordinary course of business consistent with past
practice.

          (yy) “Organizational Documents” means certificates or articles of incorporation or
other formation, bylaws, partnership agreements, limited liability company agreements or other
joint venture agreements, or other comparable governing documents of any Person.

          (zz) “Other Share Consideration” means the shares of Horizon Common Stock, if any,
allocated to the Other Closing Transactions in accordance with Section 2.5.

          (aaa) “Paired Share Proposal” means any proposal or offer (including any proposal or
offer to Sun’s or Trust’s equityholders) with respect to any transaction or a series of
transactions to the extent such one or more transactions relate to the issuance, offer or sale of
Paired Shares that has resulted or, if not yet consummated, as proposed would result, in the
acquisition by any Person or group of Persons, including any “person” within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of more than 50 percent of the Paired Shares.

          (bbb) “Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other entity.

          (ccc) “Personal Property” means, with respect to any Hotel: (i) all furniture,
furnishings, fixtures, fittings, vehicles, rugs, mats, draperies, carpeting, appliances, signage,
devices, engines, telephone and other communications equipment, artwork, televisions and other
audio and video equipment, computers, electrical, mechanical, HVAC and plumbing fixtures and
cabling and other equipment located in or used in the operation of the Hotel (the “FF&E”);
(ii) all items included within the non-real property definition of “Property and Equipment” under
the Uniform System of Accounts for the Lodging Industry, Ninth Edition Revised 1996, as published
by the Hotel Association of New York City, Inc. (the “Uniform System of Accounts”),
including linen, china, glassware, tableware, uniforms and other consumables, in use or in
circulation in connection with the operation of the Hotel; (iii) all “Inventories” as defined in
the Uniform System of Accounts, such as provisions in refrigerators, pantries and kitchens,
alcoholic and non-alcoholic beverages, other merchandise intended for sale or resale, fuel and
other similar supplies and materials, in use or in circulation in connection with the operation of
the Hotel; (iv) all Miscellaneous Hotel Assets; (v) with respect to any Acquired Hotel, all Hotel
Guest Information (as defined in the form of Operating Agreement) with respect to guests checking
in or out of such Acquired Hotel on or after the Closing Date; (vi) with respect to any Acquired

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Hotel, the applicable names, trademarks and service marks set forth on Schedule 10.1(ccc)
(the “Acquired Names”); and (vii) all operating accounts and reserves, including FF&E
Reserves and working capital of the Hotel; but (in the case of Acquired Hotels) in each case (other
than clause (v) and (vi)) excluding the Excluded Assets.

          (ddd) “Post-Closing Deferral Deadline” means (i) subject to clauses (iii) and
(iv), with respect to any Deferred Asset that does not include any Acquired Property
identified on Schedule 10.1(ddd), the day that is ninety (90) days after the Closing Date,
(ii) subject to clauses (iii) and (iv), with respect to any Deferred Asset that does include an
Acquired Property identified on Schedule 10.1(ddd), the day that is the amount of time
after the Closing Date specified on Schedule 10.1(ddd) with respect to such Deferred Asset,
(iii) with respect to Deferred International Hotels deferred pursuant to Section
6.18(a)(ix), October 17, 2006 and (iv) notwithstanding anything to the contrary in clause
(i) or (ii), with respect to any Deferred Asset for which an associated Deferral
Trigger is the subject of arbitration pursuant to Section 6.18(c), the business day that is
thirty (30) business days after the final conclusion of such arbitration.

          (eee) “Post-Closing Horizon Transactions” means the Horizon Transactions identified as
such on Exhibit X.

          (fff) “Privacy Laws” means Laws relating to privacy, data protection and the
collection and use of personal information and user information gathered or accessed in the course
of the operations of any Acquired Hotel, including the regulations and decisions of the Council or
Commission of the European Community or other organs of the European Union or European Community
implementing such regulations.

          (ggg) “Qualifying Accounting Firm” means Deloitte & Touche LLP, PricewaterhouseCoopers
LLP or E&Y.

          (hhh) “Related Property” means, with respect to any Hotel: (i) the Land;
provided that, with respect to any Acquired Hotels that are held pursuant to a Ground
Lease, the parties acknowledge that, unless expressly stated otherwise, the Sun Parties are not
making any representations as to, or agreeing to transfer any interest other than the right, title
and interest of the Sun Parties in, the Land subject to such Ground Lease; (ii) the Improvements;
(iii) the Personal Property; (iv) except (in the case of Acquired Hotels) for any Excluded Assets,
Permits; (v) the Guest Ledger; (vi) each ground lease, space lease or other right of occupancy
affecting or relating to the Hotel; (vii) except (in the case of Acquired Hotels) for any Excluded
Assets, any other leases or Contracts to the extent related to the maintenance, ownership, use,
possession or operation of the Hotel; and (viii) in the case of each Acquired Hotel, the corporate
or other company franchises, certificates of incorporation (and other Organizational Documents),
corporate or other company seals, minute books, corporate or similar company records of, equity
interests in, and all partnerships, joint ventures or other similar governance agreements with
respect to, each Acquired Entity directly or indirectly owning an interest in such Acquired Hotel.

          (iii) “Representatives” means (i) with respect to Horizon or any Horizon Subsidiaries,
their respective Horizon Representatives and (ii) with respect to Sun or any Sun Subsidiaries,
their respective Sun Representatives.

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          (jjj) “Required Antitrust Approvals” means all filings and approvals under the
following Laws required to be made or obtained, as the case may be, in order to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and the Horizon
Transactions: the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and
the EC Merger Regulations, in each case as amended, and all other Laws that are designed or
intended to regulate competition or investment or to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade.

          (kkk) [Intentionally Omitted.]

          (lll) “Restructuring Parameters” has the meaning accorded to such term by Exhibit
A.

          (mmm) “Retained Liabilities” means any and all Liabilities, whether arising before, on
or after the Closing Date, (i) of the Sun Parties, their businesses, or any of their respective
current or former Affiliates, Subsidiaries, predecessor companies or divisions (including the
Acquired Entities), to the extent resulting from, arising out of or related to: (A) the past,
present or future operation of the Retained Sun Business; (B) the past, present or future ownership
or use of any Assets (other than the Acquired Assets) owned or used by Sun or any of its
Affiliates; (C) the Restructuring Plan or the transactions contemplated hereby or thereby, except
to the extent the Horizon Parties (x) are obligated to pay such Liabilities under Section
8.3 or (y) receive a credit for such Liabilities under Article 8; (D) shareholders or
creditors of, or other holders of any Interests in, Sun or any Sun Subsidiary (including any
Acquired Entity with respect to events occurring on or prior to the Closing Date), including Losses
related to any claims regarding fiduciary duties, appraisal or dissenters’ rights (except, in the
case of appraisal or dissenters’ rights relating to the Mergers, for Losses, in the aggregate, that
equal no more than the value of consideration not paid in the Mergers due to such claims) or
securities Laws or under any Contracts with such holders of Interests, except that this clause
(D) shall exclude the amount of any Indebtedness excluded from clause (F) below; (E)
with respect to events occurring on or prior to the Closing Date, obligations under ERISA, all Laws
applicable to any Employee Plan, any Employee Plan or, except to the extent Horizon or the Horizon
Subsidiaries received a credit for such Liability pursuant to Article 8, any other
Liability related to employees; (F) Indebtedness other than Specified Indebtedness to the extent
(1) the Horizon Parties receive a credit therefor under Article 8 or (2) any and all rights
to receive payment in respect thereof, and other rights with respect thereto, constitute Acquired
Assets; (G) the Contracts or matters identified on Schedule 10.1(mmm); or (H) any claim by
a third party that there had occurred any default or breach (or alleged default or breach) by Sun
or Horizon OP or any of their respective Subsidiaries to the extent it arises by reason of the fact
that (in accordance with the Assumption Agreement) Horizon OP or one of its Subsidiaries, rather
than Sun or one of its Subsidiaries, is, or has been, performing Sun’s or its Subsidiary’s
obligations under, or obtaining Sun’s or its Subsidiary’s benefits under, an Acquired Hotels
Contract (as such term is defined in the Assumption Agreement) that has not been assigned to
Horizon OP or one of its Subsidiaries, but excluding from the foregoing any default or breach (or
alleged default or breach) to the extent related to any defect in the performance by Horizon OP or
its Subsidiary itself and (ii) related to Taxes for which Sun is required to furnish
indemnification under the Tax Sharing and Indemnification Agreement.

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          (nnn) “Retained Subsidiary” means each Sun Subsidiary that is not an Acquired Entity.

          (ooo) “Retained Sun Business” means any and all businesses, activities and operations
(other than the Acquired Business) as to which any of Sun and the Sun Subsidiaries, including any
Acquired Entity, has been formerly or is currently engaged, including the Excluded Businesses.

          (ppp) “Share Value” means an amount equal to the Market Price for a share of Horizon
Common Stock on the date on which, pursuant to Section 1.2, the Closing Notice is delivered
to Sun (or, if no such notice is delivered, the date on which Horizon OP and Sun establish the
Closing Date).

          (qqq) “SLC” means SLC Operating Limited Partnership, a Delaware limited partnership.

          (rrr) “SLC LP Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of SLC.

          (sss) “SLC Units” means all issued and outstanding OP Units, Class A OP Units and
Class B OP Units, each as defined in the SLC LP Agreement, of SLC.

          (ttt) “Specified Indebtedness” means any Indebtedness of an Acquired Entity or
included in the Assumed Liabilities that is set forth on Schedule 10.1(ttt).

          (uuu) “Subsidiary” with respect to any Person, means (i) any corporation, partnership,
limited liability company, joint venture, trust or other legal entity of which such Person (either
directly or through or together with another Subsidiary or other intermediary of such Person)
either (A) owns capital stock or other equity interests having ordinary voting power to elect a
majority of the board of directors (or equivalent) of such Person, (B) controls the management, (C)
is a general partner or managing member or (D) directly or indirectly through Subsidiaries owns 50%
or more of the equity interests and (ii) any “subsidiary” (as such term is defined in Section
1-02(x) of Regulation S-X of the Exchange Act) of such Person. For the avoidance of doubt, prior
to the Closing, each Acquired Entity and each Subsidiary of an Acquired Entity is a Sun Subsidiary.

          (vvv) “Sun Capital Budget” means (i) with respect to the fiscal year 2005, the capital
expenditure budget and schedule for each Acquired Hotel, including a description in reasonable
detail of the capital expenditures that any Sun Subsidiary has budgeted for such Acquired Hotel
(including any carry-over items from the capital expenditure budget for fiscal year 2004) for the
period running through December 31, 2005 and attached as Schedule 10.1(vvv) and (ii) with
respect to such Acquired Hotel during periods after December 31, 2005, the capital expenditure
budget and schedule for each Acquired Hotel, which budget and schedule shall be prepared by Sun, in
form comparable to the budget and schedule described in clause (i), and be subject to
approval by Horizon OP, which approval shall not be unreasonably withheld or delayed.

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          (www) “Sun Common Stock Value” means an amount equal to (i) the Market Price for a
Paired Share as of the Closing Date minus (ii) the sum of (x) the number equal to (A) the Market
Price for a share of Horizon Common Stock as of the Closing Date multiplied by (B) the Exchange
Ratio and (y) the Class B Cash Amount.

          (xxx) “Sun Indenture” means that certain Indenture, dated as of May 16, 2003, by and
among Sun, Trust, SHC and U.S. Bank National Association, as trustee, as amended.

          (yyy) “Sun Intellectual Property” means any and all Intellectual Property owned by Sun
or any Sun Subsidiary or which Sun or any Sun Subsidiary has a right to use; provided that,
Sun Intellectual Property shall exclude the Acquired Names.

          (zzz) “Sun Material Adverse Effect” means any circumstance, event, occurrence, change
or effect that is materially adverse to the business, Assets, financial condition or results of
operations of the Acquired Business, taken as a whole (provided that the likely impact on the
Acquired Business after the Closing of any circumstance, event, occurrence, change or effect shall
be considered taking into account the operation of the Acquired Business contemplated by this
Agreement and the Ancillary Agreements, including the likely impact, if any, on the ability of Sun
and the Retained Subsidiaries to comply, in all material respects, with their respective
obligations under the Operating Agreements, License Agreements and Sublease Agreements);
provided, however, any adverse effect arising out of or resulting primarily and
directly from any of the following shall be disregarded when determining whether there has been a
Sun Material Adverse Effect: (1) any change in the market price or trading volume of the Paired
Shares (but not the underlying cause(s) of such change in market price or trading volume), (2)
changes in the United States economy (or the economy of another country in which any Acquired Hotel
is located) generally which do not disproportionately affect the Acquired Business in any material
respect, (3) the announcement and pendency of the transactions contemplated by this Agreement, (4)
seasonal fluctuations in the Acquired Business, (5) (A) changes in law or regulation generally
affecting the hotel and leisure industry or (B) changes in GAAP, except, in the case of this
clause (5), to the extent the Acquired Business is disproportionately affected in any
material respect; provided, further, however, that changes resulting from
(I) the commencement or material worsening of a war or armed hostilities or other national or
international calamity or (II) any terrorist activities shall not be so disregarded.

          (aaaa) “Sun Material Impairment” means any of the following: (i) with respect to any
Acquired Hotel or Acquired Entity, any circumstance, event, occurrence, change or effect that is
materially adverse to the business, Assets, financial condition or results of operations of the
Acquired Hotel or Acquired Entity, in each case taken as a whole; or (ii) any Sun Material Adverse
Effect.

          (bbbb) “Sun Restructuring Steps” means the transactions referred to in Exhibit
A as the Sun Restructuring Steps.

          (cccc) “Sun Rights Agreement” means that certain Rights Agreement, dated March 15,
1999, between Sun and ChaseMellon Shareholder Services, L.L.C., as amended.

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          (dddd) “Sun Space Lease” means any lease or other right of occupancy affecting or
relating to an Acquired Property in which an Acquired Entity or, with respect to the Acquired
Business, Sun or a Sun Subsidiary is the landlord, either pursuant to the terms of the lease
agreement or as successor to any prior landlord.

          (eeee) “Sun Trademarks” means the trademarks, service marks and trade names
“Starwood”, “Sheraton”, “Westin”, “CIGA”, “SLT” and “W”.

          (ffff) “Superior Proposal” means any unsolicited bona fide written offer made by any
Person (other than Sun and its Affiliates) to acquire, directly or indirectly, for consideration
consisting of cash and/or securities and/or other property, Acquired Assets representing more than
42% of the aggregate Acquired Hotel Agreed Amount of all the Acquired Assets and otherwise on terms
which a majority of Trust’s Board of Trustees or a majority of Sun’s Board of Directors, as
applicable, determines in its reasonable good faith judgment (after consultation with its financial
advisors) to be more favorable, after taking into account the likelihood of consummation of such
transaction on the terms set forth therein, and all legal, financial (including the financing terms
of any such proposal), regulatory and other aspects of such proposal and any other relevant factors
permitted under applicable law, to holders of Trust Shares or Sun Common Stock, as applicable, than
the transactions contemplated by this Agreement (and any revised proposal made by Horizon).

          (gggg) “Tax-Deferred Exchange” means an exchange (rather than a purchase and sale) of
or for all or a portion of any Acquired Hotel for other property of like kind in one or more
concurrent or delayed tax-deferred exchanges which shall qualify under Section 1031 of the Code.

          (hhhh) “Westin Transaction Agreement” means the Transaction Agreement, dated as of
September 9, 1997, by and among WHWE L.L.C., Woodstar Investor Partnership, Nomura Asset Capital
Corporation, Juergen Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company, Inc., W&S Denver Corp., W&S
Atlanta Corp., Starwood Lodging Trust, SLT Realty Limited Partnership, Starwood Lodging Corporation
and SLC Operating Limited Partnership.

          (iiii) WD Parent” means WD Parent, Inc., a Delaware corporation.

          (jjjj) “Working Capital” means, with respect to the Acquired Business or any Deferred
Asset, the applicable Acquired Assets classified as current assets on Schedule 8.4(a), less
the applicable Assumed Liabilities classified as current liabilities on Schedule 8.4(a),
all determined in accordance with the Closing Statement Principles.

     Section 10.2 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of the parties contained in this Agreement
and in any instrument delivered pursuant to this Agreement confirming the representations and
warranties in this Agreement shall not survive the Closing, except to the extent expressly set
forth in the Indemnification Agreement; provided, however, that the foregoing shall
not limit any covenant or agreement of the parties which by its terms contemplates performance at
or after the Closing.

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     Section 10.3 Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be delivered personally, sent by overnight
courier (providing proof of delivery) to the parties hereto or sent by telecopy (providing
confirmation of transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):

          (a) if to any Horizon Party, to:

Host Marriott, L.P.

6903 Rockledge Drive, Suite 1500

Bethesda, MD 20817

Attn: W. Edward Walter

Fax: 240.744.5155

          with copies (which shall not constitute notice) to:

Host Marriott Corporation

6903 Rockledge Drive, Suite 1500

Bethesda, MD 20817

Attn: Elizabeth A. Abdoo, Esq.

Fax: 240.744.5155

Latham & Watkins LLP

555 Eleventh Street, Suite 1000

Washington, DC 60606-6401

Attn: Scott C. Herlihy, Esq.

     David I. Brown, Esq.

Fax: 312.993.9767

          (b) if to any Sun Party to:

Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

Attn: Kenneth S. Siegel

Fax: 914.640.8310

          with a copy (which shall not constitute notice) to:

Sidley Austin Brown & Wood LLP

10 South Dearborn Street

Chicago, IL 60603

Attn: Michael A. Gordon, Esq.

     Paul C. Adams, Esq.

Fax: 312.853.7036

          All notices shall be deemed to have been given only when actually received.

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     Section 10.4 Interpretation.

          (a) When a reference is made in this Agreement to an Article, Section, Schedule or Exhibit,
such reference shall be to an Article, Section, Schedule or Exhibit to this Agreement unless
otherwise indicated. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without limitation.” The words “hereof”,
“herein”, “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision in this Agreement.

          (b) Each of the Sun Parties and the Horizon Parties has or may have set forth information in
its respective disclosure letter in a section or subsection thereof that corresponds to the section
of this Agreement to which it relates. Nothing in any disclosure letter shall be deemed adequate
to disclose an exception to a representation or warranty (referenced by subsection) made herein
unless such exception is identified in the applicable section or subsection of the disclosure
letter with particularity and the relevant facts are described therein in reasonable detail;
provided that, a matter set forth in one section or subsection of a disclosure letter need
not be set forth in any other section or subsection of the disclosure letter, but only to the
extent that the relevance of such disclosure to such other section or subsection is reasonably
apparent from the facts specified in such disclosure. Matters reflected in a disclosure letter are
not necessarily limited to matters required by this Agreement to be reflected in a disclosure
letter. Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. The fact that any item of information or
matter is disclosed in a disclosure letter to this Agreement shall not be construed to mean that
such item or matter is required to be disclosed by this Agreement, and the disclosure of any such
item or matter, and the dollar thresholds set forth herein, shall not be used as a basis for
interpreting the terms “material,” “Sun Material Adverse Effect,” “Horizon Material Adverse Effect”
or other similar terms in this Agreement.

          (c) The transactions contemplated by this Agreement shall be deemed to include the Sun
Restructuring Steps, the Closing Restructuring Steps and the Closing Transactions and the execution
and delivery of the Ancillary Agreements.

          (d) Any representation or warranty, covenant or condition in this Agreement that refers to any
prevention, delay or impairment (or words of similar import) of any transactions shall be deemed to
refer to such transactions as initially contemplated by this Agreement, any Ancillary Agreement or
the Horizon Transactions, as applicable, and not such transactions as they may be modified by
Section 6.8, 6.18 or 6.26, the Restructuring Plan or any other provision of
this Agreement or the Ancillary Agreements.

          (e) Solely for purposes of Sections 3.8(a) and 3.17(a), the words “delivered
or made available to Horizon OP” and words of similar import, when used in this Agreement with
respect to any documents or other information, shall mean such documents or other information that
are (i) delivered by any of the Sun Parties to Horizon OP or its attorneys or other representatives
or (ii) made available on the date of this Agreement, and for at least two (2)

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business days prior
to the date of this Agreement, to Horizon OP and its representatives through the Sun Parties’
virtual data room established for purposes of the transactions contemplated by this Agreement.

          (f) Neither Trust nor any of its Subsidiaries, on the one hand, nor Sun or any of its
Subsidiaries (other than Trust and its Subsidiaries), on the other hand, shall have any obligations
hereunder to the other.

          (g) Any references in this Agreement to requirements or the terms of the form of Operating
Agreement or the form of License Agreement (in each case other than in Section 6.16) shall
be deemed to refer to the requirements or terms of such form, as are contemplated to be modified by
the terms of the form of the Corporate Level Agreement.

     Section 10.5 Counterparts; Facsimile. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties hereto. This Agreement may be executed by facsimile signature.

     Section 10.6  Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Sun
Disclosure Letter, the Horizon Disclosure Letter, the Confidentiality Agreement, the Ancillary
Agreements, including the schedules and exhibits hereto and thereto, and the other agreements
entered into in connection with the transactions contemplated hereby and thereby or the Horizon
Transactions constitute the entire agreement of the parties hereto and supersede all prior
agreements and understandings, both written and oral, between the parties hereto, or any of them,
with respect to the subject matter of this Agreement and are not (i) intended to confer upon any
Person other than the parties hereto any rights or remedies or (ii) intended to be enforceable by
any Person who is not a party hereto or entitled to enforce rights hereunder pursuant to the
Contracts (Rights of Third Parties) Act of 1999 or any similar legislation of any other
jurisdiction.

     Section 10.7 Governing Law; Consent to Jurisdiction.

          (a) To the extent required by Maryland law, the REIT Merger shall be governed by, and
construed in accordance with, the laws of the State of Maryland regardless of the laws that might
otherwise govern under applicable principles of conflict of laws thereof. To the extent required
by Delaware law, the SLT Merger shall be governed by, and construed in accordance with, the laws of
the State of Delaware regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereto. Except as provided in the immediately preceding two
sentences, this Agreement, and all claims arising out of or related thereto, shall be governed by,
and construed in accordance with, the laws of the state of New York, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.

          (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the
United States of America, sitting in Delaware, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the

127

 

agreements delivered in
connection herewith or the transactions contemplated hereby or thereby or the Horizon Transactions
or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in
such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware court or, to the extent permitted by law, in such Federal court,
(iii) waives, to the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or proceeding in any such
Delaware State or Federal court and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such
Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 10.3. Nothing
in this Agreement will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

     Section 10.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned or delegated, in whole or in part, by operation
of law or otherwise by any of the parties hereto without the prior written consent of the other
parties hereto; provided, however, that without the consent of the Sun Parties, the
Horizon Parties may assign its rights under this Agreement in whole or in part to any Horizon
Subsidiary; provided, further, that (i) notwithstanding anything in the Tax Sharing
and Indemnification Agreement to the contrary, the Horizon Parties indemnify the Sun Parties
against any incremental Tax liability that results from such assignment and that would not have
been incurred absent such assignment, and (ii) the Horizon Parties remain bound by the terms of
this Agreement and the Ancillary Agreements, as applicable. Subject to the preceding sentence,
this Agreement and the Ancillary Agreements will be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted assigns.

     Section 10.9 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled, without posting any bond, to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.

     Section 10.10 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable. Notwithstanding anything to the contrary in this Section 10.10,
in the event any such invalidity or unenforceability would materially and adversely affect the
economic benefits of the transactions contemplated by this Agreement or the Horizon Transactions to
any party, the parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original

128

 

intent of the parties hereto as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement or the Horizon Transactions, as
applicable, are fulfilled to the extent possible.

     Section 10.11 Joint and Several Obligations. In each case where both Sun and Trust,
on the one hand, or Horizon and Horizon OP, on the other hand, are obligated to perform the same
obligation hereunder, such obligation shall be joint and several; provided,
however, that, from and after the Closing, the Acquired Entities shall have no Liabilities
with respect to the Liabilities of any Sun Parties hereunder. The Sun Parties shall cause the
other Sellers and any other applicable Sun Subsidiaries to perform the obligations required of such
Sellers and other Sun Subsidiaries under this Agreement.

     Section 10.12 Mutual Drafting. Each party hereto has participated in the drafting of
this Agreement, which each party acknowledges is the result of extensive negotiations between the
parties hereto.

     Section 10.13 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE HORIZON TRANSACTIONS. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
10.13.

     Section 10.14 No Agreement Until Executed. Irrespective of negotiations among the
parties hereto or the exchange of drafts of this Agreement, this Agreement shall not constitute or
be deemed to evidence a contract, agreement, arrangement or understanding among the parties hereto
unless and until, subject to Section 10.5, this Agreement is executed by the parties
hereto.

     Section 10.15 Bulk Transfer Laws. The parties to this Agreement hereby waive
compliance by the other parties hereto with the provisions of any so-called bulk sales or bulk
transfer Laws of any jurisdiction in connection with the sales, conveyances, assignments and
deliveries of Global Directly Acquired Assets and Local Directly Acquired Assets contemplated by
this Agreement. Sun shall indemnify the Purchaser Indemnified Parties for any Losses resulting
from any failure to comply with such Laws.

[Remainder of page intentionally left blank.]

129

 

          IN WITNESS WHEREOF, Horizon, Horizon OP, REIT Merger Sub, SLT Merger Sub, Sun, Trust,
SHC and SLT have caused this Agreement to be signed by their respective officers (or general
partner or managing member, as applicable) thereunto duly authorized all as of the date first
written above.

	 	 	 	 	 
	 	HOST MARRIOTT CORPORATION

 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 
	 

	 	 	 	 	 
	 	HOST MARRIOTT, L.P.

 	 
	 	By:  	                       Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 
	 

	 	 	 	 	 
	 	HORIZON SUPERNOVA MERGER SUB, L.L.C.

 	 
	 	By:  	                       Host Marriott, L.P.,
its sole member
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                       Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	HORIZON SLT MERGER SUB, L.P.

 	 
	 	By:  	                  Horizon Supernova Merger Sub, L.L.C.,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  Host Marriott, L.P.,
its sole member
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

 	 
	 	By:  	/s/ Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Executive Vice President, General Counsel & Secretary	 
	 

	 	 	 	 	 
	 	STARWOOD HOTELS & RESORTS

 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President, General Counsel & Secretary	 
	 

	 	 	 	 	 
	 	SHERATON HOLDING CORPORATION

 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President & Secretary	 
	 

	 	 	 	 	 
	 	SLT REALTY LIMITED PARTNERSHIP

 	 
	 	By:  	                       Starwood Hotels & Resorts,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President, General Counsel & Secretary<PAGE>
                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

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

                                 $1,700,000,000

                   SECURED SUPER-PRIORITY DEBTOR IN POSSESSION
                                CREDIT AGREEMENT

                         DATED AS OF SEPTEMBER 16, 2005

                                      AMONG

                             DELTA AIR LINES, INC.,
                       A DEBTOR AND DEBTOR IN POSSESSION,
                                  AS BORROWER,

                   THE OTHER CREDIT PARTIES SIGNATORY HERETO,
                     EACH A DEBTOR AND DEBTOR IN POSSESSION,
                               AS CREDIT PARTIES,

                 THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
                                   AS LENDERS,

                                       AND

                      GENERAL ELECTRIC CAPITAL CORPORATION,
                       AS ADMINISTRATIVE AGENT AND LENDER

                                      * * *

                            GE CAPITAL MARKETS, INC.,
                 AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER FOR
                           TERM LOAN A AND TERM LOAN B

                                      * * *

                            GE CAPITAL MARKETS, INC.
                                       AND
                      MORGAN STANLEY SENIOR FUNDING, INC.,
               AS JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS FOR
                                   TERM LOAN C

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
1.  AMOUNT AND TERMS OF CREDIT..........................................................     2
    1.1     Credit Facilities...........................................................     2
    1.2     Prepayments.................................................................     3
    1.3     Priority and Application of Payments........................................     5
    1.4     Use of Proceeds.............................................................     5
    1.5     Interest and Applicable Margins.............................................     6
    1.6     Term A Borrowing Base.......................................................     8
    1.7     [Reserved.].................................................................     8
    1.8     Fees........................................................................     8
    1.9     Receipt of Payments.........................................................     8
    1.10    Loan Account and Accounting.................................................     8
    1.11    Indemnity...................................................................     9
    1.12    Access......................................................................    10
    1.13    Taxes.......................................................................    11
    1.14    Capital Adequacy; Increased Costs; Illegality...............................    12
    1.15    Regulation D Compensation...................................................    14
2.  CONDITIONS PRECEDENT................................................................    14
    2.1     Conditions to Closing.......................................................    14
    2.2     Conditions to Subsequent Loans..............................................    17
3.  REPRESENTATIONS AND WARRANTIES......................................................    18
    3.1     Corporate Existence; Compliance with Law....................................    18
    3.2     Executive Offices, Collateral Locations, FEIN...............................    18
    3.3     Corporate Power, Authorization, Enforceable Obligations.....................    19
    3.4     Financial Statements and Projections........................................    19
    3.5     Material Adverse Effect; Burdensome Restrictions; Default...................    20
    3.6     Ownership of Property; Real Estate; Liens...................................    20
    3.7     Labor Matters...............................................................    21
    3.8     Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness...    22
    3.9     Government Regulation.......................................................    22
    3.10    Margin Regulations..........................................................    22
    3.11    Taxes.......................................................................    22
    3.12    ERISA.......................................................................    23
    3.13    No Litigation...............................................................    24
    3.14    Intellectual Property.......................................................    24
    3.15    Full Disclosure.............................................................    24
    3.16    Environmental Matters.......................................................    25
    3.17    Insurance...................................................................    25
    3.18    Use of Proceeds.............................................................    25
    3.19    Deposit.....................................................................    26
    3.20    Trade Relations.............................................................    26
    3.21    Compliance With Industry Standards..........................................    26
    3.22    Post-Petition Skymiles Facility.............................................    26
    3.23    Secured, Super-Priority Obligations.........................................    26
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                         <C>
    3.24    Certificated Air Carrier....................................................    27
    3.25    U.S. Citizen................................................................    27
    3.26    Spare Parts.................................................................    27
    3.27    Aircraft; Engines...........................................................    27
    3.28    Slots, Primary Gates and Routes.............................................    28
4.  FINANCIAL STATEMENTS AND INFORMATION................................................    28
    4.1     Reports and Notices.........................................................    28
    4.2     Communication with Accountants..............................................    28
5.  AFFIRMATIVE COVENANTS...............................................................    29
    5.1     Maintenance of Existence and Conduct of Business............................    29
    5.2     Payment of Charges..........................................................    29
    5.3     Books and Records...........................................................    30
    5.4     Insurance; Damage to or Destruction of Collateral...........................    30
    5.5     Compliance with Laws........................................................    32
    5.6     Intellectual Property.......................................................    32
    5.7     Environmental Matters.......................................................    32
    5.8     Landlords' Agreements; Bailee Letters.......................................    33
    5.9     [Reserved.].................................................................    33
    5.10    Notices.....................................................................    34
    5.11    Further Assurances..........................................................    34
    5.12    Additional Guaranties and Collateral Documents..............................    34
    5.13    Pledged Spare Parts.........................................................    36
    5.14    Aircraft Mortgage; Spare Parts Mortgage; SGR Security Agreement.............    36
    5.15    Slot Utilization............................................................    36
    5.16    ERISA/Labor Matters.........................................................    37
    5.17    Maintenance of Liens and Collateral.........................................    38
    5.18    Use of Proceeds.............................................................    38
    5.19    Cash Management Systems.....................................................    38
    5.20    Appraisals..................................................................    38
    5.21    Post-Closing Covenants......................................................    38
6.  NEGATIVE COVENANTS..................................................................    38
    6.1     Mergers, Subsidiaries, Etc..................................................    38
    6.2     Investments; Loans and Advances.............................................    39
    6.3     Indebtedness................................................................    40
    6.4     Affiliate Transactions......................................................    43
    6.5     Capital Structure and Business..............................................    43
    6.6     Guaranteed Indebtedness.....................................................    43
    6.7     Liens.......................................................................    44
    6.8     Sale of Stock and Assets....................................................    45
    6.9     [Reserved.].................................................................    47
    6.10    Financial Covenants.........................................................    47
    6.11    Hazardous Materials.........................................................    48
    6.12    Sale-Leasebacks.............................................................    48
    6.13    Restricted Payments.........................................................    48
    6.14    Change of Corporate Name or Location; Change of Fiscal Year.................    48
    6.15    No Impairment of Intercompany Transfers.....................................    49
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                         <C>
    6.16    Limitation on Negative Pledge Clauses.......................................    49
    6.17    No Speculative Transactions.................................................    49
    6.18    Real Estate Purchases and Leases............................................    50
    6.19    Changes Relating to Permitted Subordinated Indebtedness and
               Post-Petition Skymiles Facility Documents................................    50
    6.20    Cancellation of Indebtedness................................................    51
7.  TERM................................................................................    51
    7.1     Termination.................................................................    51
    7.2     Survival of Obligations Upon Termination of Financing Arrangements..........    51
8.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES..............................................    52
    8.1     Events of Default...........................................................    52
    8.2     Remedies....................................................................    55
    8.3     Waivers by Credit Parties...................................................    56
9   GUARANTY............................................................................    56
    9.1     Guaranty of Obligations of Borrower.........................................    56
    9.2     Demand by Secured Parties...................................................    57
    9.3     Enforcement of Guaranty.....................................................    57
    9.4     Waiver......................................................................    57
    9.5     Benefit of Guaranty.........................................................    58
    9.6     Modification of Obligations, Etc............................................    58
    9.7     Waiver of Subrogation, Etc..................................................    59
    9.8     Election of Remedies........................................................    59
10  SECURITY............................................................................    60
    10.1    Security....................................................................    60
    10.2    Perfection of Security Interests............................................    61
    10.3    Rights of Lender; Limitations on Lenders' Obligations.......................    63
    10.4    Covenants of the Credit Parties with Respect to Collateral..................    65
    10.5    Performance by Administrative Agent of the Credit Parties' Obligations......    68
    10.6    Limitation on Administrative Agent's duty in Respect of Collateral..........    68
    10.7    Remedies; Rights Upon Default...............................................    68
    10.8    The Administrative Agent's Appointment as Attorney-in-Fact..................    75
    10.9    [Reserved]..................................................................    77
    10.10   Intercreditor Issues........................................................    77
    10.11   Release of Collateral.......................................................    77
11. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT..................    78
    11.1    Assignment and Participations...............................................    78
    11.2    Appointment of Administrative Agent.........................................    80
    11.3    Administrative Agent's Reliance, Etc........................................    81
    11.4    GE Capital and Affiliates...................................................    82
    11.5    Lender Credit Decision......................................................    82
    11.6    Indemnification.............................................................    83
    11.7    Successor Agents............................................................    83
    11.8    Setoff and Sharing of Payments..............................................    84
    11.9    Payments; Non-Funding Lenders; Information; Actions in Concert..............    84
12. SUCCESSORS AND ASSIGNS..............................................................    86
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                         <C>
    12.1    Successors and Assigns......................................................    86
13. MISCELLANEOUS.......................................................................    86
    13.1    Complete Agreement; Modification of Agreement...............................    86
    13.2    Amendments and Waivers......................................................    86
    13.3    Fees and Expenses...........................................................    90
    13.4    No Waiver...................................................................    91
    13.5    Remedies....................................................................    91
    13.6    Severability................................................................    91
    13.7    Conflict of Terms...........................................................    92
    13.8    Confidentiality.............................................................    92
    13.9    GOVERNING LAW...............................................................    92
    13.10   Notices.....................................................................    93
    13.11   Section Titles..............................................................    95
    13.12   Counterparts................................................................    95
    13.13   WAIVER OF JURY TRIAL........................................................    95
    13.14   Press Releases and Related Matters..........................................    95
    13.15   [Reserved]..................................................................    96
    13.16   Advice of Counsel...........................................................    96
    13.17   No Strict Construction......................................................    96
</TABLE>

                               INDEX OF APPENDICES

Annex A  (Recitals)                        - Definitions
Annex B  (Section 1.1(a))                  - Letters of Credit
Annex C  (Section 1.7)                     - Cash Management Systems
Annex D  (Section 2.1(f))                  - Closing Checklist
Annex E  (Section 4.1(a))                  - Financial Statements and
                                             Projections -- Reporting
Annex F  (Section 4.1(b))                  - Collateral Reports
Annex G  (Section 6.10)                    - Financial Covenants
Annex H  (Section 11.9(a))                 - Lenders' Wire Transfer Information
Annex I  (Section 13.10)                   - Notice Addresses
Annex J  (from Annex A -
         Commitments Definition)           - Commitments as of Closing Date
Annex K  (from Annex A-
         Permitted Investments Definition) - Investments Guidelines
Annex L  (Section 5.21)                    - Post-Closing Covenants

Exhibit 1.1                 -  Form of Note
Exhibit 1.5(e)              -  Form of Notice of Conversion/Continuation
Exhibit 4.1(b)              -  Form of Borrowing Base Certificate
Exhibit 11.1(a)             -  Form of Assignment Agreement

                                       iv

<PAGE>

Exhibit I                   -  Form of Interim Order

Disclosure Schedule 3.1     -  Type of Entity; State of Organization
Disclosure Schedule 3.2     -  Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a)  -  Financial Statements
Disclosure Schedule 3.6     -  Real Estate and Leases:
         Part 1             -     Owned Real Estate
         Part 2             -     Material Real Estate Contracts
         Part 3             -     Leases Affecting Owned Real Estate
Disclosure Schedule 3.7     -  Labor Matters
Disclosure Schedule 3.8     -  Ventures, Subsidiaries and Affiliates;
                               Outstanding Stock
Disclosure Schedule 3.11    -  Tax Matters
Disclosure Schedule 3.12    -  ERISA Plans
Disclosure Schedule 3.14    -  Intellectual Property
Disclosure Schedule 3.16    -  Environmental Matters
Disclosure Schedule 3.17    -  Insurance:
         Part 1             -     Insurance Policies
         Part 2             -     Those Insurance Policies with respect to
                                  Collateral
Disclosure Schedule 3.19    -  Deposit
Disclosure Schedule 3.20    -  Trade Relations
Disclosure Schedule 3.26    -  Spare Parts
Disclosure Schedule 3.27    -  Eligible Aircraft; Eligible Engines
Disclosure Schedule 3.28    -  Primary Slots and Primary Routes
Disclosure Schedule 5.1     -  Trade Names
Disclosure Schedule 6.2     -  Existing Investments
Disclosure Schedule 6.3     -  Existing Indebtedness
Disclosure Schedule 6.7     -  Existing Liens
Disclosure Schedule 6.15    -  Restrictions on Intercompany Transfers
Disclosure Schedule 6.16    -  Negative Pledge Clauses
Disclosure Schedule 10.1    -  Commercial Tort Claims
Disclosure Schedule 10.4    -  Pledged Collateral
         Part 1             -     Pledged Shares
         Part 2             -     Pledged Indebtedness

Exhibit A                   -  Form of Power of Attorney
Exhibit B                   -  Form of Aircraft Mortgage
Exhibit C                   -  Form of Copyright Security Agreements
Exhibit D                   -  Form of Mortgage
Exhibit E                   -  Form of SGR Security Agreement
Exhibit F                   -  Form of Spare Parts Mortgage
Exhibit G                   -  Form of Trademark Security Agreements
Exhibit H                   -  Form of Pledge Amendment

                                        v

<PAGE>

          This SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT
(this "Agreement"), dated as of September 16, 2005, among DELTA AIR LINES, INC.,
a Delaware corporation, as a debtor and debtor in possession under chapter 11 of
title 11 of the Bankruptcy Code (as defined below) ("Borrower"); the other
Credit Parties signatory hereto, each as a debtor and debtor in possession under
chapter 11 of the Bankruptcy Code; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, "GE Capital"), for itself, as
Lender, and as administrative agent and collateral agent for the Lenders (in
such capacity, the "Administrative Agent"); and the other Lenders signatory
hereto from time to time.

                                    RECITALS

          WHEREAS, on September 14, 2005, (the "Petition Date"), Borrower and
each of the other Credit Parties filed voluntary petitions for relief
(collectively, the "Cases") under chapter 11 of the Bankruptcy Code with the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"); and

          WHEREAS, Borrower and the other Credit Parties are continuing to
operate their respective businesses and manage their respective properties as
debtors and debtors in possession under sections 1107 and 1108 of the Bankruptcy
Code; and

          WHEREAS, Borrower has requested that the Lenders to provide secured
super-priority term loan facilities of up to $1,700,000,000 in order to fund the
continued operation of the Credit Parties' businesses as debtors and debtors in
possession under the Bankruptcy Code; and

          WHEREAS, the Lenders are willing to make available to Borrower such
post-petition loans and other extensions of credit upon the terms and subject to
the conditions set forth herein; and

          WHEREAS, each of the Guarantors has agreed to guaranty the obligations
of Borrower hereunder, and each of the Credit Parties has agreed to secure its
obligations to the Lenders and the L/C Issuers hereunder with, inter alia,
security interests in, and liens on, all of its property and assets, whether
real or personal, tangible or intangible, now existing or hereafter acquired or
arising, with certain exceptions, all as more fully provided herein;

          WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Schedules, Exhibits and other attachments (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:

<PAGE>

1. AMOUNT AND TERMS OF CREDIT

          1.1  Credit Facilities.

          (a)  Term Loan A.

               (i) Subject to the terms and conditions hereof, each Term A
Lender agrees to make a term loan (collectively, the "Term Loan A") to Borrower
in an aggregate principal amount equal to (A) on the Closing Date, the least of
(1) its Term A Commitment, (2) its Pro Rata Share of the Term A Borrowing Base
and (3) its Pro Rata Share of the aggregate principal amount of the Term Loan A
approved or authorized by the Interim Order to be made available to Borrower on
such date and (B) on the Entry Date, the lesser of (1) the remainder of its Term
A Commitment and (2) an amount equal to its Pro Rata Share of the then effective
Term A Borrowing Base minus the outstanding amount of Term Loan A made by such
Term A Lender on the Closing Date. The obligations of each Term A Lender
hereunder shall be several and not joint. The Term Loan A shall, upon the
request of any Lender pursuant to Section 1.10, be evidenced by promissory notes
substantially in the form of Exhibit 1.1 (each a "Note" and collectively the
"Notes"), and, upon such request as provided in Section 1.10, Borrower shall
execute and deliver each Note to the applicable Term A Lender. Each Note shall
represent the obligation of Borrower to pay the amount of the applicable Term A
Lender's Term Loan A, together with interest thereon as prescribed in Section
1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
A shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan A may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan A
shall be paid to the Administrative Agent for the ratable benefit of each Term A
Lender, ratably in proportion to each such Term A Lender's respective Term A
Commitment.

               (iv) Subject to and in accordance with the terms and conditions
contained herein and in Annex B, unless a Default or an Event of Default shall
have occurred and be continuing, each L/C Issuer agrees to issue one or more
Letters of Credit at the request of the Borrower from time to time during the
period commencing on the Closing Date and ending on the earlier of the Maturity
Date and 30 days prior to the Scheduled Maturity Date.

          (b) Term Loan B.

               (i) Subject to the terms and conditions hereof, each Term B
Lender agrees to make a term loan (collectively, the "Term Loan B") on the
Closing Date to Borrower in an aggregate principal amount equal to its Term B
Commitment. The obligations of each Term B Lender hereunder shall be several and
not joint. The Term Loan B shall, upon the request of any Lender pursuant to
Section 1.10, be evidenced by a Note, and, upon such request as provided in
Section 1.10, Borrower shall execute and deliver each Note to the applicable
Term B Lender. Each Note shall represent the

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obligation of Borrower to pay the amount of the applicable Term B Lender's Term
Loan B, together with interest thereon as prescribed in Section 1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
B shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan B may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan B
shall be paid to the Administrative Agent for the ratable benefit of each Term B
Lender, ratably in proportion to each such Term B Lender's respective Term B
Commitment.

          (c) Term Loan C.

               (i) Subject to the terms and conditions hereof, each Term C
Lender agrees to make a term loan (collectively, the "Term Loan C") on the
Closing Date to Borrower in an aggregate principal amount equal to its Term C
Commitment. The obligations of each Term C Lender hereunder shall be several and
not joint. The Term Loan C shall, upon the request of any Lender pursuant to
Section 1.10, be evidenced by a Note, and, upon such request as provided in
Section 1.10, Borrower shall execute and deliver each Note to the applicable
Term C Lender. Each Note shall represent the obligation of Borrower to pay the
amount of the applicable Term C Lender's Term Loan C, together with interest
thereon as prescribed in Section 1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
C shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan C may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan C
shall be paid to the Administrative Agent for the ratable benefit of each Term C
Lender, ratably in proportion to each such Term C Lender's respective Term C
Commitment.

          1.2  Prepayments.

          (a) Voluntary Prepayments. Borrower may at any time on at least three
(3) Business Days' prior written notice to the Administrative Agent, voluntarily
prepay all or part of the Term Loan; provided that any such prepayment shall be
in a minimum amount of $5,000,000 and integral multiples of $250,000 in excess
of such amount and shall be accompanied by payment of any LIBOR funding breakage
costs in accordance with Section 1.11(b); provided, further, that any such
prepayment shall be applied pursuant to Section 1.3.

          (b) Mandatory Prepayments.

               (i) If at any time the aggregate outstanding principal amount of
the Term Loan A exceeds the Term A Borrowing Base, Borrower shall immediately
repay the aggregate outstanding amount of the Term Loan A to the extent required
to eliminate such excess.

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               (ii) Upon receipt by any Credit Party of Net Cash Proceeds
arising from an Asset Sale (other than an Asset Sale of Skymiles Collateral) or
Property Loss Event, Borrower shall immediately prepay the Loans in an amount
equal to 100% of such Net Cash Proceeds; provided, that, immediately upon
receipt by any Credit Party of such Net Cash Proceeds, Borrower may, at its
option, deposit 100% of such Net Cash Proceeds in the Cash Collateral Account,
in each case, to be applied in accordance with Section 1.2(c).

          (c) Application of Net Cash Proceeds. Any Net Cash Proceeds received
by Borrower or any other Credit Party or the Administrative Agent under any Loan
Document (except as otherwise expressly provided herein or therein) shall be
applied pursuant to Section 1.3; provided, however, that, in the event Borrower
has elected to deposit such Net Cash Proceeds in the Cash Collateral Account in
accordance with Section 1.2(b)(ii):

               (i) upon any Asset Sale of Collateral included in the Term A
     Borrowing Base, the Administrative Agent shall (A) upon receipt of a
     Borrowing Base Certificate prior to the Prepayment Date that includes one
     or more assets (the "Replacement Borrowing Base Assets" and which, other
     than in the case of Aircraft or Engines, may consist of any type of asset
     eligible to be included in the Term A Borrowing Base and, in the case of
     Aircraft or Engines, shall consist of Additional Aircraft or Additional
     Engines, as the case may be) replacing the asset or assets (the "Original
     Borrowing Base Assets") giving rise to such Net Cash Proceeds, release to
     Borrower an amount equal to (1) such Net Cash Proceeds minus (2) the
     amount, if any, by which (x) the Allocated Amount for the Original
     Borrowing Base Assets exceeds (y) the Allocated Amount for the Replacement
     Borrowing Base Assets and (B) on the earlier of (1) the election by the
     Administrative Agent, the Requisite Term A Lenders, the Requisite Term B
     Lenders or the Requisite Term C Lenders following the occurrence of any
     Event of Default and (2) the Prepayment Date, apply the balance of such Net
     Cash Proceeds pursuant to Section 1.3;

               (ii) upon a Reinvestment Event, all or a portion of such Net Cash
     Proceeds, as specified in a Reinvestment Notice, shall be used to acquire
     or construct Permitted Reinvestment Collateral (the "Reinvestment Deferred
     Amount") and such Reinvestment Deferred Amount shall, within five (5)
     Business Days of delivery of a Reinvestment Release Request, be released to
     Borrower to acquire or construct such Permitted Reinvestment Collateral
     until the Reinvestment Prepayment Date corresponding thereto, on which date
     the remaining Net Cash Proceeds, if any, shall be applied pursuant to
     Section 1.3;

               (iii) upon a Property Loss Event involving any Aircraft or
     Engines, Borrower shall comply with the applicable notice provisions and
     requirements for Replacement Aircraft or Replacement Engines as set forth
     in the Aircraft Mortgage; and

               (iv) upon a Property Loss Event involving any Real Estate subject
     to a Mortgage, Borrower shall comply with the applicable provisions and
     requirements set forth in such Mortgage.

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          (d) No Implied Consent. Nothing in this Section 1.2 shall be construed
to constitute the Administrative Agent's or Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.

          1.3 Priority and Application of Payments.

          So long as no Event of Default has occurred and is continuing,
payments matching specific scheduled or required payments then due shall be
applied to those scheduled or required payments. As to any other payment and as
to all payments made when an Event of Default has occurred and is continuing or
following the Maturity Date, Borrower hereby irrevocably waives the right to
direct the application of any and all payments received from or on behalf of
Borrower, and Borrower and each Secured Party hereby irrevocably agrees that the
Administrative Agent shall have the continuing exclusive right to apply any and
all such payments against the Obligations as follows: first, to Fees and
reimbursable expenses of the Administrative Agent then due and payable pursuant
to any of the Loan Documents; second, to unpaid Fees and reimbursable expenses
of the Arrangers due and payable as of Entry Date pursuant to the any of the
Loan Documents; third, to Fees and reimbursable expenses of Term A Lenders and
Letter of Credit Obligations of L/C Issuers then due and payable pursuant to any
of the Loan Documents; fourth, to interest then due and payable on the Term Loan
A; fifth, to prepay the remaining principal amount of the Term Loan A, until the
Term Loan A shall have been paid in full; sixth, to all other Obligations then
due and payable to the Term A Lenders; seventh, to Fees and reimbursable
expenses of Term B Lenders then due and payable pursuant to any of the Loan
Documents; eighth, to interest then due and payable on the Term Loan B; ninth,
to prepay the remaining principal amount of the Term Loan B, until the Term Loan
B shall have been paid in full; tenth, to all other Obligations then due and
payable to the Term B Lenders; eleventh, to Fees and reimbursable expenses of
Term C Lenders then due and payable pursuant to any of the Loan Documents;
twelfth, to interest then due and payable on the Term Loan C; thirteenth, to
prepay the remaining principal amount of the Term Loan C, until the Term Loan C
shall have been paid in full; and last, to all other Obligations then due and
payable to the Term C Lenders. All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. Notwithstanding anything herein to
the contrary, no Credit Party shall be obligated to make any payment to any
Secured Party under any Loan Document from the proceeds of Skymiles Collateral
at any time after the delivery to Borrower of a Notice of Actionable Default and
until the withdrawal of all pending Notices of Actionable Default except as and
to the extent set forth in the Skymiles Intercreditor Agreement.

          1.4 Use of Proceeds.

          Borrower shall utilize the proceeds of the Loans and Letters of Credit
solely for the refinancing of the obligations under the Existing Credit
Agreement and the Existing Skymiles Facility pursuant to Section 2.1(j) and
Section 2.1(k) and for the general corporate purposes of the Credit Parties.

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          1.5 Interest and Applicable Margins.

          (a) Borrower shall pay interest to the Administrative Agent, for the
ratable benefit of Lenders in accordance with the various Loans being made by
each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Term Loan A, at the election of
Borrower, (A) the Index Rate plus the Applicable Term A Index Margin per annum
or (B) at the election of Borrower, the applicable LIBOR Rate plus the
Applicable Term A LIBOR Margin per annum; (ii) with respect to the Term Loan B,
at the election of Borrower, (A) the Index Rate plus the Applicable Term B Index
Margin per annum or (B) the applicable LIBOR Rate plus the Applicable Term B
LIBOR Margin per annum; and (iii) with respect to the Term Loan C, at the
election of Borrower, (A) the Index Rate plus the Applicable Term C Index Margin
per annum or (B) the applicable LIBOR Rate plus the Applicable Term C LIBOR
Margin per annum.

          The applicable margins are as follows:

<TABLE>
<S>                                           <C>
          Applicable Term A Index Margin...   4.25%
          Applicable Term A LIBOR Margin...   5.00%
          Applicable Term B Index Margin...   6.25%
          Applicable Term B LIBOR Margin...   7.00%
          Applicable Term C Index Margin...   8.25%
          Applicable Term C LIBOR Margin...   9.00%
</TABLE>

          (b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.

          (c) All computations of interest shall be made by the Administrative
Agent on the basis of a 360-day year (or, in the case of interest calculated
based on the Index Rate, a 365/366 day year), in each case for the actual number
of days occurring in the period for which such interest is payable. The Index
Rate is a floating rate determined for each day. Each determination by the
Administrative Agent of interest rates hereunder shall be presumptive evidence
of the correctness of such rates.

          (d) So long as an Event of Default has occurred and is continuing
under Section 8.1(a), or so long as any other Event of Default has occurred and
is continuing and at the election of any of (i) the Administrative Agent, (ii)
the Requisite Term A Lenders, (iii) the Requisite Term B Lenders or (iv) the
Requisite Term C Lenders confirmed by written notice from the Administrative
Agent to Borrower, (A) the interest rates applicable to the Loans shall be
increased by two percentage points (2%) per annum above the rates of interest
otherwise applicable to such Loans hereunder (the "Default Rate"), and (B) all
other outstanding

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Obligations shall bear interest at the Default Rate applicable to the Term Loan
C. Interest at the Default Rate shall accrue from the initial date of such Event
of Default until that Event of Default is cured or waived and shall be payable
upon demand.

          (e) So long as no Event of Default has occurred and is continuing,
Borrower shall have the option to (i) convert at any time all or any part of
outstanding Loans from Index Rate Loans to LIBOR Loans, (ii) convert any LIBOR
Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in
accordance with Section 1.11(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iii) continue all or any
portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on
the first day after the last day of the LIBOR Period of the Loan to be
continued. Any Loan or group of Loans having the same proposed LIBOR Period to
be made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $5,000,000 and integral multiples of $500,000 in excess of such
amount. Any such election must be made by 11:00 a.m. (New York time) on the
third Business Day prior to (1) the date of any proposed borrowing which is to
bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect
to any LIBOR Loans to be continued as such, or (3) the date on which Borrower
wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period
designated by Borrower in such election. If no election is received with respect
to a LIBOR Loan by 11:00 a.m. (New York time) on the third Business Day prior to
the end of the LIBOR Period with respect thereto (or if an Event of Default has
occurred and is continuing), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. Borrower must make such election by notice
to the Administrative Agent in writing, by telecopy or overnight courier. In the
case of any conversion or continuation, such election must be made pursuant to a
written notice (a "Notice of Conversion/Continuation") in the form of Exhibit
1.5(e). No Loan may be made as or converted into a LIBOR Loan until after five
(5) Business Days following the Closing Date and, until the earlier of ninety
(90) days following the Closing Date and completion of primary syndication of
the Loans as determined by the Arrangers, no Loan may be converted into a LIBOR
Loan that has an interest period of more than one week.

          (f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by the Administrative
Agent, on behalf of applicable Lenders, is equal to the total interest that
would have been received had the interest rate payable hereunder been (but for
the operation of this paragraph) the interest rate payable since the Closing
Date as otherwise provided in this Agreement. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
that such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate.

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          1.6 Term A Borrowing Base.

          The Administrative Agent shall have the right to modify or eliminate
Reserves against Eligible Accounts, Eligible Unbilled Accounts and Eligible
Refundable Ticket Accounts, Eligible Real Estate, Eligible Aircraft, Eligible
Engines, Eligible Spare Parts, Eligible Ground Service Equipment, Eligible
Flight Simulators and Eligible Tooling from time to time in its reasonable
credit judgment. In addition, the Administrative Agent reserves the right, at
any time and from time to time after the Closing Date, to adjust any of the
eligibility criteria and to establish new eligibility criteria, and to adjust
advance rates with respect to Eligible Accounts, Eligible Unbilled Accounts and
Eligible Refundable Ticket Accounts, Eligible Real Estate, Eligible Aircraft,
Eligible Engines, Eligible Spare Parts, Eligible Ground Service Equipment,
Eligible Flight Simulators and Eligible Tooling, in its reasonable credit
judgment, reflecting changes in the collectibility or realization values (in the
case of Accounts) or changes in the Fair Market Value or Net Orderly Liquidation
Value (in the case of the other components of the Term A Borrowing Base), in
each case, arising or discovered by the Administrative Agent after the Closing
Date, subject to the approval of each of the Supermajority Term A Lenders, the
Requisite Term B Lenders and the Requisite Term C Lenders in the case of
adjustments or new eligibility criteria, reductions in the amount of the
Reserves in effect on the Closing Date or changes in advance rates which have
the effect of making more credit available.

          1.7 [Reserved.]

          1.8 Fees.

          Borrower shall pay to GE Capital the Fees specified in the Fee
Letters.

          1.9 Receipt of Payments.

          Borrower shall make each payment under this Agreement not later than
2:00 p.m. (New York time) on the day when due in immediately available funds in
Dollars to the Collection Account. For purposes of computing interest as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.

          1.10 Loan Account and Accounting.

          The Administrative Agent shall maintain a loan account (the "Loan
Account") on its books to record each of Term Loan A, Term Loan B and Term Loan
C, all payments made by Borrower with respect to such Term Loan, and all other
debits and credits as provided in this Agreement with respect to such Term Loan
or any other Obligations with respect to such Term Loan. All entries in the Loan
Account shall be made in accordance with the Administrative Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on the Administrative Agent's most recent printout or other
written statement, shall, absent manifest error, be presumptive evidence of the
amounts due and owing to the Administrative Agent and the Lenders by Borrower;
provided, that any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's duty to pay the

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Obligations with respect to the Term Loans. The Administrative Agent shall
render to Borrower a monthly accounting of transactions with respect to each
Term Loan setting forth the balance of the Loan Account for the immediately
preceding month. Any Lender may elect, by notice to Borrower and the
Administrative Agent, to have such Lender's Term Loan be evidenced by a Note
issued to that Lender. If no such Note is requested, such Lender may rely on the
Term Loan Account as evidence of the amount of Obligations with respect to the
Term Loan from time to time owing to it. Unless Borrower notifies the
Administrative Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall be presumptive
evidence of all matters reflected therein. Only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower.

          1.11 Indemnity.

          (a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of the Administrative Agent, Lenders
and their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents, and associated with Electronic Transmissions or E-Systems as
well as failures caused by Borrower's equipment, software, services or otherwise
used in connection therewith (collectively, "Indemnified Liabilities");
provided, that no such Credit Party shall be liable for any indemnification to
an Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense results from that Indemnified Person's
gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

          (b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall

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request a termination of any borrowing, conversion into or continuation of LIBOR
Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against any loss or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection. This covenant
shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.11(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within thirty (30) days of receipt thereof, specifying the basis for such
objection in detail.

          1.12 Access.

          (a) Each Credit Party shall, during normal business hours, from time
to time upon five (5) Business Days' prior notice as frequently as the
Administrative Agent reasonably determines to be appropriate (and subject to
such other restrictions on inspections set forth in the Aircraft Mortgage with
respect to Aircraft and Engines or the Spare Parts Mortgage with respect to
Spare Parts): (i) provide the Administrative Agent and any of its officers,
employees and agents access to its officers and employees, and with prior notice
and the opportunity to be present, advisors of each Credit Party, (ii) permit
the Administrative Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's Books and Records
(subject to requirements under any confidentiality agreements, if applicable) ,
and (iii) permit the Administrative Agent, and any of its officers, employees
and agents, to have access to properties, facilities and to the Collateral and
to inspect, audit, review, evaluate, conduct field examinations and make test
verifications and counts of the Accounts, Inventory and other Collateral of any
Credit Party; provided, that so long as no Event of Default has occurred and is
continuing, such access and inspections shall not be permitted more frequently
than (A) once in any calendar quarter with respect to any Collateral of the type
described in clauses (d) through (m) of the definition of "Term A Borrowing
Base," (B) twice every calendar year with respect to any Collateral of the type
described in clauses (a) through (c) of the definition of "Term A Borrowing
Base," and (C) as set forth in the other applicable Collateral Documents.
Representatives of other Lenders may accompany the Administrative Agent's
representatives on regularly scheduled audits at no charge to Borrower. Each
Credit Party shall make available to the Administrative Agent and its counsel
reasonably promptly originals or copies of all Books and Records (subject to
requirements under any confidentiality agreements, if applicable) that the
Administrative Agent may reasonably request. Each Credit Party shall deliver any
document or instrument necessary for the Administrative Agent, as it may from
time to time request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party and shall maintain supporting
documentation on media, including computer

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tapes and discs owned by such Credit Party. The Administrative Agent will give
Lenders at least five (5) days' prior written notice of regularly scheduled
audits.

          (b) If an Event of Default has occurred and is continuing, each such
Credit Party shall provide such access as set forth in clause (a) above to the
Administrative Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default has occurred and is continuing,
Borrower shall provide the Administrative Agent and each Lender with access,
with prior notice and opportunity for Borrower to be present, to its suppliers,
service providers and customers.

          1.13 Taxes.

          (a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.13, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) unless such Taxes are imposed as the result of
a determination that an applicable Certificate of Exemption (as defined in
Section 1.13(c)) did not entitle a Foreign Lender to an exemption from such
Taxes at the time such Foreign Lender became a Lender hereunder, the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.13) the Administrative Agent or Lenders, as applicable,
receive an amount equal to the sum they would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days after the
date of any such payment of Taxes, Borrower shall furnish to the Administrative
Agent the original or a certified copy of a receipt evidencing payment thereof.

          (b) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay the Administrative Agent and each Lender for the full amount of
Taxes paid by the Administrative Agent or such Lender, as appropriate, with
respect to payments received from Borrower hereunder and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted unless
such Taxes are imposed as the result of a determination that establishes that an
applicable Certificate of Exemption did not in fact entitle a Foreign Lender to
an exemption from such Taxes at the time such Foreign Lender became a Lender
hereunder.

          (c) Each Person organized under the laws of a jurisdiction outside the
United States (a "Foreign Person") as to which payments to be made under this
Agreement or under the Notes are completely exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and the Administrative Agent a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Person's entitlement to such complete exemption (a "Certificate of Exemption").
Any Foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and the Administrative Agent
prior to becoming a Lender hereunder. No Foreign Person may become a Lender
hereunder if such Foreign Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender. For the avoidance of doubt, (i) any Sale described
in Section

                                       11

<PAGE>

11.1(a) to a Foreign Person shall only become effective upon delivery by the
party to whom such Sale is made to the Borrower and the Administrative Agent of
a Certificate of Exemption, and (ii) any participant or SPV described in Section
11.1(e) shall not be entitled to any benefit under Section 1.13 unless such
participant or SPV delivers to Borrower and the Administrative Agent a
Certificate of Exemption. In addition, any Lender that is not a Foreign Person
and that is a partnership or trust for U.S. federal income tax purposes shall
not be entitled to any payment by Borrower pursuant to Section 1.13(b) with
respect to any Taxes paid by such Lender with respect to any Foreign Person that
is a partner or owner of an interest in such Lender unless such Lender had
obtained a Certificate of Exemption from such Foreign Person at the later of the
times (i) such Lender became a Lender hereunder and (ii) such Foreign Person
became a partner or owner of an interest in such Lender.

          (d) Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstance that would result in any additional payment by
Borrower pursuant to Section 1.13(a) or (b), such Lender shall, to the extent
not inconsistent with such Lender's internal policies of general application use
reasonable commercial efforts to mitigate any Taxes that would result in such
payments by Borrower. If Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 1.13, then such Lender,
at the request of Borrower and at Borrower's expense, will change the
jurisdiction of its lending office if such change (i) will eliminate or reduce
any such additional payment which may thereafter accrue and (ii) as determined
by such Lender in its sole discretion, is not otherwise materially
disadvantageous to such Lender, provided, that the mere existence of fees,
charges, costs or expenses that such Borrower has offered and agreed to pay on
behalf of a Lender shall not be deemed to be disadvantageous to such Lender.

          1.14 Capital Adequacy; Increased Costs; Illegality.

          (a) If any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time upon demand by such Lender
(with a copy of such demand to the Administrative Agent) pay to the
Administrative Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to the Administrative Agent shall be
presumptive evidence of the matters set forth therein.

          (b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) other than in
respect of taxes (including income taxes) or (ii) the compliance with any
guideline or request from any central bank or other non-tax Governmental
Authority (whether or not having the force of law), in each case occurring after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall
from time to time, upon

                                       12

<PAGE>

demand by such Lender (with a copy of such demand to the Administrative Agent),
pay to the Administrative Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
to the Administrative Agent by such Lender, shall be presumptive evidence of the
matters set forth therein. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would result
in any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 1.14(b).

          (c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) after the Closing Date shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is unlawful,
for any Lender to agree to make or to make or to continue to fund or maintain
any LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender's reasonable opinion, materially and adversely affecting
it or its Loans or the income obtained therefrom, on notice thereof and demand
therefor by such Lender to Borrower through the Administrative Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith prepay in
full all outstanding LIBOR Loans owing to such Lender, together with interest
accrued thereon, unless Borrower, within five (5) Business Days after the
delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.

          (d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period, provided, that Borrower shall not be required to compensate a
Lender pursuant to this Section 1.14 for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender notifies Borrower
of the circumstance giving rise to such increased costs or reductions and of
such Lender's intention to claim compensation therefor.

          (e) Within thirty (30) days after receipt by Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.13(a), 1.13(b),
1.14(a) or 1.14(b), Borrower may, at its option, notify the Administrative Agent
and such Affected Lender of its intention to replace the Affected Lender. So
long as no Default or Event of Default has occurred and is continuing, Borrower,
with the consent of the Administrative Agent, may obtain, at Borrower's expense,
a replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to the Administrative Agent.
If Borrower obtains a Replacement Lender within ninety (90) days following
notice of its intention to do so, the Affected Lender must sell and assign its
Loans and Commitments to such Replacement Lender for an amount equal to the
principal balance of all Loans held by the Affected Lender and all accrued and
unpaid interest and Fees with respect thereto through the date of such sale and
such assignment shall not require the payment of an assignment fee to the
Administrative Agent; provided, that Borrower shall have reimbursed such
Affected Lender for the additional amounts or increased

                                       13

<PAGE>

costs that it is entitled to receive under this Agreement through the date of
such sale and assignment. Notwithstanding the foregoing, Borrower shall not have
the right to obtain a Replacement Lender if the Affected Lender rescinds its
demand for increased costs or additional amounts within fifteen (15) days
following its receipt of Borrower's notice of intention to replace such Affected
Lender. Furthermore, if Borrower gives a notice of intention to replace and does
not so replace such Affected Lender within ninety (90) days thereafter,
Borrower's rights under this Section 1.14(e) shall terminate with respect to
such Affected Lender and Borrower shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections
1.13(a), 1.13(b), 1.14(a) or 1.14(b).

          1.15 Regulation D Compensation.

          If and so long as a reserve requirement of the type referred to in
clause (i)(B) below is prescribed by the Federal Reserve Board (or any
successor), each Lender subject to such requirement may require Borrower to pay,
contemporaneously with each payment of interest on each such Lender's LIBOR
Loans, additional interest on such LIBOR Loan at a rate per annum determined by
such Lender up to but not exceeding the excess of (i) (A) the applicable LIBOR
Rate divided by (B) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days prior to
the beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board) that
are required to be maintained by a member bank of the Federal Reserve System
over (ii) the applicable LIBOR Rate.

2.   CONDITIONS PRECEDENT

          2.1 Conditions to Closing.

          This Agreement, including the obligation of each Lender to make the
Loans requested to be made by it, shall not become effective until the date (the
"Closing Date") on which each of the following conditions precedent is satisfied
or provided for in a manner reasonably satisfactory to the Administrative Agent,
or duly waived in writing in accordance with Section 13.2:

          (a) Bankruptcy Court Orders. The Bankruptcy Court shall have entered
the Interim Order no later than seven days after the commencement of the Cases
or, if the Closing Date is more than 35 days (or such longer period not to
exceed 55 days as the Arrangers shall agree in their sole discretion) after the
commencement of the Cases, the Bankruptcy Court shall have entered the Final
Order by the 35th day (or the 55th day if agreed by the Arrangers in their sole
discretion) following the Petition Date, and the Clerk of the Bankruptcy Court
shall have certified that such Order has been duly entered, and such Order shall
be in full force and effect and shall not have been vacated, reversed, modified,
amended or stayed without the prior written consent of the Administrative Agent
and the Requisite Lenders.

                                       14

<PAGE>

          (b) First Day Orders. All First Day Orders entered into on or prior to
the Closing Date, and all motions related thereto, including, without
limitation, those related to the Loans, the Loan Documents, the Post-Petition
Skymiles Facility and cash management, entered by the Bankruptcy Court in the
Cases shall be in form and substance reasonably satisfactory to the
Administrative Agent and its counsel; provided, that the satisfaction or waiver
of such condition shall not be deemed a suspension or waiver of any Default or
Event of Default arising therefrom or related thereto.

          (c) Credit Agreement. This Agreement or counterparts hereof shall have
been duly executed by, and delivered to, each of Borrower, the other Credit
Parties, the Administrative Agent and the Lenders.

          (d) Post-Petition Skymiles Facility. Each of the Post-Petition
Skymiles Facility Documents shall be in full force and effect, in form and
substance reasonably satisfactory to Administrative Agent, and the transactions
contemplated thereunder shall have been consummated in accordance therewith
concurrently with the Closing Date, including the funding of the Bankruptcy
Loans (as defined in the Post-Petition Skymiles Facility Documents) thereunder
in an aggregate principal amount of not less than $350,000,000.

          (e) Skymiles Intercreditor Agreement. Administrative Agent shall have
received the Skymiles Intercreditor Agreement or counterparts thereof, duly
executed by, and delivered to, Administrative Agent and Amex and duly
acknowledged by each Credit Party.

          (f) Loan Documents. The Administrative Agent shall have received such
documents, instruments, agreements and legal opinions listed on Annex D, and
such other documents, instruments, agreements and legal opinions as the
Administrative Agent shall request, in its discretion exercised reasonably in
accordance with their customary business practices for comparable debtor in
possession transactions, in connection with the transactions contemplated by
this Agreement and the other Loan Documents, each in form and substance
reasonably satisfactory to the Administrative Agent.

          (g) Approvals. The Administrative Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons, including all requisite Governmental
Authorities, to the execution and delivery of this Agreement and the other Loan
Documents, (ii) satisfactory evidence that the Credit Parties have obtained all
material governmental and third party approvals or waivers necessary in
connection with the performance and consummation of this Agreement and the other
Loan Documents and the continuing operations of Borrower and its Subsidiaries
shall have been obtained and be in full force and effect, or (iii) an officer's
certificate in form and substance reasonably satisfactory to the Administrative
Agent affirming that no such consents or approvals are required.

          (h) Payment of Fees; Satisfaction of Conditions. Borrower shall have
paid the Fees required to be paid on or prior to the Closing Date in the
respective amounts specified in the Fee Letters, and shall have reimbursed the
Administrative Agent and the Arrangers for all fees, costs and expenses of
closing presented as of the Closing Date and the other conditions set forth in
the Fee Letters shall have been satisfied.

                                       15

<PAGE>

          (i) [Reserved.]

          (j) Refinancing of Existing Credit Agreement. Concurrently with the
Closing Date, (i) all obligations under the Existing Credit Agreement shall have
been repaid in full, and (ii) the Existing Credit Agreement and all Loan
Documents (as defined therein) shall have been terminated on terms satisfactory
to the Administrative Agent.

          (k) Refinancing of Existing Skymiles Facility. Concurrently with the
Closing Date, (i) all obligations under the Existing Skymiles Facility shall
have been repaid in full, and (ii) the Existing Skymiles Facility Documents
shall have been terminated or ceased to be effective or otherwise modified on
terms satisfactory to the Administrative Agent.

          (l) No Material Adverse Effect. There has been no Material Adverse
Effect since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005.

          (m) No Action, Suit, Litigation. Other than the Cases, there shall
exist no unstayed action, suit, investigation, litigation, or proceeding pending
(or, to the knowledge of any officer of Borrower or any other Credit Party,
threatened) in any court or before any arbitrator or governmental
instrumentality, which could reasonably be expected to result in a Material
Adverse Effect.

          (n) No Violation of Law or Injunction. The consummation of the
transactions contemplated hereby shall not, after giving effect to such
transactions, (i) violate any applicable law, statute, rule or regulation or
(ii) conflict with, or result in a default or event of default under, any
material agreement of Borrower or any of its Subsidiaries entered into or
assumed after the commencement of the Cases, and there shall be in effect no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of, or imposing adverse conditions on,
the transactions contemplated hereby.

          (o) Access. The Administrative Agent shall have been given ongoing
access (subject to requirements under any confidentiality agreements, if
applicable) to the management, records, books of account, contracts, and
properties of Borrower, Guarantors, and their respective subsidiaries and shall
have received such financial, business, legal, and other information regarding
Borrower, Guarantors, and their respective subsidiaries, in each case as the
Administrative Agent and Lenders and their respective counsel shall have
reasonably requested.

          (p) [Reserved.]

          (q) No Default. No Default or Event of Default under this Agreement or
any other Loan Document shall have occurred and be continuing.

          (r) Representations and Warranties. All representations and warranties
in this Agreement or any other Loan Document (including, without limitation, the
Material Adverse Effect and litigation representations) shall be true and
correct in all respects.

                                       16

<PAGE>

          (s) Minimum Liquidity. As of the Closing Date, after giving effect to
any Loans made on such date, Borrower and its Subsidiaries shall have Aggregate
Cash On Hand of no less than $750,000,000.

          2.2 Conditions to Subsequent Loans.

          No Term A Lender shall be obligated to make the remaining Term A Loan
requested to be made by it after the Closing Date pursuant to Section 1.1(c)(i)
unless each of the following conditions precedent is satisfied or provided for
in a manner reasonably satisfactory to the Administrative Agent, or duly waived
in writing in accordance with Section 13.2:

          (a) Final Order. The Bankruptcy Court shall have entered the Final
Order no later than 35 days (or such longer period not to exceed 55 days as the
Arrangers shall agree in their sole discretion) after the commencement of the
Cases, certified by the Clerk of the Bankruptcy Court as having been duly
entered, and the Final Order shall be in full force and effect and shall not
have been vacated, reversed, modified, amended or stayed without the prior
written consent of the Administrative Agent, the Arrangers and the Requisite
Lenders.

          (b) Representations and Warranties. All representations and warranties
in this Agreement or any other Loan Document (including, without limitation, the
Material Adverse Effect and litigation representations) shall be true and
correct in all respects.

          (c) No Material Adverse Effect. There has been no Material Adverse
Effect since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005.

          (d) Payment of Fees; Satisfaction of Conditions. Borrower shall have
paid the Fees required to be paid on or prior to such date in the respective
amounts specified in the Fee Letters, and shall have reimbursed the
Administrative Agent and the Arrangers for all fees, costs and expenses of
closing presented as of such date and the other conditions set forth in the Fee
Letters, and the conditions set forth in clauses (i) and (m) of the "Conditions
Precedent to the Closing" section of the GE Capital Commitment Letter, shall
have been satisfied.

          (e) No Default. No Default or Event of Default under this Agreement or
any other Loan Document shall have occurred and be continuing.

          (f) No Violation of Law or Injunction. The consummation of the
transactions contemplated hereby shall not, after giving effect to such
transactions, (i) violate any applicable law, statute, rule or regulation or
(ii) conflict with, or result in a default or event of default under, any
material agreement of Borrower or any of its Subsidiaries entered into or
assumed after the commencement of the Cases, and there shall be in effect no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of, or imposing adverse conditions on,
the transactions contemplated hereby.

          (g) Post-Petition Skymiles Facility. Each of the Post-Petition
Skymiles Facility Documents shall be in full force and effect, in form and
substance reasonably satisfactory to Administrative Agent.

                                       17

<PAGE>

          The acceptance by Borrower of the proceeds of any Loan upon the
request of Borrower shall be deemed to constitute, as of the date thereof, a
representation and warranty by Borrower that the conditions in this Section 2.2
have been satisfied.

3. REPRESENTATIONS AND WARRANTIES

          To induce the Lenders to make the Loans, the Credit Parties executing
this Agreement, jointly and severally, make the following representations and
warranties to the Administrative Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.

          3.1 Corporate Existence; Compliance with Law.

          Each Credit Party (a) is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation or organization set
forth in Disclosure Schedule 3.1; (b) is duly qualified to conduct business and
is in good standing in each other jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not result in losses or liabilities
which could reasonably be expected to have a Material Adverse Effect; (c)
subject to the entry by the Bankruptcy Court of the Orders, has the requisite
power and authority to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease and to conduct its
business as now conducted or proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the failure to
do so would not result in losses or liabilities which could reasonably be
expected to have a Material Adverse Effect; (e) is in compliance with its
charter and bylaws or partnership or operating agreement, as applicable; and (f)
subject to specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

          3.2 Executive Offices, Collateral Locations, FEIN.

          As of the Closing Date, each Credit Party's name as it appears in
official filings in its state of incorporation or organization, state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and the location as of the
Closing Date of each Credit Party's chief executive office, principal place of
business and location and the hangars, terminals, maintenance facilities,
warehouses and premises at which any Collateral is located as of the Closing
Date are set forth in Disclosure Schedule 3.2, and none of such Collateral has
been kept at any location other than the locations listed on Disclosure Schedule
3.2 within four (4) months preceding the Closing Date (or since its acquisition
if less than four (4) months prior to the Closing Date). In addition, Disclosure
Schedule 3.2 lists the federal employer identification number of each Credit
Party as of the Closing Date. Each Credit Party has only one jurisdiction of
existence, incorporation or organization, as applicable.

                                       18

<PAGE>

          3.3 Corporate Power, Authorization, Enforceable Obligations.

          Upon the entry by the Bankruptcy Court of the Interim Order (or Final
Order, when applicable), the execution, delivery and performance by each Credit
Party of the Loan Documents to which it is a party and the creation of all Liens
provided for therein: (a) are, subject to the entry of the Orders, are within
such Person's power; (b) have been duly authorized by all necessary corporate,
limited liability company or limited partnership action; (c) subject to the
entry of the Orders, do not contravene any provision of such Person's charter,
bylaws or partnership or operating agreement as applicable; (d) subject to the
entry of the Orders, do not violate any law or regulation, or any order or
decree of any court or Governmental Authority; (e) subject to the entry of the
Orders, do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any material lease, material agreement or other
material instrument entered into or assumed by such Person after the
commencement of the Cases to which such Person is a party or by which such
Person or any of its property is bound; (f) do not result in the creation or
imposition of any Lien upon any of the property of such Person other than those
in favor of the Administrative Agent for the benefit of the Secured Parties,
pursuant to the Loan Documents and the Orders; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
(i) those referred to in Section 2.1(g), all of which will have been duly
obtained, made or complied with prior to the Closing Date and (ii) any consents,
notices or approvals pursuant to the Federal Assignment of Claims Act of 1940 or
any applicable state, county or municipal law restricting the assignment of any
Accounts for which the Account Debtor is the United States government or a
political subdivision thereof or any state, county or municipality or
department, agency or instrumentality thereof. Each of the Loan Documents shall
be duly executed and delivered by each Credit Party that is a party thereto and,
subject to the entry of the Orders, each such Loan Document shall constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.

          3.4 Financial Statements and Projections.

          Except for the Projections, all Financial Statements concerning
Borrower and its Subsidiaries that are referred to below have been prepared in
accordance with GAAP consistently applied throughout the periods covered (except
as disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the consolidated financial position of Borrower
and its Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.

          (a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule 3.4(a) have been delivered on the date hereof:

               (i) The audited consolidated balance sheet at December 31, 2004
of Borrower and its Subsidiaries and the related consolidated statements of
operations, cash flows and shareowners' (deficit) equity for the Fiscal Year
then ended, reported on by Deloitte Touche LLP.

                                       19

<PAGE>

               (ii) The unaudited consolidated balance sheet at June 30, 2005 of
Borrower and its Subsidiaries and the related consolidated statements of
operations and cash flows for the six (6) months then ended.

          (b) Projections. The Projections delivered to Lenders prior to the
date hereof have been prepared by Borrower and reflect projections for the
period beginning on August 1, 2005 on a month-by-month basis through December
31, 2007. The Projections are based upon the same accounting principles (other
than adjustments related to the impact of the Cases) as those used in the
preparation of the financial statements described above and are based on
assumptions believed by Borrower to be reasonable at the time such Projections
were delivered in light of conditions and facts known to Borrower as of the date
thereof (it being understood that projections by their nature are inherently
uncertain, the Projections are not a guaranty of future performance, and actual
results may differ materially from the Projections).

          3.5 Material Adverse Effect; Burdensome Restrictions; Default.

          Since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Projections
delivered to Lenders prior to the date hereof and that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, (b)
no contract, lease or other agreement or instrument has been entered into by any
Credit Party or has become binding upon any Credit Party's assets and no law or
regulation applicable to any Credit Party has been adopted that has or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrower's knowledge no third party is in
default under any material contract, lease or other agreement or instrument,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Since the date of Borrower's Form 10-Q for the six-month period
ended June 30, 2005 as updated by subsequent public filings prior to September
10, 2005, no event has occurred, that alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.

          3.6 Ownership of Property; Real Estate; Liens.

          (a) Each Credit Party warrants that it has good, marketable, legal and
valid title to, or legal and valid leasehold interests in, all of its personal
property constituting Collateral.

          (b) As of the Closing Date, the real estate listed in Part 1 of
Disclosure Schedule 3.6 ("Owned Real Estate") constitutes substantially all of
the real property owned by any Credit Party. As of the Closing Date, Borrower
reasonably believes the leases and other agreements listed in Part 2 of
Disclosure Schedule 3.6 constitute all of the Material Real Estate Contracts.
Each Credit Party owns good and marketable fee simple title to all of its Owned
Real Estate. As of the Closing Date, Borrower has valid and enforceable
leasehold interests in all of its material leased real estate, excluding any
leased real estate that is occupied on a month to month or "at will" basis (such
material leased real estate of the Credit Parties, together with the Owned Real
Estate, being herein collectively referred to as "Real Estate"). As of the
Closing

                                       20

<PAGE>

Date, there are no purchase options, rights of first refusal or similar
contractual rights that exist with respect to the Owned Real Estate, except as
disclosed in Part 1 of Disclosure Schedule 3.6. As of the Closing Date, true,
correct and complete copies of all Material Real Estate Contracts and leases,
usufructs, use agreements or other occupancy or facility agreements affecting
the Owned Real Estate have been delivered to the Administrative Agent. Part 3 of
Disclosure Schedule 3.6 describes all of the leases, usufructs, use agreements
or other occupancy or facility agreements by a Credit Party for any Owned Real
Estate with respect to which such Credit Party is a landlord as of the Closing
Date. As of the Closing Date, none of the properties and assets of any Credit
Party are subject to any Liens other than Permitted Encumbrances and other Liens
permitted by Section 6.7. As of the Closing Date, no portion of any Credit
Party's Owned Real Estate has suffered any material damage by fire or other
casualty loss since September 10, 2005 that has not heretofore been repaired and
restored in all material respects to its original condition or otherwise
remedied. As of the Closing Date, Borrower reasonably believes all material
permits required to have been issued or appropriate to enable the Owned Real
Estate to be lawfully occupied and used for all of the purposes for which it is
currently occupied and used have been lawfully issued and are in full force and
effect. Since November 30, 2004, there have been no changes or improvements to
the Owned Real Estate that would require a change in any Credit Party's current
certificates of occupancy.

          (c) [Reserved.]

          (d) As of the Closing Date, each Credit Party that is party to the
Spare Parts Mortgage has established and is maintaining reasonable safeguards
against theft of the Spare Parts and the Spare Parts and the Spare Parts are
located at the Designated Spare Parts Location, except to the extent permitted
under the Spare Parts Mortgage.

          3.7 Labor Matters.

          Except as set forth on Disclosure Schedule 3.7: (a) no strikes are
pending against any Credit Party (i) in the United States and (ii) outside of
the United States, except those that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the operations of such Credit
Party; (b) no other material labor disputes against any Credit Party are pending
or, to any Credit Party's knowledge, threatened, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(c) hours worked by and payment made to employees of each Credit Party to such
Credit Party's knowledge, comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matters except to
the extent that non-compliance could not reasonably be expected to have a
Material Adverse Effect; (d) as of the Closing Date, no Credit Party is a party
to or bound by any domestic collective bargaining agreement (and true and
complete copies of any agreements described on Disclosure Schedule 3.7 have been
delivered to the Administrative Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(f) there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Mediation Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition, except those that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; and (g) there are no material
complaints or charges

                                       21

<PAGE>

against any Credit Party pending or, to any Credit Party's knowledge, threatened
to be filed with any Governmental Authority or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment or termination
of employment by any Credit Party of any individual, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

          3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.

          Except as set forth in Disclosure Schedule 3.8, as of the Closing
Date, no Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. As of
the Closing Date, all of the issued and outstanding Stock of each Credit Party
is owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule 3.8. Except as set forth in Disclosure Schedule 3.8, as of the Closing
Date, there are no outstanding rights to purchase, options, warrants or similar
rights or agreements pursuant to which any Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock or other equity securities or
any Stock or other equity securities of its Subsidiaries. All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing
Date (except for the Obligations) is described in Section 6.3 (including
Disclosure Schedule 6.3).

          3.9 Government Regulation.

          No Credit Party is required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940. No Credit Party is
subject to regulation under the Public Utility Holding Company Act of 1935 that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrower, the
issuance of any Letter of Credit on behalf of Borrower, the application of the
proceeds thereof and repayment thereof will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

          3.10 Margin Regulations.

          No Credit Party is engaged, nor will it engage, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" as such terms are defined in
Regulation U of the Federal Reserve Board as now and from time to time hereafter
in effect (such securities being referred to herein as "Margin Stock"). None of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board.

          3.11 Taxes.

          Except as provided on Disclosure Schedule 3.11, (and except as
otherwise permitted by the Bankruptcy Court and the Bankruptcy Code) all Federal
and other material tax returns, reports and statements, including information
returns, required by any Governmental

                                       22

<PAGE>

Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority, all such returns, reports and statements are true and
correct in all material respects and, subject to the automatic stay, all Charges
shown to be due and payable on such returns, reports and statements have been or
will be timely paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof, excluding Charges or
other amounts being contested in accordance with Section 5.2(b) and unless the
failure to so file or pay would not be reasonably expected to result in a
Material Adverse Effect. Proper and accurate amounts have been withheld by each
Credit Party from amounts paid to its respective employees for all periods in
full and complete compliance in all material respects with all applicable
federal, state, local and foreign laws and such withholdings have been or will
be timely paid, subject to the automatic stay, to the respective Governmental
Authorities. Except as provided on Disclosure Schedule 3.11, to each Credit
Party's knowledge, as of the Closing Date, none of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements) or (b) as a transferee. As of the Closing
Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise,
which would reasonably be expected to have a Material Adverse Effect.

          3.12 ERISA.

          (a) Disclosure Schedule 3.12(a) lists as of the Closing Date, all
Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and all
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of
the latest form IRS/DOL 5500-series for each such Plan have been delivered to
the Administrative Agent. Except with respect to Multiemployer Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC and to the knowledge of any
Credit Party, nothing has occurred that would cause the loss of such
qualification or tax-exempt status. To the knowledge of any Credit Party and
except for non-compliance to the extent permitted under the Bankruptcy Code,
each Plan is in compliance in all material respects with the applicable
provisions of ERISA and the IRC. Each Credit Party and all ERISA Affiliates have
made all material contributions and paid all material amounts due as required by
either Section 412 of the IRC or Section 302 of ERISA prior to the date of
commencement of the Cases.

          (b) Except as set forth in Disclosure Schedule 3.12(b) or which would
reasonably be expected not to have a Material Adverse Effect (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) other than the Cases, no
ERISA Event or event described in Section 4062(e) of ERISA with respect to any
Title IV Plan has occurred or is reasonably expected to occur; (iii) there are
no pending, or to the knowledge of any Credit Party, threatened material claims
(other than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person as fiduciary or
sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or
reasonably expects to incur any material liability as a result of a complete or
partial withdrawal from a Multiemployer Plan; (v) within the last five years no
Title IV Plan of any Credit Party or ERISA Affiliate has been terminated
pursuant to a "standard termination" as that term is used in Section 4041 of
ERISA, nor has any Title IV Plan of any Credit Party or ERISA Affiliate
(determined at any time within the past five years) with material Unfunded
Pension Liabilities been transferred outside of the

                                       23

<PAGE>

"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate; and (vi) except in the case of any ESOP, Stock
of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no
more than 10% of the fair market value of the assets of any Plan measured on the
basis of fair market value as of the latest valuation date of any Plan.

          3.13 No Litigation.

          Other than the Cases, no unstayed action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any officer
of such Credit Party, threatened against any Credit Party, before any
Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation") that, individually or in the aggregate, (a)
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder or (b) could
reasonably be expected to have a Material Adverse Effect.

          3.14 Intellectual Property.

          Each Credit Party owns or has rights to use all Intellectual Property
necessary to continue to conduct its business as now conducted by it or
presently proposed to be conducted by it, and each U.S. registered Patent, U.S.
registered Trademark, U.S. registered Copyright and U.S. License in effect on
the Closing Date is listed, together with application or registration numbers,
as applicable, in Disclosure Schedule 3.14. To the knowledge of any Credit
Party, each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect and no material claim or litigation regarding any of the
foregoing is pending or threatened. Except as set forth in Disclosure Schedule
3.14, as of the Closing Date, no Credit Party is aware of any infringement claim
by any other Person with respect to any material Intellectual Property.

          3.15 Full Disclosure.

          No information contained in this Agreement, any of the other Loan
Documents, Financial Statements or Collateral Reports or other written reports
from time to time prepared by any Credit Party and delivered hereunder or any
written statement prepared by any Credit Party and furnished by or on behalf of
any Credit Party to the Administrative Agent or Lender pursuant to the terms of
this Agreement (other than any Projections) contains or will contain, when taken
as a whole, any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made
and as of the date when made. Projections from time to time delivered hereunder
are or will be based upon the estimates and assumptions stated therein, all of
which Borrower believed at the time of delivery to be reasonable in light of the
conditions and facts known to Borrower as of such delivery date (it being
understood that projections by their nature are inherently uncertain, such
Projections are not a guaranty of future performance and actual results may
differ materially from those set forth in such Projections).

                                       24

<PAGE>

          3.16 Environmental Matters.

          (a) Except as set forth in Disclosure Schedule 3.16 or for any matter
for which notice has been given under Section 5.7, and except for any matter
that would not reasonably be expected to result in any Credit Party incurring
Environmental Liabilities in excess of $500,000 individually or $2,500,000 in
the aggregate in a Fiscal Year, as of the Closing Date: (i) the Owned Real
Estate is free of contamination from any Hazardous Material; (ii) no Credit
Party has caused or suffered to occur any material Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental
Laws; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
which compliance includes obtaining, maintaining and complying with required
Environmental Permits and all such Environmental Permits are valid, uncontested
and in good standing; (v) no Credit Party knows of any existing circumstances or
conditions, including any Releases of Hazardous Materials, which is likely to
result in an Environmental Liability; (vi) there is no unstayed Litigation
arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or expenses or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes; and (viii) the Credit Parties have provided to the
Administrative Agent copies of all existing environmental reports, reviews and
audits in their possession, custody or control relating to the Owned Real Estate
and material written information pertaining to any Environmental Liabilities of
any Credit Party.

          (b) Each Credit Party hereby acknowledges and agrees that the
Administrative Agent (i) is not now, and has not ever been, in control of any of
the Real Estate or any Credit Party's affairs, and (ii) does not have the
capacity through the provisions of the Loan Documents or otherwise to influence
any Credit Party's conduct with respect to the ownership, operation or
management of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.

          (c) None of the items set forth on Disclosure Schedule 3.16 either
individually or in the aggregate would be reasonably likely to have a Material
Adverse Effect.

          3.17 Insurance.

          Part 1 of Disclosure Schedule 3.17 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the scope and term of each such policy.
Part 2 of Disclosure Schedule 3.17 identifies those insurance policies which
relate to the Collateral.

          3.18 Use of Proceeds.

          The proceeds of the Loans and the Letters of Credit are being used by
Borrower for the refinancing of the obligations under the Existing Credit
Agreement and the Existing

                                       25

<PAGE>

Skymiles Facility pursuant to Section 2.1(j) and Section 2.1(k) and general
corporate purposes of the Credit Parties.

          3.19 Deposit.

          Disclosure Schedule 3.19 lists, as of the Closing Date, all banks and
other financial institutions at which any Credit Party maintains deposit or
other accounts in the United States, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held and the complete account number therefor.

          3.20 Trade Relations.

          As of the Closing Date and except as set forth in Disclosure Schedule
3.20 or resulting directly from the commencement of the Cases, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship (including, without limitation, any code sharing arrangements) of
any Credit Party with any service provider or supplier whose services during the
preceding twelve (12) months caused them to be ranked among the ten largest
service providers or suppliers of the Credit Parties taken as a whole.

          3.21 Compliance With Industry Standards.

          Borrower maintains its Books and Records, Aircraft, Engines, Spare
Parts and other assets and properties that are used in the conduct of its
business in compliance in all material respects with applicable law, including
but not limited to all rules, regulations and standards of the FAA or any other
applicable Aviation Authority.

          3.22 Post-Petition Skymiles Facility.

          All of the Post-Petition Skymiles Facility Documents have been
provided to the Administrative Agent pursuant to Section 2.1(d) and contain all
of the material terms related to the Advance Payment arrangements described
therein as of the Closing Date, other than terms relating generally to Amex's
purchase of Skymiles from Delta set forth in the American Express Co-Branded
Credit Card Program Agreement and the Membership Rewards Agreement, each as
amended and supplemented from time to time, that do not relate to the Advance
Payments (as defined in the Post-Petition Skymiles Facility Documents).

          3.23 Secured, Super-Priority Obligations.

          (a) On and after the Closing Date, the provisions of the Loan
Documents and the Orders are effective to create in favor of the Administrative
Agent, for the benefit of the Secured Parties, legal, valid and perfected Liens
on and security interests (having the priority provided for herein and in the
Orders) in all right, title and interest in the Collateral, enforceable against
each Credit Party that owns an interest in such Collateral.

          (b) Pursuant to subsections 364(c)(2) and (3) of the Bankruptcy Code
and the Orders, all amounts owing by the Borrower under the Loan and by the
Guarantors in respect thereof will be secured by a first priority perfected Lien
on the Collateral, subject only to (i) the

                                       26

<PAGE>

Liens of the Skymiles Agent in the Skymiles Collateral pursuant to an order of
the Bankruptcy Court in form and substance satisfactory to the Administrative
Agent, (ii) valid, perfected, nonavoidable and enforceable Liens existing as of
the Petition Date, (iii) valid liens in existence at the commencement of the
Cases to the extent perfected subsequent to such commencement as permitted by
Section 546(b) of the Code (iv) the Carve-Out and (v) Permitted Liens permitted
pursuant to Section 6.7(a), (c), (f), (i), (j) (subject, in the case of Amex, to
the Skymiles Intercreditor Agreement), (n), (o), (q), (r) or (s).

          (c) Pursuant to section 364(c)(i) of the Bankruptcy Code and the
Orders, all obligations of the Borrower and the obligations of the Guarantors
under the Guaranty in respect thereof at all times will constitute allowed
Super-Priority Claim in each of the Cases having priority over all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve-Out.

          (d) The Orders and the transactions contemplated hereby and thereby,
are in full force and effect and have not been vacated, reversed, modified,
amended or stayed in any manner that affects the rights or duties of the
Administrative Agent, the Arrangers or the Lenders, in each case, without the
prior written consent of the Administrative Agent.

          3.24 Certificated Air Carrier.

          Each Air Carrier is a Certificated Air Carrier and possesses all
necessary certificates, franchises, licenses, permits, rights, designations,
authorizations, exemptions, concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted (the "Permits"). Neither the DOT nor FAA nor
any other Aviation Authority has taken any action or proposed or, to such Air
Carrier's knowledge, threatened to take any action, to amend, modify, suspend,
revoke, terminate, cancel, or otherwise affect such Permits and Op Specs, in
each case, in an adverse manner.

          3.25 U.S. Citizen.

          Each Air Carrier is a "citizen of the United States" as defined in
Section 40102(a)(15) of Title 49.

          3.26 Spare Parts.

          Set forth on Disclosure Schedule 3.26, is a true, correct and complete
list of each Designated Spare Parts Location as of the Closing Date.

          3.27 Aircraft; Engines.

          Set forth on Disclosure Schedule 3.27 is a true, correct and complete
list of Eligible Aircraft and Eligible Engines as of the Closing Date.

                                       27

<PAGE>

          3.28 Slots, Primary Gates and Routes.

          (a) Set forth on Disclosure Schedule 3.28 is a complete and accurate
list, as of the Closing Date, of all Primary Slots and Primary Routes of the
Credit Parties, except those that are licensed for less than one (1) IATA
season. Such Disclosure Schedule 3.28 shall be revised from time to time by
Borrower, or as reasonably requested by the Administrative Agent, to reflect all
Primary Slots and Primary Routes of such Credit Parties. Each such Credit Party,
if applicable, represents and warrants that it holds each of the FAA Slots
pursuant to authority granted by the FAA pursuant to Title 14 of the United
States Code.

          (b) As of the Closing Date, the Credit Parties are utilizing, or
causing to be utilized, in all material respects, the Slots, Primary Gates and
Routes as required by the applicable Governmental Authority, Airport Authority
or Foreign Aviation Authority. As of the Closing Date, except as disclosed in
Borrower's Form 10-K for the Fiscal Year ended December 31, 2004, none of the
Credit Parties has received any notice from any Governmental Authority, Airport
Authority or Foreign Aviation Authority or is aware of any other event or
circumstance, that would be reasonably likely to impair its right to hold and
use Primary Gates, Slots and Routes in any material respect, except that which
would not reasonably be expected to result in a Material Adverse Effect.

4. FINANCIAL STATEMENTS AND INFORMATION

          4.1 Reports and Notices.

          (a) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver to the Administrative Agent and
Lenders, as required, the Financial Statements, notices, Projections and other
information at the times, to the Persons and in the manner set forth in Annex E.

          (b) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver to the Administrative Agent and
Lenders, as required, the various Collateral Reports (including Borrowing Base
Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons and in
the manner set forth in Annex F.

          4.2 Communication with Accountants.

          Each Credit Party executing this Agreement authorizes (a) the
Administrative Agent and (b) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate, with prior notice to Borrower and
Borrower's opportunity to be present, directly with its independent registered
public accountants, including Deloitte & Touche LLP, and authorizes and shall
instruct those accountants to communicate to the Administrative Agent and such
Lender, with notice to Borrower, information relating to any Credit Party with
respect to the business, results of operations and financial condition of any
Credit Party as the Administrative Agent or such Lender shall reasonably
request.

                                       28

<PAGE>

5. AFFIRMATIVE COVENANTS

          Each Credit Party agrees that from and after the Closing Date and
until the Termination Date:

          5.1 Maintenance of Existence and Conduct of Business.

          Except as otherwise required by the Bankruptcy Code, each Credit Party
shall (a) except as otherwise permitted by Section 6.1 or Section 6.8, do or
cause to be done all things necessary to preserve and keep in full force and
effect its legal existence, all rights, permits, licenses, approvals and
privileges (including all Permits) necessary in the conduct of its business, and
its material rights and franchises entered into or assumed after the
commencement of the Cases, and; (b) at all times maintain, preserve and protect
all of its assets and properties (including all Collateral) used or useful and
necessary in the conduct of its business, and keep the same in good repair,
working order and condition in all material respects (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices except as otherwise permitted in the
applicable Loan Documents; and (c) except where failure to do so could not
reasonably be expected to have a Material Adverse Effect, transact business only
in such corporate and trade names as are set forth in Disclosure Schedule 5.1.

          5.2 Payment of Charges.

          (a) Unless payment thereof is precluded by the Cases and subject to
Section 5.2(b), each Credit Party shall pay and discharge or cause to be paid
and discharged promptly all Charges arising after the Petition Date payable by
it, including (i) Charges imposed upon it, its income and profits, or any of its
operations, its property (real, personal or mixed) and all Charges with respect
to tax, social security and unemployment withholding with respect to its
employees, (ii) lawful claims for labor, materials, supplies and services or
otherwise, and (iii) all storage or rental charges payable to warehousemen and
bailees, in each case, before any thereof shall become past due, except in each
case, where the failure to pay or discharge such Charges would not result in
aggregate liabilities in excess of $5,000,000.

          (b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges that is
superior to any of the Liens securing payment of the Obligations and such
contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges (except where the
failure to pay or discharge such Charges would not result in aggregate
liabilities or Liens in excess of $5,000,000); (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest; and (iv) such
Credit Party shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses and shall
deliver to the Administrative Agent evidence reasonably acceptable to the
Administrative Agent of such compliance, payment or discharge, if

                                       29

<PAGE>

such contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met.

          (c) Notwithstanding the foregoing, this Section 5.2 shall not be
construed to require Borrower to pay any obligation arising under any agreement
with respect to Section 1110 Assets unless Borrower is approved by the
Bankruptcy Court to make such payment.

          5.3 Books and Records.

          Each Credit Party shall keep adequate Books and Records with respect
to its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule 3.4(a). Upon reasonable
request of the Administrative Agent, each Credit Party shall deliver any
requested Chattel Paper or Instrument to the Administrative Agent (in each case,
accompanied by instruments of transfer executed in blank), and shall, if
requested by the Administrative Agent, mark any Chattel Paper or Instrument that
has not been delivered to the Administrative Agent with a legend that provides
that the writing and the obligations evidenced or secured thereby are subject to
the security interest of the Administrative Agent for the benefit of the Secured
Parties.

          5.4 Insurance; Damage to or Destruction of Collateral. Except as set
forth in the Aircraft Mortgage and the Spare Parts Mortgage with respect to the
Collateral addressed therein:

          (a) The Credit Parties shall, at their sole cost and expense, maintain
insurance at all times against such risks as is customary for companies of the
same or similar size in the same or similar business and industry or as
otherwise required in the Collateral Documents. Such policies of insurance as in
effect on the Closing Date are described, collectively, in Part 1 and Part 2 of
Disclosure Schedule 3.17. Except for policies of insurance relating to
Collateral addressed by the Aircraft Mortgage and the Spare Parts Mortgage, the
policies of insurance (or the loss payable and additional insured endorsements
delivered to the Administrative Agent) described in Part 2 of Disclosure
Schedule 3.17, which lists those policies relating to the Collateral, shall
contain provisions pursuant to which the insurer agrees to provide thirty (30)
days' prior written notice to the Administrative Agent in the event of any
non-renewal, cancellation or material adverse amendment of any such insurance
policy. If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance listed in Part 2 of Disclosure
Schedule 3.17 or to pay all premiums relating thereto, the Administrative Agent
may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
that the Administrative Agent deem advisable. The Administrative Agent shall
have no obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, the Administrative Agent shall not be deemed to have
waived any Default or Event of Default arising from any Credit Party's failure
to maintain such insurance or pay any premiums therefor. All sums so disbursed,
including reasonable attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by Borrower to the Administrative Agent and
shall be additional Obligations hereunder secured by the Collateral.

                                       30

<PAGE>

          (b) The Administrative Agent reserves the right at any time upon any
change in any Credit Party's risk profile (including any change in the product
mix maintained by any Credit Party or any laws affecting the potential liability
of such Credit Party) to require, upon prior written notice to such Credit
Party, additional forms and limits of insurance, in the Administrative Agent's
reasonable opinion, to adequately protect both the Administrative Agent's and
the Lenders' interests in all or any portion of the Collateral needed to ensure
that each Credit Party is protected by insurance in amounts and with coverage
customary for its industry with respect to such Collateral; such additional
forms and limits of insurance to be obtained and in effect within thirty (30)
days of such written notice. If reasonably requested by the Administrative
Agent, each Credit Party shall deliver to the Administrative Agent from time to
time a report of a reputable insurance broker reasonably satisfactory to the
Administrative Agent, with respect to its insurance policies.

          (c) Borrower on behalf of each Credit Party shall deliver to the
Administrative Agent, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to the insurance policies listed on Part 2 of
Disclosure Schedule 3.17, endorsements to (i) all "All Risk" property and
business interruption insurance naming the Administrative Agent for the benefit
of Secured Parties, as lender loss payee as its interests may appear; provided,
that, with respect to business interruption insurance only, so long as no Event
of Default has occurred or is continuing, the Administrative Agent shall
promptly release to Borrower any insurance proceeds received in connection with
such business interruption insurance, and (ii) all general liability and other
liability policies naming the Administrative Agent for the benefit of Secured
Parties, as an additional insured as its interests may appear. Borrower on
behalf of each Credit Party irrevocably makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent), so long as the anticipated insurance proceeds exceed
$5,000,000, as Borrower's and each Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" property policies of insurance, endorsing the name of Borrower
or such Credit Party on any check or other item of payment for the proceeds of
such "All Risk" property policies of insurance and for making all determinations
and decisions with respect to such "All Risk" property policies of insurance.
The Administrative Agent shall have no duty to exercise any rights or powers
granted to them pursuant to the foregoing power-of-attorney. Borrower shall
promptly notify the Administrative Agent of any loss, damage, or destruction to
the Collateral in the amount of $1,000,000 or more, whether or not covered by
insurance. All Net Cash Proceeds from insurance required under the Loan
Documents shall be applied in accordance with Section 1.2.

          (d) Notwithstanding the foregoing, subject to the Orders, where
casualty or condemnation proceeds are required to be applied to the repair or
restoration of the affected property, which does not constitute Collateral
included in the Term A Borrowing Base, or to be delivered to a third party or
deposited in an escrow or similar account, by the express terms of any lease,
usufruct, use agreement or other occupancy or facility agreement to which
Borrower or any Credit Party is a party and that either (i) constitutes a Lien
permitted hereunder having priority over the Administrative Agent's Liens, for
the benefit of Secured Parties or (ii) affects leased real estate or usufruct or
pursuant to the express terms of documents entered into in connection with ARB
Indebtedness, either existing as of the Closing Date or permitted under this
Agreement, then the Administrative Agent's rights under this Agreement with
respect to any

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<PAGE>

casualty or condemnation proceeds or insurance policies required to be
maintained under any such lease, usufruct, use agreement or other occupancy or
facility agreement or other document entered into in connection with such ARB
Indebtedness to which Borrower or any Credit Party is a party shall be subject
to the terms and conditions of such agreement, including without limitation the
settlement of claims, the repair and restoration obligations of Borrower or any
Credit Party and the delivery or deposit of any casualty or condemnation
proceeds for repair or restoration.

          5.5 Compliance with Laws.

          Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including labor laws, and
Environmental Laws and Environmental Permits, and laws and regulations of any
Aviation Authority applicable to it, except to the extent that the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect (including, without limitation, as a result of
the loss of any material Permit).

          5.6 Intellectual Property.

          Subject to Section 6.8(i), each Credit Party shall own or have rights
to use all Intellectual Property necessary to continue to conduct its business
as now conducted by it or presently proposed to be conducted by it. Each Credit
Party shall do or cause to be done all things necessary to preserve and keep in
full force and effect at all times all material registered Patents, Trademarks,
trade names, Copyrights and service marks necessary in the conduct of its
business. Each Credit Party shall conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect.

          5.7 Environmental Matters.

          Except as otherwise required by the Bankruptcy Code, each Credit Party
shall and shall cause each Person within its control to: (a) conduct its
operations and keep and maintain its Real Estate in compliance with all
Environmental Laws and Environmental Permits other than noncompliance that could
not reasonably be expected to have a Material Adverse Effect; (b) implement any
and all investigation, remediation, removal and response actions that are
necessary to comply in all material respects with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify the
Administrative Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in any Credit Party incurring Environmental Liabilities in excess of
$500,000 individually or $2,500,000 in the aggregate in a Fiscal Year; and (d)
promptly forward to the Administrative Agent a copy of any order, notice,
request for information or any communication or report received by such Credit
Party in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in any Credit Party incurring Environmental
Liabilities in excess of $500,000 individually or $2,500,000 in the aggregate in
a Fiscal Year. If the Administrative Agent at any time has a

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<PAGE>

reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall, upon the Administrative Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as the Administrative Agent may from time to time reasonably request,
which shall be conducted by reputable environmental consulting firms reasonably
acceptable to the Administrative Agent and shall be in form and substance
reasonably acceptable to the Administrative Agent, and (ii) permit the
Administrative Agent or their representatives to have access to all Real Estate
(subject, in the case of leased Real Estate, to the terms of the applicable
lease or other agreement which governs rights of access to leased Real Estate)
for the purpose of conducting such environmental audits and testing as the
Administrative Agent deem appropriate, including subsurface sampling of soil and
groundwater; provided, that the Administrative Agent shall use commercially
reasonable efforts to cause such audits or testing to be conducted in a manner
that does not unreasonably interfere with the operations of the relevant Credit
Party. Borrower shall reimburse the Administrative Agent for the reasonable
costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.

          5.8 Landlords' Agreements; Bailee Letters.

          If requested by the Administrative Agent in its reasonable discretion,
each Credit Party shall use commercially reasonable efforts to obtain a
landlord's agreement or bailee letter, as applicable, from the lessor of each
leased property or bailee with respect to any warehouse, processor or converter
facility, maintenance facilities or other location where Collateral with an
aggregate book value in excess of $10,000,000 is stored or located, in each
case, to the extent the Liens and other unstayed rights of the applicable
warehouseman, bailee or lessor are senior to or pari passu with the Liens of the
Administrative Agent (each such location, a "Material Location"), which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord or bailee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to the Administrative Agent. With respect to each Material Location leased or
owned on or after the Closing Date, if the Administrative Agent has requested
but, within sixty (60) days following such request, has not received a landlord
agreement or bailee letter, Borrower's Eligible Spare Parts, Eligible Ground
Service Equipment and Eligible Tooling at that location shall, in the
Administrative Agent's discretion, be subject to such Reserves as may be
established by the Administrative Agent in its reasonable credit judgment. Each
Credit Party shall timely and fully pay and perform its material obligations
under all leases and other agreements entered into or assumed after the
commencement of the Cases in all respects with respect to Material Locations.

          5.9 [Reserved.]

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<PAGE>

          5.10 Notices.

          Promptly after the sending or filing thereof, Borrower shall send
Administrative Agent copies of all material notices, certificates or reports
delivered pursuant to, or in connection with, any Post-Petition Skymiles
Facility Document.

          5.11 Further Assurances.

          Subject to Section 5.12(b), each Credit Party executing this Agreement
agrees that it shall, at such Credit Party's expense and upon the reasonable
request of the Administrative Agent, duly execute and deliver, or cause to be
duly executed and delivered, to the Administrative Agent such further
instruments and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of the Administrative Agent, in accordance with
its customary business practices for comparable debtor in possession
transactions, to carry out more effectively the provisions and purposes of this
Agreement and each Loan Document.

          5.12 Additional Guaranties and Collateral Documents.

          (a) Except as otherwise set forth in the Aircraft Mortgage, to the
extent not delivered to the Administrative Agent on or before the Closing Date
(including in respect of after-acquired property, other than real estate and
interests in real estate that are not Owned Real Estate, and Persons that become
Subsidiaries of any Credit Party after the Closing Date), Borrower agrees
promptly to do, or cause each Subsidiary of Borrower (other than Excluded
Subsidiaries) to do, each of the following, unless otherwise agreed by the
Administrative Agent:

               (i) deliver to the Administrative Agent such duly executed
     supplements and amendments to this Agreement, in each case in form and
     substance reasonably satisfactory to the Administrative Agent and as the
     Administrative Agent reasonably deems necessary in order to ensure that
     each Domestic Subsidiary of Borrower (other than Excluded Subsidiaries),
     guaranties, as primary obligor and not as surety, the full and punctual
     payment when due of the Obligations or any part thereof;

               (ii) deliver to the Administrative Agent such duly executed
     supplements and amendments to any of the Collateral Documents, in each case
     in form and substance reasonably satisfactory to the Administrative Agent
     and as the Administrative Agent reasonably deems necessary in order to (A)
     effectively grant to the Administrative Agent for the benefit of the
     Secured Parties, a valid, perfected and enforceable security interest in
     all assets, personal property or property interests that constitute
     Collateral owned by any Credit Party and (B) effectively grant to the
     Administrative Agent for the benefit of the Secured Parties, a valid,
     perfected and enforceable security interest in all Stock and other debt
     Securities of any Credit Party and each direct Subsidiary of each Credit
     Party (other than the Stock of the Excluded Issuers); provided, however,
     that, in no event shall (x) more than 65% of the outstanding voting Stock
     of any Subsidiary which is not a Domestic Subsidiary be pledged to secure
     the Obligations or (y) the Stock of any joint venture company be pledged to
     the extent that such pledge is restricted by legally binding arrangements
     between the joint venture parties;

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<PAGE>

               (iii) deliver to the Administrative Agent all certificates,
     instruments and other documents representing all Collateral required to be
     pledged and delivered under the Collateral Documents and all other Stock
     and other debt Securities being pledged pursuant to the joinders,
     amendments and supplements executed pursuant to clause (ii) above;

               (iv) to the extent permitted hereunder, if any Credit Party
     acquires a fee simple ownership interest in real estate after the Closing
     Date, or discovers that it owns any fee simple interest in real estate not
     constituting Owned Real Estate, within ninety (90) days thereof, execute
     and deliver to the Administrative Agent, a Mortgage granting the
     Administrative Agent for the benefit of Secured Parties a valid, perfected
     and enforceable first priority Lien on such real estate and, if reasonably
     required by the Administrative Agent, environmental audits, mortgage title
     insurance policy, real property survey, local counsel opinion(s),
     supplemental casualty insurance and flood insurance, and such other
     documents, instruments or agreements reasonably requested by the
     Administrative Agent, in each case, in form and substance reasonably
     satisfactory to the Administrative Agent (it being understood and agreed
     that each such real estate so acquired shall be considered "Owned Real
     Estate" for purposes of this Agreement from and after the date of its
     acquisition);

               (v) if such Subsidiary is party to a Case, to obtain an order of
     the Bankruptcy Court confirming in such Case extension of the terms of the
     Orders to such new Subsidiary as a debtor and debtor in possession;

               (vi) to take such other actions as the Administrative Agent
     reasonably deems necessary to ensure the validity or continuing validity of
     the guaranties required to be given pursuant to clause (i) above or to
     create, maintain or perfect the security interest required to be granted
     pursuant to clause (ii) above, including the filing of financing statements
     or other recordations in such jurisdictions as may be required by the
     Collateral Documents, the Code, the FAA or applicable law, or as may be
     reasonably requested by the Administrative Agent; and

               (vii) if requested by the Administrative Agent, deliver to the
     Administrative Agent legal opinions relating to the matters described above
     in connection with the addition of any Guarantor or Collateral acquired
     after the date hereof, which opinions shall be in form and substance
     consistent with those delivered on the Closing Date and from counsel
     reasonably satisfactory to the Administrative Agent.

          (b) Notwithstanding the foregoing, (i) prior to the occurrence of any
Event of Default, the Administrative Agent shall not take any security interest
in or require any actions to be taken with respect to (A) those assets as to
which the Administrative Agent shall determine, in their reasonable discretion,
that the cost of obtaining such security interest or taking such action are
excessive in relation to the benefit to Lenders afforded thereby, (B) property
the acquisition or construction of which was financed through Indebtedness
(existing as of the Closing Date (other than Gates) or as permitted by Section
6.3(a)), and (C) any property to the extent that the granting of such a security
interest would constitute a breach or violation of a valid and effective
restriction in favor of a third party (including, without limitation, mandatory
consent rights), that

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<PAGE>

would result in the termination of any Credit Party's interest in such
Collateral or give rise to any indemnification obligations or any right to
terminate or commence the exercise of remedies under such restrictions, (ii) the
Administrative Agent shall not take any security interest in, or require any
Credit Party to take any action referred to in Section 5.12(a)(iv) with respect
to, real estate, or require the execution or delivery of any Aircraft Mortgage
or Spare Parts Mortgage, or require any Credit Party to take any actions with
respect to the FAA relating to any of the 737-800 aircraft described in Section
6.8(m) hereof or with respect to any asset (A) until the expiration of 90 days
after the date of acquisition thereof, unless Borrower shall have given the
Administrative Agent notice that it does not intend to finance such acquisition
as permitted by Section 6.3(a)(i), and (B) previously securing or financed by
Existing Secured Indebtedness until the expiration of 90 days after such
Existing Secured Indebtedness has been repaid, unless Borrower shall have given
the Administrative Agent notice that it does not intend to finance such asset as
permitted by Section 6.3(a)(v), and (iii) Liens required to be granted and
actions required to be taken pursuant to this Section 5.12 shall all be subject
to exceptions and limitations (including Liens permitted pursuant to Section
6.7) consistent with those set forth herein and in the Collateral Documents as
in effect on the Closing Date.

          5.13 Pledged Spare Parts.

          Each Credit Party shall segregate all of its Pledged Spare Parts from
any Spare Parts which are subject to any consignment arrangement, and shall keep
all Spare Parts not so subject to a consignment arrangement in Designated Spare
Parts Locations, except to the extent permitted in the Spare Parts Mortgage. The
Pledged Spare Parts will be maintained by or on behalf of the Air Carriers that
are Credit Parties, as required by the Spare Parts Mortgage.

          5.14 Aircraft Mortgage; Spare Parts Mortgage; SGR Security Agreement.

          Each Air Carrier that is a Credit Party shall execute the Aircraft
Mortgage, the Spare Parts Mortgage and the SGR Security Agreement.

          5.15 Slot Utilization.

          (a) Subject to transfers, exchanges and other dispositions permitted
by this Agreement and the SGR Security Agreement, from and after the Closing
Date Borrower shall cause the FAA Slots to have sufficient Slot Utilization, for
purposes of 14 C.F.R. 93.227 (the "Slot Utilization Regulations") and shall at
the end of Week 4 of any respective Two-Month FAA Reporting Period for FAA Slots
present to each Administrative Agent (i) if, during Week 1, Week 2, Week 3 or
Week 4, the FAA or any applicable Foreign Aviation Authority has revoked,
terminated or canceled any Credit Parties' right to utilize any Primary Slot, a
list of all such Primary Slots and (ii) a certification from Borrower that
either:

               (i) the FAA Slots have been utilized at the following rates (a
     week shall be deemed to be seven (7) days for purposes of this Section
     5.14): (x) sixty-five percent (65%) for each hourly period for Weeks 1-4 of
     the respective Two-Month FAA Reporting Period for Slots in DCA and LGA; (y)
     sixty-five percent (65%) for each half

                                       36

<PAGE>

     hour period for Weeks 1-4 of the respective Two-Month FAA Reporting Period
     for arrival Slots in DCA and LGA; or

               (ii) Borrower intends to effectuate full compliance with all of
     the slot utilization covenants pursuant to exchanging slots at such
     airports with third party air carriers and such officer has no reason to
     believe that Borrower will fail to comply with the Slot Utilization
     Regulations.

          (b) Subject to transfers, exchanges and other dispositions permitted
by this Agreement and the SGR Security Agreement, utilize the Foreign Slots in a
manner consistent in all material respects with applicable regulations and
contracts in order reasonably to preserve its right to hold and operate the
Foreign Slots, taking into account any waivers or other relief granted by any
applicable Aviation Authority.

          5.16 ERISA/Labor Matters.

          Borrower shall furnish the Administrative Agent (with sufficient
copies for each of Lenders) each of the following:

          (a) promptly and in any event within thirty (30) days of filing or
receipt by Borrower, with respect to any Title IV Plan, copies of the most
recent annual reports or returns (IRS Form 5500), audited or unaudited financial
statements and actuarial valuations with respect to such Plans;

          (b) promptly and in any event within ten (10) days after Borrower, any
Subsidiary of Borrower or any ERISA Affiliate knows or has reason to know that a
request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a written
statement of an officer of Borrower describing such waiver request and the
action, if any, Borrower, its Subsidiaries and ERISA Affiliates propose to take
with respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto;

          (c) simultaneously with the date that Borrower, any Subsidiary of
Borrower or any ERISA Affiliate files a notice of intent to terminate any Title
IV Plan, a copy of each notice;

          (d) promptly and in any event within three (3) days after Borrower,
any Subsidiary of Borrower or any ERISA Affiliate receives any adverse
communication from a Governmental Authority which could result in an increase to
or accelerate the payment of any liability with respect to a Pension Plan, a
copy of such notice; and

          (e) simultaneously with the date that any Credit Party (i) commences
or terminates negotiations with any collective bargaining agent for the purpose
of materially changing any collective bargaining agreement; (ii) reaches an
agreement with any collective bargaining agent prior to ratification for the
purpose of materially changing any collective bargaining agreement; (iii)
ratifies any agreement reached with a collective bargaining agent for the
purpose of materially changing any collective bargaining agreement; or (iv)
becomes subject to a "cooling off period" under the auspices of the National
Mediation Board, notification of the

                                       37

<PAGE>

commencement or termination of such negotiations, a copy of such agreement or
notice of such ratification or a "cooling off period," as the case may be.

          5.17 Maintenance of Liens and Collateral.

          Each Credit Party, subject to Section 5.12, shall do or cause to be
done all things necessary to preserve and keep in full force and effect at all
times the Liens securing the Obligations as provided in the Loan Documents.

          5.18 Use of Proceeds.

          The proceeds of the Loans and the Letters of Credit will be used by
Borrower solely for the refinancing of the obligations under the Existing Credit
Agreement and the Existing Skymiles Facility pursuant to Section 2.1(j) and
Section 2.1(k) and for the general corporate purposes of the Credit Parties.

          5.19 Cash Management Systems.

          Borrower will, subject to the entry of the applicable First Day
Orders, establish and will maintain until the Termination Date, the Cash
Management Systems as described in Annex C.

          5.20 Appraisals.

          Each Credit Party shall provide the Administrative Agent access to its
properties and to the Collateral in accordance with Section 1.12 and permit the
Administrative Agent to have an Appraiser conduct appraisals as set forth in
Annex F.

          5.21 Post-Closing Covenants. Borrower shall comply with the terms and
conditions set forth on Annex L.

6. NEGATIVE COVENANTS

          Each Credit Party agrees that from and after the Closing Date until
the Termination Date:

          6.1 Mergers, Subsidiaries, Etc.

          No Delta Company shall directly or indirectly, by operation of law or
otherwise, merge or consolidate with any Person or acquire Stock of any Person;
provided, that (a) any Subsidiary may merge or consolidate with (i) Borrower or
a Guarantor in a transaction in which Borrower or any Guarantor is the surviving
Person and (ii) if such Subsidiary is not a Guarantor, any other Delta Company,
(b) Borrower may merge or consolidate with, or acquire Stock of, any Person to
effectuate an Investment permitted by Section 6.2 in a transaction in which
Borrower is the surviving Person, (c) any Subsidiary may merge or consolidate
with, or acquire Stock of, any Person to effectuate an Investment permitted by
Section 6.2 in a transaction in which a Subsidiary is the surviving Person and
(d) any Subsidiary may merge or consolidate with another Person in connection
with any sale or other disposition of such Subsidiary permitted pursuant to

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<PAGE>

Section 6.8; provided, that such merger, consolidation or acquisition shall not
result in the acquisition of Stock located outside of the United States in an
amount in excess of $25,000,000 in the aggregate.

          6.2 Investments; Loans and Advances.

          Except as otherwise expressly permitted by this Section 6.2, no Delta
Company shall make or permit to exist any investment in, or make, accrue or
permit to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise (all of the
foregoing, "Investments"), except (without duplication):

          (a) each Delta Company may hold Investments comprised of notes
payable, or stock or other securities issued by Account Debtors to such Delta
Company pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, consistent with
past practices;

          (b) each Delta Company may maintain its existing investments in its
Subsidiaries as of the Closing Date summarized on Disclosure Schedule 3.8;

          (c) each Delta Company may make investments, subject to Section 5.19,
in Permitted Investments;

          (d) each Delta Company may maintain its existing Investments
summarized on Disclosure Schedule 6.2;

          (e) Investments (i) may be made by any Credit Party in any other
Credit Party, (ii) may be made by any Delta Company that is not a Credit Party
in any other Delta Company, subject to compliance with Section 6.3(a)(vii) and
(iii) constituting capital contributions or intercompany loans or advances may
be made to Aero Assurance, Ltd. or New Sky, Ltd. for the purpose of cash
collateralizing letters of credit issued for the account of such captive
insurance Subsidiaries to the extent permitted under Section 6.3(a)(xiii);

          (f) each Delta Company may make Investments with the funds held in the
Excluded Accounts;

          (g) each Delta Company may make Investments consisting of (i) currency
swap agreements, currency future or option contracts and other similar
agreements designed to hedge against fluctuations in foreign interest rates and
currency values, (ii) interest rate swap, cap or collar agreements and interest
rate future or option contracts, and (iii) fuel hedges and other derivatives
contracts, in each case, to the extent that such agreement or contract is
permitted by Section 6.3 and Section 6.17 and entered into in the ordinary
course of business;

          (h) the Delta Companies, in the aggregate, may make Investments in an
amount not to exceed $10,000,000 outstanding at any time in travel or airline
related businesses made in connection with marketing and promotion agreements,
alliance agreements, distribution agreements, agreements with respect to fuel
consortiums, agreements relating to flight training, agreements relating to
insurance arrangements, agreements relating to parts management systems and
other similar agreements;

                                       39

<PAGE>

          (i) the Delta Companies may make advances to their respective
officers, directors and employees in an amount not to exceed (i) $10,000
outstanding at any time to any individual officer, director or employee and (ii)
$7,000,000 in the aggregate outstanding at any time for all such advances;

          (j) the Delta Companies may make advances in respect of (i) signing
bonuses for newly hired officers, directors or employees of any Delta Company in
an amount not to exceed $250,000 individually outstanding at any time and (ii)
relocation expenses for newly hired officers, directors or employees of any
Delta Company in an amount not to exceed $5,000,000 in the aggregate outstanding
at any time;

          (k) the Delta Companies may make Investments in the form of foreign
cash equivalents in the ordinary course of business and consistent with past
practices;

          (l) [Reserved];

          (m) the Delta Companies may make additional Investments in
Subsidiaries that are not Credit Parties in an aggregate amount at any one time
not to exceed $5,000,000;

          (n) the Delta Companies may make any Investment consisting of the
acquisition of Stock of any Person; provided that (i) such Person becomes a
Credit Party or is merged with or into Borrower or a Credit Party immediately
upon consummation of such acquisition and (ii) such acquisition is permitted by
Section 6.10;

          (o) the Delta Companies may make any Investment consisting of the
acquisition of equity interests permitted pursuant to Section 6.13(d), (e) and
(f); and

          (p) the Delta Companies may make other Investments in an aggregate
amount at any one time not to exceed $25,000,000 for all Investments made
pursuant to this clause (p).

The term "Investments" shall not include deposits to secure the performance of
leases.

          6.3 Indebtedness.

          (a) No Delta Company shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication):

               (i) Indebtedness secured by purchase money security interests and
Capital Leases (including in the form of sale-leaseback, synthetic lease or
similar transactions) to the extent such Indebtedness was incurred to finance
the acquisition or construction of aircraft, equipment and real estate to the
extent permitted by Section 6.10 or ARB Indebtedness; provided, that the amount
of such Indebtedness does not exceed 100% of the purchase price or construction
cost (including any capitalized interest and issuance fees) of the subject
asset;

               (ii) the Loans and the other Obligations;

               (iii) [Reserved];

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<PAGE>

               (iv) existing Indebtedness described in Disclosure Schedule
3.12(b) or 6.3;

               (v) Indebtedness incurred after the Closing Date; provided, that
(A) such indebtedness is (x) secured by (or finances) assets which, as of the
Closing Date, secured (or was financed by) other Indebtedness outstanding on the
Closing Date described in Disclosure Schedule 6.3 (the "Existing Secured
Indebtedness"), (y) incurred within one hundred eighty (180) days after the
repayment in full of such Existing Secured Indebtedness and (z) is in an
aggregate principal amount not exceeding the maximum principal amount of such
Existing Secured Indebtedness outstanding at any time on or prior to the Closing
Date and (B) such Existing Secured Indebtedness shall have been repaid in full
on the scheduled maturity date thereof (a "Permitted Secured Financing");

               (vi) Indebtedness under the Post-Petition Skymiles Facility in an
aggregate principal amount not to exceed $350,000,000;

               (vii) Indebtedness consisting of intercompany loans and advances
made (A) among Credit Parties, (B) among Delta Companies that are not Credit
Parties and (C) by a Credit Party to Aero Assurance, Ltd. or New Sky Ltd.
permitted pursuant to Section 6.2(e)(iii), provided, that (A) to the extent any
such loan or advance is evidenced by a promissory note (the "Intercompany
Notes") held by any Credit Party, the applicable Credit Party shall have pledged
and delivered such note to the Administrative Agent pursuant to the applicable
Collateral Document as additional collateral security for the Obligations, (B)
each applicable Credit Party shall record all intercompany transactions on its
Books and Records in the ordinary course of business and (C) the obligations of
any Credit Party under any such intercompany loans to any other Delta Company
shall be subordinated to the Obligations of such Credit Party under the Loan
Documents in a manner reasonably satisfactory to the Administrative Agent;

               (viii) Indebtedness owed to any Lender (or any of its affiliates)
or any other Person in connection with Investments permitted under Section
6.2(g) and Section 6.17;

               (ix) Indebtedness in respect of any overdrafts and related
liabilities arising from treasury, depository and cash management services or in
connection with any automated clearing house transfers of funds (but subject to
compliance with Section 5.19);

               (x) Indebtedness consisting of take-or-pay obligations contained
in supply agreements entered into in the ordinary course of business and
consistent with past practices;

               (xi) Indebtedness to credit card processors in connection with
credit card processing services incurred in the ordinary course of business and
consistent with past practices;

               (xii) Indebtedness owing by the Credit Parties to Citibank, N.A.
and its banking Affiliates, arising in the ordinary course of business,
providing netting

                                       41

<PAGE>

services with respect to intercompany Indebtedness permitted to be incurred and
outstanding pursuant to this Agreement so long as such Indebtedness does not
remain outstanding for more than three (3) Business Days from the date of its
incurrence and does not exceed an aggregate outstanding amount of $50,000,000;

               (xiii) Indebtedness in respect of letters of credit in an
aggregate outstanding amount not to exceed $150,000,000;

               (xiv) surety bonds in an aggregate outstanding amount not to
exceed $80,000,000;

               (xv) other unsecured Indebtedness incurred subsequent to the
Closing Date; provided, that no principal payments shall be required thereunder
(except upon acceleration) on or prior to the Scheduled Maturity Date;

               (xvi) Permitted Subordinated Indebtedness;

               (xvii) Indebtedness constituting a Permitted Refinancing of
Indebtedness referred to in clauses (i), (iv), (v), (vi) or (xvi) above;

               (xviii) unsecured Indebtedness (including letters of credit)
incurred subsequent to the Closing Date to provide credit support for (x)
obligations arising in the ordinary course of business and consistent with past
practices in connection with credit card processing services and (y) the
Indebtedness described in clause (ix) above;

               (xix) other unsecured Indebtedness incurred subsequent to the
Closing Date in an aggregate amount not to exceed $25,000,000 outstanding at any
time; and

               (xx) refinancings, replacements and restructurings of
Indebtedness secured directly or indirectly by "equipment" described in Section
1110(a)(3) of the Bankruptcy Code (as in effect on the Filing Date hereof and
permitted by Section 6.03(a)(iv)) or by any equipment that would have qualified
as such equipment had it been placed in service after October 22, 1994
(collectively, "Section 1110-Type Indebtedness"); provided, that (A) the
principal amount of such existing Indebtedness shall not be increased above the
principal amount thereof outstanding immediately prior to such refinancing or
replacement, unless (1) the interest expense, if any, on any scheduled payments
deferred as a result of such refinancing is not paid currently but is
recapitalized as principal or (2) such refinancing increases the principal
amount of such refinanced Section 1110-Type Indebtedness but the overall effect
on the aggregate amount of existing Indebtedness secured directly or indirectly
by "equipment" described in Section 1110(a)(3) of the Bankruptcy Code is reduced
or remains the same, or the financing expenses in connection with all such
Indebtedness is reduced (it being understood that any such increase in
Indebtedness may not be granted Super-Priority Claim status pursuant to Section
364(c)(1) of the Bankruptcy Code), (B) after giving effect thereto, the average
maturity of all the then-outstanding Section 1110-Type Indebtedness shall not be
shortened as a result of such refinancing or replacement, (C) the

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<PAGE>

weighted average life to maturity of all such existing Section 1110-Type
Indebtedness shall not be reduced as a result of such refinancing, replacement
or restructuring, and (D) the direct and contingent obligors therefor shall not
be changed, as a result of or connection with such refinancing or replacement.

          (b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount in respect of any post-petition Indebtedness prior to its
scheduled maturity, other than (i) the Obligations; (ii) Indebtedness secured by
a Lien permitted under Section 6.7 if the asset securing such Indebtedness on a
first-priority basis has been sold or otherwise disposed of in accordance with
Section 6.8; (iii) Indebtedness upon any Permitted Refinancing; (iv) other
Indebtedness (excluding Permitted Subordinated Indebtedness) not in excess of
$10,000,000; (v) Indebtedness incurred subsequent to the Closing Date permitted
under Section 6.3(a) other than Indebtedness permitted under Section
6.3(a)(iii), (iv), (vi), (xv), (xvi) or any Permitted Refinancing of
Indebtedness permitted by any of the foregoing; (v) as otherwise permitted in
Section 6.13; and (vi) ARB Indebtedness in order to minimize, in Borrower's
reasonable judgment upon opinion of counsel, such Credit Party's potential
liability arising from a loss of the tax exempt status of such Indebtedness.

          6.4 Affiliate Transactions.

          None of the Credit Parties will sell or transfer any property or
assets to, or otherwise engage in any other material transactions with, any of
its Affiliates (other than the other Credit Parties), except transactions (a) at
prices and on terms and conditions no less favorable to such Credit Party than
could be obtained on an arm's length basis from unrelated third parties, (b)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of such Credit Party and other
transactions permitted by Section 6.2(i) and (j), (c) any dividends, other
distributions or payments permitted by Section 6.13, (d) any Investment in a
Delta Company permitted by Section 6.2 or intercompany transactions with a Delta
Company permitted by Section 6.3, (e) and (e) provision of legal, accounting or
administrative services to any Delta Company in the ordinary course of business
in accordance with past practices.

          6.5 Capital Structure and Business.

          No Credit Party shall amend its charter or bylaws in a manner that
would adversely affect the Administrative Agent or Lenders, or such Credit
Party's duty or ability to repay the Obligations, in any material respect. No
Credit Party shall engage in any business other than the businesses currently
engaged in by it and businesses that are reasonably related thereto.

          6.6 Guaranteed Indebtedness.

          No Credit Party shall create, incur, assume or permit to exist any
Guaranteed Indebtedness, except (without duplication) (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party in the ordinary course of business, (b) Guaranteed Indebtedness incurred
for the benefit of any other Credit Party if the primary

                                       43

<PAGE>

obligation is expressly permitted by this Agreement, (c) Guaranteed Indebtedness
to the extent constituting Indebtedness permitted by Section 6.3 and (d) to the
extent existing on the Closing Date as set forth in Disclosure Schedule 6.3.

          6.7 Liens.

          No Credit Party shall create, incur, assume or permit to exist any
Lien on or with respect to the Collateral or any of its other properties or
assets (whether now owned or hereafter acquired), except for:

          (a) Permitted Encumbrances;

          (b) Liens in existence on the date hereof and summarized on Disclosure
Schedule 6.7;

          (c) Liens created after the date hereof by conditional sale or other
title retention agreements (including Capital Leases) or in connection with
purchase money Indebtedness, in each case, permitted in Section 6.3(a)(i);
provided, that such Liens attach only to the assets (including related leases
and subleases thereof and other assets integral to the use thereof including
security deposits from any sublessee collaterally assigned for the benefit of
lessors) subject to such purchase money debt and such Indebtedness is incurred
within one hundred eighty (180) days following such purchase and does not exceed
100% of the purchase price of the subject assets;

          (d) Liens (having the priority set forth in the Skymiles Intercreditor
Agreement) securing the "Obligations" as defined in the Post-Petition Skymiles
Facility Documents, so long as the Skymiles Intercreditor Agreement is in full
force and effect;

          (e) [Reserved];

          (f) Liens on assets that are the subject of a Permitted Secured
Financing; provided, that such Liens attach only to the assets subject to the
Existing Secured Indebtedness related thereto;

          (g) other Liens securing Indebtedness permitted by Section 6.3(a)(ix)
and (xii);

          (h) Liens on the Excluded Accounts and amounts on deposit therein in
favor of the beneficiaries of the amounts on deposit therein to the extent such
Liens secure obligations owed to such beneficiaries;

          (i) any interest or title of a licensor, lessor or sublessor granted
to others, but only to the extent permitted by any of the Collateral Documents;

          (j) Liens in favor of credit card processors securing obligations in
connection with credit card processing services incurred in the ordinary course
of business and consistent with past practices;

                                       44

<PAGE>

          (k) Liens on cash deposits that do not constitute Collateral in an
aggregate amount not in excess of $150,000,000;

          (l) [Reserved.]

          (m) Liens on Margin Stock, if and to the extent the value of all
Margin Stock of Borrower and its Subsidiaries exceeds 25% of the total assets
subject to this Section 6.7;

          (n) Liens on real and personal property acquired in connection with
acquisitions permitted by this Article 6 to the extent such Liens exist on such
acquired property at the time of acquisition; provided, that such Liens attach
only to the assets (including related leases thereof and, in the case of
personal property, other assets integral to the use thereof including security
deposits from any sublessee collaterally assigned for the benefit of lessors)
subject to such acquisition;

          (o) Liens securing a Permitted Refinancing of Indebtedness, to the
extent such Indebtedness being refinanced was originally secured in accordance
with this Section 6.7; provided that such Lien does not attach to any additional
property or assets of Borrower or any Subsidiary;

          (p) Liens securing the Loans and the other Obligations;

          (q) any Lien on any Non-1110 Aviation Assets or Section 1110 Assets
securing Indebtedness permitted under Section 6.3(a)(xx); provided, that such
Liens attach only to the assets securing the applicable Indebtedness permitted
under Section 6.3(a)(iv);

          (r) Liens created after the Closing Date in connection with operating
Leases; provided, that such Liens attach only to the assets subject to such
Lease (including any sublease thereof, other assets integral to the use thereof
and security deposits from any sublessee collaterally assigned for the benefit
of lessors); and

          (s) other Liens so long as the value of the property subject to such
Liens, and the Indebtedness and other obligations secured thereby, do not
exceed, in the aggregate, $2,000,000.

          No Credit Party shall grant, or permit any of its Subsidiaries to
grant, except as expressly permitted by this Agreement, any Lien on any of its
respective assets securing the Senior Claims or the Junior Claims (as each such
term is defined in the Skymiles Intercreditor Agreement), as the case may be, to
any Person other than each of the Administrative Agent and the Skymiles Agent
(as defined in the Skymiles Intercreditor Agreement) on behalf of the applicable
Secured Parties (as defined in the Skymiles Intercreditor Agreement), subject to
the relative priorities set forth in the Skymiles Intercreditor Agreement.

          6.8 Sale of Stock and Assets.

          No Credit Party shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets, including the Stock of any of
its Subsidiaries (whether in a public or

                                       45

<PAGE>

a private offering or otherwise) or any of its Accounts (any such disposition
being an "Asset Sale"), other than (without duplication):

          (a) sales and other dispositions of assets (excluding those assets
subject to clause (c) or (i) below), and swaps, exchanges, interchange or
pooling of assets (subject to the limitations set forth in the Collateral
Documents), in the ordinary course of business;

          (b) sales or dispositions of surplus, obsolete, negligible or
uneconomical assets no longer used in the business of Borrower and the
Guarantors;

          (c) the sale or other disposition of any Collateral consisting of (i)
up to fifteen (15) 767-200 aircraft or (ii) other Collateral included in the
Term A Borrowing Base having a book value not exceeding $50,000,000 in the
aggregate in any Fiscal Year; provided, that, in each case, any disposition of
any such Collateral included in the Term A Borrowing Base (other than DFW
Assets) may only be sold for value in excess of the Allocated Amount for such
Collateral;

          (d) Excluded Sales;

          (e) all sales of assets of DLMS securing its obligations under the
Skymiles Facility;

          (f) dispositions of Section 1110 Assets, consisting of the return
thereof to the party that had provided financing therefor; provided, that such
dispositions, in the aggregate, shall not materially and adversely affect the
operations of the Delta Companies, taken as a whole;

          (g) sales or dispositions of assets among (i) Borrower and the
Guarantors or (ii) Subsidiaries that are not Guarantors;

          (h) sales or dispositions of other assets in arm's length transactions
at fair market value in an aggregate amount not to exceed $50,000,000 in the
aggregate in any Fiscal Year;

          (i) (i) abandonment of Intellectual Property constituting Collateral;
provided, that such abandonment is (A) in the ordinary course of business
consistent with past practices and (B) with respect to Intellectual Property
that is not material to the business of Borrower and the Guarantors and (ii)
licensing or sublicensing of Intellectual Property constituting Collateral in
the ordinary course of business consistent with past practices;

          (j) dispositions of assets located outside of the United States in an
aggregate amount not to exceed $5,000,000;

          (k) the sale or discount of Accounts to a collection agency in
connection with collections of delinquent receivables;

          (l) (i) abandonment of Slots, Gates, Routes or Supporting Route
Facilities; provided, that such abandonment is (A) in connection with the
downsizing of any hub or other

                                       46

<PAGE>

facility located in Cincinnati as reflected in the Projections, (B) in
connection with the downsizing of any other hub or facility as reflected in the
Projections, which does not materially and adversely affect the business of
Borrower and the Guarantors, taken as a whole, or (C) in the ordinary course of
business consistent with past practices and does not materially and adversely
affect the business of Borrower and the Guarantors, taken as a whole, (ii)
transfer or other disposition of Slots to the extent permitted by Section 7(b)
of the SGR Security Agreement in an aggregate amount not to exceed $25,000,000,
(iii) exchange of Slots to the extent permitted by Section 7(c) of the SGR
Security Agreement and (iv) assignments of leases or granting of leases of (x)
Aircraft or Engines to the extent permitted pursuant to the Aircraft Mortgage
and (y) other aircraft or engines (that do not constitute Collateral) in the
ordinary course of business;

          (m) the sale or other disposition of any 737-800 aircraft
substantially concurrently with the consummation of the purchase of such
aircraft to the extent such purchase occurs pursuant to a purchase agreement to
which a Delta Company is a party as of the Closing Date;

          (n) sale-leaseback, synthetic lease or similar transactions to the
extent permitted under Section 6.3(a)(i) and Section 6.10 and sale-leasebacks of
Section 1110 Assets and Non-1110 Aviation Assets;

          (o) to the extent not prohibited by Section 6.18 or any of the
Collateral Documents, the disposition of leasehold or similar interests in
non-Owned Real Estate, including through assignment, sublease or lease
termination or rejection, in whole or in part, or the return, surrender,
exchange or abandonment of any property subject thereto;

          (p) any sale of Margin Stock for fair value as determined in good
faith by Borrower; and

          (q) any Property Loss Event (without giving effect to the thresholds
set forth in the definition thereof);

          (r) rejection of executory contracts in accordance with an order of
the Bankruptcy Court to the extent such rejections do not, individually or in
the aggregate, materially and adversely affect the business of Borrower and the
Guarantors, taken as a whole; and

          (s) sale of Excluded Properties; provided, that, if such Excluded
Properties are included in the Term A Borrowing Base, the sale price shall be in
excess of the Allocated Amount for such Excluded Properties.

          6.9 [Reserved.]

          6.10 Financial Covenants.

          Borrower shall not breach or fail to comply with any of the Financial
Covenants.

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<PAGE>

          6.11 Hazardous Materials.

          No Credit Party shall cause or knowingly permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral, other than in the case of each of
clauses (a) and (b), such violations, Releases or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.

          6.12 Sale-Leasebacks.

          No Credit Party shall engage in any sale-leaseback, synthetic lease or
similar transaction involving any of its assets (including without limitation,
any aircraft) unless permitted by Section 6.3(a)(i) or Section 6.8(n).

          6.13 Restricted Payments.

          No Credit Party shall make any Restricted Payment, except (a) payments
of principal of and interest on intercompany loans and advances between Borrower
and Guarantors to the extent permitted by Section 6.3, (b) dividends and
distributions by Subsidiaries of Borrower, (c) dividends and distributions by
Borrower with respect to its Stock payable solely in additional shares of its
common Stock, (d) pursuant to stock option plans or other benefit plans for
management or employees of Borrower and its Subsidiaries in a maximum aggregate
amount not to exceed $2,000,000, (e) the redemption of the Class B shares of
Delta Benefits Management Inc. held by Aon Group, Inc., pursuant to put and call
rights existing on the date hereof (f) scheduled payments of interest with
respect to Permitted Subordinated Indebtedness and any Permitted Refinancing
thereof (or, subject to any applicable subordination terms, upon acceleration),
and (g) scheduled payments of principal and interest with respect to, and
payment of fees and other charges required by the terms of, the Post-Petition
Skymiles Facility (or, subject to the Skymiles Intercreditor Agreement, upon
acceleration), provided that no such payments shall be made from proceeds of
Collateral other than Skymiles Collateral (A) from and after the issuance of any
Notice of Actionable Default and until the withdrawal of all pending Notices of
Actionable Default or (B) during the period in which the Excess Aggregate Cash
on Hand is lower than the lesser of (x) $200 million and (y) the aggregate
amount of "Obligations" (as defined in the Post-Petition Skymiles Facility
Documents) outstanding at such time; provided that such Restricted Payments in
clause (a) shall be permitted so long as no Event of Default has occurred and is
continuing or would result after giving effect to such Restricted Payments and
the Administrative Agent shall not have notified Borrower to stop such payments.

          6.14 Change of Corporate Name or Location; Change of Fiscal Year.

          No Credit Party shall (a) change its name as it appears in official
filings in the state of its incorporation or other organization, (b) change its
chief executive office, principal place of business, corporate offices or
warehouses, hangars, terminals, maintenance facilities or other locations at
which Collateral with book value in excess of $5,000,000, individually or in the
aggregate, is held or stored, or the location of its records concerning such
Collateral, (c)

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<PAGE>

change the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization, or
(e) change its state of incorporation or organization, in each case, without at
least thirty (30) days' prior written notice to the Administrative Agent;
provided, that (i) in the case of clauses (b) or (e), any such new location
shall be in the continental United States and (ii) the Credit Parties shall be
in compliance with the Spare Parts Mortgage at all times. No Credit Party shall
change its Fiscal Year or the Post-Petition Skymiles Facility Documents.

          6.15 No Impairment of Intercompany Transfers.

          No Credit Party shall directly or indirectly enter into or become
contractually bound by any agreement, instrument, indenture or other obligation
(other than this Agreement, the other Loan Documents and the Post-Petition
Skymiles Facility Documents) that could directly or indirectly restrict,
prohibit or require the consent of any Person with respect to the payment of
dividends or distributions by a Credit Party or the making or repayment of
intercompany loans by a Subsidiary of Borrower to Borrower; other than (a)
prohibitions or restrictions existing on the Closing Date and listed on
Disclosure Schedule 6.15, and any extension or renewal thereof on terms no less
favorable to such Credit Party and (b) prohibitions or restrictions set forth in
the Loan Documents or the Post-Petition Skymiles Facility (to the extent
consistent with such provisions in the Loan Documents).

          6.16 Limitation on Negative Pledge Clauses.

          No Credit Party will enter into any agreement (other than the Loan
Documents) with any Person which prohibits or limits the ability of such Credit
Party to create, incur, assume or suffer to exist any Lien securing the
Obligations upon any of its properties, assets or revenues, whether now owned or
hereafter acquired, other than agreements that contain (a) prohibitions or
limitations existing on the Closing Date and listed on Disclosure Schedule 6.16,
and any extension or renewal thereof on terms no less favorable to the Credit
Parties, (b) prohibitions set forth in the Loan Documents and the Post-Petition
Skymiles Facility Documents, (c) customary prohibitions, restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale; provided, that such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (d)
prohibitions or restrictions imposed by any agreement relating to secured
Indebtedness or other obligations permitted by this Agreement if such
restriction or condition applies only to property secured or financed by such
Indebtedness or other obligations and (e) restrictions prohibiting Liens
contained in agreements relating to the use and occupancy of airport premises
and facilities, operating leases, Capital Leases or Licenses with respect to
properties subject thereto and interests created therein.

          6.17 No Speculative Transactions.

          No Credit Party shall engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to hedge in
the ordinary course of business.

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<PAGE>

          6.18 Real Estate Purchases and Leases.

          No Credit Party shall purchase a fee simple ownership interest in real
estate with an aggregate purchase price in excess of $30,000,000. No Credit
Party shall modify, amend, extend, cancel, terminate or otherwise change in any
materially adverse manner any term, covenant or condition of any lease,
sublease, usufruct, use agreement or other occupancy or facility agreement
affecting its Real Estate as of the Closing Date, and no Credit Party shall
hereafter enter into any new lease, sublease, usufruct, use agreement or other
occupancy or facility agreement granting such Credit Party possessory, use or
similar rights in or to any real estate, unless such modification, amendment,
extension, cancellation, termination or other change, or such new lease,
sublease, usufruct, use agreement or other occupancy or facility agreement, (a)
is not prohibited by the Collateral Documents, (b) would not have a Material
Adverse Effect, and (c) would not materially and adversely affect the
Administrative Agent's Liens, for the benefit of Secured Parties, in the
Collateral stored or located at the location to which such modification or other
change, or such new lease or other agreement relates. Further, no Credit Party
shall assign, sublet or otherwise dispose of any such lease, sublease, usufruct,
use agreement or other occupancy or facility agreement to which such Credit
Party is now or hereafter a counterparty, except for an assignment, subletting
or disposition that (x) is not prohibited by Section 6.8 or the Collateral
Documents, (y) would not have a Material Adverse Effect and (z) would not
materially and adversely affect the Administrative Agent's Liens, for the
benefit of Secured Parties, in the Collateral stored or located at such
location.

          6.19 Changes Relating to Permitted Subordinated Indebtedness and
Post-Petition Skymiles Facility Documents.

          (a) No Credit Party shall change or amend the terms of any Permitted
Subordinated Indebtedness (or any indenture or agreement in connection
therewith) if the effect of such amendment is to: (i) increase the interest rate
on such Permitted Subordinated Indebtedness; (ii) change the dates upon which
payments of principal or interest are due on such Permitted Subordinated
Indebtedness other than to extend such dates; (iii) change any default or event
of default other than to delete or make less restrictive any default provision
therein with respect to such Permitted Subordinated Indebtedness; (iv) change
the redemption or prepayment provisions of such Permitted Subordinated
Indebtedness other than to extend the dates therefor or to reduce the premiums
payable in connection therewith; (v) grant any security or collateral to secure
payment of such Permitted Subordinated Indebtedness; or (vi) change or amend any
other term, in each case, if such change or amendment would materially increase
the obligations of the Credit Party thereunder or confer additional material
rights on the holder of such Permitted Subordinated Indebtedness, in each case,
in a manner adverse to any Credit Party, the Administrative Agent or any Lender.

          (b) No Credit Party shall change or amend the terms of the
Post-Petition Skymiles Facility Documents, if the effect of such amendment is
to: (i) increase the interest rate on the Post-Petition Skymiles Facility; (ii)
change the dates upon which payments of principal or interest are due on the
Post-Petition Skymiles Facility other than to extend such dates; (iii) change
any default or event of default other than to delete or make less restrictive
any default provision therein with respect to the Post-Petition Skymiles
Facility; (iv) change the redemption or prepayment provisions of the
Post-Petition Skymiles Facility other than to extend

                                       50

<PAGE>

the dates therefor or to reduce the premiums payable in connection therewith;
(v) grant any security or collateral to secure payment of the Post-Petition
Skymiles Facility; or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of the
Post-Petition Skymiles Facility, in each case, in a manner adverse to any Credit
Party, the Administrative Agent or any Lender.

          6.20 Cancellation of Indebtedness.

          No Credit Party shall, nor shall they permit any of its Subsidiaries
to, cancel any claim or Indebtedness owed to any of them except (i) in the
ordinary course of business consistent with past practice, (ii) in respect of
intercompany Indebtedness among the Credit Parties or (iii) negotiated on an
arm's-length basis and for consideration reasonably deemed by the Borrower to be
reasonable.

7. TERM

          7.1 Termination.

          The financing arrangements contemplated hereby shall be in effect
until the Maturity Date, and the Loans and all other Obligations shall be
automatically due and payable in full on such date.

          7.2 Survival of Obligations Upon Termination of Financing
Arrangements.

          Except as otherwise expressly provided for in the Loan Documents, no
termination or cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of the
Administrative Agent and the Lenders relating to any unpaid portion of the Loans
or any other Obligations, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the Maturity
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of the
Administrative Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Article 13, the payment obligations under
Sections 1.13 and 1.14, and the indemnities contained in the Loan Documents
shall survive the Termination Date.

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<PAGE>

8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

          8.1 Events of Default.

          The occurrence of any one or more of the following events (regardless
of the reason therefor) shall constitute an "Event of Default" hereunder:

          (a) Borrower (i) fails to make any payment of principal of the Loans
or any Letter of Credit Obligation when due and payable, (ii) fails to make any
payment of interest on, or Fees owing in respect of, the Loans or any of the
other Obligations within three (3) Business Days of the date when due and
payable, or (iii) fails to pay or reimburse the Administrative Agent or any L/C
Issuer or Lender for any expense reimbursable hereunder or under any other Loan
Document within ten (10) days following the demand for such reimbursement or
payment of expenses.

          (b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.2, 1.3, 1.4, 1.7, 5.4, 5.14, 5.15, 5.16 or
Article 6, the insurance provisions in the Collateral Documents or any of the
provisions set forth in Annexes C or G, respectively.

          (c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4.1 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three (3) Business Days
or more.

          (d) (x) Borrower fails to perform or observe any covenant, condition
or agreement to be performed or observed by it under the Aircraft Mortgage, and
such failure continues unremedied for a period for sixty (60) days after receipt
by Borrower of a notice thereof from the Administrative Agent (such failure, a
"Maintenance Default"); provided that, if Borrower shall have undertaken to cure
any such failure which arises under Sections 7.02 or 7.04 of the Aircraft
Mortgage as those sections relate to maintenance, service, repair or overhauls
and such failure is capable of being remedied, no such failure shall constitute
an Event of Default for a period of ninety (90) days after such notice is
received by Borrower ("Maintenance Cure Period") so long as Borrower is
diligently proceeding to remedy such failure; provided further that, if not
cured, such failure shall constitute an Event of Default if not remedied within
180 days after receipt by Borrower of such notice of a Maintenance Default or
(y) any Credit Party fails or neglects to perform, keep or observe any other
provision of this Agreement, any of the other Loan Documents or the Collateral
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.

          (e) Except for defaults resulting directly from the commencement of
the Cases and defaults resulting from obligations (other than the Obligations)
with respect to which the Bankruptcy Code prohibits any Credit Party from
complying or permits an Credit Party not to comply, a default or breach occurs
under any other agreement, document or instrument to which any Credit Party is a
party that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due in
respect of any post-petition Indebtedness or Guaranteed Indebtedness (other than
the Obligations) of any

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<PAGE>

Credit Party in excess of $25,000,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
post-petition Indebtedness or Guaranteed Indebtedness or a portion thereof in
excess of $25,000,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, or cash
collateral to be demanded in respect thereof, in each case, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.

          (f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any material respect, or any representation or warranty
herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or
delivered to the Administrative Agent or any Lender by any Credit Party is
untrue or incorrect in any material respect, in each case, as of the date when
made or deemed made.

          (g) [Reserved].

          (h) The Loan Documents and the Orders shall, for any reason, cease to
create a valid Lien on any of the Collateral purported to be covered thereby or
such Lien shall cease to be a perfected Lien having the priority provided for
herein and in the Orders, or any Credit Party shall so allege in any pleading
filed in any court or any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on each Credit Party party thereto (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms).

          (i) A final unstayed judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate at any time are outstanding against one
or more of the Credit Parties (which judgments are not covered by insurance
policies as to which liability has been accepted by the insurance carrier), and
the same are not, within thirty (30) days after the entry thereof, discharged or
bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay.

          (j) Suspension of all or substantially all of the Credit Parties'
flight and other operations for longer than two days (excluding, however, any
such suspension as a result of an order by an Aviation Authority due to a force
majeure or any other extraordinary event similarly affecting all major U.S.
commercial carriers) or entry of an order by the Bankruptcy Court authorizing
the same.

          (k) Any Change of Control occurs.

          (l) Any Air Carrier shall cease to be a Certificated Air Carrier or a
"citizen of the United States" as defined in Section 40102(a)(15) of Title 49.

          (m) (i) In the case of any Primary Route, any applicable Aviation
Authority revokes, terminates or cancels any Credit Party's Permits to use,
occupy or maintain such

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<PAGE>

Primary Route, whether as a result of any revocation, termination or
cancellation of any Primary Gate, Primary Slot or otherwise; (ii) in the case of
any Primary Slot, any applicable Aviation Authority revokes, terminates or
cancels any Credit Party's Permits to use, occupy or maintain such Primary Slot;
provided, that an Event of Default shall not occur under this clause (m)(ii) if
the aggregate value of all such Primary Slots that have been revoked, terminated
or canceled does not exceed an amount equal to the sum of (i) $25,000,000 plus
(ii) the lesser of (x) the amount of cash and Cash Equivalents held in the SGR
Cash Collateral Account and (y) $25,000,000; provided, further, that, in the
event the Administrative Agent, in its reasonable discretion, determines that
the aggregate value of all such Primary Slots that have been revoked, terminated
or canceled exceeds $25,000,000, the Administrative Agent shall promptly request
an appraisal from an Appraiser, and each Credit Party shall permit such
appraisals to be conducted, for purposes of determining such value.

          (n) In the case of any other Slots, Gates or Routes, any applicable
Aviation Authority modifies, suspends, revokes, terminates, cancels or otherwise
takes any action that adversely affects any Credit Party's Permits or any Credit
Party's use or occupation or maintenance of such Slots, Gates and Routes due to
any Credit Party's failure to abide by applicable law or any contract governing
the use of such Slots, Gates and Routes, or any Credit Party otherwise ceases to
use, occupy or maintain such Slots, Gates and Routes, and any event referred to
in this clause (n) could reasonably be expected to have a Material Adverse
Effect.

          (o) Any Lien shall arise on the assets of any Credit Party in favor of
the PBGC or an ERISA Plan and such lien has not been stayed pursuant to the
Bankruptcy Code, but only to the extent that such Lien could reasonably be
expected to result in liability to any Credit Party in an amount which would
exceed $1,000,000.

          (p) Any of the Cases shall be dismissed (or the Bankruptcy Court shall
make a ruling requiring the dismissal of the Cases) or converted to a case under
chapter 7 of the Bankruptcy Code (except to the extent the disposition of assets
upon such liquidation would be permitted under Section 6.8), or any Credit Party
shall file any pleading requesting any such relief; a trustee under chapter 7 or
chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section
1106(b) of the Bankruptcy Code shall be appointed in any of the Cases; or an
application shall be filed by any Credit Party for the approval of, or the Court
shall enter an order granting, (i) other than any Claim of Amex under the
Post-Petition Skymiles Facility Documents with respect to the Skymiles
Collateral, any other Claim having priority senior to or pari passu with the
claims of the Administrative Agent and the Lenders under the Loan Documents or,
without the prior written consent of the Administrative Agent, any other claim
having priority over any or all administrative expenses of the kind specified in
sections 503(b) or 507(b) of the Bankruptcy Code (other than the Carve-Out) or
(ii) any Lien on the Collateral having a priority senior to or pari passu with
the Liens and security interests granted herein, except the Liens on Skymiles
Collateral securing the obligations under the Post-Petition Skymiles Facility
and except as otherwise expressly provided herein.

          (q) Any Credit Party shall file a motion seeking, or the Bankruptcy
Court shall enter, an order (i) approving any payment (as adequate protection or
otherwise) on account

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<PAGE>

of any Claim against any Credit Party arising or deemed to have arisen prior to
the Petition Date, other than a Permitted Prepetition Payment, (ii) approving
any other First Day Order not reasonably acceptable to the Administrative Agent,
(iii) granting relief from the automatic stay applicable under section 362 of
the Bankruptcy Code to any holder of any security interest to permit foreclosure
or obtain liens on any assets which have a value in excess of $10,000,000 (it
being understood that neither the relinquishment by the Borrower or Guarantors
of Section 1110 Assets, nor the foreclosure of security interests in Section
1110 Assets (or in property in the possession of the applicable secured party)
as to which defaults have not been cured pursuant to Section 1110 of the
Bankruptcy Code, shall be considered to be included in this paragraph), (iv)
authorizing the sale of all or substantially all of Borrower's assets (unless
such order contemplates payment in full in cash of the Obligations upon
consummation of such sale, whether pursuant to a Plan of Reorganization or
otherwise) or (v) except to the extent the disposition of assets upon such
liquidation would be permitted under Section 6.8, approving the implementation
of liquidation under chapter 11 of the Bankruptcy Code in any Case; or

          (r) (i) The Interim Order shall cease to be in full force and effect
and the Final Order shall not have been entered prior to such cessation, or (ii)
the Final Order shall not have been entered by the Bankruptcy Court on or before
the 35th day following the Petition Date (or such later day not later than the
55th day following the Petition Date as the Arrangers shall have agreed in their
sole discretion), or (iii) from and after the date of entry thereof, the Final
Order shall cease to be in full force and effect, or (iv) any Credit Party shall
fail to comply with the terms of the Interim Order or the Final Order in any
material respect, or (v) the Interim Order or the Final Order shall be amended,
supplemented, stayed, reversed, vacated or otherwise modified (or any of the
Credit Parties shall apply for authority to do so) in any manner that affects
the rights or duties of the Administrative Agent, the Arrangers or the Lenders,
in each case, without the prior written consent of the Administrative Agent.

          8.2 Remedies.

          (a) If any Event of Default has occurred and is continuing, without
further order of, application to, or action by, the Bankruptcy Court, the
Administrative Agent may (and at the written request of any of the Requisite
Term A Lenders, the Requisite Term B Lenders or the Requisite Term C Lenders
shall), without notice except as otherwise expressly provided herein, increase
the rate of interest applicable to the Loans to the Default Rate.

          (b) If any Event of Default has occurred and is continuing, without
further order of, application to, or action by, the Bankruptcy Court, (i) the
Administrative Agent may (and at the written request of (A) the Requisite
Lenders or (B) after 120 days following the occurrence of such Event of Default,
any of the Requisite Term A Lenders, the Requisite Term B Lenders or the
Requisite Term C Lenders, shall), without notice, declare all or any portion of
the Obligations, including all or any portion of any Loan to be forthwith due
and payable, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower and each other Credit Party;
or (ii) the Administrative Agent may (and at the written request of the
Requisite Lenders, shall), without notice except as required by the Orders,
exercise any rights and remedies provided to the Administrative Agent under the
Loan Documents or at law or equity, including all remedies provided under the
Code.

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<PAGE>

          (c) In addition, subject solely to any requirement of the giving of
notice by the terms of the Interim Order or the Final Order, the automatic stay
provided in section 362 of the Bankruptcy Code shall be deemed automatically
vacated without further action or order of the Bankruptcy Court and the
Administrative Agent and the Lenders shall be entitled to exercise all of their
respective rights and remedies under the Loan Documents, including, without
limitation, all rights and remedies with respect to the Collateral and the
Guarantors.

          8.3 Waivers by Credit Parties.

          Except as otherwise provided for in this Agreement or by applicable
law, each Credit Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by the
Administrative Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever the Administrative Agent may do in this
regard, (b) all rights to notice and a hearing prior to the Administrative
Agent's taking possession or control of, or to the Administrative Agent's
replevy, attachment or levy upon, the Collateral or any bond or security that
might be required by any court prior to allowing the Administrative Agent to
exercise any of their remedies, and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.

9 . GUARANTY

          9.1 Guaranty of Obligations of Borrower. Each Guarantor hereby jointly
and severally unconditionally guarantees to Secured Parties, and their
respective successors, endorsees, transferees and assigns, the prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of
the Obligations of Borrower. Guarantors agree that this Agreement is a guaranty
of payment and performance and not of collection, and that their obligations
under this Agreement shall be primary, absolute and unconditional, irrespective
of, and unaffected by:

          (a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in any other Loan Document or any other
agreement, document or instrument to which any Credit Party and/or Guarantors
are or may become a party;

          (b) the absence of any action to enforce any other Loan Document or
the waiver or consent by any Secured Party with respect to any of the provisions
thereof;

          (c) the existence, value or condition of, or failure to perfect its
Lien against, any Collateral for the Obligations or any action, or the absence
of any action, by Secured Parties in respect thereof (including, without
limitation, the release of any such security);

          (d) the insolvency of any Credit Party; or

          (e) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor,

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<PAGE>

it being agreed by each Guarantor that its obligations under this Agreement
shall not be discharged until the Termination Date. Each Guarantor shall be
regarded, and shall be in the same position, as principal debtor with respect to
the Obligations. Each Guarantor agrees that any notice or directive given at any
time to Secured Parties which is inconsistent with the waiver in the immediately
preceding sentence shall be null and void and may be ignored by Secured Parties,
and, in addition, may not be pleaded or introduced as evidence in any litigation
relating to this Agreement for the reason that such pleading or introduction
would be at variance with the written terms of this Agreement, unless Secured
Parties have specifically agreed otherwise in writing. It is agreed among each
Guarantor and Secured Parties that the foregoing waivers are of the essence of
the transaction contemplated by the Loan Documents and that, but for this
Agreement and such waivers, Secured Parties would decline to enter into this
Agreement.

          9.2 Demand by Secured Parties. In addition to the terms of the
Guaranty set forth in Section 9.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at any
time, the outstanding principal amount of the Obligations under this Agreement
(including all accrued interest thereon) is declared to be immediately due and
payable, then Guarantors shall, without demand, pay to the holders of the
Obligations the entire amount of the outstanding Obligations due and owing to
such holders. Payment by Guarantors shall be made to Administrative Agent in
immediately available Federal funds to the Cash Collateral Account and applied
to the Obligations in accordance with Section 1.3.

          9.3 Enforcement of Guaranty. In no event shall any Secured Party have
any obligation (although it is entitled, at its option) to proceed against
Borrower or any other Credit Party or any Collateral pledged to secure
Obligations before seeking satisfaction from any or all of the Guarantors, and
Secured Parties may proceed, prior or subsequent to, or simultaneously with, the
enforcement of Secured Parties' rights hereunder, to exercise any right or
remedy which it may have against any Collateral, as a result of any Lien it may
have as security for all or any portion of the Obligations.

          9.4 Waiver. In addition to the waivers contained in Section 9.1
hereof, Guarantors waive, and agree that they shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantors of their Obligations
under, or the enforcement by Secured Parties of, this Agreement. Guarantors
hereby waive diligence, presentment and demand (whether for non-payment or
protest or of acceptance, maturity, extension of time, change in nature or form
of the Obligations, acceptance of further security, release of further security,
composition or agreement arrived at as to the amount of, or the terms of, the
Obligations, notice of adverse change in Borrower's financial condition or any
other fact which might increase the risk to Guarantors) with respect to any of
the Obligations or all other demands whatsoever and waive the benefit of all
provisions of law which are or might be in conflict with the terms of this
Agreement. Guarantors represent, warrant and jointly and severally agree that,
as of the date of this Agreement, their obligations under this Agreement are not
subject to any offsets or defenses against Secured Parties or any Credit Party
of any kind. Guarantors further jointly and severally agree that their
obligations under this Agreement shall

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<PAGE>

not be subject to any counterclaims or offsets or defenses against Secured
Parties or against any Credit Party of any kind which may arise in the future.

          9.5 Benefit of Guaranty. The provisions of this Agreement are for the
benefit of Secured Parties and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
Credit Party and Secured Parties, the obligations of any Credit Party under the
Loan Documents. In the event all or any part of the Obligations are transferred,
indorsed or assigned by any Secured Party to any Person or Persons, any
reference to "Secured Party" herein shall be deemed to refer equally to such
Person or Persons.

          9.6 Modification of Obligations, Etc. Each Guarantor hereby
acknowledges and agrees that Secured Parties may at any time or from time to
time, with or without the consent of, or notice to, Guarantors or any of them:

          (a) change or extend the manner, place or terms of payment of, or
renew or alter all or any portion of, the Obligations;

          (b) take any action under or in respect of the Loan Documents in the
exercise of any remedy, power or privilege contained therein or available to it
at law, equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;

          (c) amend or modify, in any manner whatsoever, the Loan Documents,
other than this Section 9;

          (d) extend or waive the time for any Credit Party's performance of, or
compliance with, any term, covenant or agreement on its part to be performed or
observed under the Loan Documents, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or compliance;

          (e) take and hold Collateral for the payment of the Obligations
guaranteed hereby or sell, exchange, release, dispose of, or otherwise deal
with, any property pledged, mortgaged or conveyed, or in which Secured Parties
have been granted a Lien, to secure any Obligations;

          (f) release anyone who may be liable in any manner for the payment of
any amounts owed by other Guarantors or any other Credit Party to any Secured
Party;

          (g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of any
Guarantor or any Credit Party are subordinated to the claims of Secured Parties;
and/or

          (h) apply any sums by whomever paid or however realized to any amounts
owing by any other Guarantor or any other Credit Party to any Secured Party in
such manner as any Secured Party shall determine in its discretion;

and Secured Parties shall not incur any liability to Guarantors as a result
thereof, and no such action shall impair or release the Obligations of
Guarantors or any of them under this Agreement.

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<PAGE>

          9.7 Waiver of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement, or in any other Loan Document, each Guarantor
hereby:

          (a) expressly and irrevocably waives, on behalf of itself and its
successors and assigns (including any surety), any and all rights at law or in
equity to subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a surety
against a principal, to a guarantor against a principal, to a guarantor against
a maker or obligor, to an accommodation party against the party accommodated, to
a holder or transferee against a maker, or to the holder of any claim against
any Person, and which such Guarantor may have or hereafter acquire against any
Credit Party in connection with or as a result of such Guarantor's execution,
delivery and/or performance of this Agreement, or any other documents to which
such Guarantor is a party or otherwise; and

          (b) acknowledges and agrees that this waiver is intended to benefit
Secured Parties and shall not limit or otherwise effect any Guarantor's
liability hereunder or the enforceability of this Agreement and their rights
under this Section 9.7 shall survive payment in full of the Obligations.

          9.8 Election of Remedies. If Administrative Agent may, under
applicable law, proceed to realize benefits under any of the Loan Documents
giving Secured Parties a Lien upon any Collateral owned by any Credit Party,
either by judicial foreclosure or by non-judicial sale or enforcement,
Administrative Agent may, at its sole option, determine which of such remedies
or rights it may pursue without affecting any of such rights and remedies under
this Agreement. If, in the exercise of any of its rights and remedies,
Administrative Agent shall forfeit any of its rights or remedies, including its
right to enter a deficiency judgment against any Credit Party, whether because
of any applicable laws pertaining to "election of remedies" or the like,
Guarantors hereby consent to such action by Administrative Agent and waive any
claim based upon such action, even if such action by Administrative Agent shall
result in a full or partial loss of any rights of subrogation which Guarantors
might otherwise have had but for such action by Administrative Agent. Any
election of remedies which results in the denial or impairment of the right of
Administrative Agent to seek a deficiency judgment against any Credit Party
shall not impair each Guarantor's obligation to pay the full amount of the
Obligations. In the event Administrative Agent shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
Administrative Agent may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Administrative Agent but shall be
credited against the Obligations in accordance with Section 1.3. The amount of
the successful bid at any such sale shall be conclusively deemed to be the fair
market value of the Collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Agreement, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Secured Parties might
otherwise be entitled but for such bidding at any such sale.

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10. SECURITY

          10.1 Security.

          (a) To secure the prompt and complete payment, performance and
observance of all of the Obligations, in addition to other "Collateral" upon
which a Lien is granted under the other Collateral Documents, each Credit Party
hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers
to Administrative Agent, for itself and for the benefit of the Secured Parties,
a first priority Lien (subject only to (i) the Liens of the Skymiles Agent (as
defined in the Skymiles Intercreditor Agreement) in the Skymiles Collateral
pursuant to an order of the Bankruptcy Court in form and substance satisfactory
to the Administrative Agent, (ii) valid, perfected, nonavoidable and enforceable
Liens existing as of the Petition Date, (iii) valid liens in existence at the
commencement of the Cases to the extent perfected subsequent to such
commencement as permitted by Section 546(b) of the Code, (iv) the Carve-Out and
(v) Permitted Liens permitted pursuant to Section 6.7(a), (c), (f), (i), (j)
(subject, in the case of Amex, to the Skymiles Intercreditor Agreement), (n),
(o), (q), (r) or (s)) in accordance with sections 364(c)(2) and 364(c)(3) of the
Bankruptcy Code upon all of the following property now owned or at any time
hereafter acquired by a Credit Party or in which such Credit Party now has or at
any time in the future may acquire any right, title or interest (capitalized
terms contained in this section, unless the context indicates otherwise, or
unless defined elsewhere herein, have the meanings provided for in the Code to
the extent the same is used or defined therein):

               (i) all Accounts;

               (ii) all Chattel Paper;

               (iii) all Documents;

               (iv) all General Intangibles (including payment intangibles and
     Software);

               (v) all Goods, Inventory and Equipment, including spare parts,
     Flight Simulators and Tooling, and other personal property, whether
     tangible or intangible or wherever located;

               (vi) all Instruments;

               (vii) all Investment Property;

               (viii) all Vehicles;

               (ix) all real property (subject to Section 5.12(b));

               (x) the commercial tort claims described on Disclosure Schedule
     10.1;

               (xi) all Deposit Accounts of any Credit Party, including all
     Blocked Accounts, Concentration Accounts and all other bank accounts and
     all deposits therein;

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<PAGE>

               (xii) all money, cash or cash equivalents of any Credit Party;

               (xiii) all Supporting Obligations and Letter of Credit Rights of
     any Credit Party;

               (xiv) to the extent not otherwise included, all monies and other
     property of any kind which is, after the Petition Date, received by such
     Credit Party in connection with refunds with respect to taxes, assessments
     and governmental charges imposed on such Credit Party or any of its
     property or income;

               (xv) to the extent not otherwise included, all causes of action
     (other than claims of the Credit Parties under sections 544, 545, 547 and
     548 of the Bankruptcy Code) and all monies and other property of any kind
     received therefrom, and all monies and other property of any kind recovered
     by any Credit Party; and

               (xvi) all property of any Credit Party held by the Administrative
     Agent or any other Secured Party, including all property of every
     description, in the possession or custody of or in transit to the
     Administrative Agent or such Secured Party for any purpose, including
     safekeeping, collection or pledge, for the account of such Grantor or as to
     which such Grantor may have any right or power;

               (xvii) to the extent not otherwise included, all Proceeds of each
     of the foregoing, tort claims, insurance claims and other rights to payment
     not otherwise included in the foregoing and products of the foregoing and
     all accessions to, substitutions and replacements for, and rents and
     profits of, each of the foregoing;

          provided, that "Collateral" shall not include (i) the Excluded
Collateral provided that if and when any property shall cease to be Excluded
Collateral, such property shall be deemed at all times from and after the date
such property ceased to be Excluded Collateral to constitute Collateral and (ii)
any General Intangibles or other rights arising under any contract, instrument,
license or other document if the grant of a security interest therein would
constitute a breach or violation of a valid and effective restriction in favor
of a third party, but only to the extent, and for so long as, in the case of
clause (ii) such restriction is not terminated or rendered unenforceable or
otherwise deemed ineffective by any applicable law.

          (b) [Reserved].

          (c) To the extent a security interest hereunder would be created in
any asset in which a security interest is created under any Collateral Document,
the rights, remedies and obligations of the relevant Credit Party and the
Secured Parties with respect to such asset shall be governed by such Collateral
Document and not this Agreement.

          10.2 Perfection of Security Interests.

          (a) At any time and from time to time, upon the reasonable request of
the Administrative Agent and at the sole expense of the Credit Parties, each
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further actions as the
Administrative Agent may deem desirable to obtain the full

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<PAGE>

benefits of any security interest granted or purported to be granted by such
Credit Party hereunder and of the rights and powers herein granted, including
(i) upon the reasonable request of the Administrative Agent, using its
commercially reasonable efforts to secure all consents and approvals necessary
or appropriate for the assignment to or for the benefit of Administrative Agent
of any License or Contract held by such Credit Party and to enforce the security
interests granted hereunder, (ii) unless Administrative Agent shall otherwise
consent in writing (which consent may be revoked), delivering to Administrative
Agent all Collateral consisting of negotiable Documents and certificated
securities (in each case, accompanied by stock powers, allonges or other
instruments of transfer executed in blank) promptly after such Credit Party
receives the same, (iii) delivering any requested Chattel Paper or Instrument to
Administrative Agent (in each case accompanied by instruments of transfer
executed in blank), (iv) obtaining or using commercially reasonable efforts to
obtain, (A) waivers or subordinations of Liens from landlords at locations
required by Section 5.8 of this Agreement and (B) signed acknowledgements of
Administrative Agent's Liens from bailees at locations required by Section 5.8
of this Agreement having possession of any Credit Party's Goods that they hold
for the benefit of Secured Parties, (v) to the extent required by this Agreement
and not waived by Administrative Agent in writing (which waiver may be revoked)
obtaining authenticated Control Letters from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities, in each case constituting
Collateral, to or for any Credit Party; provided, that the Administrative Agent
shall not deliver a notice that it is exercising exclusive control over any
financial assets or commodities to any such issuer, securities intermediary or
commodities intermediary unless an Event of Default has occurred and is
continuing, (vi) in accordance with and to the extent required by Annex C to
this Agreement, obtaining a blocked account or similar agreement with each bank
or financial institution holding a Deposit Account for such Credit Party;
provided, that the Administrative Agent shall not deliver a notice that it is
exercising exclusive control over any Deposit Account to any such bank or
financial institution unless an Event of Default has occurred and is continuing,
(vii) for each Credit Party that is or becomes the beneficiary of a letter of
credit with a face amount in excess of $1,000,000, promptly, and in any event
within two (2) Business Days after becoming a beneficiary, notifying
Administrative Agent thereof and thereafter, unless the related Letter-of-Credit
Rights constitute a Supporting Obligation for which Administrative Agent's
security interest is perfected, using its commercially reasonable efforts to
cause the issuer and/or confirmation bank with respect to such Letter-of-Credit
Rights to enter into a tri-party agreement with Administrative Agent assigning
such Letter-of-Credit Rights to Administrative Agent and directing all payments
thereunder to a Blocked Account, all in form and substance reasonably
satisfactory to Administrative Agent, (viii) taking all steps necessary to grant
the Administrative Agent control of all electronic chattel paper in accordance
with the Code and all "transferable records" as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act, (ix) promptly, and in any event within five (5) Business Days
after the same is acquired by it, notifying the Administrative Agent of any
commercial tort claim (as defined in the Code) involving a claim of more than
$1,000,000 acquired by it and if requested by the Administrative Agent, entering
into a supplement to this Agreement, granting to Administrative Agent a Lien in
such commercial tort claim, (x) maintaining complete and accurate stock records,
(xi) except as otherwise provided in clause (vii) hereof, delivering to the
Administrative Agent all documents, certificates and Instruments necessary or
desirable to perfect the Administrative Agent's Lien on letters of

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credit on which such Credit Party is named as beneficiary and all acceptances
issued in connection therewith and (xii) taking such other steps as are deemed
necessary or desirable to maintain the Administrative Agent's security interest
in the Collateral.

          (b) Each Credit Party hereby irrevocably authorizes the Administrative
Agent at any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of such
Credit Party or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of the
Code in such jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Credit Party is an
organization, the type of organization and any organization identification
number issued to such Credit Party, and (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. Each Credit Party agrees to furnish any such
information to the Administrative Agent promptly upon request. Each Credit Party
also ratifies its authorization for the Administrative Agent to have filed in
any Uniform Commercial Code jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.

          (c) Notwithstanding subsections (a) and (b) of this Section 10.2, or
any failure on the part of any Credit Party or the Administrative Agent to take
any of the actions set forth in such subsections, the Liens and security
interests granted herein shall be deemed valid, enforceable and perfected by
entry of the Interim Order and the Final Order, as applicable. No financing
statement, notice of lien, mortgage, deed of trust or similar instrument in any
jurisdiction or filing office need be filed or any other action taken in order
to validate and perfect the Liens and security interests granted by or pursuant
to this Agreement, the Interim Order or the Final Order.

          10.3 Rights of Lender; Limitations on Lenders' Obligations.

          (a) Subject to each Credit Party's rights and duties under the
Bankruptcy Code (including section 365 of the Bankruptcy Code), it is expressly
agreed by each Credit Party that, anything herein to the contrary
notwithstanding, each such Credit Party shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, unless such Credit
Party determines in its reasonable good faith judgment that such Contract or
License is no longer valuable to such Credit Party's business, economically or
otherwise. Neither the Administrative Agent nor any Secured Party shall have any
obligation or liability under any Contract or License by reason of or arising
out of this Agreement or the granting herein of a Lien thereon or the receipt by
Administrative Agent or any Secured Party of any payment relating to any
Contract or License pursuant hereto. Neither Administrative Agent nor any
Secured Party shall be required or obligated in any manner to perform or fulfill
any of the obligations of any Credit Party under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or License, or to present or file any claims, or
to take any action to

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collect or enforce any performance or the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.

          (b) Subject to Section 10.5 hereof, the Administrative Agent
authorizes each Credit Party to collect its Accounts, provided that such
collection is performed in accordance with such Credit Party's customary
procedures, and the Administrative Agent may, upon the occurrence and during the
continuation of any Event of Default and without notice, other than any
requirement of notice provided in the Orders, limit or terminate said authority
at any time.

          (c) Subject to any requirement of notice provided in the Orders, the
Administrative Agent may at any time after an Event of Default has occurred and
is continuing without prior notice to any Credit Party, notify Account Debtors
and other Persons obligated on the Collateral that Administrative Agent has a
security interest therein, and that payments shall be made directly to
Administrative Agent. Subject to any requirement of notice provided in the
Orders, upon the reasonable request of Administrative Agent, each Credit Party
shall so notify Account Debtors and other Persons obligated on Collateral. Once
any such notice has been given to any Account Debtor or other Person obligated
on the Collateral, the affected Credit Party shall not give any contrary
instructions to such Account Debtor or other Person without Administrative
Agent's prior written consent. Subject to any requirement of notice provided in
the Orders, upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may in its own name, or in the name of others,
communicate with such parties to such Accounts, Contracts, Instruments,
Investment Property and Chattel Paper to verify with such Persons to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any such Accounts, Contracts, Instruments, Investment Property or Chattel
Paper.

          (d) Subject to any requirement of notice provided in the Orders,
Administrative Agent may at any time in Administrative Agent's own name, in the
name of a nominee of Administrative Agent or in the name of any Credit Party
communicate (by mail, telephone, facsimile or otherwise) with Account Debtors to
verify with such Persons, to Administrative Agent's satisfaction, the existence,
amount, terms of, and any other matter relating to, Accounts and/or payment
intangibles comprising Collateral; provided that unless an Event of Default
shall have occurred and be continuing, the Administrative Agent shall not do any
of the foregoing except during normal business hours and after giving such
Credit Party reasonable prior notice and opportunity to be present. If an Event
of Default shall have occurred and be continuing, each Credit Party, at its own
expense, shall cause the independent certified public accountants then engaged
by such Credit Party to prepare and deliver to Administrative Agent and each
Secured Party at any time and from time to time promptly upon Administrative
Agent's written request the following reports with respect to each Credit Party:
(i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Administrative Agent
may request. Administrative Agent may at any time in Administrative Agent's own
name, in the name of a nominee of Administrative Agent or in the name of any
Credit Party communicate (by mail, telephone, facsimile or otherwise) with
parties to Contracts and obligors in respect of Instruments to verify with such
Persons, to Administrative Agent's satisfaction, the existence, amount, terms
of, and any other matter relating to, Instruments, Chattel Paper and/or payment
intangibles comprising Collateral; provided that unless an Event of Default
shall have occurred and be continuing, the

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Administrative Agent shall not do any of the foregoing except during normal
business hours and after giving such Credit Party reasonable prior notice and
opportunity to be present. Each Credit Party, at its own expense, shall deliver
to Administrative Agent the results of each physical verification, if any, which
such Credit Party may in its discretion have made, or caused any other Person to
have made on its behalf, of all or any portion of its Inventory.

          10.4 Covenants of the Credit Parties with Respect to Collateral. Each
Credit Party covenants and agrees with Administrative Agent, for the benefit of
Secured Parties, that from and after the date of this Agreement and until the
Termination Date:

          (a) Maintenance of Records. Credit Parties shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral, in each case in a manner consistent with past practice. Upon request
by the Administrative Agent, Credit Parties shall mark their books and records
pertaining to the Collateral to evidence this Agreement and the Liens granted
hereby. If any Credit Party retains possession of any Chattel Paper or
Instruments with Administrative Agent's consent, such Chattel Paper and
Instruments shall, if requested by Administrative Agent, be marked with the
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of General Electric Capital Corporation, as
Administrative Agent, for the benefit of Secured Parties."

          (b) Covenants Regarding Patent, Trademark and Copyright Collateral.

               (i) Credit Parties shall notify Administrative Agent promptly if
     they know or have reason to know that any application or registration
     relating to any material Patent, Trademark or Copyright (now or hereafter
     existing) may become abandoned or dedicated, or of any adverse
     determination or development (including the institution of, or any such
     determination or development in, any proceeding in the United States Patent
     and Trademark Office, the United States Copyright Office or any court)
     regarding any Credit Party's ownership of any material Patent, Trademark or
     Copyright, its right to register the same, or to keep and maintain the
     same.

               (ii) Promptly after any Credit Party, either itself or through
     the Administrative Agent, employee, licensee or designee, files an
     application for the registration of any Patent, Trademark or Copyright with
     the United States Patent and Trademark Office or the United States
     Copyright Office, Credit Party shall give Administrative Agent written
     notice of such filing and, upon request of Administrative Agent, Credit
     Party shall execute and deliver any and all Patent Security Agreements,
     Copyright Security Agreements or Trademark Security Agreements as
     Administrative Agent may request to evidence Administrative Agent's Lien on
     such Patent, Trademark or Copyright, and the General Intangibles of such
     Credit Party relating thereto or represented thereby.

               (iii) Credit Parties shall take all actions necessary or
     requested by Administrative Agent to maintain and pursue each application,
     to obtain the relevant registration and to maintain the registration of
     each of the Patents, Trademarks and

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     Copyrights (now or hereafter existing), including the filing of
     applications for renewal, affidavits of use, affidavits of
     noncontestability and opposition and interference and cancellation
     proceedings unless such Credit Party reasonably determines that such
     Patent, Trademark or Copyright Collateral is in no way material to the
     conduct of its business or operations,

               (iv) In the event that any of the Patent, Trademark or Copyright
     Collateral is infringed upon, or misappropriated or diluted by a third
     party, such Credit Party shall comply with Section 10.2(a)(ix) of this
     Agreement. Such Credit Party shall, unless such Credit Party reasonably
     determines that such Patent, Trademark or Copyright Collateral is in no way
     material to the conduct of its business or operations, promptly sue for
     infringement, misappropriation or dilution and to recover any and all
     damages for such infringement, misappropriation or dilution, and shall take
     such other actions as Administrative Agent shall deem appropriate under the
     circumstances to protect such Patent, Trademark or Copyright Collateral.

          (c) [Reserved].

          (d) Further Identification of Collateral. In addition to any other
requirements herein, Credit Parties will, if so requested by Administrative
Agent, furnish to Administrative Agent, as often as Administrative Agent
reasonably requests, statements and schedules further identifying and describing
the Collateral as Administrative Agent may reasonably request, all in such
detail as Administrative Agent may specify.

          (e) Notices. Credit Parties will advise Administrative Agent promptly,
in reasonable detail of any Lien or claim made or asserted against any of the
Collateral other than in respect of Permitted Liens.

          (f) Terminations; Amendments Not Authorized. Except to the extent
permitted by clause (g), each Credit Party acknowledges that it is not
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement relating to the Collateral and filed
pursuant to the terms hereof without the prior written consent of Administrative
Agent and agrees that it will not do so without the prior written consent of
Administrative Agent, subject to such Credit Party's rights under Section
9-509(d)(2) of the Code.

          (g) Authorized Terminations and Subordinations. Administrative Agent
will promptly deliver to each Credit Party for filing or authorize each Credit
Party to prepare and file termination statements and releases in respect of any
sales, transfers, conveyances, assignments or other dispositions of Collateral
made in accordance with Section 6.8 of this Agreement. Administrative Agent
will, upon request of any Credit Party, expressly subordinate, in form and
substance reasonably satisfactory to the Administrative Agent the Liens granted
hereunder to any prior Lien permitted under Section 6.7 of this Agreement.

          (h) Motor Vehicles. Upon request, each Credit Party shall deliver to
Administrative Agent a motor vehicle certificate of title, if any, for all motor
vehicles from time

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to time owned by it and shall cause those title certificates to be filed (with
Administrative Agent's Lien noted thereon) in the appropriate state motor
vehicle filing office.

          (i) Pledged Collateral.

               (i) All certificates and all promissory notes and instruments
     evidencing the Pledged Collateral shall be delivered to and held by or on
     behalf of Administrative Agent, for itself and the benefit of Secured
     Parties, pursuant hereto. All Pledged Shares shall be accompanied by duly
     executed instruments of transfer or assignment in blank, all in form and
     substance satisfactory to Administrative Agent and all promissory notes or
     other instruments evidencing the Pledged Indebtedness shall be endorsed by
     the applicable Credit Party.

               (ii) Without the prior written consent of Administrative Agent,
     no Credit Party will sell, assign, transfer, pledge, or otherwise encumber
     any of its rights in or to the Pledged Collateral, or any unpaid dividends,
     interest or other distributions or payments with respect to the Pledged
     Collateral or grant a Lien in the Pledged Collateral, unless otherwise
     expressly permitted by this Agreement;

               (iii) Each Credit Party will, at its expense, promptly execute,
     acknowledge and deliver all such instruments and take all such actions as
     Administrative Agent from time to time may reasonably request in order to
     ensure to Administrative Agent and Secured Parties obtain the benefits of
     the Liens in and to the Pledged Collateral intended to be created by this
     Agreement, including the filing of any necessary Code financing statements,
     which may be filed by Administrative Agent with or (to the extent permitted
     by law) without the signature of Credit Party, and will cooperate with
     Administrative Agent, at such Credit Party's expense, in obtaining all
     necessary approvals and making all necessary filings under federal, state,
     local or foreign law in connection with such Liens or any sale or transfer
     of the Pledged Collateral; provided that Administrative Agent shall not,
     prior to the occurrence of any Event of Default, require any actions to be
     taken with respect to (i) those assets as to which Administrative Agent
     shall determine, in its reasonable discretion, that the cost of obtaining
     such security interest or taking such action are excessive in relation to
     the benefit to Lenders afforded thereby, (ii) property the acquisition or
     construction of which was financed through Indebtedness (existing as of the
     Closing Date or as permitted by Section 6.3(a) of this Agreement), and
     (iii) all property to the extent that the granting of such a security
     interest or taking such action would constitute a breach or violation of a
     valid and effective restriction in favor of a third party (including,
     without limitation, mandatory consent rights), or give rise to any
     indemnification obligations or any right to terminate or commence the
     exercise of remedies under such restrictions;

               (iv) Each Credit Party has and will defend the title to the
     Pledged Collateral and the Liens of Administrative Agent in the Pledged
     Collateral against the claim of any Person (other than the holder of a
     Permitted Lien) and will maintain and preserve such Liens (it being
     understood that nothing in this clause (iv) will prevent such Credit Party
     from disposing of Pledged Collateral as otherwise permitted by Section
     6.8); and

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               (v) Each Credit Party will, upon obtaining ownership of any
     additional Stock of a Pledged Entity or promissory notes or instruments
     representing Pledged Indebtedness or Stock or promissory notes or
     instruments otherwise required to be pledged to Administrative Agent
     pursuant to any of the Loan Documents, which Stock, notes or instruments
     are not already Pledged Collateral, promptly (and in any event within five
     (5) Business Days) deliver to Administrative Agent a Pledge Amendment, duly
     executed by such Credit Party, in substantially the form of Exhibit H
     hereto (a "Pledge Amendment") in respect of any such additional Stock,
     notes or instruments, pursuant to which such Credit Party shall pledge to
     Administrative Agent all of such additional Stock, notes and instruments;
     provided that such Credit Party shall be required to do the foregoing with
     respect to any such promissory note or instrument only if requested to do
     so by the Administrative Agent pursuant to Section 10.2(a)(ii) of this
     Agreement. Credit Party hereby authorizes Administrative Agent to attach
     each Pledge Amendment to this Agreement and agrees that all Pledged Shares
     and Pledged Indebtedness listed on any Pledge Amendment delivered to
     Administrative Agent shall for all purposes hereunder be considered Pledged
     Collateral. This clause (v) shall not apply to any Excluded Equity.

          10.5 Performance by Administrative Agent of the Credit Parties'
Obligations. If any Credit Party fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at the rate then in effect in respect of Term
Loan C, shall be payable by such Credit Party to the Administrative Agent on
demand and shall constitute Obligations secured by the Collateral. Performance
of such Credit Party's obligations as permitted under this Section 10.5 shall in
no way constitute a violation of the automatic stay provided by section 362 of
the Bankruptcy Code and each Credit Party hereby waives applicability thereof.
Moreover, the Administrative Agent shall in no way be responsible for the
payment of any costs incurred in connection with preserving or disposing of
Collateral pursuant to section 506(c) of the Bankruptcy Code and the Collateral
may not be charged for the incurrence of any such cost.

          10.6 Limitation on Administrative Agent's duty in Respect of
Collateral. The Administrative Agent and each Secured Party shall use reasonable
care with respect to the Collateral in its possession or under its control.
Neither the Administrative Agent nor any Secured Party shall have any other duty
as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Administrative Agent or such Secured
Party, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.

          10.7 Remedies; Rights Upon Default.

          (a) In addition to all other rights and remedies granted to it under
the other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Secured Obligations, if any Event of
Default shall have occurred and be continuing, the Administrative Agent may
exercise all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, each Credit Party expressly agrees
that in any

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such event the Administrative Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice required by the
Interim Order or Final Order or the notice specified below of time and place of
public or private sale) to or upon such Credit Party or any other Person (all
and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code and other applicable law),
may, to the maximum extent permitted by law, forthwith enter upon the premises
of such Credit Party where any Collateral is located through self-help, without
judicial process, without first obtaining a final judgment or giving such Credit
Party or any other Person notice and opportunity for a hearing on the
Administrative Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent or any Secured Party shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of Secured Parties, the whole
or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Credit Party hereby releases. Such
sales may be adjourned and continued from time to time with or without notice.
The Administrative Agent shall have the right to conduct such sales on any
Credit Party's premises or elsewhere and shall have the right to use any Credit
Party's premises without charge for such time or times as the Administrative
Agent may deem necessary or advisable. EACH CREDIT PARTY HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS ADMINISTRATIVE AGENT AS THE PROXY AND ATTORNEY-IN-FACT
OF SUCH CREDIT PARTY WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT
TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE
APPOINTMENT OF ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE. IN
ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN
CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT
SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE
RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE
PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT
OF DEFAULT. NOTWITHSTANDING THE FOREGOING, (X) ADMINISTRATIVE AGENT SHALL NOT
HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT
BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO AND (Y)
ADMINISTRATIVE AGENT SHALL NOT EXERCISE ANY SUCH RIGHT WITH RESPECT TO ANY
REGULATED SUBSIDIARY UNLESS ANY AND ALL REGULATORY APPROVALS REQUIRED UNDER
APPLICABLE LAW SHALL HAVE BEEN OBTAINED.

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          (b) If any Event of Default shall have occurred and be continuing,
each Credit Party further agrees, at Administrative Agent's request, to assemble
the Collateral and make it available to Administrative Agent at a place or
places designated by Administrative Agent which are reasonably convenient to
Administrative Agent and such Credit Party, whether at such Credit Party's
premises or elsewhere. Until Administrative Agent is able to effect a sale,
lease, or other disposition of Collateral, the Administrative Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Administrative Agent. The Administrative
Agent shall have no obligation to any Credit Party to maintain or preserve the
rights of Credit Party as against third parties with respect to Collateral while
Collateral is in the possession of the Administrative Agent. The Administrative
Agent may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of the Administrative Agent's
remedies (for the benefit of Secured Parties), with respect to such appointment
without prior notice or hearing as to such appointment. The Administrative Agent
shall deposit the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Cash Collateral Account and such net
proceeds shall be applied in accordance with Section 1.3. To the maximum extent
permitted by applicable law, each Credit Party waives all claims, damages, and
demands against the Administrative Agent or any Secured Party arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of the Administrative Agent or
such Secured Party as finally determined by a court of competent jurisdiction.
Each Credit Party agrees that ten (10) days prior notice by Administrative Agent
of the time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters. Credit Parties
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
including any attorneys' fees and other expenses incurred by Administrative
Agent or any Secured Party to collect such deficiency.

          (c) Except as otherwise specifically provided herein, each Credit
Party hereby waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this
Agreement or any Collateral.

          (d) To the extent that applicable law imposes duties on the
Administrative Agent to exercise remedies in a commercially reasonable manner,
each Credit Party acknowledges and agrees that it is not commercially
unreasonable for the Administrative Agent (i) to fail to incur expenses
reasonably deemed significant by the Administrative Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as the Credit
Parties, for expressions of interest in acquiring

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all or any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Administrative Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Credit Party acknowledges that the
purpose of this Section 10.7(d) is to provide non-exhaustive indications of what
actions or omissions by the Administrative Agent would not be commercially
unreasonable in the Administrative Agent's exercise of remedies against the
Collateral and that other actions or omissions by the Administrative Agent shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section 10.7(d). Without limitation upon the foregoing, nothing
contained in this Section 10.7(d) shall be construed to grant any rights to any
Credit Party or to impose any duties on the Administrative Agent that would not
have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 10.7(d).

          (e) Neither the Administrative Agent nor any Secured Party shall be
required to make any demand upon, or pursue or exhaust any of their rights or
remedies against, any Credit Party, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the Secured Obligations or to pursue
or exhaust any of their rights or remedies with respect to any Collateral
therefore or any direct or indirect guarantee thereof. Neither the
Administrative Agent nor the Secured Parties shall be required to marshal the
Collateral or any guarantee of the Secured Obligations or to resort to the
Collateral or any such guarantee in any particular order, and all of its and
their rights hereunder or under any other Loan Document shall be cumulative. To
the extent it may lawfully do so, each Credit Party absolutely and irrevocably
waives and relinquishes the benefit and advantage of, and covenants not to
assert against the Administrative Agent or any Secured Party, any valuation,
stay, appraisement, extension, redemption or similar laws and any and all rights
or defenses it may have as a surety now or hereafter existing which, but for
this provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Agreement, or otherwise.

          (f) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, and concurrently with written notice to
Credit Parties, Administrative Agent is hereby authorized and empowered to
transfer and register in its name or in the name of its nominee the whole or any
part of the Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations, to exercise the voting and all other rights as
a holder with respect thereto, to collect and receive all cash dividends,
interest, principal and other distributions made thereon, to sell in one or more
sales after ten (10) days' notice of the time and place of any public sale or of
the time at which a private sale is to take place (which notice Credit Parties
agree is commercially reasonable) the whole or any part of the Pledged
Collateral and to

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otherwise act with respect to the Pledged Collateral as though Administrative
Agent was the outright owner thereof in each case provided that no such action
shall be taken with respect to the Stock of any Regulated Subsidiary unless any
and all regulatory approvals required under applicable law shall have been
obtained. Any sale shall be made at a public or private sale at Administrative
Agent's place of business, or at any place to be named in the notice of sale,
either for cash or upon credit or for future delivery at such price as
Administrative Agent may deem fair, and Administrative Agent may be the
purchaser of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of such Credit Party or
any right of redemption. Each sale shall be made to the highest bidder, but
Administrative Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of
Administrative Agent.

          (g) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the Pledged Collateral has been offered for sale in lots, and if at any of
such sales, the highest bid for the lot offered for sale would indicate to
Administrative Agent, in its discretion, that the proceeds of the sales of the
whole of the Pledged Collateral would be unlikely to be sufficient to discharge
all the Secured Obligations, the Administrative Agent may, on one or more
occasions and in its sole discretion, postpone effectuating any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, however, that any sale or
sales made after such postponement shall be after ten (10) days' notice to such
Credit Party.

          (h) If, at any time when Administrative Agent in its sole discretion
determines, following the occurrence and during the continuance of an Event of
Default, that, in connection with any actual or contemplated exercise of its
rights (when permitted under this Section 10.7(h) to sell the whole or any part
of the Pledged Shares hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act"),
such Credit Party shall, in an expeditious manner, cause the Pledged Entities
to:

               (i) Prepare and file with the Securities and Exchange Commission
     (the "Commission") a registration statement with respect to the Pledged
     Shares and in good faith use commercially reasonable efforts to cause such
     registration statement to become and remain effective;

               (ii) Prepare and file with the Commission such amendments and
     supplements to such registration statement and the prospectus used in
     connection therewith as may be necessary to keep such registration
     statement effective and to comply with the provisions of the Act with
     respect to the sale or other disposition of the Pledged Shares covered by
     such registration statement whenever Administrative Agent shall desire to
     sell or otherwise dispose of the Pledged Shares;

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               (iii) Furnish to Administrative Agent such numbers of copies of a
     prospectus and a preliminary prospectus, in conformity with the
     requirements of the Act, and such other documents as Administrative Agent
     may request in order to facilitate the public sale or other disposition of
     the Pledged Shares by Administrative Agent;

               (iv) Use commercially reasonable efforts to register or qualify
     the Pledged Shares covered by such registration statement under such other
     securities or blue sky laws of such jurisdictions within the United States
     and Puerto Rico as Administrative Agent shall request, and do such other
     reasonable acts and things as may be required of it to enable
     Administrative Agent to consummate the public sale or other disposition in
     such jurisdictions of the Pledged Shares by Administrative Agent;

               (v) Furnish, at the request of Administrative Agent, on the date
     that shares of the Pledged Collateral are delivered to the underwriters for
     sale pursuant to such registration or, if the security is not being sold
     through underwriters, on the date that the registration statement with
     respect to such Pledged Shares becomes effective, (A) an opinion, dated
     such date, of the independent counsel representing such registrant for the
     purposes of such registration, addressed to the underwriters, if any, and
     in the event the Pledged Shares are not being sold through underwriters,
     then to Administrative Agent, in customary form and covering matters of the
     type customarily covered in such legal opinions; and (B) a comfort letter,
     dated such date, from the independent certified public accountants of such
     registrant, addressed to the underwriters, if any, and in the event the
     Pledged Shares are not being sold through underwriters, then to
     Administrative Agent, in a customary form and covering matters of the type
     customarily covered by such comfort letters and as the underwriters or
     Administrative Agent shall reasonably request. The opinion of counsel
     referred to above shall additionally cover such other legal matters with
     respect to the registration in respect of which such opinion is being given
     as Administrative Agent may reasonably request. The letter referred to
     above from the independent certified public accountants shall additionally
     cover such other financial matters (including information as to the period
     ending not more than five (5) Business Days prior to the date of such
     letter) with respect to the registration in respect of which such letter is
     being given as Administrative Agent may reasonably request; and

               (vi) Otherwise use commercially reasonable efforts to comply with
     all applicable rules and regulations of the Commission, and make available
     to its security holders, as soon as reasonably practicable but not later
     than 18 months after the effective date of the registration statement, an
     earnings statement covering the period of at least 12 months beginning with
     the first full month after the effective date of such registration
     statement, which earnings statement shall satisfy the provisions of Section
     11(a) of the Act.

          (i) All expenses incurred in complying with Section 10.7(h) hereof,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), printing expenses, fees and disbursements of counsel for the registrant,
the fees and expenses of counsel for Administrative Agent, expenses of the
independent certified public accountants (including any special audits

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incident to or required by any such registration) and expenses of complying with
the securities or blue sky laws or any jurisdictions, shall be paid by Credit
Parties.

          (j) If, at any time when Administrative Agent shall determine to
exercise its right to sell the whole or any part of the Pledged Collateral
hereunder, such Pledged Collateral or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Act, Administrative
Agent may, in its discretion (subject only to applicable requirements of law),
sell such Pledged Collateral or part thereof by private sale in such manner and
under such circumstances as Administrative Agent may deem necessary or
advisable, but subject to the other requirements of this Section 10.7, and shall
not be required to effect such registration or to cause the same to be effected.
Without limiting the generality of the foregoing, in any such event,
Administrative Agent in its discretion (x) may, in accordance with applicable
securities laws, proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Collateral or
part thereof could be or shall have been filed under said Act (or similar
statute), (y) may approach and negotiate with a single possible purchaser to
effect such sale, and (z) may restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that such
purchaser is purchasing for its own account, for investment and not with a view
to the distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 10.7, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed sale
pursuant to this Section 10.7, then Administrative Agent shall not be required
to effect such registration or cause the same to be effected but, in its
discretion (subject only to applicable requirements of law), may require that
any sale hereunder (including a sale at auction) be conducted subject to
restrictions:

               (i) as to the financial sophistication and ability of any Person
     permitted to bid or purchase at any such sale;

               (ii) as to the content of legends to be placed upon any
     certificates representing the Pledged Collateral sold in such sale,
     including restrictions on future transfer thereof;

               (iii) as to the representations required to be made by each
     Person bidding or purchasing at such sale relating to that Person's access
     to financial information about such Credit Party and such Person's
     intentions as to the holding of the Pledged Collateral so sold for
     investment for its own account and not with a view to the distribution
     thereof; and

               (iv) as to such other matters as Administrative Agent may, in its
     discretion, deem necessary or appropriate in order that such sale
     (notwithstanding any failure so to register) may be effected in compliance
     with the Bankruptcy Code and other laws affecting the enforcement of
     creditors' rights and the Act and all applicable state securities laws.

          (k) Each Credit Party recognizes that Administrative Agent may be
unable to effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof in accordance with
clause (j) above. Each Credit Party also

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acknowledges that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws, even if
such Credit Party and the Pledged Entity would agree to do so.

          (l) Each Credit Party agrees to the maximum extent permitted by
applicable law that following the occurrence and during the continuance of an
Event of Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Credit Party waives the benefit of all such laws to the extent it lawfully
may do so. Each Credit Party agrees that it will not interfere with any right,
power and remedy of Administrative Agent provided for in this Agreement or now
or hereafter existing at law or in equity or by statute or otherwise, or the
exercise or beginning of the exercise by Administrative Agent of any one or more
of such rights, powers or remedies. No failure or delay on the part of
Administrative Agent to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon Credit Parties by Administrative
Agent with respect to any such remedies shall operate as a waiver thereof, or
limit or impair Administrative Agent's right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its rights
as against any Credit Party in any respect.

          (m) Each Credit Party further agrees that a breach of any of the
covenants contained in this Section 10.7 will cause irreparable injury to
Administrative Agent, that Administrative Agent shall have no adequate remedy at
law in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 10.7 shall be specifically enforceable
against the Credit Parties, and each Credit Party hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such Obligations.

          (n) To the extent that any rights and remedies under this Section 10.7
would otherwise be in violation of the automatic stay of section 362 of the
Bankruptcy Code, such stay shall be deemed modified, as set forth in the Interim
Order or Final Order, as applicable, to the extent necessary to permit the
Administrative Agent to exercise such rights and remedies.

          10.8 The Administrative Agent's Appointment as Attorney-in-Fact.

          (a) On the Closing Date each Credit Party shall execute and deliver to
Administrative Agent a power of attorney (the "Power of Attorney") substantially
in the form attached hereto as Exhibit A. The power of attorney granted pursuant
to the Power of Attorney is a power coupled with an interest and shall be
irrevocable until the Termination Date. The powers conferred on Administrative
Agent, for the benefit of Secured Parties, under the Power of

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Attorney are solely to protect Administrative Agent's interests (for the benefit
of Secured Parties) in the Collateral and shall not impose any duty upon the
Administrative Agent or any Secured Party to exercise any such powers.
Administrative Agent agrees that (a) except for the powers granted in clause (h)
of the Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and is
continuing, and (b) Administrative Agent shall account for any moneys received
by the Administrative Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that neither the
Administrative Agent nor any Secured Party shall have any duty as to any
Collateral, and Administrative Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers. NEITHER THE ADMINISTRATIVE AGENT, THE SECURED PARTIES
NOR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY CREDIT PARTY FOR ANY ACT OR FAILURE
TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

          (b) The Administrative Agent agrees that it will forbear from
exercising the power of attorney or any rights granted to the Administrative
Agent pursuant to this Section 10.8, except upon the occurrence or during the
continuation of an Event of Default. The Credit Parties hereby ratify, to the
extent permitted by law, all that said attorneys shall lawfully do or cause to
be done by virtue hereof. Exercise by the Administrative Agent of the powers
granted hereunder is not a violation of the automatic stay provided by section
362 of the Bankruptcy Code and each Credit Party waives applicability thereof.
The power of attorney granted pursuant to this Section 10.8 is a power coupled
with an interest and shall be irrevocable until the Obligations are indefeasibly
paid in full.

          (c) The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Administrative Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to any Credit
Party for any act or failure to act, except for its own gross negligence or
willful misconduct.

          (d) Each Credit Party also authorizes the Administrative Agent, at any
time and from time to time upon the occurrence and during the continuation of
any Event of Default or as otherwise expressly permitted by this Agreement, (i)
to communicate in its own name or the name of its Subsidiaries with any party to
any Contract with regard to the assignment of the right, title and interest of
such Credit Party in and under the Contracts hereunder and other matters
relating thereto and (ii) to execute any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.

          (e) All Obligations shall constitute, in accordance with section
364(c)(1) of the Bankruptcy Code, claims against the Borrower and each Credit
Party in their respective

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Cases which are administrative expense claims having priority over any all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code.

          10.9 [Reserved].

          10.10 Intercreditor Issues.

          Notwithstanding anything herein to the contrary, for so long as the
Post-Petition Skymiles Facility Documents are in effect, if any Credit Party is
in compliance with any requirements relating to SkyMiles Collateral imposed by
the Post-Petition Skymiles Collateral Documents which are equivalent to
requirements set forth in this Agreement (other than creation and, with respect
to Collateral which is not Control Collateral (as defined below), perfection, of
any Lien hereunder), such Credit Party need not comply with (and shall be deemed
to have satisfied) such requirements of this Agreement. Without limiting the
foregoing:

          (a) any covenant hereunder requiring (or any representation or
warranty hereunder to the extent that it would have the effect of requiring) the
delivery of possession or control to the Administrative Agent of Control
Collateral that is SkyMiles Collateral shall be deemed to have been satisfied
(or such representation and warranty shall be deemed to be true) if such
possession or control shall have been delivered to SkyMiles Agent as provided in
the Post-Petition Skymiles Facility Documents (as used herein, "Control
Collateral" shall mean any Collateral (including, without limitation, any
Collateral consisting of any Deposit Account, Investment Property,
Letter-of-Credit Rights, electronic chattel paper or money) as to which a Lien
therein may be perfected through possession or other control by any secured
party or any agent therefor);

          (b) if any provision hereof shall require any Credit Party to take any
action with respect to any SkyMiles Collateral if requested to do so by the
Administrative Agent, such Credit Party shall be required to take such action
only if and to the extent that the SkyMiles Agent shall have requested the
Credit Party to take such action pursuant to the corresponding provision of the
Post-Petition Skymiles Facility Documents;

          (c) if any provision hereof shall require any Credit Party to take any
action with respect to any SkyMiles Collateral unless the Administrative Agent
shall have otherwise provided its consent or a waiver, such Credit Party shall
not be required to take such action if and to the extent that the SkyMiles Agent
shall have provided its consent or a waiver to the Credit Party not taking such
action pursuant to the corresponding provision of the Post-Petition Skymiles
Facility Documents; and

          (d) if any provision hereof permits any Credit Party to take any
action with respect to any SkyMiles Collateral only upon receiving the
Administrative Agent's consent to do so, the Administrative Agent shall be
deemed to have provided such consent if and to the extent that the SkyMiles
Agent shall have provided its consent to such Credit Party taking such action
pursuant to the corresponding provision of the Post-Petition Skymiles Facility
Documents.

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          10.11 Release of Collateral.

          (a) The Liens granted pursuant to this Agreement shall automatically
terminate, and all the Collateral shall be automatically released, without
further action by the Administrative Agent and without any further notice or
consent to or of any Secured Party, on the Termination Date.

          (b) Immediately upon (i) any sale, transfer, conveyance, assignment or
other disposition by any Credit Party of any Collateral permitted by this
Agreement (or pursuant to a valid waiver or consent to any transaction otherwise
prohibited by this Agreement), (ii) any part of the Collateral becoming subject
to a Lien permitted by Section 6.7(f) or (iii) any Pledged Collateral being
cancelled, replaced or repaid in accordance with the terms of this Agreement,
such Collateral shall be automatically released from the security interest
granted pursuant to this Agreement and the Lien on such Collateral in favor of
the Administrative Agent, for itself and for the benefit of the Secured Parties,
shall automatically terminate (and, if such Collateral consists of all of the
equity interest in a Subsidiary Guarantor, such Subsidiary Guarantor shall be
released from its Guaranty), in each case without further action by the
Administrative Agent and without any further notice or consent to or of any
Secured Party.

          (c) At the request of the Borrower, the Administrative Agent shall,
and each of the Secured Parties hereby authorizes and directs the Administrative
Agent (without any further notice or consent to or of any Secured Party) to,
promptly release or subordinate, as requested by the holders of any Lien
permitted by Section 6.7(a), (c), (f), (i), (j) (subject, in the case of Amex,
to the Skymiles Intercreditor Agreement), (n), (o), (q), (r) or (s), any part of
the Collateral that is subject to a Lien permitted by such section.

          (d) (d) At the request of the Borrower, the Administrative Agent
shall, and each of the Secured Parties hereby authorizes and directs the
Administrative Agent (without further notice or consent to or of any Secured
Party) to, execute and deliver or file such termination or partial release
statements and take such other actions (including return of Collateral) as are
necessary to terminate, release or subordinate Liens pursuant to this Section
10.11 promptly upon the effectiveness of any such termination, release or
subordination. The Administrative Agent and the Secured Parties hereby
acknowledges and agree that the Credit Parties may use the Collateral to the
extent permitted under the Credit Agreement.

11. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT

          11.1 Assignment and Participations.

          (a) Right to Assign. Each Lender may sell, transfer, negotiate or
assign all or a portion of its rights and obligations hereunder (including all
or a portion of its Commitments and its rights and obligations with respect to
Loans) to (i) any existing Lender, (ii) any Affiliate or Approved Fund of any
existing Lender or (iii) any other Person acceptable (which acceptance shall not
be unreasonably withheld or delayed) to the Administrative Agent and, as long as
no Event of Default is continuing, the Borrower; provided, that (x) such Sales
do not have to be ratable between the Term Loans but must be ratable among the
obligations owing to and owed

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by such Lender with respect to a Term Loan and (y) for each Term Loan, the
aggregate outstanding principal amount (determined as of the effective date of
the applicable Assignment) of the Loans and Commitments subject to any such Sale
shall be an integral multiple of $1,000,000, unless such Sale is made to an
existing Lender or an Affiliate or Approved Fund of any existing Lender, is of
the assignor's (together with its Affiliates and Approved Funds) entire interest
in such Term Loan or is made with the prior consent of the Borrower and the
Administrative Agent; provided, further, that the consent of the Administrative
Agent shall not be required for any assignment by any Arranger (or any Affiliate
or Related Person of such Arranger) of the Commitments or Loans held on the
Closing Date by such Person to the extent such assignment is made as part of the
primary syndication of the applicable Term Loan.

          (b) Procedure. The parties to each Sale made in reliance on clause (a)
above (other than those described in clause (e) below) shall execute and deliver
to the Administrative Agent (which shall keep a copy thereof) an Assignment,
together with any existing Note subject to such Sale (or any affidavit of loss
therefor acceptable to the Administrative Agent), any Certificates of Exemption
required to be delivered pursuant to Section 1.13 (which shall also be delivered
to Borrower) and, except with respect to any assignment by any Arranger (or any
Affiliate or Related Person of such Arranger) of the Commitments or Loans held
on the Closing Date by such Person to the extent such assignment is made as part
of the primary syndication of the applicable Term Loan, payment by the assignee
of an assignment fee in the amount of $3,500. Upon receipt of all the foregoing,
and conditioned upon such receipt and upon the Administrative Agent consenting
to such Assignment, from and after the effective date specified in such
Assignment, the Administrative Agent shall record or cause to be recorded in the
Loan Account the information contained in such Assignment.

          (c) Effectiveness. Effective upon the entry of such record in the Loan
Account, (i) such assignee shall become a party hereto and, to the extent that
rights and obligations under the Loan Documents have been assigned to such
assignee pursuant to such Assignment, shall have the rights and obligations of a
Lender, (ii) any applicable Note shall be transferred to such assignee through
such entry and (iii) the assignor thereunder shall, to the extent that rights
and obligations under this Agreement have been assigned by it pursuant to such
Assignment, relinquish its rights (except for those surviving the termination of
the Commitments and the payment in full of the Obligations) and be released from
its obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment covering all or the remaining portion of an assigning Lender's rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto.

          (d) Grant of Security Interests. In addition to the other rights
provided in this Section 11.1, each Lender may grant a security interest in, or
otherwise assign as collateral, any of its rights under this Agreement, whether
now owned or hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) any federal reserve bank (pursuant to Regulation
A of the Federal Reserve Board), without notice to the Administrative Agent or
(B) any holder of, or trustee for the benefit of the holders of, such Lender's
Securities by notice to the Administrative Agent; provided, that no such holder
or trustee, whether because of such grant or assignment or any foreclosure
thereon (unless such foreclosure is made through

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an assignment in accordance with clause (b) above), shall be entitled to any
rights of such Lender hereunder and no such Lender shall be relieved of any of
its obligations hereunder.

          (e) Participants and SPVs. In addition to the other rights provided in
this Section 11.1, each Lender may, (x) with notice to the Administrative Agent,
grant to an SPV the option to make all or any part of any Loan that such Lender
would otherwise be required to make hereunder (and the exercise of such option
by such SPV and the making of Loans pursuant thereto shall satisfy the
obligation of such Lender to make such Loans hereunder) and such SPV may assign
to such Lender the right to receive payment with respect to any Obligation and
(y) without notice to or consent from the Administrative Agent or the Borrower,
sell participations to one or more Persons in or to all or a portion of its
rights and obligations under the Loan Documents; provided, that, whether as a
result of any term of any Loan Document or of such grant or participation, (i)
no such SPV or participant shall have a commitment, or be deemed to have made an
offer to commit, to make Loans hereunder, and, except as provided in the
applicable option agreement, none shall be liable for any obligation of such
Lender hereunder, (ii) such Lender's rights and obligations, and the rights and
obligations of the Credit Parties and the Secured Parties towards such Lender,
under any Loan Document shall remain unchanged and each other party hereto shall
continue to deal solely with such Lender, which shall remain the holder of the
Obligations in the Register, except that (A) each such participant and SPV shall
be entitled to the benefit of Section 1.11, Section 1.13 and Section 1.14, but,
in the case of Section 1.13, only to the extent Borrower and the Administrative
Agent receive a Certificate of Exemption with respect to any such participant or
SPV that is a Foreign Person and in each such case only to the extent of any
amount to which such Lender would be entitled in the absence of any such grant
or participation and (B) each such SPV may receive other payments that would
otherwise be made to such Lender with respect to Loans funded by such SPV to the
extent provided in the applicable option agreement and set forth in a notice
provided to the Administrative Agent by such SPV and such Lender; provided, that
in no case (including pursuant to clause (A) or (B) above) shall an SPV or
participant have the right to enforce any of the terms of any Loan Document, and
(iii) the consent of such SPV or participant shall not be required (either
directly, as a restraint on such Lender's ability to consent hereunder or
otherwise) for any amendments, waivers or consents with respect to any Loan
Document or to exercise or refrain from exercising any powers or rights such
Lender may have under or in respect of the Loan Documents (including the right
to enforce or direct enforcement of the Obligations), except for those described
in clauses (viii)(B) and (viii)(C) of Section 13.2(a) with respect to amounts,
or dates fixed for payment of amounts, to which such participant or SPV would
otherwise be entitled and, in the case of participants, except for those
described in Section 13.2(a)(xii) (or amendments, consents and waivers with
respect to Section 10.10 to release all or substantially all of the Collateral).
No party hereto shall institute (and Borrower shall cause each other Credit
Party not to institute) against any SPV grantee of an option pursuant to this
clause (e) any bankruptcy, reorganization, insolvency, liquidation or similar
proceeding, prior to the date that is one year and one day after the payment in
full of all outstanding commercial paper of such SPV; provided, however, that
each Lender having designated an SPV as such agrees to indemnify each
Indemnified Person against any Liability that may be incurred by, or asserted
against, such Indemnified Person as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such
Liability). The agreement in the preceding sentence shall survive the
termination of the Commitments and the payment in full of the Obligations.

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          11.2 Appointment of Administrative Agent.

          GE Capital is hereby appointed to act as the Administrative Agent on
behalf of the Lenders and the Secured Parties under this Agreement and the other
Loan Documents. The provisions of this Section 11.2 are solely for the benefit
of the Administrative Agent and Lenders and no Credit Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, the Administrative Agent shall act solely as an agent of
the Lenders, and the Administrative Agent does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. The Administrative Agent shall
have no duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of the Administrative Agent
shall be mechanical and administrative in nature, and the Administrative Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Except as expressly set forth in this Agreement and the other Loan Documents,
the Administrative Agent shall not have any duty to disclose, and shall not be
liable for failure to disclose, any information relating to any Credit Party or
any of their respective Subsidiaries or any Account Debtor that is communicated
to or obtained by GE Capital or any of its Affiliates in any capacity. Neither
the Administrative Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.

          If the Administrative Agent shall request instructions from Requisite
Lenders, Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C
Lenders, Supermajority Term A Lenders, all Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from Requisite Lenders,
Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C Lenders,
Supermajority Term A Lenders, all Lenders or all affected Lenders, as the case
may be, and the Administrative Agent shall not incur liability to any Person by
reason of so refraining. The Administrative Agent shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (a) if such action would, in the opinion of the Administrative Agent,
be contrary to law or the terms of this Agreement or any other Loan Document,
(b) if such action would, in the opinion of the Administrative Agent, expose the
Administrative Agent to Environmental Liabilities or (c) if the Administrative
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders, Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C
Lenders, Supermajority Term A Lenders, all Lenders or all affected Lenders, as
applicable.

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          11.3 Administrative Agent's Reliance, Etc. None of the Administrative
Agent or any of its Affiliates or any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or the other Loan
Documents, except for damages caused by its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the
Administrative Agent: (a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form reasonably satisfactory to the
Administrative Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the Books and Records to
the extent not prohibited by a confidentiality agreement in favor of a third
party) of any Credit Party; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

          11.4 GE Capital and Affiliates.

          With respect to its Commitments hereunder, GE Capital shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not the Administrative
Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not the Administrative Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as the
Administrative Agent.

          11.5 Lender Credit Decision.

          Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on the
Financial Statements referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance

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upon the Administrative Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

          11.6 Indemnification.

          Lenders agree to indemnify the Administrative Agent (to the extent not
reimbursed by Credit Parties and without limiting the Obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted to be taken by the
Administrative Agent in connection therewith; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that the Administrative Agent is not reimbursed for such expenses by
Credit Parties.

          11.7 Successor Agents.

          The Administrative Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor the Administrative Agent. If a successor Administrative Agent shall
not have been so appointed by the Requisite Lenders and shall not have accepted
such appointment within thirty (30) days after the resigning Administrative
Agent's giving notice of resignation, then such resigning Administrative Agent
on behalf of the Lenders may appoint a successor Administrative Agent, which
shall be a Lender, if such Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If a successor Administrative Agent has not been appointed
pursuant to the foregoing, within thirty (30) days after the date such notice of
resignation was given by such resigning Administrative Agent, such resignation
shall become effective and the Requisite Lenders shall thereafter perform all
the duties of the Administrative Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Administrative Agent as provided above.
Any successor Administrative Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided, that

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such approval shall not be required if a Default or an Event of Default has
occurred and is continuing. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Administrative Agent.
Upon the earlier of (i) the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent or (ii) the effective date
of the resigning Administrative Agent's resignation, such resigning
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Administrative Agent shall continue.
After any Administrative Agent's resignation hereunder, the provisions of this
Article 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent under this Agreement
and the other Loan Documents.

          11.8 Setoff and Sharing of Payments.

          In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, each Lender is hereby
authorized upon the occurrence and during the continuance of any Event of
Default and subject to Section 11.9(d), at any time or from time to time,
without prior notice to any Credit Party or to any Person other than the
Administrative Agent (except as otherwise required by the Orders), any such
notice being hereby expressly waived, to offset and to appropriate and to apply
any and all balances held by it at any of its offices for the account of
Borrower or any Guarantor (regardless of whether such balances are then due to
Borrower or any Guarantor) and any other properties or assets at any time held
or owing by that Lender or that holder to or for the credit or for the account
of Borrower or any Guarantor against and on account of any of the Obligations
that are not paid when due; provided, that the Lender exercising such offset
rights shall give notice thereof to the affected Credit Party, except as
otherwise required by the Orders, promptly after exercising such rights. Any
Lender exercising a right of setoff or otherwise receiving any payment on
account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares, (other than offset rights exercised by any
Lender with respect to Sections 1.11, 1.13 or 1.14). Borrower and each Guarantor
agrees, to the fullest extent permitted by law, that (a) any Lender may exercise
its right to offset with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.

          11.9 Payments; Non-Funding Lenders; Information; Actions in Concert.

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          (a) Payments. Not less than once during each calendar month or more
frequently at the Administrative Agent's election (each, a "Settlement Date"),
the Administrative Agent shall advise each Lender by telephone, or telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
each Lender has funded all payments and Loans required to be made by it and
purchased all participations required to be purchased by it under this Agreement
and the other Loan Documents as of such Settlement Date, the Administrative
Agent shall pay to each Lender such Lender's Pro Rata Share of principal,
interest and Fees paid by Borrower since the previous Settlement Date for the
benefit of such Lender on the Loans held by it. To the extent that any Lender (a
"Non-Funding Lender") has failed to fund all such payments and Loans or failed
to fund the purchase of all such participations, the Administrative Agent shall
be entitled to set off the funding short-fall against that Non-Funding Lender's
Pro Rata Share of all payments received from Borrower. Such payments shall be
made by wire transfer to such Lender's account (as specified by such Lender in
Annex H or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date.

          (b) Return of Payments.

               (i) If the Administrative Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by the Administrative Agent from Borrower and such related
payment is not received by the Administrative Agent, then the Administrative
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

               (ii) If the Administrative Agent determines at any time that any
amount received by the Administrative Agent under this Agreement must be
returned to Borrower or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, the Administrative Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to the Administrative Agent on demand any portion of such
amount that the Administrative Agent has distributed to such Lender, together
with interest at such rate, if any, as the Administrative Agent is required to
pay to Borrower or such other Person, without setoff, counterclaim or deduction
of any kind.

          (c) Dissemination of Information. The Administrative Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by the Administrative Agent from, or delivered by the
Administrative Agent to, any Credit Party, with notice of any Event of Default
of which the Administrative Agent has actually become aware and with notice of
any action taken by the Administrative Agent following any Event of Default;
provided, that the Administrative Agent shall not be liable to any Lender for
any failure to do so, except to the extent that such failure is attributable to
the Administrative Agent's gross negligence or willful misconduct. Lenders
acknowledge that Borrower is required to provide Financial Statements and
Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that the Administrative Agent shall not have the duty to provide the same
to Lenders.

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          (d) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of the Administrative Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of the Administrative Agent or Requisite
Lenders.

12. SUCCESSORS AND ASSIGNS

          12.1 Successors and Assigns.

          This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, the Administrative Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party), except
as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of the Administrative Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of the Administrative Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each Credit Party,
the Administrative Agent and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.

13. MISCELLANEOUS

          13.1 Complete Agreement; Modification of Agreement.

          The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 13.2. Any letter of interest,
commitment letter, fee letter or confidentiality agreement, if any, between any
Credit Party and the Administrative Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement. Notwithstanding the foregoing, the Fee Letters and all obligations of
Borrower with respect to syndication contained in the GE Capital Commitment
Letter shall survive the execution and delivery of this Agreement and shall
continue to be binding obligations of the parties.

          13.2 Amendments and Waivers.

          (a) Except as otherwise expressly provided in this Agreement, the
Requisite Lenders (or the Administrative Agent with the prior written consent of
the Requisite Lenders), on the one hand, and Borrower, on the other hand, may
from time to time enter into written amendments, supplements or modifications
for the purpose of adding, deleting or modifying any provision of any Loan
Document or changing in any manner the rights, remedies, obligations and duties
of the parties thereto, and with the written consent of the Requisite Lenders,
the

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Administrative Agent, on behalf of Lenders, may execute and deliver a written
instrument waiving, on such terms and conditions as may be specified in such
instrument, any of the requirements applicable to the Credit Parties, as the
case may be, party to any Loan Document, or any Default or Event of Default and
its consequences; provided, that:

               (i) the Requisite Term A Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term A Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan A and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term A Lenders, which does not adversely affect any Term B Lender or
     Term C Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term A Commitment or the aggregate outstanding principal amount
     of the Term Loan A);

               (ii) the Requisite Term B Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term B Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan B and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term B Lenders, which does not adversely affect any Term A Lender or
     Term C Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term B Commitment or the aggregate outstanding principal amount
     of the Term Loan B);

               (iii) the Requisite Term C Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term C Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan C and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term C Lenders, which does not adversely affect any Term A Lender or
     Term B Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term C Commitment or the aggregate outstanding principal amount
     of the Term Loan C);

               (iv) no amendment, waiver or consent shall, unless in writing and
     signed by the Administrative Agent in addition to Lenders required above to
     take such action, affect the rights or duties of the Administrative Agent
     under this Agreement or the other Loan Documents; and

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               (v) the Administrative Agent may, with the consent of Borrower,
     amend, modify or supplement any Loan Document to cure any ambiguity,
     typographical error, defect or inconsistency;

provided, further, that no amendment, supplement, modification or waiver shall
be effective to:

               (vi) without the prior written consent of each of the Requisite
     Term A Lenders, the Requisite Term B Lenders and the Requisite Term C
     Lenders, (A) amend, supplement, modify or waive any provision of paragraph
     (c) (Aggregate Cash on Hand) of Annex G, (B) unless expressly permitted by
     this Agreement, release or permit any Credit Party to sell or otherwise
     dispose of assets in an aggregate amount in excess of $75,000,000 or (C)
     increase the Commitment of any Lender or extend any scheduled final
     maturity of any Loan; or

               (vii) without the prior written consent of each of the
     Supermajority Term A Lenders, the Requisite Term B Lenders and the
     Requisite Term C Lenders, amend, supplement, modify or waive any of the
     terms and provisions (and related definitions) related to the Term A
     Borrowing Base (including advance rates and eligibility criteria) if more
     credit would be available to Borrower thereafter; provided, that Borrower's
     consent will not be required with respect to any modifications made in
     accordance with Section 1.6;

provided, further, that no such amendment, supplement, modification or waiver
shall be effective to, without the prior written consent, in addition to Lenders
required above to take such action, of each Lender directly affected thereby:

               (viii) (A) modify the Commitment of such Lender or subject such
     Lender to any additional obligation, (B) extend any scheduled final
     maturity of any Loan owing to such Lender, (C) waive or reduce, or postpone
     or cancel any scheduled date fixed for the payment of (it being understood
     that any mandatory prepayment required under Section 1.2(b) does not
     constitute any scheduled date fixed for payments), principal of or interest
     on any such Loan or any fees owing to such Lender, (D) reduce, or release
     Borrower from its obligations to repay, any other Obligation owed to such
     Lender or (E) consent to the assignment or transfer by Borrower of any of
     its rights and obligations under this Agreement;

               (ix) amend, modify or waive any provision of Section 1.2, 1.3 or
     11.8;

               (x) subordinate any of the Obligations or Liens securing the
     Obligations, except as permitted by this Agreement and the Skymiles
     Intercreditor Agreement; or

               (xi) (A) amend, modify or waive this Section 13.2 or any other
     provision specifying the Administrative Agent, Lenders or group of Lenders
     required for any amendment, modification or waiver thereof or (B) change
     the respective percentages specified in the definition of "Requisite
     Lenders,"

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     "Requisite Term A Lenders," "Requisite Term B Lenders," "Requisite Term C
     Lenders," or "Supermajority Term A Lenders"; or

provided, further, that no such amendment, supplement, modification or waiver
shall be effective to, without the prior written consent of all Lenders:

               (xii) (A) release any Guarantor from the obligations provided for
     in the Collateral Documents, except as otherwise permitted herein or in the
     other Loan Documents, or (B) release or permit any Credit Party to sell or
     otherwise dispose of all or substantially all of the Collateral provided
     for in the Collateral Documents; provided, however, that no waiver,
     amendment, supplement or modification shall be required for the
     Administrative Agent to take additional Collateral pursuant to any Loan
     Document.

          (b) Any waiver, amendment, supplement or modification pursuant to this
Section 13.2 shall apply equally to each of Lenders and shall be binding upon
Lenders and all future holders of any of the Loans, the Notes, the Letter of
Credit Obligations and all other Obligations.

          (c) To the extent (a) the consent or vote of any Lender in its
capacity as a Term A Lender, a Term B Lender or a Term C Lender, as applicable,
is required, but not obtained (any such Lender whose consent is not obtained as
described in this Section 13.2(c) being referred to as a "Non-Consenting
Lender") in connection with any proposed amendment, modification, supplement,
waiver or exercise of remedies (a "Proposed Change") and (b) the Administrative
Agent shall have consented to such Proposed Change, at the request of Borrower
and with the consent of the Administrative Agent (not to be unreasonably
withheld), any Person reasonably acceptable to such Administrative Agent (which
Person may be the Lender acting as such Administrative Agent and shall have
consented to such Proposed Change) shall have the right (but not the obligation)
to purchase from such Non-Consenting Lender, and such Non-Consenting Lender
shall, upon the request of such Administrative Agent, sell and assign to such
Person all of the applicable Commitments and Loans of such Non-Consenting Lender
for an amount equal to the principal balance of all applicable Loans held by
such Non-Consenting Lender and all accrued and unpaid interest and fees with
respect thereto through the date of such sale and purchase (the "Purchase
Amount"); provided, however, that such sale and purchase (and the corresponding
assignment) shall not be effective until (A) such Administrative Agent shall
have received from such Person an agreement in form and substance satisfactory
to such Administrative Agent whereby such Person shall agree to be bound by the
terms hereof and (B) such Non-Consenting Lender shall have received the Purchase
Amount from such Person. Each Lender agrees that, if it becomes a Non-Consenting
Lender, it shall execute and deliver to the Administrative Agent the Note or
Notes evidencing such Commitments or Loans and an Assignment Agreement to
evidence such sale and assignment; provided, however, that the failure of any
Non-Consenting Lender to deliver such Note or Notes or execute an Assignment
Agreement shall not render such sale and purchase (and the corresponding
assignment) invalid.

          (d) Upon the Termination Date, the Administrative Agent shall deliver
to Borrower termination statements, mortgage releases, reconveyances and other
documents

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necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

          13.3 Fees and Expenses.

          Borrower shall reimburse (i) the Administrative Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants and auditors) and (ii) the Administrative Agent
(and, with respect to clauses (b), (c) and (d) below, all Lenders) for all fees,
costs and expenses, including the reasonable fees, costs and expenses of counsel
or other advisors (including environmental and management consultants and
appraisers) incurred in connection with the negotiation, preparation and filing
and/or recordation of the Loan Documents and incurred in connection with:

          (a) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or advice in connection with
the syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;

          (b) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Administrative Agent, any Lender, any Credit Party or
any other Person and whether as a party, witness or otherwise) in any way
relating to the Collateral, any of the Loan Documents or any other agreement to
be executed or delivered in connection herewith or therewith, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against any or all
of the Credit Parties or any other Person that may be obligated to the
Administrative Agent by virtue of the Loan Documents, including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; provided, that in the case of reimbursement of counsel
for Lenders other than the Administrative Agent, such reimbursement shall be
limited to one counsel for all such Lenders; provided, further, that no Person
shall be entitled to reimbursement under this clause (b) in respect of any
litigation, contest, dispute, suit, proceeding or action to the extent any of
the foregoing results from such Person's gross negligence or willful misconduct;

          (c) any attempt to enforce any remedies of the Administrative Agent or
any Lender against any or all of the Credit Parties or any other Person that may
be obligated to the Administrative Agent or any Lender by virtue of any of the
Loan Documents, including any such attempt to enforce any such remedies in the
course of any work-out or restructuring of the Loans during the pendency of one
or more Events of Default; provided, that in the case of reimbursement of
counsel for Lenders other than the Administrative Agent, such reimbursement
shall be limited to one counsel for all such Lenders;

          (d) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and

          (e) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral, in each case pursuant
to and in accordance with the terms of the Loan Documents;

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including, as to each of clauses (a) through (e) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 13.3, all of
which shall be payable, on demand, by Borrower to the Administrative Agent.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial overtime charges;
charges for any E-System; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.

          13.4 No Waiver.

          The Administrative Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of the Administrative Agent or such Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of Section 13.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by the Administrative Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer of or
other authorized employee of the Administrative Agent and the applicable
required Lenders and directed to Borrower specifying such suspension or waiver.

          13.5 Remedies.

          The Administrative Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that the Administrative Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.

          13.6 Severability.

          Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or such other Loan Document.

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<PAGE>

          13.7 Conflict of Terms.

          Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

          13.8 Confidentiality.

          The Administrative Agent and Lender agree to use commercially
reasonable efforts (equivalent to the efforts the Administrative Agent or Lender
applies to maintain the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that the Administrative Agent and Lender may
disclose such information (a) to Persons employed or engaged by the
Administrative Agent or Lender; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 13.8 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by the
Administrative Agent or Lender to be compelled by any court decree, subpoena or
legal or administrative order or process; (d) as, on the advice of the
Administrative Agent's or Lender's counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which the Administrative Agent or Lender is
a party related to the Loan Documents or the Loans or other Obligations
thereunder; (f) that ceases to be confidential through no fault of the
Administrative Agent or Lender; (g) to its affiliates and its and their
directors, officers, employees, advisors, representatives or agents, and (h) to
ratings agencies.

          13.9 GOVERNING LAW.

          EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND
LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT THE ADMINISTRATIVE AGENT, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE

                                       92

<PAGE>

COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND;
PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE ADMINISTRATIVE AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS, TO THE
EXTENT PERMITTED BY LAW, TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES, TO THE EXTENT
PERMITTED BY LAW, PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL, TO THE EXTENT PERMITTED BY LAW, BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE
PREPAID.

          13.10 Notices.

          (a) Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 13.10); (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated in Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower or the Administrative Agent) designated in Annex I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.

                                       93

<PAGE>

          (b) Subject to the provisions of Section 13.10(a), each of the
Administrative Agent, Borrower, the Lenders, the L/C Issuers and each of their
Related Persons is authorized (but not required) to transmit, post or otherwise
make or communicate, in its sole discretion, Electronic Transmissions in
connection with any Loan Document and the transactions contemplated therein;
provided, that notices to any Credit Party shall not be made by any posting to
an Internet or extranet based site or other equivalent service but may be made
by e-mail or E-fax, if available, so long as such notices are also sent in
accordance with Section 13.10(a). Each Credit Party and each Secured Party
hereby acknowledges and agrees that the use of Electronic Transmissions is not
necessarily secure and that there are risks associated with such use, including
risks of interception, disclosure and abuse and each indicates it assumes and
accepts such risks by hereby authorizing the transmission of Electronic
Transmissions.

          (c) Subject to the provisions of Section 13.10(a), (i)(A) no posting
to any E-System shall be denied legal effect merely because it is made
electronically, (B) each E Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a "signature" and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a "writing",
in each case including pursuant to any Loan Document, any applicable provision
of any Uniform Commercial Code, the federal Uniform Electronic Transactions Act,
the Electronic Signatures in Global and National Commerce Act and any
substantive or procedural Requirement of Law governing such subject matter, (ii)
each such posting that is not readily capable of bearing either a signature or a
reproduction of a signature may be signed, and shall be deemed signed, by
attaching to, or logically associating with such posting, an E-Signature, upon
which each Secured Party and Credit Party may rely and assume the authenticity
thereof, (iii) each such posting containing a signature, a reproduction of a
signature or an E-Signature shall, for all intents and purposes, have the same
effect and weight as a signed paper original and (iv) each party hereto or
beneficiary hereto agrees not to contest the validity or enforceability of any
posting on any E-System or E-Signature on any such posting under the provisions
of any applicable Requirement of Law requiring certain documents to be in
writing or signed; provided, however, that nothing herein shall limit such
party's or beneficiary's right to contest whether any posting to any E-System or
E-Signature has been altered after transmission.

          (d) All uses of an E-System shall be governed by and subject to, in
addition to this Section 13.10, separate terms and conditions posted or
referenced in such E-System and related contractual obligations executed by
Secured Parties and Delta Companies in connection with the use of such E-System.

          (e) ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED "AS
IS" AND "AS AVAILABLE". NONE OF THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED
PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR
ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS
THEREIN. NO WARRANTY OF ANY KIND IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF
ITS RELATED PERSONS IN CONNECTION WITH ANY E SYSTEMS OR ELECTRONIC
COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS. The Credit Parties agree (and Borrower shall
cause each other Credit Party to

                                       94

<PAGE>

agree) that the Administrative Agent has no responsibility for maintaining or
providing any equipment, software, services or any testing required in
connection with any Electronic Transmission or otherwise required for any
E-System.

          13.11 Section Titles.

          The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

          13.12 Counterparts.

          This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.

          13.13 WAIVER OF JURY TRIAL.

          BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

          13.14 Press Releases and Related Matters.

          Each Credit Party executing this Agreement agrees that neither it nor
its Affiliates will in the future issue any press releases or other public
disclosure using the name of the Administrative Agent or any Arranger or its
affiliates or referring to this Agreement, the other Loan Documents without at
least two (2) Business Days' prior notice to the Administrative Agent or such
Arranger, as the case may be, and without the prior written consent of the
Administrative Agent or such Arranger, as the case may be, unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult, to the
extent permitted by law, with the Administrative Agent or such Arranger, as the
case may be, before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by the Administrative Agent, any
Arranger or Lender of advertising material relating to the financing
transactions contemplated by this Agreement using Borrower's name, product
photographs, logo or trademark. The Administrative Agent, any Arranger or any
Lender shall provide a draft of any advertising

                                       95

<PAGE>

material to each Credit Party for review and comment at least two (2) Business
Days prior to the publication thereof. Each of the Administrative Agent and the
Arrangers reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.

          13.15 [Reserved].

          13.16 Advice of Counsel.

          Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Sections 13.9 and
13.13, with its counsel.

          13.17 No Strict Construction.

          The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

            [The remainder of this page is intentionally left blank.]

                                       96

<PAGE>

     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.

                                        DELTA AIR LINES, INC., as Borrower

                                        By: /s/ Paul A. Jacobson
                                            ------------------------------------
                                        Name: Paul A. Jacobson
                                        Title: Vice President and Treasurer

                                              Signature Page to Credit Agreement

<PAGE>

                                        GENERAL ELECTRIC CAPITAL
                                        CORPORATION, as Administrative Agent
                                        and Lender

                                        By: /s/ Douglas A. Kelly
                                            ------------------------------------
                                        Name: Douglas A. Kelly
                                        Title: Duly Authorized Signatory

                                        MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Lender

                                        By: /s/ Jason Colodne
                                            ------------------------------------
                                        Name: Jason Colodne
                                        Title: Executive Director

                                              Signature Page to Credit Agreement

<PAGE>

The following Persons are signatories to this Agreement in their capacity as
Credit Parties and not as Borrower.

                                        ASA HOLDINGS, INC.

                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Vice President

                                        COMAIR HOLDINGS, LLC

                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Treasurer

                                        COMAIR, INC.

                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Chief Financial Officer

                                        COMAIR SERVICES, INC.

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer

                                        CROWN ROOMS, INC.

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                              Signature Page to Credit Agreement

<PAGE>

                                        DAL AIRCRAFT TRADING, INC.

                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Treasurer

                                        DAL GLOBAL SERVICES, LLC

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                        DAL MOSCOW, INC.

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                        DELTA AIRELITE BUSINESS JETS, INC.

                                        By: /a/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                        DELTA BENEFITS MANAGEMENT, INC.

                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer

                                              Signature Page to Credit Agreement

<PAGE>

                                        DELTA CONNECTION ACADEMY, INC.

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer

                                        DELTA CORPORATE IDENTITY, INC.

                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                        DELTA LOYALTY MANAGEMENT SERVICES, LLC

                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer

                                        DELTA TECHNOLOGY, LLC

                                        By: /s/ E. Alan Arnold
                                            ------------------------------------
                                        Name: E. Alan Arnold
                                        Title: Secretary

                                        DELTA VENTURES III, LLC

                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer

                                              Signature Page to Credit Agreement

<PAGE>

                                        EPSILON TRADING, INC.

                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Assistant Treasurer

                                        KAPPA CAPITAL MANAGEMENT, INC.

                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: President

                                        SONG, LLC

                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Assistant Treasurer

                                              Signature Page to Credit Agreement

<PAGE>

                               ANNEX A (RECITALS)
                                       TO
                                CREDIT AGREEMENT

                                   DEFINITIONS

          Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:

          "Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).

          "Accounting Changes" has the meaning ascribed thereto in Annex G.

          "Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all
healthcare insurance receivables, and (e) all collateral security of any kind,
now or hereafter in existence, given by any Account Debtor or other Person with
respect to any of the foregoing.

          "Additional Aircraft" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Additional Engine" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Administrative Agent" has the meaning ascribed to it in the Preamble.

          "Affected Lender" has the meaning ascribed to it in Section 1.14(e).

          "Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 20% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, and (c)
each of such Person's joint venturers and partners who are Affiliates under
clause (a) hereof. For the purposes of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies,

                                       A-1

<PAGE>

whether through the ownership of voting securities, by contract or otherwise;
provided, that the term "Affiliate," when used with reference to a Credit Party,
shall specifically exclude the Administrative Agent and each Lender.

          "Aggregate Cash On Hand" means the amount of cash and Cash Equivalents
of the Delta Companies that may be classified, in accordance with GAAP, as
"unrestricted" on the consolidated balance sheets of Borrower.

          "Agreement" means this Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

          "Air Carrier" means each of Borrower and Comair, Inc.

          "Aircraft" shall have the meaning ascribed to it in the Aircraft
Mortgage.

          "Aircraft Mortgage" means the Aircraft Mortgage and Security Agreement
in the form of Exhibit B hereto entered into by and among the Administrative
Agent for the benefit of the Secured Parties and each Credit Party that is a
signatory thereto, as amended, modified or supplemented from time to time.

          "Airport Authority" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Allocated Amount" means, with respect to any asset, the amount
allocated to such asset in the most recent Borrowing Base Certificate delivered
by Borrower to the Administrative Agent in accordance with Annex F.

          "Amex" means American Express Travel Related Services Company, Inc.
and each of its affiliates party to the Existing Skymiles Facility Documents or
the Post-Petition Skymiles Facility Documents, as applicable.

          "Appendices" has the meaning ascribed to it in the recitals to the
Agreement.

          "Applicable Term A Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan A, as determined by reference to Section 1.5(a).

          "Applicable Term A LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan A, as determined by reference to Section 1.5(a).

          "Applicable Term B Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan B, as determined by reference to Section 1.5(a).

          "Applicable Term B LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan B, as determined by reference to Section 1.5(a).

                                      A-2

<PAGE>

          "Applicable Term C Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan C, as determined by reference to Section 1.5(a).

          "Applicable Term C LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan C, as determined by reference to Section 1.5(a).

          "Appraisers" shall mean Simat, Helliesen & Eichner, Inc., Sage
Popovich and Cushman & Wakefield (with respect to the Owned Real Estate
appraised on or before the Closing Date), or such other appraisers acceptable to
the Administrative Agent.

          "Approved Fund" means, with respect to any Lender, any Person (other
than a natural Person) that (a) is or will be engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and (b) is advised or managed by
(i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other
than an individual) or any Affiliate of any Person (other than an individual)
that administers or manages such Lender.

          "ARB Indebtedness" means, with respect to any Delta Company, without
duplication, all Indebtedness or obligations of such Delta Company created or
arising with respect to any limited recourse revenue bonds issued for the
purpose of financing or refinancing improvements to, or the construction or
acquisition of, airport and other related facilities and equipment, the use or
construction of which qualifies and renders such bonds exempt from certain
federal or state taxes.

          "Arrangement Fee Letter" means the Fee Letter, dated September 10,
2005, between GE Capital and Borrower.

          "Arrangers" shall mean, collectively, (a) with respect to Term Loan A
and Term Loan B, GE Capital Markets, Inc. and (b) with respect to Term Loan C,
GE Capital Markets, Inc. and Morgan Stanley Senior Funding, Inc.

          "Asset Sale" has the meaning ascribed to it in Section 6.8.

          "Assignment Agreement" has the meaning ascribed to it in Section
11.1(a).

          "Aviation Authority" means any nation or government or national or
governmental authority of any nation, state, province or other political
subdivision thereof, and any agency, department, regulator, airport authority,
air navigation authority or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
in respect of the regulation of commercial aviation or the registration,
airworthiness or operation of civil aircraft and having jurisdiction over the
Credit Parties including, without limitation, the FAA or DOT.

          "Avoidance Actions" shall mean the Credit Parties' claims and causes
of action arising under Section 502(d), 544, 547, 548 or 550 of the Bankruptcy
Code or any other

                                      A-3

<PAGE>

avoidance action under the Bankruptcy Code; provided, that "Avoidance Actions"
shall not include any Proceeds of such property.

          "Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq.

          "Bankruptcy Court" has the meaning ascribed to it in the Preamble or
shall mean any other court having competent jurisdiction over the Cases.

          "Blocked Account" means any account of any Credit Party that is
subject to a Blocked Account Agreement or a Control Letter pursuant to Annex C.

          "Blocked Account Agreement" means a control agreement, in form and
substance satisfactory to the Administrative Agent, among any Credit Party, the
Administrative Agent for the benefit of Secured Parties and the applicable bank
or financial institution. Any Blocked Account Agreement substantially in the
form of any Blocked Account Agreement in effect on the Closing Date shall be
deemed to be satisfactory to the Administrative Agent.

          "Books and Records" means books and records of the Credit Parties,
including financial, corporate, operations and sales books, records, books of
account, sales and purchase records, lists of suppliers and customers, formulae,
business reports, plans and projections and all other documents, logs, surveys,
plans, files, records, assessments, correspondence, and other data and
information, financial or otherwise, and all aircraft manuals, log books and
other documents and records, including all data and information stored on
computer-related or other electronic media.

          "Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.

          "Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by Borrower in the form attached to the Agreement as
Exhibit 4.1(b).

          "Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York
and in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.

          "Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period, net of cash amounts received by
Borrower and its Subsidiaries from other Persons during such period in
reimbursement of Capital Expenditures made by Borrower and its Subsidiaries and
excluding interest capitalized during construction, for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
under GAAP (including equipment which in the ordinary course of business is
purchased simultaneously with the trade-in or exchange of existing equipment
owned by Borrower or any of its Subsidiaries to the extent of the gross amount
of such purchase price less the book value of the equipment being traded in or
exchanged at such time), but excluding expenditures made in connection with the
replacement or restoration of assets to the extent reimbursed or financed from
(x) insurance proceeds paid on account of the

                                       A-4

<PAGE>

loss of or the damage to the assets being replaced or restored, or (y) awards of
compensation arising from the taking by condemnation or eminent domain of such
assets being replaced.

          "Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.

          "Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

          "Carve-Out" means claims of the following parties for the following
amounts: (i) the unpaid fees of the U.S. Trustee or the Clerk of the Bankruptcy
Court pursuant to 28 U.S.C. Section 1930(a) and (ii) after the occurrence and
during the continuance of an Event of Default, the aggregate allowed unpaid fees
and expenses payable under sections 330 and 331 of the Bankruptcy Code to
professional persons retained pursuant to an order of the Bankruptcy Court by
any Credit Party or any Committee not to exceed $35,000,000 (plus all unpaid
professional fees and disbursements accrued or incurred prior to the occurrence
of an Event of Default and reflected on the most recent Borrowing Base
Certificate and reserved against the Term A Borrowing Base, or otherwise
reported in writing to the Administrative Agent, to the extent allowed by the
Bankruptcy Court at any time) in the aggregate; provided, that the Carve-Out
shall not include, apply to or be available for any fees or expenses incurred by
any party, including any Credit Party or any Committee, in connection with the
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against the Administrative Agent, the Lenders or the L/C
Issuers, including challenging the amount, validity, perfection, priority or
enforceability of or asserting any defense, counterclaim or offset to, the
Obligations or the security interests and Liens of the Secured Parties in
respect thereof; provided, further, that (a) as long as no Event of Default
shall have occurred and be continuing, the Credit Parties shall be permitted to
pay compensation and reimbursement of expenses allowed and payable under
sections 330 and 331 of the Bankruptcy Code, as the same may be due and payable,
and the same shall not reduce the Carve-Out and (b) in the event the Carve-Out
is reduced by any amount during an Event of Default, upon the effectiveness of
any cure or waiver of such Event of Default pursuant to the terms of this
Agreement, the Carve-Out shall be increased by such amount.

          "Cases" has the meaning ascribed to it in the Preamble.

          "Cash Collateral Account" means a cash collateral account in the name
of Borrower and subject to a Blocked Account Agreement, into which the Net Cash
Proceeds of the Collateral, including the Term A Borrowing Base and, at the
election of Borrower, cash or Cash Equivalents are deposited pursuant to the
Agreement, the Collateral Documents and any other Loan Document.

          "Cash Equivalents" means Permitted Investments and such other cash and
cash equivalents acceptable to the Administrative Agent.

                                      A-5

<PAGE>

          "Cash Management Systems" has the meaning ascribed to it in Section
1.7.

          "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.).

          "Certificated Air Carrier" shall mean an "air carrier" within the
meaning of Section 40102 of Title 49, holding a certificate of public
convenience and necessity under Section 41102 of Title 49 and an air carrier
operating certificate under 14 C.F.R. Part 121 of the Federal Aviation
Regulations authorizing its operations to/from/within the United States.

          "Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 40% or more of the issued and outstanding shares of
capital Stock of Borrower having the right to vote for the election of directors
of Borrower under ordinary circumstances other than any employee benefit plan of
Borrower or any of its Subsidiaries or any Person organized, appointed or
established by borrower or any of its Subsidiaries for, or pursuant to, the
terms of any such employee benefit plan; or (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the Stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.

          "Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances (including interest and penalties relating thereto) upon or
relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll,
income or gross receipts of any Credit Party, (d) any Credit Party's ownership
or use of any properties or other assets, or (e) any other aspect of any Credit
Party's business.

          "Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party, wherever located.

          "Citibank Cash Collateral Account" means the Cash Collateral Account
as defined in the Security Agreement dated as of September 1, 2004 between
Borrower and Citibank, N.A. and the cash, cash equivalents and other investment
property and financial assets credited thereto, and all proceeds thereof, in an
amount not to exceed $20,000,000.

          "Claim" has the meaning ascribed to such term in Section 101(5) of the
Bankruptcy Code.

          "Closing Date" has the meaning ascribed to it in Section 2.1.

                                       A-6

<PAGE>

          "Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.

          "Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Administrative Agent's or Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.

          "Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Credit Party in or upon which a
Lien is granted under this Agreement or any Collateral Documents.

          "Collateral Documents" means this Agreement, the Mortgage, the
Aircraft Mortgage, the SGR Security Agreement, the Spare Parts Mortgage and all
similar agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.

          "Collateral Reports" means the reports with respect to the Collateral
referred to in Annex F.

          "Collection Account" means that certain account of the Administrative
Agent, account number 502-328-54 in the name of the Administrative Agent at
DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001 033,
Account Name: GECC/CAF Depository, Reference: CFN5803/Term Loan, or such other
account as may be specified in writing by the Administrative Agent as the
"Collection Account."

          "Commitments" means (a) as to any Lender, the aggregate of such
Lender's Term A Commitment, Term B Commitment and Term C Commitment as set forth
on Annex J to the Agreement or in the most recent Assignment Agreement executed
by such Lender and (b) as to all Lenders, the aggregate of all Lenders' Term A
Commitments, Term B Commitments and Term C Commitments, as to each of clauses
(a) and (b), as such Commitments may be reduced, amortized or adjusted from time
to time in accordance with the Agreement.

          "Committee" means the official statutory committee of unsecured
creditors approved in the Cases pursuant to section 1102 of the Bankruptcy Code.

          "Compliance Certificate" has the meaning ascribed to it in Section (b)
of Annex E.

                                      A-7

<PAGE>

          "Concentration Account" has the meaning ascribed to it in Section (c)
of Annex C.

          "Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.

          "Control Letter" means a letter agreement, in form and substance
satisfactory to the Administrative Agent, between Administrative Agent and (i)
the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearinghouse, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant limits any security interest in the
applicable financial assets in a manner reasonably satisfactory to the
Administrative Agent, acknowledges the Lien of Administrative Agent for the
benefit of Secured Parties on such financial assets, and agrees to follow the
instructions or entitlement orders of the Administrative Agent without further
consent by the affected Credit Party. Any Control Letter substantially in the
form of any Control Letter in effect on the Closing Date shall be deemed to be
satisfactory to the Administrative Agent.

          "Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.

          "Copyright Security Agreements" means the Copyright Security
Agreements made in favor of Administrative Agent for the benefit of the Secured
Parties, by each applicable Credit Party substantially in the form of Exhibit C
hereto.

          "Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

          "Credit Card" means any agreement or plan relating to a credit card,
debit card, charge card or other similar system, including but not limited to
the American Express Card, Diners Club, MasterCard, Visa Card, Carte Blanche and
Discover Card.

          "Credit Card Receivables" means any right to payment in Dollars
(including, but not limited to, rights to payment for goods, services,
insurance, fees, taxes, prepayment penalties

                                      A-8

<PAGE>

and finance charges) from (i) any issuer of a Credit Card arising from goods or
services provided or to be provided by a Credit Party or (ii) to the extent that
the right to such payment described in clause (i) has been transferred in whole
or part to U.S. Bank, National Association ("USB") or any other settlement
and/or processing system, or, alternatively, to the extent USB or any other
settlement and/or processing system has received any collections with respect to
such right of payment, any right to payment from USB or any other settlement
and/or processing system arising from the transfer to or by USB or any other
settlement and/or processing system of such claims against an issuer of a Credit
Card.

          "Credit Parties" means Borrower and each of the Guarantors.

          "Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.

          "Default Rate" has the meaning ascribed to it in Section 1.5(d).

          "Delta Company" means Borrower and each of its Subsidiaries.

          "Deposit Accounts" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.

          "Designated Spare Parts Locations" means the locations set out in
Disclosure Schedule 3.26 and such other locations as are permitted by the Spare
Parts Mortgage.

          "Desk-top Aircraft Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Aircraft or Eligible
Engines, including but not limited to, taking at least the following actions:
(i) reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to such Aircraft or Engines; and
(iii) checking other sources, such as manufacturers, other airlines and U.S.
government procurement data, for orderly liquidation prices of such Aircraft or
Engines.

          "Desk-top Ground Service Equipment Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Ground Service Equipment, including but not limited to, taking at least the
following actions: (i) reviewing the most recent Collateral Report; (ii)
reviewing the Appraiser's internal value database for values applicable to such
Ground Service Equipment; and (iii) checking other sources, such as
manufacturers, other airlines and U.S. government procurement data, for orderly
liquidation prices of such Ground Service Equipment.

          "Desk-top Spare Parts Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Spare Parts,
including but not limited to, taking at least the following actions: (i)
reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to Spare Parts; (iii) developing a
representative sampling of a reasonable number of the different Spare Parts for
which a market check will be conducted; (iv) checking other sources, such as
manufacturers, other airlines, U.S. government procurement data and airline
parts pooling price lists, for orderly liquidation prices of the sample parts
referred to in clause (iii); (v) conducting a limited review of the inventory
reporting system applicable to the Spare Parts, including checking information

                                      A-9

<PAGE>

reported in such system against information determined through physical
inspection; and (vi) reviewing a sampling of the Spare Parts' serviceability
tags, books and records (including tear-down reports).

          "Desk-top Tooling Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Tooling, including
but not limited to, taking at least the following actions: (i) reviewing the
most recent Collateral Report; (ii) reviewing the Appraiser's internal value
database for values applicable to such Tooling; and (iii) checking other
sources, such as manufacturers, other airlines and U.S. government procurement
data, for orderly liquidation prices of such Tooling.

          "DFW Assets" means assets located at the Dallas/Fort Worth hub
facilities which are disposed of in connection with the closing of such hub
facilities as disclosed in Borrower's public disclosures on or prior to the
Closing Date.

          "DIP Fee Letter" means the Fee Letter, dated September 14, 2005, among
GE Capital, Morgan Stanley Senior Funding, Inc. and Borrower.

          "DLMS" means Delta Loyalty Management Services, Inc.

          "Documents" means any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.

          "Dollars" or "$" means lawful currency of the United States of
America.

          "Domestic Subsidiary" means a Subsidiary of Borrower organized under
the laws of any jurisdiction within the United States of America.

          "DOT" shall mean the United States Department of Transportation or any
analogous successor agency.

          "E-Fax" means any system used to receive or transmit faxes
electronically.

          "E-Signature" means the process of attaching to or logically
associating with an Electronic Transmission an electronic symbol, encryption,
digital signature or process (including the name or an abbreviation of the name
of the party transmitting the Electronic Transmission) with the intent to sign,
authenticate or accept such Electronic Transmission.

          "E-System" means any electronic system, including Intralinks(R) and
any other Internet or extranet-based site, whether such electronic system is
owned, operated or hosted by the Administrative Agent, any of its Related
Persons or any other Person, providing for access to data protected by passcodes
or other security system.

          "EBITDAR" means, with respect to any Person for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Person for such period, determined in accordance with GAAP, minus (b) the sum of
(i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain during such period arising
from the sale, exchange or other disposition of capital assets by such Person

                                      A-10

<PAGE>

(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities) (a
"Capital Asset Sale"), and (v) any other non-cash gains that have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) the amount of any deduction to
consolidated net income as the result of any grant to any employee of such
Person of any Stock, (vii) depreciation, amortization and aircraft rent expense
for such period, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
(viii) any aggregate net loss during such period arising from a Capital Asset
Sale, (ix) all other non-cash charges for such period, (x) costs and expenses,
including fees, incurred directly in connection with the consummation of the
transactions contemplated under the Loan Documents to the extent included in the
calculation of consolidated net income and (xi) expenses incurred with respect
to the Chapter 11 reorganization as set forth on the Parent's consolidated
statement of income for such period, including (A) professional and other fees,
(B) key employee retention program payments, (C) financing fees, (D) severance
costs and (E) any litigation expenses incurred during or in connection with the
Cases. For purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period; (4) any write-up of any asset; (5) any net gain from
the collection of the proceeds of life insurance policies; (6) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person; (7) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets; and (8) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.

          "Electronic Transmission" means each notice, request, instruction,
demand, report, authorization, agreement, document, file, information and any
other communication transmitted, posted or otherwise made or communicated by
e-mail, E-Fax, Internet or extranet-based site or any other equivalent
electronic service, whether owned, operated or hosted by the Administrative
Agent, any Affiliate of the Administrative Agent or any other Person.

          "Eligible Accounts" means all of the Accounts owned by the Credit
Parties and reflected in the most recent Borrowing Base Certificate delivered by
Borrower to the Administrative Agent shall be "Eligible Accounts" for purposes
of this Agreement, except, without duplication, any Account of the Credit
Parties:

                                      A-11

<PAGE>

               (a) that does not arise from the air transportation of
          passengers, freight and cargo or the sale of goods or performance of
          services by the Credit Parties in the ordinary course of its business;

               (b) (i) upon which any Credit Party's right to receive payment is
          not absolute or is contingent upon the fulfillment of any condition
          whatsoever or (ii) as to which any Credit Party is not able to bring
          suit or otherwise enforce its remedies against the Account Debtor
          through judicial process, or (iii) if the Account represents a
          progress billing consisting of an invoice for goods sold or used or
          services rendered pursuant to a contract under which the Account
          Debtor's obligation to pay that invoice is subject to any Credit
          Party's completion of further performance under such contract or is
          subject to the equitable lien of a surety bond issuer; provided, that
          clauses (i) and (iii) above shall not apply to receivables in respect
          of the transportation of passengers in the ordinary course of
          business;

               (c) to the extent that any defense, counterclaim, setoff or
          dispute is asserted as to such Account;

               (d) that is not a true and correct statement of bona fide
          indebtedness incurred in the amount of the Account for goods and
          services sold to or services rendered, or to be rendered with respect
          to receivables in respect of the transportation of passengers, and
          goods accepted by the applicable Account Debtor;

               (e) Eligible Unbilled Accounts;

               (f) that is owed by any director, officer, other employee or
          Affiliate of any Credit Party;

               (g) that is the obligation of an Account Debtor that is the
          United States government or a political subdivision thereof, or any
          state, county or municipality or department, agency or instrumentality
          thereof unless the Credit Party, if necessary or desirable, has
          complied with respect to such obligation with the Federal Assignment
          of Claims Act of 1940, or any applicable state, county or municipal
          law restricting the assignment thereof with respect to such obligation
          and such assignment has been accepted and acknowledged by the
          appropriate governmental officers;

               (h) that is the obligation of an Account Debtor located in (x)
          with respect to Credit Card Receivables, Korea or Brazil and (y) with
          respect to all other receivables, a foreign country other than Canada
          unless payment thereof is assured by a letter of credit assigned and
          delivered to the Administrative Agent, satisfactory to the
          Administrative Agent as to form, amount and issuer;

               (i) with respect to receivables in respect of the transportation
          of passengers, to the extent any Credit Party owed the applicable
          Account Debtor for services sold or rendered by such Account Debtor to
          such Credit Party but only to

                                      A-12

<PAGE>

          the extent of the potential offset, including, without limitation
          under code share arrangements, interline agreements or other
          agreements between airlines in which tickets may be purchased on one
          airline and honored by another airline;

               (j) that is in default and such default is reasonably likely to
          result in such Account Debtor's failure to make payment with respect
          to such Account; provided, that, without limiting the generality of
          the foregoing, an Account shall be deemed in default upon the
          occurrence of any of the following:

               (i)  the Account is not paid within ninety (90) days following
                    its original invoice date;

               (ii) the Account Debtor obligated upon such Account suspends
                    business, makes a general assignment for the benefit of
                    creditors or fails to pay its debts generally as they come
                    due; or

               (iii) a petition is filed by or against any Account Debtor
                    obligated upon such Account under any bankruptcy law or any
                    other federal, state or foreign (including any provincial)
                    receivership, insolvency relief or other law or laws for the
                    relief of debtors;

               (k) that is the obligation of an Account Debtor if fifty percent
          (50%) or more of the Dollar amount of all Accounts owing by that
          Account Debtor are ineligible under the other criteria set forth in
          clause (j) above;

               (l) as to which the Lien of the Administrative Agent for the
          benefit of the Secured Parties is not a first priority perfected Lien;

               (m) as to which any of the representations or warranties in the
          Loan Documents with respect to such specific Account are untrue;

               (n) to the extent such Account is evidenced by a judgment,
          Instrument or Chattel Paper;

               (o) to the extent such Account exceeds any credit limit
          established by the Administrative Agent, in its reasonable credit
          judgment;

               (p) except with respect to Credit Card Receivables, to the extent
          that such Account, together with all other Accounts owing by such
          Account Debtor and its Affiliates as of any date of determination
          exceed 10% of all Eligible Accounts;

               (q) that is payable in any currency other than Dollars;

               (r) that arises from interline activity including services and
          billings performed between airlines (but excluding the transportation
          of passengers) and

                                      A-13

<PAGE>

          the payment of which is handled through third party domestic or
          foreign clearing houses;

               (s) that arises from the sale of Delta Skymiles through DLMS to
          Amex;

               (t) that are Ineligible Refundable Ticket Accounts or Eligible
          Refundable Ticket Accounts; or

               (u) of any Credit Party which Credit Party has not been subject
          to a field examination.

          "Eligible Aircraft" means all of the Aircraft, except any Ineligible
Term A Borrowing Base Collateral, owned by the Credit Parties; provided, that
(i) a valid and enforceable first priority Lien on such Aircraft (subject only
to Permitted Encumbrances and other Liens approved by the Administrative Agent)
shall have been granted by the applicable Credit Party in favor of
Administrative Agent for the benefit of the Secured Parties pursuant to the
Aircraft Mortgage and (ii) the Liens described in clause (i) above shall be in
full force and effect in favor of Administrative Agent for the benefit of the
Secured Parties at such time.

          "Eligible Engines" means all of the Engines, except any Ineligible
Term A Borrowing Base Collateral, owned by the Credit Parties; provided, that
(i) a valid and enforceable first priority Lien on such Engine (subject only to
Permitted Encumbrances and other Liens approved by the Administrative Agent)
shall have been granted by the applicable Credit Party in favor of
Administrative Agent for the benefit of the Secured Parties pursuant to the
Aircraft Mortgage and (ii) the Liens described in clause (i) above shall be in
full force and effect in favor of Administrative Agent for the benefit of the
Secured Parties at such time.

          "Eligible Flight Simulators" means all of the Flight Simulators,
except any Ineligible Term A Borrowing Base Collateral, owned by the Credit
Parties; provided that (i) a valid and enforceable first priority Lien on such
Flight Simulators (subject only to Permitted Encumbrances and other Liens
approved by the Administrative Agent) shall have been granted by the applicable
Credit Parties in favor of Administrative Agent for the benefit of the Secured
Parties pursuant to the Loan Documents and (ii) the Liens described in clause
(i) above shall be in full force and effect in favor of Administrative Agent for
the benefit of the Secured Parties at such time.

          "Eligible Ground Service Equipment" means all Ground Service Equipment
owned by Credit Parties and reflected in the most recent Term A Borrowing Base
Certificate delivered by Borrower to the Administrative Agent, except any
Ineligible Term A Borrowing Base Collateral.

          "Eligible Real Estate" means any parcel of Owned Real Estate, except
any Ineligible Term A Borrowing Base Collateral, in the United States owned in
fee simple by the Credit Parties as to which each of the following conditions
has been satisfied at such time:

               (a) a valid and enforceable first priority Lien on such parcel of
          Real Estate (subject only to Permitted Encumbrances and other Liens
          approved by the

                                      A-14

<PAGE>

          Administrative Agent) shall have been granted by Borrower in favor of
          Administrative Agent for the benefit of the Secured Parties pursuant
          to a Mortgage;

               (b) except as otherwise permitted by the Administrative Agent
          and, where applicable, the relevant title insurance company shall have
          received in form and substance satisfactory to the Administrative
          Agent, all Mortgage Supporting Documents in respect of such parcel;

               (c) the Administrative Agent shall have received a FIRREA
          appraisal with respect to such parcel of Real Estate in form and
          substance satisfactory to the Administrative Agent and performed by an
          appraiser that is satisfactory to the Administrative Agent;

               (d) no casualty shall have occurred affecting the use, operation
          or value of such parcel of Real Estate if such casualty has not been
          restored or repaired by the mortgagor under the Mortgage encumbering
          such parcel of Real Estate;

               (e) no condemnation or taking by eminent domain shall have
          occurred nor shall any notice of any pending or threatened
          condemnation or other proceeding against such parcel of Real Estate
          have been delivered to the owner or lessee of such parcel of Real
          Estate that would materially affect the use, operation or value of
          such parcel of Real Estate;

               (f) the mortgagor under the relevant Mortgage encumbering such
          parcel of Real Estate shall comply in all material respects with the
          terms of such Mortgage;

               (g) each written lease, license or other use or occupancy
          agreement, other than the lease between Borrower and Worldspan L.P.
          and the lease between Borrower and Verizon Airfone Inc. f/k/a GTE
          Airfone Incorporated (both of which leases are disclosed on Part 3 of
          Disclosure Schedule 3.6), now or hereafter affecting all or any
          portion of such parcel of Real Estate shall, by its express terms, be
          subject and subordinate to the relevant Mortgage; and

               (h) each lease, license, or other use or occupancy agreement
          between a Credit Party, as landlord, and its Affiliate, as tenant, now
          or hereafter affecting all or any portion of such parcel of Real
          Estate shall be subject and subordinate to the relevant Mortgage or
          shall be terminable (without fee) on 60 days' prior written notice by
          the owner of such Real Estate.

          "Eligible Refundable Ticket Accounts" means Eligible Accounts arising
from the sale of refundable tickets that are to be used within 30 days from the
date of issuance of such ticket.

          "Eligible Spare Parts" means all of the Pledged Spare Parts owned by
Credit Parties and reflected in the most recent Term A Borrowing Base
Certificate delivered by

                                      A-15

<PAGE>

Borrower to the Administrative Agent, except for any Ineligible Term A Borrowing
Base Collateral.

          "Eligible Tooling" means all of the Tooling owned by Credit Parties
and reflected in the most recent Term A Borrowing Base Certificate delivered by
Borrower to the Administrative Agent, except any Ineligible Term A Borrowing
Base Collateral.

          "Eligible Unbilled Accounts" means Eligible Accounts with respect to
which an invoice, reasonably acceptable to the Administrative Agent in form and
substance, (it being understood that the form of invoice customarily used by the
applicable Credit Party on the Closing Date shall be deemed to be satisfactory
to the Administrative Agent) has not been sent to the applicable Account Debtor.

          "Engines" shall have the meaning ascribed to it in the Aircraft
Mortgage.

          "Entry Date" means the date of the entry of the Final Order.

          "Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include CERCLA; the
Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. Sections
5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.); the
Clean Air Act (42 U.S.C. Sections 7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. Sections 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.

          "Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, arising under or related to
any Environmental Laws, Environmental Permits, or in connection with any Release
or threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.

                                      A-16

<PAGE>

          "Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.

          "ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.

          "ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any "reportable event" described in Section 4043 of ERISA with
respect to a Title IV Plan (other than a "reportable event" to which the 30-day
notice is waived under PBGC Regulation Section 4043); (b) the withdrawal of any
Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any
Credit Party or any ERISA Affiliate from any Multiemployer Plan; (d) the filing
of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f)
the failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within thirty (30) days; (g) any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan described
in Section 4064 of ERISA.

          "Escrow Accounts" shall mean (1) accounts of Borrower or any
Subsidiary, solely to the extent any such accounts hold funds set aside by
Borrower or any Subsidiary to manage the collection and payment of amounts
collected, withheld or incurred by Borrower or such Subsidiary for the benefit
of third parties relating to: (a) federal income tax withholding and backup
withholding tax, employment taxes, transportation excise taxes and security
related charges; (b) any and all state and local income tax withholding,
employment taxes and related charges and fees and similar taxes, charges and
fees, including, but not limited to, state and local payroll withholding taxes,
unemployment and supplemental unemployment taxes, disability taxes, workman's or
workers' compensation charges and related charges and fees; (c) state and local
taxes imposed on overall gross receipts, sales and use taxes, fuel excise taxes
and hotel occupancy taxes; (d) passenger facility fees and charges collected on
behalf of and owed to various administrators, institutions, authorities,
agencies and entities; and (e) other similar federal, state or local taxes,
charges and fees (including without limitation any amount required to be
withheld or collected under applicable law); in each case, held in escrow
accounts, trust funds or other segregated accounts in an aggregate amount for
all of such escrow accounts, trust funds and other segregated accounts not in
excess of $300,000,000, plus accrued interest; provided, that such amount may be
increased upon an increase in any of the foregoing taxes, fees

                                      A-17

<PAGE>

and charges for which Borrower's or any Subsidiary's officers and directors may
have personal liability if not paid; or (2) accounts, capitalized interest
accounts, debt service reserve accounts and other similar accounts or funds
established in connection with the ARB Indebtedness.

          "ESOP" means a Pension Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.

          "Event of Default" has the meaning ascribed to it in Section 8.1.

          "Excess Aggregate Cash On Hand" means, as of any date, the amount by
which the actual Aggregate Cash On Hand as of such date exceeds the minimum
Aggregate Cash On Hand required to be maintained on such date by Section (c) of
Annex G.

          "Excluded Accounts" shall mean (i) the Escrow Accounts, (ii)
Restricted Accounts; and (iii) accounts located outside the United States;
provided, that the aggregate amount held in all such accounts under this clause
(iii) at any time does not exceed $90,000,000.

          "Excluded Collateral" means, collectively, (i) Excluded Accounts
(other than the Credit Parties' rights to receive any excess funds remaining in
the Escrow Accounts following the payment in full of the taxes, fees and charges
payable from such Escrow Accounts and other than the Credit Parties' rights to
receive any excess funds remaining in the Restricted Accounts), (ii) Excluded
Equity, (iii) JV Interests, (iv) Excluded Equipment, (v) Section 1110 Assets,
(vi) Avoidance Actions, (vii) any asset subject to the restrictions on Liens set
forth in Section 5.12(b), (viii) any asset excluded as Collateral in the SGR
Security Agreement (other than any Proceeds thereof that any Credit Party is
entitled to receive) and, to the extent the Administrative Agent has otherwise
consented in writing, in any other Collateral Documents.

          "Excluded Equipment" means Equipment financed, in whole or in part, by
ARB Indebtedness or otherwise to the extent the granting of a security interest
in such Equipment would constitute a breach or violation of a valid and
effective restriction in favor of a third party or give rise to any
indemnification obligations or any right to terminate or commence the exercise
of remedies under such restrictions, in each case, to the extent not subject to
the automatic stay; provided, that "Excluded Equipment" shall not include
Proceeds, substitutions or replacements of Excluded Equipment (unless such
Proceeds, substitutions or replacements would constitute Excluded Equipment),
but only to the extent, and for so long as, such restriction is not terminated
or rendered unenforceable or otherwise deemed ineffective by the Code or any
other applicable law.

          "Excluded Equity" means, collectively, (i) equity interests in the
Excluded Issuers and in any public company and (ii) any Voting Stock in excess
of 65% of the total outstanding Voting Stock of any Foreign Subsidiary of any
Credit Party. For purposes of this definition, "Voting Stock" means, as to any
issuer, the issued and outstanding shares of each class of capital stock or
other membership interests of such issuer entitled to vote (within the meaning
of Treasury Regulations Section 1.956-2(c)(2)).

          "Excluded Issuer" means (i) Delta Air Lines, Inc. and Pan American
World Airways, Inc., GMBH, (ii) Guardant, Inc., (iii) Delta Air Technology,
Ltd., (iv) Aero Assurance Ltd. and (v) New Sky, Ltd.

                                      A-18

<PAGE>

          "Excluded Obligations" means contingent indemnification and expense
reimbursement obligations.

          "Excluded Properties" means the three real properties set forth on
Part 1 of Disclosure Schedule 3.6, the sale of which is permitted in accordance
with the Agreement.

          "Excluded Sales" means (i) the sales of spare engines and related
inventory with respect to the MD-11 aircraft sold prior to the date hereof, (ii)
the sale of the business of DAL Global Services LLC, Delta Technology, LLC,
Delta AirElite Business Jets, Inc., Delta Connection Academy, Inc. and the
technical operations (aircraft maintenance) division of Borrower, (iii) the
disposition of any Skymiles Collateral, (iv) the sale of the reservation
operations of Borrower, (v) the sale or other disposition of Permitted
Investments for cash or in exchange for Permitted Investments and (vi) the sale
of Inventory in the ordinary course of business.

          "Excluded Subsidiaries" means (i) Aero Assurance, Ltd. and its
subsidiaries and (ii) Guardant, Inc.

          "Existing Agent" means GE Capital, in each of its separate capacities
as revolving facility administrative agent, term loan administrative agent and
collateral agent for the lenders under the Existing Credit Agreement.

          "Existing Credit Agreement" means the Credit Agreement, dated as of
November 30, 2004, among Borrower, the other Credit Parties signatory thereto,
GE Capital, as the Existing Agent, and the other Lenders signatory thereto from
time to time, as amended, modified or supplemented prior to the date hereof.

          "Existing Secured Indebtedness" has the meaning ascribed to it in
Section 6.3(a)(v) hereof.

          "Existing Skymiles Facility" means the "Skymiles Facility" as such
term is defined in the Existing Credit Agreement.

          "Existing Skymiles Facility Documents" means the "Skymiles Facility
Documents" as such term is defined in the Existing Credit Agreement.

          "FAA" means the Federal Aviation Administration of the United States
of America, and any successor Governmental Authority.

          "FAA Slots" has the meaning ascribed to it in the SGR Security
Agreement.

          "Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. Section 201 et seq.

          "Fair Market Value" means (a) with respect to any asset or group of
assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the

                                      A-19

<PAGE>

nature and characteristics of such asset, as reasonably determined by the Chief
Financial Officer or Treasurer or, if such asset shall have been the subject of
an appraisal within the last twelve months by an independent third party
appraiser, the basic assumptions underlying which have not materially changed
since its date, the value set forth in such appraisal and (b) with respect to
any marketable Security at any date, the closing sale price of such Security on
the Business Day next preceding such date, as appearing in any published list of
any national securities exchange or the NASDAQ Stock Market or, if there is no
such closing sale price of such Security, the final price for the purchase of
such Security at face value quoted on such Business Day by a financial
institution of recognized standing regularly dealing in Securities of such type
and selected by the Administrative Agent.

          "Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by the Administrative Agent
in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).

          "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

          "Fee Letters" means, collectively, the Arrangement Fee Letter and the
DIP Fee Letter.

          "Fees" means any and all fees payable to the Administrative Agent or
any Lender pursuant to the Agreement or any of the other Loan Documents.

          "Final Order" means an order, approving or authorizing this Agreement
and the other Loan Documents and the incurrence by the Credit Parties hereunder
of post-petition secured and super-priority Indebtedness in an aggregate
principal amount of not less than $1,700,000,000 in accordance with this
Agreement, issued by the Bankruptcy Court in form and substance satisfactory to
the Administrative Agent, the Arrangers and the Requisite Lenders.

          "Financial Covenants" means the financial covenants set forth in Annex
G.

          "Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex E.

          "First Day Orders" means all orders entered by the Bankruptcy Court in
respect of motions filed on the Petition Date or within five Business Days
thereafter.

          "Fiscal Month" means any of the monthly accounting periods of
Borrower.

          "Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.

          "Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.

                                      A-20

<PAGE>

          "Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.

          "Flight Simulators" means the flight simulators and flight training
devices of Borrower or any Subsidiary.

          "Foreign Aviation Authority" shall have the meaning ascribed to it in
the SGR Security Agreement.

          "Foreign Subsidiary" means any Subsidiary which is a "controlled
foreign corporation" within the meaning of the Internal Revenue Code of 1986, as
amended from time to time.

          "Foreign Slots" has the meaning ascribed to it in the SGR Security
Agreement.

          "GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, as such term is further defined in
Annex G to the Agreement.

          "Gates" shall have the meaning ascribed to it in the SGR Security
Agreement.

          "GE Capital" means General Electric Capital Corporation, a Delaware
corporation.

          "GE Capital Commitment Letter" means the Commitment Letter, dated
September 10, 2005, between GE Capital and Borrower.

          "General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, Software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all Books and Records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.

                                      A-21

<PAGE>

          "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including but not limited to, any
Aviation Authority.

          "Granting Lender" has the meaning ascribed to it in Section 11.1(e).

          "Ground Service Equipment" means ground service equipment, de-icers,
ground support equipment, aircraft cleaning devices, materials handling
equipment and other similar equipment used to service equipment.

          "Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness ("primary obligation") of any other Person (the "primary obligor")
in any manner, including any obligation or arrangement of such Person to (a)
purchase or repurchase any such primary obligation, (b) advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, (d) protect the
beneficiary of such arrangement from loss (other than product warranties given
in the ordinary course of business) or (e) indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at
such time of (x) the stated or determinable amount of the primary obligation in
respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.

          "Guarantors" means each Domestic Subsidiary of Borrower, other than
the Excluded Subsidiaries, and each other Person, if any, that executes a
guaranty or other similar agreement in favor of Administrative Agent for the
benefit of the Secured Parties in connection with the transactions contemplated
by the Agreement and the other Loan Documents.

          "Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.

          "Hedging Obligations" has the meaning ascribed to it in the definition
of "Indebtedness."

          "IATA" means International Air Transport Association.

                                      A-22

<PAGE>

          "Indebtedness" means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured (collectively,
"Hedging Obligations"), (h) all Indebtedness referred to above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations, but excluding any claims arising upon the rejection of
unexpired leases and other executory contracts.

          "Indemnified Liabilities" has the meaning ascribed to it in Section
1.11(a).

          "Indemnified Person" has the meaning ascribed to it in Section
1.11(a).

          "Index Rate" means, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
the "prime rate" (or, if The Wall Street Journal ceases quoting a prime rate,
the highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected Interest
Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate.

          "Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.

          "Ineligible Refundable Ticket Accounts" means Accounts arising from
the sale of refundable tickets that are to be used later than 30 days from the
date of issuance of such ticket.

          "Ineligible Term A Borrowing Base Collateral" means any Aircraft,
Engines, Tooling, Flight Simulators, Ground Service Equipment and Spare Parts
that:

                                      A-23

<PAGE>

          (a) is not subject to a valid and enforceable first priority Lien on
     such Collateral (subject only to Permitted Encumbrances and other Liens
     approved by the Administrative Agent) granted by the applicable Credit
     Party in favor of Administrative Agent for the benefit of the Secured
     Parties pursuant to a Collateral Document;

          (b) is not located on premises (i) leased by Credit Party or (ii)
     owned by Credit Party and subject to a valid and enforceable first priority
     Mortgage in favor of Administrative Agent for the benefit of the Secured
     Parties pursuant to a Collateral Document;

          (c) is placed on consignment, is in transit or out for repair, except
     for Collateral (other than Spare Parts) in transit between domestic
     locations of Credit Parties as to which Liens of Administrative Agent for
     the benefit of the Secured Parties have been perfected at origin and
     destination;

          (d) is covered by a negotiable document of title, unless such document
     has been delivered to the Administrative Agent with all necessary
     endorsements,

          (e) is not of a type used in the ordinary course of Credit Parties'
     business;

          (f) as to which any of the representations or warranties pertaining to
     Collateral set forth in the Loan Documents are untrue;

          (g) consists of Hazardous Materials or goods that can be transported
     or sold only with licenses that are not readily available;

          (h) is not covered by casualty insurance required to be maintained
     under the Collateral Documents;

          (i) is subject to any patent or trademark license requiring the
     payment of royalties or fees or requiring the consent of the licensor for a
     sale thereof by the Administrative Agent;

          (j) constitutes Technology Equipment;

          (k) has not been appraised in accordance with Section 5.20 of the
     Agreement; or

          (l) with respect to any Aircraft or Engine, as to which Borrower fails
     to cure a Maintenance Default during the Maintenance Cure Period.

          "Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.

          "Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks, and
Technology.

                                      A-24

<PAGE>

          "Intercompany Notes" has the meaning ascribed to it in Section
6.3(a)(vii).

          "Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date.

          "Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided, that
in the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of such LIBOR
Period; and provided, further that, in addition to the foregoing, each of (x)
the date upon which all of the Commitments have been terminated and the Loans
have been paid in full and (y) the Maturity Date shall be deemed to be an
"Interest Payment Date" with respect to any interest that has then accrued under
the Agreement.

          "Interim Order" means an order, approving or authorizing Loans in an
aggregate principal amount of not less than $1,400,000,000, issued by the
Bankruptcy Court in substantially the form of Exhibit I and otherwise in form
and substance satisfactory to the Administrative Agent and the Arrangers.

          "Inventory" means any "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded Software.

          "Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.

          "Investments" has the meaning ascribed to it in Section 6.2.

          "IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.

          "IRS" means the Internal Revenue Service.

                                      A-25

<PAGE>

          "JV Interests" means any joint venture interest held by any Credit
Party to the extent such Credit Party is restricted from assigning or pledging
such interest pursuant to legally binding arrangements between the joint venture
parties; provided, that "JV Interests" shall not include any Proceeds of such
property.

          "L/C Issuer" has the meaning ascribed to it in Annex B.

          "L/C Cash Collateral Account" means a cash collateral account
maintained at a bank or financial institution acceptable to the Administrative
Agent, subject to a Blocked Account Agreement, into which cash or Cash
Equivalents are deposited pursuant to Annex B.

          "Letter of Credit" means each documentary or standby letters of credit
issued under the Loan Documents for the account of Borrower or any of the Credit
Parties by any L/C Issuer.

          "Letter of Credit Obligations" means the sum, without duplication, of
(i) the amount available for drawing under all outstanding Letters of Credit and
(ii) the aggregate unpaid amount of all outstanding reimbursement obligations in
respect of previous drawings under Letters of Credit.

          "Letter of Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.

          "Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement and, if any such Lender shall decide to assign all or any
portion of the Obligations in accordance with Section 11.1(a), such term shall
include any assignee of such Lender.

          "Liabilities" means all claims, actions, suits, judgments, damages,
losses, liability, obligations, responsibilities, fines, penalties, sanctions,
costs, fees, taxes, commissions, charges, disbursements and expenses, in each
case of any kind or nature (including interest accrued thereon or as a result
thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect,
contingent, consequential, actual, punitive, treble or otherwise.

          "LIBOR Business Day" means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.

          "LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.

          "LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to the Administrative Agent as set forth in
Section 1.5(e); provided, that the foregoing provision relating to LIBOR Periods
is subject to the following:

                                      A-26

<PAGE>

          (a) if any LIBOR Period would otherwise end on a day that is not a
     LIBOR Business Day, such LIBOR Period shall be extended to the next
     succeeding LIBOR Business Day unless the result of such extension would be
     to carry such LIBOR Period into another calendar month in which event such
     LIBOR Period shall end on the immediately preceding LIBOR Business Day;

          (b) any LIBOR Period that would otherwise extend beyond the Maturity
     Date shall end on or prior to such date;

          (c) any LIBOR Period that begins on the last LIBOR Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such LIBOR Period) shall end on the
     last LIBOR Business Day of a calendar month; and

          (e) Borrower shall select LIBOR Periods so that there shall be no more
     than 5 separate LIBOR Loans in existence at any one time.

          "LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by the Administrative Agent equal to the offered rate for deposits in
United States Dollars for the applicable LIBOR Period that appears on Telerate
Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR Business Day
next preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used). If
such interest rates shall cease to be available from Telerate News Service, the
LIBOR Rate shall be determined from such financial reporting service or other
information as shall be mutually acceptable to the Administrative Agent and
Borrower.

          "License" means any Copyright License, Patent License, Trademark
License or other similar license of rights or interests now held or hereafter
acquired by any Credit Party.

          "Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any capital
lease or conditional sale agreement, and any financing lease having
substantially the same economic effect as any of the foregoing).

          "Litigation" has the meaning ascribed to it in Section 3.13.

          "Loan" means any loan made by any Lender pursuant to this Agreement.

          "Loan Account" has the meaning ascribed to it in Section 1.10.

          "Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Fee Letters, Borrowing Base Certificates and all other
agreements, instruments, documents and certificates executed and delivered to,
or in favor of, the Administrative Agent or any Lender in connection with the
Agreement and the transactions contemplated thereby and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written agreements whether heretofore, now or
hereafter executed by or on behalf of any Credit Party and delivered to the
Administrative Agent or any Lender in

                                      A-27

<PAGE>

connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

          "Maintenance Cure Period" has the meaning ascribed to it in Section
8.1(d).

          "Maintenance Default" has the meaning ascribed to it in Section
8.1(d).

          "Margin Stock" has the meaning ascribed to it in Section 3.10.

          "Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit between Borrower, as Applicant, and GE Capital, as
L/C Issuer, to be executed prior to issuance of any Letter of Credit, in form
and substance reasonably satisfactory to the Administrative Agent.

          "Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit between Borrower, as Applicant, and GE Capital, as L/C Issuer,
to be executed prior to issuance of any Letter of Credit, in form and substance
reasonably satisfactory to the Administrative Agent.

          "Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial or other condition or prospects of (x)
Borrower or (y) the Credit Parties taken as a whole (other than the commencement
of the Cases and events customarily leading up to and following the commencement
of the Cases or otherwise reflected in the operating budget dated September 9,
2005 provided to the Administrative Agent), (ii) the ability of Borrower or
Guarantors to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (iii) the Collateral, the Liens of
Administrative Agent for the benefit of the Secured Parties on the Collateral,
or the priority of such Liens, or (iv) the Administrative Agent's or Lender's
rights and remedies under the Agreement and the other Loan Documents.

          "Material Location" has the meaning ascribed to it in Section 5.8.

          "Material Real Estate Contracts" means (for purposes of the Agreement
only) any lease, usufruct, use agreement, license, permit or other occupancy or
facility use agreement under which a Credit Party is a tenant or counterparty,
that has a remaining term of three (3) years or more as of the Closing Date and
(i) subject to receipt of any necessary consents, could be assigned to another
user for a cash payment in excess $10,000,000 with a novation of such Credit
Party, or (ii) relates to major facilities required for a Credit Party's
operations, the loss of the lease, usufruct, use agreement, license, permit or
other occupancy or facility use agreement with respect thereto would materially
and adversely affect a Credit Party's ability to conduct its business as now
being conducted.

          "Maturity Date" the earliest of (a) Scheduled Maturity Date, (b) the
effective date of a Plan of Reorganization and (c) the date of termination of
Lenders' obligations to permit existing Loans to remain outstanding pursuant to
Section 8.2(b).

                                      A-28

<PAGE>

          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means each of the mortgages, deeds to secured debt, deeds
of trust or other real estate security documents delivered by any Credit Party
to the Administrative Agent on behalf of itself and Lenders with respect to the
Mortgaged Properties, substantially in the form attached as Exhibit D hereto.

          "Mortgage Supporting Documents" means, with respect to a Mortgage for
a parcel of Real Estate, each of the following:

          (i) (i) evidence in form and substance reasonably satisfactory to the
          Administrative Agent that the recording of counterparts of such
          Mortgage in the recording offices specified in such Mortgage will
          create a valid, perfected and enforceable first priority lien on
          property described therein in favor of Administrative Agent for the
          benefit of the Secured Parties (or in favor of such other trustee as
          may be required or desired under local law) subject only to (A)
          Permitted Encumbrances and (B) such other Liens as the Administrative
          Agent may reasonably approve and (ii) an opinion of counsel in each
          state in which any such Mortgage is to be recorded in form and
          substance and from counsel reasonably satisfactory to the
          Administrative Agent;

          (j) if requested by the Administrative Agent in its reasonable
          discretion, (i) a mortgagee's title policy (or policies) or marked-up
          unconditional binder (or binders) for such insurance (or other
          evidence reasonably acceptable to the Administrative Agent proving
          ownership thereof) ("Mortgagee's Title Insurance Policy"), dated a
          date satisfactory to the Administrative Agent, and shall (A) be in an
          amount equal to 110% of the appraised value (determined by reference
          to the initial FIRREA appraisals) of such parcel of Real Estate, (B)
          be issued at ordinary rates, (C) insure that the Lien granted pursuant
          to the Mortgage insured thereby creates a valid first priority Lien on
          such parcel of Real Estate free and clear of all defects and
          encumbrances, except for Permitted Encumbrances and for such defects
          and encumbrances as may be approved by the Administrative Agent, (D)
          name Administrative Agent for the benefit of the Secured Parties as
          the insured thereunder, (E) be in the form of ALTA Loan Policy - 1992
          (or such local equivalent thereof as is reasonably satisfactory to the
          Administrative Agent), (F) contain such endorsements and affirmative
          coverage as the Administrative Agent may request to the extent
          available in the applicable jurisdictions (including but not limited
          to a comprehensive lender's endorsement, a zoning endorsement and a
          floating rate endorsement), (G) be issued by Lawyers Title Insurance
          Corporation, Chicago Title Insurance Company or any other title
          company reasonably satisfactory to the Administrative Agent (including
          any such title companies acting as co-insurers or reinsurers), (H)
          delete the general survey exception, and (I) be otherwise in form and
          substance reasonably satisfactory to the Administrative Agent and (ii)
          a copy of all documents referred to, or listed as exceptions to title,
          in such title policy (or policies) in each case in form and substance
          reasonably satisfactory to the Administrative Agent;

                                      A-29

<PAGE>

          (k) as-built surveys of such parcel of Real Estate certified to and
          received by (in a manner reasonably satisfactory to each of them)
          Administrative Agent for the benefit of the Secured Parties and, if
          the Administrative Agent requires a Mortgage Title Insurance Policy
          pursuant to clause (a) above, the title insurance company issuing the
          Mortgagee's Title Insurance Policy for such Mortgage, dated a date
          reasonably satisfactory to the Administrative Agent and such title
          insurance company, by an independent professional licensed land
          surveyor reasonably satisfactory to the Administrative Agent and such
          title insurance company, which maps or plats and the surveys on which
          they are based shall be made in form and substance reasonably
          satisfactory to the Administrative Agent;

          (l) evidence in form and substance reasonably satisfactory to the
          Administrative Agent that all premiums in respect of each Mortgagee's
          Title Insurance Policy, all recording fees and stamp, documentary,
          intangible or mortgage taxes, if any, in connection with the Mortgage
          have been paid;

          (m) a Phase I environmental report with respect to such parcel of Real
          Estate, dated a date not more than one year prior to November 30,
          2004, showing no material condition of environmental concern and
          otherwise in form and substance reasonably satisfactory to the
          Administrative Agent; and

          (n) such other agreements, documents and instruments in form and
          substance reasonably satisfactory to the Administrative Agent as the
          Administrative Agent deems necessary or appropriate to create,
          register or otherwise perfect, maintain, evidence the existence,
          substance, form or validity of, or enforce a valid and enforceable
          first priority lien on such parcel of Real Estate in favor of
          Administrative Agent for the benefit of the Secured Parties (or in
          favor of such other trustee as may be required or desired under local
          law) subject only to Permitted Encumbrances.

          "Mortgaged Properties" has the meaning ascribed to it in Annex D.

          "Mortgagee's Title Insurance Policy" has the meaning ascribed to it in
the definition of "Mortgage Supporting Documents".

          "Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.

          "Net Capital Expenditures" means, for any period, Capital Expenditures
for such period plus (without duplication) (i) any increases in the aggregate
amount of advances or deposits made in connection with Capital Expenditures
during such period, and (ii) the amount by which the aggregate principal amount
of any Indebtedness incurred pursuant to Section 6.3(a)(i) ("Purchase Money
Debt") was reduced in connection with any refinancing of interim Purchase Money
Debt during such period, minus (without duplication) (x) the aggregate principal
amount of any Purchase Money Debt incurred during such period, including without

                                      A-30

<PAGE>

limitation in connection with any increase in Purchase Money Debt incurred in
connection with any refinancing of interim Purchase Money Debt, and (y) any
decreases in advances or deposits made in connection with Capital Expenditures
during such period.

          "Net Cash Proceeds" means proceeds received by any Credit Party after
the Closing Date in cash or Cash Equivalents from:

          (a) (i) Asset Sales permitted under Section 6.8(a) in excess of
$5,000,000, individually or in the aggregate, for any Fiscal Year (other than
(x) Asset Sales of Aircraft and (y) any single Asset Sale resulting in gross
proceeds not exceeding $5,000), (ii) Asset Sales of any Collateral included in
the Term A Borrowing Base permitted under Section 6.8(c)(ii), (iii) any Excluded
Sales permitted under Section 6.8(d) resulting in gross proceeds in excess of
$50,000,000, individually or in the aggregate, and (iv) any other Asset Sale
(other than (A) any Asset Sale permitted under Sections 6.8(c)(i), (e), (f),
(g), (i), (j), (k), (l), (n) (other than sales of Section 1110 Assets or
Non-1110 Aviation Assets) or (o) or (B) any single Asset Sale resulting in gross
proceeds not exceeding $5,000), in excess of $5,000,000, individually or in the
aggregate, for any Fiscal Year for all such Asset Sales, in each case, net of
(1) the reasonable cash costs of sale, assignment or other disposition, (2)
taxes paid or reasonably estimated to be payable as a result thereof, (3)
reserves provided, to the extent required by GAAP, against any liabilities that
are directly attributed to such Asset Sale (clauses (1), (2) and (3)
collectively referred to herein as the "Sale Costs") and (4) any amount required
to be paid or prepaid on Indebtedness or other obligations (other than the
Obligations) secured by the assets subject to such Asset Sale, or otherwise
required to be repaid as a result of such Asset Sale; provided, that, in the
case of any Asset Sale permitted under Section 6.8(m), "Net Cash Proceeds" shall
be deemed net of the purchase price of the assets subject to such Asset Sale;
and

          (b) Property Loss Event, net of (1) the costs of collection (the
"Collection Costs" and, together with the Sale Costs, "Costs"), (2) the amounts
required to be applied pursuant to the terms of any ARB Indebtedness in respect
of any asset subject thereto, (3) any amounts required to be applied as
described in Section 5.4(d) and (4) any amount required to be paid or prepaid on
Indebtedness or other obligations (other than the Obligations) secured by the
assets subject to such Property Loss Event, or otherwise required to be repaid
as a result of such Property Loss Event;

          provided, that, if the aggregate Costs related to any Asset Sale or
any Property Loss Event exceeds $500,000, evidence of each such Costs shall be
provided to the Administrative Agent, in form and substance reasonably
satisfactory to them.

          "Net Orderly Liquidation Value" shall mean with regard to any Eligible
Aircraft, Eligible Engines, Eligible Spare Parts, Eligible Ground Service
Equipment, Eligible Flight Simulators or Eligible Tooling, the net orderly
liquidation value of such Eligible Aircraft, Eligible Spare Parts, Eligible
Ground Service Equipment, Eligible Flight Simulators or Eligible Tooling, as the
case may be, as determined by reference to the most recent appraisal of the
applicable Credit Party.

          "Non-Funding Lender" has the meaning ascribed to it in Section
11.9(a).

                                      A-31

<PAGE>

          "Non-1110 Agreement" shall mean any agreement related to property that
would have qualified as "equipment," as such term is used in Section 1110(a)(3)
of the Bankruptcy Code if it had been placed in service on or prior to October
22, 1994, including, without limitation, security agreements, mortgages, trusts,
leases, conditional sale agreements or other instruments applicable to such
property.

          "Non-1110 Aviation Assets" shall mean (a) property that would have
qualified as "equipment," as such term is used in Section 1110(a)(3) of the
Bankruptcy Code if it had been placed in service on or prior to October 22, 1994
and all Non-1110 Agreements, to the extent that the Credit Parties are
prohibited from granting liens thereon or assignments thereof under the terms of
any such agreements in effect at the commencement of the Cases (and to the
extent permitted by this Agreement, as such Non-1110 Agreement may be amended,
modified, refinanced or restructured), (b) any other asset with respect to which
the granting of any lien would cause a default, directly or indirectly, of any
such Non-1110 Agreements, (c) any deposits and reserves held or maintained
pursuant to such agreement or (d) property referred to in the previous clause
that the Borrower or any of the Guarantors elects to return to the party
providing financing therefor in exchange for a discharge of the related
indebtedness; provided, that Non-1110 Aviation Assets shall not include any
Proceeds of such property (but only to the extent that the Credit Parties are
entitled to such Proceeds).

          "Non-Stayed Order" means an order of the Bankruptcy Court which is in
full force and effect, as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned.

          "Note" has the meaning assigned to it in Section 1.1(a).

          "Notice of Actionable Default" has the meaning ascribed to it in the
Skymiles Intercreditor Agreement.

          "Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).

          "Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to the Administrative Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement, letter of credit agreement or other
instrument, arising under the Agreement or any of the other Loan Documents. This
term includes all principal, interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.

          "Op Specs" means Operating Specifications issued by the FAA under Part
121 of the Federal Aviation Regulations authorizing an air carrier's operations
to/from/within the United States.

                                      A-32

<PAGE>

          "Orders" means the Interim Order or the Final Order, as applicable.

          "Original Borrowing Base Assets" has the meaning ascribed to it in
Section 1.2(c)(i).

          "Owned Real Estate" has the meaning ascribed to it in Section 3.6(b)
and Section 5.12(a)(iv).

          "Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.

          "Patent Security Agreements" means the Patent Security Agreements made
in favor of Administrative Agent for the benefit of the Secured Parties by each
applicable Credit Party.

          "Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.

          "PBGC" means the Pension Benefit Guaranty Corporation.

          "Pension Plan" means a Plan which is an "employee pension benefit
plan" described in Section 3(2) of ERISA.

          "Permits" has the meaning ascribed to it in Section 3.24.

          "Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases (other than leases of aircraft) to which any Credit Party is a
party as lessee made in the ordinary course of business; (d) workers',
mechanics' or similar liens arising in the ordinary course of business, so long
as such Liens are inchoate and unperfected and attach only to Tooling, Fixtures
and/or real estate or being contested in accordance with Section 5.2(b); (e)
carriers', warehousemen's, suppliers' or other similar possessory liens arising
in the ordinary course of business so long as such Liens are inchoate and
unperfected and attach only to Inventory or being contested in accordance with
Section 5.2(b); (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(i); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any real estate or interests of any Credit Party in real estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use or the value of any parcel of Owned

                                      A-33

<PAGE>

Real Estate; (i) presently existing or hereafter created Liens in favor of
Administrative Agent for the benefit of the Secured Parties; (j) statutory and
common law landlords' liens under leases to which any Credit Party is a party
(subject to the requirements of Section 5.8); (k) (i) leases, subleases,
licenses, permits and similar use rights, entered into in the ordinary course of
business with respect to the Owned Real Estate, that are by their express terms
subject and subordinate to Administrative Agent's Liens, for the benefit of
Secured Parties, in the Owned Real Estate, and do not, in the aggregate,
materially detract from the value of the any parcel of Owned Real Estate and
(ii) leases, subleases, licenses, permits and similar use rights, entered into
in the ordinary course of business with respect to any leased real estate, to
the extent they are not prohibited by the Collateral Documents and would not
have a Material Adverse Effect and would not materially and adversely affect the
Administrative Agent's Liens, for the benefit of Secured Parties, in Collateral
stored or located at such location; (l) with respect to Real Estate, other
defects and encumbrances as may be approved by the Administrative Agent,
including, with respect to the Eligible Real Estate, any matters shown as title
exceptions in the Mortgagee's Title Insurance Policy, (m) liens imposed by
applicable law on the assets of any Credit Party located at an airport for the
benefit of an Aviation Authority; (n) Liens (including leases) permitted
pursuant to the Aircraft Mortgage and (o) subject, with respect to Blocked
Accounts, to the Blocked Account Agreements, Liens in favor of depositary banks
(including set-off rights) arising as a matter of law.

          "Permitted Investments" means Investments made in accordance with the
Investment Guidelines set forth on Annex K.

          "Permitted Liens" means (i) Liens granted by the Credit Parties under
the Collateral Documents and (ii) any other Liens permitted to be created or
assumed or to exist pursuant to Section 6.7 of this Agreement.

          "Permitted Prepetition Payment" means a payment (as adequate
protection or otherwise) on account of any Claim against any Credit Party
arising or deemed to have arisen prior to the Petition Date, which payments are
(i) authorized by the Bankruptcy Court pursuant to First Day Orders or other
Non-Stayed Orders reasonably satisfactory to the Administrative Agent in amounts
approved by the Bankruptcy Court and the Administrative Agent, (ii) made
pursuant to an agreement relating to Section 1110 Assets, (iii) made in
connection with the assumption of executory contracts and unexpired leases or
(iv) made in respect of accrued payroll and related expenses and employee
benefits as of the Petition Date.

          "Permitted Refinancing" means, with respect to any Person, any
modification, refinancing, refunding, renewal, extension or replacement
(collectively, a "refinancing") of any Indebtedness of such Person; provided,
that (a) the principal amount (or accreted value, if applicable) thereof does
not exceed 100% (or, to the extent no payment of principal thereof (except upon
acceleration) is required on or prior to the Scheduled Maturity Date, 105%) of
the principal amount (or accreted value, if applicable) of the Indebtedness so
refinanced, except by an amount equal to the unpaid accrued interest and premium
thereon; (b) such refinancing has a final maturity date equal to or later than
the final maturity of the Indebtedness being refinanced, (c) such refinancing
does not reduce the weighted average life to maturity of the Indebtedness being
refinanced, (d) if the Indebtedness being refinanced is subordinated in right of
payment to the Obligations, such refinancing is subordinated in right of payment
to the Obligations on terms

                                      A-34

<PAGE>

at least as favorable to Lenders as those contained in the documentation
governing the Indebtedness being refinanced. Permitted Refinancings shall
include any refinancing financed with proceeds from or exchanges into Stock
issued by Borrower.

          "Permitted Reinvestment Collateral" means, with respect to any
Collateral, (i) replacement assets useful in Borrower's (or, in the case of any
asset owned by any Subsidiary, such Subsidiary's) business or, in the case of
any Property Loss Event, repairs to the applicable Collateral, (ii) in the case
of any Property Loss Event with respect to any Collateral included in the Term A
Borrowing Base (other than Aircraft or Engines), replacement assets consisting
of like-kind assets and the Allocated Amount for which exceeds the Allocated
Amount for the Original Borrowing Base Assets after replacement or repair, as
the case may be, and (iii) in the case of Aircraft or Engines, Replacement
Aircraft or Replacement Engines, as the case may be; provided, that, in each
case, any replacement asset shall be subject to a first priority Lien of
Administrative Agent for the benefit of Secured Parties to the extent that the
original asset was subject to a first priority Lien of Administrative Agent for
the benefit of Secured Parties.

          "Permitted Secured Financing" has the meaning ascribed to it in
Section 6.3(a)(v) hereof.

          "Permitted Subordinated Indebtedness" means any unsecured Indebtedness
of any Delta Company that (a) is expressly subordinated to the prior payment in
full in cash of the Obligations on terms reasonably acceptable to the
Administrative Agent, (b) will not mature prior to the date that is ninety-one
(91) days after the Scheduled Maturity Date, and (c) does not require payments
of principal prior to the date which is ninety-one (91) days after the Scheduled
Maturity Date of the Term Loan, except pursuant to acceleration.

          "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).

          "Petition Date" has the meaning ascribed to it in the Preamble.

          "Physical Aircraft Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Aircraft or Eligible
Engines, including but not limited to, taking at least the following actions:
(i) reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to such Aircraft or Engines; and
(iii) checking other sources, such as manufacturers, other airlines and U.S.
government procurement data, for orderly liquidation prices of such Aircraft or
Engines.

          "Physical Ground Service Equipment Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Ground Service Equipment, including but not limited to, taking at least the
following actions: (i) reviewing the most recent Collateral Report; (ii)
reviewing the Appraiser's internal value database for values applicable to such
Ground Service Equipment; (iii) checking other sources, such as manufacturers,
other airlines and U.S. government procurement data, for orderly liquidation

                                      A-35

<PAGE>

prices of such Ground Service Equipment and (iv) physical inspection of such
Ground Service Equipment.

          "Physical Flight Simulator Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Flight Simulators, including but not limited to, taking at least the following
actions: (i) reviewing the most recent Collateral Report; (ii) reviewing the
Appraiser's internal value database for values applicable to such Flight
Simulators; (iii) checking other sources, such as manufacturers, other airlines
and U.S. government procurement data, for orderly liquidation prices of such
Flight Simulators and (iv) physical inspection of such Flight Simulators.

          "Physical Spare Parts Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Spare Parts,
including but not limited to, taking at least the following actions: (i)
reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to Spare Parts; (iii) developing a
representative sampling of a reasonable number of the different Spare Parts for
which a market check will be conducted; (iv) checking other sources, such as
manufacturers, other airlines, U.S. government procurement data and airline
parts pooling price lists, for orderly liquidation prices of the sample parts
referred to in clause (iii); (v) visiting the Designated Spare Parts Locations
selected by the Appraiser where the Spare Parts are kept by any Credit Party;
(vi) conducting a limited review of the inventory reporting system applicable to
the Spare Parts, including checking information reported in such system against
information determined through physical inspection pursuant to the preceding
clause (v); and (vii) reviewing a sampling of the Spare Parts serviceability
tags, books and records (including tear-down reports). The physical sampling
will be completed at the necessary Designated Spare Parts Locations where in the
aggregate up to 80% (by measure of appraised NOLV) of the Pledged Spare Parts
are kept by the Credit Parties.

          "Physical Tooling Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Tooling, including
but not limited to, taking at least the following actions: (i) reviewing the
most recent Collateral Report; (ii) reviewing the Appraiser's internal value
database for values applicable to such Tooling; (iii) checking other sources,
such as manufacturers, other airlines and U.S. government procurement data, for
orderly liquidation prices of such Tooling and (iv) physical inspection of such
Tooling.

          "Plan" means, at any time, a Pension Plan, ESOP, Multiemployer Plan,
Qualified Plan, Title IV Plan or Retiree Welfare Plan that any Credit Party or
ERISA Affiliate maintains or to which such Credit Party contributes or has an
obligation to contribute.

          "Plan of Reorganization" means a plan of reorganization in the Cases
under chapter 11 of the Bankruptcy Code.

          "Pledged Collateral" means all of the following property now owned or
at anytime acquired by a Credit Party or in which such Credit Party now has or
at any time in the future may acquire any right, title or interest:

                                      A-36

<PAGE>

          (o) the Pledged Shares and the certificates representing the Pledged
     Shares, and all dividends, distributions, cash, instruments and other
     property or proceeds from time to time received, receivable or otherwise
     distributed in respect of or in exchange for any or all of the Pledged
     Shares; and

          (p) such portion, as determined by Administrative Agent as provided in
     Section 10.4(j)(v) of this Agreement, of any additional shares of stock of
     a Pledged Entity from time to time acquired by Credit Party in any manner
     (which shares shall be deemed to be part of the Pledged Shares), and the
     certificates representing such additional shares, and all dividends,
     distributions, cash, instruments and other property or proceeds from time
     to time received, receivable or otherwise distributed in respect of or in
     exchange for any or all of such stock; and

          (q) the Pledged Indebtedness and the promissory notes or instruments
     evidencing the Pledged Indebtedness, and all interest, cash, instruments
     and other property and assets from time to time received, receivable or
     otherwise distributed in respect of the Pledged Indebtedness; and

          (r) all additional Indebtedness arising after the date hereof and
     owing to Credit Party and evidenced by promissory notes or other
     instruments, together with such promissory notes and instruments, and all
     interest, cash, instruments and other property and assets from time to time
     received, receivable or otherwise distributed in respect of that
     Indebtedness.

          "Pledged Entity" means an issuer of Pledged Shares or Pledged
Indebtedness.

          "Pledged Indebtedness" means the Indebtedness evidenced by promissory
notes and instruments listed on Part 2 of Disclosure Schedule 10.4 hereto.

          "Pledged Shares" means those shares listed on Part 1 of Disclosure
Schedule 10.4 hereto.

          "Pledged Spare Parts" means Spare Parts which are maintained by or on
behalf of any Credit Party at a Designated Spare Parts Location.

          "Post-Petition Skymiles Facility" means the provisions related to the
Advance Payments (as defined in the Post-Petition Skymiles Facility Documents)
in the Post-Petition Skymiles Facility Documents.

          "Post-Petition Skymiles Facility Documents" means the "SkyMiles
Documents" as defined in the Skymiles Intercreditor Agreement.

          "Prepayment Date" means, with respect to any Net Cash Proceeds from
any Collateral, the earlier of (i) the date occurring 180 days after the date on
which such Net Cash Proceeds were deposited into the Cash Collateral Account
(unless, prior to such date, the applicable Credit Party has (A) acquired any
Replacement Borrowing Base Asset, (B) entered into an agreement for such
acquisition or (C) commenced the construction of the Replacement Borrowing Base
Assets or the repair of the Original Borrowing Base Assets) and (ii) the date
that

                                      A-37

<PAGE>

is five (5) Business Days after the date on which Borrower shall have notified
the Administrative Agent of Borrower's determination not to acquire replacement
assets useful in any Credit Party's business (or, in the case of a Property Loss
Event, not to effect repairs).

          "Primary Routes" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Primary Slots" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any
asset, (b) any and all payments (in any form whatsoever) made or due and payable
to any Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of such
property by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Credit Party against third parties
(i) for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Credit Party against third parties with respect to any litigation or dispute
concerning such property including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, such property, (e) all amounts collected on, or
distributed on account of, other property, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of such
property and all rights arising out of such property.

          "Projections" means Borrower's forecasted consolidated (a) balance
sheets, (b) profit and loss statements and (c) cash flow statements consistent
with the historical Financial Statements of Borrower (other than adjustments
related to the impact of the Cases), together with appropriate supporting
details and a statement of underlying assumptions.

          "Property Loss Event" means (a) any loss of or damage to property of
any Credit Party that results in the receipt by such Person of proceeds of
insurance in excess of $5,000,000, individually or in the aggregate, (b) any
taking of property of any Credit Party that results in the receipt by such
Person of a compensation payment in respect thereof that exceeds $5,000,000,
individually or in the aggregate, or (c) an "Event of Loss" (as such term is
defined in the Aircraft Mortgage or the Spare Parts Mortgage).

          "Proposed Change" has the meaning ascribed to it in Section 13.2(c).

          "Pro Rata Share" means with respect to all matters relating to any
Lender (a) with respect to the Term Loan A, the percentage obtained by dividing
(i) the Term A Commitment of that Lender by (ii) the aggregate Term A
Commitments of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to Section 11.1, (b) with respect to the Term Loan B, the
percentage obtained by dividing (i) the Term B Commitment of that Lender by (ii)
the

                                      A-38

<PAGE>

aggregate Term B Commitments of all Lenders as such percentage may be adjusted
by assignments permitted pursuant to Section 11.1, (c) with respect to the Term
Loan C, the percentage obtained by dividing (i) the Term C Commitment of that
Lender by (ii) the aggregate Term C Commitments of all Lenders as such
percentage may be adjusted by assignments permitted pursuant to Section 11.1,
(d) with respect to all Loans, the percentage obtained by dividing (i) the
aggregate Commitments of that Lender by (ii) the aggregate Commitments of all
Lenders and, on and after the Maturity Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of all Loans held by that Lender
by (ii) the outstanding principal balance of all Loans held by all Lenders, in
each case, as any such percentages may be adjusted by assignments permitted
pursuant to Section 11.1.

          "Purchase Amount" has the meaning ascribed to it in Section 13.2(c).

          "Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.

          "Real Estate" has the meaning ascribed to it in Section 3.6(b).

          "Regulated Subsidiary" means each of Comair Holdings, LLC and Crown
Rooms, Inc.

          "Reinvestment Deferred Amount" has the meaning ascribed to it in
Section 1.2(c)(ii).

          "Reinvestment Event" means the date on which the Net Cash Proceeds of
(x) any Asset Sale of assets not included in the Term A Borrowing Base or (y)
any Property Loss Event, which in each case are deposited in the Cash Collateral
Account.

          "Reinvestment Notice" means a written notice executed by the Chief
Financial Officer of Borrower stating that no Event of Default has occurred and
is continuing and that Borrower (directly or indirectly through one of the
Guarantors or the applicable Subsidiary) intends and expects to use the
Reinvestment Deferred Amount for Permitted Reinvestment Collateral as specified
therein.

          "Reinvestment Prepayment Date" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, (i) involving any Collateral (other than in
respect of Collateral subject to the Aircraft Mortgage), the earliest of (a) the
date occurring 180 days after such Reinvestment Event, unless, prior to any such
date, Borrower or the applicable Subsidiary has (x) entered into an agreement
for the acquisition of Permitted Reinvestment Collateral or (y) commenced the
construction of Permitted Reinvestment Collateral or the repair of the original
assets constituting Permitted Reinvestment Collateral, (b) the date that is five
(5) Business Days after the date on which Borrower shall have notified the
Administrative Agent of Borrower's determination not to acquire Permitted
Reinvestment Collateral with all or any portion of the relevant Reinvestment
Deferred Amount for such Net Cash Proceeds and (c) the occurrence of any Event
of Default, (ii) arising from a Property Loss Event involving any Aircraft or
Engine, the Loss Payment Date (as defined in the Aircraft Mortgage), or (iii)
arising from a Property Loss Event involving any Engine (not involving the
related Airframe (as defined in the Aircraft

                                      A-39

<PAGE>

Mortgage)), the date upon which such Engine is required to be replaced in
accordance with Section 7.05(b) of the Aircraft Mortgage.

          "Reinvestment Release Request" means a written notice executed by the
Chief Financial Officer of Borrower stating that no Event of Default has
occurred and is continuing and that Borrower (directly or indirectly through one
of the Guarantors or the applicable Subsidiary) requests the release of the
Reinvestment Deferred Amount from the Cash Collateral Account for Permitted
Reinvestment Collateral as specified therein.

          "Related Person" means, with respect to any Person, any Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Person.

          "Relationship Bank" has the meaning ascribed to it in Section (b) of
Annex C.

          "Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.

          "Replacement Aircraft" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Replacement Borrowing Base Assets" has the meaning ascribed to it in
Section 1.2(c)(i).

          "Replacement Engine" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Replacement Lender" has the meaning ascribed to it in Section
1.14(e).

          "Requirement of Law" means, with respect to any Person, the common law
and all federal, state, local and foreign laws, treaties, rules and regulations,
orders, judgments, decrees and other legal requirements or determinations of any
Governmental Authority or arbitrator, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

          "Requisite Lenders" means Lenders having 51% or more of the aggregate
outstanding amount of all Loans.

          "Requisite Term A Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan A.

          "Requisite Term B Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan B.

          "Requisite Term C Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan C.

                                      A-40

<PAGE>

          "Reserves" means (a) reserves established by the Administrative Agent
from time to time in its reasonable credit judgment, against Eligible Tooling,
Eligible Aircraft, Eligible Engines, Eligible Real Estate, Eligible Spare Parts,
Eligible Flight Simulators and Eligible Ground Service Equipment, including, but
not limited to, pursuant to Section 5.8, and (b) reserves established by the
Administrative Agent from time to time in its reasonable credit judgment against
Eligible Accounts, Eligible Unbilled Accounts and Eligible Refundable Ticket
Accounts including, but not limited to, a reserve in the amount of Fifty Million
Dollars ($50,000,000) for maintenance of Collateral and liquidation expenses and
for the Carve-Out. Without limiting the generality of the foregoing, Reserves
established to ensure the payment of accrued Interest Expenses or Indebtedness
shall be deemed to be a reasonable exercise of the Administrative Agent's credit
judgment.

          "Restricted Accounts" means (i) the Citibank Cash Collateral Account;
(ii) the accounts identified as Restricted Accounts on Disclosure Schedule 3.19;
and (iii) any deposit account holding cash and cash equivalents subject to Liens
permitted under Section 6.7(j) (except to the extent securing any obligations
under the Post-Petition Skymiles Facility) or Section 6.7(k) or securing surety
bonds permitted under Section 6.3(a)(xiv).

          "Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Permitted Subordinated Indebtedness or the
Post-Petition Skymiles Facility; and (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter
outstanding.

          "Retiree Welfare Plan" means, at any time, a Plan which is an
"employee welfare benefit plan" as described in Section 3(1) of ERISA that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.

          "Routes" has the meaning ascribed to it in the SGR Security Agreement.

          "S&P" means Standard & Poor's Ratings Group.

          "Scheduled Maturity Date" means March 16, 2008.

          "Sell" means, with respect to any property, to sell, convey, transfer,
assign, license, lease or otherwise dispose of, any interest therein or to
permit any Person to acquire any such interest, including, in each case, through
a Sale and Leaseback Transaction or through a sale, factoring at maturity,
collection of or other disposal, with or without recourse, of any notes

                                      A-41

<PAGE>

or accounts receivable. Conjugated forms thereof and the noun "Sale" have
correlative meanings.

          "Section 1110 Agreement" means any agreement related to property that
qualifies as "equipment," as such term is used in Section 1110(a)(3) of the
Bankruptcy Code, including, without limitation, security agreements, mortgages,
trusts, leases, conditional sale agreements or other instruments applicable to
such property.

          "Section 1110 Assets" shall mean (a) property that qualifies as
"equipment," as such term is used in Section 1110(a)(3) of the Bankruptcy Code
and all Section 1110 Agreements, to the extent that the Credit Parties are
prohibited from granting liens thereon or assignments thereof under the terms of
any Section 1110 Agreement in effect at the commencement of the Cases (and, to
the extent permitted by this Agreement), as such Section 1110 Agreement may be
amended, modified, refinanced or restructured) under which the applicable
secured party, lessor or seller is entitled to the protections afforded under
Section 1110 of the Bankruptcy Code with respect to such property or agreements,
(b) any other asset with respect to which the granting of any lien would cause a
default, directly or indirectly, of any Section 1110 Agreement, (c) any deposits
and reserves held or maintained pursuant to such agreement or (d) property
referred to in the previous clause that the Borrower or any of the Guarantors
elects to return to the party providing financing therefor in exchange for a
discharge of the related indebtedness; provided, that Section 1110 Assets shall
not include any Proceeds of such property (but only to the extent that the
Credit Parties are entitled to such Proceeds).

          "Secured Obligations" means, in the case of Borrower, the Obligations
and, in the case of any other Credit Party, the obligations of such Credit Party
under the Guaranties and the other Loan Documents to which it is a party.

          "Secured Parties" means the Lenders, the Administrative Agent, any L/C
Issuer and any other holder of any Secured Obligation.

          "Security" means any Stock, voting trust certificate, bond, debenture,
note or other evidence of Indebtedness, whether secured, unsecured, convertible
or subordinated, or any certificate of interest, share or participation in, any
temporary or interim certificate for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing, but shall not
include any evidence of the Obligations.

          "Settlement Date" has the meaning ascribed to it in Section 11.9(a).

          "SGR Cash Collateral Account" means a cash collateral account
maintained at a bank or financial institution acceptable to the Administrative
Agent, subject to a Blocked Account Agreement, into which cash or Cash
Equivalents are deposited pursuant to Section 8.1(l).

          "SGR Security Agreement" means the Slot, Gate and Route Security and
Pledge Agreement from Borrower in favor of the Administrative Agent for the
benefit of the Secured Parties substantially in the form of Exhibit E hereto, as
amended, modified or supplemented from time to time.

                                      A-42
<PAGE>

          "Skymiles Agent" has the meaning ascribed to it in the Skymiles
Intercreditor Agreement.

          "Skymiles Collateral" has the meaning ascribed to it in the Skymiles
Intercreditor Agreement.

          "Skymiles Collateral Documents" has the meaning ascribed to it in the
Skymiles Intercreditor Agreement.

          "Skymiles Intercreditor Agreement" means the Intercreditor Agreement
of even date herewith entered into by and among Amex and the Administrative
Agent in form and substance satisfactory to the Arrangers.

          "Slots" has the meaning ascribed to it in the SGR Security Agreement.

          "Slot Utilization" means, with respect to any Slot, (a) a Slot which
is used for a take-off or landing operation; (b) if, by regulation or other
regulatory notice, the FAA considers such Slot as "used" for purposes of the
Slot Utilization Regulations, regardless whether or not such Slot was, in fact,
used (e.g., holidays, labor actions); (c) if, by waiver, the FAA considers such
Slot as "used" for purposes of the Slot Utilization Regulations; or (d) if the
FAA otherwise waives the utilization requirement of the Slot Utilization
Regulations.

          "Slot Utilization Regulations" has the meaning ascribed to it in
Section 5.14(a).

          "Software" shall mean computer programs whether in source code or
object code form, together with all related documentation.

          "Spare Parts" means all of the Spare Parts as defined in the Spare
Parts Mortgage.

          "Spare Parts Mortgage" means the Spare Parts Security Agreement
substantially in the form of Exhibit F entered into by and among the
Administrative Agent for the benefit of the Secured Parties and each Credit
Party that is a signatory thereto, in each case, as amended, modified or
supplemented from time to time.

          "SPC" has the meaning ascribed to it in Section 11.1(e).

          "SPV" means any special purpose funding vehicle identified as such in
a writing by any Lender to the Administrative Agent.

          "Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).

          "Stockholder" means, with respect to any Person, each holder of Stock
of such Person.

                                      A-43

<PAGE>

          "Subsidiary" means, with respect to any Person, (a) any domestic
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than 50% of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any domestic partnership or limited
liability company in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of Borrower.

          "Supermajority Term A Lenders" means Lenders having (a) 66-2/3% or
more of the Term A Commitments of all Lenders, or (b) if the Term A Commitments
have been terminated, 66-2/3% or more of the aggregate outstanding amount of the
Term Loan A.

          "Super-Priority Claim" shall mean a claim against any Credit Party in
any of the Cases which is an administrative expense claim having priority over
any or all administrative expenses of the kind specified in sections 503(b) or
507(b) of the Bankruptcy Code.

          "Supporting Route Facilities" has the meaning ascribed to it in the
SGR Security Agreement.

          "Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of the Administrative Agent or a Lender by the
jurisdictions under the laws of which the Administrative Agent and Lenders are
organized or conduct business or any political subdivision thereof.

          "Technology" means, collectively, all designs, formulas, algorithms,
procedures, methods, techniques, ideas, know-how, programs, subroutines, tools,
inventions, creations, improvements, works of authorship, Software, other
similar materials, and all recordings, graphs, drawings, reports, analyses,
other writings, and any other embodiment of the above, in any form whether or
not specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in or displayed by any of the foregoing, or used or
useful in the design, development, reproduction, maintenance or modification of
any of the foregoing.

          "Technology Equipment" means technology assets including mainframe
computers, servers, general computer equipment, printers, monitors, hard drives,
memory, storage devices and call centers/ACD systems but excluding Flight
Simulators, as more fully described in the appraisal with respect thereto
prepared as of July 14, 2004 by American Appraisal Associates.

          "Term A Borrowing Base" means, as of any date of determination by the
Administrative Agent, from time to time, an amount equal to the sum at such time
of:

                                      A-44

<PAGE>

          (a)  up to 80% of the book value of the Credit Parties' Eligible
               Accounts as of the date set forth in the most recently delivered
               Borrowing Base Certificate; plus

          (b)  up to 50% of the book value of the Credit Parties' Eligible
               Unbilled Accounts as of the date set forth in the most recently
               delivered Borrowing Base Certificate; plus

          (c)  the lesser of 50% of the book value of the Credit Parties'
               Eligible Refundable Ticket Accounts as of the date set forth in
               the most recently delivered Borrowing Base Certificate and
               $30,000,000; plus

          (d)  the lesser of 50% of the Fair Market Value of Eligible Real
               Estate and $100,000,000, plus

          (e)  the lesser of 50% of the Net Orderly Liquidation Value of
               Eligible Aircraft (other than the Aircraft described in clause
               (f) below) and $250,000,000, plus

          (f)  the lesser of 30% of the Net Orderly Liquidation Value of
               Eligible Aircraft consisting of Comair CRJ-100ERs aircraft and
               $13,500,000; plus

          (g)  the lesser of 40% of the half life Net Orderly Liquidation Value
               of Eligible Engines consisting of the Comair CF34-3A1 engines and
               CF34-3B1 engines and $13,500,000; plus

          (h)  the lesser of 65% of the half life Net Orderly Liquidation Value
               of Eligible Engines consisting of the Comair CF34-8C1 engines and
               $5,100,000; plus

          (i)  the lesser of 50% of the Net Orderly Liquidation Value of
               Eligible Flight Simulators and $25,000,000, plus

          (j)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Spare Parts and $7,000,000, plus

          (k)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Ground Service Equipment and $25,000,000, plus

          (l)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Tooling (excluding Technology Equipment) and
               $25,000,000, plus

          (m)  Cash Collateral Account minus 100% of the aggregate face amount
               of all outstanding Letters of Credit,

in each case, less any Reserves established by the Administrative Agent at such
time and provided, that the availability from the sum of clauses (a), (b) and
(c) above shall not exceed $400,000,000 at any time.

                                      A-45

<PAGE>

          "Term A Commitment" means (a) as to any Lender with a Term A
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan A as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term A
Commitment, the aggregate commitment of all Lenders to make the Term Loan A,
which aggregate commitment shall be Six Hundred Million Dollars ($600,000,000)
on the Closing Date. After advancing the Term Loan A, each reference to a
Lender's Term A Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan A.

          "Term A Lenders" means, as of the date of determination, those Lenders
having Term A Commitments.

          "Term A Termination Date" means the date on which (a) the Term Loan A
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan A pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term A
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term B Commitment" means (a) as to any Lender with a Term B
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan B as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term B
Commitment, the aggregate commitment of all Lenders to make the Term Loan B,
which aggregate commitment shall be Six Hundred Million Dollars ($600,000,000)
on the Closing Date. After advancing the Term Loan B, each reference to a
Lender's Term B Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan B.

          "Term B Lenders" means, as of the date of determination, those Lenders
having Term B Commitments.

          "Term B Termination Date" means the date on which (a) the Term Loan B
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan B pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term B
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term C Commitment" means (a) as to any Lender with a Term C
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan C as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term C
Commitment, the aggregate commitment of all Lenders to make the Term Loan C,
which aggregate commitment shall be Five Hundred Million Dollars ($500,000,000)
on the Closing Date. After advancing the Term Loan C, each reference to a
Lender's Term C Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan C.

          "Term C Lenders" means, as of the date of determination, those Lenders
having Term C Commitments.

                                      A-46

<PAGE>

          "Term C Termination Date" means the date on which (a) the Term Loan C
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan C pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term C
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term Loan" means the collective reference to the Term Loan A, the
Term Loan B and the Term Loan C.

          "Term Loan A" has the meaning assigned to it in Section 1.1(a).

          "Term Loan B" has the meaning assigned to it in Section 1.1(b).

          "Term Loan C" has the meaning assigned to it in Section 1.1(c).

          "Term Loan Commitment" means each of the Term A Commitments, the Term
B Commitments and the Term C Commitments.

          "Termination Date" means the date on which (a) the Loans have been
repaid in full, (b) all other monetary Obligations (other than Letter of Credit
Obligations and Excluded Obligations) pursuant to the Agreement and the other
Loan Documents have been completely discharged, (c) all Letter of Credit
Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with this Agreement (including Annex B), and (d)
Borrower shall not have any further right to borrow any monies under the
Agreement.

          "Title 49" means Title 49 of the United States Code, which, among
other things, recodified and replaced the Aviation Act of 1958, as amended, and
the regulations promulgated pursuant thereto or any subsequent legislation that
amends, supplements, or supercedes such provisions.

          "Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.

          "Tooling" means tooling inventory, including but not limited to dies,
molds, tooling, casting patterns, gauges, jigs, racks and stands for engines,
cowls, radome and wheels, aircraft jacks, test benches, test equipment, lathes,
welders, grinders, presses, punches and hoists and other similar items (whether
or not completed or fixed or handheld).

          "Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Administrative Agent for the benefit of the Secured
Parties by each applicable Credit Party substantially in the form of Exhibit G.

          "Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.

                                      A-47

<PAGE>

          "Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.

          "Two-Month FAA Reporting Period" means the period for which air
carriers provide slot utilization reports to the FAA pursuant to 14 C.F.R.
Section 93.227(i).

          "Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.

          "Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted all or substantially all of Article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.

          Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.

          Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective

                                      A-48

<PAGE>

successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.

                                      A-49

<PAGE>

                          ANNEX B (SECTION 1.1(A)(IV))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       B-1

<PAGE>

                              ANNEX C (SECTION 1.8)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       C-1

<PAGE>

                            ANNEX D (SECTION 2.1(F))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       D-1

<PAGE>

                            ANNEX E (SECTION 4.1(A))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       E-1

<PAGE>

                            ANNEX F (SECTION 4.1(B))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       F-1

<PAGE>

                             ANNEX G (SECTION 6.10)
                                       TO
                                CREDIT AGREEMENT

                               FINANCIAL COVENANTS

          Borrower shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

     (a) Maximum Net Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Net Capital Expenditures during the any Fiscal
Quarter that exceed in the aggregate the amounts set forth opposite each such
Fiscal Quarter below:

<TABLE>
<CAPTION>
      Fiscal Quarter        Net Capital Expenditures
      --------------        ------------------------
                                  (in millions)
<S>                         <C>
October - December   2005              145
January - March      2006              131
April - June         2006              138
July - September     2006              108
October - December   2006              121
January - March      2007              152
April - June         2007              132
July - September     2007              108
October - December   2007              106
January - March      2008              106
</TABLE>

; provided, however, that the amount of Net Capital Expenditures referenced
above will be increased in any period by the positive amount (if any), equal to
the difference obtained by taking the Net Capital Expenditures limits specified
above for all prior periods minus the actual amount of any Net Capital
Expenditures expended during all such prior periods (the "Carry Over Amount").

     (b) Minimum EBITDAR. At the end of each Fiscal Month set forth below, the
amount equal to the sum of (i) EBITDAR for the 12-month period then ended of
Borrower and its Subsidiaries on a consolidated basis plus (ii) the lesser of
(A) 100% of the Excess Aggregate Cash On Hand as of such date and (B)
$250,000,000 shall not be less than the amount set forth below opposite such
Fiscal Month (the "Required EBITDAR").

                                       G-1

<PAGE>

<TABLE>
<CAPTION>
  Fiscal Month        EBITDAR
  ------------        -------
                   (in millions)
<S>                <C>
October     2005         571
November    2005         628
December    2005         644
January     2006         672
February    2006         681
March       2006         704
April       2006         745
May         2006         779
June        2006         830
July        2006         907
August      2006       1,015
September   2006       1,104
October     2006       1,210
November    2006       1,290
December    2006       1,372
January     2007       1,560
February    2007       1,625
March       2007       1,691
April       2007       1,731
May         2007       1,769
June        2007       1,806
July        2007       1,843
August      2007       1,875
September   2007       1,903
October     2007       1,935
November    2007       1,963
December    2007       1,988
January     2008       2,000
February    2008       2,000
March       2008       2,000
</TABLE>

     (c) Aggregate Cash On Hand. The Delta Companies shall maintain Aggregate
Cash On Hand of at least:

          (i) at all times from the Closing Date through May 31, 2006,
     $750,000,000;

          (ii) at all times from June 1, 2006 through November 30, 2006,
     $1,000,000,000;

          (iii) at all times from December 1, 2006 through February 28, 2007,
     $750,000,000; and

          (iv) at all times thereafter until the Termination Date,
     $1,000,000,000.

                                      G-2

<PAGE>

          If on any date of determination of Aggregate Cash On Hand, any Delta
Company has contractually agreed (i) to post cash collateral for the benefit of
any third party or (ii) that payments otherwise owing to it by a third party
shall be subject to a holdback, in each case in an amount exceeding
$125,000,000, such amount shall not be included in any calculation of Aggregate
Cash On Hand on such date of determination to the extent such obligation to post
cash collateral or such holdback will become effective within ninety (90) days
of such date of determination; provided, that in no event shall any
determination of Aggregate Cash On Hand exclude the amount of cash collateral or
any holdback to be provided (x) in connection with any aircraft or equipment
financing or lease or (y) pursuant to any other agreement with GE Capital or any
of its affiliates until, in each case, actually so provided.

                    Unless otherwise specifically provided herein, any
accounting term used in the Agreement shall have the meaning customarily given
such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP consistently applied. That certain
items or computations are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing. If any "Accounting
Changes" (as defined below) occur and such changes result in a change in the
calculation of the financial covenants, standards or terms used in the Agreement
or any other Loan Document, then Borrower, Administrative Agent and Lenders
agree to enter into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Borrower's and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred
in by Borrower's certified public accountants; (iii) purchase accounting
adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including capitalization of
costs and expenses or payment of pre-Closing Date liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDAR in such period. If Administrative Agent, Borrower and
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If Administrative Agent, Borrower and
Requisite Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change. For purposes of Section 8.1, a breach of a Financial Covenant
contained in this Annex G shall be deemed to have

                                      G-3

<PAGE>

occurred as of any date of determination by Administrative Agent or as of the
last day of any specified measurement period, regardless of when the Financial
Statements reflecting such breach are delivered to Administrative Agent.

                                      G-4

<PAGE>

                            ANNEX H (SECTION 1.1(D))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       H-1

<PAGE>

                             ANNEX I (SECTION 13.10)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       I-1

<PAGE>

                 ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       J-1

<PAGE>

            ANNEX K (FROM ANNEX A - PERMITTED INVESTMENTS DEFINITION)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                                       J-1

<PAGE>

                             ANNEX L (SECTION 5.21)
                                       TO
                                CREDIT AGREEMENT

                             POST-CLOSING CONDITIONS

          In addition to, and not in limitation of, the conditions described in
Section 2.1 of the Agreement, pursuant to Section 5.21, the following items must
be received by the Administrative Agent in form and substance reasonably
satisfactory to the Administrative Agent (it being understood that any document
delivered substantially in the form of the applicable Exhibit hereto shall be
deemed to be in form and substance satisfactory to the Administrative Agent) or
waived in writing by the Administrative Agent within thirty (30) days after the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):

     1.   Security Interests; Filings; Lien Search Results. (a) Evidence
          reasonably satisfactory to the Administrative Agent that (for the
          benefit of Secured Parties) has a valid and perfected first priority
          security interest in the Collateral (or, if applicable, subject to the
          relative priorities set forth in the Collateral Documents), and that
          all documents and instruments (including financing statements under
          the Code) required by law or reasonably requested by the
          Administrative Agent to be filed, registered or recorded in order to
          perfect Secured Parties' security interests in the Collateral shall
          have been filed, registered or recorded, or shall have been delivered
          to the Administrative Agent for filing, registration or recording and
          (b) the results of a recent Lien, tax and judgment search in each
          relevant jurisdiction, including the FAA registry, with respect to the
          Credit Parties, revealing no Liens on any of the assets of the Credit
          Parties, other than Liens permitted hereby and other Liens acceptable
          to the Administrative Agent.

     2.   Control Letters. Control Letters from (a) all issuers of
          uncertificated securities and financial assets held by Borrower, (b)
          all securities intermediaries with respect to all securities accounts
          and securities entitlements of Borrower, and (c) all futures
          commission agents and clearing houses with respect to all commodities
          contracts and commodities accounts held by Borrower, in each case to
          the extent required by the Loan Documents.

     3.   Intellectual Property Security Agreements. Duly executed originals of
          Trademark Security Agreements, Copyright Security Agreements and
          Patent Security Agreements, each signed by each Credit Party which
          owns U.S. registered Trademarks, Copyrights and/or Patents, as
          applicable, all in form and substance reasonably satisfactory to the
          Administrative Agent, together with all instruments, documents and
          agreements executed pursuant thereto.

     4.   Cash Management System; Blocked Account Agreements. Evidence
          satisfactory to Administrative Agent that Cash Management Systems
          complying with Annex C to the Agreement have been established and are
          being maintained in the manner set forth in such Annex C, together
          with copies of duly executed tri-

                                       L-1

<PAGE>

          party blocked account and lock box agreements, all as required by
          Annex C (it being understood that agreements in substantially the same
          form as the Blocked Account Agreements entered into pursuant to the
          Existing Credit Agreement shall be deemed to be in form and substance
          satisfactory to the Administrative Agent).

     5.   Opinions of Counsel. Duly executed originals of opinions of (a) Davis
          Polk & Wardwell, counsel for the Credit Parties and (b) with respect
          to the laws of the State of Georgia, In-House Counsel for the Credit
          Parties, (c) Daugherty, Fowler, Peregrin & Haught, FAA Counsel, (c)
          with respect to the laws of the State of Florida, counsel to the
          Credit Parties reasonably acceptable to the Administrative Agent and
          its counsel, (d) with respect to the laws of the State of Ohio,
          counsel to the Credit Parties reasonably acceptable to the
          Administrative Agent and its counsel, (d) with respect to the laws of
          the Commonwealth of Kentucky, counsel to the Credit Parties reasonably
          acceptable to the Administrative Agent and its counsel, and (e) any
          special, local, regulatory and in-house counsel opinions reasonably
          requested by the Administrative Agent, each in form and substance
          reasonably satisfactory to the Administrative Agent and its counsel
          and each such opinion to include an express statement to the effect
          that the Administrative Agent and Lenders are authorized to rely on
          such opinion.

     6.   Mortgages. Mortgages covering all of the Owned Real Estate (the
          "Mortgaged Properties") together with: (a) evidence that counterparts
          of the Mortgages have been recorded or arrangements reasonably
          satisfactory to the Administrative Agent have been made to record in
          all places to the extent necessary or desirable, in the judgment of
          the Administrative Agent, to create a valid, perfected and enforceable
          first priority lien (subject only to Permitted Encumbrances) on each
          Mortgaged Property in favor of the Administrative Agent for the
          benefit of itself and Term Lenders and (b) an opinion of counsel in
          each state in which any Mortgaged Property is located in form and
          substance and from counsel reasonably satisfactory to the
          Administrative Agent.

     7.   Intercompany Loan Subordination Agreement. Duly executed originals of
          the Intercompany Loan Subordination Agreement, and all instruments,
          documents and agreements executed pursuant thereto.

     8.   FAA Releases. Execution and filing of FAA releases with respect to the
          following: (a) Senior Aircraft Mortgage, (b) Junior Aircraft Mortgage,
          (c) Senior Spare Parts Security Agreement and (d) Junior Spare Parts
          Security Agreement.

     9.   SGR Security Agreement Schedule. Delivery of revised Schedule 5(e) to
          the SGR Security Agreement.

     10.  Payoff Letters/Termination. Payoff letter and termination of the
          Existing Credit Agreement and related security and the Existing
          Skymiles Facility and related security.

                                      L-2

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