Document:

exv10w7

 

Exhibit 10.7

U.S. $100,000,000

SENIOR SECURED CREDIT AGREEMENT

Dated as of October 28, 2002

Among

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

as the Borrower,

SOCIÉTÉ GÉNÉRALE

as Administrative Agent,

SG COWEN SECURITIES CORPORATION

as Lead Arranger and Book Runner,

LEHMAN BROTHERS, INC.

as Syndication Agent,

SALOMON SMITH BARNEY INC.

as Documentation Agent,

and

THE LENDERS NAMED HEREIN

as the Lenders

 

 

	 	 	 	 	 
	 	 	
TABLE OF CONTENTS	Page
	 
	 	 	
ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS	 	 
	Section 1.01	 	
Certain Defined Terms
	 	1
	Section 1.02	 	
Computation of Time Periods
	 	32
	Section 1.03	 	
Accounting Terms; Changes in GAAP
	 	32
	Section 1.04	 	
Classes and Types of Advances
	 	33
	Section 1.05	 	
Miscellaneous
	 	33
	Section 1.06	 	
Recitals
	 	33
	Section 1.07	 	
Senior Indebtedness
	 	33
	 	 	
ARTICLE II	 	 
	 	 	
THE ADVANCES AND THE LETTERS OF CREDIT	 	 
	Section 2.01	 	
The Advances
	 	33
	Section 2.02	 	
Method of Borrowing
	 	35
	Section 2.03	 	
Fees
	 	38
	Section 2.04	 	
Reduction of the Revolving Commitments
	 	39
	Section 2.05	 	
Repayment of Advances on the Maturity Date
	 	40
	Section 2.06	 	
Interest, Late Payment Fee
	 	40
	Section 2.07	 	
Prepayments
	 	41
	Section 2.08	 	
Breakage Costs
	 	43
	Section 2.09	 	
Increased Costs
	 	43
	Section 2.10	 	
Payments and Computations
	 	45
	Section 2.11	 	
Taxes
	 	46
	Section 2.12	 	
Illegality
	 	48
	Section 2.13	 	
Letters of Credit
	 	49
	Section 2.14	 	
Determination of Leverage Ratio and Senior Unsecured Leverage Ratio
	 	51
	Section 2.15	 	
Lender Replacement
	 	52
	Section 2.16	 	
Sharing of Payments, Etc
	 	53
	 	 	
ARTICLE III	 	 
	 	 	
CONDITIONS OF LENDING	 	 
	Section 3.01	 	
Conditions Precedent to the Initial Advance
	 	53
	Section 3.02	 	
Conditions Precedent for Each Borrowing or Letter of Credit
	 	55
	Section 3.03	 	
Conditions as Covenants
	 	56

 

 

	 	 	 	 	 
	 	 	
TABLE OF CONTENTS
(continued)	Page
	 
	 	 	
ARTICLE IV	 	 
	 	 	
REPRESENTATIONS AND WARRANTIES	 	 
	Section 4.01	 	
Existence; Qualification; Partners; Subsidiaries
	 	56
	Section 4.02	 	
Partnership and Corporate Power
	 	57
	Section 4.03	 	
Authorization and Approvals
	 	57
	Section 4.04	 	
Enforceable Obligations
	 	57
	Section 4.05	 	
Parent Common Stock; REIT
	 	57
	Section 4.06	 	
Financial Statements
	 	58
	Section 4.07	 	
True and Complete Disclosure
	 	58
	Section 4.08	 	
Litigation
	 	58
	Section 4.09	 	
Use of Proceeds and Letters of Credit
	 	58
	Section 4.10	 	
Investment Company Act
	 	59
	Section 4.11	 	
Taxes
	 	59
	Section 4.12	 	
Pension Plans
	 	60
	Section 4.13	 	
Condition of Hotel Property; Casualties; Condemnation
	 	60
	Section 4.14	 	
Insurance
	 	60
	Section 4.15	 	
No Burdensome Restrictions; No Defaults
	 	60
	Section 4.16	 	
Environmental Condition
	 	61
	Section 4.17	 	
Legal Requirements, Zoning, Utilities, Access
	 	62
	Section 4.18	 	
Existing Indebtedness
	 	62
	Section 4.19	 	
Ownership; Title; Encumbrances
	 	63
	Section 4.20	 	
Leasing Arrangements
	 	63
	Section 4.21	 	
Franchise Agreements
	 	64
	Section 4.22	 	
Management Agreements
	 	64
	Section 4.23	 	
Intercompany Agreement
	 	64
	Section 4.24	 	
Senior Indebtedness
	 	64
	 	 	
ARTICLE V	 	 
	 	 	
AFFIRMATIVE COVENANTS	 	 
	Section 5.01	 	
Compliance with Laws, Etc
	 	64
	Section 5.02	 	
Preservation of Existence; Separateness, Etc
	 	64
	Section 5.03	 	
Payment of Taxes, Etc
	 	66
	Section 5.04	 	
Visitation Rights; Lender Meeting
	 	66

 

 

	 	 	 	 	 	 	 
	 	 	
TABLE OF CONTENTS
(continued)	 	Page
	 
	Section 5.05	 	
Reporting Requirements
	 	 	66	 
	Section 5.06	 	
Maintenance of Property and Required Work
	 	 	69	 
	Section 5.07	 	
Insurance
	 	 	70	 
	Section 5.08	 	
Interest Rate Agreements
	 	 	70	 
	Section 5.09	 	
Approved Participating Leases and Approved Management Agreements
	 	 	70	 
	Section 5.10	 	
Use of Proceeds
	 	 	70	 
	Section 5.11	 	
Collateral
	 	 	70	 
	Section 5.12	 	
New Subsidiaries
	 	 	71	 
	Section 5.13	 	
Excluded Foreign Subsidiaries
	 	 	71	 
	 	 	
ARTICLE VI

NEGATIVE COVENANTS	 	 	 	 
	Section 6.01	 	
Liens, Etc
	 	 	72	 
	Section 6.02	 	
Indebtedness
	 	 	73	 
	Section 6.03	 	
Agreements Restricting Distributions From Subsidiaries
	 	 	74	 
	Section 6.04	 	
Restricted Payments
	 	 	74	 
	Section 6.05	 	
Fundamental Changes; Asset Dispositions
	 	 	76	 
	Section 6.06	 	
Personal Property Leases
	 	 	76	 
	Section 6.07	 	
Investments and other Property
	 	 	76	 
	Section 6.08	 	
Affiliate Transactions
	 	 	80	 
	Section 6.09	 	
Sale and Leaseback
	 	 	80	 
	Section 6.10	 	
Sale or Discount of Receivables
	 	 	81	 
	Section 6.11	 	
No Further Negative Pledges
	 	 	81	 
	Section 6.12	 	
Material Documents
	 	 	81	 
	Section 6.13	 	
Limitations on Development, Construction, Renovation and Purchase

of Hotel Properties
	 	 	82	 
	 	 	
ARTICLE VII	 	 	 	 
	 	 	
FINANCIAL COVENANTS	 	 	 	 
	Section 7.01	 	
Interest Coverage Ratio
	 	 	82	 
	Section 7.02	 	
Senior Unsecured Interest Coverage Ratio
	 	 	82	 
	Section 7.03	 	
Fixed Charge Coverage Ratio
	 	 	83	 
	Section 7.04	 	
Maintenance of Net Worth
	 	 	83	 

 

 

	 	 	 	 	 	 	 
	 	 	
TABLE OF CONTENTS
(continued)	 	Page
	 
	Section 7.05	 	
Leverage Ratio
	 	 	83	 
	Section 7.06	 	
Senior Unsecured Leverage Ratio
	 	 	85	 
	Section 7.07	 	
Limitations on Secured Indebtedness and Secured Recourse Indebtedness
	 	 	85	 
	Section 7.08	 	
Senior Note Indenture — $200,000,000 9 1/8% Senior Notes
	 	 	86	 
	 	 	
ARTICLE VIII	 	 	 	 
	 	 	
EVENTS OF DEFAULT; REMEDIES	 	 	 	 
	Section 8.01	 	
Events of Default
	 	 	86	 
	Section 8.02	 	
Optional Acceleration of Maturity; Other Actions
	 	 	89	 
	Section 8.03	 	
Automatic Acceleration of Maturity
	 	 	90	 
	Section 8.04	 	
Cash Collateral Account
	 	 	90	 
	Section 8.05	 	
Non-exclusivity of Remedies
	 	 	90	 
	Section 8.06	 	
Right of Set-off
	 	 	91	 
	 	 	
ARTICLE IX	 	 	 	 
	 	 	
AGENCY AND ISSUING BANK PROVISIONS	 	 	 	 
	Section 9.01	 	
Authorization and Action
	 	 	91	 
	Section 9.02	 	
Administrative Agent’s Reliance, Etc
	 	 	92	 
	Section 9.03	 	
Each Agent and Its Affiliates
	 	 	92	 
	Section 9.04	 	
Lender Credit Decision
	 	 	92	 
	Section 9.05	 	
Indemnification
	 	 	93	 
	Section 9.06	 	
Successor Agent and Issuing Banks
	 	 	93	 
	Section 9.07	 	
Arranger, Book Runner, and Other Agents
	 	 	94	 
	 	 	
ARTICLE X	 	 	 	 
	 	 	
MISCELLANEOUS	 	 	 	 
	Section 10.01	 	
Amendments, Etc
	 	 	94	 
	Section 10.02	 	
Notices, Etc
	 	 	96	 
	Section 10.03	 	
No Waiver; Remedies
	 	 	96	 
	Section 10.04	 	
Costs and Expenses
	 	 	96	 
	Section 10.05	 	
Binding Effect
	 	 	96	 
	Section 10.06	 	
Lender Assignments and Participations
	 	 	97	 
	Section 10.07	 	
Indemnification
	 	 	100	 
	Section 10.08	 	
Execution in Counterparts
	 	 	100	 

 

 

	 	 	 	 	 	 	 
	 	 	
TABLE OF CONTENTS
(continued)	 	Page
	 
	Section 10.09	 	
Survival of Representations, Indemnifications, etc
	 	 	100	 
	Section 10.10	 	
Severability
	 	 	101	 
	Section 10.11	 	
Florida Liens
	 	 	101	 
	Section 10.12	 	
Supplemental Guaranties
	 	 	101	 
	Section 10.13	 	
Usury Not Intended
	 	 	101	 
	Section 10.14	 	
GOVERNING LAW
	 	 	102	 
	Section 10.15	 	
CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL102	 	 	 	 
	Section 10.16	 	
Lender Interest Rate Agreements
	 	 	104	 
	Section 10.17	 	
Knowledge of Borrower
	 	 	104	 
	Section 10.18	 	
Lenders Not in Control
	 	 	104	 
	Section 10.19	 	
Headings Descriptive
	 	 	104	 
	Section 10.20	 	
Time is of the Essence
	 	 	104	 
	Section 10.21	 	
No Consequential Damages
	 	 	104	 

 

 

	 	 	 	 	 
	EXHIBITS:	 	 	 	 
	Exhibit A-1	 	
-
	 	Form of Revolving Note
	Exhibit A-2	 	
-
	 	Form of Term Note
	Exhibit B	 	
-
	 	Form of Adjustment Report
	Exhibit C	 	
-
	 	Form of Assignment and Acceptance
	Exhibit D	 	
-
	 	Form of Compliance Certificate
	Exhibit E	 	
-
	 	Form of Environmental Indemnity
	Exhibit F	 	
-
	 	Form of Guaranty
	Exhibit G	 	
-
	 	Form of Notice of Borrowing
	Exhibit H	 	
-
	 	Form of Notice of Conversion or Continuation
	Exhibit I	 	
-
	 	Form of Pledge Agreement
	SCHEDULES:	 	 	 	 

	 	 	 	 	 
	Schedule 1.01(a)	 	
-
	 	Commitments
	Schedule 1.01(b)	 	
-
	 	Initial Properties and Investment Amount
	Schedule 1.01(c)	 	
-
	 	Approved Franchisors
	Schedule 1.01(d)	 	
-
	 	Non-Pledged Ownership Interests
	Schedule 1.01(e)	 	
-
	 	Guarantors
	Schedule 4.01	 	
-
	 	Subsidiaries
	Schedule 4.08	 	
-
	 	Litigation
	Schedule 4.16	 	
-
	 	Environmental Condition
	Schedule 4.17	 	
-
	 	Legal Requirements; Zoning; Utilities; Access
	Schedule 4.18(a)	 	
-
	 	Existing Indebtedness
	Schedule 4.20(a)	 	
-
	 	Approved Participating Leases
	Schedule 4.20(b)	 	
-
	 	Ground Leases
	Schedule 4.21	 	
-
	 	Franchise Agreements
	Schedule 4.22	 	
-
	 	Management Agreements
	Schedule 5.07	 	
-
	 	Insurance

 

 

SENIOR SECURED CREDIT AGREEMENT

     SENIOR SECURED CREDIT AGREEMENT, dated as of October 28, 2002 (the
“Closing Date”) is among MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership, as the Borrower; SOCIÉTÉ GÉNÉRALE, as the
Administrative Agent and the Issuing Bank; SG COWEN SECURITIES CORPORATION, as
Lead Arranger and Book Runner; LEHMAN BROTHERS, INC., as Syndication Agent;
SALOMON SMITH BARNEY INC., as Documentation Agent; and the Lenders.

PRELIMINARY STATEMENTS:

     WHEREAS, the Borrower desires that the Lenders extend certain credit
facilities, the proceeds of which will be used for the purposes set forth in
Section 4.08;

     WHEREAS, the Lenders have agreed to extend such credit facilities as more
specifically described in this Agreement;

     NOW, THEREFORE, in consideration of the foregoing recitals and the
provisions contained in this Agreement, the parties hereto do hereby agree as
follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     Section 1.01
Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

     “Acceptable
Lien” means a security interest which (a) exists in favor of
the Administrative Agent for its benefit and the ratable benefit of the
Lenders, (b) is superior to all other security interests, (c) secures the
Obligations and (d) is perfected and enforceable against all Persons in
preference to any rights of any Person in the property encumbered thereby;
provided that the Lien on any Ownership Interests in an Unconsolidated Entity
may be subordinate to the Liens securing any Indebtedness of such
Unconsolidated Entity.

     “Accession
Agreement” means an Accession Agreement in the form attached
respectively to the Guaranty, Environmental Indemnity and Pledge Agreement as
Annex 1 thereto, which agreement causes the Person executing and delivering
the same to the Administrative Agent to become a party to the Guaranty,
Environmental Indemnity and Pledge Agreement.

     “Adjusted
EBITDA” means, for any Person or Hotel Property, as applicable,
for any period, the EBITDA of such Person or Hotel Property, as applicable, for
such period less the aggregate FF&E Reserves for such period in respect of, as
applicable, each Hotel Property owned by such Person or its Subsidiaries
(whether located on land owned by or land leased to such owner of the Hotel
Property) or such Hotel Property.

 

 

     “Adjusted Net
Worth” means, for the Parent as of any date, the sum of (a)
the Parent’s Net Worth on such date plus (b) the minority interest reflected as
a liability on the Parent’s balance sheet on such date determined in accordance
with GAAP (excluding that portion of the minority interest attributable to
Ownership Interests in any Subsidiary of the Borrower which is not a
Guarantor).

     “Adjusted
Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus one-half of one percent
(.50%).

     “Adjusted
Base Rate Advance” means an Advance which bears interest as
provided in Section 2.06(a).

     “Adjusted
Total Assets” has the meaning given such term in the Senior Note
Indenture — $200,000,000 9 1/8% Senior Notes as in effect on the Closing Date.

     “Adjustment
Event” has the meaning set forth in Section 2.14(b).

     “Adjustment
Report” means a certificate of the Borrower in substantially
the form of the attached Exhibit B.

     “Administrative
Agent” means Société Générale in its capacity as
Administrative Agent for the Lenders pursuant to Article IX and any successor
Administrative Agent appointed pursuant to Section 9.06.

     “Advance” means a Revolving Advance or a Term Advance.

     “Affected Lender” has the meaning set forth in Section 2.15(a).

     “Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person.
The term “control” (including the terms “controlled by” or “under common
control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of a Control Percentage, by contract or otherwise.

     “Agreement” has the meaning given such term in the initial paragraph of
this agreement.

     “Applicable Lending Office” means, with respect to each Lender, (a) in the
case of an Adjusted Base Rate Advance, such Lender’s Domestic Lending Office,
(b) in the case of all Eurodollar Rate Advances, such Lender’s Eurodollar
Lending Office, and (c) in the case of any other notice or request under the
Credit Documents, the office of such Lender specified as its “Credit Contact”
in the questionnaire such Lender provided to the Administrative Agent, or such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

-2-

 

     “Applicable Margin” means, (a) with respect to any Class of Advance at any
date, the applicable percentage per annum set forth below based upon the Status
then in effect under the column for such Type and Class of Advance, (b) with
respect to the letter of credit fee payable under Section 2.03(b) at any date,
the applicable percentage per annum set forth below based upon the Status then
in effect under the column for Revolving Advances which are Eurodollar Rate
Advances and (c) with respect to the commitment fee payable under Section
2.03(a) at any date, the applicable percentage per annum set forth below under
the column “Unused Commitment Fee,” based upon the Status then in effect.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving Advances	 	Term Advances
	 	 	
	 	

	 	 	Adjusted Base Rate	 	Eurodollar Rate	 	Adjusted Base Rate	 	Eurodollar Rate	 	Unused Commitment
	 	 	Advances	 	Advances	 	 	 	 	 	Advances	 	Advances	 	Fee
	 	 	
	 	
	 	 	 	 	 	
	 	
	 	

	Level I Status
	 	 	 	 	 	 	1.625	%	 	 	2.625	%	 	 	 	 	 	 	 	 	 	 	2.125	%	 	 	3.125	%                    	 	 	.90	%
	Level II Status
	 	 	 	 	 	 	1.875	%	 	 	2.875	%	 	 	 	 	 	 	 	 	 	 	2.375	%	 	 	3.375	%                    	 	 	.90	%
	Level III Status
	 	 	 	 	 	 	2.125	%	 	 	3.125	%	 	 	 	 	 	 	 	 	 	 	2.625	%	 	 	3.625	%                    	 	 	.90	%
	Level IV Status
	 	 	 	 	 	 	2.375	%	 	 	3.375	%	 	 	 	 	 	 	 	 	 	 	2.875	%	 	 	3.875	%                    	 	 	.90	%
	Level V Status
	 	 	 	 	 	 	2.625	%	 	 	3.625	%	 	 	 	 	 	 	 	 	 	 	3.125	%	 	 	4.125	%                    	 	 	.90	%
	Level VI Status
	 	 	 	 	 	 	2.875	%	 	 	3.875	%	 	 	 	 	 	 	 	 	 	 	3.375	%	 	 	4.375	%                    	 	 	.90	%

     “Approved Franchisor” means those certain franchisors listed on Schedule
1.01(c) attached hereto, or any other reputable, nationally known, third party
franchisor or licensor of a Hotel Property approved by the Administrative Agent
in writing.

     “Approved Fund” means any fund that invests in commercial loans which is
advised or managed by an investment advisor which has total assets under
management in excess of $250,000,000.

     “Approved Management Agreement” means a management agreement (a) in (i)
substantially the form of those management agreements existing as of the
Closing Date, between a direct or indirect TRS of the Borrower and an Approved
Operator, (ii) a form otherwise customary in the Hospitality/Leisure-Related
Business, or (iii) such other form as is approved by the Administrative Agent
in writing (which approval shall not be unreasonably withheld) and (b) either
subject to the terms of the Approved Master Amendment or subject to terms
otherwise customary in the Hospitality/Leisure-Related Business.

     “Approved Master Amendment” means the Master Amendment to Hotel Management
Agreement dated as of even date as the initial Approved Management Agreements,
substantially in the form provided to the Administrative Agent and the Lenders,
by and between the initial direct or indirect TRSs of the Borrower and the
initial Approved Operators party to the initial

-3-

 

Approved Management Agreements, as amended as permitted in this Agreement,
including executing an additional Master Amendment to Master Agreements with
respect to Hotel Properties which act as security for Secured Non-Recourse
Indebtedness or Secured Recourse Indebtedness permitted pursuant to this
Agreement.

     “Approved Operator” means OPCO, OPCO OP, any Approved Franchisor, any of
the foregoing Person’s respective Affiliates and any future manager or operator
for a Hotel Property approved by the Administrative Agent in writing.

     “Approved Other Country” means each of the following countries: Canada,
Mexico, United Kingdom, France, Germany, Spain, Belgium, The Netherlands,
Luxembourg, Italy, Portugal, Austria, Switzerland, Norway, Sweden, Denmark, U.
S. Virgin Islands, British Virgin Islands, Bahamas, Puerto Rico, and Japan.

     “Approved Participating Lease” means (a) a participating lease with an
Approved Operator, as lessee, in substantially the form of those participating
leases existing as of the Closing Date, (b) a participating lease with a direct
or indirect TRS of the Borrower, as lessee, in substantially the form of the
participating leases as of the Closing Date, or (c) such other form as is
approved by the Administrative Agent in writing (which approval shall not be
unreasonably withheld).

     “Asset Disposition” means (a) any sale or lease (in which the Borrower or
a Guarantor is lessor but exclusive of the Approved Participating Leases) of
all or substantially all of a Hotel Property, or conveyance, exchange,
transfer, or assignment of any other Investment or Non-Replaced Property by the
Borrower or a Guarantor to a Person other than the Borrower or a Guarantor; and
(b) any loss, casualty or condemnation of a Hotel Property owned by the
Borrower or any Guarantor.

     “Assignment and Acceptance” means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Agent, in substantially the form of the attached Exhibit C.

     “Borrower” means MeriStar Hospitality Operating Partnership, L.P., a
Delaware limited partnership.

     “Borrowing” means a Revolving Borrowing or a Term Borrowing.

     “Business Day” means (a) with respect to Adjusted Base Rate Advances, a
day of the year on which banks are not required or authorized to close in New
York, New York, and (b) with respect to Eurodollar Rate Advances or Pound Rate
Advances, a day of the year on which banks are not required or authorized to
close in New York, New York or London, England.

     “Capital Expenditure” means any payment made directly or indirectly for
the purpose of acquiring or constructing fixed assets, Real Property or
equipment which in accordance with GAAP would be capitalized in the fixed asset
accounts of such Person making such expenditure, including, without limitation,
amounts paid or payable for such purpose under any conditional sale or other
title retention agreement or under any Capital Lease, but excluding repairs of

-4-

 

Property in the normal and ordinary course of business in keeping with the
past practices of the Borrower.

     “Capital Lease” means, for any Person, any lease of any Property (whether
real, personal or mixed) by that Person as lessee which, in accordance with
GAAP, is or should be accounted for as a capital lease on the balance sheet of
that Person.

     “Capitalization Event” means any sale or issuance by the Parent or any of
its Subsidiaries of equity securities except for the issuance of the Borrower’s
limited partnership interests in accordance with the provisions of Section
6.05.

     “Capitalized Lease Obligations” means, as to any Person, the capitalized
amount of all obligations of such Person or any of its Subsidiaries under
Capitalized Leases, as determined on a consolidated basis in conformity with
GAAP.

     “Cash Collateral Account” means a special cash collateral account
containing cash deposited pursuant to the terms of this Agreement to be
maintained at the Administrative Agent’s office in accordance with Section
8.04.

     “CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.

     “Change in Control” means for any Person a change in ownership or control
of such Person effected through either of the following transactions:

     (a)  any Person or related group of Persons (other than such Person or an
Affiliate of such Person) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities possessing more than thirty-five percent (35%) of the
total combined voting power of such Person’s outstanding securities; or

     (b)  there is a change in the composition of such Person’s Board of
Directors over a period of thirty-six (36) consecutive months (or less) such
that a majority of Board members (rounded up to the nearest whole number)
ceases, by reason of one or more proxy contests for the election of Board
members, to be comprised of individuals who either (i) have been Board members
continuously since the beginning of such period or (ii) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.

     “Class” has the meaning set forth in Section 1.04.

     “Closing Date” has the meaning set forth in the initial paragraph of this
agreement.

     “Code” means the Internal Revenue Code of 1986, as amended, and any
successor statute.

-5-

 

     “Collateral” means the Ownership Interests of all existing and future
Material Subsidiaries and Material Unconsolidated Entities of the Parent and
the Borrower except for the Ownership Interests in Permitted Other Subsidiaries
(the Ownership Interests required to be Collateral pursuant to this definition
being referred to herein as the “Ownership Interests
Collateral”), and any
other collateral described in the Pledge Agreement; provided that the pledge of
such Property is not prohibited by the terms of (i) joint venture agreements,
organizational documents and other contractual arrangements to which the
Borrower or a Subsidiary is a party and which are in effect on the Closing
Date, in each case as approved by the Administrative Agent; (ii) with respect
to any Ownership Interests in or Property of a Permitted Other Subsidiary, the
loan documentation for any Permitted Other Indebtedness incurred by such
Permitted Other Subsidiary; and (iii) with respect to any Ownership Interests
in an Unconsolidated Entity, the loan documentation for Indebtedness incurred
by such Unconsolidated Entity or joint venture agreements or other contractual
arrangements for such Unconsolidated Entity. The Ownership Interests which
cannot be pledged as of the date of this Agreement or are not required by the
terms of this Agreement to be pledged are those certain Ownership Interests
designated in Schedule 1.01(d) as Non-Pledged.

     “Commitments” means, as to any Lender, its Revolving Commitment.

     “Compliance Certificate” means a certificate of the Borrower in
substantially the form of the attached Exhibit D.

     “Consolidated” refers, with respect to any Person, to the consolidation of
the accounts of such Person with such Person’s Subsidiaries in accordance with
GAAP.

     “Control Percentage” means, with respect to any Person, the percentage of
the outstanding capital stock of such Person having ordinary voting power which
gives the direct or indirect holder of such stock the power to elect a majority
of the Board of Directors of such Person.

     “Controlled Group” means all members of the controlled group of
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.

     “Convert”,
“Conversion”, and “Converted” each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.02(b).

     “Credit Documents” means this Agreement, the Notes, the Guaranties, the
Environmental Indemnities, the Security Documents, the Fee Letter, and each
other agreement, instrument or document executed by the Borrower or any of its
Subsidiaries at any time in connection with this Agreement.

     “Default” means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.

     “Defaulting Lender” means any Lender which has wrongfully refused or
failed to make available its portion of any Borrowing or to fund its portion of
any unreimbursed payment under

-6-

 

Section 9.05, or notified in writing the Borrower or the Administrative
Agent that such Lender does not intend to comply with its obligations under
this Agreement.

     “Designated Event” means the occurrence of either (a) a sale or issuance
by the Parent or any of its Subsidiaries of equity securities (including
without limitation the issuance of the Borrower’s limited partnership interests
in accordance with the provisions of Section 6.05) from and after the Closing
Date which in the aggregate had a fair market value at the time of sale or
issuance equal to or greater than $100,000,000 or (b) Permitted Asset
Dispositions and equity sales or issuances contemplated by the foregoing clause
(a) from and after the Closing Date for which (i) the aggregate fair market
value of such equity sales or issuances at the time of sale or issuance is
equal to or greater than $75,000,000 and (ii) the aggregate Net Cash Proceeds
from such Permitted Asset Dispositions plus the fair market value of such
equity sales or issuances at the time of sale or issuance is equal to or
greater than $125,000,000; provided that any Ownership Interests or Ownership
Interest Equivalents which are convertible into the Parent’s common stock shall
be valued at the price at which they could be exchanged into the Parent’s
common stock assuming such exchange occurred on the date of issuance;
provided
further that in no way shall the issuance of either Mandatorily Redeemable
Stock or Indebtedness convertible into Ownership Interests or Ownership
Interest Equivalents be deemed as or included in a Designated Event.

     “Designated Redemption Indebtedness” means Indebtedness in the amount of
approximately $10,000,000 in the form of Mandatorily Redeemable Stock
consisting of 392,157 Preferred Units in the Borrower held by CapStar
Management Company, LLC which are redeemable at the option of the Unit holder
pursuant to the partnership agreement of Borrower on or after April 1, 2004
for, at the option of the holder, cash in the amount of $22.16 per unit or the
equivalent in common stock of the Parent; provided that without the written
consent of the Required Lenders the Parent and the Borrower will not modify the
documentation creating or evidencing the “Designated Redemption Indebtedness”
in any manner which would increase the amount of such Indebtedness or
accelerate the time at which such Person is obligated to repay such
Indebtedness.

     “Dollar Equivalent” means the equivalent in another currency of an amount
in U.S. Dollars to be determined by reference to the rate of exchange quoted by
the Administrative Agent, at 10:00 a.m. (New York, New York time) on the date
of determination, for the spot purchase in the foreign exchange market of such
amount of Dollars with such other currency.

     “Dollars”
and “$” means lawful money of the United States of America.

     “Domestic Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Administrative Contact” in the questionnaire such
Lender provided to the Administrative Agent, or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the
Administrative Agent.

     “EBITDA” means for any Person or Hotel Property, as applicable, for any
period for which such amount is being determined, an amount equal to (a) the
Net Income for such Person or Hotel Property, as applicable, for such period
plus (b) to the extent deducted in determining Net Income, Interest Expense,
income taxes, depreciation, amortization, and other non-cash

-7-

 

items for such period, as determined on a Consolidated basis in accordance
with GAAP plus (c) to the extent deducted in determining Net Income, deductions
for minority interest attributable to the ownership interests in the Borrower
not owned (directly or indirectly) by the Parent plus (d) with respect to the
Parent, non-cash employee compensation up to $5,000,000 per Fiscal Year in the
aggregate commencing with the 2002 Fiscal Year plus (e) with respect to the
Parent, to the extent not already included in determining Net Income interest
income received from the Parent’s existing loan to OPCO;
provided that with
respect to EBITDA attributable to an Unconsolidated Entity, (i) for any such
Unconsolidated Entity for which the Unconsolidated Entity Percentage is equal
to or greater than 20%, such Person shall only be deemed to have received the
Unconsolidated Entity Percentage of such Unconsolidated Entity’s EBITDA to the
extent not subject to (A) any limitation or restriction (except for the
obligation to repay Indebtedness of such Person) on the right to distribute
such EBITDA to such Person’s owners or (B) any decision by another Person to
not distribute the available cash of such Unconsolidated Entity to the owners
of such Unconsolidated Entity, and (ii) for any such Unconsolidated Entity for
which the Unconsolidated Entity Percentage is less than 20%, such Person shall
only be deemed to have received the actual sums paid by such Unconsolidated
Entity to such Person; provided further that if the Parent or any of its
Subsidiaries during such Rolling Period or in the period from the end of such
Rolling Period to the Status Reset Date which occurs in the Fiscal Quarter
following such Rolling Period either sells or disposes of any Investments or
Non-Replaced Property with an Investment Amount in excess of $1,000,000, the
EBITDA arising from such Investment or Non-Replaced Property, as applicable,
for the applicable Rolling Period shall be excluded from the calculation of
EBITDA; and provided further if the Parent or any of its Subsidiaries during
such Rolling Period or in the period from the end of such Rolling Period to the
Status Reset Date which occurs in the Fiscal Quarter following such Rolling
Period either purchases or acquires any Investments or Non-Replaced Property
with an Investment Amount in excess of $1,000,000, the EBITDA arising from such
Investment or Non-Replaced Property, as applicable, for the applicable Rolling
Period on a pro forma basis shall be included in the calculation of EBITDA.

     “Effective Date” means the date all of the conditions precedent set forth
in Section 3.01 have been satisfied.

     “Eligible Assignee” means (a) a commercial bank organized under the laws
of the United States, or any State thereof, and having primary capital of not
less than $250,000,000 and approved by the Administrative Agent and the Issuing
Bank, which approvals will not be unreasonably withheld, (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development and having primary
capital (or its equivalent) of not less than $250,000,000 (or its Dollar
Equivalent) and approved by the Administrative Agent and the Issuing Bank,
which approvals will not be unreasonably withheld, (c) an investment bank
organized under the laws of the United States, or any State thereof, and having
total assets in excess of $5,000,000,000, (d) an insurance company, finance
company or financial institution (whether a corporation, partnership, trust or
other Person) organized under the laws of the United States, or any state
thereof, and having total assets in excess of $5,000,000,000, (e) with respect
to Term Advances only, any Approved Fund, (f) with respect to Term Advances
only, any “accredited investor” (as defined in Regulation D of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder)
which has total assets in excess of $100,000,000, (g) a Lender, and (h) an
Affiliate of the

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respective assigning Lender, without approval of any Person but otherwise
meeting the eligibility requirements of (a), (b), (c), (d), (e) or (f) above.

     “Engineering Report” means with respect to any Hotel Property, an
engineering report which (a) is prepared for the Lenders and the Administrative
Agent by a Person reasonably satisfactory to the Administrative Agent, (b) is
prepared in accordance with a scope of services reasonably satisfactory to the
Administrative Agent, and (c) is prepared within three (3) months of the date
of acquisition of such Hotel Property.

     “Environment”
or “Environmental” shall have the meanings set forth in 42
U.S.C. § 9601(8), as amended.

     “Environmental Claim” means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.

     “Environmental Indemnity” means one or more environmental indemnity
agreements dated of even date herewith in substantially the form of the
attached Exhibit E executed or to be executed by the Borrower, the Parent and
all Subsidiaries of the Borrower (excluding the Permitted Other Subsidiaries),
and any future environmental indemnities executed in connection with any Hotel
Property, as any of such environmental indemnities may be amended hereafter in
accordance with the terms of such agreements.

     “Environmental Law” means all Legal Requirements arising from, relating
to, or in connection with the Environment, health, or safety, including without
limitation CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment,
processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, medical,
infectious, or toxic substances, materials or wastes; (d) the safety or health
of employees; or (e) the manufacture, processing, handling, transportation,
distribution in commerce, use, storage or disposal of hazardous, medical,
infectious, or toxic substances, materials or wastes.

     “Environmental Permit” means any permit, license, order, approval or other
authorization under Environmental Law.

     “Environmental Report” means with respect to any Hotel Property, an
environmental report which (a) is prepared for the Lenders and the
Administrative Agent by a Person reasonably satisfactory to the Administrative
Agent, (b) is prepared in accordance with a scope of services reasonably
satisfactory to the Administrative Agent, (c) is prepared within three (3)
months of the date of acquisition of such Hotel Property, and (d) certifies to
the Administrative Agent and the Lenders as to whether or not the soil and the
groundwater for such Hotel Property contain Hazardous Substances except for
Permitted Hazardous Substances.

-9-

 

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     “Eurocurrency Liabilities” has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.

     “Eurodollar Lending Office” means, with respect to any Lender, the office
of such Lender specified as its “Administrative Contact” in the questionnaire
such Lender provided to the Administrative Agent, or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the
Administrative Agent.

     “Eurodollar Rate” means, for the Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum) equal to
the rate per annum at which deposits in Dollars are offered to prime banks in
the London interbank market at 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period as shown on the display designated
“British Banker’s Association Interest Settlement Rates” on Telerate at Page
3750 or Page 3740, or such other page or pages as may replace such pages on
Telerate for purposes of displaying such rate, in an amount substantially equal
to Société Générale’s Eurodollar Rate Advance comprising part of such Borrowing
and for a period equal to such Interest Period; provided, however, that if such
rate is not available on Telerate then such offered rate shall be otherwise
independently determined by Administrative Agent from an alternate,
substantially similar source available to Administrative Agent or shall be
calculated by Administrative Agent by a substantially similar methodology as
that theretofore used to determine such offered rate in Telerate.

     “Eurodollar Rate Advance” means an Advance which bears interest as
provided in Section 2.06(b).

     “Event of Default” has the meaning set forth in Section 8.01.

     “Exchange Act” has the meaning set forth in Section 2.04.

     “Excluded Foreign Subsidiaries” means those Subsidiaries of the Borrower
which (a) are incorporated or organized under the laws of any jurisdiction
other than the United States or any state or territory thereof, (b) own only
Hotel Properties and related assets which are Unencumbered except for FF&E
which is collateral for Indebtedness permitted by this Agreement and (c) do not
own Hotel Properties and other Investments which for all such Subsidiaries in
the aggregate have an Investment Amount in excess of $75,000,000.

     “Existing Credit Agreement” means that Second Amended and Restated Senior
Secured Credit Agreement, dated as of August 3, 1998, among the Borrower;
Société Générale, Southwest Agency, as Arranger and Administrative Agent;
Bankers Trust Company, as Arranger and Syndication Agent; Lehman Commercial
Paper Inc., as Arranger and Documentation Agent; Wells Fargo Bank, National
Association, as Documentation Agent; and the lenders party thereto, as amended.

-10-

 

     “Existing Letters of Credit” means the letters of credit outstanding on
the date of this Agreement issued for the account of the Borrower or its
Subsidiaries under the Existing Credit Agreement, as the same may be amended,
supplemented, and otherwise modified from time to time.

     “Expiration Date” means, with respect to any Letter of Credit, the date on
which such Letter of Credit will expire or terminate in accordance with its
terms.

     “Federal Funds Rate” means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for any such day
on such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.

     “Federal Reserve Board” means the Board of Governors of the Federal
Reserve System or any of its successors.

     “Fee Letter” means the letter agreement dated as of September 3, 2002
among the Borrower, the Parent, SG Cowen and Société Générale, as amended by
Amendment to Fee Letter dated October 25, 2002.

     “FF&E” means furniture, fixtures and equipment.

     “FF&E Reserve” means, for any Person or any Hotel Property for any period,
a reserve equal to four percent (4%) of gross revenues from any Hotel Property
owned by such Person and its Subsidiaries on a Consolidated basis or from such
Hotel Property, as applicable, for such period, excluding, however, from such
calculation for the applicable Person and Hotel Property the gross revenues
generated by the office, retail and garage portions of such Hotel Property or
the Hotel Properties owned or leased by such Person and its Subsidiaries on a
Consolidated basis.

     “Financial Statements” means the financial statements of the Parent, the
Borrower and their respective Subsidiaries dated as of June 30, 2002.

     “Fiscal Quarter” means each of the three-month periods ending on March 31,
June 30, September 30 and December 31.

     “Fiscal Year” means the twelve-month period ending on December 31.

     “Fixed Charges” means, for any Person for the period for which such amount
is being determined, the amount (without duplication) of all scheduled
principal payments and mandatory prepayments (excluding optional prepayments
and scheduled principal payments in respect of any such Indebtedness which is
payable in a single installment at final maturity), Interest Expense during
such period, and all payments scheduled to be made in respect of Capital Leases
of such Person and such Person’s Subsidiaries on a Consolidated basis during
such period, and

-11-

 

all preferred stock dividends and preferred partnership distributions paid
during such period by such Person and such Person’s Subsidiaries on a
Consolidated basis.

     “Fixed Charge Coverage Ratio” means, as of the end of any Rolling Period,
a ratio of (a) the Parent’s Adjusted EBITDA for such Rolling Period to (b) the
Parent’s Fixed Charges for such Rolling Period.

     “Florida Liens” means the existing Liens securing Indebtedness evidenced
by the Existing Credit Agreement on the Initial Properties located in the State
of Florida.

     “Free Cash Flow” means, for any Person for any period, (a) the Funds From
Operations for such period less (b) the sum of (i) the aggregate FF&E Reserves
for such Person and its Subsidiaries for such period, and (ii) the aggregate
amount of scheduled principal payments and mandatory prepayments on the Total
Indebtedness of such Person (excluding optional prepayments, scheduled
principal payments in respect of any such Indebtedness which is payable in a
single installment at final maturity and mandatory prepayments in connection
with Asset Dispositions) required to be made during such period.

     “Fund,”
“Trust Fund,” or “Superfund” means the Hazardous Substance
Response Trust Fund, established pursuant to 42 U.S.C. § 9631 (1988) and the
Post-closure Liability Trust Fund, established pursuant to 42 U.S.C. § 9641
(1988), which statutory provisions have been amended or repealed by the
Superfund Amendments and Reauthorization Act of 1986, and the “Fund,” “Trust
Fund,” or “Superfund” that are now maintained pursuant to 42 U.S.C. § 9507.

     “Funding Date” has the meaning set forth in Section 2.01(c)(ii).

     “Funds From Operations” means, for any Person for any period for which
such amount is being determined, an amount equal to such Person’s (a) Net
Income for such period excluding gains (losses) from debt restructuring and
sales of property (including furniture and equipment) plus (b) depreciation and
amortization (including amortization of deferred financing costs) plus (or
minus) (c) adjustments for Unconsolidated Entities owned by such Person to
reflect the actual cash received by such Person from such Unconsolidated
Entities in lieu of those amounts included in the preceding clauses (a) and (b)
for such Unconsolidated Entities.

     “Future Property” means any Hotel Property which the Parent or any
Subsidiary of the Parent acquires except for the Initial Properties.

     “GAAP” means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with the requirements
of Section 1.03.

     “Governmental Authority” means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, securities exchange, self-regulatory organization, authority or
instrumentality, bureau or court having jurisdiction over any Lender, the
Parent, the Borrower, any Subsidiaries of the Borrower or the Parent, an
Approved Operator, a property manager or any of their respective Properties.

-12-

 

     “Governmental Proceedings” means any action or proceedings by or before
any Governmental Authority, including, without limitation, the promulgation,
enactment or entry of any Legal Requirement.

     “Guarantor” means each of the Parent and each Subsidiary of the Borrower
(except the Permitted Other Subsidiaries, the Subsidiary which owns the
Atlanta, Georgia Westin during such time as the Borrower holds a first-lien
mortgage on such Hotel Property, and certain other non-Material Subsidiaries),
and “Guarantors” means all of such Persons. The Guarantors on the Effective
Date are identified on Schedule 1.01(e).

     “Guaranty” means one or more Guaranty and Contribution Agreements in
substantially the form of the attached Exhibit F executed by the Guarantors,
evidencing the joint and several guaranty by the signatories thereto of the
obligations of Borrower in respect of the Credit Documents, and any future
guaranty and contribution agreement executed to secure Advances except for
Supplemental Guaranties, as any of such agreements may be amended hereafter in
accordance with the terms of such agreements.

     “Hazardous
Substance” means the substances identified as such pursuant to
CERCLA and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products, radio
nuclides, radioactive materials, and medical and infectious waste.

     “Hazardous Waste” means the substances regulated as such pursuant to any
Environmental Law.

     “Hospitality/Leisure-Related
Business” shall mean a full service and
limited service hotel or resort, executive conference center, an extended stay
lodging, or a convention center, and other businesses incidental to, or in
support of such business, including without limitation, (a) developing,
improving or acquiring lodging facilities, restaurants and other food-service
facilities, golf facilities or other entertainment facilities or club,
convention or meeting facilities and marketing services or reservation systems
related thereto, and (b) acquiring, developing, or improving any real estate
(including retail, office or garage use) ancillary or connected to any hotel,
resort, executive conference center, extended stay lodging, convention center
or reservation system constructed, leased, owned, managed or operated (or
proposed to be constructed, leased, or owned) by the Borrowers, the Guarantors
or any of their Subsidiaries at any time; provided that such business shall not
include any casino or other gaming (even if only a part of a Hotel Property) or
senior living.

     “Hotel Property” for any hotel means the Real Property and the Personal
Property for such hotel.

     “Improvements” for any hotel means all buildings, structures, fixtures,
tenant improvements and other improvements of every kind and description now or
hereafter located in or on or attached to the Land for such hotel; and all
additions and betterments thereto and all renewals, substitutions and
replacements thereof.

     “Indebtedness” means (without duplication), at any time and with respect
to any Person, the following indebtedness and other obligations and items of
such Person and its Subsidiaries on

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a Consolidated basis at such time: (a) indebtedness for borrowed money
(whether by loan or the issuance and sale of debt securities) or for the
deferred purchase price of property or services purchased (other than amounts
constituting trade payables or bank drafts arising in the ordinary course of
business); (b) indebtedness of others in the amount which such Person or its
Subsidiaries has directly or indirectly assumed or guaranteed or otherwise
provided credit support therefor or for which such Person or its Subsidiaries
is liable as a partner of such Person; (c) indebtedness of others in the amount
secured by a Lien on assets of such Person or its Subsidiaries, whether or not
such Person shall have assumed such indebtedness unless the validity of such
Lien is being contested in good faith and with due diligence by appropriate
proceedings, provided that such Lien is subordinate to the Liens created by the
Security Documents and such Person or its Subsidiaries, as applicable, shall
have delivered a bond or other security acceptable to the Administrative Agent
equal to 125% of the contested amount; (d) obligations in respect of letters of
credit, acceptance facilities, or drafts or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person or its Subsidiaries (other than trade payables or bank drafts arising in
the ordinary course); (e) obligations under Capital Leases; (f) all
obligations, contingent or otherwise, under any synthetic lease, tax retention
operating lease, off balance sheet loan or similar off balance sheet financing
arrangement if the transaction giving rise to such obligation (1) is considered
indebtedness for borrowed money for U.S. federal income tax purposes but is
classified as an operating lease under GAAP and (2) does not (and is not
required pursuant to GAAP to) appear as a liability on the balance sheet of
such Person and its Subsidiaries on a Consolidated basis; (g) all obligations
to purchase, redeem, retire, defease or otherwise make any payment in respect
of any Mandatorily Redeemable Stock issued by such Person or any other Person,
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; (h) all obligations in respect of any
take-out commitment or forward equity commitment (excluding, in the case of the
Borrower and its Subsidiaries, any such obligation that can be satisfied solely
by the issuance of Ownership Interests (other than Mandatorily Redeemable
Stock)); (i) to the extent treated as a liability under GAAP, obligations under
interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements designed to
protect against fluctuations in interest rates; and (j) to the extent treated
as a liability under GAAP, unfunded liability under a Plan;
provided that for
purposes of determining compliance with the financial covenants contained in
Article VII only “Indebtedness” shall not include any Designated Redemption
Indebtedness.

     “Initial Properties” means collectively the Hotel Properties listed on
Schedule 1.01(b), and “Initial Property” means any of such Hotel Properties.

     “Intercompany Agreement” means the Intercompany Agreement dated as of
August 3, 1998, by and among the Parent, the Borrower, OPCO, and OPCO OP, as
amended by the Amendment to the Intercompany Agreement dated as of January 1,
2001, and as may be further amended in accordance with the provisions of this
Agreement.

     “Interest Coverage Ratio” means, as of the end of any Rolling Period, a
ratio of (a) the Parent’s EBITDA to (b) Parent’s Interest Expense, for such
Rolling Period.

     “Interest Expense” means, for any Person for any period for which such
amount is being determined, the total interest expense (including that properly
attributable to Capital Leases in

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accordance with GAAP) and all charges incurred with respect to letters of
credit of such Person and its Subsidiaries determined on a Consolidated basis
in conformity with GAAP, plus capitalized interest of such Person and its
Subsidiaries on a Consolidated basis.

     “Interest Period” means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Advance or the
date of the Conversion of any Adjusted Base Rate Advance into such an Advance
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below and Section 2.02 and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below and Section 2.02. The duration of each such Interest Period
shall be one, two, three or six months, in each case as the Borrower may
select, upon notice received by the Administrative Agent not later than 12:00
noon (New York, New York time) on the third Business Day prior to the first day
of such Interest Period, provided, however, that:

     (a)  Interest Periods for Advances of the same Borrowing shall be of the
same duration;

     (b)  whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;

     (c)  any Interest Period which begins on the last 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 Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and

     (d)  each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires; and

     (e)  no Interest Period with respect to any portion of any Revolving
Advance shall extend beyond the Revolving Maturity Date, and no Interest Period
with respect to any portion of any Term Advance shall extend beyond the Term
Maturity Date.

     “Interest Rate Agreements” means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement pertaining to the fluctuations in interest rates.

     “Investment” means, with respect to any Person, (a) any loan or advance to
any other Person, (b) the ownership, purchase or other acquisition of (i) any
Ownership Interests or Ownership Interests Equivalent of any other Person, (ii)
all or substantially all of the assets of any other Person, or (iii) all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any other Person, (c) any joint venture or
partnership with, or any capital contribution to, or other investment in, any
other Person or any real property, or (d) any Capital Expenditure.

-15-

 

     “Investment Amount” means (a) for any Hotel Property the sum of (i) for
any Initial Property, the amount set forth for such Initial Property on
Schedule 1.01(b) attached hereto, and for any other Hotel Property, the
aggregate purchase price paid by the Borrower or its Subsidiary for such other
Hotel Property, and (ii) the actual cost of any Capital Expenditures for such
Hotel Property made by the Borrower or its Subsidiaries; provided that with
respect to the Investment Amount for a Hotel Property owned or leased by a
Unconsolidated Entity, the Investment Amount for such Hotel Property shall be
deemed to be the Unconsolidated Entity Percentage of the Investment Amount for
such Hotel, and (b) for any other Investment or Property the aggregate purchase
price paid by the Borrower or its Subsidiary for such other Investment or
Property. The Investment Amount shall include any Ownership Interests or
Ownership Interest Equivalents used to purchase such Investment at their fair
market value at the time of purchase; provided that any such Ownership
Interests or Ownership Interest Equivalents which are convertible into the
Parent’s common stock shall be valued at the price at which they could be
exchanged into the Parent’s common stock assuming such exchange occurred on the
date of acquiring such Investment.

     “ISP” has the meaning set forth in Section 2.13(a).

     “Issuing Bank” means Société Générale or any Lender acting as a successor
Issuing Bank pursuant to Section 9.06, and “Issuing Banks” means, collectively,
all of such Lenders.

     “Land” for any hotel means the real property upon which the hotel is
located, together with all rights, title and interests appurtenant to such real
property, including without limitation all rights, title and interests to (a)
all strips and gores within or adjoining such property, (b) the streets, roads,
sidewalks, alleys, and ways adjacent thereto, (c) all of the tenements,
hereditaments, easements, reciprocal easement agreements, rights-of-way and
other rights, privileges and appurtenances thereunto belonging or in any way
pertaining thereto, (d) all reversions and remainders, (e) all air space
rights, and all water, sewer and wastewater rights, (e) all mineral, oil, gas,
hydrocarbon substances and other rights to produce or share in the production
of anything related to such property, and (f) all other appurtenances
appurtenant to such property, including without limitation, any now or
hereafter belonging or in anywise appertaining thereto.

     “Legal Requirement” means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.

     “Lenders” means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 10.06.

     “Letter of Credit” means, individually, any letter of credit issued by the
Issuing Bank in accordance with the provisions of Section 2.13 of this
Agreement including any Existing Letter of Credit, and
“Letters of Credit”
means all such letters of credit collectively.

     “Letter of Credit Documents” means, with respect to any Letter of Credit,
such Letter of Credit and any reimbursement or other agreements, documents, and
instruments entered into in connection with or relating to such Letter of
Credit.

-16-

 

     “Letter of Credit Exposure” means, at any time, without duplication, the
sum of (a) the aggregate undrawn maximum face amount of each Letter of Credit
and (b) the aggregate unpaid amount of all Letter of Credit Obligations at such
time.

     “Letter of Credit Obligations” means all obligations of the Borrower
arising in respect of the Letter of Credit Documents, including without
limitation the aggregate drawn amounts of Letters of Credit which have not been
reimbursed by the Borrower or converted into an Adjusted Base Rate Advance
pursuant to the provisions of Section 2.13(c).

     “Leverage Ratio” means the ratio on any date of (a) the Parent’s Total
Indebtedness on such date, to (b) the Parent’s EBITDA for the Rolling Period
immediately preceding such date.

     “Lien” means any mortgage, lien, pledge, charge, deed of trust, security
interest, encumbrance or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law or otherwise (including, without limitation, the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement).

     “Liquid Investments” means:

     (a)  direct obligations of the United States, or obligations for which the
principal of and interest on are unconditionally guaranteed by the United
States;

     (b)  (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the date of acquisition thereof (“bank debt securities”), issued by (A) any
Lender or (B) any other bank or trust company which has a combined capital
surplus and undivided profit of not less than $250,000,000 or the Dollar
Equivalent thereof, if at the time of deposit or purchase, such bank debt
securities are rated not less than “A” (or the then equivalent) by the rating
service of S&P or of Moody’s, and (ii) commercial paper issued by (A) any
Lender or (B) any other Person if at the time of purchase such commercial paper
is rated not less than “A-2” (or the then equivalent) by the rating service of
S&P or not less than “P-2” (or the then equivalent) by the rating service of
Moody’s, or upon the discontinuance of both of such services, such other
nationally recognized rating service or services, as the case may be, as shall
be selected by the Borrower with the consent of the Administrative Agent;

     (c)  repurchase agreements relating to investments described in clauses (a)
and (b) above with a market value at least equal to the consideration paid in
connection therewith, with any Person who regularly engages in the business of
entering into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $250,000,000 or the Dollar Equivalent
thereof, if at the time of entering into such agreement the debt securities of
such Person are rated not less than “A” (or the then equivalent) by the rating
service of S&P or of Moody’s; and

     (d)  such other instruments (within the meaning of New York’s Uniform
Commercial Code) as the Borrower may request and the Required Lenders may
approve in writing, which approval will not be unreasonably withheld.

-17-

 

     “Mandatorily Redeemable Stock” means, with respect to any Person, any
Ownership Interests of such Person which by the terms of such Ownership
Interests (or by the terms of any security into which it is convertible or for
which it is exchangeable or exercisable), upon the happening of any event or
otherwise (a) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise (other than Ownership Interests which are redeemable
solely in exchange for common stock or Ownership Interests Equivalent thereof),
(b) is convertible into or exchangeable or exercisable for Indebtedness or
Mandatorily Redeemable Stock, or (c) is redeemable at the option of the holder
thereof, in whole or in part (other than Ownership Interests which are
redeemable solely in exchange for common stock or Ownership Interests
Equivalent thereof), in each case on or prior to the Revolving Maturity Date.

     “Margin Stock” shall have the meaning provided in Regulation U.

     “Market Value” means for any Hotel Property, at any date, the value
thereof to be calculated as follows:

     (a)  for a Hotel Property that has been owned for four (4) or more Fiscal
Quarters, by the Parent or by a Person that has been a Subsidiary of the Parent
during such entire period, the product of (i) the Adjusted EBITDA for such
Hotel Property for the preceding Rolling Period times (b) ten (10); and

     (b)  for any other Hotel Property, the Investment Amount in such Hotel
Property.

     “Material Adverse Change” shall mean a material adverse change (a) in the
business, property, condition (financial or otherwise), prospects or results of
operations of the Borrower, the Parent and the other Guarantors taken as a
whole, in each case since June 30, 2002, or (b) in the validity or
enforceability of this Agreement or any of the other Credit Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.

     “Material Subsidiary” means any direct or indirect Subsidiary of the
Parent or the Borrower (except for a Permitted Other Subsidiary) having assets
or annual revenues in excess of $5,000,000, and “Material
Subsidiaries” means
all such Subsidiaries collectively.

     “Material Unconsolidated Entity” means any direct or indirect
Unconsolidated Entity of the Parent or the Borrower for which the Investment
Amount is in excess of $1,000,000.

     “Maturity Date” means, (a) with respect to any Revolving Advances, the
Revolving Maturity Date, and (b) with respect to any Term Advances, the Term
Maturity Date.

     “Maximum Rate” means the maximum nonusurious interest rate under
applicable law.

     “Minimum Net Worth” means, with respect to the Parent, at any time, the
sum of $850,000,000 plus (a) 75% of the aggregate net proceeds or value
received by the Parent or any of its Subsidiaries after the date of this
Agreement in connection with any Capitalization Events taken as a whole,
including without limitation in connection with the acquisition of any
Investment or other Property, plus (b) to the extent a positive number, 75% of
the aggregate Net Income of the Parent and the Parent’s Subsidiaries for the
period from and including July 1, 2002 to the date of testing, on a
Consolidated basis.

-18-

 

     “Moody’s” means Moody’s Investor Service Inc.

     “Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA to which the Parent, the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.

     “Net Cash Proceeds” means (a) the aggregate cash proceeds (including,
without limitation, insurance proceeds) received by the Parent, the Borrower or
any of their respective Subsidiaries (as applicable) in connection with any
Indebtedness incurrence on or after the Closing Date (excluding the Obligations
and the incurrence of other Indebtedness which does not trigger a Repayment
Event), Asset Disposition or Capitalization Event, minus (b) the reasonable
expenses of such Person in connection with such Indebtedness incurrence, Asset
Disposition or Capitalization Event, minus (c) to the extent that assets
disposed of in connection with an Asset Disposition secure Indebtedness
permitted pursuant to the provisions of Section 6.02(b), the amount of such
Indebtedness which is required to be repaid pursuant to the terms of such
Indebtedness in connection with such Asset Disposition, as reasonably evidenced
by the Borrower to the Administrative Agent.

     “Net Income” means, for any Person or Hotel Property for any period for
which such amount is being determined, the net income or net loss of such
Person and its or Hotel Property, as applicable, after taxes, as determined on
a Consolidated basis in accordance with GAAP, excluding, however, (a)
non-recurring expenses and (b) extraordinary items, including but not limited
to (i) any net gain or loss during such period arising from the sale, exchange,
or other disposition of capital assets (such term to include all fixed assets
and all securities) other than in the ordinary course of business, and (ii) any
write-up or write-down of assets.

     “Net Worth” means, for any Person, stockholders equity of such Person and
its Subsidiaries on a Consolidated basis determined in accordance with GAAP.

     “Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.

     “Non-Replaced Property” means any Property owned by the Borrower or any of
the Guarantors which (a) was used in the ownership, operation or management of
any Hotel Property, (b) has been conveyed, exchanged, transferred, or assigned
by the Borrower or a Guarantor to a Person other than the Borrower or a
Guarantor, (c) has not been replaced in the ordinary course of business by
Property of equal or better quality, and (d) was not included within the
definition of “Investments”.

     “Note”
means a Revolving Note or a Term Note, and “Notes” means all of
such promissory notes.

     “Notice of Borrowing” means a notice of borrowing in the form of the
attached Exhibit G signed by a Responsible Officer of the Borrower.

     “Notice of Conversion or Continuation” means a notice of conversion or
continuation in the form of the attached Exhibit H signed by a Responsible
Officer of the Borrower.

-19-

 

     “Obligations” means all Advances, Letter of Credit Obligations, and other
amounts payable by the Borrower to the Administrative Agent or the Lenders
under the Credit Documents.

     “OPCO” means Interstate Hotels & Resorts, Inc., a Delaware corporation.

     “OPCO OP” means MeriStar H & R Operating Company, L.P., a Delaware limited
partnership.

     “Ownership Interests” means shares of stock, other securities, partnership
interests, member interests, beneficial interests or other interests in any
Person, whether voting or non-voting, and participations or other equivalents
(regardless of how designated) of or in a Person.

     “Ownership Interests Equivalents” means all securities (other than
Ownership Interests) convertible into or exchangeable for Ownership Interests
and all warrants, options or other rights to purchase or subscribe for any
Ownership Interests, whether or not presently convertible, exchangeable or
exercisable.

     “Parent” means MeriStar Hospitality Corporation, a Maryland corporation.

     “Parent Common Stock” means the common stock of Parent, par value $.01 per
share.

     “Parent Deemed Investment Amount” means, in connection with measuring the
Investment Amount in an Unconsolidated Entity which owns or leases an
Unconsolidated Entity Property in a particular category of hotel under the
definition of “Parent Property Requirement”, a reasonable allocation of the
portion of the Investment Amount in such Unconsolidated Entity attributable to
the Unconsolidated Entity Property or Unconsolidated Entity Properties owned or
leased by such Unconsolidated Entity which is or are within the category
tested. Such allocation shall be based upon the cost of such Unconsolidated
Entity Property or Unconsolidated Entity Properties and the total cost of all
assets owned by such Unconsolidated Entity, all as proposed by the Borrower and
approved by the Administrative Agent in its reasonable discretion.

     “Parent Property” means a Hotel Property owned or leased by the Parent or
one of the Parent’s Subsidiaries, and “Parent Properties” means all such Hotel
Properties.

     “Parent Property Requirements” means collectively that as of the last day
of any Rolling Period (a) all Parent Properties must be located within the
United States or in an Approved Other Country, provided that the guest rooms
for the Parent Properties which are located in an Approved Other Country shall
not exceed 15% of the guest rooms for all Parent Properties; (b) the guest
rooms for the Parent Properties which are limited service or extended stay
hotels shall not collectively in the aggregate exceed 20% of the guest rooms
for all Parent Properties; (c) the guest rooms for the Parent Properties which
are not operated (or are not subject to a binding agreement to convert to
operation) under any franchise or license agreement with an Approved Franchisor
shall not exceed 15% of the guest rooms for all Parent Properties; (d) the
Investment Amount or guest rooms, as applicable, for Parent Properties which
are substantially subject to a ground lease shall not exceed 20% of the
Investment Amount or 20% of the total guest rooms, as applicable, for all
Parent Properties; and (e) no Hotel Property or other Property shall cause the
Parent to forfeit the Parent’s tax status as a REIT.

-20-

 

     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

     “Permitted Asset Disposition” means an Asset Disposition which occurs at a
time in which no Default has occurred and is continuing and which would not
cause a Default to occur upon the consummation of such Asset Disposition.

     “Permitted Encumbrances” means the Liens permitted to exist pursuant to
Section 6.01.

     “Permitted Hazardous Substances” means (a) Hazardous Substances, petroleum
and petroleum products which are (i) used in the ordinary course of business
and in typical quantities for a hotel and (ii) generated, used and disposed of
in accordance with all Legal Requirements and good hotel industry practice and
(b) non-friable asbestos to the extent (i) that no applicable Legal
Requirements require removal of such asbestos from the Hotel Property and (ii)
such asbestos is encapsulated in accordance with all applicable Legal
Requirements and such reasonable operations and maintenance program as may be
reasonably required by the Administrative Agent.

     “Permitted Indebtedness Purchases” means purchases of Indebtedness of the
Parent or the Borrower for which (a) the aggregate price paid (as opposed to
the face amount of the Indebtedness purchased) for purchases of Subordinate
Indebtedness do not exceed (i) if a Designated Event has not occurred, then $0
and (ii) if a Designated Event has occurred, then $50,000,000 and (b) subject
to the preceding clause (a), the aggregate price paid (as opposed to the face
amount of the Indebtedness purchased) for purchases of Indebtedness do not
exceed $100,000,000.

     “Permitted Other Subsidiaries” means (a) a Subsidiary of the Borrower
which is a single-purpose Person (i) which owns a Hotel Property or Hotel
Properties or an interest in a Person which owns a Property which Property or
interest is pledged to secure Secured Non-Recourse Indebtedness or Secured
Recourse Indebtedness permitted by this Agreement, and (ii) which does not own
any Hotel Properties other than those that secure such Indebtedness, (b) a
direct or indirect Subsidiary of the Parent which is a single-purpose Person
and which is not a Subsidiary of the Borrower and does not have assets or
annual revenues in excess of $5,000,000, or (c) a TRS which (i) is a lessee
for a Hotel Property that secures either Secured Non-Recourse Indebtedness or
Secured Recourse Indebtedness permitted pursuant to the Credit Agreement and
(ii) is not a lessee for any Hotel Property which does not secure any of such
Indebtedness.

     “Person” means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
limited liability company, joint venture or other entity, or a government or
any political subdivision or agency thereof or any trustee, receiver, custodian
or similar official.

     “Personal Property” for any Hotel Property means all FF&E, inventory and
other personal property of every kind, whether now existing or hereafter
acquired, tangible and intangible, now or hereafter located on or about the
Land, and used or to be used in the future in connection with the operation of
such Hotel Property.

-21-

 

     “Plan” means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Parent, the Borrower or any member of the
Controlled Group and covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.

     “Pledge Agreement” means the Pledge Agreement in favor of the
Administrative Agent from the Borrower, the Parent and the other Guarantors,
pledging its current and future Ownership Interests in all of its direct
operating Subsidiaries (excluding the Permitted Other Subsidiaries and certain
other specified exceptions) in substantially the form of the attached Exhibit
I.

     “Prescribed Forms” means such duly executed form(s) or statement(s), and
in such number of copies, which may, from time to time, be prescribed by law
and which, pursuant to applicable provisions of (a) an income tax treaty
between the United States and the country of residence of the Lender providing
the form(s) or statement(s), (b) the Code, or (c) any applicable rule or
regulation under the Code, permit the Borrower to make payments hereunder for
the account of such Lender free of (or, upon written request of the Borrower
specifying the applicable form, at a reduced rate of) deduction or withholding
of income or similar taxes (except for any deduction or withholding of income
or similar taxes as a result of any change in or in the interpretation of any
such treaty, the Code or any such rule or regulation).

     “Prime Rate” means a fluctuating interest rate per annum as shall be in
effect from time to time equal to the rate of interest publicly announced by
the Administrative Agent as its prime commercial lending rate (which may not be
the lowest rate offered to its customers), whether or not the Borrower has
notice thereof.

     “Property” of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.

     “Property Information” for any Hotel Property means an Engineering Report
and Environmental Report for such Hotel Property.

     “Property Owner” for any Initial Property or Future Property, means the
Person who owns fee or leasehold title interest (as applicable) in and to such
Property.

     “Pro Rata Share” means, at any time with respect to any Lender, the ratio
(expressed as a percentage) of (a) the sum of (i) such Lender’s Term Advances
at such time and (ii) such Lender’s Revolving Commitment at such time (or, if
the Revolving Commitments have been terminated, such Lender’s Revolving
Advances at such time) to (b) the sum of (i) all Lenders’ Term Advances at such
time and (ii) all Lenders’ Revolving Commitments at such time (or, if the
Revolving Commitments have been terminated, all Lenders’ Revolving Advances at
such time).

     “Real Property” for any hotel means the Land and the Improvements for such
hotel, including without limitation, parking, restaurants and other
food-service facilities, golf facilities or other entertainment facilities or
club, conference or meeting facilities and other ancillary functions necessary
for the operation of such hotel, and office and retail property owned by the
Borrower or a Guarantor other than the Parent in connection with such hotel;
provided that such property shall not include any casino or other gaming
property (even if only a part of a Hotel Property) or senior living property.

-22-

 

     “Register” has the meaning set forth in paragraph (c) of Section 10.06.

     “Regulation U” shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.

     “REIT” means a real estate investment trust under Sections 856-860 of the
Code.

     “Related Fund” means, with respect to any Approved Fund, any fund that
invests in commercial loans which is advised or managed by the same investment
advisor as such Approved Fund.

     “Release” shall have the meaning set forth in CERCLA or under any other
Environmental Law.

     “Repayment Event” means the occurrence of any of the following:

     (a)  at a time when the Leverage Ratio is equal to or greater than 6.00 to
1:00 or a Default exists in any of the covenants set forth in Article VII, or
such event would cause the Leverage Ratio to be greater than 6.00 to 1:00 or a
Default to exist in any of the covenants set forth in Article VII:

		
	 	     (i) the incurrence of any Capitalization Event.
	 
	 	     (ii) the incurrence by the Parent, the Borrower or any of their
respective Subsidiaries of any Indebtedness after the date of this
Agreement except:

		
	 	     (1) the Obligations;
	 
	 	     (2) Unsecured Indebtedness permitted pursuant to the
provisions of Section 6.01 to the extent such Unsecured
Indebtedness is an extension, renewal or refinancing of any of such
Unsecured Indebtedness set forth on Schedule 4.18;
	 
	 	     (3) Secured Recourse Indebtedness and Secured Non-Recourse
Indebtedness permitted pursuant to the provisions of Section 6.01
to the extent such Indebtedness is either (A) an extension, renewal
or refinancing of any of such Indebtedness set forth on Schedule
4.18 or (B) incurred in connection with the acquisition of Future
Properties in accordance with the provisions of this Agreement; and
	 
	 	     (4) Indebtedness permitted pursuant to the provisions of
clauses (c), (d) or (e) of Section 6.02.

		
	 	     (iii) the occurrence of an Asset Disposition after the date of this
Agreement.

     (b)  If the conditions precedent for a Repayment Event set forth in the
preceding clause (a) do not exist, then the occurrence of an Asset Disposition
after the date of this Agreement except Asset Dispositions for which (i) the
aggregate Net Cash Proceeds do not exceed one percent (1%) of the Adjusted
Total Assets during any Rolling Period, (ii) the Net

-23-

 

Cash Proceeds from such Asset Disposition are used to make an Investment
in the Hospitality/Leisure-Related Business within one year of the date of such
Asset Disposition and (iii) none of the Parent, the Borrower or any of their
respective Subsidiaries are obligated by an agreement with another Person to
apply such Net Cash Proceeds to the repayment of Indebtedness of such Person;
provided that Net Cash Proceeds from a casualty or condemnation shall not be
counted toward such one percent (1%) of the Adjusted Total Assets threshold to
the extent such Net Cash Proceeds are utilized for the restoration of the Hotel
Property affected by such casualty or condemnation within one year of the date
of such casualty or condemnation; provided further that only the aggregate Net
Cash Proceeds in excess of one percent (1%) of the Adjusted Total Assets during
any Rolling Period shall be deemed to be part of a Repayment Event under this
paragraph (b).

     “Reportable Event” means any of the events set forth in Section 4043(b) of
ERISA.

     “Required Lenders” means Non-Defaulting Lenders the sum of whose
outstanding Term Advances and Revolving Commitments (or after the termination
thereof, outstanding Revolving Advances and participations in Letter of Credit
Exposure) represent at least 51% of the sum of all outstanding Term Advances of
Non-Defaulting Lenders and the sum of all Revolving Commitments of
Non-Defaulting Lenders (or after the termination of the Revolving Commitments,
the sum of the then total outstanding Revolving Advances of Non-Defaulting
Lenders, and the aggregate participations of all Non-Defaulting Lenders of
Letter of Credit Exposure at such time); provided that with respect to a vote
which only involves a certain Class or Classes, only the Commitments and
Advances for the applicable Class or Classes shall be used in the calculation
of Required Lenders.

     “Required Work” means for any Future Property, the work agreed upon by the
Borrower and the Administrative Agent, if any, as the Required Work for such
Future Property, if any.

     “Response” shall have the meaning set forth in CERCLA or under any other
Environmental Law.

     “Responsible Officer” means the Chief Executive Officer, President,
Executive Vice President, Chief Investment Officer, Chief Financial Officer or
Treasurer of any Person, or, with respect to a partnership, the general partner
of such Person.

     “Restricted Payment” means (a) any direct or indirect payment, prepayment,
redemption, purchase, or deposit of funds or Property for the payment
(including any sinking fund or defeasance), prepayment, redemption or purchase
of Indebtedness which Indebtedness is not permitted by this Agreement or any
Subordinate Indebtedness, and (b) the making by any Person of any dividends or
other distributions (in cash, property, or otherwise) on, or payment for the
purchase, redemption or other acquisition of, any shares of any capital stock,
any limited liability company interests or any partnership interests of such
Person, other than dividends or distributions payable in such Person’s (or the
Parent’s) stock, limited liability company interests or any partnership
interests.

-24-

 

     “Revolving Advance” means any advance by a Lender to the Borrower pursuant
to such Lender’s Revolving Commitment or a continuation of an existing
Revolving Advance, and refers to an Adjusted Base Rate Advance or a Eurodollar
Rate Advance.

     “Revolving Availability” means on any date the lesser of (a) the aggregate
Revolving Commitments on such date and (b) prior to the first Status Reset Date
following the Closing Date, $50,000,000, and on and after the first Status
Reset Date following the Closing Date, the amount set forth in the following
table based upon the Leverage Ratio on such date and whether the Term Loan
Conversion Date has occurred:

	 	 	 	 	 	 	 	 	 
	 	 	Amount if Term Loan	 	Amount if Term Loan
	 	 	Conversion Date has	 	Conversion Date has
	Leverage Ratio	 	not occurred	 	occurred
	
	 	
	 	

	The Leverage Ratio is
equal to or greater
than 7.25.	 	 	
$50,000,000
	 	 	$	0	 
	
	 	 	

	 	 	 	
	 
	The Leverage Ratio is
equal to or greater
than 7.0 but less
than 7.25.	 	 	
$100,000,000
	 	 	$	100,000,000 minus
the Term Loan
Conversion Amount	 
	
	 	 	

	 	 	 	
	 
	The Leverage Ratio is
less than 7.0.	 	 	
$150,000,000
	 	 	$	150,000,000 minus
the Term Loan
Conversion Amount	 
	
	 	 	

	 	 	 	
	 

     “Revolving Borrowing” means a borrowing consisting of simultaneous
Revolving Advances of the same Type made by each Lender pursuant to Section
2.01(a) or Converted by each Lender to Revolving Advances of a different Type
pursuant to Section 2.02(b).

     “Revolving Commitment” means, for each Lender, the amount set opposite
such Lender’s name on Schedule 1.01(a) as its Revolving Commitment or, if such
Lender has entered into any Assignment and Acceptance after the Effective Date,
set forth for such Lender as its Revolving Commitment in the Register
maintained by the Administrative Agent pursuant to Section 9.06(b).

     “Revolving Exposure” at any time shall mean the sum of (i) the aggregate
principal amount of all Revolving Advances and (ii) the aggregate amount of all
Letter of Credit Exposure at such time.

     “Revolving Maturity Date” means October 28, 2005.

     “Revolving Note” means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form of the attached Exhibit A-1,
evidencing indebtedness of the

-25-

 

Borrower to such Lender resulting from Revolving Advances from such
Lender, and “Revolving Notes” means all of such promissory notes.

     “Revolving Share” means, at any time with respect to any Lender with a
Revolving Commitment or outstanding Revolving Advance, the ratio (expressed as
a percentage) of such Lender’s Revolving Commitment at such time to the
aggregate Revolving Commitments at such time, or, if the Revolving Commitments
have been terminated, the ratio (expressed as a percentage) of such Lender’s
Revolving Advances at such time to the aggregate Revolving Advances at such
time.

     “RMA” means the REIT Modernization Act, as amended.

     “Rolling Period” means, as of any date, the four Fiscal Quarters ending on
or immediately preceding such date.

     “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill,
Inc., or any successor thereof.

     “Secured Indebtedness Ratio” means, as of any date, a ratio of (a) the
sum of the Secured Non-Recourse Indebtedness and Secured Recourse Indebtedness
of the Parent and its Subsidiaries on a Consolidated basis (excluding the
Obligations) on such date to (b) the EBITDA of the Parent and its Subsidiaries
on a Consolidated basis for the Rolling Period immediately preceding such date.

     “Secured Non-Recourse Indebtedness” of any Person means all Indebtedness
of such Person and its Subsidiaries on a Consolidated basis with respect to
which recourse for payment is limited to specific assets encumbered by a Lien
securing such Indebtedness; provided, however, that personal recourse of a
holder of Indebtedness against any obligor with respect thereto for fraud,
misrepresentation, misapplication of cash, non-payment of real estate taxes or
ground lease rent, waste and other circumstances customarily excluded from
non-recourse provisions in non-recourse financing of real estate shall not, by
itself, prevent any Indebtedness from being characterized as Secured
Non-Recourse Indebtedness, provided further that if a personal recourse claim
is made in connection therewith, such claim shall not constitute Secured
Non-Recourse Indebtedness for the purposes of this Agreement to the extent of
such claim.

     “Secured Recourse Indebtedness” of any Person means (a) any Total
Indebtedness of such Person for which the obligations thereunder are secured by
a Lien on any assets of such Person or its Subsidiaries minus (b) any Secured
Non-Recourse Indebtedness of such Person or its Subsidiaries.

     “Security Documents” means the Pledge Agreements, and each other document,
instrument or agreement executed in connection therewith or otherwise executed
in order to secure all or a portion of the Obligations.

     “Senior Note
Indenture — $200,000,000 9 1/8% Senior Notes” means that certain
Indenture dated as of February 7, 2002, among MeriStar Hospitality Operating
Partnership, L.P., MeriStar Hospitality Finance Corp. III, MeriStar Hospitality
Corporation, certain guarantors and U.S.

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Bank Trust National Association, as Trustee
covering $200,000,000 9 1/8%
Senior Notes due 2011.

     “Senior Note Indentures” means the following:

     (a)  Senior Note Indenture — $200,000,000 9?% Senior Notes;

     (b)  that certain Indenture dated as of December 19, 2001, among MeriStar
Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp. II,
MeriStar Hospitality Corporation, certain guarantors and U.S. Bank Trust
National Association, as Trustee covering $250,000,000 10 1/2% Senior Notes due
2009; and

     (c)  that certain Indenture dated as of January 26 2001, among MeriStar
Hospitality Operating Partnership, L.P., MeriStar Hospitality Finance Corp.,
MeriStar Hospitality Corporation, certain guarantors and U.S. Bank Trust
National Association, as Trustee covering $300,000,000 9% Senior Notes due 2008
and $200,000,000 9 1/8% Senior Notes due 2011.

     “Senior Unsecured Indebtedness” of any Person means any Unsecured
Indebtedness of such Person which is not Subordinate Indebtedness of such
Person.

     “Senior Unsecured Interest Coverage Ratio” means, as of the end of any
Rolling Period, a ratio of (a) the Parent’s Unencumbered EBITDA to (b) Parent’s
Senior Unsecured Interest Expense, for such Rolling Period.

     “Senior Unsecured Interest Expense” means, for any Person for any period,
the Interest Expense for all Senior Unsecured Indebtedness of such Person and
its Subsidiaries on a Consolidated basis for such Period.

     “Senior Unsecured Leverage Ratio” means the ratio on any date of (a) the
Parent’s Senior Unsecured Indebtedness on such date, to (b) the Parent’s
Unencumbered EBITDA for the Rolling Period immediately preceding such date.

     “SG Cowen ” means SG Cowen Securities Corporation.

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

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     “Status” means the existence of Level I Status, Level II Status, Level III
Status, Level IV Status, Level V Status, or Level VI Status, as the case may
be. As used in this definition:

		
	 	     “Level I Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is less than 5.0;
	 
	 	     “Level II Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is equal to or greater
than 5.0 but less than 5.5;
	 
	 	     “Level III Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is equal to or greater
than 5.5 but less than 6.0;
	 
	 	     “Level IV Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is equal to or greater
than 6.0 but less than 6.5;
	 
	 	     “Level V Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is equal to or greater
than 6.5 but less than 7.0;
	 
	 	     “Level VI Status” exists at any date if, at such date, the Leverage
Ratio at the end of the preceding Rolling Period is equal to or greater
than 7.0.

     Status shall be determined and changed as of the Status Reset Date
following any Fiscal Quarter; provided that if the Borrower fails to timely
provide (a) the financial statements needed to recalculate the Leverage Ratio
as required by the provisions of Section 5.05(a) prior to the 50th day
following the end of any Fiscal Quarter (except for the Fiscal Quarter which
ends on the date the Fiscal Year ends), (b) the draft Compliance Certificate
related to the end of the Fiscal Year as required by the provisions of Section
5.05(b) prior to the 50th day following the end of any Fiscal Year or (c) the
financial statements needed to recalculate the Leverage Ratio as required by
the provisions of Section 5.05(b) prior to the 95th day following the end of
any Fiscal Year, then Status shall automatically be reset at the Status one
level higher than the Status existing immediately prior to such Status reset
until such time as the Borrower provides such financial statements or draft
Compliance Certificate, as applicable; provided further that at the Closing
Date the Status under the Credit Agreement will be reset to Level VI Status and
such Status shall not be reduced until the next Status Reset Date following the
Closing Date.

     “Status Reset Date” means the date following the end of any Fiscal Quarter
which is the earlier of (a) the 50th day following the end of such Fiscal
Quarter and (b) the date which is 5 days following the delivery of the reports
and other documents required by (i) the provisions of Section 5.05(a) for such
Fiscal Quarter (except for the Fiscal Quarter which ends on the date the Fiscal
Year ends) or (ii) the provisions of Section 5.05(b) for the Fiscal Quarter
which ends on the date the Fiscal Year ends; provided that the documents
contemplated by the preceding clause (ii) shall never be deemed delivered prior
to the 40th day following the end of the Fiscal Year.

     “Stock” means shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated)
of or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.

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     “Stock Equivalents” means all securities (other than Stock) convertible
into or exchangeable for Stock and all warrants, options or other rights to
purchase or subscribe for any stock, whether or not presently convertible,
exchangeable or exercisable.

     “Subordinate Convertible Indenture” means the Indenture dated as if
October 16, 1997 between the Parent, as successor by merger to CapStar Hotel
Company, and First Trust of New York, National Association, as trustee covering
CapStar Hotel Company’s $172,500,000 4.75% Convertible Subordinated Notes due
October 15, 2004.

     “Subordinate Indebtedness” means with respect to any Person the
Indebtedness of such Person and its Subsidiaries on a Consolidated basis which
(a) except for the Subordinate Convertible Indenture (but not any refinancings
thereof), shall not mature, become payable or require the payment of any
principal amount thereof (or any amount in lieu thereof) or be mandatorily
redeemable, pursuant to a sinking fund or otherwise redeemable at the option of
the holder thereof, in any case in whole or in part, before the date that is
ninety one (91) days after the Maturity Date and (b) shall be junior and
subordinate to the Obligations and subject to an intercreditor agreement or
subordination provisions which is acceptable to the Administrative Agent

     “Subordinate Indenture” means the Indenture dated as of August 19, 1997
between the Parent, as successor by merger to CapStar Hotel Company, and IBJ
Schroder Bank & Trust Company, as trustee, as amended by First Supplemental
Indenture dated March 20, 1998 and Second Supplemental Indenture dated August
3, 1998, covering approximately $204,000,000 8.75% Senior Subordinated Notes
due August 19, 2007.

     “Subsidiary” of a Person means any corporation, association, partnership
or other business entity of which more than fifty percent (50%) of the
outstanding shares of capital stock (or other equivalent interests) having by
the terms thereof ordinary voting power under ordinary circumstances to elect a
majority of the board of directors or Persons performing similar functions (or,
if there are no such directors or Persons, having general voting power) of such
entity (irrespective of whether at the time capital stock (or other equivalent
interests) of any other class or classes of such entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of such Person.

     “Super Required Lenders” means Non-Defaulting Lenders the sum of whose
outstanding Term Advances and Revolving Commitments (or after the termination
thereof, outstanding Revolving Advances and participations in Letter of Credit
Exposure) represent at least 75% of the sum of all outstanding Term Advances of
Non-Defaulting Lenders and the sum of all Revolving Commitments of
Non-Defaulting Lenders (or after the termination of the Revolving Commitments,
the sum of the then total outstanding Revolving Advances of Non-Defaulting
Lenders, and the aggregate participations of all Non-Defaulting Lenders of
Letter of Credit Exposure at such time).

     “Supplemental Guarantor” means any partner of the Borrower or a Subsidiary
of the Borrower except for the Parent or the Guarantors that executes a
Supplemental Guaranty.

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     “Supplemental Guaranty” means any future assumption of liability in a form
reasonably acceptable to the Administrative Agent executed by a Supplemental
Guarantor to secure a portion of Advances, as such future supplemental
guaranties may be amended hereafter in accordance with their terms.

     “Term Advance” means any advance by a Lender to the Borrower pursuant to
the conversion of Revolving Advances into Term Advances pursuant to Section
2.01(b) or a continuation of an existing Term Advance, and refers to an
Adjusted Base Rate Advance or a Eurodollar Rate Advance.

     “Term Borrowing” means a borrowing consisting of simultaneous Term
Advances of the same Type made by each Lender pursuant to Section 2.01(b) or
Converted by each Lender to Term Advances of a different Type pursuant to
Section 2.02(b).

     “Term Loan Conversion Amount” has the meaning set forth in Section
2.01(b).

     “Term Loan Conversion Date” has the meaning set forth in Section 2.01(b).

     “Term Maturity Date” means October 28, 2005.

     “Term Note” means a promissory note of the Borrower payable to the order
of any Lender in substantially the form of the attached Exhibit A-2, evidencing
indebtedness of the Borrower to such Lender resulting from any Term Advance
from such Lender, and “Term Notes” means all such Term Notes.

     “Term Share” means, at any time with respect to any Lender with an
outstanding Term Advance, the ratio (expressed as a percentage) of such
Lender’s outstanding Term Advances at such time to the aggregate outstanding
Term Advances at such time.

     “Termination Event” means (a) the occurrence of a Reportable Event with
respect to a Plan, as described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations), (b) the withdrawal of
the Borrower or any of the Controlled Group from a Plan during a plan year in
which it was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA, (c) the giving of a notice of intent to terminate a Plan under Section
4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the
PBGC, or (e) any other event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan.

     “Total Indebtedness” of any Person means the sum of the following (without
duplication): (a) all Indebtedness of such Person and its Subsidiaries on a
Consolidated basis, plus (b) to the extent not already included in the
calculation of the preceding clause (a), the aggregate amount of the
Indebtedness of such Person’s or such Person’s Subsidiary’s Unconsolidated
Entities for which such Person has a direct or contingent obligation,
plus (c)
to the extent not already included in the calculation of either of the
preceding clauses (a) or (b), the aggregate amount of letters of credit for
which such Person or any of its Subsidiaries would have a direct or contingent
obligation to reimburse the issuers of such letters of credit upon a
drawing

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under such letters of credit, minus (d) to the extent included in the
calculation of either of the preceding clauses (a), (b), or (c), the amount of
any minority interests.

     “TRS” means a “Taxable REIT Subsidiary” as such term is used in the RMA.

     “Type” has the meaning set forth in Section 1.04.

     “Unconsolidated Entity” means, with respect to any Person, at any date,
any other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP
with the financial results of such Person on the consolidated financial
statements of such Person, if such statements were prepared as of such date.

     “Unconsolidated Entity Percentage” means, for any Person, with respect to
a Person’s Unconsolidated Entity, the percentage ownership interest of such
Person in such Unconsolidated Entity.

     “Unconsolidated Entity Property” means a Hotel Property owned or leased by
an Unconsolidated Entity in which the Parent or one of the Parent’s
Subsidiaries has an Investment, and “Unconsolidated Entity Properties” means
all such Hotel Properties.

     “Unencumbered” means, with respect to any Hotel Property, at any date of
determination, the circumstance that such Hotel Property or the interest of the
Borrower or its Subsidiary therein on such date:

     (a)  is not subject to any Liens (including restrictions on transferability
or assignability except for restrictions on the transferability of ground
leases) of any kind (including any such Lien or restriction imposed by (i) any
agreement governing Indebtedness, or (ii) the organizational documents of the
Borrower or any of its Subsidiaries), but excluding Permitted Encumbrances;

     (b)  is not subject to any agreement (including (i) any agreement governing
Indebtedness, and (ii) if applicable, the organizational documents of the
Borrower or any of its Subsidiaries) which prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon such Hotel Property, other than Permitted Encumbrances
(excluding any agreement or organizational document which limits generally the
amount of Indebtedness which may be incurred by the Borrower or its
Subsidiaries); and

     (c)  is not subject to any agreement (including any agreement governing
Indebtedness) which entitles any Person to the benefit of any Lien (other than
Permitted Encumbrances) on such Hotel Property, or would entitle any Person to
the benefit of any such Lien upon the occurrence of any contingency (including,
without limitation, pursuant to an “equal and ratable” clause).

Notwithstanding the foregoing, the “equal and ratable” clause contained in the
Senior Note Indentures as of the Closing Date, and a similar “equal and
ratable” clause contained in any future indenture for Senior Unsecured
Indebtedness permitted by this Agreement shall not by itself cause a Hotel
Property to fail to qualify as Unencumbered. For the purposes of
this

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Agreement, (a) any Hotel Property owned by a Subsidiary of the Borrower shall
not be deemed to be Unencumbered unless both (i) such Hotel Property and (ii)
all Stock owned directly or indirectly by Borrower in such Subsidiary is
Unencumbered and (b) any Hotel Property leased by the Borrower or a Subsidiary
of the Borrower, as lessee, which lease constitutes Indebtedness of such lessee
shall not be deemed “Unencumbered.”

     “Unencumbered EBITDA” means for any Person for any period for which such
amount is being determined, an amount equal to the EBITDA for such Person and
its Subsidiaries on a Consolidated basis for such period derived from
Unencumbered Hotel Properties; provided that with respect to EBITDA
attributable to an Unconsolidated Entity which owns or leases Unencumbered
Hotel Properties, (a) for any such Unconsolidated Entity for which the
Unconsolidated Entity Percentage is equal to or greater than 20%, such Person
or its Subsidiary, as applicable, shall only be deemed to have received the
Unconsolidated Entity Percentage of such Unconsolidated Entity’s EBITDA derived
from Unencumbered Hotel Properties to the extent not subject to (i) any
limitation or restriction (except for the obligation to repay Indebtedness of
such Person) on the right to distribute such EBITDA to such Person’s owners or
(ii) any decision by another Person to not distribute the available cash of
such Unconsolidated Entity to the owners of such Unconsolidated Entity, and (b)
for any such Unconsolidated Entity for which the Unconsolidated Entity
Percentage is less than 20%, such Person or its Subsidiary shall only be deemed
to have received that actual sums paid by such Unconsolidated Entity to such
Person or its Subsidiary, as applicable, derived from Unencumbered Hotel
Properties.

     “Unencumbered Hotel Property” means a Hotel Property which is
Unencumbered.

     “Unsecured Indebtedness” of any Person means (a) any Total Indebtedness of
such Person minus (b) any Secured Non-Recourse Indebtedness and Secured
Recourse Indebtedness of such Person.

     Section 1.02
Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”.

     Section 1.03
Accounting Terms; Changes in GAAP.

     (a)  All accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the Financial Statements.

     (b)  Unless otherwise indicated, all financial statements of the Borrower
and the Parent, all calculations for compliance with covenants in this
Agreement, and all calculations of any amounts to be calculated under the
definitions in Section 1.01 shall be based upon the Consolidated accounts of
the Borrower, the Parent and their respective Subsidiaries (as applicable) in
accordance with GAAP.

     (c)  If any change in accounting principles after June 30, 2002 required by
GAAP or the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or similar agencies results in a change in the
method of calculation of, or affects the results of such calculation of, any of
the financial covenants, standards or terms found in this

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Agreement, then the parties shall enter into and diligently pursue
negotiations in order to amend such financial covenants, standards or terms so
as to equitably reflect such change, with the desired result that the criteria
for evaluating the financial condition of Borrower and its Subsidiaries
(determined on a Consolidated basis) shall be the same after such change as if
such change had not been made.

     Section 1.04
Classes and Types of Advances. Advances are distinguished by
“Class” and “Type”. The “Class” of an Advance refers to the determination
whether such Advance is a Term Advance or a Revolving Advance, each of which
constitutes a Class. The “Type” of an Advance refers to the determination
whether such Advance is an Eurodollar Rate Advance or Adjusted Base Rate
Advance, each of which constitutes a Type.

     Section 1.05
“Miscellaneous.” Article, Section, Schedule and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.

     Section 1.06
Recitals. The matters set forth in the recitals at the
beginning of this Agreement are agreed to by the parties to this Agreement and
incorporated into this Agreement as if set forth in their entirety herein.

     Section 1.07
Senior Indebtedness. The Obligations and all renewals and
extensions of the Obligations are designated as “Designated Senior
Indebtedness” under the Subordinate Convertible Indenture and the Subordinate
Indenture.

ARTICLE II

THE ADVANCES AND THE LETTERS OF CREDIT

     Section 2.01
The Advances.

     (a) 
Revolving Advances. Subject to and upon the terms and conditions set
forth herein, each Lender severally agrees at any time and from time to time on
any Business Day up to fifteen (15) days prior to the Revolving Maturity Date
to make Revolving Advances; provided that Revolving Advances shall not be made
(or be required to be made) by any Lender on any date if, after giving effect
thereto, (i) such Lender’s Revolving Share of the Revolving Exposure would
exceed such Lender’s Revolving Commitment at such time, or (ii) the Revolving
Exposure would exceed the Revolving Availability at such time; provided that
for purposes of the definition of Revolving Availability only, the Leverage
Ratio shall be deemed to be greater than 7.25 until a Designated Event occurs.
Within the limits set forth in the preceding sentence, the Borrower may from
time to time prepay pursuant to Section 2.07 and reborrow under this Section
2.01(a).

     (b)  Term
Advances. Subject to and upon the terms and conditions set forth
herein, each Lender severally agrees to make, on the Term Loan Conversion Date,
a Term Advance to the Borrower, which Term Advance (i) shall be incurred and
initially maintained as Borrowings of Adjusted Base Rate Advances or Eurodollar
Rate Advances in the same respective amounts as the Revolving Advances that
were converted into Term Advances (subject to the Borrower’s option to convert
such Term Advances pursuant to Section 2.02(b)), and (ii) shall be made by

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each Lender in an aggregate principal amount that is equal to the product
of (a) the Revolving Share of such Lender on the Term Loan Conversion Date
times (b) the Term Loan Conversion Amount. The “Term Loan Conversion Date”
shall mean the first date, if any, on which the aggregate principal amount of
Revolving Advances exceeds the Term Loan Conversion Amount for more than 180
consecutive days. The “Term Loan Conversion Amount” shall mean $75,000,000;
provided that if the aggregate Revolving Commitments are increased to an amount
of $125,000,000 or more as contemplated by the provisions of Section 2.01(c),
then the “Term Loan Conversion Amount” shall be $100,000,000. Prior to the
Revolving Maturity Date, there shall be only one Term Loan Conversion Date. On
the Term Loan Conversion Date, the conversion referred to in this Section
2.01(b) shall occur automatically and without the taking of further action by
redesignating (as compared to repaying and borrowing) outstanding Revolving
Advances in the aggregate principal amount of the Term Loan Conversion Amount
as Term Advances (i) first, Adjusted Base Rate Advances, and (ii) second,
Eurodollar Rate Advances as Borrower shall designate, and failing such
designation, having an Interest Period ending furthest from the Term Loan
Conversion Date. The conversion referred to in this Section 2.01(b) shall occur
regardless of whether a Default or an Event of Default then exists or whether
the conditions precedent to each Borrowing set forth in Section 3.02 are then
satisfied. The Administrative Agent shall promptly notify the Borrower and the
Lenders of the occurrence of the Term Loan Conversion Date. The Revolving
Commitment of each Lender shall be permanently reduced on the Term Loan
Conversion Date by the amount of the Term Advance made by such Lender on such
date. No amount of any Term Borrowing that has been repaid may be reborrowed.

     (c)  Revolving Commitments Increase.

		
	 	     (i) The Borrower shall be entitled to request that the aggregate
Revolving Commitments be increased to an amount not exceeding One Hundred
Fifty Million Dollars ($150,000,000); provided that (A) no Default then
exists, (B) the Borrower gives the Lenders thirty (30) days prior written
notice of such election, (C) no Lender shall be obligated to increase
such Lender’s Revolving Commitment without such Lender’s written consent
which may be withheld in such Lender’s sole discretion, (D) the Borrower,
not the Lenders or the Administrative Agent, is responsible for arranging
for Persons to provide the additional Revolving Commitment amounts, (E)
any Person providing any additional Revolving Commitment amount must
qualify as an Eligible Assignee and be reasonably acceptable to the
Borrower, the Administrative Agent and the Issuing Bank if such Person is
not already a Lender, (F) following the Term Loan Conversion Date the
aggregate Revolving Commitments cannot be increased to an amount
exceeding (1) One Hundred Fifty Million Dollars ($150,000,000) minus (2)
the Term Loan Conversion Amount and (G) at least ten (10) days prior to
any increase in the Revolving Commitments, Borrower shall deliver to the
Lenders a pro forma Compliance Certificate and projections through the
Maturity Date demonstrating that, based upon the Borrower’s good faith
estimate of Obligations following the increase in the Revolving
Commitments, on a pro forma basis the Borrower will be in compliance with
all financial covenants contained in this Agreement for the Rolling
Period ending in the quarter in which such increase in the Revolving
Commitments occurs and all subsequent Rolling Periods. In connection
with any such increase in the Revolving Commitments the parties

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	 	shall execute any documents reasonably requested in connection with
or to evidence such increase, including without limitation an amendment
to this Agreement.

		
	 	     (ii) On the date (the “Funding Date”) designated by the
Administrative Agent, the Lenders whose Revolving Commitments have
increased in connection with such increase in the Revolving Commitments
shall fund to the Administrative Agent such amounts as may be required to
cause each of them to hold its Revolving Share of Revolving Advances
based upon the Revolving Commitments as of such Funding Date, and the
Administrative Agent shall distribute the funds so received to the other
Lenders in such amounts as may be required to cause each of them to hold
its Revolving Share of Revolving Advances as of such Funding Date. The
Lenders receiving such amounts to be applied to Eurodollar Rate Advances
may demand payment of the breakage costs under Section 2.08 as though
Borrower had elected to prepay such Eurodollar Rate Advances on such date
and the Borrower shall pay the amount so demanded as provided in Section
2.08. The first payment of interest and letter of credit fees received
by the Administrative Agent after such Funding Date shall be paid to the
Lenders in amounts adjusted to reflect the adjustments of their
respective Revolving Shares of the Revolving Advances as of the Funding
Date. On the Funding Date each Lender shall be deemed to have either
sold or purchased, as applicable, participations in the Letter of Credit
Exposure sold to the Lenders pursuant to Section 2.13(b) so that upon
consummation of all such sales and purchases each Lender holds
participations in the Letter of Credit Exposure equal to such Lender’s
Revolving Share of the total Letter of Credit Exposure as of such Funding
Date.

     Section 2.02 Method of Borrowing.

     (a)  Notice. Each Borrowing consisting of Revolving Advances shall be made
pursuant to a Notice of Borrowing, given not later than 12:00 noon (New York,
New York time) (i) on the third (3rd) Business Day before the date of the
proposed Borrowing, in the case of a Borrowing consisting of Eurodollar Rate
Advances, or (ii) on the Business Day before the date of the proposed
Borrowing, in the case of a Borrowing consisting of Adjusted Base Rate
Advances, by the Borrower to the Administrative Agent, which shall give each
Lender prompt notice on the day of receipt of such timely Notice of Borrowing
of such proposed Borrowing by telecopier. Each Notice of Borrowing shall be in
writing or by telecopier specifying the requested (i) date of such Borrowing,
(ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing, and (iv) if such Borrowing is to be comprised of Eurodollar Rate
Advances, the Interest Period for each such Advance. The Administrative Agent
shall promptly notify each Lender who is obligated to fund an Advance under
such Notice of Borrowing of such Notice of Borrowing not later than 6:00 p.m.
(New York, New York time) on the day such Notice of Borrowing is deemed
received by the Administrative Agent. In the case of a proposed Borrowing
comprised of Eurodollar Rate Advances, the Administrative Agent shall also so
notify each Lender who is obligated to fund an Advance under such Notice of
Borrowing and the Borrower of the applicable interest rate under Section
2.06(b). Each Lender shall, before 12:00 noon (New York, New York time) on the
date of such Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent at its address referred to in
Section 10.02, or such other location as the Administrative Agent may specify
by notice to the Lenders, in same day funds, such Lender’s Revolving Share of
such

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Borrowing. After the Administrative Agent’s receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the Borrower at its
account with the Administrative Agent. No Notice of Borrowing is required in
connection with (i) the conversion of Revolving Advances to Term Advances
pursuant to the provisions of Section 2.01(b) or (ii) the conversion of any
Existing Letter of Credit to a Letter of Credit in accordance with provisions
of Section 2.13(a).

     (b)  Conversions and Continuations. In order to elect to Convert or
continue Advances comprising part of the same Borrowing under this Section, the
Borrower shall deliver an irrevocable Notice of Conversion or Continuation to
the Administrative Agent at the Administrative Agent’s office no later than
12:00 noon (New York, New York time) (i) on the date which is at least three
(3) Business Days in advance of the proposed Conversion or continuation date in
the case of a Conversion to or a continuation of a Borrowing comprised of
Eurodollar Rate Advances and (ii) on the Business Day prior to the proposed
Term Loan Conversion Date in the case of a Conversion to a Borrowing comprised
of Adjusted Base Rate Advances. Each such Notice of Conversion or Continuation
shall be in writing or by telecopier, specifying (i) the requested Conversion
or continuation date (which shall be a Business Day), (ii) the Borrowing
amount, Class and Type of the Advances to be Converted or continued, (iii)
whether a Conversion or continuation is requested, and if a Conversion, into
what Type of Advances, and (iv) in the case of a Conversion to, or a
continuation of, Eurodollar Rate Advances, the requested Interest Period. Not
later than 6:00 p.m. (New York, New York time) on the day such Notice of
Conversion or Continuation is deemed received by the Administrative Agent, the
Administrative Agent shall provide each Lender who has an Advance affected by
such Notice of Conversion or Continuation with a copy thereof and, in the case
of a Conversion to or a continuation of Eurodollar Rate Advances, notify each
Lender who has an Advance affected by such Notice of Conversion or Continuation
and the Borrower of the applicable interest rate under Section 2.06(b). For
purposes other than the conditions set forth in Section 3.02, the portion of
Advances comprising part of the same Borrowing that are Converted to Advances
of another Type shall constitute a new Borrowing. If the Borrower shall fail
to specify an Interest Period for a Eurodollar Rate Advance including the
continuation of a Eurodollar Rate Advance, the Borrower shall be deemed to have
selected an Adjusted Base Rate Advance. Under no circumstances may the
Borrower convert one Class of Borrowing into another Class of Borrowing;
provided that the conversion of Revolving Advances to Term Advances pursuant to
the provisions of Section 2.01(b) may occur, and in connection therewith no
Notice of Conversion or Continuation is required.

     (c)  Certain Limitations. Notwithstanding anything in paragraphs (a) and
(b) above:

		
	 	     (i) in the case of Eurodollar Rate Advances each Borrowing shall be
in an aggregate amount of not less than $2,000,000 or greater multiples
of $100,000;

		
	 	     (ii) in the case of Adjusted Base Rate Advances each Borrowing shall
be in an aggregate amount of not less than $1,000,000 or greater
multiples of $100,000;

		
	 	     (iii) except for Borrowings for the acquisition of Future Properties
by the Borrower or its Subsidiary, the Borrower may not request
Borrowings on more than four (4) days in any calendar month.

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	 	     (iv) at no time shall there be more than eight (8) Interest Periods
applicable to outstanding Eurodollar Rate Advances;

		
	 	     (v) the Borrower may not select Eurodollar Rate Advances for any
Borrowing to be made, Converted or continued if a Default has occurred
and is continuing;

		
	 	     (vi) if any Lender shall, at any time prior to the making of any
requested Borrowing comprised of Eurodollar Rate Advances, notify the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other governmental authority asserts that it is unlawful,
for such Lender or its Eurodollar Lending Office to perform its
obligations under this Agreement to make Eurodollar Rate Advances or to
fund or maintain Eurodollar Rate Advances, then such Lender’s Revolving
Share or Term Share, as applicable, of such Borrowing shall be made as an
Adjusted Base Rate Advance, provided that such Adjusted Base Rate Advance
shall be considered part of the same Borrowing and interest on such
Adjusted Base Rate Advance shall be due and payable at the same time that
interest on the Eurodollar Rate Advances comprising the remainder of such
Borrowing shall be due and payable; and such Lender agrees to use
commercially reasonable efforts (consistent with its internal policies
and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such designation would avoid
the effect of this paragraph and would not, in the reasonable judgment of
such Lender, be otherwise materially disadvantageous to such Lender;

		
	 	     (vii) if the Administrative Agent is unable to determine the
Eurodollar Rate for Eurodollar Rate Advances comprising any requested
Borrowing, the right of the Borrower to select Eurodollar Rate Advances
for such Borrowing or for any subsequent Borrowing shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist, and each
Advance comprising such Borrowing shall be an Adjusted Base Rate Advance;

		
	 	     (viii) if the Required Lenders shall, at least one (1) Business Day
before the date of any requested Borrowing, notify the Administrative
Agent that the Eurodollar Rate for Eurodollar Rate Advances comprising
such Borrowing will not adequately reflect the cost to such Lenders of
making or funding their respective Eurodollar Rate Advances, as the case
may be, for such Borrowing, the right of the Borrower to select
Eurodollar Rate Advances for such Borrowing or for any subsequent
Borrowing shall be suspended until the Administrative Agent shall notify
the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing
shall be an Adjusted Base Rate Advance; and

		
	 	     (ix) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate Advances in
accordance with the provisions contained in the definition of “Interest
Period” in Section 1.01 and paragraph (a) or (b) above, the
Administrative Agent will forthwith so notify the Borrower and the
Lenders and such Advances will be made available to the Borrower on the
date of such Borrowing as Adjusted Base Rate Advances or, if an existing
Advance, Converted into Adjusted Base Rate Advances.

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     (d)  Notices Irrevocable. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower.
In the case of any Borrowing which the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, out-of-pocket cost or expense incurred by such Lender
as a result of any condition precedent for Borrowing set forth in Article III
not being satisfied for any reason, including, without limitation, any loss,
cost or expense actually incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing when such Advance, as a result of
such failure, is not made on such date.

     (e)  Administrative Agent Reliance. Unless the Administrative Agent shall
have received notice from a Lender before the date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender’s
Revolving Share or Term Share, as applicable, of the Borrowing, the
Administrative Agent may assume that such Lender has made its Revolving Share
or Term Share, as applicable, of such Borrowing available to the Administrative
Agent on the date of such Borrowing in accordance with paragraph (a) of this
Section 2.02 and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made its Revolving
Share or Term Share, as applicable, of such Borrowing available to the
Administrative Agent, such Lender and the Borrower severally agree to
immediately repay to the Administrative Agent on demand such corresponding
amount, together with interest on such amount, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid
to the Administrative Agent, at (i) in the case of the Borrower, the interest
rate applicable on each such day to Advances comprising such Borrowing and (ii)
in the case of such Lender, the Federal Funds Rate for each such day. If such
Lender shall repay to the Administrative Agent such corresponding amount and
interest as provided above, such corresponding amount so repaid shall
constitute such Lender’s Advance as part of such Borrowing for purposes of this
Agreement even though not made on the same day as the other Advances comprising
such Borrowing.

     (f)  Lender Obligations Several. The failure of any Lender to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, to make its Advance on the date of such
Borrowing. No Lender shall be responsible for the failure of any other Lender
to make the Advance to be made by such other Lender on the date of any
Borrowing.

     (g)  Notes. The indebtedness of the Borrower to each Lender resulting from
Revolving Advances owing to such Lender shall be evidenced by a Revolving Note
of the Borrower payable to the order of such Lender in substantially the form
of Exhibit A-1. If the Term Loan Conversion Date occurs, the indebtedness of
the Borrower to each Lender resulting from Term Advances owing to such Lender
shall be evidenced by a Term Note of the Borrower payable to the order of such
Lender in substantially the form of Exhibit A-2 executed and delivered within
two (2) Business Days of the Term Loan Conversion Date.

     Section 2.03 Fees.

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     (a) Commitment
Fees. For the period from the Effective Date until the
Revolving Maturity Date the Borrower agrees to pay to the Administrative Agent
for the account of each Lender with a Revolving Commitment a commitment fee on
the average daily amount by which such Lender’s Revolving Commitment exceeds
such Lender’s Revolving Share of the Revolving Exposure at a rate per annum
equal to the Applicable Margin (computed on the actual number of days elapsed,
including the first day and excluding the last, based upon a 360-day year).
Such fees shall be due and payable quarterly in arrears (i) on the date which
is 30 days following the end of the last Business Day of each March, June,
September and December and (ii) on the Revolving Maturity Date.

     (b)  Letter
of Credit Fees. The Borrower agrees to pay to the
Administrative Agent for the benefit of the Lenders with a Revolving
Commitment, fees in respect of all Letters of Credit outstanding at a rate per
annum equal to the Applicable Margin (computed on the actual number of days
elapsed, including the first day and excluding the last, based upon a 360-day
year) on the average daily amount of the aggregate undrawn maximum amount of
each Letter of Credit outstanding, payable in arrears (i) on the date which is
30 days following the last Business Day of each March, June, September and
December and (ii) on the Maturity Date. In addition, the Borrower agrees to
pay to the Issuing Bank for its own account a fee on the average daily amount
of the aggregate undrawn maximum amount of each Letter of Credit issued by
such Issuing Bank at a rate per annum equal to one eighth of one percent
(.125%), such fees due and payable quarterly in arrears (i) on the date which
is 30 days following the last Business Day of each March, June, September and
December and (ii) on the Revolving Maturity Date.

     (c)  Fee
Letter. The Borrower agrees to pay to the Administrative Agent
for the benefit of Société Générale and SG Cowen, as applicable, the fees set
forth in the Fee Letter payable to such Persons as and when the same are due
and payable pursuant to the terms of the Fee Letter. The Borrower agrees to pay
to the Administrative Agent for the benefit of the Lenders the upfront fees
payable to the Lenders set forth in the Fee Letter on the Closing Date pursuant
to the terms of the Fee Letter.

     Section 2.04
Reduction of the Revolving Commitments.

     (a)  Upon the occurrence of a Change in Control in the Parent or the
Borrower, then, in such event the Required Lenders may, at their sole option
upon written notice to the Borrower (a “Termination Notice”), declare the
obligation of each Lender to make Advances and the obligation of the Issuing
Bank to issue, increase, or extend Letters of Credit to be terminated,
whereupon the same shall forthwith terminate and the Revolving Commitments
shall reduce to zero.

     (b) The Borrower may, upon at least three Business Days’ prior notice to
the Administrative Agent, permanently terminate in whole or permanently reduce
ratably in part the Revolving Commitments of the Lenders; provided, however,
that (i) each partial reduction shall be in the aggregate amount of not less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (ii)
no such reduction shall result in an overdraft status as provided in Section
2.07(c)(ii), and (iii) no such reduction shall result in the total aggregate
Revolving Commitments of the Lenders being less than $50,000,000.

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     Section 2.05
Repayment of Advances on the Maturity Date. The Borrower
shall repay the outstanding principal amount of each Advance on the applicable
Maturity Date.

     Section 2.06
Interest, Late Payment Fee. The Borrower shall pay interest
on the unpaid principal amount of each Advance made by each Lender from the
date of such Advance until such principal amount shall be paid in full, at the
following rates per annum:

     (a)  Adjusted
Base Rate Advances. If such Advance is an Adjusted Base Rate
Advance, a rate per annum (computed on the actual number of days elapsed,
including the first day and excluding the last, based on a 365 day year) equal
at all times to the lesser of (i) the Adjusted Base Rate in effect from time to
time plus the Applicable Margin and (ii) the Maximum Rate, payable in arrears
on the first Business Day of each calendar month and on the date such Adjusted
Base Rate Advance shall be paid in full, provided that during the continuance
of an Event of Default, Adjusted Base Rate Advances shall bear interest at a
rate per annum equal at all times to the lesser of (i) the rate required to be
paid on such Advance immediately prior to the date on which such amount becomes
due plus three percent (3%) and (ii) the Maximum Rate.

     (b) 
Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
Advance, a rate per annum (computed on the actual number of days elapsed,
including the first day and excluding the last, based on a 360 day year) equal
at all times during the Interest Period for such Advance to the lesser of (i)
the Eurodollar Rate for such Interest Period plus the Applicable Margin and
(ii) the Maximum Rate, payable in arrears on the last day of such Interest
Period, and on the date such Eurodollar Rate Advance shall be paid in full,
and, with respect to Eurodollar Rate Advances having an Interest Period in
excess of 30 days, the first day of each calendar month during such Interest
Period excluding the month in which such Eurodollar Rate Advance shall be paid
in full; provided that during the continuance of an Event of Default,
Eurodollar Rate Advances shall bear interest at a rate per annum equal at all
times to the lesser of (i) the rate required to be paid on such Advance
immediately prior to the date on which such amount became due plus three
percent (3%) and (ii) the Maximum Rate.

     (c)  Usury Recapture. In the event the rate of interest chargeable under
this Agreement or the Notes at any time is greater than the Maximum Rate, the
unpaid principal amount of the Notes shall bear interest at the Maximum Rate
until the total amount of interest paid or accrued on the Notes equals the
amount of interest which would have been paid or accrued on the Notes if the
stated rates of interest set forth in this Agreement had at all times been in
effect. In the event, upon payment in full of the Notes, the total amount of
interest paid or accrued under the terms of this Agreement and the Notes is
less than the total amount of interest which would have been paid or accrued if
the rates of interest set forth in this Agreement had, at all times, been in
effect, then the Borrower shall, to the extent permitted by applicable law, pay
the Administrative Agent for the account of the Lenders an amount equal to the
difference between (i) the lesser of (A) the amount of interest which would
have been charged on the Notes if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued on the Notes if
the rates of interest set forth in this Agreement had at all times been in
effect and (ii) the amount of interest actually paid or accrued under this
Agreement on the Notes. In the event the Lenders ever receive, collect or
apply as interest any sum in excess of the Maximum Rate, such excess amount
shall, to the extent permitted by law,

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be applied to the reduction of the principal balance of the Notes, and if
no such principal is then outstanding, such excess or part thereof remaining
shall be paid to the Borrower.

     (d)  Other
Amounts Overdue. If any amount payable under this Agreement
other than the Advances is not paid when due and payable, including without
limitation, accrued interest and fees, then such overdue amount shall accrue
interest hereon due and payable on demand at a rate per annum equal to the
Adjusted Base Rate plus three percent (3%), from the date such amount became
due until the date such amount is paid in full.

     (e)  Late
Payment Fee. Subject to the provisions of Section 10.14, if any
interest payable under this Agreement is not paid when due and payable (after
taking into account any applicable grace period), then the Borrower will pay to
the Administrative Agent for the account of the Lenders contemporaneously with
the payment of such past due interest a late payment fee equal to an amount
equal to the product of (i) such overdue interest times (ii) four percent (4%).

     Section 2.07
Prepayments.

     (a)  Right to Prepay The Borrower shall have no right to prepay any
principal amount of any Advance except as provided in this Section 2.07.

     (b)  Optional
Prepayments. The Borrower may elect to prepay any of the
Advances, after giving by 12:00 noon (New York, New York time) (i) in the case
of Eurodollar Rate Advances, at least three Business Days’ or (ii) in case of
Adjusted Base Rate Advances, at least one Business Day’s prior written notice
to the Administrative Agent stating the Class or Classes to be repaid, the
proposed date and aggregate principal amount of such prepayment, and if
applicable, the relevant Interest Period for the Advances to be prepaid. If
any such notice is given, the Borrower shall prepay Advances comprising part of
the same Borrowing in whole or ratably in part in an aggregate principal amount
equal to the amount specified in such notice, and shall also pay accrued
interest to the date of such prepayment on the principal amount prepaid and
amounts, if any, required to be paid pursuant to Section 2.08 as a result of
such prepayment being made on such date; provided, however, that each partial
prepayment shall be in an aggregate principal amount not less than $1,000,000
and in integral multiples of $100,000.

     (c) 
Mandatory Prepayments.

		
	 	     (i)
Change of Control. On the fifth Business Day following the
Borrower’s receipt of a Termination Notice pursuant to Section 2.04(a)
hereof, the Borrower shall be required to prepay all outstanding Advances
in full and to deposit with the Administrative Agent into the Cash
Collateral Account an amount equal to the Letter of Credit Exposure.
	 
	 	     (ii)
Overdraft. On any date on which the outstanding principal
amount of the Revolving Exposure exceeds the aggregate Revolving
Availability, the Borrower agrees to make a prepayment of the Revolving
Advances in the amount of such excess.
	 
	 	     (iii)
Repayment Event. Upon the occurrence of any Repayment Event,
the Borrower shall prepay Advances on the Business Day the Net Cash
Proceeds from such Repayment Event are received by the Borrower or the
Parent, as applicable, in an amount equal to the lesser of (A) the amount
of the outstanding Advances on such Business Day

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	 	and (B) 100% of the Net Cash Proceeds of such Repayment Event. If,
in connection with an Asset Disposition which qualifies as a Repayment
Event for which the Borrower has not used the Net Cash Proceeds to repay
the Obligations, the Borrower has failed to make an Investment or
Investments in the Hospitality/Leisure-Related Business with such Net
Cash Proceeds within one year from the date of such Asset Disposition,
then the Borrower shall prepay Advances on the first anniversary of the
Business Day such Net Cash Proceeds are received by the Borrower or the
Parent, as applicable, in the amount equal to the lesser of (A) the
amount of the outstanding Advances on such first anniversary and (B) 100%
of the Net Cash Proceeds of such Repayment Event which have not been used
to make an Investment or Investments in the Hospitality/Leisure-Related
Business. Any Net Cash Proceeds utilized to repay Advances will be
applied in the following order: (a) first, to repay the outstanding
principal of Term Advances, and (b) second, to repay the outstanding
principal of Revolving Advances.
	 
	 	     (iv) Accrued Interest. Each prepayment pursuant to this Section
2.07(c) shall be accompanied by accrued interest on the amount prepaid to
the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.08 as a result of such prepayment being made on
such date.

		
	 	     (v)
Avoidance of Breakage Costs. In the event that the amount of
any mandatory prepayment of Advances under this Section 2.07(c) exceeds
the aggregate principal amount of Advances in any Class which consist of
Adjusted Base Rate Advances (the amount of such excess being the
“Excess
Amount“), the Borrower shall have the right, in lieu of making such
prepayment in full, to prepay such outstanding Advances which are
Adjusted Base Rate Advances and to deposit an amount equal to the Excess
Amount with the Administrative Agent in the Cash Collateral Account
maintained by and in the sole dominion and control of the Administrative
Agent for the ratable benefit of the Lenders. Any amount so deposited
shall be held by the Administrative Agent as collateral for the
Obligations, earn interest on behalf of the Borrower and be applied to
the prepayment of Advances which are Eurodollar Rate Advances at the end
of the current Interest Period(s) applicable thereto. On any day on
which amounts collected in the Cash Collateral Account remain on deposit
in or to the credit of the Cash Collateral Account after giving effect to
the payment made on such day pursuant to this Section 2.07(c), and the
Borrower shall have delivered to the Administrative Agent a written
request or a telephonic request (which shall be promptly confirmed in
writing) prior to 12:00 noon (New York, New York time) that such
remaining collected amounts be invested in cash equivalents specified in
such request, the Administrative Agent shall invest such funds, to the
extent the Administrative Agent is reasonably able to do so, in such cash
equivalents as are acceptable to, and with no risk to, the Administrative
Agent on an overnight basis or with maturities such that amounts will be
available to pay the Obligations secured thereby as they become due,
whether at maturity, by acceleration or otherwise; provided, however,
that any loss resulting from such investments shall be charged to and be
immediately payable by the Borrower on demand by the Administrative
Agent.

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     (d)  Ratable Payments. Each payment of any Advance pursuant to this
Section 2.07 or any other provision of this Agreement shall be made in a manner
such that all Advances comprising part of the same Borrowing are paid in whole
or ratably in part.

     (e)  Effect of Notice. All notices given pursuant to this Section 2.07
shall be irrevocable and binding upon the Borrower.

     (f)  Payments with respect to Florida Liens. Notwithstanding anything in
this Agreement or any other Credit Document to the contrary, each payment of
any Advance pursuant to this Section 2.07 or any other provision of this
Agreement shall be made in a manner such that all Advances secured by Florida
Liens shall be deemed the last Advances repaid.

     Section 2.08 Breakage Costs. If (a) any payment of principal of any
Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Advance as a result of any payment pursuant to Section 2.07 or
the acceleration of the maturity of the Notes pursuant to Article VIII or
otherwise; (b) any Conversion of a Eurodollar Rate Advance is made other than
on the last day of the Interest Period for such Advance pursuant to Section
2.12 or otherwise; or (c) the Borrower fails to make a principal or interest
payment with respect to any Eurodollar Rate Advance on the date such payment is
due and payable, the Borrower shall, within 10 days of any written demand sent
by any Lender to the Borrower through the Administrative Agent, pay to the
Administrative Agent for the account of such Lender any amounts (without
duplication of any other amounts payable in respect of breakage costs) required
to compensate such Lender for any additional losses, out-of-pocket costs or
expenses which it may reasonably incur as a result of such payment or
nonpayment, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.

     Section 2.09 Increased Costs.

     (a)  Eurodollar Rate Advances. If, due to either (i) the introduction of
or any change (other than any change by way of imposition or increase of
reserve requirements included in the calculation of the Eurodollar Rate) in or
in the interpretation of any law or regulation following the date of this
Agreement or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
not complied with prior to the date of this Agreement, there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), immediately pay to the Administrative Agent for the
account of such Lender additional amounts (without duplication of any other
amounts payable in respect of increased costs) sufficient to compensate such
Lender for such increased cost; provided, however, that, before making any such
demand, each Lender agrees to use commercially reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost and would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender. A certificate as to the amount of such increased cost and detailing
the calculation of such cost submitted to the Borrower and the Administrative
Agent by such Lender at the time such Lender demands

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 payment under this Section shall be conclusive and binding for all
purposes, absent manifest error.

     (b)  Capital Adequacy. If any Lender or the Issuing Bank determines in
good faith that compliance with any law or regulation or any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) implemented or effective after the date of this
Agreement affects or would affect the amount of capital required or expected to
be maintained by such Lender, any corporation controlling such Lender or the
Issuing Bank and that the amount of such capital is increased by or based upon
the existence of such Lender’s commitment to lend or the Issuing Bank’s
commitment to issue Letters of Credit or any Lender’s commitment to risk
participate in Letters of Credit and other commitments of this type, then, upon
thirty (30) days prior written notice by such Lender or the Issuing Bank (with
a copy of any such demand to the Administrative Agent), the Borrower shall
immediately pay to the Administrative Agent for the account of such Lender or
to the Issuing Bank, as the case may be, from time to time as specified by such
Lender or the Issuing Bank, additional amounts (without duplication of any
other amounts payable in respect of increased costs) sufficient to compensate
such Lender, such corporation or the Issuing Bank, in light of such
circumstances, (i) with respect to such Lender or such corporation, to the
extent that such Lender or such corporation reasonably determines such increase
in capital to be allocable to the existence of such Lender’s or such
corporation’s Lender’s commitment to lend under this Agreement or its
commitment to risk participate in Letters of Credit and (ii) with respect to
the Issuing Bank, to the extent that such Issuing Bank reasonably determines
such increase in capital to be allocable to the issuance or maintenance of the
Letters of Credit. A certificate as to such amounts and detailing the
calculation of such amounts submitted to the Borrower and the Administrative
Agent by such Lender or the Issuing Bank shall be conclusive and binding for
all purposes, absent manifest error.

     (c)  Letters of Credit. If any change in any law or regulation (except
with respect to Taxes or Other Taxes) or in the interpretation thereof by any
court or administrative or Governmental Authority charged with the
administration thereof following the date of this Agreement shall either (i)
impose, modify, or deem applicable any reserve, special deposit, or similar
requirement against letters of credit issued by, or assets held by, or deposits
in or for the account of, Issuing Bank or any Lender or (ii) impose on Issuing
Bank or any Lender any other condition regarding the provisions of this
Agreement relating to the Letters of Credit or any Letter of Credit
Obligations, and the result of any event referred to in the preceding clause
(i) or (ii) shall be to increase the cost to Issuing Bank of issuing or
maintaining any Letter of Credit, or increase the cost to such Lender of its
risk participation in any Letter of Credit (which increase in cost shall be
determined by Issuing Bank’s or such Lender’s reasonable allocation of the
aggregate of such cost increases resulting from such event), then, upon demand
by Issuing Bank or such Lender (with a copy sent to the Administrative Agent),
as the case may be, the Borrower shall pay to the Administrative Agent for the
account of Issuing Bank or Lender, as the case may be, from time to time as
specified by Issuing Bank or such Lender, additional amounts which shall be
sufficient to compensate such Issuing Bank or such Lender for such increased
cost. Issuing Bank and each Lender agrees to use commercially reasonable
efforts (consistent with internal policy and legal and regulatory restrictions)
to designate a different Applicable Lending Office for the booking of its
Letters of Credit or risk participations if the making of such designation
would avoid the effect of this paragraph and would not, in the reasonable
judgment

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of Issuing Bank or such Lender, be otherwise disadvantageous to Issuing
Bank or such Lender, as the case may be. A certificate as to such increased
cost incurred by Issuing Bank or such Lender, as the case may be, as a result
of any event mentioned in clause (i) or (ii) above, and detailing the
calculation of such increased costs submitted by Issuing Bank or such Lender to
the Borrower and the Administrative Agent, shall be conclusive and binding for
all purposes, absent manifest error.

     Section 2.10 Payments and Computations.

     (a)  Payment Procedures. Except if otherwise set forth herein, the
Borrower shall make each payment under this Agreement and under the Notes not
later than 12:00 noon (New York, New York time) on the day when due in Dollars
to the Administrative Agent at the location referred to in the Notes (or such
other location as the Administrative Agent shall designate in writing to the
Borrower) in same day funds. The Administrative Agent will on the same day
cause to be distributed like funds relating to the payment of principal,
interest or fees ratably (other than amounts payable solely to the
Administrative Agent, the Issuing Banks, or a specific Lender pursuant to
Section 2.03(b), 2.03(c), 2.06(c), 2.08, 2.09, 2.11, 2.12, or 2.13(c) but after
taking into account payments effected pursuant to Section 10.04) to the Lenders
in accordance with, in the case of a payment made in respect of a Revolving
Borrowing, each Lender’s Revolving Share, and in the case of a payment made in
respect of Term Borrowing, each Lender’s Term Share for the account of their
respective Applicable Lending Offices, and like funds relating to the payment
of any other amount payable to any Lender or Issuing Bank for the account of
its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement.

     (b)  Computations. All computations of interest based on the Adjusted Base
Rate shall be made by the Administrative Agent on the basis of a year of 365
days and all computations of fees and interest based on the Eurodollar Rate and
the Federal Funds Rate shall be made by the Administrative Agent on the basis
of a year of 360 days, in each case for the actual number of days (including
the first day, but excluding the last day) occurring in the period for which
such interest or fees are payable. Each determination by the Administrative
Agent of an interest rate shall be conclusive and binding for all purposes,
absent manifest error.

     (c)  Non-Business Day Payments. Whenever any payment shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

     (d)  Administrative Agent Reliance. Unless the Administrative Agent shall
have received written notice from the Borrower prior to the date on which any
payment is due to the Lenders that the Borrower will not make such payment in
full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such date an amount equal to the amount then due such Lender. If and
to the extent the Borrower shall not have so made such payment in full to the
Administrative

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Agent, each Lender shall repay to the Administrative Agent forthwith on
demand such amount distributed to such Lender, together with interest, for each
day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Administrative Agent, at the Federal Funds
Rate for each such day.

     (e)  Application of Payments. Unless otherwise specified in Section 2.07
hereof, whenever any payment received by the Administrative Agent under this
Agreement is insufficient to pay in full all amounts then due and payable under
this Agreement and the Notes, such payment shall be distributed and applied by
the Administrative Agent and the Lenders in the following order: first, to the
payment of fees and expenses due and payable to the Administrative Agent under
and in connection with this Agreement or any other Credit Document; second, to
the payment of all expenses due and payable under Section 2.11(c), ratably
among the Lenders in accordance with the aggregate amount of such payments owed
to each such Lender; third, to the payment of fees due and payable to the
Issuing Bank pursuant to Section 2.03(b); fourth, to the payment of all other
fees due and payable under Section 2.03; and fifth, to the payment of the
interest accrued on and the principal amount of all of the Notes and the
interest accrued on and all Letter of Credit Obligations, regardless of whether
any such amount is then due and payable, ratably among the Lenders in
accordance with the aggregate accrued interest plus the aggregate principal
amount owed to such Lender.

     (f)  Register. The Administrative Agent shall record in the Register the
Revolving Commitment and the Advances from time to time of each Lender and each
repayment or prepayment in respect to the principal amount of such Advances of
each Lender. Any such recordation shall be conclusive and binding on the
Borrower and each Lender, absent manifest error; provided however, that failure
to make any such recordation, or any error in such recordation, shall not
affect the Borrower’s obligations hereunder in respect of such Advances.

     Section 2.11 Taxes.

     (a)  No Deduction for Certain Taxes. Any and all payments by the Borrower
shall be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender, Issuing Bank, and the Administrative Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Lender, Issuing Bank, or the Administrative Agent
(as the case may be) is organized or carries on business (other than as a
result of a connection arising primarily from the Lender, Issuing Bank, or the
Administrative Agent (as the case may be) having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement) or any political subdivision of the jurisdiction (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”) and, in the case of each
Lender and Issuing Bank, Taxes by the jurisdiction of such Lender’s Applicable
Lending Office or any political subdivision of such jurisdiction. If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable to any Lender, Issuing Bank, or the Administrative Agent, (i) the
sum payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11), such Lender, Issuing Bank, or the Administrative
Agent (as the case may be) receives an amount equal to the sum it would have

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received had no such deductions been made; provided, however, that if the
Borrower’s obligation to deduct or withhold Taxes is caused solely by such
Lender’s, Issuing Bank’s, or the Administrative Agent’s failure to provide the
forms described in paragraph (e) of this Section 2.11 and such Lender, Issuing
Bank, or the Administrative Agent could have provided such forms or if such
Lender, Issuing Bank, or the Administrative Agent (as the case may be) fails to
comply with Section 2.11(g), no such increase shall be required; (ii) the
Borrower shall make such deductions; and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Legal Requirements.

     (b)  Other Taxes. In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Notes, or the other Credit Documents (hereinafter referred to as
“Other Taxes”).

     (c)  Indemnification. The Borrower indemnifies each Lender, Issuing Bank,
and the Administrative Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
Governmental Authority on amounts payable under this Section 2.11) paid by such
Lender, Issuing Bank, or the Administrative Agent (as the case may be) and any
liability (including interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Each payment required to be made by the Borrower in respect of this
indemnification shall be made to the Administrative Agent for the benefit of
any party claiming such indemnification within thirty (30) days from the date
the Borrower receives written demand detailing the calculation of such amounts
therefor from the Administrative Agent on behalf of itself as Administrative
Agent, Issuing Bank, or any such Lender. If any Lender, the Administrative
Agent, or Issuing Bank receives a refund, offset, credit or deduction in
respect of any Taxes or Other Taxes paid by the Borrower under this paragraph
(c), such Lender, the Administrative Agent, or Issuing Bank, as the case may
be, shall promptly pay to the Borrower the Borrower’s share of such refund,
offset, credit or deduction, received by or credited to the Lender, the
Administrative Agent, or Issuing Bank, as the case may be, (reduced by any
Taxes imposed on the Lender, the Administrative Agent, or Issuing Bank, as the
case may be, by reason of the receipt, accrual or payment of such refund,
offset, credit or deduction).

     (d)  Evidence of Tax Payments. The Borrower will pay prior to delinquency
all Taxes and Other Taxes payable in respect of any payment. Within 30 days
after the date of any payment of Taxes, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 10.02, the original
or a certified copy of a receipt evidencing payment of such Taxes or Other
Taxes.

     (e)  Foreign Lender Withholding Exemption. Each Lender and Issuing Bank
that is not incorporated under the laws of the United States of America or a
state thereof agrees that it will deliver to the Borrower and the
Administrative Agent on the date of this Agreement or upon the effectiveness of
any Assignment and Acceptance two duly completed copies of the Prescribed
Forms, as the case may be, certifying in each case that such Lender is entitled
to receive payments under this Agreement and the Notes payable to it, without
deduction or withholding of any United States federal income taxes. Each
Lender which delivers to the

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Borrower and the Administrative Agent a Prescribed Form further undertakes
to deliver to the Borrower and the Administrative Agent on or before the date
that any such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously delivered by it to
the Borrower and the Administrative Agent two further copies of a replacement
Prescribed Form. If an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any delivery
required by the preceding sentence would otherwise be required which renders
all such forms inapplicable or which would prevent any Lender from duly
completing and delivering any such letter or form with respect to it and such
Lender advises the Borrower and the Administrative Agent that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax, and in the case of a Prescribed Form establishing an
exemption from, or a reduced rate of, United States backup withholding tax,
such Lender shall not be required to deliver such forms. The Borrower shall
withhold tax at the rate and in the manner required by the laws of the United
States with respect to payments made to a Lender failing to timely provide the
Prescribed Forms.

     (f)  Nothing in this Section 2.11 shall require any Lender, the Issuing
Bank, or the Administrative Agent to make available any of its tax returns (or
any other information that it deems to be confidential or proprietary, in its
sole discretion).

     (g)  If the Issuing Bank or any Lender claims any additional amounts
payable pursuant to this Section 2.11, then such Issuing Bank or Lender (as the
case may be) shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not be otherwise disadvantageous to such
Issuing Bank or Lender.

     Section 2.12 Illegality. If any Lender shall notify the Administrative
Agent and the Borrower that the introduction of or any change in or in the
interpretation of any Legal Requirement makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such
Lender or its Eurodollar Lending Office to perform its obligations under this
Agreement to maintain any Eurodollar Rate Advances of such Lender then
outstanding hereunder, then, notwithstanding anything herein to the contrary,
the Borrower shall, if demanded by such Lender by notice to the Borrower and
the Administrative Agent no later than 12:00 noon (New York, New York time),
(a) if not prohibited by Legal Requirement to maintain such Eurodollar Rate
Advances for the duration of the Interest Period, on the last day of the
Interest Period for each outstanding Eurodollar Rate Advance of such Lender or
(b) if prohibited by Legal Requirement to maintain such Eurodollar Rate
Advances for the duration of the Interest Period, on the second Business Day
following its receipt of such notice from such Lender, Convert all Eurodollar
Rate Advances of such Lender then outstanding to Adjusted Base Rate Advances,
and pay accrued interest on the principal amount Converted to the date of such
Conversion and amounts, if any, required to be paid pursuant to Section 2.08 as
a result of such Conversion being made on such date. Each Lender agrees to use
commercially reasonable efforts (consistent with its internal policies and
legal and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such designation would avoid the effect of this
paragraph and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.

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     Section 2.13 Letters of Credit.

     (a)  Issuance. From time to time from the date of this Agreement until
three months before the Revolving Maturity Date, at the request of the
Borrower, the Issuing Bank shall, on any Business Day and on the terms and
conditions hereinafter set forth, issue, increase, decrease, amend, or extend
the expiration date of Letters of Credit for the account of the Borrower (for
its own benefit or for the benefit of any of its Subsidiaries). Upon the
Effective Date, but subject to the limitations contained in the following
sentence, each Existing Letter of Credit shall be automatically converted to a
Letter of Credit. No Letter of Credit will be issued, increased, or extended
and no Existing Letter of Credit will be converted to a Letter of Credit (i) if
such issuance, increase, extension or conversion would cause the Letter of
Credit Exposure to exceed the lesser of (A) $50,000,000 or (B) an amount equal
to (1) the Revolving Availability at such time less (2) the Revolving Exposure
at such time; (ii) unless such Letter of Credit has an Expiration Date not
later than the earlier of (A) one year after the date of issuance thereof and
(B) one day prior to the Revolving Maturity Date; (iii) unless such Letter of
Credit is in form and substance acceptable to the respective Issuing Bank; (iv)
unless such Letter of Credit is a standby letter of credit not supporting the
repayment of indebtedness for borrowed money of any Person; (v) unless the
Borrower has delivered to the respective Issuing Bank the completed and
executed Letter of Credit Documents (other than the Letter of Credit) on such
Issuing Bank’s standard form, which shall contain terms no more restrictive
than the terms of this Agreement; (vi) unless such Letter of Credit is governed
by the International Standby Practices (1998) (“ISP”) or any successor to the
ISP; and (vii) unless no Default has occurred and is continuing or would result
from the issuance of such Letter of Credit. If the terms of any of the Letter
of Credit Documents referred to in the foregoing clause (v) conflicts with the
terms of this Agreement, the terms of this Agreement shall control.

     (b)  Participations. On the date of the issuance or increase of any Letter
of Credit on or after the Effective Date or the conversion of any Existing
Letter of Credit to a Letter of Credit in accordance with provisions of the
preceding Section 2.13(a), each Issuing Bank shall be deemed to have sold to
each other Lender and each other Lender shall have been deemed to have
purchased from such Issuing Bank a participation in the Letter of Credit
Exposure related to the Letters of Credit issued by such Issuing Bank equal to
such Lender’s Revolving Share at such date and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement. Each Issuing Bank
shall promptly notify each such participant Lender by telex, telephone, or
telecopy of each Letter of Credit of such Issuing Bank issued, increased or
decreased, and the actual dollar amount of such Lender’s participation in such
Letter of Credit. Each Lender’s obligation to purchase participating interests
pursuant to this Section and to reimburse the respective Issuing Bank for such
Lender’s Revolving Share of any payment under a Letter of Credit by such
Issuing Bank not reimbursed in full by the Borrower shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any of the circumstances described in paragraph (d) below, (ii)
the occurrence and continuance of a Default, (iii) an adverse change in the
financial condition of the Borrower or any Guarantor, or (iv) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing, except for any such circumstance, happening or event
constituting or arising from gross negligence or willful misconduct on the part
of such Issuing Bank.

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     (c)  Reimbursement. The Borrower shall have the right (but not the
obligation) to pay promptly on demand to each Issuing Bank in respect of each
Letter of Credit issued by such Issuing Bank an amount equal to any amount paid
by such Issuing Bank under or in respect of such Letter of Credit. In the
event any Issuing Bank makes a payment pursuant to a request for draw presented
under a Letter of Credit and such payment is not promptly reimbursed by the
Borrower upon demand, such Issuing Bank shall give notice of such payment to
the Administrative Agent and, upon receipt of such notice, the Administrative
Agent shall give notice of such payment to the Lenders, and each Lender shall
promptly reimburse such Issuing Bank for such Lender’s Revolving Share of such
payment, and such reimbursement shall be deemed for all purposes of this
Agreement to constitute an Adjusted Base Rate Advance to the Borrower from such
Lender. If such reimbursement is not made by any Lender to any Issuing Bank on
the same day on which such Issuing Bank shall have made payment on any such
draw, such Lender shall pay interest thereon to such Issuing Bank for each such
day from the date such payment should have been made until the date repaid at a
rate per annum equal to the Federal Funds Rate for each such day. The Borrower
hereby unconditionally and irrevocably authorizes, empowers, and directs the
Administrative Agent and the Lenders with Revolving Commitments to record and
otherwise treat each payment under a Letter of Credit not immediately
reimbursed by the Borrower as a Borrowing comprised of Adjusted Base Rate
Advances made by such Lenders to the Borrower on the day of payment under such
Letter of Credit.

     (d)  Obligations Unconditional. The obligations of the Borrower under this
Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, notwithstanding the following circumstances:

		
	 	     (i) any lack of validity or enforceability of any Letter of Credit
Documents;
	 
	 	     (ii) any amendment or waiver of or any consent to departure from any
Letter of Credit Documents;
	 
	 	     (iii) the existence of any claim, set-off, defense or other right
which the Borrower or any Lender or any other Person may have at any time
against any beneficiary or transferee of such Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), the respective Issuing Bank or any other Person or entity,
whether in connection with this Agreement, the transactions contemplated
in this Agreement or in any Letter of Credit Documents or any unrelated
transaction;
	 
	 	     (iv) any statement or any other document presented under such Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect to the extent the respective Issuing Bank would not be liable
therefor pursuant to the following paragraph (e);
	 
	 	     (v) payment by the respective Issuing Bank under such Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit; or

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	 	     (vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.

     (e)  Liability of Issuing Banks. The Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. No Issuing Bank, nor any other
Lender, nor any of their respective officers or directors shall be liable or
responsible for:

		
	 	     (i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith;

		
	 	     (ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged;

		
	 	     (iii) payment by such Issuing Bank against presentation of documents
which do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to
the relevant Letter of Credit; or
	 
	 	     (iv) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit (including such Issuing Bank’s own
negligence),

except that the Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to, and shall promptly pay to, the Borrower, to
the extent of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by (A) such Issuing Bank’s
willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (B) such Issuing Bank’s gross negligence in failing to make lawful
payment under any Letter of Credit after the presentation to it of a draft and
certificate strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, any Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation.

     Section 2.14 Determination of Leverage Ratio and Senior Unsecured Leverage
Ratio. The Leverage Ratio shall be determined by the Administrative Agent, as
follows:

     (a)  Quarterly. On the Status Reset Date the Administrative Agent shall
determine the Leverage Ratio and the Senior Unsecured Leverage Ratio as of the
last day of the immediately preceding Fiscal Quarter upon receipt of a
Compliance Certificate setting forth the components of the Leverage Ratio and
the Senior Unsecured Leverage Ratio as of such date.

     (b)  Adjustments. Following each making, acquisition or disposition by the
Parent or its Subsidiary of a Hotel Property or any of the Parent’s or its
Subsidiary’s other Investments or Non-Replaced Property with an Investment
Amount in excess of $5,000,000 or the incurrence by the Parent or its
Subsidiary of additional Indebtedness (excluding any Obligations) in excess of
$5,000,000 (an “Adjustment Event”), and the Administrative Agent’s receipt of
an Adjustment Report with respect thereto, the Administrative Agent shall
adjust the Leverage Ratio and the Senior Unsecured Leverage Ratio accordingly.

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     Section 2.15 Lender Replacement.

     (a)  Right to Replace. The Borrower shall have the right to replace each
Lender either (i) affected by a condition under Section 2.02(c)(vi), 2.09,
2.11, or 2.12 for more than 60 days or (ii) that refuses to consent to a
proposed change, waiver, discharge or termination with respect to this
Agreement which has been approved by the Required Lenders [Super Required
Lenders with respect to the matters covered in Section 10.01(b) of this
Agreement] (each such affected or non-consenting Lender, an
“Affected Lender”)
in accordance with the procedures in this Section 2.15 and provided that no
reduction of the total Revolving Commitments or Term Advances occurs as a
result thereof.

     (b)  Replacement Allocation.

		
	 	     (i) Upon the occurrence of any condition permitting the replacement
of a Lender, the Administrative Agent in its sole discretion shall have
the right to reallocate the amount of the Revolving Commitments or Term
Advances, as applicable, of the Affected Lenders to Persons who desire to
increase their Revolving Commitments or Term Advances, as applicable,
including without limitation to Persons which are not already party to
this Agreement but which qualify as Eligible Assignees, which election
shall be made by written notice within 30 days after the date such
condition occurs.
	 
	 	     (ii) If the aggregate amount of the reallocated Commitments is less
than the Commitments of the Affected Lenders, or reallocated Term
Advances is less than the Term Advances of the Affected Lenders, (A) the
respective Commitments or Term Advances, as applicable, of the Lenders
which have received such reallocated Commitments or Term Advances, as
applicable, shall be increased by the respective amounts of their
proposed reallocations to the extent any such Lender agrees to such
increase, and (B) the Borrower shall have the right to add additional
Lenders which are Eligible Assignees to this Agreement to replace such
Affected Lenders, which additional Lenders would have aggregate
Commitments or Term Advances, as applicable, no greater than those of the
Affected Lenders minus the amounts of the Commitments or Term Advances,
as applicable, already reallocated.
	 
	 	     (iii) Notwithstanding any provision in this Section 2.15 to the
contrary, (A) no Lender may have such Lender’s Commitment or Term
Advances, as applicable, increased pursuant to the provisions of this
Section 2.15 without such Lender’s written consent and (B) no Lender
except for an Affected Lender may have such Lender’s Commitment or Term
Advances, as applicable, decreased pursuant to the provisions of this
Section 2.15 without such Lender’s written consent.

     (c)  Procedure. Any assumptions of Commitments or Term Advances, as
applicable, pursuant to this Section 2.15 shall be (i) made by the purchasing
Lender or Eligible Assignee and the selling Lender entering into an Assignment
and Assumption and by following the procedures in Section 10.06 for adding a
Lender. In connection with the reallocation of the Commitments or Term
Advances, as applicable, of any Lender pursuant to the foregoing paragraph (b),
each Lender with a reallocated Commitment or Term Advances, as applicable,
shall purchase from the Affected Lenders at par such Lender’s ratable share of
the outstanding Revolving Advances or

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Term Advances, as applicable, of the Affected Lenders and, in connection
with a reallocation of Revolving Commitments, assume such Lender’s ratable
share of the Affected Lenders’ Letter of Credit Exposure.

     Section 2.16 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) (i) on account of the Revolving Advances made by it in
excess of its Revolving Share of payments or collateral on account of the
Revolving Advances or Letter of Credit Obligations obtained by all the Lenders,
or (ii) on account of the Term Advances made by it in excess of its Term Share
of payments or collateral on account of the Term Advances obtained by all the
Lenders, such Lender shall notify the Administrative Agent and forthwith
purchase from the other Lenders such participations in the Revolving Advances
or Term Advances, as applicable, made by them or Letter of Credit Obligations
held by them as shall be necessary to cause such purchasing Lender to share the
excess payment or benefits of such collateral or proceeds ratably in accordance
with the requirements of this Agreement with each of them;
provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such Lender’s ratable share (according to the proportion of (a) the
amount of the participation sold by such Lender to the purchasing Lender as a
result of such excess payment to (b) the total amount of such excess payment)
of such recovery, together with an amount equal to such Lender’s ratable share
(according to the proportion of (a) the amount of such Lender’s required
repayment to the purchasing Lender to (b) the total amount of all such required
repayments to the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.16 may, to the fullest extent permitted by
Legal Requirement, unless and until rescinded as provided above, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

ARTICLE III

CONDITIONS OF LENDING

     Section 3.01 Conditions Precedent to the Initial Advance. The obligation
of each Lender to make any Advance hereunder and of the Issuing Bank to issue
any Letter of Credit are subject to the following conditions precedent being
satisfied on or prior to November 15, 2002:

     (a)  Documentation. The Administrative Agent shall have received
counterparts of this Agreement executed by the Borrower and the Lenders, and
the following duly executed by all the parties thereto, in form and substance
satisfactory to the Administrative Agent, and, with respect to this Agreement,
all Guaranties and the Environmental Indemnity, in sufficient copies for each
Lender:

		
	 	     (i) the Revolving Notes, all Guaranties, and the Environmental
Indemnity;

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	 	     (ii) the Security Documents to the extent applicable executed by the
Borrower, the Parent and the other Guarantors granting to the
Administrative Agent for the benefit of the Lenders an Acceptable Lien in
the Collateral, together with stock certificates, stock powers executed
in blank, UCC-1 financing statements and any other documents, agreements
or instruments necessary or desirable to create an Acceptable Lien in the
Collateral, provided that in the Administrative Agent’s discretion
certain Security Documents necessary for the granting to the
Administrative Agent for the benefit of the Lenders of an Acceptable Lien
in Ownership Interests in Persons which are domiciled outside the United
States may be executed and delivered within ten (10) Business Days of the
Closing;
	 
	 	     (iii) a certificate from a Responsible Officer of the Parent on
behalf of the Borrower dated as of the Effective Date stating that as of
the Effective Date (A) all representations and warranties of the Borrower
set forth in this Agreement and the Credit Documents are true and correct
in all material respects; (B) no Default has occurred and is continuing;
(C) the conditions in this Section 3.01 have been met or waived in
writing; and (D) to the best of the Borrower’s knowledge there are no
claims, defenses, counterclaims or offsets against the Lenders under the
Credit Documents;
	 
	 	     (iv) a certificate of the Secretary or an Assistant Secretary of the
Parent on behalf of the Borrower and each corporation or limited
liability company that is either a Guarantor or a general partner of a
Guarantor dated as of the date of this Agreement certifying as of the
date of this Agreement (A) the names and true signatures of officers or
authorized representatives of the Parent and such other Persons
authorized to sign the Credit Documents to which such Person is a party
in the capacity therein indicated, (B) resolutions of the Board of
Directors or the members of the Parent and such other Persons with
respect to the transactions herein contemplated, (C) either (x) the
copies of the organizational documents of the Parent and such other
Persons delivered to the Lenders are still true and correct and have not
been amended or modified since such date or (y) copies of any
modification or amendment to the organizational documents of the Parent
or any such other Persons made since such date, (D) a true and correct
copy of the partnership agreement for the Borrower and each Guarantor
which is a partnership, (E) a true and correct copy of all partnership,
corporate or limited liability company authorizations necessary or
desirable in connection with the transactions herein contemplated, (F) a
true and correct copy of the Intercompany Agreement, and (G) a true and
correct copy of the Senior Indenture — $200,000,000
91/8% Senior Notes;
	 
	 	     (v) (A) one or more favorable written opinions of DeCampo, Diamond &
Ash, special counsel for the Borrower, the Parent, and their
Subsidiaries, in a form reasonably acceptable to the Administrative
Agent, in each case dated as of the Closing Date and with such changes as
the Administrative Agent may approve, and (B) such other legal opinions
as the Administrative Agent shall reasonably request, in each case dated
as of the Closing Date and with such changes as the Administrative Agent
may approve;
	 
	 	     (vi) a Compliance Certificate dated as of the Closing Date
reflecting for the financial tests covered therein the pro forma
financial performance for the Borrower for

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	 	the Rolling Period ended September 30, 2002, duly completed and
executed by the Chief Financial Officer or Treasurer of the Parent; and
	 
	 	     (vii) such other documents, governmental certificates, agreements,
and lien searches as the Administrative Agent may reasonably request.

     (b)  Representations and Warranties. The representations and warranties
contained in Article IV hereof, the Guaranties, and the Environmental
Indemnities shall be true and correct in all material respects.

     (c)  Certain Payments. The Borrower shall have paid the fees required to be
paid as of the execution of this Agreement pursuant to the Fee Letter.

     (d)  Security Documents. Except as expressly contemplated by the
provisions of Section 3.01(a)(ii) above, the Administrative Agent shall have
received all appropriate evidence required by the Administrative Agent in its
reasonable discretion necessary to determine that the Administrative Agent has
an Acceptable Lien in the Collateral, including, without limitation, lien
searches conducted on the Borrower and the Guarantors and lien releases with
respect to any Collateral currently subject to a Lien other than Permitted
Encumbrances.

     Section 3.02 Conditions Precedent for Each Borrowing or Letter of Credit.
The obligation of each Lender to fund an Advance on the occasion of each
Borrowing (other than the Conversion or continuation of any existing Borrowing)
and of any Issuing Bank to issue or increase or extend any Letter of Credit
shall be subject to the further conditions precedent that on the date of such
Borrowing or the issuance, increase or extension of such Letter of Credit:

     (a)  the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing or the issuance or increase or extension of such
Letter of Credit shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing or the issuance or increase or extension of
such Letter of Credit such statements are true):

		
	 	     (i) the representations and warranties contained in Article IV
hereof, the Guaranties, the Environmental Indemnities and the other
Credit Documents, as such representations and warranties (excluding those
contained within Section 4.06 or those contained within Section 4.08
pertaining to litigation reasonably likely to result in or cause a
Material Adverse Change) may change based upon events or activities
permitted by this Agreement, are correct in all material respects on and
as of the date of such Borrowing or the issuance or increase or extension
of such Letter of Credit, before and after giving effect to such
Borrowing or to the issuance or increase or extension of such Letter of
Credit and to the application of the proceeds from such Borrowing, as
though made on and as of such date; and
	 
	 	     (ii) no Default has occurred and is continuing or would result from
such Borrowing or from the application of the proceeds therefrom, as
evidenced by a Compliance Certificate executed and delivered by the
Borrower to the Administrative Agent dated as of the date of the Notice
of Borrowing; provided that the financial tests in such Compliance
Certificate except for the Leverage Ratio do not need to be updated

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	 	from the last Compliance Certificate delivered by the Borrower
except for an update of the Leverage Ratio and the Senior Unsecured
Leverage Ratio if an Adjustment Event has occurred since the date of such
Compliance Certificate and the Borrower has not yet delivered the
Adjustment Report in connection with such Adjustment Event; and

     (b)  the Administrative Agent shall have received such other approvals,
opinions or documents deemed necessary or desirable by any Lender or the
Administrative Agent as such party may reasonably request.

     Section 3.03 Conditions as Covenants. Without in any way waiving the
conditions precedent contained in Sections 3.01 or 3.02, if the Lenders make
any Advances, or the Issuing Bank issues a Letter of Credit, prior to the
satisfaction of all conditions precedent set forth in Sections 3.01 and 3.02.,
the Borrower shall nevertheless cause such condition or conditions to be
satisfied within two (2) Business Days (ten (10) Business Days for those items
for which the Borrower is permitted such time period pursuant to the provisions
of Section 3.01) after the date of the making of such Advances or the issuance
of such Letter of Credit.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants as follows:

     Section 4.01 Existence; Qualification; Partners; Subsidiaries.

     (a)  The Borrower is a limited partnership duly organized, validly
existing, and in good standing under the laws of Delaware and in good standing
and qualified to do business in each jurisdiction where its ownership or lease
of property or conduct of its business requires such qualification, except
where the failure to so qualify would not cause a Material Adverse Change to
the Borrower.

     (b)  The Parent is a corporation duly organized, validly existing, and in
good standing under the laws of Maryland and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure
to so qualify would not cause a Material Adverse Change to the Parent. The
Parent owns 100% of the outstanding stock in MeriStar LP, Inc. and is the sole
general partner of the Borrower. MeriStar LP, Inc. owns at least 88% of the
outstanding partnership interests in the Borrower and is the sole limited
partner of the Borrower. The Parent has no first tier Subsidiaries except for
the Borrower, MeriStar LP, Inc., and certain Permitted Other Subsidiaries.

     (c)  Each Subsidiary of the Borrower is a corporation, limited partnership,
general partnership or limited liability company duly organized, validly
existing, and in good standing under the laws of its jurisdiction of formation
and in good standing and qualified to do business in each jurisdiction where
its ownership or lease of property or conduct of its business requires such
qualification, except where the failure to so qualify would not cause a
Material Adverse Change to such Subsidiary. The Borrower has no Subsidiaries
on the date of this Agreement other than the Subsidiaries listed on the
attached Schedule 4.01. Schedule 4.01 lists the

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 jurisdiction of formation and the address of the principal office of each
such Subsidiary existing on the date of this Agreement. Schedule 4.01 lists
which of such Subsidiaries are TRS. As of the date of this Agreement, the
Borrower owns, directly or indirectly, at least the percentage interests in
each such Subsidiary listed on the attached Schedule 4.01.

     Section 4.02 Partnership and Corporate Power. The execution, delivery,
and performance by the Borrower, the Parent, and each Guarantor of the Credit
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within such Persons’ partnership,
limited liability company and corporate powers, as applicable, (b) have been
duly authorized by all necessary corporate, limited liability company and
partnership action, as applicable, (c) do not contravene (i) such Person’s
certificate or articles, as the case may be, of incorporation or by-laws,
operating agreement or partnership agreement, as applicable, or (ii) any law or
any contractual restriction binding on or affecting any such Person, the
contravention of which could reasonably be expected to cause a Material Adverse
Change, and (d) will not result in or require the creation or imposition of any
Lien prohibited by this Agreement. At the time of each Borrowing, such
Borrowing and the use of the proceeds of such Borrowing will be within the
Borrower’s partnership powers, will have been duly authorized by all necessary
partnership action, (a) will not contravene (i) the Borrower’s partnership
agreement or (ii) any law or any contractual restriction binding on or
affecting the Borrower, the contravention of which could reasonably be expected
to cause a Material Adverse Change, and (b) will not result in or require the
creation or imposition of any Lien prohibited by this Agreement.

     Section 4.03 Authorization and Approvals. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the Borrower, the
Parent, or any Guarantor of the Credit Documents to which it is a party or the
consummation of the transactions contemplated thereby. At the time of each
Borrowing, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority will be required for such Borrowing or
the use of the proceeds of such Borrowing the absence of which could reasonably
be expected to cause a Material Adverse Change.

     Section 4.04 Enforceable Obligations. This Agreement, the Notes, and the
other Credit Documents to which the Borrower is a party have been duly executed
and delivered by the Borrower; each Guaranty and the other Credit Documents to
which each Guarantor and the Parent is a party have been duly executed and
delivered by such Guarantor; and the Environmental Indemnity and Pledge
Agreement have been duly executed and delivered by the respective parties
thereto. Each Credit Document is the legal, valid, and binding obligation of
the Borrower, the Parent, and each Guarantor which is a party to it enforceable
against the Borrower, the Parent, and each such Guarantor in accordance with
its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors’ rights generally and by general principles of equity (whether
considered in proceeding at law or in equity).

     Section 4.05 Parent Common Stock; REIT. The entire authorized capital
stock of the Parent consists of 100,000,000 shares of Parent Common Stock of
which approximately 44,600,000 shares of Parent Common Stock are duly and
validly issued and outstanding, fully

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 paid and nonassessable as of the Closing Date. The issuance and sale of
such Parent Common Stock either (i) has been registered under applicable
federal and state securities laws or (ii) was issued pursuant to an exemption
therefrom. The Parent Common Stock is duly listed on the New York Stock
Exchange, Inc. and the Parent has timely filed all reports required to be filed
by it with the New York Stock Exchange, Inc. and the Securities and Exchange
Commission. The Parent qualifies as a REIT.

     Section 4.06 Financial Statements. The respective Consolidated balance
sheets, statements of operations, shareholders’ equity and cash flows, of the
Parent and the Borrower contained in the Financial Statements fairly present
such Person’s financial condition in all material respects on a Consolidated
basis as of the dates indicated in the Financial Statements and the respective
results of the operations for the periods indicated, and such balance sheets
and statements were prepared in accordance with GAAP, subject to year-end
adjustments. Since the date of such statements, no Material Adverse Change has
occurred.

     Section 4.07 True and Complete Disclosure. No representation, warranty,
or other statement made by the Borrower (or on behalf of the Borrower) in this
Agreement or any other Credit Document contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made as of the date of this Agreement. There is no fact known
to any Responsible Officer of the Borrower or the Parent on the date of this
Agreement that has not been disclosed to the Administrative Agent which could
reasonably be expected to cause a Material Adverse Change. All projections,
estimates, and pro forma financial information furnished by the Borrower and/or
the Parent or on behalf of the Borrower were prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such projections, estimates, and pro forma financial information
were furnished. No representation, warranty or other statement made the
Parent’s latest 10K, the 10Q or the annual report contains any untrue statement
of material fact or omits to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made as of the date same were made. Borrower and/or Parent has
made all filings required by the Exchange Act.

     Section 4.08 Litigation. Except as set forth in the attached Schedule
4.08, there is no pending or, to the best knowledge of the Borrower, threatened
investigation, action or proceeding affecting the Borrower, the Parent, or any
of their respective Subsidiaries before any court, Governmental Authority or
arbitrator either (a) in which in Borrower’s good faith judgment the
anticipated loss is over $500,000 (provided that with respect to the giving of
this representation after the date of this Agreement, the representation shall
only be deemed to apply to those matters for which Administrative Agent would
have been entitled to notice under Section 5.05(l)) or (b) which in Borrower’s
good faith judgment would result in criminal penalties against the Parent, the
Borrower or their respective Subsidiaries which could reasonably be expected to
cause a Material Adverse Change.

     Section 4.09 Use of Proceeds and Letters of Credit.

     (a)  Advances. The proceeds of the Advances have been, and will be used by
the Borrower (i) to repay the Indebtedness evidenced by the Existing Credit
Agreement, (ii) to

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 refinance other existing Indebtedness, (iii) to make Investments permitted
pursuant to the provisions of Section 6.07, (iv) to finance the renovation,
repair, restoration and expansion of Hotel Properties, Capital Expenditures for
and expenditures for FF&E for any Hotel Properties in accordance with the
provisions of Section 5.06 and as permitted pursuant to the provisions of
Sections 6.07 and 6.13, (v) for working capital and general corporate purposes
of the Parent, the Borrower and their respective Subsidiaries, and (vi) for
costs incurred in connection the Parent’s or any of its Subsidiary’s sale or
issuance of equity securities or incurrence of Indebtedness done in compliance
with this Agreement.

     (b)  Regulations. No proceeds of Advances will be used to purchase or
carry any Margin Stock or be used in violation of Regulations T, U or X of the
Federal Reserve Board, as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof. The Borrower is
not engaged in the business of extending credit for the purpose of purchasing
or carrying Margin Stock.

     (c)  Letters of Credit. The Letters of Credit shall be used by the
Borrower in connection with (i) the making of investments permitted pursuant to
the provisions of Section 6.07 or (ii) the Borrower’s Hospitality/Leisure
Related Business and ancillary activities.

     Section 4.10 Investment Company Act. Neither the Borrower, the Parent nor
any of their respective Subsidiaries is an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

     Section 4.11 Taxes. All federal, state, local and foreign tax returns,
reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Parent, the Borrower, their
respective Subsidiaries, or any member of a Controlled Group have been filed
with the appropriate governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed, and where the failure
to file could reasonably be expected to cause a Material Adverse Change, except
where contested in good faith and by appropriate proceedings; and all taxes and
other impositions due and payable (which are material in amount) have been
timely paid prior to the date on which any fine, penalty, interest, late charge
or loss (which are material in amount) may be added thereto for non-payment
thereof except where contested in good faith and by appropriate proceedings.
As of the date of this Agreement, neither the Parent, the Borrower nor any
member of a Controlled Group has given, or been requested to give, a waiver of
the statute of limitations relating to the payment of any federal, state, local
or foreign taxes or other impositions. None of the Property owned by the
Parent, the Borrower or any other member of a Controlled Group is Property
which the Parent, the Borrower or any member of a Controlled Group is required
to be treated as being owned by any other Person pursuant to the provisions of
Section 168(f)(8) of the Code. Proper and accurate amounts have been withheld
by the Borrower and all members of each Controlled Group from their employees
for all periods to comply in all material respects with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law. Timely payment of all material sales and use taxes
required by applicable law have been made by the Parent, the Borrower and all
other members of each Controlled Group, the failure to timely pay of which
could reasonably be expected to cause a Material Adverse Change. The amounts
shown on all tax returns to be due and payable have been paid in full or
adequate

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 provision therefor is included on the books of the appropriate member of
the applicable Controlled Group.

     Section 4.12 Pension Plans. All Plans are in compliance in all material
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. Except where the failure would not cause a Material
Adverse Change, no “accumulated funding deficiency” (as defined in Section 302
of ERISA) has occurred and there has been no excise tax imposed under Section
4971 of the Code. No Reportable Event has occurred with respect to any
Multiemployer Plan, and each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. Neither the Parent, the Borrower, nor any member of a Controlled
Group has had a complete or partial withdrawal from any Multiemployer Plan for
which there is any material withdrawal liability. As of the most recent
valuation date applicable thereto, neither the Parent, the Borrower nor any
member of a Controlled Group has received notice that any Multiemployer Plan is
insolvent or in reorganization.

     Section 4.13 Condition of Hotel Property; Casualties; Condemnation.
Except as disclosed in an Engineering Report, each Initial Property and any
Future Property (a) is and will continue to be in good repair, working order
and condition, normal wear and tear excepted, (b) is free of structural defects
other than those being addressed by the Borrower and for which the Borrower has
sufficient funds to address, (c) is not subject to material deferred
maintenance and (d) has and will have all building systems contained therein
and all other FF&E in good repair, working order and condition, normal wear and
tear excepted. No condemnation or other like proceedings that has had, or
could reasonably be expected to cause, a Material Adverse Change, are pending
nor, to the knowledge of the Borrower, threatened against any Property in any
manner whatsoever. No casualty has occurred to any Property that could
reasonably be expected to cause a Material Adverse Change.

     Section 4.14 Insurance. The Borrower and each of its Subsidiaries carry
the insurance required pursuant to the provisions of Section 5.07.

     Section 4.15 No Burdensome Restrictions; No Defaults.

     (a)  Except in connection with Indebtedness which is (i) either permitted
pursuant to the provisions of Section 6.02, or (ii) being repaid with the
proceeds of the initial Borrowing, neither the Borrower nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement. Neither
the Borrower, the Parent nor any of their respective Subsidiaries is a party to
any agreement or instrument or subject to any charter or corporate restriction
or provision of applicable law or governmental regulation which could
reasonably be expected to cause a Material Adverse Change.

     (b)  Except for the Senior Indentures, neither the Borrower, nor the
Parent, nor their respective Subsidiaries has entered into or suffered to exist
any agreement (other than this Agreement and the Credit Documents) (i)
prohibiting the creation or assumption of any Lien upon the Properties of the
Parent, the Borrower or any of their respective Subsidiaries (except for

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 Properties of and Ownership Interests in the Permitted Other
Subsidiaries), whether now owned or hereafter acquired, or (ii) requiring an
obligation to be secured if some other obligation is or becomes secured.

     (c)  Neither the Borrower, the Parent nor any of their Subsidiaries is in
default under or with respect to (i) any contract, agreement, lease or other
instrument which could reasonably be expected to cause a Material Adverse
Change or (ii) any ground lease, participating lease, franchise agreement,
license agreement or management agreement which could reasonably be expected to
cause a Material Adverse Change. Neither the Borrower, the Parent nor any of
their Subsidiaries has received any written notice of default under any ground
lease, participating lease, franchise agreement, license agreement or
management agreement. Neither the Borrower, the Parent nor any of their
Subsidiaries has received any notice of default under any other material
contract, agreement, lease or other instrument which is continuing and which,
if not cured, could reasonably be expected to cause a Material Adverse Change.

     (d)  No Default has occurred and is continuing (or with respect to the
giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given).

     Section 4.16 Environmental Condition.

     (a)  Except as set forth in Schedule 4.16 (or with respect to the giving of
this representation after the date of this Agreement, as otherwise disclosed to
the Administrative Agent in writing after the date of this Agreement and prior
to the date such representation is deemed given), to the knowledge of the
Borrower, the Borrower and its Subsidiaries (i) have obtained all Environmental
Permits material for the ownership and operation of their respective Properties
and the conduct of their respective businesses; (ii) have been and are in
material compliance with all terms and conditions of such Environmental Permits
and with all other requirements of applicable Environmental Laws; (iii) have
not received written notice of any violation or alleged violation of any
Environmental Law or Environmental Permit; and (iv) are not subject to any
actual or contingent Environmental Claim. To the knowledge of the Borrower (or
with respect to the giving of this representation after the date of this
Agreement, as otherwise disclosed to the Administrative Agent in writing after
the date of this Agreement and prior to the date such representation is deemed
given), the Borrower and its Subsidiaries are not subject to any actual or
contingent Environmental Claim which the Borrower believes in good faith will
involve cost or expense to the Borrower or its Subsidiaries in excess of
$1,000,000 for any single Environmental Claim, or in excess of $5,000,000 for
all such Environmental Claims in the aggregate.

     (b)  Except as set forth in Schedule 4.16, to the knowledge of Borrower,
none of the present or previously owned or operated Property of the Borrower or
of any of its present or former Subsidiaries, wherever located, (i) has been
placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under
any Environmental Laws which could

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 reasonably be expected to cause a Material Adverse Change; (ii) is subject
to a Lien, arising under or in connection with any Environmental Laws, that
attaches to any revenues or to any Property owned or operated by the Borrower
or any of its Subsidiaries, wherever located; (iii) has been the site of any
Release, use or storage of Hazardous Substances or Hazardous Wastes from
present or past operations except for Permitted Hazardous Substances, which
Permitted Hazardous Substances have not caused at the site or at any
third-party site any condition that has resulted in or could reasonably be
expected to result in the need for Response or (iv) none of the Improvements
are constructed on land designated by any Governmental Authority having land
use jurisdiction as wetlands.

     Section 4.17 Legal Requirements, Zoning, Utilities, Access. Except as set
forth on Schedule 4.17 attached hereto, the use and operation of each Hotel
Property as a commercial hotel with related uses constitutes a legal use under
applicable zoning regulations (as the same may be modified by special use
permits or the granting of variances or “grand fathering”) and complies in all
material respects with all Legal Requirements, and does not violate in any
material respect any material approvals, material restrictions of record or any
material agreement affecting any Hotel Property (or any portion thereof). The
Borrower and its Subsidiaries possess all certificates of public convenience,
authorizations, permits, licenses, patents, patent rights or licenses,
trademarks, trademark rights, trade names rights and copyrights (collectively
“Permits”) required by Governmental Authority to own and operate the Hotel
Properties, except for those Permits that if not obtained would not cause a
Material Adverse Change. The Borrower and its Subsidiaries own and operate
their business in material compliance with all applicable Legal Requirements
and are otherwise in compliance with all Legal Requirements except for
non-compliance which in the aggregate would not cause a Material Adverse
Change. To the extent necessary for the full utilization of each Hotel
Property in accordance with its current use, telephone services, gas, steam,
electric power, storm sewers, sanitary sewers and water facilities and all
other utility services are available to each Hotel Property, are adequate to
serve each such Hotel Property, exist at the boundaries of the Land and are not
subject to any conditions, other than normal charges to the utility supplier,
which would limit the use of such utilities. All streets and easements
necessary for the occupancy and operation of each Hotel Property are available
to the boundaries of the Land.

     Section 4.18 Existing Indebtedness.

     (a)  Except for the Obligations, the only Indebtedness of the Borrower, the
Parent or any of their respective Subsidiaries existing as of the Effective
Date is the Senior Unsecured Indebtedness, other Unsecured Indebtedness,
Secured Non-Recourse Indebtedness and Secured Recourse Indebtedness set forth
on Schedule 4.18(a) attached hereto. Schedule 4.18(a) attached hereto
correctly sets forth whether such Indebtedness is Senior Indebtedness or
Subordinate Indebtedness. No “default” or “event of default”, however defined,
has occurred and is continuing under any such Indebtedness (or with respect to
the giving of this representation after the date of this Agreement, as
otherwise disclosed to the Administrative Agent in writing after the date of
this Agreement and prior to the date such representation is deemed given).

     (b)  To the best of the Borrower’s knowledge, (i) the fair value and
present fair saleable value on a going concern basis of the Property of the
Parent, the Borrower and their respective Subsidiaries, on a Consolidated
basis, exceeds the amount that will be required to pay

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 the probable liabilities of such Persons, on a Consolidated basis, on
their Indebtedness, as such Indebtedness becomes absolute and matured, (ii) the
Parent, the Borrower and their respective Subsidiaries, on a Consolidated
basis, will have sufficient cash flow to enable them to pay their debts as they
mature, and (iii) the Parent, the Borrower and their respective Subsidiaries,
on a Consolidated basis, are able to pay their Indebtedness as it matures in
the normal course of business.

     Section 4.19 Ownership; Title; Encumbrances. As of the Closing Date, the
only Hotel Properties leased or owned by the Parent, the Borrower or any of
their respective Subsidiaries are the Initial Properties. With respect to the
Initial Properties, the Borrower or any Subsidiary, as the case may be, has (i)
good and marketable fee simple title to the Real Property (other than for Real
Property subject to a ground lease, as to which it has a valid leasehold or
subleasehold interest) and (ii) good and marketable title to the Personal
Property (other than Personal Property for any Hotel Property for which the
Property Owner has a valid leasehold interest) free and clear of all Liens
except Permitted Encumbrances, and there exists no Liens or other charges
against such Property or leasehold interest or any of the real or personal,
tangible or intangible, Property of the Borrower or any Guarantor (including
without limitation statutory and other Liens of mechanics, workers,
contractors, subcontractors, suppliers, taxing authorities and others; provided
that certain Capital Expenditures have been made to the Hotel Properties prior
to the Effective Date for which the payment is not past due), except (A)
Permitted Encumbrances and (B) the Personal Property (plus any replacements
thereof) owned by an Approved Operator.

     Section 4.20 Leasing Arrangements.

     (a)  The only material leases of Real Property for which either the
Borrower or a Subsidiary is a lessor are the Approved Participating Leases
listed on Schedule 4.20(a) attached hereto. Schedule 4.20(a) attached hereto
correctly sets forth whether the lessee under such leases is an Approved
Operator or a TRS. The only material leases burdening the Hotel Properties for
which the lessee is entitled to participate in the increased revenues of the
Hotel Properties are the Approved Participating Leases.

     (b)  The only material leases of Real Property for which either the
Borrower or a Subsidiary is a lessee are the ground leases listed on Schedule
4.20(b) attached hereto and the Approved Participating Leases listed on
Schedule 4.20(a) where a TRS is the lessee. The Property Owner for a Real
Property subject to a ground lease is the lessee under such ground lease and no
consent is necessary to such Person being the lessee under such ground lease
which has not already been obtained.

     (c)  The aforementioned ground leases and the Approved Participating Leases
are in full force and effect; no monetary defaults by the Borrower or any
Guarantor, or to the actual knowledge of the Borrower by any other party
thereto, exist thereunder; and no other defaults by the Borrower or any
Guarantor, or to the actual knowledge of the Borrower by any other party
thereto, exist thereunder which could reasonably be expected to cause a
Material Adverse Change (or with respect to the giving of this representation
after the date of this Agreement, as otherwise disclosed to the Administrative
Agent in writing after the date of this Agreement and prior to the date such
representation is deemed given).

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     Section 4.21 Franchise Agreements. The only hotel franchise agreements or
license agreements burdening the Initial Properties are those certain
agreements listed on Schedule 4.21 attached hereto. The Property Owner or
Approved Operator for a Hotel Property subject to a franchise or license
agreement is the licensee under such agreement and no consent is necessary to
such Person being the licensee under such agreement which has not already been
obtained except for those consents, if any, which are set forth on Schedule
4.21. To the knowledge of the Borrower, such franchise and license agreements
are in full force and effect and no material defaults by the Borrower or any
Subsidiary exist thereunder (or with respect to the giving of this
representation after the date of this Agreement, as otherwise disclosed to the
Administrative Agent in writing after the date of this Agreement and prior to
the date such representation is deemed given).

     Section 4.22 Management Agreements. The only management agreements
burdening the Initial Properties (excluding management agreements for parking
facilities) are those certain management agreements listed on Schedule 4.22
attached hereto, and, except as set forth on Schedule 4.22, all such management
agreements are between a TRS, as owner, and an Approved Operator, as manager.
To the knowledge of the Borrower, the management agreements are in full force
and effect and no material defaults by the TRS exist thereunder (or with
respect to the giving of this representation after the date of this Agreement,
as otherwise disclosed to the Administrative Agent in writing after the date of
this Agreement and prior to the date such representation is deemed given).

     Section 4.23 Intercompany Agreement. The Intercompany Agreement is in
full force and effect and no material defaults by the Borrower or any
Guarantor, or to the actual knowledge of the Borrower by any other party
thereto, exist thereunder (or with respect to the giving of this representation
after the date of this Agreement, as otherwise disclosed to the Administrative
Agent in writing after the date of this Agreement and prior to the date such
representation is deemed given).

     Section 4.24 Senior Indebtedness. The Obligations and all renewals and
extensions of the Obligations constitute “Designated Senior Indebtedness” under
the Subordinate Convertible Indenture and the Subordinate Indenture.

ARTICLE V

AFFIRMATIVE COVENANTS

     So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Lender shall have
any Commitment hereunder, the Borrower agrees to comply with the following
covenants.

     Section 5.01 Compliance with Laws, Etc. The Borrower will comply, and
cause the Parent and each of its Subsidiaries to comply, in all material
respects with all Legal Requirements.

     Section 5.02 Preservation of Existence; Separateness, Etc.

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     (a)  The Borrower will preserve and maintain, and cause each of its
Subsidiaries (as long as a Subsidiary owns assets) to preserve and maintain,
its partnership, limited liability company or corporate (as applicable)
existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified, and cause each such Subsidiary to
qualify and remain qualified, as a foreign partnership or corporation as
applicable in each jurisdiction in which qualification is necessary or
desirable in view of its business and operations or the ownership of its
properties, and, in each case, where failure to qualify or preserve and
maintain its rights and franchises could reasonably be expected to cause a
Material Adverse Change.

     (b)  (i) The Parent Common Stock shall at all times be duly listed on the
New York Stock Exchange, Inc., and (ii) the Parent shall timely file all
reports required to be filed by it with the New York Stock Exchange, Inc. and
the Securities and Exchange Commission.

     (c)  The Borrower shall cause the Permitted Other Subsidiaries which either
(i) are an Approved Operator of a Hotel Property which secures Secured
Non-Recourse Indebtedness or Secured Recourse Indebtedness or (ii) have
Indebtedness and own a Hotel Property to, (A) maintain financial statements,
accounting records and other corporate records and other documents separate
from all Persons other than Permitted Other Subsidiaries, (B) maintain their
own bank accounts in their own name, separate from all Persons other than
Permitted Other Subsidiaries, (C) pay their own expenses and other liabilities
from their own assets and incur (or endeavor to incur) obligations to other
Persons based solely upon their own assets and creditworthiness and not upon
the creditworthiness of each other or any other Person, and (D) file their own
tax returns or, if part of a consolidated group, join in the consolidated tax
return of such group as a separate member thereof.

     (d)  The Borrower shall, and shall cause the Permitted Other Subsidiaries
which either (i) are an Approved Operator of a Hotel Property which secures
Secured Non-Recourse Indebtedness or Secured Recourse Indebtedness or (ii) have
Indebtedness and own a Hotel Property to, take all actions necessary to keep
such Permitted Other Subsidiaries, separate from the Borrower and the
Borrower’s other Subsidiaries, including, without limitation, (A) the taking of
action under the direction of the Board of Directors, members or partners, as
applicable, of such Permitted Other Subsidiaries and, if so required by the
Certificate of Incorporation or the Bylaws, operating agreement or partnership
agreement, as applicable, of such Permitted Other Subsidiaries or by any Legal
Requirement, the approval or consent of the stockholders, members or partners,
as applicable, of such Permitted Other Subsidiaries, (B) the preparation of
corporate, partnership or limited liability company minutes for or other
appropriate evidence of each significant transaction engaged in by such
Permitted Other Subsidiaries, (C) the observance of separate approval
procedures for the adoption of resolutions by the Board of Directors or
consents by the partners, as applicable, of such Permitted Other Subsidiaries,
on the one hand, and of the Borrower and the Borrower’s other Subsidiaries, on
the other hand, and (D) preventing the cash, cash equivalents, credit card
receipts or other revenues of the Hotel Properties owned by such Permitted
Other Subsidiaries or any other assets of such Permitted Other Subsidiaries
from being commingled with the cash, cash equivalents, credit card receipts or
other revenues collected by the Borrower or the Borrower’s other Subsidiaries.

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     (e)  The Borrower shall take all steps reasonably necessary to avoid (i)
misleading any other Person as to the identity of the entity with which such
Person is transacting business or (ii) implying that the Borrower is, directly
or indirectly, absolutely or contingently, responsible for the Indebtedness or
other obligations of the Permitted Other Subsidiaries or any other Person.

     Section 5.03 Payment of Taxes, Etc. The Borrower will pay and discharge,
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto and (b) all lawful
claims that are material in amount which, if unpaid, might by Legal Requirement
become a Lien upon its Property; provided, however, that neither the Borrower
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim (a) which is being contested in good faith
and by appropriate proceedings, (b) with respect to which reserves in
conformity with GAAP have been provided, (c) such charge or claim does not
constitute and is not secured by any choate Lien on any portion of any Hotel
Property and no portion of any Hotel Property is in jeopardy of being sold,
forfeited or lost during or as a result of such contest, (d) neither the
Administrative Agent nor any Lender could become subject to any civil fine or
penalty or criminal fine or penalty, in each case as a result of non-payment of
such charge or claim and (e) such contest does not, and could not reasonably be
expected to, result in a Material Adverse Change.

     Section 5.04 Visitation Rights; Lender Meeting. At any reasonable time
and from time to time and so long as any visit or inspection will not
unreasonably interfere with the Borrower’s or any of its Subsidiaries’
operations, upon reasonable notice, the Borrower will, and will cause the
Parent and its Subsidiaries and those Persons operating the Hotel Properties,
to, permit the Administrative Agent and any Lender or any of its agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower, the Parent and any of their
respective Subsidiaries; to inspect such other records and documents of the
Borrower, the Parent and any of their respective Subsidiaries as shareholders
of the Parent are entitled; and to discuss the affairs, finances and accounts
of such Persons with any of their respective officers or directors. Without in
any way limiting the foregoing, the Borrower will, upon the request of the
Administrative Agent, participate in a meeting with the Administrative Agent
and the Lenders once during each calendar year to be held at the Borrower’s
office in the District of Columbia (or such other location as may be agreed to
by the Borrower and the Administrative Agent) at such time as may be agreed to
by the Borrower and the Administrative Agent.

     Section 5.05 Reporting Requirements. The Borrower will furnish to the
Administrative Agent and, with respect to those items set forth in clauses (a),
(b) and (c), each Lender:

     (a)  Quarterly Financials. As soon as available and in any event not later
than fifty (50) days after the end of each Fiscal Quarter of the Parent (except
for the Fiscal Quarter which ends on the date the Fiscal Year ends), the
respective unaudited Consolidated balance sheets of the Parent and its
Subsidiaries and the Borrower and its Subsidiaries as of the end of such
quarter and the related respective unaudited statements of income,
shareholders’ equity and cash flows of the Parent and its Subsidiaries and the
Borrower and its Subsidiaries for such Fiscal Quarter and the period commencing
at the end of the previous year and ending with the end of such Fiscal

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 Quarter, and the corresponding figures as at the end of, and for, the
corresponding periods in the preceding Fiscal Year, all duly certified with
respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of the Parent as having been prepared in accordance with
GAAP, together with (i) a Compliance Certificate duly executed by a Responsible
Officer of the Parent; provided that the Parent’s Total Indebtedness used to
calculate the Leverage Ratio and the Parent’s Senior Unsecured Indebtedness
used to calculate the Senior Unsecured Leverage Ratio in such Compliance
Certificate shall be the Parent’s Total Indebtedness and the Parent’s Senior
Unsecured Indebtedness, as applicable, as of the Status Reset Date during the
Fiscal Quarter in which such Compliance Certificate was delivered, (ii)
written notice of any anticipated material variation to an operating budget
prepared pursuant to Section 5.05(c), and (iii) a report certified by a
Responsible Officer of the Parent setting forth for each of the Hotel
Properties owned or leased by the Parent or any of its Subsidiaries for both
the Fiscal Quarter and Rolling Period just ended the revenues, the expenses,
the Net Income and the EBITDA for such Hotel Properties for such Fiscal Quarter
or Rolling Period, as applicable.

     (b)  Annual Financials.

		
	 	        (i) As soon as available and in any event not later than ninety five
(95) days after the end of each Fiscal Year of the Parent, a copy of the
respective Consolidated balance sheets of the Parent and its Subsidiaries
and the Borrower and its Subsidiaries as of the end of such Fiscal Year
and the related respective Consolidated statements of income,
shareholders’ equity and cash flows of the Parent and its Subsidiaries
and the Borrower and its Subsidiaries for such Fiscal Year, and the
corresponding figures as at the end of, and for, the preceding Fiscal
Year, and audited and certified by KPMG, L.L.P. or other independent
certified public accountants of nationally recognized standing reasonably
acceptable to the Administrative Agent in an opinion, without
qualification as to the scope, and including, if requested by the
Administrative Agent, any management letters delivered by such
accountants to the Parent in connection with such audit, together with
the documents required in clauses (i)-(iii) of the preceding Section
5.05(a). As soon as available and in any event not later than fifty (50)
days after the end of each Fiscal Year of the Parent, the Borrower will
furnish to the Administrative Agent a draft Compliance Certificate duly
executed by a Responsible Officer of the Parent for such end of Fiscal
Year financial statements. Such draft Compliance Certificate will be
used for purposes of re-determining Status at the Status Reset Date
following the end of such Fiscal Year. If the final Compliance
Certificate delivered in connection with the financial statements for the
end of such Fiscal Year reflects a different Status than that reflected
in the draft Compliance Certificate, then (A) the Borrower shall be
deemed to have been at the Status set forth in the final Compliance
Certificate since the Status Reset Date following the end of the Fiscal
Year and (B) within five (5) Business Days following delivery of such
final Compliance Certificate, either the Borrower will pay to the Lenders
or the Lenders will pay to the Borrower, as applicable, the amount of the
adjustment of interest and fees payable by the Borrower under this
Agreement because of such adjustment in Status.

		
	 	        (ii) As soon as available and in any event not later than sixty (60)
days after the end of each Fiscal Year of the Parent, a copy of the
officer’s certificate delivered pursuant to Section 4.4 of the Senior
Note Indenture — $200,000,000 9 1/8% Senior Notes.

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     (c)  Annual Budgets. Prior to the start of each Fiscal Year, the
Consolidated annual operating budget of the Parent and its Subsidiaries for
such upcoming Fiscal Year and the Consolidated annual Capital Expenditure and
FF&E expenditure budget (stating the total of each such expenditures for each
Hotel Property) of the Parent and its Subsidiaries for such upcoming Fiscal
Year, both in reasonable detail and duly certified by a Responsible Officer of
the Parent as the budgets presented or to be presented to the Parent’s Board of
Directors for their review.

     (d)  Securities Law Filings. Promptly and in any event within fifteen (15)
days after the sending or filing thereof, copies of all proxy material, reports
and other information which the Borrower, the Parent or any of their respective
Subsidiaries sends to or files with the United States Securities and Exchange
Commission or sends to all shareholders of the Parent or partners of the
Borrower.

     (e)  Defaults. As soon as possible and in any event within five (5) days
after the occurrence of each Default known to a Responsible Officer of the
Borrower, the Parent or any of their respective Subsidiaries, a statement of an
authorized financial officer or Responsible Officer of the Borrower setting
forth the details of such Default and the actions which the Borrower has taken
and proposes to take with respect thereto.

     (f)  ERISA Notices. As soon as possible and in any event (i) within thirty
(30) days after the Parent, the Borrower or any of a Controlled Group knows
that any Termination Event described in clause (a) of the definition of
Termination Event with respect to any Plan has occurred, (ii) within ten (10)
days after the Parent, the Borrower or any of a Controlled Group knows that any
other Termination Event with respect to any Plan has occurred, a statement of
the Chief Financial Officer of the Parent describing such Termination Event and
the action, if any, which the Parent, the Borrower or such member of such
Controlled Group proposes to take with respect thereto; (iii) within ten (10)
days after receipt thereof by the Parent, the Borrower or any of a Controlled
Group from the PBGC, copies of each notice received by the Parent, the Borrower
or any such member of such Controlled Group of the PBGC’s intention to
terminate any Plan or to have a trustee appointed to administer any Plan; and
(iv) within ten (10) days after receipt thereof by the Parent, the Borrower or
any member of a Controlled Group from a Multiemployer Plan sponsor, a copy of
each notice received by the Parent, the Borrower or any member of such
Controlled Group concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA.

     (g)  Environmental Notices. Promptly upon the knowledge of any Responsible
Officer of the Borrower of receipt thereof by the Borrower or any of its
Subsidiaries, a copy of any form of notice, summons or citation received from
the United States Environmental Protection Agency, or any other Governmental
Authority concerning (i) violations or alleged violations of Environmental
Laws, which seeks to impose liability therefor, (ii) any action or omission on
the part of the Parent or Borrower or any of their present or former
Subsidiaries in connection with Hazardous Waste or Hazardous Substances which,
based upon information reasonably available to the Borrower, could reasonably
be expected to cause a Material Adverse Change or an Environmental Claim in
excess of $1,000,000, (iii) any notice of potential responsibility under
CERCLA, or (iv) concerning the filing of a Lien upon, against or in connection
with the Parent, Borrower, their present or former Subsidiaries, or any of
their leased or owned Property, wherever located.

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     (h)  Other Governmental Notices or Actions. Promptly and in any event
within five Business Days after receipt thereof by the Borrower, the Parent or
any of their respective Subsidiaries, (i) a copy of any notice, summons,
citation, or proceeding seeking to adversely modify in any material respect,
revoke, or suspend any license, permit, or other authorization from any
Governmental Authority, which action could reasonably be expected to cause a
Material Adverse Change, and (ii) any revocation or involuntary termination of
any license, permit or other authorization from any Governmental Authority,
which revocation or termination could reasonably be expected to cause a
Material Adverse Change.

     (i)  Reports Affecting the Leverage Ratio. On or prior to the fifteenth
(15th) day following any Adjustment Event, an Adjustment Report with respect to
such Adjustment Event.

     (j)  Press Releases. Promptly and in any event within five (5) days after
the sending or releasing thereof, copies of all press releases or other
releases of information to the public by the Borrower, the Parent or any of
their respective Subsidiaries or releases of information to the Parent’s
shareholders.

     (k)  Corporate Activity. Promptly following any merger or dissolution of
any Subsidiary of the Borrower which is permitted hereunder or event which
would make any of the representations in Section 4.01-4.04 untrue, notice
thereof.

     (l)  Material Litigation. As soon as possible and in any event within five
days of any Responsible Officer of the Borrower, the Parent or any of their
respective Subsidiaries having knowledge thereof, notice of any litigation,
claim or any other event which could reasonably be expected to cause a Material
Adverse Change.

     (m)  Other Information. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of the
Borrower, the Parent or any of their respective Subsidiaries, as any Lender
through the Administrative Agent may from time to time reasonably request.

     Section 5.06 Maintenance of Property and Required Work. The Borrower
will, and will cause each of its Subsidiaries to, (a) maintain their owned,
leased, or operated Property in a manner consistent for hotel properties and
related property of the same quality and character and shall keep or cause to
be kept every part thereof and its other properties in good condition and
repair, reasonable wear and tear excepted, and make all reasonably necessary
repairs, renewals or replacements thereto as may be reasonably necessary to
conduct the business of the Borrower and its Subsidiaries, (b) not renovate or
expand any of the Improvements except as permitted by Section 6.07(h), (c) not
knowingly or willfully permit the commission of waste or other injury, or the
occurrence of pollution, contamination or any other condition in, on or about
any Hotel Property, (d) substantially maintain and repair each Hotel Property
as required by any franchise agreement, license agreement, management agreement
or ground lease for such Hotel Property, and (e) commence the Required Work for
any Future Property by a date which would allow a reasonable period of time to
complete such work on or prior to the deadline set for such Required Work
agreed to by the Borrower and the Administrative Agent, (f) after any
commencement of any work for any Hotel Property diligently perform such work
(i) in a good and workmanlike manner, (ii) in compliance in all material
respects with all Legal Requirements, and (iii) for the

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 Required Work for any Future Property, by the required deadline and as
described in the Engineering Reports and/or the Environmental Reports for such
Future Property. Except as may be required to maintain the Parent’s status as
a REIT under the Code, any Capital Expenditures or expenditures or leases for
FF&E made for any Hotel Property shall be in the name of the Property Owner for
such Hotel Property.

     Section 5.07 Insurance. The Borrower will maintain, and cause each of its
Subsidiaries to maintain, the insurance required pursuant to Schedule 5.07.

     Section 5.08 Interest Rate Agreements. From the date thirty (30) days
following the Closing Date until the Maturity Date, the Borrower shall cause
the Parent to obtain and thereafter maintain Interest Rate Agreements
reasonably satisfactory to the Administrative Agent, sufficient to ensure that
50% of the Parent’s Total Indebtedness, measured as of each day during such
period, shall be covered by such Interest Rate Agreements or shall have a fixed
rate of interest. Any Interest Rate Agreements for the Parent shall be
provided by either a Lender, an Affiliate of a Lender or a bank or other
financial institution whose long-term debt rating is equal to or greater than
“A”. To the extent that any Interest Rate Agreement is provided by a Lender or
an Affiliate of a Lender, the obligations of the Parent or its Subsidiary under
such Interest Rate Agreement may be secured by the Collateral pari passu with
the Obligations. However, the pledge of any Collateral to secure any Interest
Rate Agreement from any Person which is not a Lender or an Affiliate of a
Lender shall be subject to the written approval of the Administrative Agent.

     Section 5.09 Approved Participating Leases and Approved Management
Agreements. Upon knowledge of a material default by an Approved Operator
(other than a TRS) under an Approved Participating Lease or an Approved
Management Agreement, as applicable, the Borrower will send, or will cause the
Guarantor who is a party to such Approved Participating Lease or Approved
Management Agreement, as applicable, to send, a notice of such default to such
Approved Operator as provided in the document under which such default has
occurred unless in Borrower’s good faith judgment such Approved Operator is
curing or has agreed to cure such default and thereafter diligently proceeds to
cure such default.

     Section 5.10 Use of Proceeds. The proceeds of the Advances have been, and
will be used by the Borrower for the purposes set forth in Section 4.09(a).

     Section 5.11 Collateral. Subject to the time periods set forth in
Sections 5.12 and 6.07 for executing Security Documents in connection with a
new Material Subsidiary or other Investment, the time periods set forth in
Section 3.01(a)(ii) with respect to satisfying certain conditions precedent
related to Ownership Interests in Persons domiciled outside the United States,
and the provisions set forth in Section 5.13, the Parent, the Borrower and the
Subsidiaries (a) will cause at all times the Administrative Agent to have an
Acceptable Lien in the Collateral, (b) will cause at all times all material
provisions of the Security Documents to be valid and binding on the Persons
executing such Security Documents and (c) shall execute or re-execute such
Security Documents and take such other actions as the Administrative Agent
shall reasonably request in order for the Administrative Agent to maintain or
create an Acceptable Lien in the Collateral, including without limitation any
Collateral acquired by the Borrower, the Parent, or any of the other Guarantors
after the Closing Date. Without limiting the foregoing, on

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 the Closing Date the Parent will grant to the Administrative Agent an
Acceptable Lien in the Parent’s Ownership Interests in the Borrower at the time
of granting such Acceptable Lien and thereafter maintain such Acceptable Lien.
Notwithstanding the foregoing, upon request of the Borrower to the
Administrative Agent, the Administrative Agent will release from the Liens of
the Security Documents in conjunction with any repayment of Advances required
under this Agreement in connection therewith (a) the Property which is the
subject of a Permitted Asset Disposition and (b) any Hotel Property and the
Ownership Interests in the Permitted Other Subsidiary which owns such Hotel
Property in connection with the incurrence of Permitted Other Indebtedness to
be secured by such Collateral. If the Property released in connection with any
such Permitted Asset Disposition includes all or substantially all of the
Ownership Interests in a Guarantor, or if a Permitted Other Subsidiary
incurring Permitted Other Indebtedness is a Guarantor, then, upon request of
the Borrower to the Administrative Agent, at the time of such Permitted Asset
Disposition or the incurrence of such Permitted Other Indebtedness, as
applicable, the Administrative Agent shall release such Guarantor from the
Guaranty and the other Credit Documents to which such Guaranty is a party.

     Section 5.12 New Subsidiaries. Except with respect to a Permitted Other
Subsidiary that has incurred or issued Permitted Other Indebtedness and as
provided in the following Section 5.13, within ten (10) Business Days after
either (a) the date that any Subsidiary of the Parent that was not a Material
Subsidiary becomes a Material Subsidiary, or (b) the purchase by the Parent or
any of its Subsidiaries of the Ownership Interests of any Person, which
purchase results in such Person becoming a Material Subsidiary the Parent
shall, in each case, cause (i) such Material Subsidiary to execute and deliver
to the Administrative Agent either (A) a Guaranty, an Environmental Indemnity
and a Security Agreement or (B) an Accession Agreement, (ii) any of the
Borrower and any Guarantor who is a direct owner of the Ownership Interests of
such Material Subsidiary to execute and deliver to the Administrative Agent a
Security Agreement, if necessary, and such other documents as are necessary to
create an Acceptable Lien in the Ownership Interests in the Material Subsidiary
owned by such Person (and such other Security Documents as the Administrative
Agent may reasonably request) and (iii) the Persons who are party to the
documents delivered pursuant to the provisions of this Section 5.10 to provide
such evidence of authority to enter into such documents as the Administrative
Agent may reasonably request.

     Section 5.13 Excluded Foreign Subsidiaries. Notwithstanding the other
provisions of this Agreement or the other Credit Documents to the contrary, as
long as no Event of Default exists, to the extent that any such action would
cause the Parent, the Borrower or any of their Subsidiaries any increase in
taxes (a) no Excluded Foreign Subsidiary must execute the Guaranty, the Pledge
Agreement, or the Environmental Indemnity or otherwise act as an obligor or
guarantor of any of the Obligations and (b) neither the Borrower, nor any
Guarantor who is a direct owner of the capital stock, membership interests or
partnership interests of any Excluded Foreign Subsidiary must pledge such
Ownership Interests to secure the Obligations.

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ARTICLE VI

NEGATIVE COVENANTS

     So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Lender shall have
any Commitment, to comply with the following covenants.

     Section 6.01 Liens, Etc. The Borrower, the Parent and their respective
Subsidiaries (except for or with respect to Permitted Other Subsidiaries) will
not create, assume, incur or suffer to exist, any Lien on or in respect of any
of its Property whether now owned or hereafter acquired, or assign any right to
receive income, except that the Borrower and its Subsidiaries may create,
incur, assume or suffer to exist Liens:

     (a)  securing only the Obligations;

     (b)  for taxes, assessments or governmental charges or levies on Property
of the Borrower or any Guarantor to the extent not required to be paid pursuant
to Sections 5.03;

     (c)  imposed by law (such as landlords’, carriers’, warehousemen’s and
mechanics’ liens or otherwise arising from litigation) (i) which are being
contested in good faith and by appropriate proceedings, (ii) with respect to
which reserves in conformity with GAAP have been provided, (iii) which have not
resulted in any Hotel Property being in jeopardy of being sold, forfeited or
lost during or as a result of such contest, (iv) neither the Administrative
Agent nor any Lender could become subject to any civil fine or penalty or
criminal fine or penalty, in each case as a result of non-payment of such
charge or claim and (v) such contest does not, and could not reasonably be
expected to, result in a Material Adverse Change, provided that the Borrower
does not have to comply with clauses (i) and (ii) if the Borrower has caused a
title company to insure over such Lien in a manner reasonably satisfactory to
the Administrative Agent;

     (d)  on leased personal property to secure solely the lease obligations
associated with such property;

     (e)  securing Secured Recourse Indebtedness and Secured Non-Recourse
Indebtedness permitted pursuant to the provisions of Section 6.02; and

     (f)  on the Collateral (or on other assets of the Parent and its
Subsidiaries which are approved by the Administrative Agent as additional
security for the Obligations) to secure Senior Indebtedness permitted by this
Agreement, provided that such Liens (i) also secure the Obligations on an equal
and ratable basis with such Indebtedness, and (ii) if not already granted by
the Security Documents, then are granted pursuant to documentation (including
documentation granting Liens to secure the Obligations on an equal and ratable
basis) reasonably acceptable to the Administrative Agent and the Borrower.
Notwithstanding any definitions in this Agreement to the contrary, for purposes
of the financial covenants contained in Article VII and the provisions of
Section 6.02, any such Senior Indebtedness which is secured by assets of the
Parent and its Subsidiaries on an equal and ratable basis with the Obligations
shall be deemed to be Unsecured Indebtedness.

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     Section 6.02 Indebtedness. The Borrower, the Parent and their respective
Subsidiaries will not incur or permit to exist any Indebtedness other than the
Obligations and the following:

     (a)  Unsecured Indebtedness in an amount that does not cause a breach at
any time of the covenants contained in Article VII and on a pro forma basis
would not be reasonably expected to cause any such breach in the future;

     (b)  Secured Recourse Indebtedness and Secured Non-Recourse Indebtedness
(excluding the Obligations) incurred by Permitted Other Subsidiaries (and
possibly guaranteed by the Parent) to the extent:

		
	 	        (i) the amount thereof does not cause a breach at any time of the
covenants contained in Article VII and on a pro forma basis would not be
reasonably expected to cause any such breach in the future;
	 
	 	        (ii) the Secured Recourse Indebtedness secured by a Hotel Property
does not exceed 65% of the Market Value of such Hotel Property (or with
respect to Secured Recourse Indebtedness which is secured by more than
one Hotel Property, such Secured Recourse Indebtedness does not exceed
65% of the aggregate Market Value of all Hotel Properties which secure
such Secured Recourse Indebtedness which do not also secure other
Indebtedness) and all Secured Recourse Indebtedness in the aggregate
secured by Hotel Properties does not exceed 65% of the aggregate Market
Value of such Hotel Properties;
	 
	 	        (iii) the Secured Non-Recourse Indebtedness secured by a Hotel
Property located in the United States does not exceed 70% of the Market
Value of such Hotel Property (or with respect to Secured Non-Recourse
Indebtedness which is secured by more than one Hotel Property, such
Secured Non-Recourse Indebtedness does not exceed 70% of the aggregate
Market Value of all Hotel Properties which secure such Secured Recourse
Indebtedness which do not also secure other Indebtedness) and all Secured
Non-Recourse Indebtedness in the aggregate secured by Hotel Properties
located in the United States does not exceed 70% of the aggregate Market
Value of such Hotel Properties; and
	 
	 	        (iv) the Secured Non-Recourse Indebtedness secured by a Hotel
Property located outside the United States does not exceed 65% of the
Market Value of such Hotel Property (or with respect to Secured
Non-Recourse Indebtedness which is secured by more than one Hotel
Property located outside the United States, such Secured Non-Recourse
Indebtedness does not exceed 65% of the aggregate Market Value of all
Hotel Properties which secure such Secured Recourse Indebtedness which do
not also secure other Indebtedness) and all Secured Non-Recourse
Indebtedness in the aggregate secured by Hotel Properties located outside
the United States does not exceed the lesser of (A) 65% of the aggregate
Market Value of such Hotel Properties or (B) $100,000,000; provided that
for purposes of this Section 6.02(b) the Borrower shall not be deemed to
be in default of this Section 6.02(b) solely because of (1) a decrease in
the Market Value of a Hotel Property after the date of incurrence of the
Indebtedness secured by such Hotel Property if the Borrower was not in
default of this Section 6.02(b) at the time of

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	 	incurrence of such Indebtedness and (2) any refinancing of the
Indebtedness described in the preceding clause (1) which does not provide
refinancing proceeds in excess of the Indebtedness refinanced;

     (c)  Capital Leases for Personal Property;

     (d)  Interest Rate Agreements; provided that (i) such agreements shall be
unsecured except as provided in Section 10.16 and the Pledge Agreement, (ii)
the dollar amount of indebtedness subject to such agreements and the
indebtedness subject to Interest Rate Agreements in the aggregate shall not
exceed the sum of the amount of the Revolving Commitments, the amount of the
outstanding Term Advances and the amount of the other Indebtedness of the
Borrower or its Affiliates which bears interest at a variable rate, and (iii)
the agreements shall be at such interest rates and otherwise in form and
substance reasonably acceptable to the Administrative Agent.

     (e)  Any of the following Indebtedness incurred by the Parent or the
Borrower:

		
	 	        (i) guaranties in connection with the Indebtedness secured by a
Hotel Property or interest in a Person owning a Hotel Property of (A) if
the Hotel Property is subject to a ground lease, the payment of rent and
performance of obligations under such ground lease, (B) real estate taxes
relating to such Hotel Property, (C) capital reserves required under such
Indebtedness, and (D) after a default under such Indebtedness, the rent
under the applicable Approved Participating Lease will be applied to such
Indebtedness;
	 
	 	        (ii) customary indemnities for acts of malfeasance, misappropriation
and misconduct and an environmental indemnity for the lender under
Indebtedness permitted under this Agreement;
	 
	 	        (iii) customary indemnities for acts of malfeasance,
misappropriation and misconduct by the Permitted Other Subsidiaries and
environmental indemnities, all for the benefit of the lenders of other
Permitted Other Subsidiary Indebtedness in connection with such
Indebtedness; and
	 
	 	        (iv) guaranties of franchise and license agreements.

     (f)  extensions, renewals and refinancing of any of the Indebtedness
specified in paragraphs (b) — (e) above so long as the principal amount of such
Indebtedness is not thereby increased.

     Section 6.03 Agreements Restricting Distributions From Subsidiaries. The
Borrower will not, nor will it permit any of its Subsidiaries (other than
Permitted Other Subsidiaries) to, enter into any agreement (other than a Credit
Document) which limits distributions to or any advance by any of the Borrower’s
Subsidiaries to the Borrower.

     Section 6.04 Restricted Payments. Neither the Parent, the Borrower, nor
any of their respective Subsidiaries, will make any Restricted Payment, except
that:

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     (a)  provided no Default has occurred and is continuing or would result
therefrom, the Parent may:

		
	 	        (i) in the 2002 Fiscal Year make cash payments to its shareholders
(but not repurchase Stock or Stock Equivalents) which in the aggregate do
not exceed $3,250,000;
	 
	 	        (ii) in any Fiscal Quarter after the 2002 Fiscal Year, based on the
immediately preceding Rolling Period, make cash payments to its
shareholders (including in connection with the repurchase of Ownership
Interests) which with the previous such cash payments in the three
immediately preceding Fiscal Quarters are not in excess of the greater of
(A) the lesser of (1) ninety percent (90%) of the Funds From Operations
of the Parent during such Rolling Period, (2) one hundred percent (100%)
of Free Cash Flow of the Parent during such Rolling Period, or (3) if the
Parent’s Leverage Ratio at such time is greater than 7:00 to 1:00 or
would be greater than 7:00 to 1:00 following such Restricted Payment,
then $3,250,000, and (B) the amount required for the Parent to maintain
its status as a REIT, provided that the repurchase of Ownership Interests
shall only be permitted to the extent that following such repurchase the
Parent’s Leverage Ratio is less than 5:00 to 1:00;

     (b)  provided no Default has occurred and is continuing or would result
therefrom, the Borrower shall be entitled to make cash distributions to its
partners including the Parent;

     (c)  a Subsidiary of the Borrower may make a Restricted Payment to the
Borrower,

     (d)  the limited partners of the Borrower shall be entitled to exchange
limited partnership interests in the Borrower for the Parent’s stock;

     (e)  the Borrower shall be entitled to issue limited partnership interests
in the Borrower in exchange for ownership interests in Subsidiaries and
Unconsolidated Entities which own a Future Property to the extent such
Investment is permitted pursuant to the provisions of Section 6.07;

     (f)  provided that no Default has occurred and is continuing or would
result therefrom, then the Borrower shall be entitled to (i) pay interest, but
not principal (except only as permitted by clauses (ii) and (iii) of this
subsection (f)), of Subordinate Indebtedness permitted pursuant to this
Agreement, (ii) repay the Subordinate Convertible Indebtedness with the Net
Cash Proceeds of a Capitalization Event or Indebtedness permitted by this
Agreement or convert the Subordinate Convertible Indebtedness into the Parent
Common Stock, and (iii) otherwise pay principal of Subordinate Indebtedness
permitted pursuant to this Agreement, provided that following a repayment of
principal under this clause (iii) the Parent’s Leverage Ratio is less than 5:00
to 1:00; and

     (g)  provided that no Default has occurred and is continuing or would
result therefrom, the Parent or the Borrower shall be entitled to make payments
to repay the Designated Redemption Indebtedness if such Person is contractually
obligated to make such repayment at such time.

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     Section 6.05 Fundamental Changes; Asset Dispositions. Neither the Parent,
the Borrower, nor any of their respective Subsidiaries (other than the
Permitted Other Subsidiaries) will, (a) merge or consolidate with or into any
other Person, unless (i) a Guarantor is merged into the Borrower and the
Borrower is the surviving Person or a Subsidiary (other than a Permitted Other
Subsidiary which has Indebtedness other than the Obligations) is merged into
any Subsidiary (other than a Permitted Other Subsidiary which has Indebtedness
other than the Obligations), and (ii) immediately after giving effect to any
such proposed transaction no Default would exist; (b) sell, transfer, or
otherwise dispose of all or any of such Person’s material property except for a
Permitted Asset Disposition, a transfer to a Permitted Other Subsidiary to the
extent such property acts as collateral for Secured Recourse Indebtedness or
Secured Non-Recourse Indebtedness permitted pursuant to the provisions of
Section 6.02, or dispositions or replacements of personal property in the
ordinary course of business; (c) enter into, as lessor, a lease (other than an
Approved Participating Lease) of all or substantially all of any Hotel Property
with any Person without the consent of the Administrative Agent; (d) sell or
otherwise dispose of any material shares of Ownership Interests of any
Subsidiary (except for a Permitted Other Subsidiary or a sale which qualifies
as a Permitted Asset Disposition); (e) except for (i) Capitalization Events for
which the consideration is principally cash or cash equivalents and for which
the Net Cash Proceeds are applied in accordance with the provisions of Section
2.07(c) and (ii) the issuance of limited partnership interests in the Borrower
in exchange for Ownership Interests in Subsidiaries and Unconsolidated Entities
to the extent permitted pursuant to the provisions of Section 6.04, materially
alter the corporate, capital or legal structure of any such Person (except for
a Permitted Other Subsidiary); (f) enter into any forward sales of Ownership
Interests in the Parent or the Borrower; (g) include any hotel room owned by
the Borrower or its Subsidiary in a timeshare program; (h) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), provided that
nothing herein shall prohibit the Borrower from dissolving any Subsidiary which
has no assets on the date of dissolution; (i) management agreements for any
Property except for Approved Management Agreements; (j) enter into, as lessee,
any leases of Real Property except (i) a TRS entering into an Approved
Participating Lease with the Borrower or one of the Borrower’s Subsidiaries,
(ii) leases of office space for the use of the Parent’s and the Parent’s
Subsidiaries’ employees, and (iii) ground leases for Real Property to the
extent (A) the Hotel Property subject to such ground lease is an Investment
permitted pursuant to the provisions of Section 6.07 and (B) otherwise
permitted by this Agreement; or (k) materially alter the character of their
respective businesses from that conducted as of the date of this Agreement or
otherwise engage in any material business activity outside of the
Hospitality/Leisure-Related Business.

     Section 6.06 Personal Property Leases. For any Hotel Property, the
Borrower will not, and will not permit any of its Subsidiaries to enter into
leases of Personal Property except in the ordinary course of business.

     Section 6.07 Investments and other Property. Neither the Parent, the
Borrower, nor any of their respective Subsidiaries, shall acquire by purchase
or otherwise any Investments or other Property, except the following:

     (a)  Investments or Properties owned by such Persons as of the Closing Date
excluding those Investments and Properties covered under paragraphs (f), (g),
(h) and (i) of this Section 6.07;

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     (b)  a Future Property or a Subsidiary or Unconsolidated Entity which owns
a Future Property for which the Borrower has provided the Administrative Agent
the Property Information for such Future Property at least ten (10) days prior
to the date of acquisition of such Future Property which Property Information
does not reflect (i) any material Environmental problems with such Future
Property or any Hazardous Substances in the soil or the groundwater of such
Future Property or (ii) any material concerns pertaining to the physical
condition of such Future Property, including without limitation the structural,
electrical, plumbing, mechanical or other essential components of such Future
Property; provided that if such Property Information does reflect any such
problems, then the Borrower may still make such Investment if the Borrower and
the Administrative Agent agree upon the Required Work to correct or remediate
such problems;

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 (c) Capital Expenditures for permitted Hotel Properties for the following
purposes and subject to the following limitations based upon the Parent’s
Leverage Ratio calculated on a pro forma basis at the time of committing to
make such Capital Expenditures taking into account such Capital Expenditures:

	 	 	 	 	 
	

	Type of Capital Expenditure	 	
Limitation if the
Parent’s pro forma
Leverage Ratio is
equal to or greater
than 6:00 to 1:00
	 	Limitation if the
Parent’s pro forma
Leverage Ratio is
less than 6:00 to
1:00
	

	
	 	 	 	 
	

	Maintenance	 	
Limited in any
Fiscal Year to six
percent (6%) of the
gross revenues for
such Hotel
Properties in such
Fiscal Year in the
aggregate
	 	No dollar
limitation provided
that the Parent is
in compliance with
all of the
financial covenants
contained in
Article VII.
	

	Emergency repairs and to
comply with the
requirements of Franchise
Agreements	 	
Limited in any
Fiscal Year to
$20,000,000;
provided that
if less than
$20,000,000 is
expended in any
Fiscal Year
commencing with
Fiscal Year 2003,
then such
difference will be
credited to future
Fiscal Years
	 	No dollar
limitation provided
that the Parent is
in compliance with
all of the
financial covenants
contained in
Article VII.
	

	Expansion (10% or more
increase in total guest
rooms for a Hotel
Property) of existing
Hotel Properties	 	
Limited in any
Fiscal Year to 2%
of Adjusted Total
Assets
	 	No dollar
limitation provided
that the Parent is
in compliance with
all of the
financial covenants
contained in
Article VII.
	

	Development of New Hotel
Properties (includes full
Investment Amount of the
Hotel Properties under
development and land for
which development is
planned to commence within
twelve months of the
acquisition of such land)	 	
None
	 	Limited in any
Fiscal Year to 2%
of Adjusted Total
Assets.
	

     (d)  the purchase of Liquid Investments with any Person which qualifies as
an Eligible Assignee;

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     (e)  trade and customer accounts receivable (including in connection with
the sale of used FF&E) which are for goods furnished or services rendered in
the ordinary course of business and are payable in accordance with customary
trade terms, and receivables purchased in connection with the acquisition of a
Hotel Property;

     (f)  Excluding the unimproved land included within the calculations set
forth in the preceding paragraph (c) for the development of new Hotel
Properties, Investments in unimproved land that does not in the aggregate then
have an Investment Amount which exceeds 1% of Adjusted Total Assets;

     (g)  Stock or Stock Equivalents (i) received in settlement of liabilities
created in the ordinary course of business, and (ii) additional Stock or Stock
Equivalents of publicly-traded Unconsolidated Entities engaged in the
Hospitality/Leisure-Related Business which in the aggregate do not then have an
Investment Amount which exceeds 1% of Adjusted Total Assets;

     (h)  Stock, Stock Equivalents, and other Investments in Unconsolidated
Entities engaged in the Hospitality/Leisure-Related Business which are not
publicly-traded Persons and which in the aggregate do not then have an
Investment Amount which exceeds 5% of Adjusted Total Assets;

     (i)  Indebtedness of a Person to the Borrower or to a Subsidiary of the
Borrower that is secured by a Lien on one or more Hotel Properties owned by
such Person, which Hotel Properties (i) were previously owned by the Borrower
or a Subsidiary of the Borrower or (ii) the Borrower reasonably expects to
acquire (through trustee’s sale, foreclosure, deed in lieu of foreclosure or
otherwise), provided, however, that the aggregate amount of all Investments
permitted under this paragraph (i) shall not at any time exceed which in the
aggregate do not then have an Investment Amount which exceeds 2% of Adjusted
Total Assets, excluding for purposes of such calculation the current
Indebtedness owed the Borrower from its Subsidiaries which respectively own the
Atlanta, Georgia Westin and the Cathedral City, California DoubleTree Hotel;

     (j)  the existing loan to OPCO, provided that (i) the interest rate for
such loan shall not be decreased during any Fiscal Quarter to a rate which is
less than the anticipated average interest rate for outstanding Advances in
such Fiscal Quarter based upon the Leverage Ratio in effect at the commencement
of such Fiscal Quarter and (ii) once any principal of such loan is repaid, such
principal cannot be re-advanced;

     (k)  any Indebtedness of a Guarantor to the Borrower, or vice-versa,
provided such Indebtedness is subordinate to the Obligations in a manner
reasonably acceptable to the Administrative Agent;

     (l)  a direct or indirect TRS of the Borrower for which the Borrower owns
directly or indirectly ownership interests in such Subsidiary of at least
ninety-five percent (95%), provided that if for any Hotel Property the
Borrower’s direct or indirect ownership interests percentage is less than
ninety-five percent (95%), then the Borrower’s ownership percentage requirement
for the TRS for such Hotel Property shall only be a percentage equal to or
greater than the Borrower’s direct or indirect ownership interests percentage
for such Hotel Property;

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     (m)  if no Advances are outstanding at the time of such purchase or used in
connection with such purchase, then the Parent or the Borrower shall be
entitled to use the Net Cash Proceeds from any Permitted Asset Disposition or
Capitalization Event after the Effective Date which are not used to repay
Advances to make Permitted Indebtedness Purchases;

     (n)  Investments in Subsidiaries used by such Subsidiaries to make
Investments otherwise permitted under this Section 6.07; provided that any such
Investment in a Subsidiary which is used by such Subsidiary to make an
Investment subject to any limitation set forth in this Section 6.07 shall be
deemed included in the calculation of whether such limitation has been met; and

     (o)  other assets owned in the ordinary course of owning the Parent’s and
the Parent’s Subsidiaries’ Hotel Properties and Hospitality/Leisure-Related
Business.

Notwithstanding the foregoing, neither the Borrower, nor the Parent, nor their
respective Subsidiaries shall make an Investment which would (a) cause the
Parent Properties in the aggregate to violate in any way the Parent Property
Requirements without the Administrative Agent’s written consent, (b) if the
Parent Deemed Investment Amount for Unconsolidated Entities was added to
Investment Amounts for Parent Properties in determining whether the Parent
Property Requirements had been met, cause the Parent Properties in the
aggregate to violate in any material way the Parent Property Requirements
without the Administrative Agent’s written consent, (c) individually, and not
on a portfolio basis, be in excess of $75,000,000 without the written consent
of the Administrative Agent or in excess of $100,000,000 without the written
consent of the Required Lenders, (d) cause a Default, or (e) cause or result
in the Borrower or the Parent failing to comply with any of the financial
covenants contained herein. Within ten (10) Business Days of the acquisition by
the Parent or any of the Parent’s Subsidiaries of any Collateral for which the
Administrative Agent on behalf of the Lenders does not already have an
Acceptable Lien, the Borrower, the Parent and the other Guarantors will execute
such Security Documents as are necessary or desirable for the Administrative
Agent on behalf of the Lenders to have an Acceptable Lien in such Collateral

     Section 6.08 Affiliate Transactions. Except for certain liquor license
agreements, the Borrower will not, and will not permit any of its Subsidiaries
to, make, directly or indirectly: (a) any transfer, sale, lease, assignment or
other disposal of any assets to any Affiliate of the Borrower which is not a
Guarantor or any purchase or acquisition of assets from any such Affiliate
except for sales of new Personal Property (i) which in any calendar year do not
exceed $1,000,000 in the aggregate and (ii) for which the sales price is the
actual cost to the party selling; or (b) any arrangement or other transaction
directly or indirectly with or for the benefit of any such Affiliate (including
without limitation, guaranties and assumptions of obligations of an Affiliate),
other than those matters set forth in either of the foregoing clauses (a) or
(b) which are in the ordinary course of business and at market rates.

     Section 6.09 Sale and Leaseback. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any arrangement with any Person,
whereby in contemporaneous transactions the Borrower or such Subsidiary sells
essentially all of its right, title and interest in a material asset and the
Borrower or such Subsidiary acquires or leases back the right to use such

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 property except in connection with the incurrence of Indebtedness
permitted under this Agreement.

     Section 6.10 Sale or Discount of Receivables. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable.

     Section 6.11 No Further Negative Pledges. Neither the Borrower, nor the
Parent, nor their respective Subsidiaries shall enter into or suffer to exist
any provisions or covenants in any agreement (a) prohibiting the creation or
assumption of any Lien upon the Properties of the Parent, the Borrower or any
of their respective Subsidiaries (except for the Permitted Other Subsidiaries),
whether now owned or hereafter acquired, or (b) requiring an obligation to be
secured if some other obligation is or becomes secured except for (y) the
provisions and covenants contained in this Agreement, the Credit Documents, and
the Senior Note Indentures as of the Closing Date, and provisions and covenants
similar to those contained in the Senior Note Indentures as of the Closing Date
contained in future indentures for Senior Unsecured Indebtedness permitted by
this Agreement and (z) the provisions and covenants contained in an indenture
or other credit document evidencing, securing or otherwise pertaining to
Subordinate Indebtedness permitted by this Agreement which (i) provide that if
the Parent or the Borrower or any of their respective Subsidiaries provides
collateral to secure other Subordinate Indebtedness that such collateral shall
also secure such Subordinate Indebtedness on an equal and ratable basis, (ii)
do not contain any other provisions or covenants prohibited by this Section
6.11, and (iii) are in form and substance otherwise reasonably acceptable to
the Administrative Agent.

     Section 6.12 Material Documents.

     (a)  The Borrower will not, nor will it permit any of its Subsidiaries to
without the Required Lender’s written consent (i) amend the Borrower’s
partnership agreement in any material respect, (ii) admit a new general partner
to the Borrower, (iii) enter into any termination, material modification or
amendment of the Approved Master Amendment which governs those Hotel Properties
which do not secure Secured Non-Recourse Indebtedness or Secured Recourse
Indebtedness, or (iv) enter into any termination or material modification or
amendment of the Approved Management Agreements or Approved Participating
Leases which singly or in the aggregate could reasonably be expected to cause
the Parent to forfeit the Parent’s status as a REIT or to cause any other
Material Adverse Change.

     (b)  Notwithstanding the foregoing, without the Required Lender’s approval
the Borrower will be able to amend the aforementioned Approved Master Amendment
to (i) add a Hotel Property to such agreement which the Borrower and the
Borrower’s Subsidiaries are permitted to invest in under this Credit Agreement,
(ii) delete a Hotel Property from such agreement, provided that the Hotel
Property either (A) is disposed of pursuant to a Permitted Asset Disposition or
(B) on or about such deletion from the Approved Master Amendment the TRS for
such Hotel Property enters into an Approved Management Agreement for such Hotel
Property with an Approved Operator, (iii) release a TRS or Approved Operator,
as applicable, from its rights and obligations under the Approved Master
Amendment, provided such TRS or Approved Operator, as applicable, no longer is
a party to any Approved Management Agreement

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 for any Hotel Property that is subject to the Approved Master Amendment or
(iv) add a TRS or Approved Operator, as applicable, as a party to the Approved
Master Amendment.

     (c)  Any termination, modification or amendment prohibited under this
Section 6.12 without the required written consent shall, to the extent
permitted by applicable law, be void and of no force and effect.

     Section 6.13 Limitations on Development, Construction, Renovation and
Purchase of Hotel Properties. Neither the Parent nor the Borrower shall or
shall permit any of their respective Subsidiaries to (a) engage in the
development, construction or expansion of any Hotel Properties except as
permitted by the provisions of Section 6.07 or (b) enter into any agreements to
purchase Hotel Properties or other assets, unless with respect to such purchase
the Parent, the Borrower or such Subsidiary (as applicable) at all times has
available sources of capital equal to pay in full the cost of the purchase of
such Hotel Properties or other assets (to the extent that the payment of such
cost of purchase constitutes a recourse obligation of the Parent, the Borrower
or its Subsidiary), which available sources of capital may include Advances to
the extent that the Borrower may borrow the same for the purposes required or
other Indebtedness permitted by the terms of this Agreement.

ARTICLE VII

FINANCIAL COVENANTS

     So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Lender shall have
any Commitment hereunder, unless the Required Lenders shall otherwise consent
in writing, the Borrower agrees to comply and cause the Parent and the Parent’s
Subsidiaries to comply with the following covenants.

     Section 7.01 Interest Coverage Ratio. The Parent shall maintain at the
end of each Rolling Period (a) for the Rolling Periods ending on September 30,
2002 through December 31, 2002, an Interest Coverage Ratio of not less than
1.40 to 1.00, (b) for the Rolling Periods ending on March 31, 2003 through
December 31, 2003, an Interest Coverage Ratio of not less than 1.50 to 1.00,
(c) for the Rolling Periods ending on March 31, 2004 through December 31, 2004,
an Interest Coverage Ratio of not less than 1.65 to 1.00, (d) for the Rolling
Periods ending on March 31, 2005 through December 31, 2005, an Interest
Coverage Ratio of not less than 1.80 to 1.00, and (e) for any Rolling Period
thereafter, an Interest Coverage Ratio of not less than 2.00 to 1.00.

     Section 7.02 Senior Unsecured Interest Coverage Ratio. The Parent shall
maintain at the end of each Rolling Period (a) for the Rolling Periods ending
on September 30, 2002 through December 31, 2002, a Senior Unsecured Interest
Coverage Ratio of not less than 1.65 to 1.00, (b) for the Rolling Periods
ending on March 31, 2003 through December 31, 2003, a Senior Unsecured Interest
Coverage Ratio of not less than 1.75 to 1.00, (c) for the Rolling Periods
ending on March 31, 2004 through December 31, 2004, a Senior Unsecured Interest
Coverage Ratio of not less than 2.00 to 1.00, (d) for the Rolling Periods
ending on March 31, 2005 through December 31, 2005, a Senior Unsecured Interest
Coverage Ratio of not less than 2.25 to 1.00, and (e) for any Rolling Period
thereafter, a Senior Unsecured Interest Coverage Ratio of not less than 2.50 to
1.00.

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     Section 7.03 Fixed Charge Coverage Ratio. The Parent shall maintain at
the end of each Rolling Period (a) for the Rolling Periods ending on September
30, 2002 through December 31, 2002, a Fixed Charge Coverage Ratio of not less
than 1.10 to 1.00, (b) for the Rolling Period ending on March 31, 2003, a Fixed
Charge Coverage Ratio of not less than 1.15 to 1.00, (c) for the Rolling
Periods ending on June 30, 2003 through December 31, 2003, a Fixed Charge
Coverage Ratio of not less than 1.20 to 1.00, (d) for the Rolling Periods
ending on March 31, 2004 through December 31, 2004, a Fixed Charge Coverage
Ratio of not less than 1.30 to 1.00, (e) for the Rolling Periods ending on
March 31, 2005 through December 31, 2005, a Fixed Charge Coverage Ratio of not
less than 1.40 to 1.00, and (f) for any Rolling Period thereafter, a Fixed
Charge Coverage Ratio of not less than 1.50 to 1.00.

     Section 7.04 Maintenance of Net Worth. The Parent shall at all times
maintain an Adjusted Net Worth of not less than the Minimum Net Worth.

     Section 7.05 Leverage Ratio. The Parent shall not on any date permit the
Leverage Ratio to exceed during the applicable period indicated in the
following chart the amount set forth in such chart for such period:

	 	 	 	 	 
	

	Beginning Date of
Applicable Period	 	
Ending Date of Applicable
Period
	 	Leverage Ratio
	

	
	 	 	 	 
	

	Closing Date	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing April 1, 2003
	 	7.60 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing April 1, 2003	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing July 1, 2003
	 	7.40 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing July 1, 2003	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing October 1, 2003
	 	7.25 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing October 1, 2003	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing January 1, 2004
	 	7.15 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing January 1, 2004	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing April 1, 2004
	 	6.95 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing April 1, 2004	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing July 1, 2004
	 	6.75 to 1.00
	

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	The Status Reset Date
during the Fiscal Quarter
commencing July 1, 2004	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing October 1, 2004
	 	6.50 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing October 1, 2004	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing July 1, 2005
	 	6.25 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing July 1, 2005	 	
The day immediately prior
to the Status Reset Date
during the Fiscal Quarter
commencing April 1, 2006
	 	5.75 to 1.00
	

	The Status Reset Date
during the Fiscal Quarter
commencing April 1, 2006	 	
No ending date
	 	5.25 to 1.00
	

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     Section 7.06 Senior Unsecured Leverage Ratio. The Parent shall not on any
date in which the Leverage Ratio is greater than 5.00 to 1.00 permit the Senior
Unsecured Leverage Ratio to exceed during the applicable period indicated in
the following chart the amount set forth in such chart for such period:

	 	 	 	 	 
	

	Beginning Date of
Applicable Period	 	
Ending Date of
Applicable Period
	 	Senior Unsecured Leverage Ratio
	

	
	 	 	 	 
	

	Closing Date	 	
The day immediately
prior to the Status
Reset Date during the
Fiscal Quarter
commencing July 1,
2003
	 	6.00 to 1.00
	

	The Status Reset Date
during the Fiscal
Quarter commencing
July 1, 2003	 	
The day immediately
prior to the Status
Reset Date during the
Fiscal Quarter
commencing January 1,
2004
	 	5.75 to 1.00
	

	The Status Reset Date
during the Fiscal
Quarter commencing
January 1, 2004	 	
The day immediately
prior to the Status
Reset Date during the
Fiscal Quarter
commencing April 1,
2004
	 	5.50 to 1.00
	

	The Status Reset Date
during the Fiscal
Quarter commencing
April 1, 2004	 	
The day immediately
prior to the Status
Reset Date during the
Fiscal Quarter
commencing October 1,
2005
	 	5.00 to 1.00
	

	The Status Reset Date
during the Fiscal
Quarter commencing
October 1, 2005	 	
No ending date
	 	4.50 to 1.00
	

     Section 7.07 Limitations on Secured Indebtedness and Secured Recourse
Indebtedness.

     (a)  The Parent shall not on any date permit the sum of the Secured
Non-Recourse Indebtedness and Secured Recourse Indebtedness of the Parent and
its Subsidiaries on a Consolidated basis (excluding the Obligations), to be
secured by Liens on Hotel Properties or other Investments which for the Rolling
Period immediately preceding such date produced thirty two percent (32%) or
more of the EBITDA of the Parent and its Subsidiaries on a Consolidated basis.

     (b)  The Parent shall not on any date permit the sum of the Secured
Recourse Indebtedness of the Parent and its Subsidiaries on a Consolidated
basis (excluding the Obligations), to be secured by Liens on Hotel Properties
or other Investments which for the Rolling Period immediately preceding such
date produced ten percent (10%) or more of the EBITDA of the Parent and its
Subsidiaries on a Consolidated basis.

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     Section 7.08 Senior Note Indenture — $200,000,000 9 1/8% Senior Notes. For
the purpose of this Section 7.08 only, (a) all capitalized terms used in this
Section 7.08 that are defined in the Senior Note Indenture shall have the
meanings given to them in the Senior Note Indenture — $200,000,000 9 1/8% Senior
Notes as of the Closing Date, and (b) all covenant calculations made under this
Section 7.08 shall be calculated as would be calculated under the Senior Note
Indenture — $200,000,000 9 1/8% Senior Notes as of the Closing Date, including,
without limitation, by making all covenant calculations under this Section 7.08
by taking into account the designation of any Subsidiary as a Restricted
Subsidiary or an Unrestricted Subsidiary under the Senior Note Indenture -
$200,000,000
 9 1/8% Senior Notes.

     (a)  Incurrence of Indebtedness. The Parent, the Borrower and their
respective Subsidiaries will not “incur” any additional Indebtedness in
violation of Section 4.9 of the Senior Note Indenture — $200,000,000 9 1/8% Senior
Notes as in effect on the Closing Date.

     (b)  Unencumbered Assets. The Parent, the Borrower and their respective
Restricted Subsidiaries will maintain at all times Total Unencumbered Assets in
compliance with Section 4.18 of the Senior Note Indenture — $200,000,000 9 1/8%
Senior Notes as in effect on the Closing Date.

ARTICLE VIII

EVENTS OF DEFAULT; REMEDIES

     Section 8.01 Events of Default. The occurrence of any of the following
events shall constitute an “Event of Default” under any Credit Document:

     (a)  Principal or Letter of Credit Obligation Payment. The Borrower or any
Guarantor shall fail to pay any principal of any Note or any Letter of Credit
Obligation when the same becomes due and payable as set forth in this
Agreement;

     (b)  Interest or Other Obligation Payment. The Borrower or any Guarantor
shall fail to pay any interest on any Note or any fee or other amount payable
hereunder or under any other Credit Document when the same becomes due and
payable as set forth in this Agreement, provided however that the Borrower and
the Guarantors will have a grace period of five (5) days after the payments
covered by this Section 8.01(b) becomes due and payable for the first two
defaults of such Persons collectively under this Section 8.01(b) in every
calendar year;

     (c)  Representation and Warranties. Any representation or warranty made or
deemed to be made (i) by the Borrower in this Agreement or in any other Credit
Document, (ii) by the Borrower (or any of its officers) in connection with this
Agreement or any other Credit Document, or (iii) by any Guarantor in any Credit
Document shall prove to have been incorrect in any material respect when made
or deemed to be made;

     (d)  Covenant Breaches. (i) The Borrower shall fail to perform or observe
any covenant contained in Section 5.02, Article VI or Article VII of this
Agreement or the Borrower shall fail to perform or observe, or shall fail to
cause any Guarantor to perform or observe any

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 covenant in any Credit Document beyond any notice and/or cure period for
such default expressly provided in such Credit Document or (ii) the Borrower or
any Guarantor shall fail to perform or observe any term or covenant set forth
in any Credit Document which is not covered by clause (i) above or any other
provision of this Section 8.01, in each case if such failure shall remain
unremedied for thirty (30) days after the earlier of the date written notice of
such default shall have been given to the Borrower or such Guarantor by the
Administrative Agent or any Lender or the date a Responsible Officer of the
Borrower or any Guarantor has actual knowledge of such default, unless such
default in this clause (ii) cannot be cured in such thirty (30) day period and
the Borrower is diligently proceeding to cure such default, in which event the
cure period shall be extended to ninety (90) days; provided that the Borrower
shall not be entitled to more than the aforementioned thirty (30) day period to
cure a default under Section 5.11 of this Agreement;

     (e)  Cross-Defaults.

		
	 	        (i) with respect to (A) any Secured Non-Recourse Indebtedness which
is outstanding in a principal amount of at least $50,000,000 individually
or when aggregated with all such Secured Non-Recourse Indebtedness of the
Borrower, the Parent or any of their respective Subsidiaries or (B) any
other Indebtedness (but excluding Indebtedness evidenced by the Notes)
which is outstanding in a principal amount of at least $5,000,000
individually or when aggregated with all such Indebtedness of the
Borrower, the Parent or any of their respective Subsidiaries any of the
following:

		
	 	        (1) any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity
thereof,
	 
	 	        (2) the Borrower, the Parent or any of their respective
Subsidiaries shall fail to pay any principal of or premium or
interest of any of such Indebtedness (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise),
and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such
Indebtedness, or
	 
	 	        (3) any other event shall occur or condition shall exist under
any agreement or instrument relating to such Indebtedness, and
shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or
condition is to permit the holders of such Indebtedness to
accelerate the maturity of such Indebtedness;

     (f)  Insolvency. The Borrower, the Parent or any of their respective
Material Subsidiaries shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower, the Parent or any of their
respective Material Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization

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 or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against the Borrower, the Parent or any of their respective Material
Subsidiaries, either such proceeding shall remain undismissed for a period of
60 days or any of the actions sought in such proceeding shall occur; or the
Borrower, the Parent or any of their respective Material Subsidiaries shall
take any corporate action to authorize any of the actions set forth above in
this paragraph (f);

     (g)  Judgments. Any judgment or order for the payment of money in excess
of $5,000,000 (reduced for purposes of this paragraph for the amount in respect
of such judgment or order that a reputable insurer has acknowledged being
payable under any valid and enforceable insurance policy) shall be rendered
against the Borrower, the Parent or any of their respective Subsidiaries which,
within thirty (30) days from the date such judgment is entered, shall not have
been discharged or execution thereof stayed pending appeal;

     (h)  ERISA. (i) Any Person shall engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is likely to result in the termination of such Plan
for purposes of Title IV of ERISA, unless such Reportable Event, proceedings or
appointment are being contested by the Parent or the Borrower in good faith and
by appropriate proceedings, (iv) any Plan shall terminate for purposes of Title
IV of ERISA, (v) the Parent, the Borrower or any member of a Controlled Group
shall incur any liability in connection with a withdrawal from a Multiemployer
Plan or the insolvency (within the meaning of Section 4245 of ERISA) or
reorganization (within the meaning of Section 4241 of ERISA) of a Multiemployer
Plan, unless such liability is being contested by the Parent or the Borrower in
good faith and by appropriate proceedings, or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such
events or conditions, if any, could subject the Borrower or any Guarantor to
any tax, penalty or other liabilities in the aggregate exceeding $10,000,000;

     (i)  Guaranty. Any provision of any Guaranty except a Supplemental
Guaranty shall for any reason cease to be valid and binding on any Guarantor or
any Guarantor shall so state in writing;

     (j)  Environmental Indemnity. Any Environmental Indemnity shall for any
reason cease to be valid and binding on any Person party thereto or any such
Person shall so state in writing;

     (k)  Parent’s REIT Status. There shall be a determination from the
applicable Governmental Authority from which no appeal can be taken that the
Parent’s tax status as a REIT has been lost;

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     (l)  Parent Common Stock; Repayment Event. The Parent at any time
hereafter fails to (i) cause the Parent Common Stock to be duly listed on the
New York Stock Exchange, Inc. and (ii) file timely all reports required to be
filed by the Parent with the New York Stock Exchange, Inc. and the Securities
and Exchange Commission and, with respect to a failure under clause (ii), such
failure remains uncured on the date which is the earlier of (A) the date thirty
(30) days following the initial occurrence of such failure and (B) the date
specified by the New York Stock Exchange, Inc. or the Securities and Exchange
Commission as the date such failure needs to be cured by. Upon the receipt by
the Parent of any Net Cash Proceeds from a Repayment Event, (a) the Parent
fails to immediately make a capital contribution or advance to the Borrower or
a Subsidiary of the Borrower in the aggregate amount of such Net Cash Proceeds
or (b) the Borrower fails to apply such Net Cash Proceeds in accordance with
this Agreement either (i) to repay any outstanding principal of the Notes, and
accrued and unpaid interest thereon and other amounts payable by the Borrower
in respect thereof, or (ii) to make Investments permitted by this Agreement; or

     (m)  Change in Control. Any of the following occur without the written
consent of the Required Lenders: (a) a Change of Control occurs for either the
Parent or the Borrower; (b) the Parent owns less than 100% of the legal or
beneficial interest in MeriStar LP, Inc.; or (c) the Parent, MeriStar LP, Inc.
and any wholly-owned Subsidiary of the Parent collectively owns less than 70%
of the legal or beneficial interest in the Borrower.

     (n)  Subordinate Convertible Indenture. The Parent or the Borrower shall
have failed to repay by July 1, 2004 in its entirety the Indebtedness evidenced
by the Subordinate Convertible Indenture.

     Section 8.02 Optional Acceleration of Maturity; Other Actions. If any
Event of Default (other than an Event of Default pursuant to paragraph (f) of
Section 8.01) shall have occurred and be continuing, then, and in any such
event,

     (a)  the Administrative Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances and the obligation of each Issuing
Bank to issue, increase, or extend Letters of Credit to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Notes, all interest thereon, the Letter of Credit Obligations, and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest, all such Letter of Credit Obligations
and all such amounts shall become and be forthwith due and payable in full,
without presentment, demand, protest or further notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrower,

     (b)  the Borrower shall, on demand of the Administrative Agent at the
request or with the consent of the Required Lenders, deposit into the Cash
Collateral Account an amount of cash equal to the Letter of Credit Exposure as
security for the Obligations to the extent the Letter of Credit Obligations are
not otherwise paid at such time, and

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     (c)  the Administrative Agent shall at the request of, or may with the
consent of, the Required Lenders proceed to enforce its rights and remedies
under the Credit Documents for the ratable benefit of the Lenders by
appropriate proceedings.

     Section 8.03 Automatic Acceleration of Maturity. If any Event of Default
pursuant to paragraph (f) of Section 8.01 shall occur,

     (a)  the obligation of each Lender to make Advances and the obligation of
each Issuing Bank to issue, increase, or extend Letters of Credit shall
immediately and automatically be terminated and the Notes, all interest on the
Notes, all Letter of Credit Obligations, and all other amounts payable under
this Agreement shall immediately and automatically become and be due and
payable in full, without presentment, demand, protest or any notice of any kind
(including, without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrower and

     (b)  to the extent permitted by law or court order, the Borrower shall
deposit with the Administrative Agent into the Cash Collateral Account an
amount of cash equal to the outstanding Letter of Credit Exposure as security
for the Obligations to the extent the Letter of Credit Obligations are not
otherwise paid at such time.

     Section 8.04 Cash Collateral Account.

     (a)  Pledge. The Borrower hereby pledges, and grants to the Administrative
Agent for the benefit of the Lenders, a security interest in all funds held in
the Cash Collateral Account maintained with the Administrative Agent, and all
proceeds thereof, as security for the payment of the Obligations, including
without limitation all Letter of Credit Obligations owing to any Issuing Bank
or any other Lender due and to become due from the Borrower to any Issuing Bank
or any other Lender under this Agreement in connection with the Letters of
Credit and the Borrower agrees to execute all cash management or cash
collateral agreements and UCC-1 Financing Statements requested by the
Administrative Agent as needed or desirable for the Administrative Agent to
have a perfected first lien security interest in the Cash Collateral Account.

     (b)  Application against Letter of Credit Obligations. The Administrative
Agent may, at any time or from time to time apply funds then held in the Cash
Collateral Account to the payment of any Letter of Credit Obligations owing to
any Issuing Bank, in such order as the Administrative Agent may elect, as shall
have become or shall become due and payable by the Borrower to any Issuing Bank
under this Agreement in connection with the Letters of Credit.

     (c)  Duty of Care. The Administrative Agent shall exercise reasonable care
in the custody and preservation of any funds held in the Cash Collateral
Account and the Administrative Agent shall be deemed to have exercised such
care if such funds are accorded treatment substantially equivalent to that
which the Administrative Agent accords its own property, it being understood
that the Administrative Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any such
funds.

     Section 8.05 Non-exclusivity of Remedies. No remedy conferred upon the
Administrative Agent or the Lenders is intended to be exclusive of any other
remedy, and each

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 remedy shall be cumulative of all other remedies existing by contract, at
law, in equity, by statute or otherwise.

     Section 8.06 Right of Set-off.

     (a)  Upon (i) the occurrence and during the continuance of any Event of
Default pursuant to paragraph (f) of Section 8.01 or (ii) the making of the
request or the granting of the consent, if any, specified by Section 8.02 to
authorize the Administrative Agent to declare the Notes and any other amount
payable hereunder due and payable pursuant to the provisions of Section 8.02 or
the automatic acceleration of the Notes and all amounts payable under this
Agreement pursuant to Section 8.03, each Lender and Affiliate thereof is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or any Affiliate thereof to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement, the Note held by such Lender,
and the other Credit Documents, irrespective of whether or not such Lender
shall have made any demand under this Agreement, such Note, or such other
Credit Documents, and although such obligations may be unmatured. Each Lender
agrees to promptly notify the Borrower after any such set-off and application
made by such Lender or its Affiliate, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section are in addition to any other rights
and remedies (including, without limitation, other rights of set-off) which
such Lender may have.

     (b)  The Borrower waives any right of set-off, defense or counterclaim the
Borrower has or may have against any Lender to apply any amounts owed the
Borrower by such Lender or any Affiliate thereof against the Obligations
hereunder.

ARTICLE IX

AGENCY AND ISSUING BANK PROVISIONS

     Section 9.01 Authorization and Action. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as Administrative Agent
on its behalf and to exercise such powers under this Agreement and the other
Credit Documents as are delegated to the Administrative Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or
which is contrary to this Agreement, any other Credit Document, or applicable
law. The functions of the Administrative Agent are administerial in nature and
in no event shall the Administrative Agent have a fiduciary or trustee relation
in respect of any Lender by reason of this Agreement or any other Credit
Document.

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Within five (5) Business Days of the Administrative Agent receiving actual
knowledge (without any duty to investigate) of a Default, the Administrative
Agent will provide written notice of such Default to the Lenders.

     Section 9.02 Administrative Agent’s Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken (including such
Person’s own negligence) by it or them under or in connection with this
Agreement or the other Credit Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of 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
satisfactory to the Administrative Agent; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it 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
Credit 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 any other Credit Document on the part of the Borrower, the
Parent or their respective Subsidiaries or to inspect the property (including
the books and records) of the Borrower, the Parent or their respective
Subsidiaries; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Credit Document other than with respect to the
Administrative Agent’s execution of the documents to which the Administrative
Agent is a party; and (f) shall incur no liability under or in respect of this
Agreement or any other Credit Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties.

     Section 9.03 Each Agent and Its Affiliates. With respect to its
Commitment, the Advances made by it and the Notes issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as though it were not an Agent.
The term “Lender” or “Lenders” shall, unless otherwise expressly indicated,
include the Administrative Agent in its individual capacity as a Lender. The
Administrative Agent, the Lenders and their respective Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower or any of its Subsidiaries,
and any Person who may do business with or own securities of the Borrower or
any such Subsidiary, all as if the Administrative Agent were not an
Administrative Agent hereunder or the Lenders were not Lenders hereunder and
without any duty to account therefor to the Lenders.

     Section 9.04 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 4.06
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and

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 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.

     Section 9.05 Indemnification. The Lenders severally agree to indemnify
the Administrative Agent, the other agents hereunder and each Issuing Bank (to
the extent not reimbursed by the Borrower), 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 which may be imposed on, incurred by, or
asserted against such Person in any way relating to or arising out of this
Agreement or any action taken or omitted by such Person under this Agreement or
any other Credit Document (including such Person’s own negligence), 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 such Person’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its Pro Rata Share
of any out-of-pocket expenses (including 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 or any other Credit Document,
to the extent that the Administrative Agent is not reimbursed for such expenses
by the Borrower.

     Section 9.06 Successor Agent and Issuing Banks. The Administrative Agent,
or any Issuing Bank may resign at any time by giving written notice thereof to
the Lenders and the Borrower and may be removed at any time with cause by the
Required Lenders upon receipt of written notice from the Required Lenders to
such effect. Upon receipt of notice of any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Administrative
Agent or Issuing Bank. If no successor Administrative Agent or Issuing Bank
shall have been so appointed, and shall have accepted such appointment, within
thirty (30) days after the retiring Administrative Agent’s or Issuing Bank’s
giving of notice of resignation or the Required Lenders’ removal of the
retiring Administrative Agent or Issuing Bank, then the retiring Administrative
Agent or Issuing Bank may, on behalf of the Lenders and the Borrower, appoint a
successor Administrative Agent or Issuing Bank, which shall be a commercial
bank meeting the financial requirements of an Eligible Assignee and, to the
extent that a Lender is willing to act in such capacity, a Lender. Upon the
acceptance of any appointment as Administrative Agent or Issuing Bank by a
successor Administrative Agent or Issuing Bank, such successor Administrative
Agent or Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
Issuing Bank, and the retiring Administrative Agent or Issuing Bank shall be
discharged from its duties and obligations under this Agreement and the other
Credit Documents, except that the retiring Issuing Bank shall remain an Issuing
Bank with respect to any Letters of Credit issued by such Issuing Bank and
outstanding on the effective date of its resignation or removal and the
provisions affecting such Issuing Bank with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Bank until the termination
of all such Letters of Credit. After any retiring Administrative Agent’s or
Issuing Bank’s resignation or removal hereunder as Administrative Agent or
Issuing Bank, the provisions of this Article IX shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was such
Administrative Agent or Issuing Bank under this Agreement and the other Credit
Documents.

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     Section 9.07 Arranger, Book Runner, and Other Agents. Under the Credit
Documents SG Cowen shall be named Sole Lead Arranger and Book Runner; Lehman
Brothers, Inc. shall be named Syndication Agent; and Salomon Smith Barney Inc.
shall be named Documentation Agent, but such Persons in such capacities shall
have no right or duty to act as agent on behalf of the Lenders.

ARTICLE X

MISCELLANEOUS

     Section 10.01 Amendments, Etc.

     (a)  No amendment or waiver of any provision of this Agreement, the Notes,
or any other Credit Document, nor consent to any departure by the Borrower or
any Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Administrative Agent, as specified in the
particular provisions of the Credit Documents, and the Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment shall
increase the Commitment of any Lender without the prior written consent of such
Lender, and no amendment, waiver or consent shall, unless in writing and signed
by all the Lenders whose Commitments or Advances are directly modified thereby,
do any of the following: (i) increase the aggregate Commitments of the Lenders
except as permitted by Section 2.01(c), (ii) reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder or under
any other Credit Document or otherwise release the Borrower from any
Obligations, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, (iv)
amend this Section 10.01, (v) amend the definition of “Required Lenders” or
“Super Required Lenders”, and (vi) release the Parent from its obligations
under the Guaranty, (vii) release all or substantially all of the Collateral;
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent or any Issuing Bank in addition
to the Lenders required above to take such action, affect the rights or duties
of the Administrative Agent or such Issuing Bank, as the case may be, under
this Agreement or any other Credit Document.

     (b)  In addition, none of the following decisions shall be made without the
prior written consent of the Super Required Lenders:

		
	 	        (i) any waiver or any amendment to the financial covenant contained
in Section 7.05 of this Agreement or the definition of “Leverage Ratio”;
and
	 
	 	        (ii) any waiver or any amendment to the provision contained in
Section 2.01(a) of this Agreement which limits the Revolving Exposure to
the amount of the Revolving Availability or the definition of “Revolving
Availability”.

     (c)  In addition, none of the following decisions shall be made without the
prior written consent of the Required Lenders:

		
	 	        (i) release any Guarantor (except the Parent) from its obligations
under any of the Guaranties except as contemplated by the provisions of
Section 5.11, provided that

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	 	the Administrative Agent can, if no Default then exists, release any
Subsidiary of the Borrower which no longer owns, operates or manages any
Investments or other Property;
	 
	 	        (ii) release any material Collateral from its Lien securing the
Obligations except as contemplated by the provisions of Sections
10.01(a)(vii) and 5.11;
	 
	 	        (iii) any determination (A) to make a Borrowing after the occurrence
and during the continuance of an Event of Default or (B) to waive or
modify a material condition precedent to the funding of an Advance or the
issuance of a Letter of Credit;
	 
	 	        (iv) any (A) determination to send notice to the Borrower of, or
otherwise declare, an Event of Default pursuant to Section 8.01 of this
Agreement, (B) determination to accelerate the Obligations pursuant to
Section 8.02 of this Agreement, (C) exercise of remedies under any Credit
Document, (D) material decision regarding the operation, maintenance,
sale or other disposition of any Property after the foreclosure upon such
Property, provided that Administrative Agent shall be able to take any
action it determines necessary to preserve or maintain any such Property
and provided further that if the Required Lenders cannot agree on the
sale or disposition of such Property, the Administrative Agent shall not
sell or dispose of such Property, but shall continue to hold such
Property for the benefit of the Lenders;
	 
	 	        (v) to the extent not already covered by the preceding paragraph
(b)(i), any waiver or any amendment to the financial covenants contained
in Article VII of this Agreement or any definitions used therein;
	 
	 	        (vi) any other material waiver or modification of the Credit
Documents not referred to in this Section 10.01; and
	 
	 	        (vii) any amendment of any other provision of a Credit Document
which expressly requires the consent of the Required Lenders.

     (d)  Any amendment to a covenant of the Parent or any of its Subsidiaries
or amendment to a definition shall require the Borrower’s written consent.

     (e)  If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement which requires unanimous
consent of the Lenders or of a Class of the Lenders, the consent of fifty one
percent (51%) [75% with respect to the matters covered in the preceding clause
(b)] or more of the Non-Defaulting Lenders entitled to vote on such proposed
change, waiver, discharge or termination is obtained but the consent of one or
more of such other Lenders whose consent is required is not obtained, then the
Borrower shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described below, to replace each
such non-consenting Lender or Lenders with one or more Eligible Assignees
pursuant to Section 2.15, provided that (i) at the time of such replacement,
each such Eligible Assignee consents to the proposed change, waiver, discharge
or termination, (ii) the Borrower shall not have the right to replace a Lender
solely as a result of the exercise of such Lender’s rights (and the withholding
of any required consent by such Lender) to increase any of such Lender’s
Commitments and (iii) the Borrower shall have consummated any

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 such replacement of Lenders within thirty (30) days of the occurrence of
the event giving the Borrower the right to cause such replacement.

     Notwithstanding the foregoing, the Administrative Agent and the Borrower
(without the consent of any other Lender or the Issuing Bank) may enter into
amendments of any Credit Document solely with respect to corrections of formal
defects not having any economic impact.

     Section 10.02 Notices, Etc. All notices and other communications shall be
in writing (including telecopy or telex) and mailed, telecopied, telexed, hand
delivered or delivered by a nationally recognized overnight courier, if to the
Borrower, at its address at 1010 Wisconsin Avenue, N.W., Suite 650, Washington,
D.C. 20007, Attn: Mr. John Emery; if to any Lender at its Applicable Lending
Office; if to the Administrative Agent, at its address at 4900 Trammell Crow
Center, 2001 Ross Avenue, Dallas, Texas 75201, Attention: Thomas K. Day,
Managing Director (telecopy: (214) 979-2727; telephone: (214) 979-2774); or,
as to each party, at such other address or teletransmission number as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed, telecopied, telexed or hand
delivered or delivered by overnight courier, be effective three days after
deposited in the mails, when telecopy transmission is completed, when confirmed
by telex answer-back or when delivered, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II or Article IX
shall not be effective until received by the Administrative Agent.

     Section 10.03 No Waiver; Remedies. No failure on the part of any Lender,
any Agent, or any Issuing Bank to exercise, and no delay in exercising, any
right hereunder or under any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
this Agreement and the other Credit Documents are cumulative and not exclusive
of any remedies provided by law.

     Section 10.04 Costs and Expenses. The Borrower agrees to pay on demand
all out-of-pocket costs and expenses of the Administrative Agent in connection
with the preparation, execution, delivery, due diligence, administration,
modification and amendment of this Agreement, the Notes and the other Credit
Documents and syndication of the Obligations including, without limitation, (a)
the reasonable fees and out-of-pocket expenses of Bracewell & Patterson,
L.L.P., counsel for the Administrative Agent, and (b) all reasonable
out-of-pocket costs and expenses, if any, of the Administrative Agent, each
Issuing Bank, and each Lender (including, without limitation, reasonable
counsel fees and expenses of the Administrative Agent, such Issuing Bank, and
each Lender) in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement and the other Credit
Documents, and (c) to the extent not included in the foregoing, the costs of
any local counsel, travel expenses, Intralink’s charges, Engineering Reports,
Environmental Reports, mortgage and intangible taxes (if any), and any title or
Uniform Commercial Code search costs, any insurance consultant costs and other
costs usual and customary in connection with a credit facility of this type.

     Section 10.05 Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent, and
when the Administrative

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 Agent shall have, as to each Lender, either received a counterpart hereof
executed by such Lender or been notified by such Lender that such Lender has
executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent, each Issuing Bank, and each Lender and
their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights or delegate its duties under this Agreement
or any interest in this Agreement without the prior written consent of each
Lender.

     Section 10.06 Lender Assignments and Participations.

     (a)  Assignments. Any Lender may assign to one or more banks or other
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it, the Notes held by it, and the participation interest in
the Letter of Credit Obligations held by it); provided, however, that:

		
	 	        (i) each such assignment shall be of a constant, and not a varying,
percentage of all of such Lender’s rights and obligations under this
Agreement for a particular Class and shall involve a ratable assignment
of such Lender’s Commitment and Advances for a particular Class;
	 
	 	        (ii) the amount of the resulting Commitments and Advances of the
assigning Lender (unless it is assigning all its Commitments and
Advances) and the assignee Lender pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect
to such assignment) shall in no event be less than $2,500,000 in total
[provided that with respect to assignments of Term Advances by an
Approved Fund to a Related Fund only, the amount of the resulting Term
Advances for the assigning Approved Fund and the assignee Related Fund
may be for less than $2,500,000 if (A) the amount of the resulting Term
Advances for the assigning Approved Fund and the assignee Related Fund
are not less than $1,000,000, (B) the amount of the aggregate resulting
Term Advances for the assigning Approved Fund and its Related Funds are
not less than $2,500,000 and (C) such Approved Fund and all of its
Related Funds shall only be entitled collectively to one notice for all
purposes under the Credit Documents], shall in no event be less than
$1,000,000 for each Class assigned and shall be an integral multiple of
$1,000,000;
	 
	 	        (iii) each such assignment shall be to an Eligible Assignee;
	 
	 	        (iv) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with the Notes subject
to such assignment;
	 
	 	        (v) the Administrative Agent (and in the case of assignments of all
or a portion of a Lender’s Revolving Commitments and the Issuing Bank for
each Letter of Credit issued after the date of this Agreement) shall
consent to such assignment, which consent shall not be unreasonably
withheld or delayed; and
	 
	 	        (vi) each Eligible Assignee (other than an Eligible Assignee which
is an Affiliate of the assigning Lender) shall pay to the Administrative
Agent a $3,500 administrative fee; provided that, in the case of
contemporaneous assignments by a

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	 	Lender to more than one Related Fund (which Related Funds are not
then Lenders hereunder), only a single $3,500 such fee shall be payable
for all such contemporaneous assignments.

Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least three (3) Business Days after the execution thereof or
earlier such earlier date as agreed to by the Administrative Agent, (A) the
assignee thereunder shall be a party hereto for all purposes and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) such Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of such Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). Notwithstanding
anything herein to the contrary, (i) any Lender may assign or pledge, as
collateral or otherwise, any of its rights under the Credit Documents to any
Federal Reserve Bank and (ii) any Lender that is an Approved Fund or Related
Fund may, without the consent of the Administrative Agent or the Borrower,
pledge all or any portion of its Advances and Notes to any trustee for, or any
other representative of, holders of obligations owed, or securities issued, by
such Approved Fund or Related Fund, as security for such obligations or
securities; provided that (A) any foreclosure or similar action by such trustee
or representative shall be subject to the provisions of this Section 10.06(a)
concerning assignments, including without limitation the requirement that any
assignee of such Notes and Advances must qualify as an Eligible Assignee and
(B) such Lender shall not require such trustee’s or representative’s consent to
any matter under this Agreement, except (1) for a change in the principal
amount of any Note which has been so pledged, reductions in fees or interest,
or extending the Maturity Date or (2) as otherwise consented to by the
Administrative Agent.

     (b)  Term of Assignments. By executing and delivering an Assignment and
Acceptance, the Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the Guarantors or the performance or observance by the Borrower or
the Guarantors of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Sections 4.06 and 5.05, if applicable, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, such Lender 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; (v) such assignee appoints and authorizes the Administrative Agent

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 to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

     (c)  The Register. The Administrative Agent shall maintain at its address
referred to in Section 10.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Advances owing to, each Lender from time to time (the “Register”). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Administrative Agent, the Issuing Banks,
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

     (d)  Procedures. Upon its receipt of an Assignment and Acceptance executed
by a Lender and an Eligible Assignee, together with the Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of the attached
Exhibit C, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the Borrower. Within five (5) Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes, a new Note
or Notes payable to the order of such Eligible Assignee in amount equal to,
respectively, the Commitments and the outstanding Advances assumed by it
pursuant to such Assignment and Acceptance, and if the assigning Lender has
retained any Commitments hereunder, a new Note or Notes payable to the order of
such Lender in an amount equal to, respectively, the Commitments and the
outstanding Advances retained by it hereunder. Such new Note or Notes shall be
dated the date of the original Notes executed pursuant to this Agreement and
shall otherwise be in substantially the form of the attached Exhibits A-1 or
A-2, as applicable.

     (e) Participations. Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it, its participation interest in the Letter
of Credit Obligations, and the Notes held by it); provided, however, that (i)
such Lender’s obligations under this Agreement (including, without limitation,
its Commitments to the Borrower hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Notes for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent, and the Issuing Banks and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement, and (v) such Lender shall
not require the participant’s consent to any matter under this Agreement,
except for change in the principal amount of any Note in which the participant
has an interest, reductions in fees or interest, or extending the Maturity
Date. The Borrower hereby agrees that participants shall have the same rights
under Sections 2.08, 2.09, 2.11(c), and 10.07 hereof as the Lender to the
extent of their respective participations.

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     (f)  Confidentiality. Each Lender agrees to preserve the confidentiality
of any confidential information relating to the Parent, the Borrower and their
respective Subsidiaries received by Lender; provided that each Lender may
furnish any such confidential information in the possession of such Lender from
time to time to (i) assignees and participants (including prospective assignees
and participants), (ii) its regulators, the National Association of Insurance
Commissioners, governmental authorities and any self-governing organization to
which is a member, (iii) any direct or indirect contractual counterparty to
such Lender in swap agreements or such contractual counterparty’s professional
advisor and (iv) the Related Funds, Affiliates, directors, partners, officers,
employees of such Person or its Affiliates or Related Funds; provided that,
prior to any such disclosure, such Person shall agree to preserve the
confidentiality of any confidential information relating to the Borrower and
its Subsidiaries received by it from or on behalf of such Lender.

     Section 10.07 Indemnification. The Borrower shall indemnify the
Administrative Agent, the other agents hereunder, the Lenders (including any
lender which was a Lender hereunder prior to any full assignment of its
Commitment), the Issuing Banks, and each affiliate thereof and their respective
directors, officers, employees, trustees, advisors, and agents from, and
discharge, release, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from (i)
any actual or proposed use by the Borrower or any Affiliate of the Borrower of
the proceeds of any Advance, (ii) any breach by the Borrower or any Guarantor
of any provision of this Agreement or any other Credit Document, (iii) any
investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing, or (iv) any
Environmental Claim or requirement of Environmental Laws concerning or relating
to the present or previously-owned or operated properties, or the operations or
business, of the Borrower or any of its Subsidiaries, and the Borrower shall
reimburse the Administrative Agent, the other agents hereunder, each Issuing
Bank, and each Lender, and each affiliate thereof and their respective
directors, officers, employees and agents, upon demand for any reasonable
out-of-pocket expenses (including legal fees) incurred in connection with any
such investigation, litigation or other proceeding; and expressly including any
such losses, liabilities, claims, damages, or expense incurred by reason of
such Person’s own negligence, but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified.

     Section 10.08 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

     Section 10.09 Survival of Representations, Indemnifications, etc. All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Borrower in connection herewith shall survive the
execution and delivery of this Agreement and the Credit Documents, the making
of the Advances and any investigation made by or on behalf of the Lenders, none
of which investigations shall diminish any Lender’s right to rely on such
representations and warranties. All obligations of the Borrower provided for
in Sections 2.08, 2.09, 2.11(c), 9.05 and 10.07 shall survive any termination
of this Agreement and repayment in full of the Obligations.

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     Section 10.10 Severability. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.

     Section 10.11 Florida Liens. The Lenders and the Administrative Agent
agree that the Administrative Agent will release the Florida Liens or deposit
releases of the Florida Liens with any Person designated by the Borrower within
five (5) Business Days of written request by the Borrower which the Borrower
can make in its sole and absolute discretion. In addition, if no Default then
exists, the Lenders and the Administrative Agent agree to cooperate with the
Borrower in connection with a written request by the Borrower to assign all or
a portion of the Florida Liens to another Person. Without limitation of the
foregoing, the Lenders, the Administrative Agent and the Borrower agree to
execute such documents as are necessary or desirable to accomplish the
foregoing, all in form and substance reasonably acceptable to the
Administrative Agent and the Borrower.

     Section 10.12 Supplemental Guaranties. The Borrower has requested and the
Lenders have agreed that any partner of the Borrower or any partner of any
Subsidiary of the Borrower except the Parent or any Guarantor may execute a
Supplemental Guaranty. However, the execution of or release of any
Supplemental Guaranty shall not be construed as a release or modification of
any obligation of a Guarantor under a Guaranty or Environmental Indemnity.

     Section 10.13 Usury Not Intended. It is the intent of the Borrower and
each Lender in the execution and performance of this Agreement and the other
Credit Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Advances of each Lender
including such applicable laws of the State of New York and the United States
of America from time to time in effect. In furtherance thereof, the Lenders
and the Borrower stipulate and agree that none of the terms and provisions
contained in this Agreement or the other Credit Documents shall ever be
construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum
Rate and that for purposes hereof “interest” shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
charged or received under this Agreement; and in the event that,
notwithstanding the foregoing, under any circumstances the aggregate amounts
taken, reserved, charged, received or paid on the Advances, include amounts
which by applicable law are deemed interest which would exceed the Maximum
Rate, then such excess shall be deemed to be a mistake and each Lender
receiving same shall credit the same on the principal of its Notes (or if such
Notes shall have been paid in full, refund said excess to the Borrower). In
the event that the maturity of the Notes is accelerated by reason of any
election of the holder thereof resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the applicable Notes shall have been paid in full,
refunded to the Borrower). In determining whether or not the interest paid or
payable under any specific contingencies exceeds the Maximum Rate, the Borrower
and the Lenders shall to the maximum extent permitted under applicable law
amortize, prorate, allocate and spread in equal parts during the period of the
full stated term of

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 the Notes all amounts considered to be interest under applicable law at
any time contracted for, charged, received or reserved in connection with the
Obligations. The provisions of this Section shall control over all other
provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.

     Section 10.14 GOVERNING LAW. THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED, AND ANY DISPUTE BETWEEN
THE BORROWER, ANY AGENT, ANY LENDER, OR ANY INDEMNITEE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER CREDIT
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW, BUT OTHERWISE
WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK;
PROVIDED THAT THE PERFECTION OF THE LIENS OF THE ADMINISTRATIVE AGENT ON THE
COLLATERAL AND THE EXERCISE OF REMEDIES AGAINST THE COLLATERAL SHALL BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
APPLICABLE JURISDICTION.

     Section 10.15 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

     (A)  EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF
THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM 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 CREDIT DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.

     (B)  OTHER JURISDICTIONS. THE BORROWER AGREES THAT ANY AGENT, ANY LENDER
OR ANY INDEMNITEE SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS
PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN
PERSONAL JURISDICTION OVER THE BORROWER OR (2) ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT IT WILL
NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH
PERSON TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH

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 PERSON. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED
IN THIS SUBSECTION (B).

     (C)  SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
WRITS, PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING
THEREOF BY ANY AGENT OR THE LENDERS BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE BORROWER ADDRESSED AS PROVIDED HEREIN. NOTHING HEREIN SHALL IN
ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY AGENT OR THE LENDERS TO SERVE ANY
SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.

     (D)  WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     (E)  WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL ENFORCE ANY JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT.

     (F)  ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY
HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS
OF THIS SECTION 10.15 AND SECTION 10.21, WITH ITS COUNSEL.

-103-

 

     Section 10.16 Lender Interest Rate Agreements. As more fully set forth in
the Guaranty and the Pledge Agreement, if any Lender enters into an Interest
Rate Agreement with the Borrower or the Parent, the obligations of such Person
to such Lender under such Interest Rate Agreement shall (a) be pari passu with
the Obligations and (b) be secured by the Collateral pursuant to the Pledge
Agreement.

     Section 10.17 Knowledge of Borrower. For purposes of this Agreement,
“knowledge of the Borrower” means the actual knowledge of any of the executive
officers and all other Responsible Officers of the Parent.

     Section 10.18 Lenders Not in Control. None of the covenants or other
provisions contained in the Credit Documents shall or shall be deemed to, give
the Lenders the rights or power to exercise control over the affairs and/or
management of the Borrower, any of its Subsidiaries or any Guarantor, the power
of the Lenders being limited to the right to exercise the remedies provided in
the Credit Documents; provided, however, that if any Lender becomes the owner
of any stock, or other equity interest in, any Person whether through
foreclosure or otherwise, such Lender shall be entitled (subject to
requirements of law) to exercise such legal rights as it may have by being
owner of such stock, or other equity interest in, such Person.

     Section 10.19 Headings Descriptive. The headings of the several Sections
and paragraphs of the Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.

     Section 10.20 Time is of the Essence. Time is of the essence under the
Credit Documents.

     Section 10.21 No Consequential Damages. NOTWITHSTANDING ANYTHING
CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, EACH PERSON
PARTY HERETO FOR ITSELF AND ON BEHALF OF ITS AFFILIATES AGREES THAT THE
RECOVERY OF ANY DAMAGES SUFFERED OR INCURRED AS A RESULT OF ANY BREACH BY ANY
PERSON OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES
SUFFERED OR INCURRED AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS
REPRESENTATIONS, WARRANTIES OR OBLGIATIONS HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO ANY
NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST
PROFITS OR OPPORTUNITIES OR LOST OR DELAYED PRODUCTION) SUFFERED OR INCURRED BY
THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY
OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
CREDIT DOCUMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-104-

 

[SIGNATURE PAGE OF SENIOR SECURED CREDIT AGREEMENT]

     EXECUTED as of the date first referenced above.

	 	 	 
	
BORROWER:
	 
	
MERISTAR HOSPITALITY OPERATING

PARTNERSHIP, L.P.
	 
	By:	 	
MeriStar Hospitality Corporation, its

general partner
	 
	 	 	
By:
	 	 	

Name:
	 	 	

Title:
	 	 	

 

 

[SIGNATURE PAGE OF SENIOR SECURED CREDIT AGREEMENT]

	 
	SOCIÉTÉ GÉNÉRALE, individually and as the

Administrative Agent and the Issuing Bank
	 
	 
	By:
	

Name:
	

Title:exv4w1

 

Exhibit 4.1

INDENTURE

dated as of November 12, 2002

among

NII HOLDINGS (CAYMAN), LTD.,

A COMPANY INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS,

THE GUARANTORS SIGNATORY HERETO

and

WILMINGTON TRUST COMPANY, A DELAWARE CORPORATION,

as TRUSTEE

 

 

	 	 	 	 	 	 	 	 	 	 	 
	ARTICLE ONE	

	 	DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	2	 
	 	 	
SECTION 1.01
	 	 	 	Definitions
	 	 	2	 
	 	 	
SECTION 1.02
	 	 	 	Incorporation by Reference to Trust Indenture Act
	 	 	23	 
	 	 	
SECTION 1.03
	 	 	 	Rules of Construction
	 	 	23	 
	ARTICLE TWO	 	THE NOTES
	 	 	 	 	23	 
	 	 	
SECTION 2.01
	 	 	 	Form and Dating
	 	 	23	 
	 	 	
SECTION 2.02
	 	 	 	Restrictive Legends
	 	 	24	 
	 	 	
SECTION 2.03
	 	 	 	Execution, Authentication and Denominations
	 	 	24	 
	 	 	
SECTION 2.04
	 	 	 	Registrar and Paying Agent
	 	 	25	 
	 	 	
SECTION 2.05
	 	 	 	Paying Agent to Hold Money in Trust
	 	 	25	 
	 	 	
SECTION 2.06
	 	 	 	Transfer and Exchange
	 	 	26	 
	 	 	
SECTION 2.07
	 	 	 	Book-Entry Provisions for Global Notes
	 	 	27	 
	 	 	
SECTION 2.08
	 	 	 	Intentionally Deleted
	 	 	27	 
	 	 	
SECTION 2.09
	 	 	 	Replacement Notes
	 	 	27	 
	 	 	
SECTION 2.10
	 	 	 	Outstanding Notes
	 	 	28	 
	 	 	
SECTION 2.11
	 	 	 	Temporary Notes
	 	 	28	 
	 	 	
SECTION 2.12
	 	 	 	Cancellation
	 	 	28	 
	 	 	
SECTION 2.13
	 	 	 	CUSIP Numbers
	 	 	29	 
	 	 	
SECTION 2.14
	 	 	 	Defaulted Interest
	 	 	29	 
	ARTICLE THREE	 	REDEMPTION
	 	 	 	 	29	 
	 	 	
SECTION 3.01
	 	 	 	Right of Redemption
	 	 	29	 
	 	 	
SECTION 3.02
	 	 	 	Notices to Trustee
	 	 	30	 
	 	 	
SECTION 3.03
	 	 	 	Selection of Notes to Be Redeemed
	 	 	30	 
	 	 	
SECTION 3.04
	 	 	 	Notice of Redemption
	 	 	30	 
	 	 	
SECTION 3.05
	 	 	 	Effect of Notice of Redemption
	 	 	31	 
	 	 	
SECTION 3.06
	 	 	 	Deposit of Redemption Price
	 	 	31	 
	 	 	
SECTION 3.07
	 	 	 	Payment of Notes Called for Redemption
	 	 	31	 
	 	 	
SECTION 3.08
	 	 	 	Notes Redeemed in Part
	 	 	32	 
	ARTICLE FOUR	 	COVENANTS
	 	 	 	 	32	 
	 	 	
SECTION 4.01
	 	 	 	Payment of Notes
	 	 	32	 
	 	 	
SECTION 4.02
	 	 	 	Maintenance of Office or Agency
	 	 	32	 
	 	 	
SECTION 4.03
	 	 	 	Limitation on Indebtedness
	 	 	32	 
	 	 	
SECTION 4.04
	 	 	 	Limitation on Restricted Payments
	 	 	35	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	
SECTION 4.05
	 	 	 	Limitation on Dividends and Other Payments to Restricted
Group Members
	 	 	37	 
	 	 	
SECTION 4.06
	 	 	 	Limitation on the Issuance and Sale of Capital Stock of
Restricted Group Members
	 	 	38	 
	 	 	
SECTION 4.07
	 	 	 	Limitation on Guarantees by Restricted Group Members
	 	 	38	 
	 	 	
SECTION 4.08
	 	 	 	Limitation on Transactions with Affiliates
	 	 	39	 
	 	 	
SECTION 4.09
	 	 	 	Limitation on Liens
	 	 	40	 
	 	 	
SECTION 4.10
	 	 	 	Limitation on Asset Sales
	 	 	41	 
	 	 	
SECTION 4.11
	 	 	 	Repurchase of Notes upon a Change of Control
	 	 	42	 
	 	 	
SECTION 4.12
	 	 	 	Existence
	 	 	43	 
	 	 	
SECTION 4.13
	 	 	 	Payment of Taxes and Other Claims
	 	 	44	 
	 	 	
SECTION 4.14
	 	 	 	Maintenance of Properties and Insurance; Books and Records;
Compliance with Law
	 	 	44	 
	 	 	
SECTION 4.15
	 	 	 	Notice of Defaults
	 	 	45	 
	 	 	
SECTION 4.16
	 	 	 	Compliance Certificates
	 	 	45	 
	 	 	
SECTION 4.17
	 	 	 	Commission Reports and Reports to Holders
	 	 	46	 
	 	 	
SECTION 4.18
	 	 	 	Waiver of Stay, Extension or Usury Laws
	 	 	46	 
	 	 	
SECTION 4.19
	 	 	 	Limitation on Sale-Leaseback Transactions
	 	 	46	 
	 	 	
SECTION 4.20
	 	 	 	Additional Note Guarantees
	 	 	47	 
	 	 	
SECTION 4.21
	 	 	 	Advances to Excluded Entities
	 	 	47	 
	 	 	
SECTION 4.22
	 	 	 	Designation of Affiliates and Subsidiaries
	 	 	47	 
	ARTICLE FIVE	 	SUCCESSOR CORPORATION
	 	 	49	 
	 	 	
SECTION 5.01
	 	 	 	When Company May Merge, Etc.
	 	 	49	 
	 	 	
SECTION 5.02
	 	 	 	Successor Substituted
	 	 	50	 
	ARTICLE SIX	 	DEFAULT AND REMEDIES
	 	 	50	 
	 	 	
SECTION 6.01
	 	 	 	Events of Default
	 	 	50	 
	 	 	
SECTION 6.02
	 	 	 	Acceleration
	 	 	52	 
	 	 	
SECTION 6.03
	 	 	 	Other Remedies
	 	 	53	 
	 	 	
SECTION 6.04
	 	 	 	Waiver of Past Defaults
	 	 	53	 
	 	 	
SECTION 6.05
	 	 	 	Control by Majority
	 	 	53	 
	 	 	
SECTION 6.06
	 	 	 	Limitation on Suits
	 	 	53	 
	 	 	
SECTION 6.07
	 	 	 	Rights of Holders to Receive Payment
	 	 	54	 
	 	 	
SECTION 6.08
	 	 	 	Collection Suit by Trustee
	 	 	54	 

iii

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	
SECTION 6.09
	 	 	 	Trustee May File Proofs of Claim
	 	 	54	 
	 	 	
SECTION 6.10
	 	 	 	Priorities
	 	 	55	 
	 	 	
SECTION 6.11
	 	 	 	Undertaking for Costs
	 	 	55	 
	 	 	
SECTION 6.12
	 	 	 	Restoration of Rights and Remedies
	 	 	55	 
	 	 	
SECTION 6.13
	 	 	 	Rights and Remedies Cumulative
	 	 	56	 
	 	 	
SECTION 6.14
	 	 	 	Delay or Omission Not Waiver
	 	 	56	 
	ARTICLE SEVEN
	 	TRUSTEE
	 	 	 	 	56	 
	 	 	
SECTION 7.01
	 	 	 	General
	 	 	56	 
	 	 	
SECTION 7.02
	 	 	 	Certain Rights of Trustee
	 	 	57	 
	 	 	
SECTION 7.03
	 	 	 	Individual Rights of Trustee
	 	 	58	 
	 	 	
SECTION 7.04
	 	 	 	Trustee’s Disclaimer
	 	 	58	 
	 	 	
SECTION 7.05
	 	 	 	Notice of Default
	 	 	58	 
	 	 	
SECTION 7.06
	 	 	 	Reports by Trustee to Holders
	 	 	59	 
	 	 	
SECTION 7.07
	 	 	 	Compensation and Indemnity
	 	 	59	 
	 	 	
SECTION 7.08
	 	 	 	Replacement of Trustee
	 	 	60	 
	 	 	
SECTION 7.09
	 	 	 	Successor Trustee by Merger, Etc.
	 	 	60	 
	 	 	
SECTION 7.10
	 	 	 	Eligibility
	 	 	60	 
	 	 	
SECTION 7.11
	 	 	 	Money Held in Trust
	 	 	61	 
	 	 	
SECTION 7.12
	 	 	 	Withholding Taxes
	 	 	61	 
	 	 	
SECTION 7.13
	 	 	 	Engagement of Non-United States Counsel and Certain
Waivers by the Trustee
	 	 	61	 
	 	 	
SECTION 7.14
	 	 	 	New Liens	 	 	62	 
	ARTICLE EIGHT	 	COLLATERAL AND SECURITY	 	 	62	 
	 	 	
SECTION 8.01
	 	 	 	Collateral Documents
	 	 	62	 
	 	 	
SECTION 8.02
	 	 	 	Recording and Opinions
	 	 	63	 
	 	 	
SECTION 8.03
	 	 	 	Release of Collateral
	 	 	63	 
	 	 	
SECTION 8.04
	 	 	 	Certificates of the Company
	 	 	64	 
	 	 	
SECTION 8.05
	 	 	 	Certificates of the Trustee
	 	 	64	 
	 	 	
SECTION 8.06
	 	 	 	Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents
	 	 	64	 
	 	 	
SECTION 8.07
	 	 	 	Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents
	 	 	64	 
	 	 	
SECTION 8.08
	 	 	 	Termination of Security Interest
	 	 	65	 

iv

 

 

	 	 	 	 	 	 	 	 	 	 	 
	ARTICLE NINE	 	NOTE GUARANTEES
	 	 	65	 
	 	 	
SECTION 9.01
	 	 	 	Guarantee
	 	 	65	 
	 	 	
SECTION 9.02
	 	 	 	Limitation on Guarantor Liability
	 	 	66	 
	 	 	
SECTION 9.03
	 	 	 	Execution and Delivery of Note Guarantee
	 	 	66	 
	 	 	
SECTION 9.04
	 	 	 	Guarantors May Consolidate, etc., on Certain Terms
	 	 	67	 
	 	 	
SECTION 9.05
	 	 	 	Releases Following Sale of Assets
	 	 	67	 
	 	 	
SECTION 9.06
	 	 	 	Intercreditor Agreement
	 	 	68	 
	ARTICLE TEN	 	DISCHARGE OF INDENTURE
	 	 	68	 
	 	 	
SECTION 10.01
	 	 	 	Termination of Company’s Obligations
	 	 	68	 
	 	 	
SECTION 10.02
	 	 	 	Defeasance and Discharge of Indenture
	 	 	69	 
	 	 	
SECTION 10.03
	 	 	 	Defeasance of Certain Obligations
	 	 	71	 
	 	 	
SECTION 10.04
	 	 	 	Application of Trust Money; Miscellaneous
	 	 	72	 
	 	 	
SECTION 10.05
	 	 	 	Repayment to Company
	 	 	72	 
	 	 	
SECTION 10.06
	 	 	 	Reinstatement
	 	 	73	 
	ARTICLE ELEVEN	 	AMENDMENTS, SUPPLEMENTS AND WAIVERS
	 	 	73	 
	 	 	
SECTION 11.01
	 	 	 	Without Consent of Holders
	 	 	73	 
	 	 	
SECTION 11.02
	 	 	 	With Consent of Holders
	 	 	73	 
	 	 	
SECTION 11.03
	 	 	 	Revocation and Effect of Consent
	 	 	75	 
	 	 	
SECTION 11.04
	 	 	 	Notation on or Exchange of Notes
	 	 	75	 
	 	 	
SECTION 11.05
	 	 	 	Trustee to Sign Amendments, Etc.
	 	 	75	 
	 	 	
SECTION 11.06
	 	 	 	Conformity with Trust Indenture Act
	 	 	76	 
	ARTICLE TWELVE	 	MISCELLANEOUS
	 	 	 	 	76	 
	 	 	
SECTION 12.01
	 	 	 	Table of Contents, Headings, Etc.
	 	 	76	 
	 	 	
SECTION 12.02
	 	 	 	Notices
	 	 	76	 
	 	 	
SECTION 12.03
	 	 	 	Certificate and Opinion as to Conditions Precedent
	 	 	77	 
	 	 	
SECTION 12.04
	 	 	 	Statements Required in Certificate or Opinion
	 	 	77	 
	 	 	
SECTION 12.05
	 	 	 	Rules by Trustee, Paying Agent or Registrar
	 	 	77	 
	 	 	
SECTION 12.06
	 	 	 	Payment Date Other Than a Business Day
	 	 	77	 
	 	 	
SECTION 12.07
	 	 	 	Governing Law
	 	 	77	 
	 	 	
SECTION 12.08
	 	 	 	No Adverse Interpretation of Other Agreements
	 	 	78	 
	 	 	
SECTION 12.09
	 	 	 	Venue and Jurisdiction
	 	 	78	 
	 	 	
SECTION 12.10
	 	 	 	Successors
	 	 	78	 
	 	 	
SECTION 12.11
	 	 	 	Duplicate Originals
	 	 	78	 

v

 

 

	 	 	 	 	 	 	 
	
SECTION 12.12
	 	Separability
	 	 	78	 
	SECTION 12.13	 	
Trust Indenture Act Controls
	 	 	79	 
	SECTION 12.14	 	
Communication Among Holders
	 	 	79	 
	SECTION 12.15	 	
Acts of Holders
	 	 	79	 

vi

 

 

     INDENTURE,
dated as of November 12, 2002 (“Indenture”), among NII Holdings
(Cayman), Ltd., a company incorporated under the laws of the Cayman Islands
(the “Company”), the Guarantors signatory hereto and Wilmington Trust Company,
a Delaware corporation (the “Trustee”).

RECITALS OF THE COMPANY

     WHEREAS, on May 24, 2002 (the “Petition Date”), Nextel International,
Inc., a Delaware corporation (“Old NII”), and NII Holdings (Delaware), Inc., a
Delaware corporation (together with Old NII, the “Debtors”), jointly filed a
voluntary petition for relief (collectively, the “Cases”) under Chapter 11 of
the Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”);

     WHEREAS, on June 14, 2002, the Debtors filed the Plan of Reorganization
(as hereinafter defined) with the Bankruptcy Court;

     WHEREAS, on October 28, 2002, the Bankruptcy Court entered an order
pursuant to Section 1129 of the United States Bankruptcy Code confirming the
Debtors’ Revised Third Amended Joint Plan of Reorganization (the “Plan of
Reorganization”);

     WHEREAS, the Debtors have been merged to form NII Holdings, Inc., a
Delaware corporation (“NII”), pursuant to the Plan of Reorganization;

     WHEREAS, the Company is a Wholly Owned Subsidiary of NII;

     WHEREAS, the Plan of Reorganization authorizes the Company to issue up to
$180,820,855 in principal amount at maturity of its 13% Senior Secured Discount
Notes Due 2009 (the “Notes”) to those Persons who participate in the Rights
Offering (as defined in the Plan of Reorganization) (the “Rights Offering”);

     WHEREAS, the Rights Offering has been fully subscribed, and all other
things necessary to make this Indenture a valid agreement of the Company in
accordance with its terms have been done, and the Company has done all things
necessary to make the Notes, when executed by the Company and authenticated and
delivered by the Trustee hereunder, the valid obligations of the Company; and

     WHEREAS, each of the Guarantors has agreed to guarantee the obligations of
the Company hereunder, and each of the Company and the Guarantors has agreed,
subject to the terms and conditions of the Intercreditor Agreement (as
hereinafter defined), to secure its obligations to the Holders hereunder, by
inter alia granting security interests in and Liens (as hereinafter defined) on
substantially all of its property and assets, whether real or personal,
tangible or intangible, now existing or hereafter acquired or arising, all as
more fully provided herein and in the Collateral Documents (as hereinafter
defined);

     NOW, THEREFORE, the Company, the Guarantors and the Trustee hereby agree
as follows for the equal and ratable benefit of the holders of the Notes:

1

 

     This Indenture is subject to, and shall be governed by, the provisions of
the TIA (as hereinafter defined) that are required to be a part of and to
govern indentures qualified under the TIA.

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

     SECTION 1.01 Definitions.

     “Accreted Value” means (i) as of any date prior to November 1, 2004, an
amount per $1,000 principal amount at maturity of the Notes that is equal to
the sum of (a) the Issue Price ($774.25 per $1,000 principal amount at maturity
of the Notes) of such Notes and (b) the portion of the excess of the principal
amount of such Notes over such Issue Price which shall have been accreted
through such date, such amount to be so accreted on a daily basis and
compounded quarterly on February 1, May 1, August 1 and November 1 of each year
at the rate of 13% per annum from the Effective Date through the date of
determination computed on the basis of a 360-day year of twelve 30-day months,
and (ii) as of any date on or after November 1, 2004, the principal amount at
maturity of such Notes.

     “Acquired Debt” means Indebtedness of a Person existing at the time such
Person is merged with or into any Restricted Group Member or becomes a
Restricted Group Member; provided, that Indebtedness of such other Person that
is redeemed, defeased, retired or otherwise repaid at the time, or immediately
upon consummation, of the transaction by which such other Person is merged with
or into a Restricted Group Member or becomes a Restricted Group Member shall
not be Acquired Debt.

     “Adjusted Consolidated Net Income” means, for any period, the aggregate
net income (or loss) of NII and the other Restricted Group Members for such
period determined on a consolidated basis in conformity with GAAP; provided,
that the following items shall be excluded in computing Adjusted Consolidated
Net Income (without duplication):

     (1)  the net income (or loss) of any Unrestricted Subsidiary or
Unrestricted Affiliate, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to any Restricted
Group Member by such Unrestricted Subsidiary or Unrestricted Affiliate during
such period, and (y) with respect to net losses, to the extent of the amount of
cash contributed by any Restricted Group Member to such Unrestricted Subsidiary
or Unrestricted Affiliate during such period;

     (2)  the net income of any Restricted Group Member to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Group Member of such net income is not at the time permitted by the operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Restricted
Group Member; provided, that in the case of restrictions imposed in connection
with outstanding Indebtedness, the amount of net income excluded during any
period shall not exceed the aggregate amount of such Indebtedness that would
need to be repaid to enable such Restricted Group Member to declare and pay
dividends or similar distributions of such net income;

2

 

     (3)  any gains or losses (on an after-tax basis) attributable to Asset
Sales;

     (4)  all extraordinary gains and extraordinary losses; and

     (5)  to the extent not otherwise excluded in accordance with GAAP, the net
income (or loss) of any Restricted Group Member in a percentage amount that
corresponds to the percentage ownership interest in the income of such
Restricted Group Member not owned on the last day of such period, directly or
indirectly, by NII.

     “Affiliate” means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

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

     “Annualized” means in respect of any amount: (a) at any time after the
date on which internal financial statements are available for the first fiscal
quarter of NII ending following the Effective Date until the date on which
internal financial statements are available for the second fiscal quarter
following the Effective Date, such amount for such first fiscal quarter
multiplied by four (4); (b) at any time after the date on which internal financial
statements are available for the second fiscal quarter of NII ending following the
Effective Date until the date on which internal financial statements are
available for the third fiscal quarter following the Effective Date, such
amount for such second fiscal quarter, together with the immediately preceding
fiscal quarter, multiplied by two (2); (c) at any time after the date on which
internal financial statements are available for the third fiscal
quarter of NII ending
following the Effective Date until the date on which internal financial
statements are available for the fourth fiscal quarter following the Effective
Date, such amount for such third fiscal quarter, together with the immediately
preceding two fiscal quarters, multiplied by four-thirds (4/3); and (d) after
the date on which internal financial statements are available for the fourth
fiscal quarter of NII ending after the Effective Date, such amount for the latest fiscal
quarter for which internal financial statements are available, together with
the three immediately preceding fiscal quarters.

     “Asset Acquisition” means (1) an investment by any Restricted Group Member
in any other Person pursuant to which such Person becomes a Restricted Group
Member or is merged into or consolidated with any Restricted Group Member; provided, that such Person’s primary business is related, ancillary or
complementary to the businesses of the Restricted Group Members on the date of
such investment or (2) an acquisition by any Restricted Group Member of the
property and assets of any Person other than the Company or any other
Restricted Group Member that constitute substantially all of a division or line
of business of such Person; provided, that the property and assets acquired are
related, ancillary or complementary to the businesses of the Restricted Group
Members on the date of such acquisition.

3

 

     “Asset Disposition” means the sale or other disposition by any Restricted
Group Member (other than to another Restricted Group Member) of (1) all or
substantially all of the Capital Stock of any Restricted Group Member or (2)
all or substantially all of the assets that constitute a division or line of
business of any Restricted Group Member.

     “Asset Sale” means any sale, lease, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) in
one transaction or a series of related transactions by any Restricted Group
Member to any Person other than a Restricted Group Member of:

     (1)  all or any of the Capital Stock of a Restricted Group Member, other
than in respect of director’s qualifying shares or investments by foreign
nationals mandated by applicable law;

     (2)  all or substantially all of the property and assets of an operating
unit or business of any Restricted Group Member; or

     (3)  any other property and assets of any Restricted Group Member outside
the ordinary course of business of such Restricted Group Member;

     provided, that “Asset Sale” does not include:

		
	 	     (a) sales or other dispositions of inventory, receivables and other
assets in the ordinary course of business;
	 
	 	     (b) sales or other dispositions of obsolete equipment;
	 
	 	     (c) sales or other dispositions of the Capital Stock of an Unrestricted
Subsidiary or an Unrestricted Affiliate;
	 
	 	     (d) sales or other distributions of assets (in one transaction or a
series of related transactions) having an aggregate fair market value (as
certified in an Officers’ Certificate delivered to the Trustee) not in
excess of $1 million;
	 
	 	     (e) Permitted Tower Transactions;
	 
	 	     (f) any Restricted Payment permitted by Section 4.04 or transaction
permitted by Section 5.01; or
	 
	 	     (g) sales of any assets or stock of NII Philippines.

     “Authorized Agent” has the meaning set forth in Section 12.09.

     “Average Life” means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (1) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (2) the sum of all such principal payments.

4

 

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

     “Board of Directors” means, unless otherwise stated, the Board of
Directors of the Company or any committee of such Board of Directors duly
authorized to act under this Indenture.

     “Board Resolution” means a copy of a resolution, certified by the
Secretary of the Company or NII, as the case may be, to have been duly adopted
by the Board of Directors of the Company or NII, as the case may be, and to be
in full force and effect on the date of such certification, and delivered to
the Trustee.

     “Business Day” means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.

     “Capex” means, for any period, the aggregate of all cash expenditures
(including all amounts expended in connection with Capitalized Lease
Obligations but excluding any amount representing the interest component
thereof) made on account of property, plant, equipment or similar assets during
such period by the Restricted Group Members, including the purchase price paid
in connection with any spectrum purchases whether such amounts are allocable to
property, assets, plant or equipment.

     “Capitalized Lease” means, as applied to any Person, any lease of property
(whether real, personal or mixed) that in conformity with GAAP is required to
be shown as an asset on that Person’s balance sheet.

     “Capitalized Lease Obligations” means the discounted present value of the
rental obligations under a Capitalized Lease.

     “Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Effective Date, including, without limitation, all Common
Stock and Preferred Stock.

     “Cash Equivalents” means (i) obligations issued by the United States of
America or any agency or instrumentality thereof, or obligations fully and
unconditionally guaranteed by the United States of America or any agency or
instrumentality thereof; (ii) time deposits and certificates of deposit and
commercial paper issued by the parent corporation of any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000 (or the foreign currency equivalent thereof) and commercial paper
issued by others rated at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody’s, or, in each case, such
equivalent rating or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) and in
each case maturing within 180 days after the date of acquisition; and (iii)
investments in money market funds substantially all of whose assets comprise
securities of the types described in clauses (i) and (ii) above.

5

 

     “Change of Control” means the occurrence of any of the following events:

     (1)  the transfer (in one transaction or a series of transactions) of all
or substantially all of NII’s assets to any “Person” or “Group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act);

     (2)  the liquidation or dissolution of NII or the adoption of a plan by the
stockholders of NII relating to the dissolution or liquidation of NII;

     (3)  the acquisition by any “Person” or “Group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) of beneficial ownership, directly
or indirectly, of 50% or more of the aggregate ordinary voting power of the
total outstanding Voting Stock of NII; or

     (4)  at any time, Continuing Directors cease for any reason to constitute a
majority of the Board of Directors of NII then still in office.

     For purposes of this definition, “Continuing Directors” means at any time, (i)
individuals who, prior to such time, were directors of NII; (ii) any director
whose election by the Board of Directors of NII or whose nomination for
election by the stockholders of NII was approved by a majority of the
Continuing Directors then in office; and (iii) any directors designated by the
holder of the Special Director Preferred Stock; provided, however, under no
circumstances will any officer, director or employee of Nextel or its
Affiliates constitute a “Continuing Director.”

     “Collateral” has the meaning given to it in the Intercreditor Agreement.

     “Collateral Agent” means Citibank, N.A., not in its individual capacity
but solely as the initial “Collateral Agent” under the Collateral Documents,
and any successor “Collateral Agent” designated and appointed under the
Collateral Documents.

     “Collateral Documents” has the meaning given to it in the Intercreditor
Agreement.

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

     “Common Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s common equity, whether now outstanding
or issued after the date of this Indenture, including, without limitation, all
series and classes of such common equity.

     “Company” means the party named as such in the preamble of this Indenture
until a successor replaces it pursuant to Article Five of this Indenture and
thereafter means such successor.

     “Company Order” means a written request or order signed in the name of the
Company (i) by its President or a Vice President and (ii) by its Treasurer, its
Secretary or an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may

6

 

be signed by any two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed in such clause
(i) and one of the officers listed in clause (ii) above.

     “Consolidated EBITDA” means, for any period, the sum of the amounts for
such period of:

     (1)  Adjusted Consolidated Net Income;

     (2)  Consolidated Interest Expense, to the extent deducted in calculating
Adjusted Consolidated Net Income;

     (3)  income taxes, to the extent deducted in calculating Adjusted
Consolidated Net Income (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets);

     (4)  depreciation expense as determined in conformity with GAAP, to the
extent deducted in calculating Adjusted Consolidated Net Income;

     (5)  amortization expense as determined in conformity with GAAP, to the
extent deducted in calculating Adjusted Consolidated Net Income; and

     (6)  all other non-cash items to the extent reducing Adjusted Consolidated
Net Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items to the extent increasing Adjusted Consolidated Net Income, as determined
in conformity with GAAP.

     “Consolidated Interest Expense” means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers’ acceptance
financing; the net costs associated with Interest Rate Agreements; and interest
in respect of any Indebtedness that is Guaranteed or secured by a Restricted
Group Member) and all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by Restricted Group Members during such period; excluding, however, (1)
any amount of such interest of any Restricted Group Member if the net income of
such Restricted Group Member is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (2) or (5) of the definition thereof
(but only in the same proportion as the net income of such Restricted Group
Member is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (2) or (5) of the definition thereof) and (2) any premiums,
fees and expenses (and any amortization thereof) payable in connection with the
offering of the Notes, all as determined (without taking into account
Unrestricted Subsidiaries or Unrestricted Affiliates) in conformity with GAAP.

     “Consolidated Leverage Ratio” means, on any Transaction Date, the ratio
of:

7

 

     (1)  the aggregate amount of Indebtedness of the Restricted Group Members
as at such Transaction Date to

     (2)  the aggregate amount of Annualized Consolidated EBITDA;

     provided, however, that:

		
	 	     (i) pro forma effect shall be given to (x) any Indebtedness Incurred
from the beginning of the four-quarter period through the Transaction
Date (the “Reference Period”), to the extent such Indebtedness is
outstanding on the Transaction Date and (y) any Indebtedness that was
outstanding during such Reference Period but that is not outstanding or
is to be repaid on the Transaction Date;
	 
	 	     (ii) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur during such Reference
Period, as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and
	 
	 	     (iii) pro forma effect shall be given to asset dispositions and
asset acquisitions (including giving pro forma effect to the application
of proceeds of any asset disposition) that have been made by any Person
that has become a Restricted Group Member or has been merged with or into
the Company or any Restricted Group Member during such Reference Period
and that would have constituted Asset Dispositions or Asset Acquisitions
had such transactions occurred when such Person was a Restricted Group
Member as if such asset dispositions or asset acquisitions were Asset
Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period;

provided further, that to the extent that clause (ii) or (iii) of this sentence
requires that pro forma effect be given to an Asset Acquisition or Asset
Disposition, such Asset Acquisition or Asset Disposition shall be treated as if
the same had occurred at the beginning of the applicable Reference Period.

     “Consolidated Net Worth” means, at any date of determination,
stockholders’ equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Group
Members (which shall be as of a date not more than 90 days prior to the date of
such computation, and which shall not take into account Unrestricted
Subsidiaries or Unrestricted Affiliates), less any amounts of such
stockholders’ equity attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of
the Capital Stock of any Restricted Group Member, each item to be determined in
conformity with GAAP.

     “Corporate Trust Office” means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 520 Madison Avenue, 33rd Floor, New York, New York 10022.

8

 

     “Currency Agreement” means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.

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

     “Depositary” means The Depository Trust Company, its nominees and their
respective successors.

     “EFA Collateral” has the meaning given to it in the Intercreditor
Agreement.

     “EFA
Obligations” has the meaning given to it in the Intercreditor
Agreement.

     “Effective
Date” means November 12, 2002.

     “Equity Interests” means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

     “Event of Default” has the meaning provided in Section 6.01.

     “Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

     “Excluded
Entity” means each entity that is listed on Exhibit D hereto and
each entity that becomes a Restricted Group Member after the Effective Date, so
long as in the opinion of outside counsel to NII such entity would be required
to file separate financial statements with the Commission as a result of not
meeting the requirements of Rule 3-10(d) of Regulation S-X notwithstanding any
request for no action relief from the Commission with respect to such filing
requirement.

     “fair market value” means the price that would be paid in an arm’s-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors of NII, whose determination shall be
conclusive if evidenced by a Board Resolution of NII.

     “GAAP” means generally accepted accounting principles in the United States
of America as in effect from time to time, including, without limitation, those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. Except as specifically provided, all ratios and
computations contained or referred to in this Indenture shall be computed in
conformity with GAAP applied on a consistent basis.

     “Global Notes” has the meaning given to it in Section 2.01(b).

     “Guarantee” means any obligation, contingent or otherwise (including.
without limitation, letters of credit and reimbursement agreements), of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (1) to

9

 

purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services (unless such purchase arrangements are on
arm’s-length terms and are entered into in the ordinary course of such Person’s
business), to take-or-pay, or to maintain financial statement conditions or
otherwise) or (2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided, that the term
“Guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business. The term “Guarantee” used as a verb has a
corresponding meaning.

     “guaranteed indebtedness” has the meaning provided in Section 4.07.

     “Guarantors” means the Persons listed as Guarantors on the signature pages
to this Indenture and any other Persons who become Guarantors pursuant to
Section 4.20.

     “Holder” or “Noteholder” means the registered holder of any Note.

     “Incur” means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an “Incurrence” of Indebtedness by reason of a Person becoming a
Restricted Group Member; provided, that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.

     “Indebtedness” means, with respect to any Person at any date of
determination (without duplication):

     (1)  all liabilities or obligations, contingent or otherwise, of such
Person for borrowed money, including Acquired Debt;

     (2)  all liabilities or obligations, contingent or otherwise, of such
Person evidenced by bonds, debentures, notes or other similar instruments;

     (3)  all liabilities or obligations, contingent or otherwise, of such
Person in respect of letters of credit, banker’s acceptances or other similar
instruments (including reimbursement obligations with respect thereto);

     (4)  all liabilities or obligations, contingent or otherwise, of such
Person to pay the deferred and unpaid purchase price of property or services,
except Trade Payables;

     (5)  all liabilities or obligations, contingent or otherwise, of such
Person as lessee under Capitalized Leases;

     (6)  all liabilities or obligations, contingent or otherwise, of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such assets at
such date of determination and (B) the amount of such Indebtedness;

10

 

     (7)  all liabilities or obligations, contingent or otherwise, of other
Persons Guaranteed by such Person to the extent such liabilities or obligations
are Guaranteed by such Person; and

     (8)  to the extent not otherwise included in this definition, all
liabilities or obligations, contingent or otherwise, under Currency Agreements
and Interest Rate Agreements.

     The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided, that (A)
the amount outstanding at any time of any Indebtedness issued with original
issue discount shall be the face amount of such Indebtedness less the
unamortized portion of the original issue discount of such Indebtedness at the
time of its issuance as determined in conformity with GAAP, (B) Indebtedness
shall not include any liability for federal, state, local or other taxes; and
(C) Indebtedness shall not include lease payments owed in respect of any
so-called “build-to-suit” Permitted Tower Transaction.

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

     “Intercreditor Agreement” means the Intercreditor Agreement, dated
November 12, 2002, by and among the Trustee, the Collateral Agent, Motorola
Credit Corporation, the Company, NII, the Guarantors and certain other
subsidiaries of NII.

     “Interest Payment Date” means the Stated Maturity of each quarterly
interest payment on the Notes.

     “Interest Rate Agreement” means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement or arrangement.

     “Investment” in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee
or similar arrangement) or capital contribution to (by means of any transfer of
cash or other property to others), or any purchase or acquisition of Equity
Interests, bonds, notes, debentures or other similar instruments issued by,
such Person.

     “Involuntary Event” has the meaning specified in the definition of
“Permitted Investments.”

     “Issue Price” means with respect to the Notes, the aggregate issue price
of such Notes, which equals $140,000,000.

     “Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof or any option or
other agreement to give any security interest); provided, that the amount of
assets of a Restricted Group Member subject to a Lien shall be

11

 

reduced by an amount that corresponds to the percentage ownership interest in
the assets of such Restricted Group Member not owned on the date of
determination, directly or indirectly, by NII.

     “MEFA Collateral” has the meaning given to it in the Intercreditor
Agreement.

     “MEFA
Obligations” has the meaning given to it in the Intercreditor
Agreement.

     “Minority Owned Affiliate” of any specified Person, means any other Person
(other than a direct or indirect Subsidiary of such specified Person) in which
an Investment in the Capital Stock of such Person has been made by such
specified Person.

     “Moody’s” means Moody’s Investors Service, Inc. and its successors.

     “Net Cash Proceeds” means:

     (1)  with respect to any Asset Sale, the proceeds of such Asset Sale in the
form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or Cash
Equivalents (except to the extent such obligations are financed or sold with
recourse to the Restricted Group Member) and proceeds from the conversion of
other property received when converted to cash or Cash Equivalents, net of (a)
reasonable and customary brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, other than fees and expenses paid or payable to an Affiliate of the
Company, (b) provisions for all taxes (paid or payable) as a result of such
Asset Sale without regard to the consolidated results of operations of the
Restricted Group Members, taken as a whole, (c) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (x) is secured by a Lien on the property or assets sold or (y) is
required to be paid as a result of such sale, and (d) appropriate amounts to be
provided by any Restricted Group Member as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and reflected on an
Officers’ Certificate delivered to the Trustee; provided, that with respect to
any Asset Sale by a Restricted Group Member, Net Cash Proceeds shall be reduced
by a percentage amount that corresponds to the percentage ownership interest in
the assets of such Restricted Group Member not owned on the date of such Asset
Sale, directly or indirectly, by NII; and

     (2)  with respect to any capital contribution or issuance or sale of
Capital Stock, the proceeds of such capital contribution or issuance or sale in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or Cash
Equivalents (except to the extent such obligations are financed or sold with
recourse to the Restricted Group Member) and proceeds from the conversion of
other property received when converted to cash or Cash Equivalents, net of
reasonable attorney’s fees, accountants’ fees, underwriters’ or placement
agents’ fees, discounts or commissions and brokerage, consultant and other fees
incurred in connection with such capital contribution or issuance or sale and
net of taxes paid or payable as a result thereof.

     “New EFA” has the meaning given to it in the Intercreditor Agreement.

     “New MEFA” has the meaning given to it in the Intercreditor Agreement.

12

 

     “Nextel” means Nextel Communications, Inc., a Delaware corporation, and
any successor thereto.

     “NII” means the company named in the fourth recital of this Indenture.

     “NII Argentina” means, collectively, Nextel International (Argentina)
Ltd., a limited liability company formed under the laws of the Cayman Islands, Nextel
Communications Argentina S.A., a sociedad anónima
formed under the laws of
Argentina, and any other Subsidiary or Minority Owned Affiliate of NII
incorporated or otherwise formed under the laws of Argentina or doing business
in Argentina on or after the Effective Date.

     “NII Brazil” means, collectively: (1) McCaw International (Brazil), Ltd.,
organized under the laws of Virginia, and any successor thereto and any
Subsidiary or Minority Owned Affiliate of McCaw International (Brazil), Ltd.,
(2) Airfone Holdings, Inc., a corporation organized under the laws of Delaware,
Nextel S.A., a corporation organized under the laws of Brazil, Nextel
Telecomunicacoes Ltda., a limited company organized under the laws of Brazil,
H-Telecom Ltda., a limited company organized under the laws of Brazil,
Promobile Telecomunicacoes Ltda., a limited company organized under the laws of
Brazil, Telemobile Telecomunicacoes Ltda., a limited company organized under
the laws of Brazil, Master-Tec Telecomunicacoes Industria e Comercio de Produtos Electronicos
Ltda., a limited company organized under the laws of Brazil, and
Telecomunicacoes Brastel S/C Ltda., a limited company organized under the laws of
Brazil, and (3) any other Subsidiary or Minority Owned Affiliate of NII
incorporated or otherwise formed under the laws of Brazil or doing business in
Brazil on or after the Effective Date.

     “NII Philippines” means, collectively, Nextel International (Philippines)
LLC, a limited liability company incorporated under the laws of the Cayman
Islands, Top Mega Enterprises, Limited, a limited company organized under the
laws of Hong Kong, Gamboa Holdings, Inc., a corporation organized under the
laws of the Philippines, Joyce Link Holdings, Ltd., a limited liability company
organized under the laws of the British Virgin Islands, Nextel Communications
Philippines, Inc., a corporation organized under the laws of the Philippines,
East Holdings Limited, a limited company organized under the laws of Hong Kong,
Emerald Investments, Inc., a corporation organized under the laws of the
Philippines, and Foodcamp Industries and Marketing, Inc., a corporation
organized under the laws of the Philippines.

     “Note Guarantee” means the guarantee of a Guarantor set forth in (i) Article 9
(ii) a Guarantor Accession Agreement in the form of Exhibit B hereto to be executed and delivered by such Guarantor from time to time pursuant to
Section 4.2 or (iii) other documents executed by such Guarantor guaranteeing and securing the obligations of the Company under the Indenture, evidence
of which is delivered to the Trustee pursuant to Section 4.20.

     “Note Register” has the meaning provided in Section 2.04.

     “Notes” means any of the securities, as defined in the recitals hereof,
that are authenticated and delivered under this Indenture. For all purposes of
this Indenture, the term “Notes” shall include the Notes initially issued on
the Effective Date and any other Notes issued after the Effective Date under
this Indenture. For purposes of this Indenture, all Notes shall vote together
as one series of Notes under this Indenture.

13

 

     “Offer to Purchase” means an offer by the Company to purchase Notes from
the Holders commenced by mailing a notice to the Trustee and each Holder at its
last registered address which shall state such disclosures as are required by law and:

     (1)  the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis;

     (2)  the purchase price and the date of purchase (which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date such notice is
mailed) (the “Payment Date”);

     (3)  that any Note not tendered will continue to amortize original issue
discount or accrue interest, as the case may be, pursuant to its terms;

     (4)  that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to amortize original issue discount or accrue interest on and after the
Payment Date;

     (5)  that Holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender such Note to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Payment
Date, together with a completed and executed copy of the form entitled “Option of the Holder
to Elect Purchase” on the reverse side of the Note;

     (6)  that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the second Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the Accreted Value of Notes
delivered for purchase and a statement that such Holder is withdrawing such
Holder’s election to have such Notes purchased;

     (7)  that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; provided, that each Note purchased and each new Note issued
shall be in a principal amount of $1.00 or integral multiples thereof; and

     (8)  the instructions Holders must follow to properly tender their Notes.

     “Officer” means, with respect to the Company or NII, as the case may be,
the following of its officers: (i) the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer; and (ii) the Treasurer or any Assistant Treasurer, or the Secretary or
any Assistant Secretary.

14

 

     “Officers’ Certificate” means a certificate of the Company or, if so
stated herein, NII, signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers’ Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).

     “Opinion of Counsel” means a written opinion signed by legal counsel
reasonably acceptable to the Trustee, which counsel may be an employee of or
counsel to the Company. Each such Opinion of Counsel shall include the
statements provided for in TIA Section 314(e).

     “Overhead Services Agreement” means the Amended and Restated Overhead
Services Agreement, entered into as of the Effective Date, between NII and
Nextel and any amendment or successor agreement thereto.

     “Paying Agent” has the meaning provided in Section 2.04, except that, for
the purposes of Article Ten, the Paying Agent shall not be the Company or an
Affiliate of the Company. The term “Paying Agent” includes any additional
Paying Agent.

     “Permitted Amounts” means, at any date of determination, an amount equal
to:

     (1)  Net Cash Proceeds of all sales of Equity Interests in NII subsequent
to the Effective Date; plus

     (2)  Ten percent (10%) of the Consolidated EBITDA during the period from
the Effective Date through December 31, 2004, plus

     (3)  Twenty percent (20%) of the remainder of (i) Consolidated EBITDA less
(ii) cumulative Capex of the Restricted Group Members, in each case, during the
period from January 1, 2005 through such date of determination.

     “Permitted Consolidated Leverage Ratio(s)” has the meaning set forth in
Section 4.03(a).

     “Permitted Investment” means any Investment:

     (1)  in a Restricted Group Member other than a Restricted Affiliate (or a
Person that will, upon the making of such Investment, become a Restricted Group
Member other than a Restricted Affiliate or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, any
Restricted Group Member, provided, that such Person’s primary business is
related, ancillary or complementary to the businesses of the Restricted Group
Members other than a Restricted Affiliate on the date of such Investment);

     (2)  in a Restricted Affiliate (or a Person that will, upon the making of
such Investment, become a Restricted Affiliate or be merged or consolidated
with or into or transfer or convey all or substantially all its assets to, a
Restricted Affiliate; provided, that such Person’s primary business is related,
ancillary or complementary to the businesses of the Restricted Group Members on
the date of such Investment), provided, that any such Investment shall cease to
be a Permitted Investment if such Restricted Affiliate ceases to be a
Restricted Affiliate or ceases to observe any of the provisions of the
covenants that are applicable to such Restricted Affiliate, provided further,
that if such Restricted Affiliate ceases to be a Restricted Affiliate or such
Restricted Affiliate ceases to observe any of the provisions of the covenants
applicable to it solely as a result of circumstances, developments or
conditions beyond the control of NII (such failure to be a Restricted Affiliate
or failure to observe a covenant as a result of any such circumstance,
development or condition, being an “Involuntary Event”) any such Investment

15

 

 previously made in such Restricted Affiliate will not cease to be a
Permitted Investment unless such Involuntary Event continues for 90 days;

     (3)  in Cash Equivalents;

     (4)  in payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses in
accordance with GAAP;

     (5)  in stocks, obligations or securities received in satisfaction of
judgments or as part of or in connection with the bankruptcy, winding up or
liquidation of a Person, except if such stocks, obligations or securities are
received in consideration for an Investment made in such Person in connection
with or anticipation of such bankruptcy, winding up or liquidation;

     (6)  made pursuant to, or payments made in satisfaction of, Permitted Tower
Transactions;

     (7)  in inventory and accounts receivable made in the ordinary course of
business; and

     (8)  received as consideration in an Asset Sale made in compliance with
Section 4.10; and

     (a) 
in any guaranty by NII of Permitted Handset Obligations (as defined
in the New MEFA and the New EFA).

     Notwithstanding the foregoing, the term “Permitted Investment” excludes any
Investment in NII Brazil, other than (A) pursuant to clause (6) above or (B) an
Investment in any entity referred to in the definition of NII Brazil made
solely by one or more other entities referred to in the definition of NII
Brazil.

     “Permitted Liens” means:

     (1)  Liens for taxes, assessments, governmental charges or claims that are
not yet due or that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made;

     (2)  statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made;

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

     (4)  Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety
and appeal bonds provided in the ordinary course of business, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money);

16

 

     (5)  easements, rights-of-way, municipal and zoning ordinances and similar
charges, encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of any Restricted
Group Member;

     (6)  Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Effective Date; provided, that (a) such
Lien is created solely for the purpose of securing Indebtedness Incurred in
accordance with Section 4.03 (i) to finance the cost (including the cost of
design, development, construction, improvement, installation or integration) of
the items of property or assets subject thereto and such Lien is created prior
to, at the time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property, or (ii) to refinance any Indebtedness previously so secured, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of the cost of that property and (c) any such Lien shall not extend to or cover
any property or assets other than such items of property or assets and any
improvements on such items;

     (7)  leases or subleases granted to others that do not materially interfere
with the ordinary course of business of the Restricted Group Members, taken as
a whole;

     (8)  Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of a Restricted Group Member
relating to such property or assets;

     (9)  any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease;

     (10)  Liens arising from filing Uniform Commercial Code financing
statements (or substantially equivalent filings outside the United States)
regarding leases other than Capitalized Leases;

     (11)  Liens on property of, or on shares of Capital Stock or Indebtedness
of, any Person existing at the time such Person is acquired by, merged into or
consolidated with any Restricted Group Member; so long as such Liens were not
created in contemplation of such acquisition, merger or consolidation and do
not extend to or cover any property or assets of any Restricted Group Member
other than the property or assets acquired;

     (12)  Liens in favor of any Restricted Group Member;

     (13)  Liens arising from the rendering of a final judgment or order against
any Restricted Group Member that does not give rise to an Event of Default;

     (14)  Liens securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof;

     (15)  Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation
of goods;

17

 

     (16)  Liens encumbering customary initial deposits and margin deposits, and
other Liens that are either within the general parameters customary in the
industry and incurred in the ordinary course of business, in each case,
securing Indebtedness under Interest Rate Agreements and Currency Agreements
and forward contracts, options, future contracts, futures options or similar
agreements or arrangements designed solely to protect any Restricted Group
Member from fluctuations in interest rates, currencies or the price of
commodities;

     (17)  Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by any Restricted
Group Member in the ordinary course of business in accordance with the past
practices of the Restricted Group Members prior to the Effective Date;

     (18)  Liens on or sales of receivables;

     (19)  Liens on the Capital Stock of Unrestricted Subsidiaries and
Unrestricted Affiliates; and

     (20)  Liens securing the Notes, the New MEFA, the New EFA and Guarantees of
any of the foregoing.

     Notwithstanding the foregoing, except with respect to Liens under clause
(20) above, the term “Permitted Lien” shall not include any Lien to the extent
such Lien was created (or increased) after the Effective Date if such Lien
secures Indebtedness or other obligations of one or more Unrestricted
Subsidiaries and encumbers assets (other than Capital Stock of an Unrestricted
Subsidiary) of a Restricted Group Member.

     “Permitted Tower Transaction” means (i) a payment or other Investment by
NII or a Restricted Group Member in a Subsidiary of NII or any Restricted Group
Member, and (ii) the sale-leaseback of assets or properties (whether now owned
or hereafter acquired) by a Restricted Group Member, made to enable such
Subsidiary or Restricted Group Member to comply with obligations and
commitments under a sale-leaseback tower transaction (including, without
limitation, any build-to suit arrangement entered into in connection with such
sale leaseback) entered into by or on behalf of any one or more of NII’s
Subsidiaries or Restricted Group Members, which transaction has been determined
to be in the best interests of NII by its Board of Directors, as evidenced by a
resolution of the Board of Directors and an Officers’ Certificate of NII.

     “Person” means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

     “Physical Notes” has the meaning provided in Section 2.01.

     “Plan of Reorganization” has the meaning set forth in the third recital to
this Indenture.

     “Preferred Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s preferred or preference stock, whether
now outstanding or issued after the date of this

18

 

Indenture, including, without limitation, all series and classes of such
preferred or preference stock.

     “principal” of a debt security, including the Notes, means the principal
amount due on the Stated Maturity of such debt security.

     “Redeemable Stock” means any class or series of Equity Interest of any
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise is or upon the
happening of an event could be:

     (1)  required to be redeemed or repurchased prior to the one year
anniversary of the Stated Maturity of the principal of the Notes;

     (2)  redeemable at the option of the holder of such class or series of
Capital Stock at any time prior to such one year anniversary of the Stated
Maturity of the principal of the Notes; or

     (3)  convertible into or exchangeable for Capital Stock referred to in
clause (1) or (2) above or Indebtedness having a scheduled maturity prior to
such one year anniversary of the Stated Maturity of the principal of the Notes;

provided, that any Capital Stock that would not constitute Redeemable Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an “asset
sale” or “change of control” occurring prior to the one year anniversary of the
Stated Maturity of the principal of the Notes shall not constitute Redeemable
Stock if the “asset sale” or “change of control” provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in Section 4.10 and Section 4.11 and such Capital
Stock specifically provides that such Person will not repurchase or redeem any
such stock pursuant to such provision prior to the Company’s repurchase of such
Notes as are required to be repurchased pursuant to Section 4.10 and Section
4.11.

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

     “Redemption Price”, when used with respect to any Note to be redeemed,
means the price at which such Note is to be redeemed pursuant to this
Indenture.

     “Registrar” has the meaning provided in Section 2.04.

     “Regular Record Date” has the meaning set forth in Exhibit A hereto.

     “Regulation S-X” means Regulation S-X promulgated under the Exchange Act,
as amended.

     “Required Consent” means, except as otherwise expressly provided in this
Indenture with respect to matters requiring the consent of each Holder of Notes
affected thereby, the

19

 

consent of Holders of not less than a majority in aggregate Accreted Value of
the outstanding Notes.

     “Responsible Officer” means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of his or her knowledge of and familiarity with the
particular subject.

     “Restricted Affiliate” means any direct or indirect Minority Owned
Affiliate of NII that is listed as such on Exhibit C hereto or has been
designated by the Board of Directors of NII as a
Restricted Affiliate based upon a good faith determination by such Board of
Directors that NII has, directly or indirectly, the requisite control over such
Minority Owned Affiliate to prevent it from Incurring Indebtedness, or taking
any other action at any time, in contravention of any of the provisions of this
Indenture that are applicable to Restricted Affiliates; provided, that
immediately after giving effect to such designation (x) the Liens and
Indebtedness of such Minority Owned Affiliate outstanding immediately after
such designation would, if Incurred at such time, have been permitted to be
Incurred for all purposes of this Indenture and (y) no Default or Event of
Default shall exist. NII will be required to deliver an Officers’ Certificate
of NII to the Trustee certifying the foregoing upon designating any Minority Owned Affiliate as a
Restricted Affiliate. The Restricted Affiliates, as of the Effective Date, are
identified on Exhibit C hereto.

     “Restricted Group Members” means collectively, the Company, NII, each
Restricted Subsidiary of the Company or NII, each Restricted Affiliate and each
Restricted Subsidiary of such Restricted Affiliate. The Restricted Group
Members, as of the Effective Date, are identified on Exhibit C hereto.

     “Restricted Payments” has the meaning provided in Section 4.04(a).

     “Restricted Subsidiary” means any Subsidiary of the Company or NII other
than an Unrestricted Subsidiary. The Restricted Subsidiaries, as of the
Effective Date, are identified on Exhibit C hereto.

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

     “Significant Group Member” means, at any date of determination, any
Restricted Group Member that (a) together with its Restricted Subsidiaries and
Restricted Affiliates (1) for the most recent fiscal year of NII, accounted for
more than 10% of the consolidated revenues of the Restricted Group Members, (2)
as of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Restricted Group Members, all as set forth on the
most recently available consolidated financial statements of the Company for
such fiscal year, or (3) for such fiscal year accounted for more than 10% of
Consolidated EBITDA, or (b) is an obligor under the New MEFA, the New EFA or
any other Indebtedness having an outstanding principal amount of $10 million or
more in the aggregate.

20

 

     “S&P” means Standard & Poor’s Credit Market Services, a division of The
McGraw Hill Companies, Inc., and its successors.

     “Special Director Preferred Stock” means NII’s Special Director Preferred
Stock, par value one dollar ($1.00) per share.

     “Spectrum Sharing Agreement” means the Spectrum Use and Build Out
Agreement by and among NII, Servicios de Radiocomunicación Móvil de México S.A.
de C.V., Sistemas de Comunicaciones Troncales S.A. de C.V., Nextel of
California, Inc. and Nextel License Holdings 2, Inc.

     “Standstill Agreement” means the Standstill Agreement by and among NII,
Nextel and certain other holders of NII Common Stock after the Effective Date.

     “Stated Maturity” means, with respect to any debt security, (1) the date
specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable, and (2) with
respect to any scheduled installment of principal or interest on any debt
security, the date specified in such debt security as the fixed date on which
any scheduled installment of principal of or interest is due and payable.

     “Subsidiary” means, with respect to any Person, (i) any company,
corporation, association or other business entity of which more than 50% of the
voting power of the outstanding Voting Stock is owned, directly or indirectly,
by such Person and one or more other Subsidiaries of such Person, and (ii) any
other Person (other than a corporation), including, without limitation, a joint
venture, in which such Person or one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, has at least majority
ownership interest entitled to vote in the election of directors, managers or
trustees thereof (or other Person performing similar functions). For purposes
of this definition, any directors’ qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.

     “TIA” or “Trust Indenture Act” means the United States Trust Indenture Act
of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the
date this Indenture was executed.

     “Trademark License Agreement” means that certain Third Amended and
Restated Trademark License Agreement between NII and Nextel, dated on or about
the Effective Date.

     “Trade Payables” means, with respect to any Person, (i) the deferred and
unpaid purchase price of subscriber units so long as the purchase price is due
no later than 365 days after taking delivery and title thereto, and (ii) any
accounts payable or any other indebtedness or monetary obligation to trade
creditors not more than 45 days past due, created, assumed or Guaranteed by
such Person or any of its Subsidiaries arising in the ordinary course of
business in connection with the acquisition of goods or services.

     “Transaction Date” means, with respect to the Incurrence of any
Indebtedness by any Restricted Group Member, the date such Indebtedness is to
be Incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.

21

 

     “Trustee” means Wilmington Trust Company, until a successor replaces it (or
any previous successor) in accordance with the provisions of this Indenture and
thereafter means such successor.

     “U.S. Government Obligations” means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof at any time
prior to the Stated Maturity of the principal of the Notes, and shall also
include a depository receipt issued by a bank or trust company as custodian
with respect to any such U.S. Government Obligation or a specific payment of
interest on or principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt; provided, that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.

     “United States Bankruptcy Code” means the Bankruptcy Reform Act of 1978,
as amended and as codified in Title 11 of the United States Code, as amended
from time to time hereafter, or any successor federal bankruptcy law.

     “Unrestricted Affiliate” means any Minority Owned Affiliate of NII other
than a Restricted Affiliate. Unrestricted Affiliates, as of the Effective
Date, are identified on Exhibit E hereto.

     “Unrestricted Subsidiary” means (1) the entities listed on Exhibit E
hereto as Unrestricted Subsidiaries, (2) any Subsidiary of NII that at the time
of determination is designated as an Unrestricted Subsidiary by the Board of
Directors of NII in the manner provided in Section 4.22, and (3) any Subsidiary
of an Unrestricted Subsidiary. Unrestricted Subsidiaries, as of the Effective
Date, are identified on Exhibit E hereto.

     “Voting Stock” means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.

     “Wholly Owned” means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director’s qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.

     SECTION 1.02 Incorporation by Reference to Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings: “indenture notes”
means the Notes; “indenture note holder” means a Holder or a Noteholder;
“indenture to be qualified” means this Indenture; “indenture

22

 

trustee” or “institutional trustee” means the Trustee; and “obligor” on
the indenture securities means the Company or any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by a rule of the Commission and
not otherwise defined herein have the meanings assigned to them therein.

     SECTION 1.03 Rules of Construction.

     Unless the context otherwise requires: (1) a term has the meaning assigned
to it; (2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP; (3) “or” is not exclusive; (4) words in the
singular include the plural, and words in the plural include the singular; (5)
provisions apply to successive events and transactions; (6) “herein,” “hereof”
and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision; (7) all ratios and
computations based on GAAP contained in this Indenture shall be computed in
accordance with the definition of GAAP set forth in Section 1.01; (8) all
references to Sections or Articles refer to Sections or Articles of this
Indenture unless otherwise indicated; and (9) all references to “$” or to
“dollars” shall mean currency of the United States of America.

ARTICLE TWO

THE NOTES

     SECTION 2.01 Form and Dating.

     (a)  The Company has authorized the issuance of Notes of up to a maximum
principal amount at maturity of $180,820,855. The Notes are senior secured
obligations of the Company. The Notes and the Trustee’s certificate of
authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange or securities
depository agreements to which the Company is subject. The Company shall
approve the form of the Notes and any notation, legend or endorsement on the
Notes. Each Note shall be dated the date of its authentication. The terms and
provisions contained in the form of the Notes annexed hereto as Exhibit A shall
constitute, and are hereby expressly made, a part of this Indenture. To the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.

     (b) Notes issued in reliance upon 11 U.S.C. Section 1145 which are freely
tradable by the Holder thereof after issuance shall be issued as one or more
global notes in registered form substantially in the form of Exhibit A, bearing
the legend set forth in Section 2.02(a) (collectively, “Global Notes”) or, at
the request of such a Holder, as certificated notes in registered form
substantially in the form set forth on Exhibit A (the “Physical Notes”). The
aggregate principal amount of the Global Notes may be increased or decreased
from time to time by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.

23

 

     (c)  The Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officers executing such Notes, as evidenced
by their execution of such Notes.

     SECTION 2.02 Restrictive Legends.

     Each Global Note shall bear the following legend on the face thereof:

	 
	
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF
THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE
OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

	 

	UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, TO NII HOLDINGS
(CAYMAN), LTD. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
BECAUSE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE

     SECTION 2.03 Execution, Authentication and Denominations.

     The Notes shall be executed by two Officers of the Company. The signature
of any Officer on the Notes may be by facsimile or manual signature in the name
and on behalf of the Company. If any Officer whose signature is on a Note no
longer holds that office at the time the Trustee or authenticating agent
authenticates the Note, the Note shall be valid nevertheless. A Note shall not
be valid until the Trustee or authenticating agent manually signs the
certificate of authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture. At any
time and from time to time after the execution of this Indenture, the Trustee
or an authenticating agent shall, upon receipt of a Company Order, authenticate
for original issue Notes in the aggregate principal amount specified in such
Company Order up to a maximum principal amount at maturity of $180,820,855;
provided, that the Trustee shall be entitled to receive an Officers’
Certificate and an Opinion of Counsel of the Company in connection with such
authentication of Notes. The Trustee may appoint an authenticating agent to
authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the
Company.

24

 

     SECTION 2.04 Registrar and Paying Agent.

     (a)  The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange (the “Registrar”), an
office or agency where Notes may be presented for payment (the “Paying Agent”)
and an office or agency where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served, which shall be in the
Borough of Manhattan, The City of New York. The Company shall cause the
Registrar to keep a register of the Notes and of their transfer and exchange
(the “Note Register”). The Company may have one or more co-Registrars and one
or more additional Paying Agents. The Company shall enter into an appropriate
agency agreement with any Agent not a party to this Indenture. The agreement
shall implement the provisions of this Indenture that relate to such Agent.
The Company shall give prompt written notice to the Trustee of the name and
address of any such Agent and any change in the address of such Agent. If the
Company fails to maintain a Registrar, Paying Agent and/or agent for service of
notices and demands, the Trustee shall act as such Registrar, Paying Agent
and/or agent for service of notices and demands, and shall be entitled to
appropriate compensation in accordance with Section 7.07.

     (b)  The Company may remove any Agent upon 30 days written notice to such
Agent and the Trustee; provided, that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent to such Agent
as evidenced by an appropriate agency agreement entered into by the Company and
such successor Agent and delivered to the Trustee or (ii) notification to the
Trustee that the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso. The Company,
any Subsidiary of the Company, or any Affiliate of any of them may act as
Paying Agent, Registrar or co-Registrar, and/or agent for service of notice and
demands.

     (c)  The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. If, at any
time, the Trustee is not the Registrar, the Registrar shall make available to
the Trustee at least ten (10) Business Days before each Interest Payment Date
and at such other times as the Trustee may reasonably request, the names and
addresses of the Holders as they appear in the Note Register, which list may
conclusively be relied upon by the Trustee. The Trustee shall comply with the
requirements of Section 312 of the Trust Indenture Act.

     SECTION 2.05 Paying Agent to Hold Money in Trust.

     Not later than each due date of the Accreted Value, premium, if any, and
interest on any Notes, the Company shall deposit with the Paying Agent money in
immediately available funds sufficient to pay such Accreted Value, premium, if
any, and interest so becoming due in a timely manner that permits the Paying
Agent to remit payment to the Holders on such due date. The Company shall
require each Paying Agent other than the Trustee to agree in writing that such
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all money held by the Paying Agent for the payment of Accreted Value of,
premium, if any, and interest on the Notes (whether such money has been paid to
it by the Company or any other obligor on the Notes), and such Paying Agent
shall promptly notify the Trustee of any default by the Company (or any other
obligor on the Notes) in making any such payment. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and account
for any funds

25

 

disbursed, and the Trustee may at any time during the continuance of any
Event of Default under Section 6.01(a) or (b), upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Company
or any Subsidiary of the Company or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if
any, or interest on the Notes, segregate and hold in a separate trust fund for
the benefit of the Holders a sum of money sufficient to pay such Accreted
Value, premium, if any, or interest so becoming due until such sum of money
shall be paid to such Holders or otherwise disposed of as provided in this
Indenture, and will promptly notify the Trustee of its action or failure to
act.

     SECTION 2.06 Transfer and Exchange.

     (a)  The Notes are issuable only in registered form. A Holder may transfer
a Note only by written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of this Indenture.
No such transfer shall be effected until, and such transferee shall succeed to
the rights of a Holder only upon, final acceptance and registration of the
transfer by the Registrar in the Note Register. Prior to the registration of
any transfer by a Holder as provided herein, the Company, the Trustee, and any
agent of the Company shall treat the Person in whose name the Note is
registered as the owner thereof for all purposes whether or not the Note shall
be overdue, and neither the Company, the Trustee, nor any such agent shall be
affected by notice to the contrary. Furthermore, any Holder of a Global Note
shall, by acceptance of such Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book entry system
maintained by the Holder of such Global Note (or its agent) and that ownership
of a beneficial interest in the Note shall be required to be reflected in a
book entry.

     (b)  When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Notes of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at the
Registrar’s request. No service charge shall be made for any registration of
transfer or exchange or redemption of the Notes, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
other similar governmental charge payable upon exchanges pursuant to Section
2.11, 3.08 or 11.04). The Registrar shall not be required (i) to issue,
register the transfer of or exchange any Note during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Notes selected for redemption under Section 3.03 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.

     SECTION 2.07 Book-Entry Provisions for Global Notes.

     (a)  The Global Notes initially shall (i) be registered in the name of the
Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee
as custodian for such Depositary

26

 

and (iii) bear legends as set forth in Section 2.02(a). Members of, or
participants in, the Depositary (“Agent Members") shall have no rights under
this Indenture with respect to any Global Note held on their behalf by the
Depositary, or the Trustee as its custodian, or under the Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note.

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

     (c)  Global Notes and interests therein may not be exchanged for Physical
Notes, whether in whole or in part, unless (i) the Depositary (x) notifies the
Company that it is unwilling or unable to continue as depositary for the Global
Notes and the Company thereupon fails to appoint a successor depositary within
90 days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Physical Notes, (iii) any beneficial owner of
interests in a Global Note so requests or (iv) a Default or an Event of Default
exists and the Trustee requests the issuance of Physical Notes. In any such
case, the Company will notify the Trustee in writing that, upon surrender by
the beneficial owners of their interests in such Global Notes, Physical Notes
will be issued to each Person that such direct and indirect participants in the
Depositary identify as being the beneficial owner of the related Notes.

     SECTION 2.08 Intentionally Deleted.

     SECTION 2.09 Replacement Notes.

     If a mutilated Note is surrendered to the Trustee or if the Holder claims
that the Note has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Note of like tenor and
amount and bearing a number not contemporaneously outstanding; provided, that
the requirements of this Section 2.09 are met. If required by the Trustee or
the Company, an indemnity bond must be furnished that is sufficient in the
judgment of both the Trustee and the Company to protect the Company, the
Trustee or any Agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge such Holder for its reasonable expenses and
the expenses of the Trustee in replacing a Note. If any such mutilated, lost,
destroyed or wrongfully taken Note has become or is about to become due and
payable, the Company in its discretion may pay such Note instead of issuing a
new Note in replacement thereof. Every replacement Note is an additional
obligation of the Company and shall be entitled to the benefits of this
Indenture.

27

 

     SECTION 2.10 Outstanding Notes.

     Notes outstanding at any time are all Notes that have been authenticated
by the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.10 as not outstanding. If a
Note is replaced pursuant to Section 2.09, it ceases to be outstanding unless
and until the Trustee and the Company receive proof satisfactory to them that
the replaced Note is held by a bona fide purchaser. If the Paying Agent (other
than the Company or an Affiliate of the Company) holds on the maturity date
money sufficient to pay Notes payable on that date and is not prohibited from
paying such cash pursuant to the terms of this Indenture, then on and after
that date such Notes cease to be outstanding and interest on them shall cease
to accrue. A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes which a
Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.

     SECTION 2.11 Temporary Notes.

     Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have insertions,
substitutions, omissions and other variations determined to be appropriate by
the Officers executing the temporary Notes, as evidenced by their execution of
such temporary Notes. If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall be
entitled to the same benefits under this Indenture as definitive Notes.

     SECTION 2.12 Cancellation.

     The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder that the Company may
have acquired in any manner whatsoever, and may deliver to the Trustee for
cancellation any Notes previously authenticated hereunder that the Company has
not issued and sold. Such delivery shall be accompanied by a Company Order.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the

28

 

direction of the Trustee, the Registrar or the Paying Agent (other than
the Company or an Affiliate thereof) shall cancel all Notes surrendered for
transfer, exchange, payment or cancellation in accordance with its normal
procedure. Subject to Section 2.09, the Company shall not issue new Notes to
replace Notes that it has paid or delivered to the Trustee for cancellation.

     SECTION 2.13 CUSIP Numbers.

     The Company in issuing the Notes may use “CUSIP,” “CINS” or “ISIN” numbers
(if then generally in use), and the Trustee shall use CUSIP, CINS or ISIN
numbers, as the case may be, in notices of redemption or exchange as a
convenience to Holders; provided, that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee of any change in any of
such numbers.

     SECTION 2.14 Defaulted Interest.

     If the Company defaults in a payment of interest on the Notes, it shall
pay, or shall deposit with the Paying Agent money in immediately available
funds sufficient to pay the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date. A special record date, as used in this Section
2.14 with respect to the payment of any defaulted interest, shall mean the 15th
day next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least 15 days before
the subsequent special record date, the Company shall mail to each Holder and
to the Trustee a notice that states the subsequent special record date, the
payment date and the amount of defaulted interest to be paid.

ARTICLE THREE

REDEMPTION

     SECTION 3.01 Right of Redemption.

     The Notes may be redeemed, at the Company’s option, in whole or in part,
at any time or from time to time, on or after January 1, 2006, and prior to
maturity, at the following Redemption Prices (expressed in percentages of
Accreted Value), plus accrued and unpaid interest, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date), if redeemed during the 12-month period commencing
January 1 of the years set forth below:

	 	 	 	 	 
	Year
	 

        	 	Redemption Price
	2006
	 	 	106.50	%
	2007
	 	 	103.25	%
	2008 and thereafter
	 	 	100.00	%

29

 

     SECTION 3.02 Notices to Trustee.

     If the Company elects to redeem Notes pursuant to Section 3.01, it shall
notify the Trustee in writing of the Redemption Date and the principal amount
of Notes to be redeemed. The Company shall give each notice provided for in
this Section 3.02 in an Officers’ Certificate at least 45 days before the
Redemption Date (unless a shorter period shall be satisfactory to the Trustee).

     SECTION 3.03 Selection of Notes to Be Redeemed.

     If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed in compliance with the requirements, as
certified to it by the Company, of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not listed on a
national securities exchange, on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion shall deem fair and appropriate;
provided, that no Notes of $1.00 in principal amount or less shall be redeemed
in part. The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of $1.00 in
principal amount may only be redeemed in whole. The Trustee may select for
redemption portions (equal to $1.00 in principal amount or any integral
multiple thereof) of Notes that have denominations larger than $1.00 in
principal amount. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the Company and the Registrar promptly in writing of the Notes or
portions of Notes to be called for redemption.

     SECTION 3.04 Notice of Redemption.

     With respect to any redemption of Notes pursuant to Section 3.01, at least
30 days but not more than 60 days before a Redemption Date, the Company shall
mail a notice of redemption by first class mail to each Holder whose Notes are
to be redeemed at such Holder’s last address as it appears in the Note
Register. The notice shall identify the Notes (including CUSIP, CINS or ISIN
number(s)) to be redeemed and shall state: (1) the Redemption Date; (2) the
Redemption Price, including the amount of accrued interest to the paid; (3) the
name and address of the Paying Agent; (4) that Notes called for redemption must
be surrendered to the Paying Agent in order to collect the Redemption Price;
(5) that, unless the Company defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue (and the Accreted
Value of the Notes called for redemption ceases to increase) on and after the
Redemption Date and the only remaining right of the Holders is to receive
payment of the Redemption Price plus accrued interest to the Redemption Date
upon surrender of the Notes to the Paying Agent; (6) that, if any Note is being
redeemed in part, the portion of the principal amount (equal to $1.00 in
principal amount or any integral multiple thereof) of such Note to be redeemed
and that, on and after the Redemption Date, upon surrender for cancellation of
such Note to the Paying Agent, a new Note or Notes in principal amount equal to
the unredeemed portion thereof will be reissued without charge to the Holder;
and (7) that, if any Note contains a CUSIP, CINS or ISIN number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP, CINS or ISIN number either as printed on the Notes or as contained in
the notice of redemption and that reliance may be placed only on the other
identification numbers printed on the Notes. At the Company’s request (which
request may be revoked by the Company at any

30

 

time prior to the time at which the Trustee shall have given such notice
to the Holders), made in writing to the Trustee at least 30 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, the Trustee shall give the notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee an Officers’
Certificate stating that such notice has been given.

     SECTION 3.05 Effect of Notice of Redemption.

     Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Paying Agent, such Notes shall be paid at the Redemption
Price, plus accrued interest to the Redemption Date. Notice of redemption
shall be deemed to be given when properly mailed pursuant to Section 3.04,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Notes held by Holders to whom such notice was
properly given.

     SECTION 3.06 Deposit of Redemption Price.

     On or prior to any Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company is acting as its own Paying Agent, shall
segregate and hold in trust as provided in Section 2.05) money in immediately
available funds sufficient to pay the Redemption Price of and accrued interest
on all Notes or portions thereof to be redeemed on that date other than Notes
or portions thereof called for redemption on that date that have been delivered
by the Company to the Trustee for cancellation. The Paying Agent shall promptly
return to the Company any money deposited with the Paying Agent by the Company
in excess of the amounts necessary to pay the Redemption Price of, and accrued
and unpaid interest on, all Notes to be redeemed.

     SECTION 3.07 Payment of Notes Called for Redemption.

     If notice of redemption has been given in the manner provided above, the
Notes or portion of Notes specified in such notice to be redeemed shall become
due and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date, and on and after such
date (unless the Company shall default in the payment of such Notes at the
Redemption Price and accrued interest to the Redemption Date, in which case the
principal, until paid, shall bear interest from the Redemption Date at the rate
prescribed in the Notes), such Notes shall cease to accrue interest. Upon
surrender of any Note for redemption in accordance with a notice of redemption,
such Note shall be paid and redeemed by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders registered as such at the close of
business on the relevant Regular Record Date.

31

 

     SECTION 3.08 Notes Redeemed in Part.

     Upon surrender of any Note that is redeemed in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder without
charge a new Note of equal Accreted Value to the unredeemed portion of such
surrendered Note.

ARTICLE FOUR

COVENANTS

     SECTION 4.01 Payment of Notes.

     The Company shall pay or cause to be paid the Accreted Value of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes and this Indenture. An installment of Accreted Value, premium, if
any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and
sufficient to pay the installment in a timely manner and is not prohibited from
paying such money to the Holders of the Notes pursuant to the terms of this
Indenture. The Company will pay interest on overdue Accreted Value at the rate
and in the manner provided in the Notes; it shall pay interest on overdue
installments of interest at the same rate and in the same manner, to the extent
lawful.

     SECTION 4.02 Maintenance of Office or Agency.

     The Company will maintain in the Borough of Manhattan, the City of New
York an office or agency where Notes may be surrendered for registration of
transfer or exchange or for presentation for payment and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.02 or at the address of the Trustee’s designee.
The Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency. The Company hereby
initially designates the Corporate Trust Office of the Trustee, located in the
Borough of Manhattan, the City of New York, as such office of the Company in
accordance with this Section 4.02 and Section 2.04.

     SECTION 4.03 Limitation on Indebtedness.

     (a)  No Restricted Group Member shall (i) Incur any Indebtedness (other
than the Notes, the New MEFA, the New EFA, Guarantees of the Notes, the New
MEFA or the New EFA and other Indebtedness existing on the Effective Date); or
(ii) issue any Redeemable Stock; provided, that, after the first anniversary of
the Effective Date, the Restricted Group Members

32

 

may Incur Indebtedness, if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom on a pro
forma basis, the Consolidated Leverage Ratio would not be greater than: (A) 5
to 1 during the period from the day after the first anniversary of the
Effective Date through the day of the second anniversary of the Effective Date;
(B) 4.5 to 1 during the period from the day after the second anniversary of the
Effective Date through the day of the third anniversary of the Effective Date;
(C) 4 to 1 during the period from the day after the third anniversary of the
Effective Date through the day of the fourth anniversary of the Effective Date;
and (D) 3.5 to 1 on any day after the fourth anniversary of the Effective Date
(the foregoing permitted ratios for the applicable period specified being
referred to in this Indenture, collectively, as the “Permitted Consolidated
Leverage Ratios” and each as a “Permitted Consolidated Leverage Ratio”).

     (b)  Notwithstanding the provisions of Section 4.03(a), the Restricted
Group Members (except as specified below) may Incur each and all of the
following at any time:

		
	 	        (1) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $50 million for all Restricted Group Members (other
than NII Brazil), collectively, less any amount of such Indebtedness
permanently repaid as provided under Section 4.10;
	 
	 	        (2) Indebtedness (other than Indebtness of NII Brazil) (A) to the
Company or NII evidenced by an unsubordinated promissory note or (B) to
any other Restricted Group Member; provided, that any event that results
in any such Restricted Group Member ceasing to be a Restricted Group
Member or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Group Member) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by
this clause (2);
	 
	 	        (3) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness
(other than Indebtedness Incurred under clause (1), (2), (4), (5), (6) or
(7) of this Section 4.03(b)) or any refinancings thereof in an amount not
to exceed the amount so refinanced or refunded (plus required premiums,
accrued interest, and fees and expenses paid to Persons who are not
Affiliates of the Company); provided that Indebtedness, the proceeds of
which are used to refinance or refund the Notes or Indebtedness that is
pari passu with, or subordinated in right of payment to the Notes, shall
only be permitted under this clause (3) if (a) if the Notes are
refinanced in part or the Indebtedness to be refinanced is pari passu
with the Notes, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right
of payment to, the remaining Notes, (b) if the Indebtedness to be
refinanced is subordinated in right of payment to the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding,
is expressly made subordinate in right of payment to the Notes at least
to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (c) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded, and the
Average Life of such new

33

 

		
	 	Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; provided further, that in no
event may Indebtedness of the Company or NII be refinanced by means of
any Indebtedness of any other Restricted Group Member pursuant to this
clause (3);

		
	 	        (4) Indebtedness (a) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (b) under Currency
Agreements and Interest Rate Agreements; provided, that such agreements
(x) are designed solely to protect any Restricted Group Member
against fluctuations in foreign currency exchange rates or interest rates
and (y) do not increase the Indebtedness of the obligor outstanding at
any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; or (c) arising from agreements providing
for indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of any Restricted Group Member pursuant to
such agreements, in any case Incurred in connection with the disposition
of any business, assets or Equity Interests in any Restricted Group
Member (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Equity Interests
for the purpose of financing such acquisition), in a principal amount not
to exceed the gross proceeds actually received by the Restricted Group
Members Incurring such Indebtedness in connection with such disposition;
	 
	 	        (5) Indebtedness to the extent the net proceeds thereof are promptly
(a) used to purchase Notes tendered in an Offer to Purchase made as a
result of a Change in Control or (b) deposited to defease the Notes as
set forth in Article Ten;
	 
	 	        (6) Guarantees of the Notes, the New MEFA and the New EFA;
Guarantees by NII of Permited Tower Transactions; Guarantees of
Indebtedness Incurred under Section 4.03(b)(1); and Guarantees of other
Indebtedness of the Company or NII by any Restricted Group Member,
provided, that the Guarantee of such Indebtedness is permitted by and
made in accordance with Section 4.07; and
	 
	 	        (7) Indebtedness Incurred as part of a Permitted Tower Transaction.

     (c)  Notwithstanding any other provision of this Section 4.03, the maximum
amount of Indebtedness that the Restricted Group Members may Incur pursuant to
this Section 4.03 shall be deemed not to have been exceeded, with respect to
any outstanding Indebtedness, due solely to the result of fluctuations in the
exchange rates of currencies.

     (d) For purposes of determining any particular amount of Indebtedness
under this Section 4.03, Guarantees of, Liens securing or other obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included. For
purposes of determining compliance with this Section 4.03, if an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described above, the Company, in its sole discretion, shall classify such item
of Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses and may reclassify the Indebtedness from
time to time.

34

 

     SECTION 4.04 Limitation on Restricted Payments.

     (a)  No Restricted Group Member may, directly or indirectly:

		
	 	        (1) declare or pay any dividend or make any distribution on or with
respect to its Equity Interests (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions
on its Capital Stock held by Persons other than another Restricted Group
Member, provided, that any Restricted Group Member holding shares of
Capital Stock of such dividend-or distribution-paying Restricted Group
Member shall receive such pro rata dividends or distributions as may be
due to such Restricted Group Member at or prior to the payment of such
pro rata dividends or distributions to such other Persons); provided,
that no such dividend or distribution may be declared, paid or made to an
entity referred to in the definition of NII Brazil other than by another
entity referred to in the definition of NII Brazil;
	 
	 	        (2) purchase, redeem, retire or otherwise acquire for value any
Equity Interest in (a) a Restricted Group Member, which Equity Interest
is held by (i) NII Brazil, (ii) any Affiliate of the Company that is not
a Restricted Group Member (other than NII Brazil), or (iii) any holder
(or any Affiliate of such holder) of 5% or more of the Capital Stock of
NII, or (b) NII, any Unrestricted Subsidiary or any Unrestricted
Affiliate;
	 
	 	        (3) make any principal payment, or redemption, repurchase,
defeasance, or other acquisition or retirement for value prior to the
scheduled dates of payment, of Indebtedness of any Restricted Group
Member that is subordinated in right of payment to the Notes (other than
the purchase, repurchase or the acquisition of Indebtedness in
anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in any case due within one year of the
date of purchase, repurchase or acquisition);
	 
	 	        (4) make any Investment in NII Brazil (other than a Permitted
Investment) unless, at the time of, and after giving effect to, the
proposed Investment:

		
	 	        (A) no Default or Event of Default would exist; and
	 
	 	        (B) such Investment, together with the aggregate amount of all
other Investments governed by this clause (4) together with those
governed by clause (5) below made after the Effective Date would
not exceed the Permitted Amounts. The amount of any such Investment
if other than cash shall be its fair market value; or

		
	 	        (5) make any Investment (other than a Permitted Investment) in any
Person other than NII Brazil (such payments and any other actions
described in this clause (5) or in any of clauses (1) through (4) above
being collectively referred to as “Restricted Payments”) unless, at the
time of, and after giving effect to, the proposed Investment:

		
	 	        (A) no Default or an Event of Default would exist;

35

 

		
	 	        (B) the Consolidated Leverage Ratio would not be greater than
the applicable Permitted Consolidated Leverage Ratio; provided,
however, that no Restricted Group Member may make any such
Investment before the date on which internal financial statements
are available for the first fiscal quarter of NII ending following
the Effective Date, and provided further, that with respect to any
such Investment made on or before the first anniversary of the
Effective Date, the applicable Permitted Consolidated Leverage
Ratio will be deemed to be 5 to 1; and
	 
	 	        (C) such Investment, together with the aggregate amount of all
other Investments governed by this clause (5) or clause (4) above
(other than Permitted Investments) made after the Effective Date
would not exceed the Permitted Amounts. The amount of any such
Investment, if other than cash, shall be its fair market value.

     (b)  This Section 4.04 shall not be violated by reason of:

		
	 	        (1) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with this Section 4.04;
	 
	 	        (2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness, other than Indebtedness of NII
Brazil, that is subordinated in right of payment to the Notes including
premium, if any, and accrued and unpaid interest, with the proceeds of,
or in exchange for, Indebtedness Incurred in accordance with Section
4.03(b)(3) or a substantially concurrent offering of shares of Capital
Stock (other than Redeemable Stock) of NII;
	 
	 	        (3) the repurchase, redemption or other acquisition of Capital Stock
of NII (or options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a substantially
concurrent offering of, shares of Capital Stock (other than Redeemable
Stock) of NII;
	 
	 	        (4) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of NII which is subordinated in right of payment to the
Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock of NII (other than
Redeemable Stock);
	 
	 	        (5) payments or distributions, to dissenting stockholders pursuant
to applicable law and in connection with a consolidation, merger or
transfer of assets that complies with Article Five of this Indenture;
	 
	 	        (6) Investments acquired as a capital contribution to NII, or in
exchange for Capital Stock (other than Redeemable Stock) of NII;
	 
	 	        (7) the repurchase, redemption or other acquisition for value of
Capital Stock of a Restricted Group Member to the extent necessary to
prevent the loss or secure the

36

 

		
	 	renewal or reinstatement of any material license or franchise held
by such Restricted Group Member from any governmental agency; or
	 
	 	        (8) Investments in a Person (other than NII Brazil) which has ceased
to be a Restricted Affiliate, or ceases to observe a covenant provision
applicable to it, as a result of an Involuntary Event; provided, that (x)
such Investment is made with the proceeds of a substantially concurrent
capital contribution to, or sale of Capital Stock (other than Redeemable
Stock) of, the Company or NII and (y) after such Investment such
Involuntary Event shall no longer continue and such Person shall be a
Restricted Affiliate;

provided, that, except in the case of clauses (1) and (3) of this Section
4.04(b), no Default or Event of Default shall exist.

     (c)  Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers’ Certificate stating that such
Restricted Payment is permitted under this Section 4.04 and setting forth the
basis upon which the calculations required by this Section 4.04 were computed,
which calculations may be based upon NII’s latest available financial
statements.

     SECTION 4.05 Limitation on Dividends and Other Payments to Restricted
Group Members.

     (a)  No Restricted Group Member shall, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted Group
Member to (a) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Group Member owned by
any other Restricted Group Member, (b) pay any Indebtedness owed to the Company
or any other Restricted Group Member, (c) make loans or advances to the Company
or any other Restricted Group Member, (d) transfer any of its property or
assets to the Company or any other Restricted Group Member, or (e) Guarantee
any Indebtedness of the Company or any other Restricted Group Member. The
foregoing provisions shall not restrict any encumbrances or restrictions:

		
	 	        (1) existing on the Effective Date in this Indenture or any other
agreements in effect on the Effective Date, and any extensions,
refinancings, renewals or replacements of such agreements permitted under
this Indenture; provided, that the encumbrances and restrictions in any
such extensions, refinancings, renewals or replacements are no less
favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended,
refinanced, renewed or replaced;
	 
	 	        (2) existing under or by reason of applicable law;
	 
	 	        (3) existing with respect to any Person or the property or assets of
such Person acquired by any Restricted Group Member, existing at the time
of such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property
or assets of such Person so acquired;

37

 

		
	 	        (4) in the case of clause (d) of the first paragraph of this Section
4.05(a), (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of any Restricted Group
Member not otherwise prohibited by this Indenture or (C) arising or
agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract
from the value of property or assets of any Restricted Group Member in
any manner material to any Restricted Group Member; or
	 
	 	        (5) with respect to a Restricted Group Member and imposed pursuant
to an agreement that has been entered into for the sale or disposition of
all or substantially all of the Capital Stock of, or property and assets
of, such Restricted Group Member.

     (b)  Nothing contained in this Section 4.05 shall prevent any Restricted
Group Member from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in Section 4.09 or (2) restricting the sale or other
disposition of property or assets of any Restricted Group Member that secures
Indebtedness of any Restricted Group Member.

     SECTION 4.06 Limitation on the Issuance and Sale of Capital Stock of
Restricted Group Members.

     No Restricted Group Member will, directly or indirectly, issue or sell or
otherwise transfer any shares of Capital Stock of a Restricted Group Member
other than NII (including options, warrants or other rights to purchase shares
of such Capital Stock), except:

		
	 	        (1) to NII or a Wholly Owned Restricted Subsidiary of NII;
	 
	 	        (2) issuances of director’s qualifying shares or sales to foreign
nationals of shares of Capital Stock of a foreign Restricted Group
Member, to the extent required by applicable law; and
	 
	 	        (3) if, immediately after giving effect to such issuance, sale or
transfer such Restricted Group Member would no longer constitute a
Restricted Group Member, provided, that any Investment in such Person
remaining after giving effect to such issuance, sale or transfer would
have been permitted to be made under Section 4.04 if made immediately
after such issuance, sale or transfer, and provided, that the Net Cash
Proceeds, if any, of such sale are applied in accordance with Section
4.10 or such sales are excluded from the definition of “Asset Sale.”

     SECTION 4.07 Limitation on Guarantees by Restricted Group Members.

     (a)  Other than NII’s Guarantee of Permitted Tower Transactions, Guarantees
of Indebtedness Incurred under Section 4.03(b)(1), Guarantees of the New MEFA
and the New EFA and the Note Guarantees, no Restricted Group Member shall,
directly or indirectly, Guarantee any Indebtedness that is pari passu with or
subordinate in right of payment to the Notes (“guaranteed indebtedness”),
unless:

38

 

		
	 	        (1) such Restricted Group Member is or simultaneously becomes a
Guarantor (or is the Company); and
	 
	 	        (2) such Restricted Group Member waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against any
other Restricted Group Member as a result of any payment by such
Restricted Group Member under its Note Guarantee; provided, that this
paragraph shall not be applicable to (x) any Guarantee of any Restricted
Group Member that existed at the time such Person became a Restricted
Group Member and was not Incurred in connection with, or in contemplation
of, such Person becoming a Restricted Group Member or (y) any Guarantee
of any Restricted Group Member of Indebtedness Incurred under a revolving
credit, vendor financing, working capital facility or other credit
facility permitted by Section 4.03. If the guaranteed indebtedness is
(A) pari passu with the Notes, then the guarantee of such guaranteed
indebtedness shall be pari passu with, or subordinated to, the Note
Guarantee or (B) subordinated to the Notes, then the Guarantee of such
guaranteed indebtedness shall be subordinated to the Note Guarantee at
least to the extent that the guaranteed indebtedness is subordinated to
the Notes. Notwithstanding the foregoing, any Note Guarantee by a
Restricted Group Member other than NII may provide by its terms that it
shall be automatically and unconditionally released and discharged upon
(1) any sale, exchange or transfer to any Person not an Affiliate of the
Company, of all of each Restricted Group Member’s Capital Stock in, or
all or substantially all the assets of, such Restricted Group Member
(which sale, exchange or transfer is not prohibited by this Indenture) or
(2) the release or discharge of the guarantee that resulted in the
creation of such Note Guarantee, except a discharge or release by or as a
result of payment under such guarantee.

     (b)  Notwithstanding the provisions of Section 4.07(a), no Restricted Group
Member may Guarantee Indebtedness of NII Brazil other than Guarantees of the
New EFA and Guarantees of Permitted Tower Transactions and NII in respect of Permitted Handset Obligations (as defined in the New MEFA and the New EFA).

     SECTION 4.08 Limitation on Transactions with Affiliates.

     (a)  No Restricted Group Member shall, directly or indirectly, enter into,
renew or extend any transaction (including, without limitation, the purchase,
sale, lease or exchange of property or assets, or the rendering of any service)
with any holder (or any Person known by the Company or NII to be an Affiliate
of such holder) of 5% or more of any class of Capital Stock of NII or with any
Affiliate of any Restricted Group Member, except upon fair and reasonable terms
no less favorable to such Restricted Group Member than could be obtained, at
the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm’s-length transaction with a Person that is not such a holder
or an Affiliate; provided, that the foregoing limitation does not limit, and
shall not apply to:

		
	 	        (1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors of NII as evidenced by a Board
Resolution of NII, or (B) for which a Restricted Group Member delivers to
the Trustee a written opinion of a nationally

39

 

		
	 	recognized investment banking firm stating that the transaction is
fair to such Restricted Group Members from a financial point of view;

		
	 	        (2) any transaction solely between NII and any of its Wholly Owned
Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries of NII, other than transactions involving NII Brazil;
	 
	 	        (3) any transaction solely between the entities comprising NII
Brazil;
	 
	 	        (4) the payment of fees to, and the provision of reasonable and
customary indemnity on behalf of, directors of the Company, NII and NII’s
Restricted Subsidiaries in respect of their capacity as such;
	 
	 	        (5) any Restricted Payment permitted by Section 4.04;
	 
	 	        (6) payments and other transactions contemplated by the Overhead
Services Agreement, the Spectrum Sharing Agreement, the Standstill
Agreement, or the Trademark License Agreement, each case as in effect on
the Effective Date; or
	 
	 	        (7) any transaction between any Restricted Group Member and Nextel
or any Subsidiary of Nextel; provided, that such transaction is on an
arm’s-length basis and in the ordinary course of business.

     (b)  Notwithstanding the foregoing, any transaction or series of related
transactions permitted by Section 4.08(a) and not covered by clauses (2)
through (6) of Section 4.08(a) and involving aggregate consideration which
exceeds $10 million, must be approved or determined to be fair in the manner
provided in clauses (A) and (B) of Section 4.08(a)(1).

     SECTION 4.09 Limitation on Liens.

     No Restricted Group Member shall, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any of its assets or properties of any
character, or any shares of Capital Stock or Indebtedness of any Restricted
Group Member. The foregoing limitation shall not apply to:

		
	 	        (1) Liens existing on the Effective Date;
	 
	 	        (2) Liens created in favor or for the benefit of the Holders;
	 
	 	        (3) Liens with respect to the assets of a Restricted Group Member
granted by such Restricted Group Member to NII or a Wholly Owned
Restricted Subsidiary of NII to secure Indebtedness owing to NII or such
Wholly Owned Restricted Subsidiary;
	 
	 	        (4) Liens securing Indebtedness of up to $50 million Incurred
pursuant to Section 4.03(b)(1) or Guarantees of such Indebtedness; and
	 
	 	        (5) Permitted Liens.

40

 

     SECTION 4.10 Limitation on Asset Sales.

     (a)  Other than Asset Sales of the assets of NII Philippines (which Asset
Sales shall not count against the $5 million threshold referred to in the
proviso to this Section 4.10(a)), no Restricted Group Member shall consummate
any Asset Sale, unless:

		
	 	        (1) such Restricted Group Member receives consideration at the time
of such Asset Sale at least equal to the fair market value (as evidenced
by an Officers’ Certificate) of the assets subject to such Asset Sale;
	 
	 	        (2) at least 75% of the consideration received by such Restricted
Group Member in respect of such Asset Sale is in the form of (a) cash or
Cash Equivalents or (b) liabilities of a Restricted Group Member (other
than liabilities that are by their terms subordinated to the Notes or any
Note Guarantee) that are assumed by the transferee of such assets if,
following such Asset Sale, there is no further recourse to any Restricted
Group Member with respect to such liabilities; and
	 
	 	        (3) within 12 months of such Asset Sale, the Net Cash Proceeds
thereof, at NII’s election, are (a) invested in assets related to the
business of NII and its Restricted Subsidiaries in a manner permitted
under Section 4.04 or (b)(i) with respect to Net Cash
Proceeds from the sale of MEFA Collateral (A) used to repay and permanently reduce Indebtedness
under the New MEFA, Indebtedness Incurred pursuant to
Section 4.03(b)(3) (as long as the proceeds of Indebtedness
Incurred pursuant to Section 4.03(b)(3) are used to refinance and
replace the Indebtedness under the New MEFA) or Indebtedness Incurred pursuant to Section
4.03(b)(1) or (B) to the extent not used as provided in
clause (b)(i)(A), (such unused funds being hereinafter
referred to as “Excess Proceeds”) applied on a pro
rata basis to pay Indebtedness under the New EFA and to make an offer to purchase
Notes as described below (an “Excess Proceeds
Offer”), and (ii) with respect to Net Cash Proceeds from the
sale of EFA Collateral (A) used to repay and permanently reduce
Indebtedness under the New EFA, Indebtedness Incurred pursuant to Section
4.03(b)(3) (as long as the proceeds of Indebtedness Incurred pursuant
to Section 4.03(b)(3) are used to refinance and replace the
Indebtedness under the New EFA) or Indebtedness Incurred pursuant to
Section 4.03(b)(1) or (B) to the extent not used as provided in
clause (b)(ii)(A), (such unused funds being hereinafter referred to
as “Excess Proceeds”) applied on a pro rata basis to pay
Indebtedness under the New MEFA and to make an Excess Proceeds Offer;

provided, that the Company will not be required to make an Excess Proceeds
Offer at any time unless the aggregate amount of Net Cash Proceeds from all
Asset Sales shall exceed $5 million. Pending the final application of any such
Net Cash Proceeds, the selling Restricted Group Member, the Company or NII may
temporarily invest such Net Cash Proceeds in Cash Equivalents.

     (b)  Notwithstanding the provisions of Section 4.10(a), to the extent that
any or all of the Net Cash Proceeds from any Asset Sale involving assets
located outside the Cayman Islands are prohibited or delayed by applicable
local law from being repatriated to the Cayman Islands and such Net Cash
Proceeds are not actually applied in accordance with the foregoing paragraph,
the Company shall not be required to apply the portion of such Net Cash
Proceeds so affected and may permit such Restricted Group Member to retain such
portion of such Net Cash Proceeds so long, but only so long, as the applicable
local law will not permit repatriation to the Cayman Islands. The applicable
Restricted Group Member shall promptly take all actions required by the
applicable local law to permit such repatriation and once such repatriation is
permitted, such repatriation will be immediately effected and such repatriated
Net Cash Proceeds will be promptly applied in the manner set forth in this
covenant as if the Asset Sale had occurred on such date above; provided that to
the extent the Company determines in good faith that repatriation of any or all
of the Net Cash Proceeds of such Asset Sale would have a material

41

 

adverse tax consequence, such Net Cash Proceeds may be retained by the
applicable Restricted Group Member for so long as such material adverse tax
event would continue, provided, that no Default or Event of Default exists.

     (c)  If the Company elects, or becomes obligated to make, an Excess
Proceeds Offer, the Company will, within 30 days, make an Offer to Purchase
Notes having an aggregate Accreted Value of Notes equal to the Excess Proceeds
at a purchase price equal to 100% of the aggregate Accreted Value plus accrued
and unpaid interest, if any, to the payment date stated in the Offer to
Purchase. If the aggregate purchase price for the Notes tendered pursuant to
the Excess Proceeds Offer is less than the Excess Proceeds, NII and its
Restricted Subsidiaries may use the portion of the Excess Proceeds remaining
after payment of such purchase price for general corporate purposes.

     (d)  Each Excess Proceeds Offer will remain open for a period of at least
20 business days. On the Payment Date, the Company shall, to the extent lawful
(A) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to the Offer to Purchase; (B) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and accepted; and (C) deliver, or cause to be delivered, to the
Trustee all Notes or portions thereof so accepted, together with an Officers’
Certificate specifying the Notes or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail to such Holders a new Note equal in
Accreted Value to any unpurchased portion of the Note surrendered; provided,
that each Note purchased and each new Note issued shall be in a principal
amount of $1.00 or integral multiples thereof. The Company will publicly
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and
any other securities laws and regulations to the extent such laws and
regulations are applicable.

     (e)  To the extent that the provisions of any securities laws or
regulations conflict with the “Asset Sale” provisions of this Indenture, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the “Asset Sale”
provisions of this Indenture by virtue thereof.

     SECTION 4.11 Repurchase of Notes upon a Change of Control.

     The Company must commence, within 30 days, and consummate within 60 days,
of the occurrence of a Change of Control, an Offer to Purchase for all Notes
then outstanding at a purchase price equal to 101% of the Accreted Value
thereof plus accrued interest to the Payment Date stated in the Offer to
Purchase. On the Payment Date, the Company shall, to the extent lawful (a)
accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to the Offer to Purchase; (b) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and accepted; and (c) deliver, or cause to be delivered, to the
Trustee all Notes or portions thereof so accepted together with an Officers’
Certificate specifying the Notes or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail to such Holders

42

 

a new Note equal in Accreted Value to any unpurchased portion of the Note
surrendered; provided, that each Note purchased and each new Note issued shall
be in a principal amount of $1.00 or integral multiples thereof. The Company
will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations to the extent such
laws and regulations are applicable. To the extent that any securities laws or
regulations conflict with the foregoing provisions of this Section 4.11, the
Company shall comply with such laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.11 by virtue thereof.

     SECTION 4.12 Existence.

     Subject to Articles Four and Five of this Indenture, the Restricted Group
Members will do or cause to be done all things necessary to preserve and keep
in full force and effect its existence and the existence of the Company, NII
and each other Significant Group Member in accordance with their respective
organizational documents, and the rights (whether pursuant to charter,
partnership certificate, agreement, statute or otherwise), material licenses
and franchises of the Company, NII and each other Significant Group Member;
provided, that the Restricted Group Members shall not be required to preserve
any such right, license or franchise, or the existence of the Company, NII or
any other Significant Group Member if (a) the maintenance or preservation
thereof is no longer desirable in the conduct of the business of the Restricted
Group Members taken as a whole, or (b) the loss thereof is not materially
adverse to either the Restricted Group Members, taken as a whole, or the
ability of the Company to otherwise satisfy its obligations hereunder.

     SECTION 4.13 Payment of Taxes and Other Claims.

     Each Restricted Group Member shall pay or discharge, or cause to be paid
or discharged, before the same shall become delinquent (a) all material taxes,
assessments and governmental charges levied or imposed upon (1) it, (2) the
income or profits of any such Restricted Group Member which is a corporation or
which any Restricted Group Member is legally obligated to pay or discharge or
(3) the property of any such Restricted Group Member and (b) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a lien upon the property of any Restricted Group Member; provided, that
no Restricted Group Member shall be required to pay or discharge, or cause to
be paid or discharged, any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been established.

     SECTION 4.14 Maintenance of Properties and Insurance; Books and Records;
Compliance with Law.

     (a)  Each Restricted Group Member shall cause its respective properties
used or useful in the conduct of its respective business to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
such Restricted Group Member may be necessary so that the business carried on
in connection

43

 

therewith may be properly conducted at all times; provided, that nothing
in this Section 4.14 shall prevent any Restricted Group Member from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the
judgment of such Restricted Group Member, desirable in the conduct of the
business of such Restricted Group Member. The Company will provide or cause to
be provided, for itself and the other Restricted Group Members, insurance
(including appropriate self-insurance) against loss or damage of the kinds
customarily insured against by Persons similarly situated and owning like
properties, with reputable insurers or with the government of the United States
of America, or an agency or instrumentality thereof, in such amounts, with such
deductibles and by such methods as shall be customary for Persons similarly
situated in the industry in which the Company or such Restricted Group Member,
as the case may be, is then conducting business.

     (b)  Each Restricted Group Member shall keep proper books of record and
account, in which full and correct entries shall be made of all business and
financial transactions of the Restricted Group Members and reflect on its
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP consistently applied to the Restricted Group Members,
taken as a whole.

     (c)  Each Restricted Group Member shall comply with all statutes, laws,
ordinances, or government rules and regulations to which it is subject,
non-compliance with which would be materially adverse to either (i) the
Restricted Group Members, taken as a whole or (ii) to the ability of the
Company to otherwise satisfy its obligations hereunder.

     SECTION 4.15 Notice of Defaults.

     In the event that the Company becomes aware of any Default or Event of
Default the Company, promptly after it becomes aware thereof, will give written
notice thereof to the Trustee.

     SECTION 4.16 Compliance Certificates.

     (a) The Company shall deliver to the Trustee, within 45 days after the end
of each of its first three fiscal quarters of each of its fiscal years, and 90
days after the end of the last fiscal quarter of each fiscal year, an Officers’
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal quarter. In the case of the Officers’
Certificate delivered within 90 days of the end of the Company’s fiscal year,
such certificate shall contain a certification from the principal executive
officer, principal financial officer or principal accounting officer that a
review has been conducted of the activities of the Restricted Group Members and
the Restricted Group Members’ performance under this Indenture and that, to the
knowledge of such Officers, the Restricted Group Members have complied with all
conditions and covenants under this Indenture. For purposes of this Section
4.16, such compliance shall be determined without regard to any period of grace
or requirement of notice provided under this Indenture. If the signers of any
such Officers’ Certificate know of a Default or Event of Default, the
certificate shall describe any such Default or Event of Default and its status.
The first certificate to be delivered pursuant to this Section 4.16(a) shall
be for the first fiscal quarter of NII beginning after the execution of this
Indenture.

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     (b)  So long as (and to the extent) not prohibited by the then current
recommendations of the American Institute of Certified Public Accountants, the
Company shall deliver to the Trustee, within 90 days after the end of the
Company’s fiscal year, a certificate signed by the Company’s independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate
to financial matters, (ii) that they have read the most recent Officers’
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.16 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that the Company was not in
compliance with any of the provisions of Articles Four or Five of this
Indenture as they pertain to financial matters and, if any Default or Event of
Default has come to their attention, specifying the nature and period of
existence thereof; provided, that such independent certified public accountants
shall not be liable in respect of such statement by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of an audit examination conducted in accordance with
generally accepted auditing standards in effect at the date of such
examination.

     (c)  Within 90 days of the end of each of the Company’s fiscal years, the
Company shall deliver to the Trustee a list of all Significant Group Members.
The Trustee shall have no duty with respect to any such list except to keep it
on file and available for inspection by the Holders.

     SECTION 4.17 Commission Reports and Reports to Holders.

     Whether or not the Company is required to file reports with the
Commission, for so long as any Notes are outstanding the Company shall file
with the Commission all such reports and other information as it would be
required to file with the Commission by Sections 13 and 15 under the Securities
Exchange Act of 1934 if it were subject thereto. Within 15 days of such
required filings, the Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee’s receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the compliance by each Restricted Group Member with any of
the covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates). The Company also shall comply with the
other provisions of TIA Section 314(a). For as long as any of the Notes remain
outstanding and constitute “restricted securities” under Rule 144 under the
Securities Act, the Company shall provide the Trustee and the Holders with any
information required to be delivered pursuant to Rule 144(d)(4) under the
Securities Act.

     SECTION 4.18 Waiver of Stay, Extension or Usury Laws.

     The Restricted Group Members covenant (to the extent that they may
lawfully do so) that they will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive any
of them from paying all or any portion of the Accreted Value of, premium, if
any, or interest on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or that may affect the covenants or the
performance of this Indenture;

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and (to the extent that it may lawfully do so) the Restricted Group
Members hereby expressly waive all benefit or advantage of any such law and
covenants that they will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

     SECTION 4.19 Limitation on Sale-Leaseback Transactions.

     (a)  No Restricted Group Member shall enter into any sale-leaseback
transaction involving any of its assets or properties whether now owned or
hereafter acquired, whereby a Restricted Group Member sells or transfers such
assets or properties and then or thereafter leases such assets or properties or
any part thereof or any other assets or properties which a Restricted Group
Member, as the case may be, intends to use for substantially the same purpose
or purposes as the assets or properties sold or transferred.

     (b)  The restriction contained in Section 4.19(a) does not apply to any
sale-leaseback transaction for which:

		
	 	        (1) the lease is for a period, including renewal rights, of three
years or less;
	 
	 	        (2) the lease secures or relates to industrial revenue or pollution
control bonds;
	 
	 	        (3) the transaction is solely between NII and any Wholly Owned
Restricted Subsidiary of NII or solely between Wholly Owned Restricted
Subsidiaries of NII, other than any transaction involving NII Brazil;
	 
	 	        (4) such Restricted Group Member, within twelve months after the
sale or transfer of any assets or properties is completed, applies an
amount not less than the Net Cash Proceeds received from such sale in
accordance with Section 4.10; or
	 
	 	        (5) the transaction is a Permitted Tower Transaction.

     SECTION 4.20 Additional Note Guarantees.

     Other than the Company and Excluded Entities, each entity that is a
Restricted Group Member on the Effective Date shall execute and deliver to the
Trustee a Note Guarantee as of the Effective Date. Other than the Company and
Excluded Entities, each entity that becomes a Restricted Group Member after the
Effective Date, promptly upon such entity becoming a Restricted Group Member,
shall either (i) execute and deliver to the Trustee a Guarantor Accession Agreement in the
form of Exhibit B hereto or (ii) deliver evidence to the
Trustee that such entity has executed documents, or amendments to
existing documents, such that the obligations of the Company under
the Indenture have been guaranteed and secured as though such entity
were originally a Guarantor.

     SECTION 4.21 Advances to Excluded Entities.

     (a)  All advances to Excluded Entities made by the Company or any Guarantor
(other than (i) equity contributions and (ii) advances to a Restricted Group
Member with a maturity date of less than 90 days from the date of such advance
not to exceed, together with all advances to Excluded Entities, $5 million in
the aggregate) shall be evidenced by intercompany notes in favor of the Company
or Guarantor, as appropriate. Each such intercompany note must, to the extent
practicable, be secured by all assets of the applicable Excluded Entity.
Intercompany

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notes in favor of the Company shall be pledged pursuant to the Collateral
Documents to the Collateral Agent as Collateral to secure the Notes and the New EFA and the New MEFA. Each intercompany
note shall be payable upon demand and will bear interest at a rate equal to the
then current fair market interest rate.

     (b)  If an intercompany advance to an Excluded Entity is evidenced by an
intercompany note, and if the applicable Excluded Entity proposes to remit
monies to the holder of such intercompany note, such holder shall cause that
Excluded Entity to distribute such monies to the holder, directly or
indirectly, by means of a dividend or other manner and not as a repayment of
the Indebtedness evidenced by the applicable intercompany note; provided,
however, notwithstanding the foregoing, the Excluded Entity may at its
discretion (i) pay accrued interest on any intercompany note, and (ii) repay up
to 20% of the original principal balance of any intercompany note.

     SECTION 4.22 Designation of Affiliates and Subsidiaries.

     (a)  The Board of Directors of NII may designate any Restricted Affiliate
to be an Unrestricted Affiliate; provided, that a Minority Owned Affiliate that
is a Restricted Affiliate may not be designated as an “Unrestricted Affiliate”
unless (i) such Minority Owned Affiliate does not own any Capital Stock of, or
own or hold any Lien on any property of, any Restricted Group Member; (ii)
immediately after giving effect to such designation on a pro forma basis, the
Consolidated Leverage Ratio would not be greater than the applicable Permitted
Consolidated Leverage Ratio, and (iii) the creditors of such Minority Owned
Affiliate have no direct or indirect recourse (including, without limitation,
recourse with respect to the payment of principal or interest on Indebtedness
of such Minority Owned Affiliate) to the assets of any Restricted Group Member;
and provided further, that: (A) any Guarantee by any Restricted Group Member of
any Indebtedness of the Minority Owned Affiliate being so designated shall be
deemed an “Incurrence” of such Indebtedness and an “Investment” by such
Restricted Group Member in such Minority Owned Affiliate at the time of such
designation; (B) either (x) the Minority Owned Affiliate to be so designated
has total assets of $1,000 or less or (y) if such Minority Owned Affiliate has
assets greater than $1,000, such designation would be permitted under Section
4.04; (C) if applicable, the Incurrence of Indebtedness and the Investment
referred to in clause (A) of this proviso would be permitted under Sections
4.03 and 4.04; (D) the Investment resulting from operation of Section 4.22(f)
shall be permitted under Section 4.04; and (E) no Default or Event of Default
would exist.

     (b)  The Board of Directors of NII may designate any Minority Owned
Affiliate to be an Unrestricted Affiliate only if immediately after giving
effect to such designation (i) the liens and indebtedness of such Minority
Owned Affiliate outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred for all purposes of
this Indenture, (ii) no Default or Event of Default would exist, and (iii)
immediately after giving effect to such designation, on a pro forma basis, the
Consolidated Leverage Ratio would not be greater than the applicable Permitted
Consolidated Leverage Ratio.

     (c)  The Board of Directors of NII may designate any Subsidiary as an
Unrestricted Subsidiary; provided, that a Subsidiary may not be designated as
an “Unrestricted Subsidiary” unless (i) such Subsidiary does not own any
Capital Stock of, or own or hold any Lien on any property of, any Restricted
Group Member, (ii) immediately after giving effect to such

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designation on a pro forma basis, the Consolidated Leverage Ratio would
not be greater than the applicable Permitted Consolidated Leverage Ratio, and
(iii) the creditors of such Subsidiary have no direct or indirect recourse
(including without limitation, recourse with respect to the payment of
principal or interest on Indebtedness of such Subsidiary) to the assets of any
Restricted Group Member; and provided further, that (A) any Guarantee by any
Restricted Group Member of any Indebtedness of the Subsidiary being so
designated shall be deemed an “Incurrence” of such Indebtedness and an
“Investment” by such Restricted Group Member in such Subsidiary at the time of
such designation; (B) either (x) the Subsidiary to be so designated has total
assets of $1,000 or less or (y) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04; (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Sections 4.03 and 4.04; (D)
the Investment resulting from operation of Section 4.22(g) shall be permitted
under Section 4.04; and (E) no Default or Event of Default would exist.

     (d)  The Board of Directors of NII may designate any Unrestricted
Subsidiary other than NII Argentina to be a Restricted Subsidiary only if
immediately after giving effect to such designation (i) the Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
for all purposes of this Indenture, (ii) no Default or Event of Default would
exist, and (iii) immediately after giving effect to such designation, on a pro
forma basis, the Consolidated Leverage Ratio would not be greater than the
applicable Permitted Consolidated Leverage Ratio.

     (e)  Any designation by the Board of Directors of NII under Section
4.22(a)-(d) must be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution of NII giving effect to such designation
and an Officers’ Certificate of NII certifying that such designation complied
with the foregoing provisions.

     (f)  The Company shall be deemed to make an Investment in each Minority
Owned Affiliate designated as an “Unrestricted Affiliate” immediately following
such designation in an amount equal to the Investment in such Affiliate and its
subsidiaries immediately prior to such designation; provided, that if such
Affiliate is subsequently redesignated as a Restricted Affiliate the amount of
such Investment shall be deemed to be reduced (but not below zero) by the fair
market value of the net consolidated assets of such Affiliate on the date of
such redesignation.

     (g)  The Company shall be deemed to make an Investment in each Subsidiary
designated as an “Unrestricted Subsidiary” immediately following such
designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation; provided, that if such
Subsidiary is subsequently redesignated as a Restricted Subsidiary, the amount
of such Investment shall be deemed to be reduced (but not below zero) by the
fair market value of the net consolidated assets of such Subsidiary on the date
of such redesignation.

     (h) Notwithstanding the foregoing, NII may not take any action permitted
under Section 4.22 (a)-(d) before the date on which internal financial
statements are available for the first fiscal quarter of NII ending following
the Effective Date.

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     (i)  With respect to any designation permitted under Section 4.22 (a)-(d)
made on or before the first anniversary of the Effective Date, the applicable
Permitted Consolidated Leverage Ratio will be deemed to be 5 to 1.

ARTICLE FIVE

SUCCESSOR CORPORATION

     SECTION 5.01 When Company May Merge, Etc.

     Neither the Company nor NII shall consolidate with, merge with or into, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (determined on a consolidated
basis for its Restricted Group Members), in one transaction or a series of
related transactions, to any Person or permit any Person to merge with or into
the Company or NII unless:

		
	 	        (1) the Company or NII shall be the continuing Person, or the Person
(if other than the Company or NII) formed by such consolidation or into
which the Company or NII is merged or that acquired or leased such
property and assets of the Company or NII shall expressly assume, all of
the obligations of the Company or NII (as the case may be) on all of the
Notes and under this Indenture and the Collateral Documents;
	 
	 	        (2) immediately after giving effect to such transaction, no Default
or Event of Default shall exist;
	 
	 	        (3) immediately after giving effect to such transaction, the Company
or any Person becoming the successor obligor of the Notes shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of NII immediately prior to such transaction;
	 
	 	        (4) immediately after giving effect to such transaction, the
Consolidated Leverage Ratio would not be greater than the applicable
Permitted Consolidated Leverage Ratio; provided, however, that no such
transaction will be permitted before the date on which internal financial
statements are available for the first fiscal quarter of NII ending
following the Effective Date; and provided further, that with respect to
any such transaction consummated before the first anniversary of the
Effective Date, the applicable Permitted Consolidated Leverage Ratio will
be deemed to be 5 to 1; and
	 
	 	        (5) the Company delivers to the Trustee an Officers’ Certificate
(attaching the arithmetic computations (which the Trustee shall have no
obligation whatsoever to verify) to demonstrate compliance with clauses
(3) and (4)) above and an Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental indenture
complies with this provision, that all conditions precedent provided for
herein relating to such transaction have been complied with and, in the
event that the continuing Person is organized under the laws of any
jurisdiction other than the United States of America or any jurisdiction
thereof, that this Indenture, the Notes and each of the Collateral
Documents constitute legal, valid and binding obligations of the
continuing Person, enforceable in accordance with their terms.

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     SECTION 5.02 Successor Substituted.

     Upon any consolidation or merger, or any sale, conveyance, transfer, lease
or other disposition of all or substantially all of the property and assets of
the Company or NII in accordance with Section 5.01 of this Indenture, the
successor Person formed by such consolidation or into which the Company or NII
is merged or to which such sale, conveyance, transfer, lease or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or NII, as applicable, under this
Indenture with the same effect as if such successor Person had been named as
the Company or NII herein and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the Notes;
provided, that the Company shall not be released from its obligation to pay the
principal of, premium, if any, or interest on the Notes in the case of a lease
of all or substantially all of its property and assets.

ARTICLE SIX

DEFAULT AND REMEDIES

     SECTION 6.01 Events of Default.

     An “Event of Default” shall exist with respect to the Notes if any of the
following occurs and is continuing:

     (a)  the Company defaults in the payment of Accreted Value of (or premium,
if any, on) any Note when the same becomes due and payable, at Stated Maturity,
upon acceleration, redemption, required purchase or otherwise;

     (b)  the Company defaults in the payment of interest on any Note when the
same becomes due and payable, and such default continues for a period of 30
days;

     (c)  the Company fails to make or consummate a required Excess Proceeds
Offer in accordance with Section 4.10 or a required Offer to Purchase in
accordance with Section 4.11, or defaults in the observance of any material
provision of Section 5.01;

     (d)  any Restricted Group Member defaults in the performance of or breaches
any other covenant or agreement applicable to it contained in this Indenture or
the Notes (other than a default specified in clause (a), (b) or (c) above), any
Note Guarantee, or any Collateral Document that secures the Notes, and such
default or breach continues for a period of 30 consecutive days after written
notice shall have been given (i) by the Trustee to the Company or (ii) to the
Trustee and the Company by the Holders of 25% or more in aggregate Accreted
Value amount of the Notes;

     (e)  there occurs with respect to the New MEFA: (i) an event of default
that permits the lender(s) under the New MEFA to declare the New MEFA to be due
and payable prior to its Stated Maturity and the failure of the obligor to cure
or receive a waiver with respect to the event of default within 30 days after
its occurrence; (ii) an event of default and the declaration by the lender(s)
under the New MEFA that the New MEFA is due and payable prior to its Stated
Maturity; or (iii) an event of default and the request for payment by the

lender(s) under the New MEFA on any guarantee securing the New MEFA; provided,
however, that if an Event of

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Default occurs under clause (i), no Event of Default has occurred under
clauses (ii) or (iii) and the lender(s) under the New MEFA subsequently
waive(s) the event of default under the New MEFA, then the Event of Default
under clause (i) will also be waived without any further action of the
Noteholders or the Trustee;

     (f)  there occurs with respect to the New EFA an event of default and the
request for payment by the lender(s) under the New EFA on any Guarantee
securing the New EFA;

     (g)  there occurs with respect to Indebtedness (other than the New MEFA or
the New EFA) of any Restricted Group Member having an outstanding principal
amount of $10 million or more in the aggregate an event of default that permits
any holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity;

     (h)  any final judgment or order (not fully covered by insurance) for the
payment of money in excess of $10 million, individually or in the aggregate for
all such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered), shall be rendered
against any Restricted Group Member, and shall not be paid or discharged for
any period of 30 consecutive days, unless a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall be in
effect;

     (i)  a court having jurisdiction enters a decree or order for (A) relief in
respect of the Company or any Significant Group Member in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Group Member or for all or substantially all of the property and
assets of the Company or any Significant Group Member or (C) the winding up or
liquidation of the affairs of the Company or any Significant Group Member and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days;

     (j)  the Company or any Significant Group Member (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Group Member
or for all or substantially all of the property and assets of the Company or
any Significant Group Member or (C) effects any general assignment for the
benefit of creditors; or

     (k)  actual invalidity (or the assertion hereof by any Restricted Group
Member) of any Note Guarantee, Lien, priority status or the benefits of
subordination of other claims in respect of the Notes resulting from acts or
omissions of any Restricted Group Member, other than in accordance with the
terms hereof or thereof.

     SECTION 6.02 Acceleration.

     If an Event of Default (other than an Event of Default specified in clause
(i) or (j) of Section 6.01 above that occurs with respect to the Company or any
Significant Group Member) exists under this Indenture, the Trustee or the
Holders of at least 25% in aggregate Accreted Value amount of the Notes, then
outstanding, by written notice to the Company (and to the

51

 

Trustee if such notice is given by the Holders), may, and the Trustee at
the request of such Holders shall, declare the Accreted Value of, premium, if
any, and accrued interest on the Notes to be immediately due and payable. Upon
such a declaration of acceleration, such Accreted Value of, premium, if any,
and accrued interest shall be immediately due and payable. If an Event of
Default set forth in clause (e) above exists, such Event of Default shall be
automatically rescinded and annulled if, prior to acceleration of the Notes
under this Section 6.02, the event of default triggering such Event of Default
pursuant to clause (e) shall be cured by the relevant Restricted Group Member
or waived by the requisite holders of the relevant Indebtedness within 60 days
after the occurrence thereof. If an Event of Default specified in clause (i)
or (j) above exists with respect to the Company, or Indebtedness under the New
MEFA or New EFA shall have been accelerated prior to its Stated Maturity, the
Accreted Value of, premium, if any, and accrued interest on the Notes then
outstanding shall automatically become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in Accreted Value amount of the outstanding
Notes by written notice to the Company and to the Trustee, may waive all past
Defaults and rescind and annul such declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the non-payment
of the Accreted Value of, premium, if any, and accrued interest on the Notes
that have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 6.04 or the third sentence of this
paragraph and (ii) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction.

     SECTION 6.03 Other Remedies.

     If an Event of Default exists, subject to the terms of the Intercreditor
Agreement, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of Accreted Value of, premium, if any, or
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture. The Trustee may maintain a proceeding or claim even
if it does not possess any of the Notes or does not produce any of them in the
proceeding.

     SECTION 6.04 Waiver of Past Defaults.

     Subject to Sections 6.02, and 6.07 and 11.01, the Holders, by the Required
Consent, by written notice to the Company and the Trustee, may waive an
existing Default or Event of Default and its consequences, except a Default in
the payment of Accreted Value of, premium, if any, or interest on any Note as
specified in clause (a), (b) or (c) of Section 6.01 or in respect of a covenant
or provision of this Indenture that cannot be modified or amended without the
consent of the holder of each outstanding Note affected. Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.

52

 

     SECTION 6.05 Control by Majority.

     The Holders, by the Required Consent, may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture,
that may involve the Trustee in personal liability, unless the Trustee has been
provided reasonable indemnity against any loss of expense caused by its
following such direction or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders not joining in the giving of such
direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders.

     SECTION 6.06 Limitation on Suits.

     A Holder may not institute any proceeding, judicial or otherwise, with
respect to this Indenture or the Notes, or for the appointment of a receiver or
trustee, or for any other remedy hereunder unless:

	(i) such Holder has previously given the Trustee written notice of a
continuing Event of Default;
	 
	(ii) the Holders of at least 25% in aggregate Accreted Value of
outstanding Notes have made a written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
	 
	(iii) such Holder or Holders have offered the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liabilities or
expenses to be incurred in compliance with such request;
	 
	(iv) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of indemnity and has failed to
institute any such proceeding; and
	 
	(v) during such 45-day period, the Holders of a majority in aggregate
Accreted Value of the outstanding Notes do not give the Trustee a
direction that is inconsistent with such written request

     For purposes of Section 6.05 of this Indenture and this Section 6.06, the
Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate Accreted Value of outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture
or the Notes or otherwise under the law. A Holder may not use this Indenture
to prejudice the rights of another Holder or to obtain a preference or priority
over such other Holder.

     SECTION 6.07 Rights of Holders to Receive Payment.

     Notwithstanding any other provision of this Indenture, including Section
6.06, the right of any Holder of a Note to receive payment of the Accreted
Value of, premium, if any, or interest on, such Note or to bring suit for the
enforcement of any such payment, on or after the Stated

53

 

Maturity therefor, is absolute and unconditional and shall not be impaired
or affected without the consent of such Holder.

     SECTION 6.08 Collection Suit by Trustee.

     If an Event of Default in payment of Accreted Value, premium, if any, or
interest specified in clause (a), (b) or (c) of Section 6.01 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor of the Notes for the
whole amount of Accreted Value, premium, if any, and accrued interest remaining
unpaid, together with interest on overdue Accreted Value, premium, if any, and,
to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate specified in the Notes, and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

     SECTION 6.09 Trustee May File Proofs of Claim.

     The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07) and the Holders allowed in any judicial proceedings
relative to the Company or any other obligor of the Notes, their creditors or
their property and shall be entitled and empowered to collect and receive any
monies, securities or other property payable or deliverable upon conversion or
exchange of the Notes or upon any such claims and to distribute the same, and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and if the Trustee consents to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to
empower the Trustee to authorize or consent to, or accept or adopt on behalf of
any Holder, any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

     SECTION 6.10 Priorities.

     If the Trustee collects any money pursuant to this Article Six and the Intercreditor Agreement, it shall
pay out the money in the following order: First: to the Trustee for all amounts
due under Section 7.07; Second: if the Holders are forced to proceed against
any Restricted Group Member without the Trustee, to the Holders for their costs
in so doing; Third: to the Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for interest; Fourth: to the Holders for Accreted Value
(including any premium) owing under the Notes, ratably without preference or
priority of any kind according to the amounts due and payable on the Notes for
Accreted Value, and all applicable premium and Fifth: to the Company or any
other obligors of the Notes, as their interests may appear, or as a court of

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competent jurisdiction may direct. The Trustee, upon prior written notice
to the Company, may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.

     SECTION 6.11 Undertaking for Costs.

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

     SECTION 6.12 Restoration of Rights and Remedies.

     If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then, and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Company, Trustee and the Holders shall continue
as though no such proceeding had been instituted.

     SECTION 6.13 Rights and Remedies Cumulative.

     Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Notes in Section 2.09, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

     SECTION 6.14 Delay or Omission Not Waiver.

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

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ARTICLE SEVEN

TRUSTEE

     SECTION 7.01 General.

     (a)  The duties and responsibilities of the Trustee shall be as provided by
the TIA and as set forth herein. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Article Seven.

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

     (c)  Except during the continuance of an Event of Default, (1) the Trustee
need perform only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture
against the Trustee; and (2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the trust of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but if any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether they conform to the
requirements of this Indenture.

     (d)  No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, its own bad faith or its own willful misconduct,
except that: (1) this paragraph does not limit the effect of paragraph (c) of
this Section 7.01; (2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee
shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to Section
6.05.

     SECTION 7.02 Certain Rights of Trustee.

     Subject to TIA Sections 315(a) through (d):

		
	 	        (1) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document;

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	 	        (2) before the Trustee acts or refrains from acting, it may require
an Officers’ Certificate or an Opinion of Counsel, which shall conform to
Sections 12.03 and 12.04. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such certificate
or opinion;
	 
	 	        (3) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent
appointed with due care; the Trustee shall not be liable to any person
for special, indirect, consequential or punitive damages for any lost
profits;
	 
	 	        (4) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with
such request or direction; any permissive right or power available to the
Trustee under this Indenture shall not be construed to be a mandatory
duty or obligation;
	 
	 	        (5) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it reasonably believes to be authorized or
within its rights or powers or for any action it takes or omits to take
in accordance with the direction of the Holders of a majority in
principal amount of the outstanding Notes relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture, provided, that the Trustee’s conduct does not
constitute negligence or bad faith;
	 
	 	        (6) the Trustee may consult with counsel, and the written advice of
such counsel as evidenced by an Opinion of Counsel will be full and
complete authrorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and reliance thereon;
and
	 
	 	        (7) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company personally or by agent or attorney.

     SECTION 7.03 Individual Rights of Trustee.

     The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not the Trustee. Any Agent may
do the same with like rights. However, the Trustee is subject to and shall
comply with TIA Sections 310(b) and 311. The terms “cash transaction” and
“self-liquidating paper” have the meanings given to them in Rule 11b-4 and
11b-6, respectively, promulgated under the TIA.

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     SECTION 7.04 Trustee’s Disclaimer.

     The Trustee (i) makes no representation as to the validity or adequacy of
this Indenture or the Notes, (ii) shall not be accountable for the Company’s
use or application of the proceeds from the Notes and (iii) shall not be
responsible for any statement in the Notes other than its certificate of
authentication.

     SECTION 7.05 Notice of Default.

     (a)  If any Default or any Event of Default occurs and is continuing and if
such Default or Event of Default is known to the Trustee, the Trustee shall
mail to each Holder of record in the manner and to the extent provided in TIA
Section 313(c): (i) notice of the Default or Event of Default within 30 days
after it occurs, unless such Default or Event of Default has been cured; (ii)
prompt notice of any declaration of acceleration or any other remedy pursued by
the Trustee with respect to the Default or Event of Default; and (iii) prompt
notice of any other consequences known to the Trustee of the Default of Event
of Default. Notwithstanding the foregoing, except in the case of a default in
the payment of the Accreted Value of, premium, if any, or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders.

     (b)  The Trustee shall not be deemed to have notice of any Default unless
an officer of the Trustee has actual knowledge thereof, or unless written
notice of any event which is in fact such a Default is received by the Trustee,
and such notice references the Notes and this Indenture.

     (c)  Notices under this Section 7.05 will be given (i) to Holders as of a
record date chosen by the Trustee with respect to the Event of Default and (ii)
in the manner and to the extent provided in TIA Section 313(c).

     SECTION 7.06 Reports by Trustee to Holders.

     (a)  Within 60 days after each November 1, beginning with November 1, 2003,
the Trustee shall mail to each Holder as provided in TIA Section 313(c) a brief
report dated as of such November 1, 2003, if required by TIA Section 313(a).

     (b)  A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the Commission and each securities
exchange, if any, on which the Notes are listed. The Company shall notify the
Trustee in writing if the Notes become listed on any securities exchange.

     SECTION 7.07 Compensation and Indemnity.

     The Company shall pay to the Trustee compensation as agreed in writing for
its services. The compensation of the Trustee shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all reasonable out-of-pocket expenses and advances
incurred or made by the Trustee, including costs and expenses

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related to the Collateral. Such expenses shall include the reasonable
compensation and expenses of the Trustee’s agents and counsel. The Company
shall indemnify the Trustee for, and hold it harmless against, any loss or
liability or expense, including taxes (other than taxes based upon, measured by
or determined by the overall income of the Trustee) incurred by it without
negligence or bad faith on its part in connection with the acceptance or
administration of this Indenture and its rights and duties under this Indenture
and the Notes, including the costs and expenses of defending itself against any
claim or liability and of complying with any process served upon it or any of
its officers in connection with the exercise or performance of any of its
powers or duties under this Indenture and the Notes. The Trustee shall notify
the Company promptly of any claim asserted against the Trustee for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its prior written consent.
The Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct. To secure the Company’s payment obligations in
this Section 7.07, the Trustee shall have a Lien prior to the Notes on all
money or property held or collected by the Trustee, in its capacity as Trustee,
except money or property held in trust to pay Accreted Value of, premium, if
any, and interest on particular Notes. If the Trustee incurs expenses or
renders services in connection with an Event of Default specified in clause (i)
or (j) of Section 6.01, the expenses and the compensation for the services will
be intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the resignation or removal of
any Trustee, the discharge of the Company’s obligations pursuant to Article
Ten, and termination of this Indenture.

     SECTION 7.08 Replacement of Trustee.

     A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08. The Trustee may resign at any
time by so notifying the Company in writing at least 30 days prior to the date
of the proposed resignation. The Holders of a majority in Accreted Value of
the outstanding Notes may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee with the consent of the Company.
The Company may remove the Trustee if: (a) the Trustee fails to comply with
Section 7.10; (b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law; (c) a receiver or other public officer takes charge of the Trustee or its
property; or (d) the Trustee becomes incapable of acting. If a vacancy exists
in the office of Trustee for any reason, the Company shall promptly notify each
Holder of such event and appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in Accreted Value
of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company. If the successor Trustee does not
deliver its written acceptance required by the next sentence of this Section
7.08 within 30 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in Accreted Value
of the outstanding Notes may petition, at the expense of the Company, any court
of competent jurisdiction for the appointment of a successor Trustee. A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after the delivery of such
written acceptance, subject to the

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Lien provided in Section 7.07, (i) the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, (ii) the resignation
or removal of the retiring Trustee shall become effective and (iii) the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Holder. If the Trustee is no longer eligible under Section 7.10, any
Holder who satisfies the requirements of TIA Section 310(b) may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. The Company shall give prompt notice of
any resignation and any removal of the Trustee and each appointment of a
successor Trustee to all Holders. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company’s obligation under Section 7.07 shall continue for the benefit of the
retiring Trustee.

     SECTION 7.09 Successor Trustee by Merger, Etc.

     If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall, if such Person is otherwise eligible hereunder, be the successor Trustee
with the same effect as if the successor Trustee had been named as the Trustee
herein.

     SECTION 7.10 Eligibility.

     This Indenture shall always have a Trustee that satisfies the requirements
of subsections (1), (2) and (5) of TIA Section 310(a). The Trustee must be a
corporation or national banking association organized and doing business under
the laws of the United States or any State thereof, and shall have a combined
capital and surplus of at least $500,000,000 as set forth in its most recent
published annual report of condition.

     SECTION 7.11 Money Held in Trust.

     The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company All moneys
received by the Trustee pursuant hereto shall, until used or applied as herein
provided, be held in trust by the Trustee, but need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article Ten of this Indenture.

     SECTION 7.12 Withholding Taxes.

     The Trustee, as agent for the Company, shall exclude and withhold from
each payment of principal and interest and other amounts due hereunder or under
the Notes any and all withholding taxes applicable thereto as required by law.
The Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Notes, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Holders, that it will file any necessary
withholding tax returns or statements when due. The Company or the Trustee
shall, as promptly as possible after the payment of the taxes described above,
deliver to each Holder appropriate documentation showing the payment

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thereof, together with such additional documentary evidence as such
holders may reasonably request from time to time.

     SECTION 7.13 Engagement of Non-United States Counsel and Certain Waivers
by the Trustee.

     Each Holder of Notes, by its acceptance thereof, consents and agrees to
the Trustee entering into certain engagement letters with non-United States.
counsel in connection with the Collateral Documents and other matters related
to the Collateral pursuant to which engagement letters the Trustee
acknowledges, agrees and waives any conflict of interest that currently exists
by virtue of such counsel’s representation of the Trustee, on the one hand, and
Motorola Credit Corporation and its parent, on the other, and further agrees
that Motorola Credit Corporation and its parent will not be prevented from
exclusively retaining such counsel in the future with respect to legal issues
arising out of the restructuring of Old NII pursuant to the Plan of
Reorganization (including, but not limited to, potential litigation or disputes
arising between Motorola Credit Corporation and its parent, on the one hand,
and the Trustee or any of the Holders, on the other) and that such counsel will
be allowed and authorized by the Trustee to accept any such engagement without
requiring the Trustee’s or any Holder’s further consent or prior notice and
without incurring any liability in doing so. Notwithstanding the foregoing,
such engagement letters shall not constitute a waiver by the Trustee or the
Holders of any claim or cause of action (whether at law or in equity) against,
or other release by the Trustee or the Holders from any liability of, such
non-United States counsel, whether now existing or hereafter arising.
Additionally, such engagement letter shall not permit the use by such
non-United States counsel of any confidential information concerning the
Trustee or the Holders acquired by such non-United States counsel in the course
of its engagement by the Trustee in connection with the Collateral Documents
and other matters related to the Collateral (and not otherwise available from
public sources) in any manner which would be adverse to the interest of the
Trustee or the Holders with respect to any dispute arising between Motorola
Credit Corporation and its parent, on the one hand, and the Trustee or any of
the Holders, on the other; provided, however, that such prohibition shall not
apply to information contained in any documents prepared in connection with the
engagement of such non-United States counsel by the Trustee or any information
acquired by such non-United States counsel by way of three-way communications
among non-United States counsel, Motorola Credit Corporation and the Trustee or
any of the Holders.

     SECTION 7.14 New
Liens.

     If one or more Restricted Group Members Incurs
Liens (“New Liens”) pursuant to Section 4.09(4) in
connection with Guarantees or Indebtedness Incurred pursuant to and
in accordance with Sections 4.03(b)(1), 4.03(b)(6) and 4.07(a) and the
Company requests that the Trustee enter into an amendment to the
Intercreditor Agreement to permit such New Liens to be treated no
more favorable than on parity in all respects with (i) in the case of
all or any portion of the New Liens Incurred with respect to the MEFA
Collateral, the MEFA Obligations, and (ii) in case of all or any
portion of the New Liens Incurred with respect to the EFA Collateral,
the EFA Obligations, the Trustee shall enter into such amendment, and
each Holder of Notes, by its acceptance thereof, consents and agrees
to any such amendment to the Intercreditor Agreement entered into by
the Trustee.

ARTICLE EIGHT

COLLATERAL AND SECURITY

     SECTION 8.01 Collateral Documents.

     The due and punctual payment of the Accreted Value of, premium if any, and
interest on the Notes when and as the same shall be due and payable, whether on
an Interest Payment Date, at maturity, by acceleration, repurchase, redemption
or otherwise, and interest on the overdue principal of and interest on the
Notes and performance of all other obligations of the Company and the
Guarantors, as the case may be, to the Holders or the Trustee under this
Indenture, the

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Notes and the Note Guarantees, according to the terms hereunder or
thereunder, shall be secured, subject to the Intercreditor Agreement, as
provided in the Collateral Documents. Each Holder of Notes, by its acceptance
thereof, consents and agrees to the terms of the Collateral Documents and the
Intercreditor Agreement (including, without limitation, the provisions
providing for foreclosure and release of Collateral) as the same may be in
effect or may be amended from time to time in accordance with its terms,
initially appoints Citibank, N.A. (not in its individual capacity but solely as
Collateral Agent) to act as the “Collateral Agent” thereunder and authorizes
and directs the Collateral Agent to enter into the Collateral Documents and the
Trustee to enter into the Intercreditor Agreement on the terms set forth in the
Collateral Documents and Intercreditor Agreement. The Company shall do or
cause to be done all such acts and things as may be necessary or proper, or as
may be required by the provisions of the Collateral Documents and the
Intercreditor Agreement, to assure and confirm to the Collateral Agent the
security interest in the Collateral contemplated hereby, by the Collateral
Documents or any part thereof, as from time to time constituted, so as to
render the same available for the security and benefit of this Indenture and of
the Notes secured hereby, according to the intent and purposes herein
expressed, subject to the Intercreditor Agreement. The Company shall take, or
shall cause the Guarantors to take, any and all actions reasonably required to
cause the Collateral Documents to create and maintain, as security for the
obligations of the Company and Guarantors hereunder, a valid and enforceable
perfected Lien in and on all the Collateral, in favor of the Collateral Agent,
subject to the terms set forth in the Intercreditor Agreement, superior to and
prior to the rights of all third Persons other than as set forth in the
Intercreditor Agreement and Liens permitted under Section 4.09(4). In the
event of a conflict between this Indenture and the Intercreditor Agreement, the
Intercreditor Agreement shall govern.

     SECTION 8.02 Recording and Opinions.

     (a)  The Company
shall furnish to the Collateral Agent and the Trustee promptly after
the Effective Date and on each anniversary of the Effective Date, an Opinion of
Counsel, dated as of such date, either (i) (A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and re-filing of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien created by the
Collateral Documents and reciting with respect to the security interests in the
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders and the Collateral Agent and the Trustee hereunder and under the
Collateral Documents with respect to the security interests in the Collateral,
or (ii) stating that, in the opinion of such counsel, no such action is
necessary to maintain such Lien and assignment.

     (b) The Company and Guarantors shall otherwise comply with the provisions
of TIA Section 314(b).

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     SECTION 8.03 Release of Collateral.

     (a)  The Collateral Agent may release Collateral from the Lien and security
interest created by the Collateral Documents at any time or from time to time
in accordance with the provisions of the Collateral Documents and the
Intercreditor Agreement.

     (b)  To the extent applicable, the Company shall cause TIA Section 313(b),
relating to reports, and TIA Section 314(d), relating to the release of
property or securities from the Lien and security interest created by the
Collateral Documents and relating to the substitution therefor of any property
or securities to be subjected to the Lien and security interest created by the
Collateral Documents, to be complied with. Any certificate or opinion required
by TIA Section 314(d) may be made by an Officer of the Company except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by
an independent Person, which Person shall be an independent engineer, appraiser
or other expert selected or approved by the Trustee and the Collateral Agent in
the exercise of reasonable care.

     SECTION 8.04 Certificates of the Company.

     If the Company desires release of any Collateral, the Company shall
furnish to the Trustee and the Collateral Agent, prior to each such proposed
release of Collateral pursuant to the Collateral Documents, (i) all documents
required by TIA Section 314(d) and (ii) an Opinion of Counsel, which may be
rendered by internal counsel to the Company, to the effect that such
accompanying documents constitute all documents required by TIA Section 314(d).
The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of Counsel.

     SECTION 8.05 Certificates of the Trustee.

     If the Company desires to release Collateral in accordance with the
Collateral Documents and the Intercreditor Agreement and has delivered or
caused to be delivered the certificates and documents required by the
Collateral Documents and the Intercreditor Agreement and Sections 8.03 and 8.04
hereof, the Trustee shall, upon receipt of such documentation and based on the
Opinion of Counsel delivered pursuant to Section 8.02, deliver a certificate to
the Collateral Agent confirming receipt of such documentation and Opinion of
Counsel; provided, however, that if the Trustee is the Collateral Agent, the
requirement that the Trustee deliver a certificate to the Collateral Agent
shall not be applicable.

     SECTION 8.06 Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents.

     Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders, and shall,
upon Required Consent from the Holders, direct the Collateral Agent to take all
actions it deems necessary or appropriate to (a) enforce any of the terms of
the Collateral Documents and (b) collect, receive and distribute any and all
amounts payable in respect of the obligations of the Company and the Guarantors
hereunder, subject to the terms of the Intercreditor Agreement. The Trustee
shall have power to institute and maintain such suits and proceedings as it may
deem expedient to prevent any

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impairment of the Collateral by any acts that may be unlawful or in
violation of the Collateral Documents or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders in the Collateral (including power
to institute and maintain suits or proceedings to restrain the enforcement of
or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or of the
Trustee).

     SECTION 8.07 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.

     The Trustee is authorized to receive any funds for the benefit of the
Holders and to make further distributions of such funds to the Holders
according to the provisions of this Indenture.

     SECTION 8.08 Termination of Security Interest.

     If the Trustee is not the Collateral Agent, upon the cash payment in full
of all obligations of the Company and Guarantors under this Indenture, the
Notes and Note Guarantees, or upon defeasance in accordance with this
Indenture, the Trustee shall, at the request of the Company deliver a
certificate to the Collateral Agent stating that such obligations have been
paid in full, and instruct the Collateral Agent to release the Liens securing
the obligations of the Company and Guarantors hereunder pursuant to this
Indenture and the Collateral Documents.

ARTICLE NINE

NOTE GUARANTEES

     SECTION 9.01 Guarantee.

     (a)  Subject to the provisions of this Article 9, each of the Guarantors
hereby, jointly and severally, unconditionally guarantees to the Collateral Agent on behalf of each Holder of
Notes and to the Trustee, irrespective of the validity and enforceability of
this Indenture, the Collateral Documents, the Notes or the obligations of the
Company hereunder or thereunder, that: (a) the principal of, premium, if any,
and interest on the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and in accordance with the terms and conditions of the Intercreditor Agreement; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately or perform the same
immediately, as the case may be. Each Guarantor agrees that this is a
guarantee of payment and performance and not merely a guarantee of collection.

     (b)  The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this

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Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance that might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever and
covenant that this Note Guarantee shall not be discharged except by complete
payment and performance of the obligations contained in the Notes and this
Indenture.

     (c)  If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

     (d)  Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment and performance in full of all obligations guaranteed
hereby. Each Guarantor further agrees that, as between the Guarantors, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article
6 hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Note Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantees.

     SECTION 9.02 Limitation on Guarantor Liability.

     Each Guarantor, and by its acceptance of Notes each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee
of such Guarantor not constitute a fraudulent transfer or conveyance for
purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
United States Uniform Fraudulent Transfer Act or any similar law of any
jurisdiction to the extent applicable to any Note Guarantee. To effectuate the
foregoing intention, the Trustee, the Holders and the Guarantors hereby
irrevocably agree that the obligations of each Guarantor hereunder shall (after
giving effect to all other contingent and fixed liabilities of such Guarantor
that are relevant under such laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
this Article 9) not exceed the lowest amount which would cause such Guarantor’s
Note Guarantee to be a fraudulent transfer or conveyance.

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     SECTION 9.03 Execution and Delivery of Note Guarantee.

     (a)  If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates the Note on which a Note
Guarantee is endorsed, the Note Guarantee shall be valid nevertheless.

     (b)  The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set
forth in this Indenture on behalf of the Guarantors.

     (c)  Each Restricted Group Member other than the Company and Excluded
Entities shall execute supplemental indentures to this Indenture and Note
Guarantees in accordance with Section 4.20 hereof and this Article 9, to the
extent applicable and execute the Collateral Documents and such other documents
and instruments in connection with the Collateral Documents and the Collateral
as the Trustee or the Collateral Agent shall reasonably request or as are
otherwise required by any such documents.

     SECTION 9.04 Guarantors May Consolidate, etc., on Certain Terms.

     (a)  Except as otherwise provided in Section 9.05 and Article 5, no
Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to, another Person (other than the Company or a Guarantor) whether or not
affiliated with such Guarantor unless:

	(i) subject to Section 9.05 hereof, the Person formed by or surviving any
such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant
to a supplemental indenture in form and substance reasonably satisfactory
to the Trustee, under the Notes and the Indenture;
	 
	(ii) immediately after giving effect to such transaction, on a pro forma
basis (and treating any Indebtedness that becomes an obligation of the
resulting, surviving or transferee Person as a result of such transaction
as having been issued by such Person at the time of such transaction) no
Default or Event of Default exists; and
	 
	(iii) the Company delivers to the Trustee an Officers’ Certificate
stating that such consolidation, merger or transfer and its Note
Guarantee, if any, complies with this Indenture.

     (b)  In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental Indenture or Note
Guarantee, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the Note Guarantee, and the due and punctual performance of all
of the covenants and conditions of this Indenture and the Notes to be performed
by the Guarantor, such successor Person shall succeed to and be substituted for
the Guarantor with the same effect as if it had been named herein as a
Guarantor. Such successor Person thereupon may cause to be signed any or all
of the Note Guarantees or supplemental indentures in respect thereof. All the
Note Guarantees so issued shall in all

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respects have the same legal rank and benefit under this Indenture as the
Note Guarantees theretofore and thereafter issued in accordance with the terms
of this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.

     (c)  Except as set forth in Article 4 and Article 5 hereof, and
notwithstanding Sections 9.04(a)(i) and (a)(ii) above, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

     SECTION 9.05 Releases Following Sale of Assets.

     (a)  In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor other than NII, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor other than NII, in each case to a Person that is
not (either before or after giving effect to such transactions) the Company or
another Guarantor and in each case subject to compliance with the provisions of
this Indenture, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the
Capital Stock of such Guarantor) or the Person acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of such Guarantor) shall be released and relieved of any obligations under its
Note Guaranty. Upon delivery by the Company to the Trustee of an Officers’
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made in accordance with the provisions of this Indenture
(including without limitation Section 4.10 hereof), the Trustee shall execute
any documents reasonably required to evidence the release of any Guarantor from
its obligations under its Note Guarantee.

     (b)  Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of Accreted Value of,
premium, if any, and interest on the Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Article 9.

     SECTION 9.06 Intercreditor Agreement.

     Notwithstanding anything to the contrary contained herein, the Note
Guarantees are subject to the provisions of the Intercreditor Agreement, and,
in the event of a conflict between the provisions of the Note Guarantees and
the Intercreditor Agreement, the Intercreditor Agreement shall govern.

ARTICLE TEN

DISCHARGE OF INDENTURE

     SECTION 10.01 Termination of Company’s Obligations.

     Except as otherwise provided in this Section 10.01, this Indenture will be
discharged and will cease to have any force or effect as to the Notes when:

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	 	        (1) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 10.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
	 
	 	        (2) (A) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption, (B) the Company
irrevocably deposits in trust with the Trustee during such one-year
period, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the
benefit of the Holders for that purpose, money or U.S. Government
Obligations sufficient (in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee), without consideration of any
reinvestment of any interest thereon, to pay principal, premium, if, any,
and interest on the Notes to maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder, (C) no Default or
Event of Default with respect to the Notes shall exist on the date of
such deposit, (D) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement
or instrument to which the Company is a party or by which it is bound and
(E) the Company has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
	 
	 	        (3) With respect to the foregoing clause (1), the Company’s
obligations under Section 7.07 shall survive.With respect to the
foregoing clause (2), the Company’s obligations in Sections 2.02, 2.03,
2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 10.04,
10.05 and 10.06 shall survive until the Notes are no longer outstanding.
Thereafter, only the Company’s obligations in Sections 7.07, 10.05 and
10.06 shall survive. After any such irrevocable deposit, the Trustee
upon request shall acknowledge in writing the discharge of the Company’s
obligations under the Notes and this Indenture except for those surviving
obligations specified above.

     SECTION 10.02 Defeasance and Discharge of Indenture.

     The Company will be deemed to have paid and will be discharged from any
and all obligations in respect of the Notes on the 123rd day after the date of
the deposit referred to in clause (A) of this Section 10.02, and the provisions
of this Indenture will no longer be in effect with respect to the Notes, and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same, except as to (i) rights of registration of transfer and
exchange, (ii) substitution of apparently mutilated, defaced, destroyed, lost
or stolen Notes, (iii) rights of Holders to receive payments of principal
thereof and interest thereon, (iv) the Company’s obligations under Section
4.02, (v) the rights, obligations and immunities of the Trustee hereunder and
(vi) the rights of the Holders as beneficiaries of this Indenture with respect
to the property so deposited with the Trustee payable to all or any of them;
provided, that the following conditions shall have been satisfied: (A) with
reference to this Section 10.02, the

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Company has irrevocably deposited or caused to be irrevocably deposited
with the Trustee (or another trustee satisfying the requirements of Section
7.10 of this Indenture) and conveyed all right, title and interest for the
benefit of the Holders, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee as trust funds in trust,
specifically pledged to the Trustee for the benefit of the Holders as security
for payment of the Accreted Value of, premium, if any, and interest, if any, on
the Notes, and dedicated solely to, the benefit of the Holders, in and to (1)
money in an amount, (2) U.S. Government Obligations that, through the payment
of interest, premium, if any, and principal in respect thereof in accordance
with their terms, will provide, not later than one day before the due date of
any payment referred to in this clause (A), money in an amount or (3) a
combination thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment of all
federal, state and local taxes or other charges and assessments in respect
thereof payable by the Trustee, the Accreted Value of, premium, if any, and
accrued interest on the outstanding Notes at the Stated Maturity of such
principal or interest; provided, that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S. Government
Obligations to the payment of such principal, premium, if any, and interest
with respect to the Notes; (B) such deposit will not result in a breach or
violation of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it is
bound; (C) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall exist on the date of such deposit
or during the period ending on the 123rd day after such date of deposit; (D)
the Company shall have delivered to the Trustee (1) either (x) a ruling
directed to the Trustee received from the United States Internal Revenue
Service to the effect that the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of the Company’s exercise of its
option under this Section 10.02 and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have been
the case if such option had not been exercised or (y) an Opinion of Counsel to
the same effect as the ruling described in clause (x) above accompanied by a
ruling to that effect published by the United States Internal Revenue Service,
unless there has been a change in the applicable federal income tax law since
the date of this Indenture such that a ruling from the United States Internal
Revenue Service is no longer required and (2) an Opinion of Counsel to the
effect that (x) the creation of the defeasance trust does not violate the
United States Investment Company Act of 1940 and (y) after the passage of 123
days following the deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an “insider” for purposes of the
United States Bankruptcy Code, after one year following the deposit), the trust
funds will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case
commenced by or against the Company under either such statute, and either (I)
the trust funds will no longer remain the property of the Company (and
therefore will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally) or (II) if a court were to rule under any such law in any case or
proceeding that the trust funds remained property of the Company, (a) assuming
such trust funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise except for the effect of
Section 552(b) of the United States Bankruptcy

69

 

Code on interest on the trust funds accruing after the commencement of a
case under such statute and (b) the Holders will be entitled to receive
adequate protection of their interests in such trust funds if such trust funds
are used in such case or proceeding; (E) if the Notes are then listed on a
national securities exchange, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that such deposit defeasance and discharge
will not cause the Notes to be delisted; and (F) the Company has delivered to
the Trustee an Officers’ Certificate and an Opinion of Counsel, in each case
stating that all conditions precedent provided for herein relating to the
defeasance contemplated by this Section 10.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one year)
period referred to in clause (D)(2)(y) of this Section 10.02, none of the
Company’s obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section
10.02, the Company’s obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 10.05 and 10.06 shall survive
until the Notes are no longer outstanding. Thereafter, only the Company’s
obligations in Sections 7.07, 10.05 and 10.06 shall survive. If and when a
ruling from the United States Internal Revenue Service or an Opinion of Counsel
referred to in clause (D)(1) of this Section 10.02 is able to be provided
specifically without regard to, and not in reliance upon, the continuance of
the Company’s obligations under Section 4.01, then the Company’s obligations
under such Section 4.01 shall cease upon delivery to the Trustee of such ruling
or Opinion of Counsel and compliance with the other conditions precedent
provided for herein relating to the defeasance contemplated by this Section
10.02. After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company’s obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.

     SECTION 10.03 Defeasance of Certain Obligations.

     The Company may omit to comply with any term, provision or condition set
forth in clauses (3) and (4) under Section 5.01 and Sections 4.03 through 4.17
and Section 4.19, clauses (c) and (d) under Section 6.01 with respect to such
clauses (3) and (4) under Section 5.01 and Sections 4.03 through 4.17 and
Section 4.19, and clauses (e) and (f) under Section 6.01 shall be deemed not to
be Events of Default, in each case with respect to the outstanding Notes if:
(1) with reference to this Section 10.03, the Company has irrevocably deposited
or caused to be irrevocably deposited with the Trustee (or another trustee
satisfying the requirements of Section 7.10) and conveyed all right, title and
interest to the Trustee for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the Trustee
as trust funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the Accreted Value of, premium, if any,
and interest, if any, on the Notes, and dedicated solely to, the benefit of the
Holders, in and to (A) money in an amount, (B) U.S. Government Obligations
that, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide, not later than one day before the
due date of any payment referred to in this clause (1), money in an amount or
(C) a combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in respect
thereof payable by the Trustee, the principal of, premium, if any, and interest
on the outstanding Notes on the Stated Maturity of such Accreted Value or
interest; provided, that the Trustee shall have been

70

 

irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of such principal, premium, if any, and
interest with respect to the Notes; (2) such deposit will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound; (3) no Default or Event of Default shall exist on the date of such
deposit; (4) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not violate the
United States Investment Company Act of 1940, (B) the Holders have a valid
first-priority security interest in the trust funds, (C) the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain obligations and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred and (D) after the passage of 123 days following the deposit (except,
with respect to any trust funds for the account of any Holder who may be deemed
to be an “insider” for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code or Section 15 of the New
York Debtor and Creditor Law in a case commenced by or against the Company
under either such statute, and either (1) the trust funds will no longer remain
the property of the Company (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally) or (2) if a court were to rule under any such law
in any case or proceeding that the trust funds remained property of the
Company, (x) assuming such trust funds remained in the possession of the
Trustee prior to such court ruling to the extent not paid to the Holders, the
Trustee will hold, for the benefit of the Holders, a valid and perfected
security interest in such trust funds that is not avoidable in bankruptcy or
otherwise (except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the commencement
of a case under such statute), (y) the Holders will be entitled to receive
adequate protection of their interests in such trust funds if such trust funds
are used in such case or proceeding and (z) no property, rights in property or
other interests granted to the Trustee or the Holders in exchange for, or with
respect to, such trust funds will be subject to any prior rights of holders of
other Indebtedness of the Company or any of its Subsidiaries; (5) if the Notes
are then listed on a national securities exchange, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that such deposit
defeasance and discharge will not cause the Notes to be delisted; and (6) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, in each case stating that all conditions precedent provided for herein
relating to the defeasance contemplated by this Section 10.03 have been
complied with.

     SECTION 10.04 Application of Trust Money; Miscellaneous.

     Subject to Section 10.06, the Trustee or Paying Agent shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to Section
10.01, 10.02 or 10.03, as the case may be, and shall apply the deposited money
and the money from U.S. Government Obligations in accordance with the Notes and
this Indenture to the payment of Accreted Value of, premium, if any, and
interest on the Notes; but such money need not be segregated from other funds
except to the extent required by law. The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 10.01, 10.02 or 10.03
or the principal and interest received in

71

 

respect thereof other than any such tax, fee or other charge which by law
is for the account of the Holders of outstanding Notes.

     SECTION 10.05 Repayment to Company.

     Subject to Sections 7.07, 10.01, 10.02 and 10.03, the Trustee and the
Paying Agent shall promptly pay to the Company upon request set forth in an
Officers’ Certificate any excess money held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of Accreted Value, premium, if any, or interest
that remains unclaimed for two years; provided, that the Trustee or such Paying
Agent before being required to make any payment may cause to be published at
the expense of the Company once in a newspaper of general circulation in the
City of New York or mail to each Holder entitled to such money at such Holder’s
address (as set forth in the Note Register) notice that such money remains
unclaimed and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of
such money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.

     SECTION 10.06 Reinstatement.

     If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 10.01, 10.02 or 10.03, as the
case may be, by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 10.01, 10.02 or 10.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with Section 10.01, 10.02 or
10.03, as the case may be; provided, that, if the Company has made any payment
of Accreted Value of, premium, if any, or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.

ARTICLE ELEVEN

AMENDMENTS, SUPPLEMENTS AND WAIVERS

     SECTION 11.01 Without Consent of Holders.

     The Company, when authorized by a resolution of its Board of Directors,
and the Trustee may amend or supplement this Indenture or the Notes without
notice to or the consent of any Holder:

		
	 	        (1) to cure any ambiguity, defect or inconsistency in this
Indenture; provided, that such amendments or supplements shall not
adversely affect the interests of the Holders in any material respect;

72

 

		
	 	        (2) to comply with Article Five;
	 
	 	        (3) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
	 
	 	        (4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
	 
	 	        (5) to make any change that, in the good faith opinion of the Board
of Directors of NII as evidenced by a Board Resolution of NII, does not
adversely affect the rights of any Holder.

     SECTION 11.02 With Consent of Holders.

     Subject to Sections 6.04 and 6.07, the Company, when authorized by its
Board of Directors (as evidenced by a Board Resolution of the Company), and the
Trustee may amend this Indenture and the Notes with the Required Consent.
Notwithstanding the provisions of this Section 11.02, without the consent of
each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 6.04, may not:

		
	 	        (1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note or alter the redemption provisions
with respect thereto;
	 
	 	        (2) reduce the Accreted Value of, or premium, if any, or interest
on, any Note;
	 
	 	        (3) change the place or currency of payment of Accreted Value of, or
premium, if any, or interest on, any Note or adversely affect any right
of repayment at the option of any Holder of any Note;
	 
	 	        (4) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
	 
	 	        (5) reduce the above-stated percentage of outstanding Notes the
consent of whose Holders is necessary to modify or amend this Indenture;
	 
	 	        (6) waive a Default in the payment of Accreted Value of, premium, if
any, or interest on the Notes;
	 
	 	        (7) modify any of the provisions of this Section 11.02, Section 6.04
or Section 6.07, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Note
affected thereby;
	 
	 	        (8) reduce the percentage or aggregate Accreted Value amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with provisions of this Indenture or for waiver of certain
defaults;

73

 

		
	 	        (9) amend, alter, change or modify the obligation of the Company to
make and consummate an Offer to Purchase in the event of a Change of
Control or Asset Sale or modify any of the provisions or definitions with
respect thereto;
	 
	 	        (10) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes;
	 
	 	        (11) release all or substantially all Guarantors and other
guarantors, if any, from guarantees of the Indebtedness evidenced by the
Notes; or
	 
	 	        (12) release all or substantially all Collateral.

     It shall not be necessary for the consent of the Holders under this
Section 11.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof. After an amendment, supplement or waiver under this Section
11.02 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing the amendment, supplement or waiver. The Company
will mail supplemental indentures to Holders upon request. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.

     SECTION 11.03 Revocation and Effect of Consent.

     Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by such Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the Note
of the consenting Holder, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as
to such Holder’s Note or portion of Holder’s Note. Such revocation shall be
effective only if the Trustee receives the notice of revocation before the date
the amendment, supplement or waiver becomes effective. An amendment,
supplement or waiver shall become effective on receipt by the Trustee of
written consents from the Holders of the requisite percentage in Accreted Value
amount of the outstanding Notes. The Company may, but shall not be obligated
to, fix a record date for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver. If a record date is fixed,
then, notwithstanding the second and third sentences of this paragraph, those
Persons who were Holders at such record date (or their duly designated proxies)
and only those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind every
Holder unless it is of the type described in any of clauses (1) through (12) of
Section 11.02. In case of an amendment or waiver of the type described in
clauses (1) through (12) of Section 11.02, the amendment or waiver shall bind
each Holder who has consented to it and every subsequent Holder of a Note that
evidences the same indebtedness as the Note of the consenting Holder.

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     SECTION 11.04 Notation on or Exchange of Notes.

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

     SECTION 11.05 Trustee to Sign Amendments, Etc.

     The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this is authorized or
permitted by this Indenture. Subject to the preceding sentence, the Trustee
shall sign such amendment, supplement or waiver if the same does not adversely
affect the rights of the Trustee. The Trustee may, but shall not be obligated
to, execute any such amendment, supplement or waiver that adversely affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise.

     SECTION 11.06 Conformity with Trust Indenture Act.

     Every amendment of or supplemental indenture or waiver executed pursuant
to this Indenture shall conform to the requirements of the TIA as then in
effect.

ARTICLE TWELVE

MISCELLANEOUS

     SECTION 12.01 Table of Contents, Headings, Etc.

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

     SECTION 12.02 Notices.

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

		
	 	        (1) if to any Restricted Group Member or any Guarantor: NII
Holdings, Inc., 10700 Parkridge Boulevard Suite 600, Reston, Virginia
20191 Attention: President, copy to Chief Financial Officer; and
	 
	 	        (2) if to the Trustee: Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Kristin Long, Fax: 302-636-4143.

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

75

 

Holder shall be mailed to such Holder at such Person’s address as it
appears on the Note Register by first class mail, postage pre-paid, and shall
be sufficiently given to such Person if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders. Except for a notice to the Trustee, which is
deemed given only when received, and except as otherwise provided in this
Indenture, if a notice or communication is mailed in the manner provided in
this Section 12.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder.

     SECTION 12.03 Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee: (1) an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and (2) an Opinion of Counsel stating
that, in the opinion of such Counsel, all such conditions precedent have been
complied with.

     SECTION 12.04 Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

		
	 	        (1) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
	 
	 	        (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
	 
	 	        (3) a statement that, in the opinion of each such Person, he or she
has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
	 
	 	        (4) a statement as to whether, in the opinion of each such Person,
such condition or covenant has been complied with; provided, however,
that, with respect to matters of fact, an Opinion of Counsel may rely on
an Officers’ Certificate or certificates of public officials.

76

 

     SECTION 12.05 Rules by Trustee, Paying Agent or Registrar.

     The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.

     SECTION 12.06 Payment Date Other Than a Business Day.

     If an Interest Payment Date, Redemption Date, Payment Date, Stated
Maturity or date of maturity of any Note shall not be a Business Day, then
payment of Accreted Value of, premium, if any, or interest on such Note, as the
case may be, need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Payment Date, or Redemption Date, or at the Stated
Maturity or date of maturity of such Note; provided, that, if such payment is
duly and timely made, no interest shall accrue for the period from and after
such Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or
date of maturity, as the case may be.

     SECTION 12.07 Governing Law.

     The laws of the State of New York shall govern this Indenture and the
Notes. The Trustee, the Company and the Holders agree to submit to the
jurisdiction of the courts of (or federal courts located in) the State of New
York in any action or proceeding arising out of or relating to this Indenture
or the Notes.

     SECTION 12.08 No Adverse Interpretation of Other Agreements.

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

     SECTION 12.09 Venue and Jurisdiction.

     Each of the Company and the Guarantors irrevocably (a) agrees that any
legal suit, action or proceeding arising out of or based upon this Indenture,
the Notes issued hereunder or the Note Guarantees may be instituted in any
federal or state court located in the City of New York, (b) waives, to the
fullest extent it may effectively do so, any objection that it may now or
hereafter have to the laying of venue of any such proceeding, and (c) submits
to the nonexclusive jurisdiction of such courts in any such suit, action or
proceeding. The Company and the Guarantors have appointed CT Corporation
System, 111th 8th Avenue, New York, New York, 10011, as their authorized agent
(the “Authorized Agent”) upon whom process may be served in any suit, action or
proceeding arising out of or based on this Indenture, the Notes or the Note
Guarantees that may be instituted in any federal or state court located in the
City of New York, expressly consents to the jurisdiction of any such court in
respect of any suit, action or proceeding, and waives any other requirements of
or objections to personal jurisdiction with respect thereto. Such appointment
shall be irrevocable. The Company and the Guarantors agree to take any and all
action, including the filing of any and all documents and instruments, that may
be necessary to continue such appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent and written notice of
such service to the Company shall be deemed, in every respect, effective
service of process upon the Company and the Guarantors.

77

 

     SECTION 12.10 Successors.

     All agreements of the Company and the Subsidiary Guarantors contained in
this Indenture and the Notes shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.

     SECTION 12.11 Duplicate Originals.

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

     SECTION 12.12 Separability.

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

     SECTION 12.13 Trust Indenture Act Controls.

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

     SECTION 12.14 Communication Among Holders.

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

     SECTION 12.15 Acts of Holders.

     (a)  Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by the Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agents duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Company and the
Guarantors. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the “Act” of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee, the
Company and the Guarantors, if made in the manner provided in this Section
12.15.

     (b)  The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary or officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of

78

 

authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.

     (c)  Except as set forth in Section 7.05, if the Company shall solicit from
the Holders of the Notes any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or pursuant to
a resolution of its Board of Directors, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. Notwithstanding TIA Section 316(c), such record date
shall be the record date specified in or pursuant to such resolution, which
shall be a date not earlier than the date 30 days prior to the first
solicitation of Holders generally in connection therewith or the date of the
most recent list of Holders forwarded to the Trustee prior to such solicitation
and not later than the date such solicitation is completed. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of the then outstanding Notes have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the then outstanding Notes shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.

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

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

79

 

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

[Remainder of the page intentionally left blank, Signatures to follow]

80

 

	 	 	 	 
	Trustee:	 	WILMINGTON TRUST COMPANY	 
	 
	 	 	By: /s/ Michael Diaz
	 
	 	 	Name: Michael Diaz	 
	 	 	Title: Authorized Signer	 
	 	 	 	 

81

 

	 	 	 	 
	 	
NII HOLDINGS (CAYMAN), LTD.	 
	 	 	
NII HOLDINGS, INC.	 
	 	 	
NEXTEL INTERNATIONAL (SERVICES), LTD.	 
	 	 	
NEXTEL INTERNATIONAL INVESTMENT COMPANY	 
	 	 	
MCCAW INTERNATIONAL (BRAZIL), LTD.	 
	 	 	
AIRFONE HOLDINGS, INC.	 
	 	 	
NEXTEL INTERNATIONAL (MEXICO), LTD.	 
	 	 	
NEXTEL INTERNATIONAL (URUGUAY), LTD.	 
	 	 	
NEXTEL INTERNATIONAL (INDONESIA) LLC	 
	 	 	
NEXTEL INTERNATIONAL (PERU) LLC	 
	 
	 	 	By: /s/ Robert J.
Gilker
	 
	 	 	      ROBERT J.
GILKER	 
	 	 	      VICE PRESIDENT	 
	 	 	 	 

	 	 	 	 
	 	 	
NEXTEL DEL PERU S.A.	 
	 	 	
TRANSNET DEL PERU S.R.L.	 
	 	 	
COMUNICACIONES NEXTEL DE MEXICO, S.A. DE C.V.	 
	 	 	
SISTEMAS DE COMUNICACIONES TRONCALES, S.A. DE C.V.	 
	 	 	
PRESTADORA DE SERVICIOS DE RADIOCOMUNICACION, S.A. DE C.V.	 
	 	 	
RADOIPHONE, S.A. DE C.V.	 
	 	 	
FONOTRANSPORTES NACIONALES, S.A. DE C.V.	 
	 	 	
SERVICIOS PROTEL, S.A. DE C.V.	 
	 	 	
NEXTEL DE MEXICO, S.A. DE C.V.	 
	 	 	
TELETRANSPORTES INTEGRALES, S.A. DE C.V.	 
	 	 	
SERVICIOS DE RADIOCOMUNICACION 
  MOVIL DE MEXICO, S.A. DE C.V.	 
	 	 	
MULTIFON, S.A. DE C.V.	 
	 
	 	 	By: /s/ Robert J. Gilker
	 
	 	 	      ROBERT J.
GILKER	 
	 	 	      ATTORNEY IN FACT	 
	 	 	 	 

82

 

	 	 	 	 
	 	 	
NEXTEL S.A.	 
	 	 	
  NEXTEL TELECOMUNICACOES LTDA.	 
	 	 	
  PROMOBILE TELECOMUNICACOES LTDA.	 
	 	 	
  TELEMOBILE TELECOMUNICACOES LTDA.	 
	 	 	
  MASTER-TEC TELECOMUNICACOES INDUSTRIA COMERCIO DE	 
	 	 	    PRODUTOS ELETRONICOS LTDA.	 
	 	 	
  TELECOMUNICACOES BRASTEL S/C LTDA.	 
	 
	 	 	By: /s/ Robert J.
Gilker
	 
	 	 	      ROBERT J.
GILKER	 
	 	 	      ATTORNEY IN FACT	 
	 	 	 	 
	 
	 	 	By: /s/ Mercedes M.
Barreras
	 
	 	 	      MERCEDES M. BARRERAS	 
	 	 	      ATTORNEY IN FACT	 
	 	 	 	 

83

 

EXHIBIT A

	 
	[FACE OF NOTE]

NII Holdings (Cayman), Ltd.

13% Senior Secured Discount Note Due 2009

     CUSIP

     No. G6520PAA3                                                                                                                                                        $______

     NII Holdings (Cayman), Ltd., a company incorporated under the laws of the
Cayman Islands (the “Company”), for value received, promises to pay to ______,
or its registered assigns, the principal sum of one hundred eighty million,
eight hundred twenty thousand, eight hundred fifty-five dollars ($180,820,855)
on November 1, 2009.

     Interest Payment Dates: each February 1, May 1, August 1 and November 1,
beginning February 1, 2005

     Regular Record Dates: January 15, April 15, July 15 and October 15.

     Trustee: Wilmington Trust Company

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place. This Note is issued pursuant to,
and subject to the terms of, the Indenture, dated as of
November 12, 2002, among the
Company, the Trustee and the Guarantors signatory thereto.

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

	NII Holdings (Cayman), Ltd.
	 
	 
	By: ______________________________
	Name:
	Title:
	 
	By: ______________________________
	Name:
	Title:

1

 

(Trustee’s Certificate of Authentication)

     This is one of the 13% Senior Secured Discount Notes due 2009 described in
the within-mentioned Indenture.

	Date:
	 
	WILMINGTON TRUST COMPANY,
	as Trustee
	 
	By: ______________________________
	Authorized Signatory

     This Note has been issued with original issue discount for United States
federal income tax purposes. For further information, please contact Catherine E.
Neel, Assistant Treasurer, NII Holdings, Inc., at (703) 390-5100.

[REVERSE SIDE OF NOTE]

     NII Holdings (Cayman), Ltd. 13% Senior Secured Discount Notes due 2009
(the “Notes”).

     [Insert the legend set forth in Section 2.02, if applicable pursuant to
the provisions of the Indenture]

	 	1.	 	Accretion, Principal and Interest.

     The Company will pay the principal of this Note on November 1, 2009.

     This Note will accrete at a rate of 13% per annum, compounded quarterly on
February 1, May 1, August 1 and November 1 of each year to but not including
November 1, 2004, from an initial principal amount of $774.25 per $1,000
Accreted Value at maturity on the Issue Date to $1,000 principal amount per
$1,000 Accreted Value at maturity on November 1, 2004. The Company promises to
pay interest on the Accreted Value of this Note at a rate of 13% per annum from
November 1, 2004, or from the most recent Interest Payment Date (defined below)
thereafter to which interest has been paid quarterly in arrears on February 1,
May 1, August 1 and November 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an “Interest Payment
Date”), commencing on February 1, 2005; provided, that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
Regular Record Date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided further, that the first Interest Payment Date shall be
February 1, 2005. Beginning February 1, 2005, cash interest will be payable on
each Interest Payment Date to the Holders of record at the close of business on
the Regular Record Date immediately preceding such Interest Payment Date. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at

2

 

a rate that is 2% per annum in excess of the rate then in effect, and it
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on installments of interest that are not paid when
initially due and payable (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

	 	2.	 	Method of Payment.

     The Company will pay interest (except defaulted interest) on the principal
amount of this Note as provided above, in each case, even if this Note is
cancelled on registration of transfer or registration of exchange after the
record date in respect of such payment; provided, that, with respect to the
payment of Accreted Value, the Company will make payment to the Holder that
surrenders this Note to a Paying Agent on or after the maturity date.

     The Company will pay Accreted Value, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay Accreted Value, premium, if any, and interest by its check payable in such
money. It may mail an interest check to a Holder’s registered address (as
reflected in the Note Register). If a payment date is not a Business Day,
payment may be made on the next succeeding day that is a Business Day and no
interest shall accrue for the intervening period.

	 	3.	 	Paying Agent and Registrar.

     Initially, the Trustee will act as authenticating agent, Paying Agent and
Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-Registrar.

	 	4.	 	Indenture; Limitations.

     The Company issued
the Notes under an Indenture dated as of November 12,
2002 (as amended, supplemented or otherwise modified from time to time, the
“Indenture”), among the Company, Wilmington Trust
Company (the “Trustee”) and
the Guarantors signatory thereto. Capitalized terms herein are used as defined
in the Indenture unless otherwise indicated. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.

     The Notes are senior secured obligations of the Company entitled to the
benefits of the Indenture and the Collateral Documents.

	 	5.	 	Optional Redemption.

     The Notes will be redeemable, at the Company’s option, in whole or in
part, at any time on or after January 1, 2006 and prior to maturity at the
following Redemption Prices (expressed

3

 

in percentages of their Accreted Value), plus accrued and unpaid interest
to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on an Interest Payment
Date that is on or prior to the Redemption Date) if redeemed during the
12-month period commencing on January 1 of the applicable year set forth below:

	 	 	 	 	 
	Year
	 	 	Redemption Price
	2006
	 	 	106.50	%
	2007
	 	 	103.25	%
	2008 and thereafter
	 	 	100.00	%

     Notice of any optional redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at his or her last address as it appears in the Note Register. On and
after the Redemption Date, interest ceases to accrue on Notes or portions of
Notes called for redemption, and the Accreted Value of the Notes called for
redemption ceases to increase, unless the Company defaults in the payment of
the Redemption Price.

	 	6.	 	Repurchase upon Change of Control.

     Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued interest to the Payment Date stated in the
Offer to Purchase (the “Change of Control Payment”).

     A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at its last address as it appears in
the Note Register. Notes in original denominations larger than $1.00 may be
sold to the Company in part. On and after the Payment Date, interest ceases to
accrue (or original issue discount shall cease to amortize) on Notes or
portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.

	 	7.	 	Denominations; Transfer; Exchange.

     The Notes are in registered form without coupons in denominations of $1.00
of principal amount and multiples of $1.00 in excess thereof. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer or exchange of any Notes selected for redemption. Also, it need not
register the transfer or exchange of any Notes for a period of 15 days before
the mailing of a notice of redemption of Notes to be redeemed is made.

	 	8.	 	Persons Deemed Owners.

     Prior to registration of a transfer by a Holder of a Note as provided for
in the Indenture, a Holder shall be treated as the owner of a Note for all
purposes.

4

 

	 	9.	 	Discharge Prior to Redemption or Maturity.

     If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding Accreted Value of, premium,
if any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain sections thereof, and (b) to the Stated Maturity, the
Company will be discharged from certain covenants set forth in the Indenture.

	 	10.	 	Amendment; Supplement; Waiver.

     Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the Required Consent, and any existing default, or
compliance with any provision, may be waived with the consent of the Holders of
at least a majority in Accreted Value amount of the Notes then outstanding.
Without notice to or the consent of any Holder, the parties thereto may amend
or supplement the Indenture or the Notes to, among other things, cure
ambiguity, defect or inconsistency and make any change that does not adversely
affect the rights of any Holder.

     “Required Consent” means, except as otherwise expressly provided in this
Indenture with respect to matters requiring the consent of each Holder of Notes
affected thereby, the consent of Holders of not less than a majority in
aggregate Accreted Value amount of the Notes outstanding at the time of such
consent.

	 	11.	 	Restrictive Covenants.

     The Indenture imposes certain limitations on the ability of each of the Restricted
Group Members, among other things, to Incur additional Indebtedness, make
Restricted Payments, use the proceeds from Asset Sales, engage in transactions
with Affiliates or merge, consolidate or transfer substantially all of its
assets. Within 45 days after the end of each of the Company’s first three
fiscal quarters of each of its fiscal years and 90 days after the end of the
last fiscal quarter of each year, the Company must report to the Trustee on
compliance with such limitations.

	 	12.	 	Successor Persons.

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

	 	13.	 	Defaults and Remedies.

     An “Event of Default” shall exist with respect to the Notes if any of the
following occurs and is continuing:

     (a)  the Company defaults in the payment of Accreted Value of (or premium,
if any, on) any Note when the same becomes due and payable, at Stated Maturity,
upon acceleration, redemption, required purchase or otherwise;

5

 

     (b)  the Company defaults in the payment of interest on any Note when the
same becomes due and payable, and such default continues for a period of 30
days;

     (c)  the Company fails to make or consummate a required Excess Proceeds
Offer in accordance with Section 4.10 of the Indenture or a required Offer to Purchase in
accordance with Section 4.11 of the Indenture, or defaults in the observance of any material
provision of Section 5.01 of the Indenture;

     (d)  any Restricted Group Member defaults in the performance of or breaches
any other covenant or agreement applicable to it contained in the Indenture or
the Notes (other than a default specified in clause (a), (b) or (c) above), any
Note Guarantee, or any Collateral Document that secures the Notes, and such
default or breach continues for a period of 30 consecutive days after written
notice shall have been given (i) by the Trustee to the Company or (ii) to the
Trustee and the Company by the Holders of 25% or more in aggregate Accreted
Value amount of the Notes;

     (e)  there occurs with respect to the New MEFA: (i) an event of default
that permits the lender(s) under the New MEFA to declare the New MEFA to be due
and payable prior to its Stated Maturity and the failure of the obligor to cure
or receive a waiver with respect to the event of default within 30 days after
its occurrence; (ii) an event of default and the declaration by the lender(s)
under the New MEFA that the New MEFA is due and payable prior to its Stated
Maturity; or (iii) an event of default and the request for payment by the
lender(s) under the New MEFA on any guarantee securing the New MEFA; provided,
however, that if an Event of Default occurs under clause (i), no Event of
Default has occurred under clauses (ii) or (iii) and the lender(s) under the
New MEFA subsequently waive(s) the event of default under the New MEFA, then
the Event of Default under clause (i) will also be waived without any further
action of the Noteholders or the Trustee;

     (f)  there occurs with respect to the New EFA an event of default and the
request for payment by the lender(s) under the New EFA on any Guarantee
securing the New EFA;

     (g)  there occurs with respect to Indebtedness (other than the New MEFA or
the New EFA) of any Restricted Group Member having an outstanding principal
amount of $10 million or more in the aggregate an event of default that permits
any holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity;

     (h)  any final judgment or order (not fully covered by insurance) for the
payment of money in excess of $10 million, individually or in the aggregate for
all such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered), shall be rendered
against any Restricted Group Member, and shall not be paid or discharged for
any period of 30 consecutive days, unless a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall be in
effect;

     (i)  a court having jurisdiction enters a decree or order for (A) relief in
respect of the Company or any Significant Group Member in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Group Member or for all or substantially all of the property and
assets of the

6

 

Company or any Significant Group Member or (C) the winding up or
liquidation of the affairs of the Company or any Significant Group Member and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days;

     (j)  the Company or any Significant Group Member (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Group Member
or for all or substantially all of the property and assets of the Company or
any Significant Group Member or (C) effects any general assignment for the
benefit of creditors; or

     (k)  actual invalidity (or the assertion hereof by any Restricted Group
Member) of any Note Guarantee, Lien, priority status or the benefits of
subordination of other claims in respect of the Notes resulting from acts or
omissions of any Restricted Group Member, other than in accordance with the
terms hereof or thereof.

If an Event of Default, as defined in the Indenture, occurs and is continuing,
the Trustee or the Holders of at least 25% in aggregate Accreted Value amount
of the Notes may declare all the Accreted Value of, premium, if any, and
accrued interest on the Notes to be immediately due and payable. If a
bankruptcy or insolvency default with respect to the Company occurs and is
continuing, or Indebtedness under the New MEFA or New EFA shall have been
accelerated prior to its Stated Maturity, the Accreted Value of, premium, if
any, and accrued interest on the Notes shall automatically be immediately due
and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to
it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of at least a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.

	 	14.	 	Trustee Dealings with Company.

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

	 	15.	 	Authentication.

     This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.

	 	16.	 	Abbreviations.

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

7

 

     The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to NII Holdings, Inc.,
10700 Parkridge Boulevard Suite 600, Reston, Virginia 20191, Attention:
President, copy to: Chief Financial Officer.

	 	17.	 	Guarantee.

This Note is guaranteed by certain Affiliates of the Company pursuant to
Article 9 and Section 4.20 of the Indenture.

8

 

[FORM OF TRANSFER NOTICE]

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

     Insert Taxpayer Identification No. ___________________________________________________________________________

     Please print or typewrite name and address including zip code of assignee
____________________________the within Note and all
rights thereunder, hereby irrevocably constituting and appointing
____________________________attorney to transfer such Note
on the books of the Company with full power of substitution in the premises.

	 	 	 
	Date: _________	 	
___________________________________________________
	 
	 	 	
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.

9

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you wish to have this Note purchased by the Company pursuant to Section
4.11 of the Indenture, check the Box:

     If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 of the Indenture, state the principal amount:
$__________________.

     Date:

     Your Signature: ______________________________

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

     Signature Guarantee: __________________

10

 

EXHIBIT B

GUARANTOR ACCESSION AGREEMENT

__, 20__

To Wilmington Trust Company and each of the Holders

(as defined in the Indenture hereinafter referred to)

Ladies and Gentlemen:

     Reference is made to the 13% Senior Secured Notes of NII Holdings
(Cayman), Ltd. in principal amount at maturity of $180,820,855 (the “Notes”)
issued under an indenture, dated as of November 12, 2002 (as amended, restated
or otherwise modified from time to time, the “Indenture”), by and among the
Trustee, NII Holdings (Cayman), Ltd., a company incorporated under the laws of
the Cayman Islands, and each Person that becomes or has become a guarantor of
the Notes pursuant to Article 9 of the Indenture (collectively, the
“Guarantors”). Capitalized terms used herein and not otherwise defined have
the meanings ascribed to such terms in the Indenture.

     [____________________________________], a [________________________] [corporation] (the
“New Guarantor”), hereby agrees with you as follows:

     1.     Guarantee. The New Guarantor hereby unconditionally agrees to assume
and become liable for, and by execution and delivery of this Agreement does
assume and become liable for, each and every obligation of a Guarantor under
the Indenture, the intent of the New Guarantor being that, upon execution and
delivery of their instrument to the Trustee, the rights and obligations of the
New Guarantor shall be the same as if the New Guarantor had been an original
party to the Indenture.

     2.     Further Assurances. The New Guarantor agrees to cooperate with the
Holders and execute such further instruments and documents as the Holders
shall reasonably request to effect, to the reasonable satisfaction of the
Holders, the purposes of this Agreement.

     3.     Binding Effect. This Agreement shall be binding upon the New Guarantor
and shall inure to the benefit of the Holders and their respective successors
and assigns.

     4.     Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.

1

 

     IN WITNESS WHEREOF, the New Guarantor has caused this Agreement to be
executed on its behalf by one of its duly authorized officers.

	 
	[NAME OF NEW GUARANTOR]
	 
	 
	By______________________________

Name:
	Title:
	[Address]

2

 

EXHIBIT C

RESTRICTED GROUP MEMBERS

	 	 	 	 	 
	 	 	Jurisdiction	 	 
	Name	 	of Formation	 	Status
	

	NII Holdings, Inc.	 	
Delaware
	 	Restricted Group Member
	NII Holdings (Cayman), Ltd.	 	
Cayman Islands
	 	Borrower
	Nextel International (Services), Ltd.	 	
Delaware
	 	Restricted Subsidiary
	Nextel International Investment Company	 	
Delaware
	 	Restricted Subsidiary
	McCaw International (Brazil), Ltd.	 	
Virginia
	 	Restricted Subsidiary
	Airfone Holdings, Inc.	 	
Delaware
	 	Restricted Subsidiary
	Nextel International (Mexico), Ltd.	 	
Delaware
	 	Restricted Subsidiary
	Nextel International (Peru) LLC	 	
Cayman Islands
	 	Restricted Subsidiary
	Nextel International (Indonesia) LLC	 	
Cayman Islands
	 	Restricted Subsidiary
	Nextel International (Uruguay), Inc.	 	
Delaware
	 	Restricted Subsidiary
	Nextel del Peru, S.A.	 	
Peru
	 	Restricted Subsidiary
	Transnet del Peru, S.R.L	 	
Peru
	 	Restricted Subsidiary
	Comunicaciones Nextel de Mexico, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Sistemas de Comunicaciones Troncales, S.A. De C.V.	 	
Mexico
	 	Restricted Subsidiary
	Radiophone, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Prestadora de Servicios de Radiocomunicacion, S.A.
de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Fonotransportes Nacionales, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Servicios Protel, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Nextel de Mexico, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Teletransportes Integrales, S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Servicios de Radiocomunicacion Movil de Mexico,
S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Multifone S.A. de C.V.	 	
Mexico
	 	Restricted Subsidiary
	Nextel, S.A.	 	
Brazil
	 	Restricted Subsidiary
	Nextel Telecomunicaçoes Ltda.	 	
Brazil
	 	Restricted Subsidiary
	Promobile Telecomunicaçoes Ltda.	 	
Brazil
	 	Restricted Subsidiary
	Telemobile Telecomunicaçoes Ltda.	 	
Brazil
	 	Restricted Subsidiary
	Master-Tec Telecomunicaçoes Industria e Comercio de Produtos
Electronicos Ltda.	 	
Brazil
	 	Restricted Subsidiary
	Telecomunicaçoes Brastel S/C Ltda.	 	
Brazil
	 	Restricted Subsidiary
	Inversiones Nextel de Mexico, S.A. de C.V.	 	
Mexico
	 	Restricted Affiliate

1

 

EXHIBIT D

EXCLUDED ENTITIES

	 	 	 	 	 
	 	 	Jurisdiction	 	 
	Name	 	of Formation	 	Status
	

	Inversiones Nextel de Mexico, S.A. de C.V.	 	
Mexico
	 	Restricted Affiliate

1

 

EXHIBIT E

UNRESTRICTED SUBSIDIARIES AND UNRESTRICTED AFFILIATES

	 	 	 	 	 
	 	 	Jurisdiction	 	 
	Name	 	of Formation	 	Status
	

	Nextel International (Argentina), Ltd.	 	
Cayman Islands
	 	Unrestricted Subsidiary
	Nextel Communications Argentina, S.A.	 	
Argentina
	 	Unrestricted Subsidiary
	Centennial Cayman Corp.	 	
Cayman Islands
	 	Unrestricted Subsidiary
	Centennial Cayman Corp. Chile S.A.	 	
Chile
	 	Unrestricted Subsidiary
	Multikom S.A.	 	
Chile
	 	Unrestricted Subsidiary
	Nextel International (Philippines) LLC	 	
Cayman Islands
	 	Unrestricted Subsidiary
	Nextel International Asia Holdings Limited	 	
Hong Kong
	 	Unrestricted Subsidiary
	East Holdings Limited	 	
Hong Kong
	 	Unrestricted Subsidiary
	Emerald Investments, Inc.	 	
Philippines
	 	Unrestricted Subsidiary
	Foodcamp Industries and Marketing, Inc.	 	
Philippines
	 	Unrestricted Subsidiary
	Top Mega Enterprises Limited	 	
Hong Kong
	 	Unrestricted Subsidiary
	Joyce Link Holdings, Ltd.	 	
Hong Kong
	 	Unrestricted Subsidiary
	Nextel Communications Philippines, Inc.	 	
Philippines
	 	Unrestricted Subsidiary
	Gamboa Holdings, Inc.	 	
Philippines
	 	Unrestricted Subsidiary
	Nextel International (Japan), Ltd.	 	
Delaware
	 	Unrestricted Subsidiary
	Holding Protel S.A. de C.V.	 	
Mexico
	 	Unrestricted Affiliate
	H-Telecom Ltda	 	
Brazil
	 	Unrestricted Affiliate

1

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