Document:

FORM OF FIXED RATE SENIOR NOTE

REGISTERED                                                   REGISTERED
No. FXR-1                                                    U.S. $
                                                             CUSIP:

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.

<PAGE>

<TABLE>
                                                   MORGAN STANLEY
                                     SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F
                                                    (Fixed Rate)

                                           STOCK PARTICIPATION ACCRETING
                                 REDEMPTION QUARTERLY-PAY SECURITIES(SM) ("SPARQS")

                                          % SPARQS(R) DUE DECEMBER 1, 2006
                                              MANDATORILY EXCHANGEABLE
                                           FOR SHARES OF COMMON STOCK OF
                                                  TRANSOCEAN INC.

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<S>                           <C>                          <C>                          <C>
ORIGINAL ISSUE DATE:          INITIAL REDEMPTION DATE:     INTEREST RATE:      per      MATURITY DATE: See
                                See "Morgan Stanley Call     annum (equivalent to $       "Maturity Date" below.
                                Right" below.                per annum per SPARQS)
--------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL DATE:        INITIAL REDEMPTION           INTEREST PAYMENT DATE(S):    OPTIONAL REPAYMENT
                                PERCENTAGE: See "Morgan      See "Interest Payment        DATE(S): N/A
                                Stanley Call Right" and      Dates" below.
                                "Call Price" below.
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SPECIFIED CURRENCY: U.S.      ANNUAL REDEMPTION            INTEREST PAYMENT PERIOD:     APPLICABILITY OF MODIFIED
  dollars                       PERCENTAGE REDUCTION: N/A    Quarterly                    PAYMENT UPON
                                                                                          ACCELERATION OR
                                                                                          REDEMPTION: See
                                                                                          "Alternate Exchange
                                                                                          Calculation in Case of
                                                                                          an Event of Default"
                                                                                          below.
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IF SPECIFIED CURRENCY OTHER   REDEMPTION NOTICE PERIOD:    APPLICABILITY OF ANNUAL      If yes, state Issue Price:
  THAN U.S. DOLLARS, OPTION     At least 10 days but no      INTEREST PAYMENTS: N/A       N/A
  TO ELECT PAYMENT IN U.S.      more than 30 days.  See
  DOLLARS: N/A                  "Morgan Stanley Call
                                Right" and "Morgan
                                Stanley Notice Date"
                                below.
--------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: N/A      TAX REDEMPTION AND PAYMENT   PRICE APPLICABLE UPON        ORIGINAL YIELD TO
                                OF ADDITIONAL AMOUNTS:       OPTIONAL REPAYMENT: N/A      MATURITY: N/A
                                N/A
--------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS: See         IF YES, STATE INITIAL
  below.                        OFFERING DATE: N/A
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Issue Price............. $          per each $          principal amount of
                         this SPARQS

                                       2
<PAGE>

Maturity Date........... December 1, 2006, subject to acceleration as described
                         below in "Price Event Acceleration" and "Alternate
                         Exchange Calculation in Case of an Event of Default"
                         and subject to extension if the Final Call Notice Date
                         is postponed in accordance with the following
                         paragraph.

                         If the Final Call Notice Date is postponed because it
                         is not a Trading Day or due to a Market Disruption
                         Event or otherwise and the Issuer exercises the Morgan
                         Stanley Call Right, the Maturity Date shall be
                         postponed so that the Maturity Date will be the tenth
                         calendar day following the Final Call Notice Date. See
                         "Final Call Notice Date" below.

                         In the event that the Final Call Notice Date is
                         postponed because it is not a Trading Day or due to a
                         Market Disruption Event or otherwise, the Issuer shall
                         give notice of such postponement as promptly as
                         possible, and in no case later than two Business Days
                         following the scheduled Final Call Notice Date, (i) to
                         the holder of this SPARQS by mailing notice of such
                         postponement by first class mail, postage prepaid, to
                         the holder's last address as it shall appear upon the
                         registry books, (ii) to the Trustee by telephone or
                         facsimile confirmed by mailing such notice to the
                         Trustee by first class mail, postage prepaid, at its
                         New York office and (iii) to The Depository Trust
                         Company (the "Depositary") by telephone or facsimile
                         confirmed by mailing such notice to the Depositary by
                         first class mail, postage prepaid. Any notice that is
                         mailed in the manner herein provided shall be
                         conclusively presumed to have been duly given, whether
                         or not the holder of this SPARQS receives the notice.
                         Notice of the date to which the Maturity Date has been
                         rescheduled as a result of postponement of the Final
                         Call Notice Date, if applicable, shall be included in
                         the Issuer's notice of exercise of the Morgan Stanley
                         Call Right.

Interest Payment Dates.. March 1, 2006, June 1, 2006, September 1, 2006 and the
                         Maturity Date.

                         If the scheduled Maturity Date is postponed due to a
                         Market Disruption Event or otherwise, the Issuer shall
                         pay interest on the Maturity Date as postponed rather
                         than on December 1, 2006, but no interest will accrue

                                       3
<PAGE>

                         on this SPARQS or on such payment during the period
                         from or after the scheduled Maturity Date.

Record Date............. Notwithstanding the definition of "Record Date" on
                         page 23 hereof, the Record Date for each Interest
                         Payment Date, including the Interest Payment Date
                         scheduled to occur on the Maturity Date, shall be the
                         date 5 calendar days prior to such scheduled Interest
                         Payment Date, whether or not that date is a Business
                         Day; provided, however, that in the event that the
                         Issuer exercises the Morgan Stanley Call Right, no
                         Interest Payment Date shall occur after the Morgan
                         Stanley Notice Date, except for any Interest Payment
                         Date for which the Morgan Stanley Notice Date falls on
                         or after the "ex-interest" date for the related
                         interest payment, in which case the related interest
                         payment shall be made on such Interest Payment Date;
                         and provided, further, that accrued but unpaid
                         interest payable on the Call Date, if any, shall be
                         payable to the person to whom the Call Price is
                         payable. The "ex-interest" date for any interest
                         payment is the date on which purchase transactions in
                         the SPARQS no longer carry the right to receive such
                         interest payment.

                         In the event that the Issuer exercises the Morgan
                         Stanley Call Right and the Morgan Stanley Notice Date
                         falls before the "ex-interest" date for an interest
                         payment, so that as a result a scheduled Interest
                         Payment Date will not occur, the Issuer shall cause
                         the Calculation Agent to give notice to the Trustee
                         and to the Depositary, in each case in the manner and
                         at the time described in the second and third
                         paragraphs under "Morgan Stanley Call Right" below,
                         that no Interest Payment Date will occur after such
                         Morgan Stanley Notice Date.

Denominations........... $       and integral multiples thereof

Morgan Stanley Call
Right................... On any scheduled Trading Day on or after June 1, 2006
                         or on the Maturity Date (including the Maturity Date
                         as it may be extended and regardless of whether the
                         Maturity Date is a Trading Day), the Issuer may call
                         the SPARQS, in whole but not in part, for mandatory
                         exchange for the Call Price paid in cash (together
                         with accrued but unpaid interest) on the Call Date.

                                       4
<PAGE>

                         On the Morgan Stanley Notice Date, the Issuer shall
                         give notice of the Issuer's exercise of the Morgan
                         Stanley Call Right (i) to the holder of this SPARQS by
                         mailing notice of such exercise, specifying the Call
                         Date on which the Issuer shall effect such exchange,
                         by first class mail, postage prepaid, to the holder's
                         last address as it shall appear upon the registry
                         books, (ii) to the Trustee by telephone or facsimile
                         confirmed by mailing such notice to the Trustee by
                         first class mail, postage prepaid, at its New York
                         office and (iii) to the Depositary in accordance with
                         the applicable procedures set forth in the Blanket
                         Letter of Representations prepared by the Issuer. Any
                         notice which is mailed in the manner herein provided
                         shall be conclusively presumed to have been duly
                         given, whether or not the holder of this SPARQS
                         receives the notice. Failure to give notice by mail or
                         any defect in the notice to the holder of any SPARQS
                         shall not affect the validity of the proceedings for
                         the exercise of the Morgan Stanley Call Right with
                         respect to any other SPARQS.

                         The notice of the Issuer's exercise of the Morgan
                         Stanley Call Right shall specify (i) the Call Date,
                         (ii) the Call Price payable per SPARQS, (iii) the
                         amount of accrued but unpaid interest payable per
                         SPARQS on the Call Date, (iv) whether any subsequently
                         scheduled Interest Payment Date shall no longer be an
                         Interest Payment Date as a result of the exercise of
                         the Morgan Stanley Call Right, (v) the place or places
                         of payment of such Call Price, (vi) that such delivery
                         will be made upon presentation and surrender of this
                         SPARQS, (vii) that such exchange is pursuant to the
                         Morgan Stanley Call Right and (viii) if applicable,
                         the date to which the Maturity Date has been extended
                         due to a Market Disruption Event as described under
                         "Maturity Date" above.

                         The notice of the Issuer's exercise of the Morgan
                         Stanley Call Right shall be given by the Issuer or, at
                         the Issuer's request, by the Trustee in the name and
                         at the expense of the Issuer.

                         If this SPARQS is so called for mandatory exchange by
                         the Issuer, then the cash Call Price and any accrued
                         but unpaid interest on this SPARQS to be delivered to

                                       5
<PAGE>

                         the holder of this SPARQS shall be delivered on the
                         Call Date fixed by the Issuer and set forth in its
                         notice of its exercise of the Morgan Stanley Call
                         Right, upon delivery of this SPARQS to the Trustee.
                         The Issuer shall, or shall cause the Calculation Agent
                         to, deliver such cash to the Trustee for delivery to
                         the holder of this SPARQS.

                         If this SPARQS is not surrendered for exchange on the
                         Call Date, it shall be deemed to be no longer
                         Outstanding under, and as defined in, the Senior
                         Indenture after the Call Date, except with respect to
                         the holder's right to receive cash due in connection
                         with the Morgan Stanley Call Right.

Morgan Stanley
Notice Date............. The scheduled Trading Day on which the Issuer issues
                         its notice of mandatory exchange, which must be at
                         least 10 but not more than 30 days prior to the Call
                         Date.

Final Call
Notice Date............. November 21, 2006; provided that if November 21, 2006
                         is not a Trading Day or if a Market Disruption Event
                         occurs on such day, the Final Call Notice Date will be
                         the immediately succeeding Trading Day on which no
                         Market Disruption Event occurs.

Call Date............... The day specified in the Issuer's notice of mandatory
                         exchange, on which the Issuer shall deliver cash to
                         the holder of this SPARQS, for mandatory exchange,
                         which day may be any scheduled Trading Day on or after
                         June 1, 2006 or the Maturity Date (including the
                         Maturity Date as it may be extended and regardless of
                         whether the Maturity Date is a scheduled Trading Day).
                         See "Maturity Date" above.

Call Price.............. The Call Price with respect to any Call Date is an
                         amount of cash per each $         principal amount of
                         this SPARQS, as calculated by the Calculation Agent,
                         such that the sum of the present values of all cash
                         flows on each $         principal amount of this
                         SPARQS to and including the Call Date (i.e., the Call
                         Price and all of the interest payments, including
                         accrued and unpaid interest payable on the Call Date),
                         discounted to the Original Issue Date from the
                         applicable payment date at the Yield to Call rate of
                             % per annum computed on the basis of a 360-day
                         year of twelve 30-day

                                       6
<PAGE>

                         months, equals the Issue Price, as determined by the
                         Calculation Agent.

Exchange at Maturity.... At maturity, subject to a prior call of this SPARQS
                         for cash in an amount equal to the Call Price by the
                         Issuer as described under "Morgan Stanley Call Right"
                         above or any acceleration of the SPARQS, upon delivery
                         of this SPARQS to the Trustee, each $
                         principal amount of this SPARQS shall be applied by
                         the Issuer as payment for a number of shares of common
                         stock of Transocean Inc. ("Transocean Stock") at the
                         Exchange Ratio, and the Issuer shall deliver with
                         respect to each $         principal amount of this
                         SPARQS an amount of Transocean Stock equal to the
                         Exchange Ratio.

                         The amount of Transocean Stock to be delivered at
                         maturity shall be subject to any applicable
                         adjustments (i) to the Exchange Ratio (including, as
                         applicable, any New Stock Exchange Ratio or any Basket
                         Stock Exchange Ratio, each as defined in paragraph 5
                         under "Antidilution Adjustments" below) and (ii) in
                         the Exchange Property, as defined in paragraph 5 under
                         "Antidilution Adjustments" below, to be delivered
                         instead of, or in addition to, such Transocean Stock
                         as a result of any corporate event described under
                         "Antidilution Adjustments" below, in each case,
                         required to be made through the close of business on
                         the third Trading Day prior to the scheduled Maturity
                         Date.

                         The Issuer shall, or shall cause the Calculation Agent
                         to, provide written notice to the Trustee at its New
                         York Office and to the Depositary, on which notice the
                         Trustee and Depositary may conclusively rely, on or
                         prior to 10:30 a.m. on the Trading Day immediately
                         prior to maturity of this SPARQS (but if such Trading
                         Day is not a Business Day, prior to the close of
                         business on the Business Day preceding the maturity of
                         this SPARQS), of the amount of Transocean Stock (or
                         the amount of Exchange Property) or cash to be
                         delivered with respect to each $ principal amount of
                         this SPARQS and of the amount of any cash to be paid
                         in lieu of any fractional share of Transocean Stock
                         (or of any other securities included in Exchange
                         Property, if applicable); provided that if the
                         maturity date of this SPARQS is accelerated (x)
                         because of a Price Event

                                       7
<PAGE>

                         Acceleration (as described under "Price Event
                         Acceleration" below) or (y) because of an Event of
                         Default Acceleration (as defined under "Alternate
                         Exchange Calculation in Case of an Event of Default"
                         below), the Issuer shall give notice of such
                         acceleration as promptly as possible, and in no case
                         later than (A) in the case of an Event of Default
                         Acceleration, two Trading Days following such deemed
                         maturity date or (B) in the case of a Price Event
                         Acceleration, 10:30 a.m. on the Trading Day
                         immediately prior to the date of acceleration (as
                         defined under "Price Event Acceleration" below), (i)
                         to the holder of this SPARQS by mailing notice of such
                         acceleration by first class mail, postage prepaid, to
                         the holder's last address as it shall appear upon the
                         registry books, (ii) to the Trustee by telephone or
                         facsimile confirmed by mailing such notice to the
                         Trustee by first class mail, postage prepaid, at its
                         New York office and (iii) to the Depositary by
                         telephone or facsimile confirmed by mailing such
                         notice to the Depositary by first class mail, postage
                         prepaid. Any notice that is mailed in the manner
                         herein provided shall be conclusively presumed to have
                         been duly given, whether or not the holder of this
                         SPARQS receives the notice. If the maturity of this
                         SPARQS is accelerated, no interest on the amounts
                         payable with respect to this SPARQS shall accrue for
                         the period from and after such accelerated maturity
                         date; provided that the Issuer has deposited with the
                         Trustee Transocean Stock, the Exchange Property or any
                         cash due with respect to such acceleration by such
                         accelerated maturity date.

                         The Issuer shall, or shall cause the Calculation Agent
                         to, deliver any such shares of Transocean Stock (or
                         any Exchange Property) and cash in respect of interest
                         and any fractional share of Transocean Stock (or any
                         Exchange Property) and cash otherwise due upon any
                         acceleration described above to the Trustee for
                         delivery to the holder of this Note. References to
                         payment "per SPARQS" refer to each $         principal
                         amount of this SPARQS.

                         If this SPARQS is not surrendered for exchange at
                         maturity, it shall be deemed to be no longer
                         Outstanding under, and as defined in, the Senior
                         Indenture, except with respect to the holder's right
                         to

                                       8
<PAGE>

                         receive Transocean Stock (and, if applicable, any
                         Exchange Property) and any cash in respect of interest
                         and any fractional share of Transocean Stock (or any
                         Exchange Property) and any other cash due at maturity
                         as described in the preceding paragraph under this
                         heading.

Price Event
Acceleration............ If on any two consecutive Trading Days during the
                         period prior to and ending on the third Business Day
                         immediately preceding the Maturity Date, the product
                         of the Closing Price of Transocean Stock and the
                         Exchange Ratio is less than $2.00, the Maturity Date
                         of this SPARQS shall be deemed to be accelerated to
                         the third Business Day immediately following such
                         second Trading Day (the "date of acceleration"). Upon
                         such acceleration, the holder of each $       principal
                         amount of this SPARQS shall receive per SPARQS on the
                         date of acceleration:

                              (i) a number of shares of Transocean Stock at the
                              then current Exchange Ratio;

                              (ii)accrued but unpaid interest on each $
                              principal amount of this SPARQS to but excluding
                              the date of acceleration; and

                              (iii) an amount of cash as determined by the
                              Calculation Agent equal to the sum of the present
                              values of the remaining scheduled payments of
                              interest on each $         principal amount of
                              this SPARQS (excluding the amounts included in
                              clause (ii) above) discounted to the date of
                              acceleration. The present value of each remaining
                              scheduled payment will be based on the comparable
                              yield that the Issuer would pay on a non-interest
                              bearing, senior unsecured debt obligation of the
                              Issuer having a maturity equal to the term of
                              each such remaining scheduled payment, as
                              determined by the Calculation Agent.

No Fractional Shares.... Upon delivery of this SPARQS to the Trustee at
                         maturity, the Issuer shall deliver the aggregate
                         number of shares of Transocean Stock due with respect
                         to this SPARQS, as described above, but the Issuer
                         shall pay cash in lieu of delivering any fractional
                         share of Transocean Stock in an amount equal to the

                                       9
<PAGE>

                         corresponding fractional Closing Price of such
                         fraction of a share of Transocean Stock as determined
                         by the Calculation Agent as of the second scheduled
                         Trading Day prior to maturity of this SPARQS.

Exchange Ratio.......... 1.0, subject to adjustment for corporate events
                         relating to Transocean Stock described under
                         "Antidilution Adjustments" below.

Closing Price........... The Closing Price for one share of Transocean Stock
                         (or one unit of any other security for which a Closing
                         Price must be determined) on any Trading Day (as
                         defined below) means:

                         o    if Transocean Stock (or any such other security)
                              is listed or admitted to trading on a national
                              securities exchange, the last reported sale
                              price, regular way, of the principal trading
                              session on such day on the principal United
                              States securities exchange registered under the
                              Securities Exchange Act of 1934, as amended (the
                              "Exchange Act"), on which Transocean Stock (or
                              any such other security) is listed or admitted to
                              trading,

                         o    if Transocean Stock (or any such other security)
                              is a security of the Nasdaq National Market (and
                              provided that the Nasdaq National Market is not
                              then a national securities exchange), the Nasdaq
                              official closing price published by The Nasdaq
                              Stock Market, Inc. on such day, or

                         o    if Transocean Stock (or any such other security)
                              is neither listed or admitted to trading on any
                              national securities exchange nor a security of
                              the Nasdaq National Market but is included in the
                              OTC Bulletin Board Service (the "OTC Bulletin
                              Board") operated by the National Association of
                              Securities Dealers, Inc. (the "NASD"), the last
                              reported sale price of the principal trading
                              session on the OTC Bulletin Board on such day.

                         If Transocean Stock (or any such other security) is
                         listed or admitted to trading on any national
                         securities exchange or is a security of the Nasdaq
                         National Market but the last reported sale price or
                         Nasdaq official closing price, as applicable, is not
                         available

                                      10
<PAGE>

                         pursuant to the preceding sentence, then the Closing
                         Price for one share of Transocean Stock (or one unit
                         of any such other security) on any Trading Day will
                         mean the last reported sale price of the principal
                         trading session on the over-the-counter market as
                         reported on the Nasdaq National Market or the OTC
                         Bulletin Board on such day. If, because of a Market
                         Disruption Event (as defined below) or otherwise, the
                         last reported sale price or Nasdaq official closing
                         price, as applicable, for Transocean Stock (or any
                         such other security) is not available pursuant to
                         either of the two preceding sentences, then the
                         Closing Price for any Trading Day will be the mean, as
                         determined by the Calculation Agent, of the bid prices
                         for Transocean Stock (or any such other security)
                         obtained from as many recognized dealers in such
                         security, but not exceeding three, as will make such
                         bid prices available to the Calculation Agent. Bids of
                         MS & Co. or any of its affiliates may be included in
                         the calculation of such mean, but only to the extent
                         that any such bid is the highest of the bids obtained.
                         The term "security of the Nasdaq National Market" will
                         include a security included in any successor to such
                         system, and the term OTC Bulletin Board Service will
                         include any successor service thereto.

Trading Day............. A day, as determined by the Calculation Agent, on
                         which trading is generally conducted on the New York
                         Stock Exchange, Inc. ("NYSE"), the American Stock
                         Exchange LLC, the Nasdaq National Market, the Chicago
                         Mercantile Exchange and the Chicago Board of Options
                         Exchange and in the over-the-counter market for equity
                         securities in the United States.

Calculation Agent....... MS & Co. and its successors.

                         All calculations with respect to the Exchange Ratio
                         and Call Price for the SPARQS shall be made by the
                         Calculation Agent and shall be rounded to the nearest
                         one hundred-thousandth, with five one-millionths
                         rounded upward (e.g., .876545 would be rounded to
                         .87655); all dollar amounts related to the Call Price
                         resulting from such calculations shall be rounded to
                         the nearest ten-thousandth, with five one hundred-
                         thousandths rounded upward (e.g., .76545 would be
                         rounded to .7655); and all dollar amounts paid with

                                      11
<PAGE>

                         respect to the Call Price on the aggregate number of
                         SPARQS shall be rounded to the nearest cent, with
                         one-half cent rounded upward.

                         All determinations made by the Calculation Agent shall
                         be at the sole discretion of the Calculation Agent and
                         shall, in the absence of manifest error, be conclusive
                         for all purposes and binding on the holder of this
                         SPARQS, the Trustee and the Issuer.

Antidilution
Adjustments............. The Exchange Ratio shall be adjusted as follows:

                         1. If Transocean Stock is subject to a stock split or
                         reverse stock split, then once such split has become
                         effective, the Exchange Ratio shall be adjusted to
                         equal the product of the prior Exchange Ratio and the
                         number of shares issued in such stock split or reverse
                         stock split with respect to one share of Transocean
                         Stock.

                         2. If Transocean Stock is subject (i) to a stock
                         dividend (issuance of additional shares of Transocean
                         Stock) that is given ratably to all holders of shares
                         of Transocean Stock or (ii) to a distribution of
                         Transocean Stock as a result of the triggering of any
                         provision of the corporate charter of Transocean Inc.
                         ("Transocean"), then once the dividend has become
                         effective and Transocean Stock is trading ex-dividend,
                         the Exchange Ratio shall be adjusted so that the new
                         Exchange Ratio shall equal the prior Exchange Ratio
                         plus the product of (i) the number of shares issued
                         with respect to one share of Transocean Stock and (ii)
                         the prior Exchange Ratio.

                         3. If Transocean issues rights or warrants to all
                         holders of Transocean Stock to subscribe for or
                         purchase Transocean Stock at an exercise price per
                         share less than the Closing Price of Transocean Stock
                         on both (i) the date the exercise price of such rights
                         or warrants is determined and (ii) the expiration date
                         of such rights or warrants, and if the expiration date
                         of such rights or warrants precedes the maturity of
                         this SPARQS, then the Exchange Ratio shall be adjusted
                         to equal the product of the prior Exchange Ratio and a
                         fraction, the numerator of which shall be the number
                         of shares of Transocean Stock outstanding immediately
                         prior to the

                                      12
<PAGE>

                         issuance of such rights or warrants plus the number of
                         additional shares of Transocean Stock offered for
                         subscription or purchase pursuant to such rights or
                         warrants and the denominator of which shall be the
                         number of shares of Transocean Stock outstanding
                         immediately prior to the issuance of such rights or
                         warrants plus the number of additional shares of
                         Transocean Stock which the aggregate offering price of
                         the total number of shares of Transocean Stock so
                         offered for subscription or purchase pursuant to such
                         rights or warrants would purchase at the Closing Price
                         on the expiration date of such rights or warrants,
                         which shall be determined by multiplying such total
                         number of shares offered by the exercise price of such
                         rights or warrants and dividing the product so
                         obtained by such Closing Price.

                         4. There shall be no adjustments to the Exchange Ratio
                         to reflect cash dividends or other distributions paid
                         with respect to Transocean Stock other than
                         distributions described in paragraph 2, paragraph 3
                         and clauses (i), (iv) and (v) of the first sentence of
                         paragraph 5 and Extraordinary Dividends.
                         "Extraordinary Dividend" means each of (a) the full
                         amount per share of Transocean Stock of any cash
                         dividend or special dividend or distribution that is
                         identified by Transocean as an extraordinary or
                         special dividend or distribution, (b) the excess of
                         any cash dividend or other cash distribution (that is
                         not otherwise identified by Transocean as an
                         extraordinary or special dividend or distribution)
                         distributed per share of Transocean Stock over the
                         immediately preceding cash dividend or other cash
                         distribution, if any, per share of Transocean Stock
                         that did not include an Extraordinary Dividend (as
                         adjusted for any subsequent corporate event requiring
                         an adjustment hereunder, such as a stock split or
                         reverse stock split) if such excess portion of the
                         dividend or distribution is more than 5% of the
                         Closing Price of Transocean Stock on the Trading Day
                         preceding the "ex-dividend date" (that is, the day on
                         and after which transactions in Transocean Stock on an
                         organized securities exchange or trading system no
                         longer carry the right to receive that cash dividend
                         or other cash distribution) for the payment of such
                         cash dividend or other cash distribution (such Closing
                         Price, the "Base Closing

                                      13
<PAGE>

                         Price") and (c) the full cash value of any non-cash
                         dividend or distribution per share of Transocean Stock
                         (excluding Marketable Securities, as defined in
                         paragraph 5 below). Subject to the following sentence,
                         if any cash dividend or distribution of such other
                         property with respect to Transocean Stock includes an
                         Extraordinary Dividend, the Exchange Ratio with
                         respect to Transocean Stock shall be adjusted on the
                         ex-dividend date so that the new Exchange Ratio shall
                         equal the product of (i) the prior Exchange Ratio and
                         (ii) a fraction, the numerator of which is the Base
                         Closing Price, and the denominator of which is the
                         amount by which the Base Closing Price exceeds the
                         Extraordinary Dividend. If any Extraordinary Dividend
                         is at least 35% of the Base Closing Price, then,
                         instead of adjusting the Exchange Ratio, the amount
                         payable upon exchange at maturity shall be determined
                         as described in paragraph 5 below, and the
                         Extraordinary Dividend shall be allocated to Reference
                         Basket Stocks in accordance with the procedures for a
                         Reference Basket Event as described in clause (c)(ii)
                         of paragraph 5 below. The value of the non-cash
                         component of an Extraordinary Dividend shall be
                         determined on the ex-dividend date for such
                         distribution by the Calculation Agent, whose
                         determination shall be conclusive in the absence of
                         manifest error. A distribution on Transocean Stock
                         described in clause (i), (iv) or (v) of the first
                         sentence of paragraph 5 below shall cause an
                         adjustment to the Exchange Ratio pursuant only to
                         clause (i), (iv) or (v) of the first sentence of
                         paragraph 5, as applicable.

                         5. Any of the following shall constitute a
                         Reorganization Event: (i) Transocean Stock is
                         reclassified or changed, including, without
                         limitation, as a result of the issuance of any
                         tracking stock by Transocean, (ii) Transocean has been
                         subject to any merger, combination or consolidation
                         and is not the surviving entity, (iii) Transocean
                         completes a statutory exchange of securities with
                         another corporation (other than pursuant to clause
                         (ii) above), (iv) Transocean is liquidated, (v)
                         Transocean issues to all of its shareholders equity
                         securities of an issuer other than Transocean (other
                         than in a transaction described in clause (ii), (iii)
                         or (iv) above) (a "spinoff stock") or (vi) Transocean
                         Stock is the subject of a tender or

                                      14
<PAGE>

                         exchange offer or going private transaction on all of
                         the outstanding shares. If any Reorganization Event
                         occurs, in each case as a result of which the holders
                         of Transocean Stock receive any equity security listed
                         on a national securities exchange or traded on The
                         Nasdaq National Market (a "Marketable Security"),
                         other securities or other property, assets or cash
                         (collectively "Exchange Property"), the amount payable
                         upon exchange at maturity with respect to each $
                         principal amount of this SPARQS following the
                         effective date for such Reorganization Event (or, if
                         applicable, in the case of spinoff stock, the
                         ex-dividend date for the distribution of such spinoff
                         stock) and any required adjustment to the Exchange
                         Ratio shall be determined in accordance with the
                         following:

                              (a) if Transocean Stock continues to be
                              outstanding, Transocean Stock (if applicable, as
                              reclassified upon the issuance of any tracking
                              stock) at the Exchange Ratio in effect on the
                              third Trading Day prior to the scheduled Maturity
                              Date (taking into account any adjustments for any
                              distributions described under clause (c)(i)
                              below); and

                              (b) for each Marketable Security received in such
                              Reorganization Event (each a "New Stock"),
                              including the issuance of any tracking stock or
                              spinoff stock or the receipt of any stock
                              received in exchange for Transocean Stock, the
                              number of shares of the New Stock received with
                              respect to one share of Transocean Stock
                              multiplied by the Exchange Ratio for Transocean
                              Stock on the Trading Day immediately prior to the
                              effective date of the Reorganization Event (the
                              "New Stock Exchange Ratio"), as adjusted to the
                              third Trading Day prior to the scheduled Maturity
                              Date (taking into account any adjustments for
                              distributions described under clause (c)(i)
                              below); and

                              (c) for any cash and any other property or
                              securities other than Marketable Securities
                              received in such Reorganization Event (the
                              "Non-Stock Exchange Property"),

                                      15
<PAGE>

                                   (i) if the combined value of the amount of
                                   Non-Stock Exchange Property received per
                                   share of Transocean Stock, as determined by
                                   the Calculation Agent in its sole discretion
                                   on the effective date of such Reorganization
                                   Event (the "Non-Stock Exchange Property
                                   Value"), by holders of Transocean Stock is
                                   less than 25% of the Closing Price of
                                   Transocean Stock on the Trading Day
                                   immediately prior to the effective date of
                                   such Reorganization Event, a number of
                                   shares of Transocean Stock, if applicable,
                                   and of any New Stock received in connection
                                   with such Reorganization Event, if
                                   applicable, in proportion to the relative
                                   Closing Prices of Transocean Stock and any
                                   such New Stock, and with an aggregate value
                                   equal to the Non-Stock Exchange Property
                                   Value multiplied by the Exchange Ratio in
                                   effect for Transocean Stock on the Trading
                                   Day immediately prior to the effective date
                                   of such Reorganization Event, based on such
                                   Closing Prices, in each case as determined
                                   by the Calculation Agent in its sole
                                   discretion on the effective date of such
                                   Reorganization Event; and the number of such
                                   shares of Transocean Stock or any New Stock
                                   determined in accordance with this clause
                                   (c)(i) shall be added at the time of such
                                   adjustment to the Exchange Ratio in
                                   subparagraph (a) above and/or the New Stock
                                   Exchange Ratio in subparagraph (b) above, as
                                   applicable, or

                                   (ii) if the Non-Stock Exchange Property
                                   Value is equal to or exceeds 25% of the
                                   Closing Price of Transocean Stock on the
                                   Trading Day immediately prior to the
                                   effective date relating to such
                                   Reorganization Event or, if Transocean Stock
                                   is surrendered exclusively for Non-Stock
                                   Exchange Property (in each case, a
                                   "Reference Basket Event"), an initially
                                   equal-dollar weighted basket of three
                                   Reference Basket Stocks (as defined below)
                                   with an aggregate value on the effective
                                   date of such Reorganization Event equal to
                                   the Non-Stock Exchange Property Value
                                   multiplied by the Exchange Ratio in effect
                                   for Transocean Stock

                                      16
<PAGE>

                                   on the Trading Day immediately prior to the
                                   effective date of such Reorganization Event.
                                   The "Reference Basket Stocks" shall be the
                                   three stocks with the largest market
                                   capitalization among the stocks that then
                                   comprise the S&P 500 Index (or, if
                                   publication of such index is discontinued,
                                   any successor or substitute index selected
                                   by the Calculation Agent in its sole
                                   discretion) with the same primary Standard
                                   Industrial Classification Code ("SIC Code")
                                   as Transocean; provided, however, that a
                                   Reference Basket Stock shall not include any
                                   stock that is subject to a trading
                                   restriction under the trading restriction
                                   policies of Morgan Stanley or any of its
                                   affiliates that would materially limit the
                                   ability of Morgan Stanley or any of its
                                   affiliates to hedge the SPARQS with respect
                                   to such stock (a "Hedging Restriction");
                                   provided further that if three Reference
                                   Basket Stocks cannot be identified from the
                                   S&P 500 Index by primary SIC Code for which
                                   a Hedging Restriction does not exist, the
                                   remaining Reference Basket Stock(s) shall be
                                   selected by the Calculation Agent from the
                                   largest market capitalization stock(s)
                                   within the same Division and Major Group
                                   classification (as defined by the Office of
                                   Management and Budget) as the primary SIC
                                   Code for Transocean. Each Reference Basket
                                   Stock shall be assigned a Basket Stock
                                   Exchange Ratio equal to the number of shares
                                   of such Reference Basket Stock with a
                                   Closing Price on the effective date of such
                                   Reorganization Event equal to the product of
                                   (a) the Non-Stock Exchange Property Value,
                                   (b) the Exchange Ratio in effect for
                                   Transocean Stock on the Trading Day
                                   immediately prior to the effective date of
                                   such Reorganization Event and (c) 0.3333333.

                         Following the allocation of any Extraordinary Dividend
                         to Reference Basket Stocks pursuant to paragraph 4
                         above or any Reorganization Event described in this
                         paragraph 5, the amount payable upon exchange at
                         maturity with respect to each $         principal
                         amount of this SPARQS shall be the sum of:

                                      17
<PAGE>

                              (x)  if applicable, Transocean Stock at the
                                   Exchange Ratio then in effect; and

                              (y)  if applicable, for each New Stock, such New
                                   Stock at the New Stock Exchange Ratio then
                                   in effect for such New Stock; and

                              (z)  if applicable, for each Reference Basket
                                   Stock, such Reference Basket Stock at the
                                   Basket Stock Exchange Ratio then in effect
                                   for such Reference Basket Stock.

                         In each case, the applicable Exchange Ratio (including
                         for this purpose, any New Stock Exchange Ratio or
                         Basket Stock Exchange Ratio) shall be determined by
                         the Calculation Agent on the third Trading Day prior
                         to the scheduled Maturity Date.

                         For purposes of paragraph 5 above, in the case of a
                         consummated tender or exchange offer or going-private
                         transaction involving consideration of particular
                         types, Exchange Property shall be deemed to include
                         the amount of cash or other property delivered by the
                         offeror in the tender or exchange offer (in an amount
                         determined on the basis of the rate of exchange in
                         such tender or exchange offer or going-private
                         transaction). In the event of a tender or exchange
                         offer or a going-private transaction with respect to
                         Exchange Property in which an offeree may elect to
                         receive cash or other property, Exchange Property
                         shall be deemed to include the kind and amount of cash
                         and other property received by offerees who elect to
                         receive cash.

                         Following the occurrence of any Reorganization Event
                         referred to in paragraphs 4 or 5 above, (i) references
                         to "Transocean Stock" under "No Fractional Shares,"
                         "Closing Price" and "Market Disruption Event" shall be
                         deemed to also refer to any New Stock or Reference
                         Basket Stock, and (ii) all other references in this
                         SPARQS to "Transocean Stock" shall be deemed to refer
                         to the Exchange Property into which this SPARQS is
                         thereafter exchangeable and references to a "share" or
                         "shares" of Transocean Stock shall be deemed to refer
                         to the applicable unit or units of such Exchange
                         Property, including any New Stock or

                                      18
<PAGE>

                         Reference Basket Stock, unless the context otherwise
                         requires. The New Stock Exchange Ratio(s) or Basket
                         Stock Exchange Ratios resulting from any
                         Reorganization Event described in paragraph 5 above or
                         similar adjustment under paragraph 4 above shall be
                         subject to the adjustments set forth in paragraphs 1
                         through 5 hereof.

                         If a Reference Basket Event occurs, the Issuer shall,
                         or shall cause the Calculation Agent to, provide
                         written notice to the Trustee at its New York office,
                         on which notice the Trustee may conclusively rely, and
                         to DTC of the occurrence of such Reference Basket
                         Event and of the three Reference Basket Stocks
                         selected as promptly as possible and in no event later
                         than five Business Days after the date of the
                         Reference Basket Event.

                         No adjustment to any Exchange Ratio (including for
                         this purpose, any New Stock Exchange Ratio or Basket
                         Stock Exchange Ratio) shall be required unless such
                         adjustment would require a change of at least 0.1% in
                         the Exchange Ratio then in effect. The Exchange Ratio
                         resulting from any of the adjustments specified above
                         will be rounded to the nearest one hundred-thousandth,
                         with five one-millionths rounded upward. Adjustments
                         to the Exchange Ratios will be made up to the close of
                         business on the third Trading Day prior to the
                         scheduled Maturity Date.

                         No adjustments to the Exchange Ratio or method of
                         calculating the Exchange Ratio shall be made other
                         than those specified above.

                         The Calculation Agent shall be solely responsible for
                         the determination and calculation of any adjustments
                         to the Exchange Ratio, any New Stock Exchange Ratio or
                         Basket Stock Exchange Ratio or method of calculating
                         the Exchange Property Value and of any related
                         determinations and calculations with respect to any
                         distributions of stock, other securities or other
                         property or assets (including cash) in connection with
                         any corporate event described in paragraphs 1 through
                         5 above, and its determinations and calculations with
                         respect thereto shall be conclusive in the absence of
                         manifest error.

                                      19
<PAGE>

                         The Calculation Agent shall provide information as to
                         any adjustments to the Exchange Ratio, or to the
                         method of calculating the amount payable upon exchange
                         at maturity of the SPARQS made pursuant to paragraph 5
                         above, upon written request by the holder of this
                         SPARQS.

Market Disruption
Event................... Market Disruption Event means, with respect to
                         Transocean Stock:

                              (i) a suspension, absence or material limitation
                              of trading of Transocean Stock on the primary
                              market for Transocean Stock for more than two
                              hours of trading or during the one-half hour
                              period preceding the close of the principal
                              trading session in such market; or a breakdown or
                              failure in the price and trade reporting systems
                              of the primary market for Transocean Stock as a
                              result of which the reported trading prices for
                              Transocean Stock during the last one-half hour
                              preceding the close of the principal trading
                              session in such market are materially inaccurate;
                              or the suspension, absence or material limitation
                              of trading on the primary market for trading in
                              options contracts related to Transocean Stock, if
                              available, during the one-half hour period
                              preceding the close of the principal trading
                              session in the applicable market, in each case as
                              determined by the Calculation Agent in its sole
                              discretion; and

                              (ii)a determination by the Calculation Agent in
                              its sole discretion that any event described in
                              clause (i) above materially interfered with the
                              ability of the Issuer or any of its affiliates to
                              unwind or adjust all or a material portion of the
                              hedge with respect to the SPARQS due December 1,
                              2006, Mandatorily Exchangeable for Shares of
                              Common Stock of Transocean Inc.

                         For purposes of determining whether a Market
                         Disruption Event has occurred: (1) a limitation on the
                         hours or number of days of trading shall not
                         constitute a Market Disruption Event if it results
                         from an announced change in the regular business hours
                         of the relevant exchange, (2) a decision to
                         permanently discontinue trading in the relevant
                         options contract

                                      20
<PAGE>

                         shall not constitute a Market Disruption Event, (3)
                         limitations pursuant to NYSE Rule 80A (or any
                         applicable rule or regulation enacted or promulgated
                         by the NYSE, any other self-regulatory organization or
                         the Securities and Exchange Commission of scope
                         similar to NYSE Rule 80A as determined by the
                         Calculation Agent) on trading during significant
                         market fluctuations shall constitute a suspension,
                         absence or material limitation of trading, (4) a
                         suspension of trading in options contracts on
                         Transocean Stock by the primary securities market
                         trading in such options, if available, by reason of
                         (x) a price change exceeding limits set by such
                         securities exchange or market, (y) an imbalance of
                         orders relating to such contracts or (z) a disparity
                         in bid and ask quotes relating to such contracts shall
                         constitute a suspension, absence or material
                         limitation of trading in options contracts related to
                         Transocean Stock and (5) a suspension, absence or
                         material limitation of trading on the primary
                         securities market on which options contracts related
                         to Transocean Stock are traded shall not include any
                         time when such securities market is itself closed for
                         trading under ordinary circumstances.

Alternate Exchange
  Calculation in
  Case of an Event
  of Default............ In case an event of default with respect to the SPARQS
                         shall have occurred and be continuing, the amount
                         declared due and payable per each $     principal
                         amount of this SPARQS upon any acceleration of this
                         SPARQS (an "Event of Default Acceleration") shall be
                         determined by the Calculation Agent and shall be an
                         amount in cash equal to the lesser of (i) the product
                         of (x) the Closing Price of Transocean Stock (and/or
                         the value of any Exchange Property) as of the date of
                         such acceleration and (y) the then current Exchange
                         Ratio and (ii) the Call Price calculated as though the
                         date of acceleration were the Call Date (but in no
                         event less than the Call Price for the first Call
                         Date), in each case plus accrued but unpaid interest
                         to but excluding the date of acceleration; provided
                         that if the Issuer has called the SPARQS in accordance
                         with the Morgan Stanley Call Right, the amount
                         declared due and payable upon any such acceleration
                         shall be an amount in cash for each $     principal
                         amount of this SPARQS equal to the Call Price for the
                         Call Date specified in the Issuer's notice of
                         mandatory exchange, plus accrued but unpaid interest
                         to but excluding the date of acceleration.

                                      21
<PAGE>

Treatment of SPARQS
  for United States
  Federal Income Tax
  Purposes.............. The Issuer, by its sale of this SPARQS, and the holder
                         of this SPARQS (and any successor holder of, or holder
                         of a beneficial interest in, this SPARQS), by its
                         respective purchase hereof, agree (in the absence of
                         an administrative determination or judicial ruling to
                         the contrary) to characterize each $       principal
                         amount of this SPARQS for all tax purposes as a unit
                         consisting of (A) a terminable contract (the
                         "Terminable Forward Contract") that (i) requires the
                         holder of this SPARQS (subject to the Morgan Stanley
                         Call Right) to purchase, and the Issuer to sell, for
                         an amount equal to $        (the "Forward Price"),
                         Transocean Stock at maturity and (ii) allows the
                         Issuer, upon exercise of the Morgan Stanley Call
                         Right, to terminate the Terminable Forward Contract by
                         returning to such holder the Deposit (as defined
                         below) and paying to such holder an amount of cash
                         equal to the difference between the Deposit and the
                         Call Price and (B) a deposit with the Issuer of a
                         fixed amount of cash, equal to the Issue Price per
                         each $        principal amount of this SPARQS, to
                         secure the holder's obligation to purchase Transocean
                         Stock pursuant to the Terminable Forward Contract (the
                         "Deposit"), which Deposit bears a quarterly compounded
                         yield of     % per annum.

                                      22
<PAGE>

     Morgan Stanley, a Delaware corporation (together with its successors and
assigns, the "Issuer"), for value received, hereby promises to pay to CEDE &
CO., or registered assignees, the amount of Transocean Stock (or other Exchange
Property), as determined in accordance with the provisions set forth under
"Exchange at Maturity" above, due with respect to the principal sum of U.S.
$               (UNITED STATES DOLLARS                 ) on the Maturity Date
specified above (except to the extent redeemed or repaid prior to maturity) and
to pay interest thereon at the Interest Rate per annum specified above, from
and including the Interest Accrual Date specified above until the principal
hereof is paid or duly made available for payment weekly, monthly, quarterly,
semiannually or annually in arrears as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing on the
Interest Payment Date next succeeding the Interest Accrual Date specified
above, and at maturity (or on any redemption or repayment date); provided,
however, that if the Interest Accrual Date occurs between a Record Date, as
defined below, and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date succeeding the Interest
Accrual Date to the registered holder of this Note on the Record Date with
respect to such second Interest Payment Date; and provided, further, that if
this Note is subject to "Annual Interest Payments," interest payments shall be
made annually in arrears and the term "Interest Payment Date" shall be deemed
to mean the first day of March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date, a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be
made by U.S. dollar check mailed to the address of the

                                      23
<PAGE>

person entitled thereto as such address shall appear in the Note register. A
holder of U.S. $10,000,000 (or the equivalent in a Specified Currency) or more
in aggregate principal amount of Notes having the same Interest Payment Date,
the interest on which is payable in U.S. dollars, shall be entitled to receive
payments of interest, other than interest due at maturity or on any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent
in writing not less than 15 calendar days prior to the applicable Interest
Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten calendar days prior to the Maturity Date or any redemption or
repayment date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Exchange Rate Agent unless such
Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on
such payment date in the amount of the Specified Currency payable in the
absence of such an election to such holder

                                      24
<PAGE>

and at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, such payment will be made in the Specified
Currency. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments.

     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.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.

                                      25
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED:                                     MORGAN STANLEY

                                           By:
                                              ---------------------------------
                                              Name:
                                              Title:

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A., as Trustee

By:
   ----------------------------------
   Authorized Officer

                                      26
<PAGE>

                          FORM OF REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series F, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A.
(formerly known as JPMorgan Chase Bank), as Trustee (the "Trustee," which term
includes any successor trustee under the Senior Indenture) (as may be amended
or supplemented from time to time, the "Senior Indenture"), to which Senior
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities of the Issuer, the Trustee and holders of the Notes and the terms
upon which the Notes are, and are to be, authenticated and delivered. The
Issuer has appointed JPMorgan Chase Bank, N.A. at its corporate trust office in
The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 calendar days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be

                                      27
<PAGE>

repaid, together with interest accrued and unpaid hereon to the date of
repayment, provided that if this Note is issued with original issue discount,
this Note will be repayable on the applicable Optional Repayment Date or Dates
at the price(s) specified on the face hereof. For this Note to be repaid at the
option of the holder hereof, the Paying Agent must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, at least 15 but
not more than 30 calendar days prior to the date of repayment, (i) this Note
with the form entitled "Option to Elect Repayment" below duly completed or (ii)
a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or a trust company in the United States setting forth
the name of the holder of this Note, the principal amount hereof, the
certificate number of this Note or a description of this Note's tenor and
terms, the principal amount hereof to be repaid, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note,
together with the form entitled "Option to Elect Repayment" duly completed,
will be received by the Paying Agent not later than the fifth Business Day
after the date of such telegram, telex, facsimile transmission or letter;
provided, that such telegram, telex, facsimile transmission or letter shall
only be effective if this Note and form duly completed are received by the
Paying Agent by such fifth Business Day. Exercise of such repayment option by
the holder hereof shall be irrevocable. In the event of repayment of this Note
in part only, a new Note or Notes for the amount of the unpaid portion hereof
shall be issued in the name of the holder hereof upon the cancellation hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date 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 or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an

                                      28
<PAGE>

integral multiple of 1,000 units of such Specified Currency, as determined by
reference to the noon dollar buying rate in The City of New York for cable
transfers of such Specified Currency published by the Federal Reserve Bank of
New York (the "Market Exchange Rate") on the Business Day immediately preceding
the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon
the Trustee shall issue in the name of the transferee or transferees, in
exchange herefor, a new Note or Notes having identical terms and provisions and
having a like aggregate principal amount in authorized denominations, subject
to the terms and conditions set forth herein; provided, however, that the
Trustee will not be required (i) to register the transfer of or exchange any
Note that has been called for redemption in whole or in part, except the
unredeemed portion of Notes being redeemed in part, (ii) to register the
transfer of or exchange any Note if the holder thereof has exercised his right,
if any, to require the Issuer to repurchase such Note in whole or in part,
except the portion of such Note not required to be repurchased, or (iii) to
register the transfer of or exchange Notes to the extent and during the period
so provided in the Senior Indenture with respect to the redemption of Notes.
Notes are exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms and
provisions. All such exchanges and transfers of Notes will be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge in connection therewith. All Notes surrendered for
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee and executed by the registered
holder in person or by the holder's attorney duly authorized in writing. The
date of registration of any Note delivered upon any exchange or transfer of
Notes shall be such that no gain or loss of interest results from such exchange
or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such

                                      29
<PAGE>

series but not applicable to all outstanding debt securities issued under the
Senior Indenture shall have occurred and be continuing, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of each affected series, voting as one class, by
notice in writing to the Issuer and to the Trustee, if given by the
securityholders, may then declare the principal of all debt securities of all
such series and interest accrued thereon to be due and payable immediately and
(b) if an Event of Default due to a default in the performance of any other of
the covenants or agreements in the Senior Indenture applicable to all
outstanding debt securities issued thereunder, including this Note, or due to
certain events of bankruptcy, insolvency or reorganization of the Issuer, shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in aggregate principal amount of all outstanding debt securities
issued under the Senior Indenture, voting as one class, by notice in writing to
the Issuer and to the Trustee, if given by the securityholders, may declare the
principal of all such debt securities and interest accrued thereon to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except a continuing default in
payment of principal or premium, if any, or interest on such debt securities)
by the holders of a majority in aggregate principal amount of the debt
securities of all affected series then outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration or Redemption," then (i) if the principal hereof is
declared to be due and payable as described in the preceding paragraph, the
amount of principal due and payable with respect to this Note shall be limited
to the aggregate principal amount hereof multiplied by the sum of the Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated
as set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws, or any regulations or rulings promulgated

                                      30
<PAGE>

thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment becomes effective on or after the Initial
Offering Date hereof, the Issuer has or will become obligated to pay Additional
Amounts, as defined below, with respect to this Note as described below. Prior
to the giving of any notice of redemption pursuant to this paragraph, the
Issuer shall deliver to the Trustee (i) a certificate stating that the Issuer
is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Issuer to so redeem
have occurred, and (ii) an opinion of independent legal counsel satisfactory to
the Trustee to such effect based on such statement of facts; provided that no
such notice of redemption shall be given earlier than 60 calendar days prior to
the earliest date on which the Issuer would be obligated to pay such Additional
Amounts if a payment in respect of this Note were then due.

     Notice of redemption will be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on the face hereof, which date and the applicable
redemption price will be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding or deduction for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States, or any political subdivision or taxing authority thereof
or therein, will not be less than the amount provided for in this Note to be
then due and payable. The Issuer will not, however, make any payment of
Additional Amounts to any such holder who is a United States Alien for or on
account of:

          (a) any present or future tax, assessment or other governmental
     charge that would not have been so imposed but for (i) the existence of
     any present or former connection between such holder, or between a
     fiduciary, settlor, beneficiary, member or shareholder of such holder, if
     such holder is an estate, a trust, a partnership or a corporation for
     United States federal income tax purposes, and the United States,
     including, without limitation, such holder, or such fiduciary, settlor,
     beneficiary, member or shareholder, being or having been a citizen or
     resident thereof or being or having been engaged in a trade or business or
     present therein or having, or having had, a permanent establishment
     therein or (ii) the presentation by or on behalf of the holder of this
     Note for payment on a date more than 15 calendar days after the date on
     which such payment became due and payable or the date on which payment
     thereof is duly provided for, whichever occurs later;

          (b) any estate, inheritance, gift, sales, transfer, excise or
     personal property tax or any similar tax, assessment or governmental
     charge;

          (c) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as a personal holding

                                      31
<PAGE>

     company or foreign personal holding company or controlled foreign
     corporation or passive foreign investment company with respect to the
     United States or as a corporation which accumulates earnings to avoid
     United States federal income tax or as a private foundation or other
     tax-exempt organization or a bank receiving interest under Section
     881(c)(3)(A) of the Internal Revenue Code of 1986, as amended;

          (d) any tax, assessment or other governmental charge that is payable
     otherwise than by withholding or deduction from payments on or in respect
     of this Note;

          (e) any tax, assessment or other governmental charge required to be
     withheld by any Paying Agent from any payment of principal of, or interest
     on, this Note, if such payment can be made without such withholding by any
     other Paying Agent in a city in Western Europe;

          (f) any tax, assessment or other governmental charge that would not
     have been imposed but for the failure to comply with certification,
     information or other reporting requirements concerning the nationality,
     residence or identity of the holder or beneficial owner of this Note, if
     such compliance is required by statute or by regulation of the United
     States or of any political subdivision or taxing authority thereof or
     therein as a precondition to relief or exemption from such tax, assessment
     or other governmental charge;

          (g) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as the actual or
     constructive owner of 10% or more of the total combined voting power of
     all classes of stock entitled to vote of the Issuer or as a direct or
     indirect subsidiary of the Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

In addition, the Issuer shall not be required to make any payment of Additional
Amounts (i) to any such holder where such withholding or deduction is imposed
on a payment to an individual and is required to be made pursuant to any law
implementing or complying with, or introduced in order to conform to, any
European Union Directive on the taxation of savings; or (ii) by or on behalf of
a holder who would have been able to avoid such withholding or deduction by
presenting this Note or the relevant coupon to another Paying Agent in a member
state of the European Union. Nor shall the Issuer pay Additional Amounts with
respect to any payment on this Note to a United States Alien who is a fiduciary
or partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States (or any
political subdivision thereof) to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the

                                      32
<PAGE>

consent of the holder of each outstanding debt security affected thereby, (a)
extend the final maturity of any such debt security, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof, or change the
currency of payment thereof, or modify or amend the provisions for conversion
of any currency into any other currency, or modify or amend the provisions for
conversion or exchange of the debt security for securities of the Issuer or
other entities or for other property or the cash value of the property (other
than as provided in the antidilution provisions or other similar adjustment
provisions of the debt securities or otherwise in accordance with the terms
thereof), or impair or affect the rights of any holder to institute suit for
the payment thereof or (b) reduce the aforesaid percentage in principal amount
of debt securities the consent of the holders of which is required for any such
supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on any Note denominated in such Specified Currency
in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the Treaty establishing
the European Community, as amended. Any payment made under such circumstances
in U.S. dollars or euro where the required payment is in an unavailable
Specified Currency will not constitute an Event of Default. If such Market
Exchange Rate is not then available to the Issuer or is not published for a
particular Specified Currency, the Market Exchange Rate will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the

                                      33
<PAGE>

absence of manifest error, be conclusive for all purposes and binding on
holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated. If any European Union Directive on
the taxation of savings comes into force, the Issuer will, to the extent
possible as a matter of law, maintain a Paying Agent in a member state of the
European Union that will not be obligated to withhold or deduct tax pursuant to
any such Directive or any law implementing or complying with, or introduced in
order to conform to, such Directive.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

                                      34
<PAGE>

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     As used herein, the term "United States Alien" means any person who is,
for United States federal income tax purposes, (i) a nonresident alien
individual, (ii) a foreign corporation, (iii) a nonresident alien fiduciary of
a foreign estate or trust or (iv) a foreign partnership one or more of the
members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.

                                      35
<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

          TEN COM  -  as tenants in common
          TEN ENT  -  as tenants by the entireties
          JT TEN   -  as joint tenants with right of survivorship and not as
                      tenants in common

     UNIF GIFT MIN ACT - _____________________ Custodian ______________________
                               (Minor)                          (Cust)

     Under Uniform Gifts to Minors Act __________________________
                                                (State)

     Additional abbreviations may also be used though not in the above list.

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

                                      36
<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

_______________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE]

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
    [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated: ______________________

NOTICE: The signature to this assignment must correspond with the name
        as written upon the face of the within Note in every particular
        without alteration or enlargement or any change whatsoever.

                                      37
<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_____________; and specify the denomination or denominations (which shall not
be less than the minimum authorized denomination) of the Notes to be issued to
the holder for the portion of the within Note not being repaid (in the absence
of any such specification, one such Note shall be issued for the portion not
being repaid): ___________.

Dated: ______________________________    _______________________________________
                                         NOTICE: The signature on this Option
                                         to Elect Repayment must correspond
                                         with the name as written upon the face
                                         of the within instrument in every
                                         particular without alteration or
                                         enlargement.

                                      38<PAGE>
                                                                     Exhibit 4.1

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

                            LORAL SKYNET CORPORATION

                                     Issuer

                   14% SENIOR SECURED CASH/PIK NOTES DUE 2015

                                   ----------

                                    INDENTURE

                         Dated as of November 21, 2005

                                   ----------

                              THE BANK OF NEW YORK

                                     Trustee

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

                                        1

<PAGE>

                              CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
TIA                                                                 Indenture
Section                                                              Section
-------                                                          ---------------
<S>                                                              <C>
            310(a)(1) ........................................   7.10
               (a)(2) ........................................   7.10
               (a)(3) ........................................   N.A.
               (a)(4) ........................................   N.A.
               (a)(5) ........................................   7.10
                  (b) ........................................   7.08; 7.10
                  (c) ........................................   N.A.
               311(a) ........................................   7.11
                  (b) ........................................   7.11
                  (c) ........................................   N.A.
               312(a) ........................................   2.05, 12.03
                  (b) ........................................   12.03
                  (c) ........................................   12.03
               313(a) ........................................   7.06
               (b)(1) ........................................   N.A.
               (b)(2) ........................................   7.06
                  (c) ........................................   12.02
                  (d) ........................................   7.06
               314(a) ........................................   4.02; 4.03
                  (b) ........................................   N.A.
               (c)(1) ........................................   12.04
               (c)(2) ........................................   12.04
               (c)(3) ........................................   N.A.
                  (d) ........................................   11.03
                  (e) ........................................   12.05
                  (f) ........................................   N.A.
               315(a) ........................................   7.01
                  (b) ........................................   7.05; 12.02
                  (c) ........................................   7.01
                  (d) ........................................   7.01
                  (e) ........................................   6.11
316(a)(last sentence) ........................................   12.06
            (a)(1)(A) ........................................   6.05
            (a)(1)(B) ........................................   6.04
               (a)(2) ........................................   Section 1 of
                                                                 the Note; 12.06
                  (b) ........................................   Section 1 of
                                                                 the Note; 6.07
                  (c) ........................................   9.04
            317(a)(1) ........................................   6.08
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                              <C>

               (a)(2) ........................................   6.09
                  (b) ........................................   2.04
               318(a) ........................................   12.01
</TABLE>

N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
ARTICLE 1 Definitions and Incorporation by Reference.......................    1
   SECTION 1.01.    Certain Definitions....................................    1
   SECTION 1.02.    Other Definitions......................................   28
   SECTION 1.03.    Incorporation by Reference of Trust Indenture Act......   29
   SECTION 1.04.    Rules of Construction..................................   30

ARTICLE 2 The Notes........................................................   31
   SECTION 2.01.    Form and Dating........................................   31
   SECTION 2.02.    Execution and Authentication...........................   31
   SECTION 2.03.    Registrar and Paying Agent.............................   32
   SECTION 2.04.    Paying Agent To Hold Money in Trust....................   32
   SECTION 2.05.    Noteholder Lists.......................................   32
   SECTION 2.06.    Transfer and Exchange..................................   33
   SECTION 2.07.    Replacement Notes......................................   33
   SECTION 2.08.    Outstanding Notes......................................   33
   SECTION 2.09.    Temporary Notes........................................   34
   SECTION 2.10.    Cancellation...........................................   34
   SECTION 2.11.    Defaulted Interest.....................................   34
   SECTION 2.12.    CUSIP Numbers..........................................   34
   SECTION 2.13.    Trustee's Disclaimer...................................   34

ARTICLE 3 Redemption.......................................................   35
   SECTION 3.01.    Notices to Trustee.....................................   35
   SECTION 3.02.    Selection of Notes To Be Redeemed......................   35
   SECTION 3.03.    Notice of Redemption...................................   36
   SECTION 3.04.    Effect of Notice of Redemption.........................   37
   SECTION 3.05.    Deposit of Redemption Price............................   37
   SECTION 3.06.    Notes Redeemed in Part.................................   38

ARTICLE 4 Covenants........................................................   38
   SECTION 4.01.    Payment of Notes.......................................   38
   SECTION 4.02.    [Intentionally Left Blank].............................   40
   SECTION 4.03.    Compliance Certificate.................................   40
   SECTION 4.04.    Change of Control......................................   40
   SECTION 4.05.    Limitation on Restricted Payments......................   42
   SECTION 4.06.    Limitation on Indebtedness.............................   44
   SECTION 4.07.    Limitation on Liens....................................   47
   SECTION 4.08.    Limitation on Restrictions on Distributions from
                    Restricted Subsidiaries................................   47
   SECTION 4.09.    Limitation on Sales of Assets and Subsidiary Stock.....   49
   SECTION 4.10.    Limitation on Affiliate Transactions...................   51
   SECTION 4.11.    Guarantors.............................................   53
   SECTION 4.12.    Limitation on the Issuance and Sale of Capital Stock of
                    Restricted Subsidiaries................................   53
   SECTION 4.13.    Limitation on Sale/Leaseback Transactions..............   54
   SECTION 4.14.    Existence..............................................   54
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                           <C>
   SECTION 4.15.    Payment of Taxes and Other Claims......................   54
   SECTION 4.16.    Insurance; Maintenance of Properties...................   55
   SECTION 4.17.    Notice of Defaults.....................................   55
   SECTION 4.18.    Business Activities....................................   55
   SECTION 4.19.    Use of Proceeds........................................   55
   SECTION 4.20.    Further Instruments and Acts...........................   55

ARTICLE 5 Merger...........................................................   56
   SECTION 5.01.    Merger and Consolidation...............................   56

ARTICLE 6 Defaults and Remedies............................................   57
   SECTION 6.01.    Events of Default......................................   57
   SECTION 6.02.    Acceleration...........................................   59
   SECTION 6.03.    Other Remedies.........................................   60
   SECTION 6.04.    Waiver of Past Defaults................................   60
   SECTION 6.05.    Control by Majority....................................   60
   SECTION 6.06.    Limitation on Suits....................................   60
   SECTION 6.07.    Rights of Holders to Receive Payment...................   61
   SECTION 6.08.    Collection Suit by Trustee.............................   61
   SECTION 6.09.    Trustee May File Proofs of Claim.......................   61
   SECTION 6.10.    Priorities.............................................   62
   SECTION 6.11.    Undertaking for Costs..................................   62
   SECTION 6.12.    Waiver of Stay or Extension Laws.......................   62
   SECTION 6.13.    Payment of Premium.....................................   62

ARTICLE 7 Trustee..........................................................   63
   SECTION 7.01.    Duties of Trustee......................................   63
   SECTION 7.02.    Rights of Trustee......................................   64
   SECTION 7.03.    Individual Rights of Trustee...........................   65
   SECTION 7.04.    Trustee's Disclaimer...................................   65
   SECTION 7.05.    Notice of Defaults.....................................   65
   SECTION 7.06.    Reports by Trustee to Holders..........................   65
   SECTION 7.07.    Compensation and Indemnity.............................   65
   SECTION 7.08.    Replacement of Trustee.................................   67
   SECTION 7.09.    Successor Trustee by Merger............................   68
   SECTION 7.10.    Eligibility; Disqualification..........................   68
   SECTION 7.11.    Preferential Collection of Claims Against Company......   68
   SECTION 7.12.    Co-trustees and Separate Trustees......................   68

ARTICLE 8 Discharge of Indenture; Defeasance...............................   69
   SECTION 8.01.    Discharge of Liability on Notes; Defeasance............   69
   SECTION 8.02.    Conditions to Defeasance...............................   70
   SECTION 8.03.    Application of Trust Money.............................   71
   SECTION 8.04.    Repayment to Company...................................   71
   SECTION 8.05.    Indemnity for Government Obligations...................   72
   SECTION 8.06.    Reinstatement..........................................   72

ARTICLE 9 Amendments.......................................................   72
   SECTION 9.01.    Without Consent of Holders.............................   72
</TABLE>

<PAGE>

<TABLE>
<S>                                                                           <C>
   SECTION 9.02.    With Consent of Holders................................   73
   SECTION 9.03.    Compliance with Trust Indenture Act....................   74
   SECTION 9.04.    Revocation and Effect of Consents and Waivers..........   74
   SECTION 9.05.    Notation on or Exchange of Notes.......................   75
   SECTION 9.06.    Trustee To Sign Amendments.............................   75

ARTICLE 10 Guaranties......................................................   75
   SECTION 10.01.   Guaranties.............................................   75
   SECTION 10.02.   Limitation on Liability................................   77
   SECTION 10.03.   Successors and Assigns.................................   77
   SECTION 10.04.   No Waiver..............................................   77
   SECTION 10.05.   Modification...........................................   78
   SECTION 10.06.   Release of Guarantor...................................   78

ARTICLE 11 Collateral......................................................   78
   SECTION 11.01.   Collateral Documents; Additional Collateral............   78
   SECTION 11.02.   Recording, Registration and Opinions...................   80
   SECTION 11.03.   Release of Collateral..................................   82
   SECTION 11.04.   Possession and Use of Collateral.......................   82
   SECTION 11.05.   Specified Releases of Collateral.......................   83
   SECTION 11.06.   Disposition of Collateral Without Release..............   84
   SECTION 11.07.   Form and Sufficiency of Release........................   85
   SECTION 11.08.   Purchaser Protected....................................   85
   SECTION 11.09.   Authorization of Actions To Be Taken by the Collateral
                    Agent Under the Collateral Documents...................   85
   SECTION 11.10.   Authorization of Receipt of Funds by the Collateral
                    Agent Under the Collateral Documents...................   86
   SECTION 11.11.   Third Party Consents to Pledge of Collateral...........   86
   SECTION 11.12.   Collateral Agent.......................................   86
   SECTION 11.13.   Authorization of Actions to Be Taken...................   86

ARTICLE 12 Miscellaneous...................................................   89
   SECTION 12.01.   Trust Indenture Act Controls...........................   89
   SECTION 12.02.   Notices................................................   89
   SECTION 12.03.   Communication by Holders with Other Holders............   90
   SECTION 12.04.   Certificate and Opinion as to Conditions Precedent.....   90
   SECTION 12.05.   Statements Required in Certificate or Opinion..........   90
   SECTION 12.06.   When Notes Disregarded.................................   91
   SECTION 12.07.   Rules by Trustee, Paying Agent and Registrar...........   91
   SECTION 12.08.   Legal Holidays.........................................   91
   SECTION 12.09.   Governing Law; Waiver of Jury Trial....................   91
   SECTION 12.10.   No Recourse Against Others.............................   92
   SECTION 12.11.   Successors.............................................   92
   SECTION 12.12.   Multiple Originals.....................................   92
   SECTION 12.13.   Table of Contents; Headings............................   92
</TABLE>

<PAGE>

Schedule 4.10 - Certain Affiliate Transactions

Schedule 11.01 - Certain Perfection Deadlines

Appendix A - Provisions Relating to the Notes
Appendix B - Form of Notes
Appendix C - Form of Security Agreement

<PAGE>

          INDENTURE dated as of November 21, 2005, by and among Loral Skynet
Corporation, a Delaware corporation (the "COMPANY"), the Guarantors from time to
time parties hereto, and The Bank of New York, as trustee and as collateral
agent.

          Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Notes.

                                    ARTICLE 1

                   Definitions and Incorporation by Reference

          SECTION 1.01. Certain Definitions.

          "ADDITIONAL ASSETS" means:

          (1) any property, plant or equipment (including transponder capacity)
     used in a Related Business and regulatory rights acquired or regulatory
     rights settled relating to a Related Business;

          (2) the Capital Stock of a Person that becomes a Restricted Subsidiary
     as a result of the acquisition of such Capital Stock by the Company or a
     Restricted Subsidiary; or

          (3) Capital Stock constituting a minority interest in any Person that
     at such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.

          "ADDITIONAL NOTES" means Notes issued from time to time after the
Issue Date pursuant to Section 4.01(b) of this Indenture.

          "ADJUSTED EBITDA" of the Company for any period means EBITDA of the
Company for such period less the following:

          (1) all ongoing cash restructuring expenses that are incurred as part
     of the ongoing emergence process, including any non-recurring fees, charges
     or other expenses directly related to the Transactions and the
     Restructuring Transactions that are paid in cash subsequent to the Issue
     Date;

          (2) income being recognized against items whose cash receipt occurred
     prior to the Issue Date;

          (3) all other non-cash income of the Company and its consolidated
     Restricted Subsidiaries except to the extent such non-cash income
     represents cash income received in a prior period;

                                        1

<PAGE>

          (4) all income tax benefits of the Company and its consolidated
     Restricted Subsidiaries; and

          (5) dividends in respect of all Preferred Stock held by Persons other
     than the Company or a Wholly Owned Subsidiary (other than dividends payable
     solely in Capital Stock (other than Disqualified Stock) of the Company).

Adjusted EBITDA shall be annualized and prorated as provided in Section
4.01(b)(ii).

          "AFFILIATE" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing;
provided, however, that notwithstanding anything else herein to the contrary,
any Permitted Holder shall be deemed not to be an Affiliate of the Company, the
Parent, any Intermediate Holding Company or any Subsidiary of any of such
entities.

          "ASSET DISPOSITION" means any sale, lease, issuance, transfer or other
disposition (or series of related sales, leases, issuances, transfers or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "DISPOSITION"), of, and any
Event of Loss with respect to:

          (1) any shares of Capital Stock of a Restricted Subsidiary;

          (2) all or substantially all the assets of any division or line of
     business of the Company or any Restricted Subsidiary; or

          (3) any other assets of the Company or any Restricted Subsidiary
     outside the ordinary course of business (it being understood that (i) the
     lease (including prepaid leases) of transponders or any similar arrangement
     whereby the Company retains title to the transponder, or (ii) the
     disposition of any transponder, in each case with a fair market value of
     less than $25.0 million, shall be deemed to be in the ordinary course of
     business) of the Company or such Restricted Subsidiary.

          Notwithstanding the foregoing, the following shall be deemed not to be
Asset Dispositions:

          (A)  a disposition to the Company or a Subsidiary Guarantor;

          (B)  for purposes of Section 4.10 only, (i) a disposition that
               constitutes a Restricted Payment permitted by Section 4.05 or a
               Permitted Investment and (ii) a transaction governed by, and
               consummated in compliance with, Section 5.01;

          (C)  the granting of a Permitted Lien;

                                        2

<PAGE>

          (D)  dispositions of obsolete, damaged or worn out equipment no longer
               used or useful to the business of the Company and its Restricted
               Subsidiaries;

          (E)  a disposition in any single transaction or a group of related
               transactions of assets, including transponders, with a fair
               market value of less than $100.0 million;

          (F)  any disposition effected as part of any Restructuring
               Transactions;

          (G)  any disposition of assets pursuant to any contract (i) assumed
               with the approval of the Bankruptcy Court under the Plan or (ii)
               entered into prior to the Issue Date and approved by the
               Bankruptcy Court;

          (H)  any disposition of title of the Estrela do Sul satellite to the
               providers of insurance for such satellite;

          (I)  a sale and leaseback transaction as described in Section 9.10 of
               that certain Lease Agreement dated August 18, 1999 by and between
               LAPS(HK) and APT Satellite Company Limited;

          (J)  the exchange of transponder capacity as set forth in the December
               10, 2002 and November 16, 2003 letter agreements entered into
               between the Company and APT Satellite Company Limited;

          (K)  any transfer of equity interests in Earth Station Ecuador CIA
               Ltda.; and

          (L)  any disposition effected pursuant to that certain letter
               agreement dated August 26, 2003, as amended on November 16, 2003
               by and between the Company and APT Satellite Company Limited.

          "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded semi-annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended); provided, however, that if such Sale/Leaseback Transaction
results in a Capital Lease Obligation, the amount of Indebtedness represented
thereby will be determined in accordance with the definition of "Capital Lease
Obligation."

          "AVERAGE LIFE" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing:

          (1) the sum of the products of the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of or redemption or similar payment with respect to such Indebtedness
     multiplied by the amount of such payment, by

          (2) the sum of all such payments.

                                        3

<PAGE>

          "BANKRUPTCY INTEREST" means, with respect to any Indebtedness, all
interest accruing thereon after the filing of a petition by or against the
Company or any of its Subsidiaries under any Bankruptcy Law, in accordance with
and at the rate (including any rate applicable upon any default or event of
default, to the extent lawful) specified in the documents evidencing or
governing such Indebtedness, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under such Bankruptcy
Law.

          "BOARD OF DIRECTORS" with respect to a Person means the board of
directors of such Person or any committee thereof duly authorized to act on
behalf of such board, and unless specified to the contrary or inappropriate in
the context, refers to the Board of Directors of the Company.

          "BUSINESS DAY" means each day which is not a Legal Holiday.

          "CAPITAL LEASE OBLIGATION" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.

          "CAPITAL STOCK" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company interests but
excluding any debt securities convertible into such equity.

          "CHANGE OF CONTROL" means the occurrence of any of the following
events:

          (1) any "person" (as such term is used in Sections 13(d) and 14(d) of
     the Exchange Act), other than one or more Permitted Holders, the Parent or
     any intermediate holding company between the Company and the Parent, is or
     becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
     Exchange Act, except that for purposes of this clause (1) such person (the
     "SPECIFIED PERSON") shall be deemed to have "beneficial ownership" of all
     shares that such specified person has the right to acquire, whether such
     right is exercisable immediately or only after the passage of time),
     directly or indirectly, of more than 50% of the total voting power of the
     Voting Stock of the Company (including any successor to the Company
     pursuant to Article 5 of this Indenture) (for the purposes of this clause
     (1), such specified person shall be deemed to beneficially own any Voting
     Stock of the Company or any other Person held by any entity (a "PARENT
     ENTITY") if such specified person is the beneficial owner (as defined in
     this clause (1)), directly or indirectly, of more than 50% of the voting
     power of the Voting Stock of such parent entity;

          (2) individuals who on the Issue Date constituted the Parent Board or
     the Company Board (together with any new directors whose election by such
     Board of Directors or whose nomination for election by the stockholders of
     the Parent or the Company, as the case may be, was approved by (A) a vote
     of a majority of the directors

                                        4

<PAGE>

     of the Parent or the Company, as the case may be, then still in office who
     were either directors on the Issue Date or whose election or nomination for
     election was previously so approved or (B) the Permitted Holders) cease for
     any reason to constitute a majority of such Board of Directors then in
     office; or

          (3) the adoption of a plan under Bankruptcy Law relating to the
     liquidation or dissolution of the Company.

          "CODE" means the Internal Revenue Code of 1986, as amended.

          "COLLATERAL" means any assets of the Company or any Guarantor defined
as "Collateral" in any Collateral Document or otherwise subject to a security
interest or lien in favor of the Collateral Agent to secure the payment of
obligations under this Indenture, the Collateral Documents or the Notes;
provided, however, that in no case shall the Collateral include Excluded
Collateral.

          "COLLATERAL AGENT" means The Bank of New York in its capacity as
collateral agent under any Collateral Document until a successor replaces it,
and thereafter means the successor.

          "COLLATERAL DOCUMENTS" means, collectively, the Security Agreement and
all other security agreements, pledge agreements, mortgages, deeds of trust,
collateral agreements, control agreements, assignments, instruments, financing
statements, filings and other documents that grant, evidence, set forth, provide
notice of, govern or limit any security interest or lien in favor of the
Collateral Agent in the Collateral, and all amendments thereto from time to
time.

          "COMMERCIALLY REASONABLE EFFORTS" means efforts that are reasonable
under the circumstances as determined in good faith by the Board of Directors of
the Company. Such efforts do not, in any event, include the payment of money or
the making of concessions by the Company or any Subsidiary (or any Affiliate or
Permitted Holder) in order to obtain such concessions or making efforts to
obtain consent or approval if in good faith the Board of Directors determines
that such efforts are unlikely to be successful.

          "COMPANY" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.

          "COMPANY BOARD" means the Board of Directors of the Company.

          "CONSOLIDATED CASH INTEREST EXPENSE" for the Company, for any period,
means Consolidated Interest Expense for the Company for such period, less the
following, without duplication:

          (1) any non-cash interest expense of the Company and its consolidated
Restricted Subsidiaries;

          (2) any interest payments on the Notes that are paid in-kind; and

                                        5

<PAGE>

          (3) any amount included pursuant to clause (7) of the definition of
the term "Consolidated Interest Expense".

          "CONSOLIDATED COVERAGE RATIO" as of any date of determination means
the ratio of (x) the aggregate amount of EBITDA of the Company for the period of
the most recent four consecutive fiscal quarters ending at least 50 days prior
to the date of such determination to (y) Consolidated Cash Interest Expense of
the Company for such four fiscal quarters; provided, however, that:

          (1) if the Company or any Restricted Subsidiary has Incurred any
     Indebtedness since the beginning of such period that remains outstanding or
     if the transaction giving rise to the need to calculate the Consolidated
     Coverage Ratio is an Incurrence of Indebtedness, or both, then EBITDA and
     Consolidated Cash Interest Expense for such period shall be calculated
     after giving effect on a pro forma basis to such Indebtedness and the use
     of proceeds thereof as if such Indebtedness had been Incurred on the first
     day of such period and such proceeds had been applied as of such date;

          (2) if the Company or any Restricted Subsidiary has repaid,
     repurchased, defeased or otherwise discharged any Indebtedness since the
     beginning of such period or if any Indebtedness is to be repaid,
     repurchased, defeased or otherwise discharged (in each case other than
     Indebtedness Incurred under any revolving credit facility unless such
     Indebtedness has been permanently repaid and has not been replaced) on the
     date of the transaction giving rise to the need to calculate the
     Consolidated Coverage Ratio, then EBITDA and Consolidated Cash Interest
     Expense for such period shall be calculated on a pro forma basis as if such
     discharge had occurred on the first day of such period and as if the
     Company or such Restricted Subsidiary had not earned the interest income
     actually earned, if any, during such period in respect of cash or Temporary
     Cash Investments used to repay, repurchase, defease or otherwise discharge
     such Indebtedness;

          (3) if, since the beginning of such period, the Company or any
     Restricted Subsidiary shall have made any Asset Disposition, then EBITDA
     for such period shall be reduced by an amount equal to EBITDA (if positive)
     directly attributable to the assets which were the subject of such Asset
     Disposition for such period, or increased by an amount equal to EBITDA (if
     negative) directly attributable thereto for such period, and Consolidated
     Cash Interest Expense for such period shall be reduced by an amount equal
     to the Consolidated Cash Interest Expense directly attributable to any
     Indebtedness of the Company or any Restricted Subsidiary repaid,
     repurchased, defeased or otherwise discharged with respect to the Company
     and its continuing Restricted Subsidiaries in connection with such Asset
     Disposition for such period (or, if the Capital Stock of any Restricted
     Subsidiary is sold, the Consolidated Cash Interest Expense for such period
     directly attributable to the Indebtedness of such Restricted Subsidiary to
     the extent the Company and its continuing Restricted Subsidiaries are no
     longer liable for such Indebtedness after such sale);

          (4) if, since the beginning of such period, the Company or any
     Restricted Subsidiary (by merger or otherwise) shall have made an
     Investment in any Restricted

                                        6

<PAGE>

     Subsidiary (or any Person which becomes a Restricted Subsidiary) or an
     acquisition of assets having a fair market value in excess of $10.0
     million, then EBITDA and Consolidated Cash Interest Expense for such period
     shall be calculated after giving pro forma effect thereto (including the
     Incurrence of any Indebtedness) as if such Investment or acquisition had
     occurred on the first day of such period; and

          (5) if, since the beginning of such period, any Person (that
     subsequently became a Restricted Subsidiary or was merged with or into the
     Company or any Restricted Subsidiary since the beginning of such period)
     shall have made any Asset Disposition, any Investment or acquisition of
     assets that would have required an adjustment pursuant to clause (3) or (4)
     above if made by the Company or a Restricted Subsidiary during such period,
     then EBITDA and Consolidated Cash Interest Expense for such period shall be
     calculated after giving pro forma effect thereto as if such Asset
     Disposition, Investment or acquisition had occurred on the first day of
     such period.

For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.

          If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness, but if the remaining term of such Interest Rate
Agreement is less than twelve months, then such Interest Rate Agreement shall
only be taken into account for that portion of the period equal to the remaining
term thereof).

          The Consolidated Interest Expense attributable to interest on any
Indebtedness under a revolving credit facility the outstanding principal balance
of which is required to be computed on a pro forma basis in accordance with the
foregoing shall be computed based on the average daily balance of such
Indebtedness during the applicable period, provided, that such average daily
balance shall take into account the amount of any repayment of Indebtedness
under such revolving credit facility during the applicable period, to the extent
such repayment permanently reduced the commitments or amounts available to be
borrowed under such facility.

          If the calculation of the Consolidated Coverage Ratio as of any date
of determination would include any period prior to the Issue Date, Consolidated
Interest Expense and EBITDA for such four fiscal quarter period shall be
determined (i) by annualizing the Consolidated Interest Expense and EBITDA for
all completed fiscal quarters starting after the Issue Date and ending prior to
such date of determination for which financial statements are available or (ii)
if no fiscal quarters have started after the Issue Date and ended prior to such
date of determination for which financial statements are available, in the case
of Consolidated Interest Expense, by using the Indebtedness and Capital Lease
Obligations balances and expense amounts as of such date of determination and
for the period from the Issue Date to such date of determination and in the case
of EBITDA, by using estimated EBITDA for the period from the

                                       7

<PAGE>

Issue Date to such date of determination as reasonably determined by the Board
of Directors of the Company in good faith.

          "CONSOLIDATED INTEREST EXPENSE" of the Company means, for any period,
the total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Company or its Restricted Subsidiaries,
without duplication:

          (1) interest expense attributable to Capital Lease Obligations and the
     interest expense attributable to leases constituting part of a
     Sale/Leaseback Transaction;

          (2) amortization of debt discount and debt issuance cost;

          (3) capitalized interest;

          (4) non-cash interest expense;

          (5) commissions, discounts and other fees and charges owed with
     respect to letters of credit and bankers' acceptance financing;

          (6) net payments pursuant to Interest Rate Agreements;

          (7) dividends in respect of all Preferred Stock held by Persons other
     than the Company or a Wholly Owned Subsidiary (other than dividends payable
     solely in Capital Stock (other than Disqualified Stock) of the Company);
     provided, however, that such dividends will be multiplied by a fraction the
     numerator of which is one and the denominator of which is one minus the
     effective combined tax rate of the issuer of such Preferred Stock
     (expressed as a decimal) for such period (as estimated by the chief
     financial officer of the Company in good faith);

          (8) interest incurred in connection with Investments in discontinued
     operations;

          (9) interest accruing on any Indebtedness of any other Person to the
     extent such Indebtedness is Guaranteed by (or secured by the assets of) the
     Company or any Restricted Subsidiary; and

          (10) the cash contributions to any employee stock ownership plan or
     similar trust to the extent such contributions are used by such plan or
     trust to pay interest or fees to any Person (other than the Company) in
     connection with Indebtedness Incurred by such plan or trust.

          "CONSOLIDATED NET INCOME" of the Company means, for any period, the
net income of the Company and its consolidated Subsidiaries (computed before
giving effect to the payment of dividends on Capital Stock); provided, however,
that there shall not be included in such Consolidated Net Income:

                                        8

<PAGE>

          (1) any net income of any Person (other than the Company) if such
     Person is not a Restricted Subsidiary, except that:

          (A)  subject to the exclusion contained in clause (3) below, the
               Company's equity in the net income of any such Person for such
               period shall be included in such Consolidated Net Income in an
               amount equal to the aggregate amount of cash actually distributed
               by such Person during such period to the Company or a Restricted
               Subsidiary as a dividend or other distribution (subject, in the
               case of a dividend or other distribution paid to a Restricted
               Subsidiary, to the limitations contained in clause (2) below);
               and

          (B)  the Company's equity in a net loss of any such Person for such
               period shall be included in determining such Consolidated Net
               Income;

          (2) any net income of any Restricted Subsidiary if such Restricted
     Subsidiary is subject to restrictions, directly or indirectly, on the
     payment of dividends or the making of distributions by such Restricted
     Subsidiary, directly or indirectly, to the Company, except that:

          (A)  subject to the exclusion contained in clause (3) below, the net
               income of any such Restricted Subsidiary for such period shall be
               included in such Consolidated Net Income in an amount equal to
               the aggregate amount of cash actually distributed by such
               Restricted Subsidiary during such period to the Company or
               another Restricted Subsidiary as a dividend or other distribution
               (subject, in the case of a dividend or other distribution paid to
               another Restricted Subsidiary, to the limitation contained in
               this clause (2));

          (B)  the net loss of any such Restricted Subsidiary for such period
               shall be included in determining such Consolidated Net Income;
               and

          (C)  the net income of any such Restricted Subsidiary for such period
               shall not be excluded solely as a result of the restrictions on
               the payment of dividends and the making of distributions set
               forth in any Credit Facility Incurred pursuant to Section
               4.06(b)(1) or Indebtedness under Section 4.06(b)(11) or (12), or
               any Credit Linked Hedge related to any such Credit Facility;

          (3) any gain or loss (other than any cash loss) realized upon the sale
     or other disposition of any assets of the Company, its consolidated
     Subsidiaries or any other Person (including pursuant to any
     sale-and-leaseback arrangement) which is not sold or otherwise disposed of
     in the ordinary course of business and any gain (but not loss) realized
     upon the sale or other disposition of any Capital Stock of any Person;

          (4) extraordinary gains or losses;

                                        9

<PAGE>

          (5) the cumulative effect of a change in accounting principles and its
     effect as shown on the Company's consolidated statement of income for such
     period;

          (6) any non-recurring fees, charges or other expenses directly related
     to the Transactions; and

          (7) any charges recorded as a result of implementing SFAS 123R
     (expensing of stock options) and any related interpretations or amendments
     thereto.

          Notwithstanding the foregoing, for the purposes of Section 4.05 only,
there shall be excluded from Consolidated Net Income any repurchases, repayments
or redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under Section 4.05(a)(3)(D).

          "CORPORATE TRUST OFFICE" means the corporate trust office of the
Trustee located at 101 Barclay Street, 8 West, New York, New York 10286,
Attention: Corporate Trust Division - Corporate Finance Unit, or such other
office, designated by the Trustee by written notice to the Company, at which at
any particular time its corporate trust business shall be administered.

          "CREDIT FACILITIES" means one or more debt facilities, capital markets
transactions or commercial paper facilities or any other agreement or instrument
providing for or evidencing the extension of credit with banks, finance
companies, funds, insurance companies, vendors or institutional lenders
providing revolving credit loans, term loans, notes, bonds, debentures,
receivables financing (including through the sale of receivables) or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.

          "CREDIT LINKED HEDGE" means, with respect to a Credit Facility, all
Hedging Obligations that (1) constitute or are directly related to Indebtedness
Incurred under such Credit Facility or are entered into with counterparties who
are lenders or Affiliates of lenders under such Credit Facility, (2) are secured
by all collateral securing such Credit Facility on an equal and ratable basis
and guaranteed by all guarantors of such Credit Facility on a pari passu basis,
in each case pursuant to common documentation, (3) contains covenants not less
favorable to the Noteholders than those set forth in such Credit Facility, and
(4) are permitted under this Indenture.

          "CURRENCY AGREEMENT" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement designed to protect
such Person against fluctuations in currency values.

          "DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.

          "DISQUALIFIED STOCK" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or upon
the happening of any event:

                                       10

<PAGE>

          (1) matures or is mandatorily redeemable (other than redeemable only
     for Capital Stock of such Person which is not itself Disqualified Stock)
     pursuant to a sinking fund obligation or otherwise;

          (2) is convertible or exchangeable at the option of the holder for
     Indebtedness or Disqualified Stock; or

          (3) is mandatorily redeemable or must be purchased upon the occurrence
     of certain events or otherwise, in whole or in part;

in each case on or prior to the date that is 367 days after the Stated Maturity
of the Notes; provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to purchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if:

          (A)  the "asset sale" or "change of control" provisions applicable to
               such Capital Stock are not more favorable to the holders of such
               Capital Stock than the terms applicable to the Notes and
               described in Sections 4.04 and 4.10; and

          (B)  any such requirement only becomes operative after compliance with
               such terms applicable to the Notes, including the purchase of any
               Notes tendered pursuant thereto.

          The amount of any Disqualified Stock that does not have a fixed
redemption, repayment or repurchase price will be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
redeemed, repaid or repurchased on any date on which the amount of such
Disqualified Stock is to be determined pursuant to this Indenture; provided,
however, that if such Disqualified Stock could not be required to be redeemed,
repaid or repurchased at the time of such determination, the redemption,
repayment or repurchase price will be the book value of such Disqualified Stock
as reflected in the most recent financial statements of such Person.

          "DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that is not a
Foreign Subsidiary.

          "EBITDA" of the Company for any period means the sum of Consolidated
Net Income of the Company, plus the following to the extent deducted in
calculating such Consolidated Net Income:

          (1) all income tax expense of the Company and its consolidated
     Restricted Subsidiaries;

          (2) Consolidated Interest Expense (but computed without any increase
     for the amount set forth in clause (7) of the definition of Consolidated
     Interest Expense);

                                       11

<PAGE>

          (3) depreciation and amortization expense of the Company and its
     consolidated Restricted Subsidiaries (excluding amortization expense
     attributable to a prepaid operating activity item that was paid in cash in
     a prior period);

          (4) all other non-cash charges of the Company and its consolidated
     Restricted Subsidiaries (excluding any such non-cash charge to the extent
     that it represents an accrual of or reserve for cash expenditures in any
     future period);

          (5) all ongoing cash restructuring expenses that are incurred as part
     of the ongoing emergence process;

          (6) equity losses recognized in Consolidated Net Income; and

          (7) gains/losses recognized on foreign exchange,

in each case for such period.

          Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and non-cash charges
of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion, including by reason of
minority interests) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.

          "ESOP" means any employee stock ownership plan or a trust established
by the Company or any of its Subsidiaries for the benefit of their employees.

          "EVENT OF LOSS" means, with respect to any property or asset (tangible
or intangible, real or personal), any loss, destruction or damage of the
property or asset or any actual condemnation, seizure or taking by the power of
eminent domain or otherwise of the property or asset, or confiscation of the
property or asset or the requisition of the use of the property or asset, in any
such case only to the extent such loss, destruction or damage is valued in good
faith by the Board of Directors of the Company to be in excess of $100.0
million.

          "EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended.

          "EXCLUDED COLLATERAL" means:

          (1) any contract, agreement, instrument or other asset that by its
terms would be violated, breached or terminated by an assignment as Collateral
under any Collateral Document (other than to the extent that such terms
prohibiting such assignment in any contract, agreement, instrument or other
asset would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the applicable Uniform Commercial Code or any successor provision or
provisions and other than to the extent that the Company has obtained a consent
from the relevant counterparty to such assignment);

                                       12

<PAGE>

          (2) any property subject to a Lien permitted by clauses (iii), (iv),
(vi), (ix), (xiii), (xvii), (xviii), (xix), (xx) and (xxi) of the definition of
Permitted Liens in this Indenture, to the extent that the contractual
arrangements governing such Lien prohibit the granting of a security interest
hereunder in such property;

          (3) assets sold to a Person which is not the Company or a Restricted
Subsidiary in compliance with this Indenture;

          (4) assets owned by a Restricted Subsidiary after the sale of such
Person or the release of the Guarantee of such Person pursuant to Section 10.06
or the release of the Liens pursuant to Section 11.05;

          (5) any domestic deposit account (i) for which the Trustee is the
depositary, and (ii) of which all or a substantial portion of the funds on
deposit are used for funding (w) payroll, (x) 401(k) and other retirement plans
and employee benefits, including rabbi trusts for deferred compensation, (y)
health care benefits and (z) escrow arrangements (e.g., environmental indemnity
accounts) or (iii) (not already subject to the other clauses of this clause (5))
with an aggregate average ten consecutive Business Day daily balance of all
funds in all such other domestic deposit accounts for all Obligors not in excess
of $2.0 million;

          (6) any individual parcel of owned real estate with a fair market
value, as reasonably determined in good faith by the Company, not in excess of
$1,000,000;

          (7) any real estate leasehold interest;

          (8) any outstanding stock of a direct or indirect Foreign Subsidiary
of the Company that is not a Guarantor in excess of 65% of the total combined
voting stock (as determined for United States federal income tax purposes) of
such Foreign Subsidiary;

          (9) any property of any Obligor which requires governmental regulatory
approval for such Guarantor to grant the lien on such Collateral so long as the
Guarantor is using or has used Commercially Reasonable Efforts to obtain such
consent;

          (10) any letter of credit rights for a specified purpose to the extent
the beneficiary is required by applicable law to apply the proceeds of such
letter of credit rights for a specified purpose;

          (11) any assets securing Indebtedness permitted under Section
4.06(b)(4) to the extent the documents securing such Indebtedness prohibit such
assets from securing other Indebtedness;

          (12) cash deposits, not exceeding $5,000,000 at any time, securing
Hedging Obligations permitted under this Indenture;

          (13) assets subject to the Amended and Restated Satellite Agreement
dated August 26, 2003, as amended, by and between the Company and APT Satellite
Company Limited, until such time as the requirements set forth in Section 13
thereof have been satisfied;

                                       13

<PAGE>

          (14) any collateral provided pursuant to that certain Security
Agreement dated October 8, 2004 entered into among the Company, APT Satellite
Company Limited and Bank of China (Hong Kong) Limited;

          (15) equity interests in Earth Station Ecuador CIA Ltda.;

          (16) other assets designated from time to time by the Company with a
fair market value as determined in good faith by the Company in the aggregate
for all assets designated not to exceed $5.0 million;

          (17) transponders on Telstar 18 that are subject to the leasehold or
ownership interest of APT Satellite Company Limited and the common elements on
the satellite associated therewith;

          (18) any contract, agreement, instrument or other asset that by its
terms would be violated, breached or terminated by an assignment as Collateral
under any Collateral Document if such asset is not material to the business of
the Obligors taken as a whole; and

          (19) FCC Licenses to the extent (and only to the extent) that the
creation of a security interest in any such FCC License would be prohibited by
FCC Laws, but excluding (i) the right to receive any payment of money
(including, without limitation, payment intangibles) and (ii) any proceeds,
products, accessions, rents, profits, income, benefits, substitutions or
replacements of any FCC License (unless and to the extent that such proceeds,
products, accessions, rents, profits, income, benefits, substitutions or
replacements would constitute an FCC License and FCC Laws applicable thereto
prohibit the creation of a security interest in such FCC License).

          "EXCLUDED CONTRIBUTIONS" means the Net Cash Proceeds received by the
Company after the Issue Date from (a) contributions to its common equity capital
and (b) the sale (other than to an ESOP) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated within 60 days of
the receipt of such Net Cash Proceeds as Excluded Contributions pursuant to an
Officers' Certificate, the cash proceeds of which are excluded from the
calculation set forth in clause(a) 3(B) of the first paragraph of Section 4.05.

          "FCC" means the U.S. Federal Communications Commission (or any
successor entity).

          "FCC LAWS" means the Communications Act of 1934, as amended, and the
rules, regulations and policies promulgated thereunder and all other similar
laws, rules and regulations administered by the FCC.

          "FCC LICENSES" means all rights that the Company or any Subsidiary may
have at any time in any license, authorization, permit, certificate, right,
consent, or approval issued by the FCC that directly relate to the business of
the Company and its Subsidiaries, including any rights to payment upon any
transfer or assignment of any FCC License, or any other transfer or transaction
intended to result in a transfer or assignment of an FCC License.

                                       14

<PAGE>

          "FOREIGN REQUIRED MINORITY SHARES" means Capital Stock of a Foreign
Subsidiary that is required by the applicable laws and regulations of such
foreign jurisdiction to be owned by the government of such foreign jurisdiction
or individual or corporate citizens of such foreign jurisdiction in order for
such Foreign Subsidiary to transact business in such foreign jurisdiction.

          "FOREIGN SUBSIDIARY" means any Restricted Subsidiary that is not
organized under the laws of the United States, any state thereof or the District
of Columbia.

          "GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in:

          (1) the opinions and pronouncements of the Accounting Principles Board
     of the American Institute of Certified Public Accountants;

          (2) statements and pronouncements of the Financial Accounting
     Standards Board;

          (3) such other statements by such other entity as approved by a
     significant segment of the accounting profession; and

          (4) the rules and regulations of the SEC governing the inclusion of
     financial statements (including pro forma financial statements) in periodic
     reports required to be filed pursuant to Section 13 of the Exchange Act,
     including opinions and pronouncements in staff accounting bulletins and
     similar written statements from the accounting staff of the SEC.

All ratios and computations based on GAAP in this Indenture will be computed in
conformity with GAAP. Computations shall not be adjusted as a result of any
recharacterization of the Notes for accounting purposes.

          "GROUP MEMBER" means the Parent and any Subsidiary of the Parent.

          "GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:

          (1) to purchase or pay (or advance or supply funds for the purchase or
     payment of) such Indebtedness of such Person (whether arising by virtue of
     partnership arrangements, or by agreements to keep-well, to purchase
     assets, goods, securities or services, to take-or-pay or to maintain
     financial statement conditions or otherwise); or

          (2) entered into for the purpose 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);

                                       15

<PAGE>

provided, however, 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.

          "GUARANTOR" means any Person that Guarantees any of the Notes pursuant
to the terms of this Indenture, in each case unless and until such Person is
released from its obligations under its Guaranty pursuant to the terms of this
Indenture.

          "GUARANTY" means a Guarantee by a Guarantor of the Company's
Obligations with respect to the Notes.

          "HEDGING OBLIGATIONS" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.

          "HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Registrar's books.

          "INCUR" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Person at the time it becomes a Restricted Subsidiary. The term
"INCURRENCE" when used as a noun shall have a correlative meaning. Solely for
purposes of determining compliance with Section 4.06, (1) amortization of debt
discount or the accretion of principal with respect to a non-interest bearing or
other discount security, (2) the payment of regularly scheduled interest in the
form of additional Indebtedness of the same instrument or the payment of
regularly scheduled dividends on Capital Stock in the form of additional Capital
Stock of the same class and with the same terms, and (3) unrealized losses or
charges in respect of Hedging Obligations (including those resulting from the
application of FAS 133), in each case will be deemed not to be Incurrences of
Indebtedness.

          "INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication):

          (1) the principal in respect of (A) indebtedness of such Person for
     money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
     or other similar instruments for the payment of which such Person is
     responsible or liable, including, in each case, any premium on such
     indebtedness to the extent such premium has become due and payable;

          (2) all Capital Lease Obligations of such Person and all Attributable
     Debt in respect of Sale/Leaseback Transactions entered into by such Person;

          (3) all obligations of such Person issued or assumed as the deferred
     purchase price of property, all conditional sale obligations of such Person
     and all obligations of such Person under any title retention agreement (but
     excluding trade accounts payable, progress payments and milestone payments
     arising in the ordinary course of business);

                                       16

<PAGE>

          (4) all obligations of such Person for the reimbursement of any
     obligor on any letter of credit, banker's acceptance or similar credit
     transaction (other than obligations with respect to letters of credit
     securing obligations (other than obligations described in clauses (1)
     through (3) above) entered into in the ordinary course of business of such
     Person to the extent such letters of credit are not drawn upon or, if and
     to the extent drawn upon, such drawing is reimbursed no later than the
     tenth Business Day following payment on the letter of credit);

          (5) the amount of all obligations of such Person with respect to the
     redemption, repayment or other repurchase of any Disqualified Stock of such
     Person or, with respect to any Preferred Stock of any Subsidiary of such
     Person, the principal amount of such Preferred Stock to be determined in
     accordance with this Indenture;

          (6) all obligations of the types referred to in clauses (1) through
     (5) of other Persons and all dividends of other Persons for the payment of
     which, in either case, such Person is responsible or liable, directly or
     indirectly, as obligor, guarantor or otherwise, including by means of any
     Guarantee;

          (7) all obligations of the types referred to in clauses (1) through
     (6) of other Persons secured by any Lien on any property or asset of such
     Person (whether or not such obligation is assumed by such Person), the
     amount of such obligation being deemed to be the lesser of the fair market
     value of such property or assets at such date of determination and the
     amount of the obligation so secured; and

          (8) to the extent not otherwise included in this definition, Hedging
     Obligations of such Person.

          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 the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided,
however, that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness at any time will be the accreted value thereof at such time.

          Indebtedness shall not include:

          (a) any obligation of the Company or any Restricted Subsidiary as of
the Issue Date under the sale and leaseback transaction as described in Section
9.10 of that certain Lease Agreement dated August 18, 1999 by and between Loral
Asia Pacific Satellite (HK) Limited and APT Satellite Company Limited;

          (b) $36,264,800 in payments to be made by the Company to APT under
that Amended and Restated Agreement dated as of August 26, 2003, as further
amended on November 16, 2003, by and between the Company and APT Satellite
Company Limited (as it may be amended pursuant to the Letter Agreement dated
August 26, 2003);

          (c) orbital or like payments pursuant to contracts with satellite
manufacturers; and

                                       17

<PAGE>

          (d) payment obligations to third parties for rights to an orbital
slot.

          "INDENTURE" means this Indenture as amended or supplemented from time
to time.

          "INDEPENDENT QUALIFIED PARTY" means an investment banking firm,
accounting firm or appraisal firm of reputable standing as determined by the
Board of Directors of the Company; provided, however, that such firm is not an
Affiliate of the Company.

          "INTEREST PAYMENT DATE" means each interest payment date as specified
in the form of Note attached hereto as Appendix B.

          "INTEREST RATE AGREEMENT" means, in respect of a Person, any interest
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to reduce such Person's interest expense or protect such
Person against fluctuations in interest rates.

          "INVESTMENT" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including 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 payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. Except as otherwise provided for
herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value. The
term "Investment" shall not include any arrangements with any service provider
for the joint sale of services or other teaming arrangement pursuant to which
the Company or any Restricted Subsidiary contributes transponder capacity and/or
related assets.

For purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and Section 4.05:

          (1) "Investment" shall include the portion (proportionate to the
     Company's equity interest in such Subsidiary) of the fair market value of
     the net assets of any Subsidiary of the Company at the time that such
     Subsidiary is designated an Unrestricted Subsidiary; and

          (2) any property transferred to or from an Unrestricted Subsidiary
     shall be valued at its fair market value at the time of such transfer, in
     each case as determined in good faith by the Board of Directors.

Any action taken by an Unrestricted Subsidiary shall not be deemed to have been
taken directly or indirectly by the Company or any Restricted Subsidiary.

          "ISSUE DATE" means November 21, 2005.

          "LAPS(HK)" means Loral Asia Pacific Satellite (HK) Limited, a
corporation with limited liability organized under the laws of Hong Kong, and
its successors.

                                       18

<PAGE>

          "LIEN" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).

          "MHR" means MHR Fund Management LLC and any successor thereto.

          "MOODY'S" means Moody's Investors Service, Inc.

          "NET AVAILABLE CASH" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form), in each case net of:

          (1) all legal, accounting, investment banking, title and recording tax
     expenses, commissions and other fees and expenses incurred, and all
     Federal, state, provincial, foreign and local taxes required to be accrued
     as a liability under GAAP, as a consequence of such Asset Disposition;

          (2) all payments made on any Indebtedness which is secured by any
     assets subject to such Asset Disposition, in accordance with the terms of
     any Lien upon or other security agreement of any kind with respect to such
     assets, or which must by its terms, or in order to obtain a necessary
     consent to such Asset Disposition, or by applicable law, be repaid out of
     the proceeds from such Asset Disposition;

          (3) all distributions and other payments required to be made to
     minority interest holders in Restricted Subsidiaries as a result of such
     Asset Disposition; and

          (4) the deduction of appropriate amounts provided by the seller as a
     reserve, in accordance with GAAP, against any liabilities associated with
     the property or other assets disposed in such Asset Disposition and
     retained by the Company or any Restricted Subsidiary after such Asset
     Disposition.

          "NET CASH PROCEEDS" means, with respect to any issuance or sale of
Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.

          "NOTES" means the notes issued under this Indenture.

          "OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements and other amounts payable.

          "OBLIGOR" means each of the Company and each Guarantor.

                                       19

<PAGE>

          "OFFICER" means the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer or the Secretary of the Company.

          "OFFICERS' CERTIFICATE" means a certificate signed by two Officers.

          "OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

          "PARENT" means Loral Space & Communications Inc., a Delaware
corporation, and its successors.

          "PARENT BOARD" means the Board of Directors of the Parent.

          "PAYMENT DEFAULT" means a Default arising pursuant to Section 6.01(1)
or 6.01(2).

          "PERMITTED HOLDERS" means MHR and any Related Party of MHR.

          "PERMITTED INVESTMENT" means an Investment by the Company or any
Restricted Subsidiary in:

          (1) the Company, a Subsidiary Guarantor or a Person that will, upon
     the making of such Investment, become a Subsidiary Guarantor; provided,
     however, that the primary business of such Subsidiary Guarantor is a
     Related Business;

          (2) another Person if as a result of such Investment such other Person
     is merged or consolidated with or into, or transfers or conveys all or
     substantially all its assets to, the Company or a Subsidiary Guarantor;
     provided, however, that such Person's primary business is a Related
     Business;

          (3) cash and Temporary Cash Investments;

          (4) receivables owing to the Company or any Restricted Subsidiary if
     created or acquired in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms; provided, however,
     that such trade terms may include such concessionary trade terms as the
     Company or any such Restricted Subsidiary reasonably deems necessary under
     the circumstances and may include prudent vendor financing terms as
     determined in good faith by the Company;

          (5) payroll, travel and similar advances to cover matters that are
     expected at the time of such advances ultimately to be treated as expenses
     for accounting purposes and that are made in the ordinary course of
     business;

          (6) loans or advances to employees made in the ordinary course of
     business of the Company or such Restricted Subsidiary not exceeding in the
     aggregate at any time $1.0 million;

                                       20

<PAGE>

          (7) stock, obligations or securities received in settlement of debts
     created in the ordinary course of business and owing to the Company or any
     Restricted Subsidiary or in satisfaction of judgments;

          (8) any Person to the extent such Investment represents the non-cash
     portion of the consideration received for an Asset Disposition as permitted
     pursuant to Section 4.10;

          (9) any Person where such Investment was acquired by the Company or
     any of its Restricted Subsidiaries (A) in exchange for any other Investment
     or accounts receivable held by the Company or any such Restricted
     Subsidiary in connection with or as a result of a bankruptcy, workout,
     reorganization or recapitalization of the issuer of such other Investment
     or accounts receivable or (B) as a result of a foreclosure by the Company
     or any of its Restricted Subsidiaries with respect to any secured
     Investment or other transfer of title with respect to any secured
     Investment in default;

          (10) any Person to the extent such Investments consist of prepaid
     expenses, negotiable instruments held for collection, and lease, workers'
     compensation, performance and similar deposits made in the ordinary course
     of business by the Company or any Restricted Subsidiary;

          (11) any Person to the extent such Investments consist of Hedging
     Obligations otherwise not prohibited under Section 4.06;

          (12) any Person, not otherwise permitted to be made pursuant to the
     preceding clauses of this definition, in an aggregate amount which, when
     taken together with all other Investments made pursuant to this clause (12)
     at any one time outstanding, does not exceed $50.0 million; and

          (13) the exchange of transponder capacity as contemplated in
     agreements with APT Satellite Company Limited in effect as of the Issue
     Date.

          "PERMITTED LIENS" means (i) Liens for taxes, assessments, governmental
charges or claims with respect to amounts not yet delinquent or amounts 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; (ii)
contractual, 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; (iii) Liens on cash or cash equivalents incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens on cash or cash equivalents incurred or deposits made to secure the
performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary

                                       21

<PAGE>

course of business (exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and similar
charges, encumbrances, title defects or other irregularities affecting real
property that do not, individually or in the aggregate, materially interfere
with the ordinary course of business of the Company or any of its Restricted
Subsidiaries; (vi) Liens (including extensions and renewals thereof) upon real
or personal property acquired after the Issue Date; provided that (a) such Lien
is created solely for the purpose of securing Indebtedness Incurred, in
accordance with Section 4.06 of this Indenture, to finance (or refinance) the
cost (including the cost of improvement, transportation, development and design,
installation, integration or construction) of the item of property or assets
subject thereto and such Lien is created prior to, at the time of or within 6
months after the later of the acquisition, the completion of construction or the
commencement of full operation of such property, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost (plus, in
the case of any refinancing Indebtedness referred to above, premiums, accrued
interest, fees and expenses), and (c) any Lien permitted by this clause shall
not extend to or cover any property or assets other than such item of property
or assets, any improvements on such item, and proceeds thereof; (vii) leases or
subleases of real property granted to others that do not materially interfere
with the ordinary course of business of the Company and its Restricted
Subsidiaries; (viii) any interest or title of a lessor in the property subject
to any capitalized lease or operating lease; (ix) Liens on property of, or on
shares of Capital Stock or Indebtedness of, any Person existing at the time such
Person becomes, or such property becomes a part of, any Restricted Subsidiary;
provided that such Liens (a) do not extend to or cover any property or assets of
the Company or any Restricted Subsidiary other than the property or assets so
acquired and (b) were not incurred in contemplation of the acquisition thereof;
(x) Liens in favor of the Company or any Restricted Subsidiary; (xi) Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary that does not give rise to a Default or an Event of
Default provided that any reserve or other appropriate provision that shall be
required in conformity with GAAP shall have been made therefor; (xii) 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 with
respect to amounts not yet delinquent or amounts 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; (xiii) Liens upon a
satellite and components thereof during the period in which such satellite is
being constructed, provided that (a) such Liens (1) are for the benefit of only
the manufacturer of such satellite or components and (2) secure only the
obligation of the Company or any Restricted Subsidiary to pay the purchase price
for such satellite or components and (b) such Liens are actually released upon,
or prior to, the completion of construction of such satellite and prior to the
launch or commencement of full operations of such satellite; (xiv) Liens
securing the Notes; (xv) Liens arising under this Indenture in favor of the
Trustee for its own benefit and similar Liens in favor of other trustees, agents
and representatives arising under instruments governing Indebtedness permitted
to be incurred under this Indenture, provided, that such Liens are solely for
the benefit of the trustees, agents, or representatives, in their capacities as
such and not for the benefit of the holders of such Indebtedness; (xvi) set-off,
chargeback and other rights of depositary and collection banks and other
regulated financial institutions with respect to money or instruments of the
Company or its Restricted Subsidiaries on deposit with or in the possession of
such institutions; (xvii) Liens arising from the deposit of funds or securities
in trust

                                       22

<PAGE>

for the purpose of decreasing or defeasing Indebtedness so long as such deposit
of funds or securities and such decreasing or defeasing of Indebtedness are
permitted under Section 4.05 hereof; (xviii) Liens securing Indebtedness
Incurred pursuant to and in compliance with Section 4.06(b)(1) hereof; (xix)
Liens on transponders leased by the Company or a Restricted Subsidiary to
customers to secure obligations to such customers under such leases; (xx) Liens,
in addition to those provided for in the foregoing clauses (i) through (xix)
securing obligations valued in good faith by the Board of Directors of the
Company to be in an aggregate amount not to exceed $40.0 million; and (xxi)
Liens on existence on the Issue Date.

          "PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

          "PLAN" means the Debtors' Fourth Amended Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code of Loral Space & Communications Ltd., et
al., as confirmed by the United States Bankruptcy Court, Southern District of
New York, including all exhibits and other attachments thereto.

          "PREFERRED STOCK", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.

          "PRINCIPAL" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.

          "RECORD DATE" means each record date as specified in the form of Note
attached hereto as Appendix B.

          "REFINANCE" means, in respect of any Indebtedness, to refinance,
extend, renew or refund, or to issue other Indebtedness in exchange or
replacement for, such Indebtedness. "REFINANCED" and "REFINANCING" shall have
correlative meanings.

          "REFINANCING INDEBTEDNESS" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:

          (1) such Refinancing Indebtedness has a Stated Maturity no earlier
     than the Stated Maturity of the Indebtedness being Refinanced; and

          (2) such Refinancing Indebtedness has an aggregate principal amount
     (or if Incurred with original issue discount, an aggregate issue price)
     that is equal to or less than the aggregate principal amount (or if
     Incurred with original issue discount, the aggregate accreted value) then
     outstanding or committed (plus fees and expenses, including any premium and
     defeasance costs) under the Indebtedness being Refinanced;

                                       23

<PAGE>

provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.

          "RELATED BUSINESS" means any business in which the Company and its
Restricted Subsidiaries were engaged on the Issue Date and any business related,
ancillary or complementary to any business in which the Company and its
Restricted Subsidiaries were engaged on the Issue Date, after giving effect to
the Restructuring Transactions.

          "RELATED PARTY" means (1) any controlling stockholder, controlling
member, general partner, majority owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of any Permitted Holder, (2) any
estate, trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons holding a controlling interest of
which consist solely of one or more Permitted Holders and/or such other Persons
referred to in the immediately preceding clause (1), (3) any executor,
administrator, trustee, manager, director or other similar fiduciary of any
Person referred to in the immediately preceding clause (2) acting solely in such
capacity, (4) any investment fund or other entity controlled by, or under common
control with, MHR or the principals that control MHR, or (5) upon the
liquidation of any entity of the type described in the immediately preceding
clause (4), the former partners or beneficial owners thereof to the extent of
the Voting Stock formerly held by such entity.

          "RESTRICTED PAYMENT" with respect to any Person means:

          (1) the declaration or payment of any dividends or any other
     distributions of any sort in respect of its Capital Stock (including any
     payment in connection with any merger or consolidation involving such
     Person) or similar payment to the direct or indirect holders of its Capital
     Stock (other than (A) dividends or distributions payable solely in its
     Capital Stock (other than Disqualified Stock), (B) dividends or
     distributions payable solely to the Company or a Restricted Subsidiary, and
     (C) dividends or other distributions made by a Subsidiary that is not a
     Wholly Owned Subsidiary to the holders of any class of its Capital Stock on
     a pro rata basis);

          (2) the purchase, redemption or other acquisition or retirement for
     value of any Capital Stock of the Company or the Parent held by any Person
     (other than the Company or a Restricted Subsidiary) or of any Capital Stock
     (other than Disqualified Stock) of a Restricted Subsidiary held by any
     Affiliate of the Company (other than a Restricted Subsidiary), including
     the exercise of any option to exchange any Capital Stock (other than
     Disqualified Stock) into any other securities of any Person (other than
     into Capital Stock of the Company that is not Disqualified Stock);

          (3) the purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value, prior to scheduled maturity, scheduled
     repayment or scheduled sinking fund payment of any Subordinated Obligations
     of such Person (other than (A) payments made solely to the Company or a
     Subsidiary Guarantor and (B) the refinancing of Subordinated Obligations
     through the Incurrence of Refinancing Indebtedness in anticipation of
     satisfying a sinking fund obligation, principal installment or final
     maturity, in each case due within one year of the date of such Incurrence);
     or

                                       24

<PAGE>

          (4) the making of any Investment (other than a Permitted Investment)
     in any Person.

For clarity, payments under tax sharing agreements, shared services agreements
and management agreements are not Restricted Payments.

          "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.

          "RESTRUCTURING TRANSACTIONS" has the meaning given to it in the Plan
and shall, in any event, include the transactions set forth on Schedule 6(f) to
the Security Agreement.

          "S&P" means Standard & Poor's Ratings Group.

          "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property
owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter
acquired by the Company or a Restricted Subsidiary whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.

          "SEC" means the U.S. Securities and Exchange Commission.

          "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.

          "SECURITY AGREEMENT" means the Security Agreement made by the Company
and the Subsidiary Guarantors in favor of the Collateral Agent, substantially in
the form of Appendix C attached hereto, as such may be amended, supplemented or
otherwise modified from time to time.

          "SERIES A PREFERRED STOCK" means the 12% Series A Non-Convertible
Preferred Stock of the Company

          "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

          "STATED MATURITY" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).

          "SUBORDINATED OBLIGATION" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinated in right of payment to the Notes or a Guaranty
of such Person, as the case may be, pursuant to a written agreement to that
effect.

                                       25

<PAGE>

          "SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by:

          (1) such Person;

          (2) such Person and one or more Subsidiaries of such Person; or

          (3) one or more Subsidiaries of such Person.

Unless otherwise specified or inappropriate in the context, "Subsidiary" means a
Subsidiary of the Company.

          "SUBSIDIARY GUARANTOR" means any Guarantor that is a Subsidiary of the
Company.

          "SUPPLEMENTAL GUARANTY AGREEMENT" means a supplemental indenture, in a
form satisfactory to the Trustee, pursuant to which a Guarantor guarantees the
Company's obligations with respect to the Notes on the terms provided for in
this Indenture.

          "TEMPORARY CASH INVESTMENTS" means any of the following:

          (1) U.S. dollars, or, in the case of any Foreign Subsidiary, such
     local currencies held by it from time to time in the ordinary course of
     business;

          (2) any investment in direct obligations of the United States of
     America or any agency thereof or obligations guaranteed by the United
     States of America, any member nation of the European Union or any agency
     thereof having maturities of not more than one year from the date of
     acquisition;

          (3) investments in demand accounts, time deposit accounts,
     certificates of deposit and money market deposits maturing within 360 days
     of the date of acquisition thereof issued by a bank or trust company which
     is organized under the laws of the United States of America, any State
     thereof or any foreign country recognized by the United States of America,
     and which bank or trust company has capital, surplus and undivided profits
     aggregating in excess of $500 million (or the foreign currency equivalent
     thereof) and has outstanding debt which is rated "A" (or such similar
     equivalent rating) or higher by at least one nationally recognized
     statistical rating organization (as defined in Rule 436 under the
     Securities Act) or any money-market fund sponsored by a registered broker
     dealer or mutual fund distributor;

          (4) repurchase obligations with a term of not more than 90 days for
     underlying securities of the types described in clause (1) above entered
     into with a bank meeting the qualifications described in clause (2) above;

          (5) investments in commercial paper, maturing not more than 360 days
     after the date of acquisition, issued by an entity (other than an Affiliate
     of the Company) organized and in existence under the laws of the United
     States of America or any foreign

                                       26

<PAGE>

     country recognized by the United States of America with a rating at the
     time as of which any investment therein is made of "P-1" (or higher)
     according to Moody's or "A-1" (or higher) according to S & P;

          (6) investments in securities with maturities of one year or less from
     the date of acquisition issued or fully guaranteed by any state,
     commonwealth or territory of the United States of America, or by any
     political subdivision or taxing authority thereof, and rated at least "A"
     by S&P or "A" by Moody's; and

          (7) instruments equivalent to those referred to in clauses (1) to (6)
     above denominated in Euros or any other foreign currency comparable in
     credit quality and tenor to those referred to above and customarily used by
     corporations for cash management purposes in any jurisdiction outside the
     United States to the extent reasonably required in connection with any
     business conducted by any Restricted Subsidiary organized in such
     jurisdiction, all as determined in good faith by the Company.

          "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the Issue Date.

          "TRANSACTIONS" means the issuance of the Notes on the Issue Date, the
Rights Offering (as defined in the Plan), and the other transactions
contemplated by the Plan.

          "TRUST OFFICER" - means, when used with respect to the Trustee, any
officer within the Corporate Trust Division - Corporate Finance Unit of the
Trustee (or any successor unit of the Trustee) located at the Corporate Trust
Office of the Trustee who has direct responsibility for the administration of
this Indenture and for the purposes of Sections 7.01(c)(2) and 7.05 also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.

          "TRUSTEE" means The Bank of New York in its capacity as trustee until
a successor replaces it, and thereafter means the successor. Where appropriate
in the context, for purposes of Articles 6 and 7 of this Indenture, the term
"Trustee" shall include the Collateral Agent.

          "UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code
as in effect from time to time.

          "UNPERFECTED COLLATERAL" means,

          (1) any vehicle covered by a certificate of title having a fair market
value of less than $250,000; and

          (2) any assets of any Obligor located outside the United States;
provided, however, that this clause (2) shall not include: (a) any contract
between LAPS (HK) and APT, (b) satellites and transponders, and (c) any Capital
Stock of any Person that owns any satellites or transponders.

                                       27

<PAGE>

          "UNRESTRICTED SUBSIDIARY" means (a) XTAR, LLC, a Delaware limited
liability company and its successors (other than the Company or a Restricted
Subsidiary), (b) XTAR Services LLC, a Delaware limited liability company and its
successors (other than the Company or a Restricted Subsidiary) and (c):

          (1) any Subsidiary of the Company that at the time of determination
     shall be designated an Unrestricted Subsidiary by the Board of Directors in
     the manner provided below; and

          (2) any Subsidiary of an Unrestricted Subsidiary;

in each case unless and until such Subsidiary is designated a Restricted
Subsidiary for purposes of this Indenture.

          The Board of Directors of the Company may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) that is
not a Significant Subsidiary to be an Unrestricted Subsidiary.

          The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (A) the Company could Incur $1.00 of
additional Indebtedness under Section 4.06(a) and (B) no Default or Event of
Default shall have occurred and be continuing. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.

          "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.

          "VOTING STOCK" of a Person means all classes of Capital Stock or other
interests of such Person then outstanding and normally entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof.

          "WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all the
Capital Stock of which is owned by the Company or one or more Wholly Owned
Subsidiaries.

          SECTION 1.02. Other Definitions.

<TABLE>
<CAPTION>
                                                                    Defined in
                              Term                                    Section
                              ----                                --------------
<S>                                                               <C>
"Affiliate Transaction"........................................   4.10(a)
"After-Acquired Property"......................................   11.01(b)
"Asset Disposition Offer"......................................   4.09(a)(3)
"Bankruptcy Law" ..............................................   6.01
</TABLE>

                                       28

<PAGE>

<TABLE>
<CAPTION>
                                                                    Defined in
                              Term                                    Section
                              ----                                --------------
<S>                                                               <C>
"Cash/PIK Interest"............................................   4.01(b)(iii)
"Change of Control Offer" .....................................   4.04(b)
"Consideration"................................................   11.05(b)(i)
"covenant defeasance option" ..................................   8.01(b)
"Custodian" ...................................................   6.01
"Default Rate".................................................   4.01(c)
"Determination Notice".........................................   4.01(b)(iii)
"Event of Default" ............................................   6.01
"Expiration Date"..............................................   4.01(b)(iv)
"Guaranteed Obligations" ......................................   10.01
"Interest Determination".......................................   4.01(b)(iii)
"legal defeasance option" .....................................   8.01(b)
"Legal Holiday" ...............................................   12.08
"Mandatory PIK Date"...........................................   4.01(b)(ii)
"Paying Agent" ................................................   2.03
"PIK Notes"....................................................   4.01(b)(ii)
"Redemption Date" .............................................   5 of the Notes
"Relevant Interest Payment Date"...............................   4.01(b)(iii)
"Registrar" ...................................................   2.03
"Released Collateral"..........................................   11.05(b)
"Requisite Objection Notice"...................................   4.01(b)(iv)
"Successor Company" ...........................................   5.01(a)
"Valuation Date"...............................................   11.05(b)(i)
</TABLE>

          In addition, terms defined in Appendix A shall have the meanings set
forth therein.

          SECTION 1.03. Incorporation by Reference of Trust Indenture Act.

This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:

          "Commission" means the SEC;

          "indenture securities" means the Notes and the Guaranties;

          "indenture security holder" means a Noteholder;

          "indenture to be qualified" means this Indenture;

          "indenture trustee" or "institutional trustee" means the Trustee; and

          "obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.

                                       29

<PAGE>

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

          SECTION 1.04. 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) "including" means including without limitation;

          (5) words in the singular include the plural and words in the plural
     include the singular;

          (6) unsecured Indebtedness shall not be deemed to be subordinate in
     right of payment to secured Indebtedness merely by virtue of its nature as
     unsecured Indebtedness;

          (7) the principal amount of any non-interest bearing or other discount
     security at any date shall be the principal amount thereof that would be
     shown on a balance sheet of the issuer dated such date prepared in
     accordance with GAAP;

          (8) the principal amount of any Preferred Stock shall be (i) the
     maximum liquidation preference plus accrued and unpaid dividends of such
     Preferred Stock or (ii) the maximum mandatory redemption or mandatory
     repurchase price with respect to such Preferred Stock, whichever is
     greater;

          (9) all references to the date the Notes were originally issued shall
     refer to the Issue Date;

          (10) in the event of a conflict between the definitions set forth in
     Section 1.01 and the definitions set forth in the first paragraph of this
     Indenture, the definitions set forth in Section 1.01 shall govern;

          (11) for purposes of determining compliance with any U.S.
     dollar-denominated restriction contained in this Indenture, the U.S.
     dollar-equivalent amount denominated in a foreign currency shall be
     calculated based on the relevant currency exchange rate in effect on the
     date such Indebtedness was incurred, in the case of term Indebtedness, or
     first committed, in the case of revolving credit Indebtedness, or made, in
     the case of Investments or other amounts; provided that if such
     Indebtedness is incurred to refinance other Indebtedness denominated in a
     foreign currency, and such refinancing would cause the applicable U.S.
     dollar-denominated restriction to be exceeded if calculated at the

                                       30

<PAGE>

     relevant currency exchange rate in effect on the date of such refinancing,
     such U.S. dollar-denominated restriction shall be deemed not to have been
     exceeded so long as the principal amount of such refinancing Indebtedness
     does not exceed the principal amount of such Indebtedness being refinanced;
     and

          (12) notwithstanding any other provision under this Indenture, the
     maximum amount of Indebtedness, Investments and other amounts that the
     Company and its Restricted Subsidiaries may incur pursuant to this
     Indenture shall not be deemed to be exceeded, with regard to any
     outstanding Indebtedness, Investments or other amounts, solely as a result
     of fluctuations in the exchange rate of currencies. The principal amount of
     any Indebtedness incurred to refinance other Indebtedness, if incurred in a
     different currency from the Indebtedness being refinanced, shall be
     calculated based on the currency exchange rate applicable to the currencies
     in which such refinancing Indebtedness is denominated that is in effect on
     the date of such refinancing.

                                    ARTICLE 2

                                    The Notes

          SECTION 2.01. Form and Dating.

Provisions relating to the Notes are set forth in Appendix A and Appendix B
attached hereto which are hereby incorporated in and expressly made part of this
Indenture. The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Appendix B. The Notes may have notations, legends
or endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any (provided, that any such notation, legend or
endorsement is in a form reasonably acceptable to the Company and the Trustee).
Each Note shall be dated the date of its authentication. The terms of the Notes
set forth in Appendix B are part of the terms of this Indenture.

          SECTION 2.02. Execution and Authentication.

Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal, if any, may be impressed, affixed, imprinted or
reproduced on the Notes and may be in facsimile form.

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

          A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture. The Trustee shall authenticate Notes in the amounts and at the times
specified in Section 2.2 of Appendix A attached hereto.

          The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the 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 agent. An

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<PAGE>

authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.

          SECTION 2.03. Registrar and Paying Agent.

The Company shall maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (the "REGISTRAR") and an office or
agency where Notes may be presented for payment (the "PAYING AGENT"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional paying
agents. The term "REGISTRAR" includes any appointed co-registrar and the term
"PAYING AGENT" includes any additional paying agent.

          The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within The
United States of America may act as Paying Agent, Registrar, co-registrar or
transfer agent.

          The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Notes.

          SECTION 2.04. Paying Agent To Hold Money in Trust.

Not less than one Business Day prior to each due date of the principal, premium
and interest on any Note, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal, premium and interest when so becoming due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of Noteholders
and the Trustee all money held by the Paying Agent for the payment of principal
of, premium or interest on the Notes and shall promptly notify the Trustee of
any default by the Company in making any such payment. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon payment in full to or a
receipt by the Trustee of all the principal, premium and interest due under this
Indenture, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Notes.

          SECTION 2.05. Noteholder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Noteholders and
shall otherwise comply with TIA Section 312(a). If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing, at least five
Business Days before each payment date, including each Interest Payment Date,
and at

                                       32

<PAGE>

such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Noteholders.

          SECTION 2.06. Transfer and Exchange.

The Notes shall be issued in registered form and shall be transferable only upon
the surrender of a Note for registration of transfer, and only to the extent
permitted by, and consummated in compliance with, Section 2.3 of Appendix A.
When a Note is presented to the Registrar or a co-registrar with a request to
register a transfer, the Registrar shall register the transfer as requested if
the requirements of this Indenture and Section 8-401(a) of the Uniform
Commercial Code are met. When Notes are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Notes of other denominations, the Registrar shall make the exchange as requested
if the same requirements are met. The Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection with the transfer or exchange of the Notes (other than any such
transfer taxes or other similar governmental charges payable upon exchange
pursuant to Section 2.07, 2.09, 3.06 or 9.05).

          SECTION 2.07. Replacement Notes.

If a mutilated Note is surrendered to the Registrar or if the Holder of a Note
claims that the Note has been lost, destroyed or wrongfully taken, the Company
shall issue, and the Trustee shall authenticate, a replacement Note if the
requirements of Section 8-405 of the Uniform Commercial Code are met and the
Holder satisfies any other reasonable requirements of the Trustee. If required
by the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the reasonable judgment of the Company and the Trustee to protect
the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar
from any loss which any of them may suffer if a Note is replaced. The Company
and the Trustee may charge the Holder for their expenses in replacing a Note.

          Every replacement Note shall be an additional Obligation of the
Company.

          SECTION 2.08. Outstanding Notes.

          (a) Notes outstanding at any time are all Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation
and those described in this Section 2.08 as not outstanding. Subject to Section
12.06, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.

          (b) If a Note is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.

          (c) If the Paying Agent (other than the Company or an Affiliate
thereof) segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Notes (or portions thereof) to
be redeemed or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Noteholders on that date pursuant to
the

                                       33

<PAGE>

terms of this Indenture or otherwise, then on and after that date interest on
such Notes (or portions thereof) ceases to accrue.

          SECTION 2.09. Temporary Notes.

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 variations that the Company reasonably considers appropriate for temporary
Notes. If the Company so reasonably elects, the Company shall prepare and the
Trustee shall authenticate permanent Definitive Notes and deliver them in
exchange for such temporary Notes.

          SECTION 2.10. Cancellation.

The Company immediately upon the redemption of any Notes shall deliver such
Notes and at any other time may deliver Notes, to the Trustee for cancellation,
which Notes the Trustee shall cancel promptly upon such delivery. The Registrar
and the Paying Agent shall forward to the Trustee any Notes surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act and the Trustee's policies) all Notes surrendered for registration
of transfer, exchange, payment or cancellation and deliver a certificate of such
destruction to the Company. The Company may not issue new Notes to replace Notes
it has redeemed, paid or delivered to the Trustee for cancellation.

          SECTION 2.11. Defaulted Interest.

If the Company defaults in a payment of interest on the Notes, the Company shall
pay defaulted interest (plus interest on such defaulted interest to the extent
lawful) in any lawful manner and in compliance with the provisions of Section
4.01(b) as to whether such interest shall be paid in cash, in-kind through the
issuance of Additional Notes or some combination thereof. The Company may pay
the defaulted interest to the Persons who are Noteholders on a subsequent
special record date. The Company shall fix or cause to be fixed any such special
record date and payment date to the reasonable satisfaction of the Trustee and
shall promptly mail to each Noteholder a notice that states the special record
date, the payment date and the amount of defaulted interest to be paid.

          SECTION 2.12. CUSIP Numbers.

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

          SECTION 2.13. Trustee's Disclaimer.

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<PAGE>

None of the Company, the Trustee, the Registrar, any Paying Agent or any agent
of any of them shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Notes, for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests, or for any acts or omissions of
a Depository or for any transactions between a Depository and any beneficial
owner or between or among beneficial owners. No owner of a beneficial interest
in the Notes shall have any rights under this Indenture, and the Depository or
its nominee, if any, shall be deemed and treated by the Company, the Trustee,
the Registrar, any Paying Agent or any agent of any of them as the absolute
owner and holder of such Notes for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee, the Registrar,
any Paying Agent or any agent of any of them from giving effect to any written
certification, proxy or other authorization furnished by a Depository, or any of
its members, as a Holder, with respect to such Notes or impair, as between such
Depository and owners of beneficial interests in such Notes, the operation of
customary practices governing the exercise of the rights of such Depository (or
its nominee) as Holder of such Notes.

                                    ARTICLE 3

                                   Redemption

          SECTION 3.01. Notices to Trustee.

If the Company elects to redeem Notes pursuant to Section 5 of the Notes, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Notes to be redeemed (such principal amount, the "PROPOSED REDEMPTION
AMOUNT" and, any such notice, the "COMPANY REDEMPTION NOTICE").

          The Company shall give each Company Redemption Notice to the Trustee
at least 90 days before the applicable Redemption Date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.

          SECTION 3.02. Selection of Notes To Be Redeemed.

     (a) Within ten (10) days after receipt by the Trustee of the Company
Redemption Notice, the Trustee, in the Company's name and at the Company's
expense, shall notify each then record holder of Notes (each, a "RECORD HOLDER")
of the Company's proposal to redeem up to the Proposed Redemption Amount and
shall instruct, in reasonable detail, each such Record Holder to cause the
Trustee to be notified within the twenty (20) days after such Record Holder's
receipt of the Trustee Notification (such 20-day period, the "ACCEPTANCE
PERIOD"), in accordance with the applicable procedures of the Depository (which
may necessitate the establishment by the Company of a Record Date), as to (A)
whether each beneficial owner of Notes in respect of whom such Record Holder
holds Notes in street name or otherwise (each, a "Beneficial Holder" and,
collectively, the "Beneficial Holders") objects to such redemption, and (B) if
such Beneficial Holder does not so object, the maximum aggregate principal
amount of Notes held of record by such Beneficial Holder that such Beneficial
Holder would voluntarily have redeemed by the Company in connection with such
Company Redemption Notice (the "VOLUNTARY

                                       35

<PAGE>

REDEMPTION AMOUNT"(such notice from the Trustee to the Record Holders, the
"TRUSTEE NOTIFICATION").

     (b) If the Proposed Redemption Amount is less than the aggregate principal
amount of Notes then outstanding, the Trustee shall select the Notes to be
redeemed from outstanding Notes not previously called for redemption as follows:

          (i) if the sum of all Voluntary Redemption Amounts (such sum, the
     "TOTAL VOLUNTARY REDEMPTION AMOUNT") in respect of the applicable
     redemption exceeds the Proposed Redemption Amount, then, in respect of each
     Beneficial Holder, such amount of such Beneficial Holder's then outstanding
     Notes as is equal to the product of (x) the Proposed Redemption Amount
     multiplied by (y) a fraction, the numerator of which is such Beneficial
     Holder's Voluntary Redemption Amount and the denominator of which is the
     Total Voluntary Redemption Amount; and

          (ii) if the Total Voluntary Redemption Amount is less than the
     Proposed Redemption Amount, then, in respect of each Beneficial Holder, (A)
     first, such Beneficial Holder's Voluntary Redemption Amount, if any, and
     (B) then, such amount of such Beneficial Holder's then remaining
     outstanding Notes (the "REMAINING NOTES AMOUNT"), if any, as is equal to
     the product of (x) the Proposed Redemption Amount less the Total Voluntary
     Redemption Amount multiplied by (y) a fraction, the numerator of which is
     such Beneficial Holder's Remaining Notes Amount, if any, and the
     denominator or which is the sum of all Remaining Notes Amounts in respect
     of all Beneficial Holders). 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 promptly of the Notes or
     portions of Notes to be redeemed.

     (c) For purposes of Section 3.02(a), the Trustee Notification shall be
deemed to have been received on the fifth Business Day after deposit in the
mails, pursuant to the requirements of Section 12.02, and each Beneficial Holder
not responding within the Acceptance Period or whose response shall not clearly
provide the information required in such response shall be conclusively deemed
to have objected to the applicable redemption.

     (d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the redemption of Notes pursuant to this
Article 3. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Article 3, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Article 3 by virtue of its compliance
with such securities laws or regulations.

          SECTION 3.03. Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date, and after
expiration of the Acceptance Period and then only if the Requisite Objection to
Redemption Notice has not been delivered, the Trustee, in the Company's name and
at the Company's expense, shall mail a

                                       36

<PAGE>

further notice of redemption by first-class mail to each Record Holder to be
redeemed at such Holder's registered address.

          The notice shall identify the Notes to be redeemed and shall state:

          (1) the Redemption Date;

          (2) the redemption price;

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

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

          (5) if fewer than all the outstanding Notes are to be redeemed, the
     identification and principal amounts of the particular Notes to be redeemed
     in compliance with Section 3.02 in respect of each Beneficial Holder
     identified to the Trustee by such Record Holder;

          (6) that, unless the Company defaults in making such redemption
     payment or the Paying Agent is prohibited from making such payment pursuant
     to the terms of this Indenture, interest on the Notes (or portion thereof)
     called for redemption shall cease to accrue on and after payment in full of
     the redemption price;

          (7) that no representation is made as to the correctness or accuracy
     of the CUSIP number or corresponding ISIN, if any, listed in such notice or
     printed on the Notes; and

          (8) if applicable, that the Holders have the right to object to and
     prevent such redemption, and in such event, such redemption notice shall
     further comply with the applicable requirements of Section 5 of the Notes.

          SECTION 3.04. Effect of Notice of Redemption.

Once notice of redemption is mailed, Notes called for redemption shall become
due and payable on the Redemption Date and at the redemption price stated in the
notice. Upon surrender to the Paying Agent, such Notes shall be paid at the
redemption price stated in the notice, plus accrued interest to the Redemption
Date (subject to the right of Holders of record on the relevant Record Date to
receive interest due on the related Interest Payment Date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.

          SECTION 3.05. Deposit of Redemption Price.

One Business Day prior to the Redemption Date, the Company shall deposit with
the Paying Agent (other than the Company or an Affiliate thereof) money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date other than Notes or

                                       37

<PAGE>

portions of Notes called for redemption which have been delivered by the Company
to the Trustee for cancellation.

          SECTION 3.06. Notes Redeemed in Part.

Upon surrender of a Note that is redeemed in part, the Company shall execute and
the Trustee shall authenticate for the Holder (at the Company's expense) a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.

                                    ARTICLE 4

                                    Covenants

          SECTION 4.01. Payment of Notes.

          (a) General. The Company shall promptly pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the dates and in the
manner provided in the Notes and in this Indenture. Subject to Section 2.08(c),
principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, if other than the Company or an Affiliate thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available U.S. funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. All payments shall be
made in New York, New York unless the Trustee otherwise specifies.
Notwithstanding any provision of this Indenture or the Notes to the contrary,
the Company shall be entitled to withhold from any payment required in respect
of the Notes any amount determined by the Company to be required by law to be
withheld.

          (b) Payment of Interest.

               (i) The Company shall pay interest on the Notes at the rate of
     14.0% per annum payable semi-annually in arrears in cash, subject only to
     certain conditions specified below. In certain circumstances more
     particularly described in this Section 4.01(b), a portion of the interest
     (including, without limitation, any defaulted interest plus interest on
     such defaulted interest) from time to time due and payable on the Notes may
     be paid in-kind through the issuance of Additional Notes in lieu of cash.

               (ii) Notwithstanding the provisions of Section 4.01(b)(i),
     interest on the Notes shall not be payable in cash, but rather shall be
     payable in-kind through the issuance of Additional Notes in lieu of cash
     (the "PIK NOTES") if and to the full extent that the amount of such
     interest (including, without limitation, any defaulted interest plus
     interest on such defaulted interest) to be paid on any Interest Payment
     Date (the "MANDATORY PIK DATE"), would exceed the amount that equals the
     product of (A) 50% of the Company's 12-month Adjusted EBITDA for the period
     ending as of the end of the most recently completed fiscal quarter which
     ended at least 50 days prior to the date of Interest Determination (as
     defined below) immediately preceding such Mandatory PIK Date, which
     Adjusted EBITDA shall be annualized if necessary consistently with the
     annualization provisions set forth in the definition of Consolidated
     Coverage Ratio (as certified by the Company's Chief Financial Officer),
     multiplied by (B) a fraction the

                                       38

<PAGE>

     numerator of which is the number of days from and including the last
     Mandatory PIK Date (or in the case of the first Interest Payment Date, from
     and including the Issue Date) to but not including the current Mandatory
     PIK Date, and the denominator of which is 365 or 366 days, as applicable.

               (iii) Notwithstanding the provisions of Section 4.01(b)(i), not
     later than thirty (30) days prior to any Interest Payment Date, the Board
     of Directors shall make the following determination: whether any portion or
     all of the interest to be paid on such Interest Payment Date (the "RELEVANT
     INTEREST PAYMENT DATE") if otherwise payable in cash in accordance with
     Section 4.01(b)(i) as modified by Section 4.01(b)(ii) (the entire amount of
     such interest so payable in cash but for the provisions of this clause
     (iii), the "CASH/PIK INTEREST") should be paid in cash or, instead, in PIK
     Notes (such determination, the "INTEREST DETERMINATION"). If the Board of
     Directors makes the Interest Determination that the entire amount of the
     Cash/PIK Interest be paid in cash, then the Cash/PIK Interest shall be
     payable only in cash. If the Board makes the Interest Determination that
     any portion or the entire amount of the Cash/PIK Interest be paid in PIK
     Notes, a notice of such Interest Determination (a "DETERMINATION NOTICE"),
     shall be sent to the Holders not more than thirty (30) nor fewer than
     fifteen (15) days prior to the Relevant Interest Payment Date. The
     Determination Notice shall describe in reasonable detail, among other
     things: (A) the Interest Determination, (B) the methods by which the
     Holders may respond to such Determination Notice in accordance with Section
     4.01(b)(iv) (including a contact at the Company and the address and
     facsimile number of such contact), (C) the Interest Payment Date to which
     such Determination Notice relates, and (D) the Expiration Date (as defined
     below). The Determination Notice shall be deemed delivered on the fifth
     Business Day after deposit in the mails pursuant to the requirements of
     Section 12.02.

               (iv) If within ten (10) Business Days following the date that a
     Determination Notice is deemed delivered to the Holders in accordance with
     Section 4.01(b)(iii), written notice is received by the Company from the
     Holders of at least two-thirds (2/3) in principal amount of the then
     outstanding Notes directing that the Cash//PIK Interest being paid be paid
     in cash and not in PIK Notes (such notices from the Holders of such
     two-thirds or greater amount, collectively, the "REQUISITE OBJECTION
     NOTICE"), then the entire amount of the Cash/PIK Interest shall be paid in
     cash. If the Requisite Objection Notice is not received by the Company by
     the expiration of such ten (10) Business Day-period (the "EXPIRATION
     DATE"), then the Cash/PIK Interest or the relevant portion thereof shall be
     paid in PIK Notes to the extent set forth in the Determination Notice and
     the balance, if any, of such Cash/PIK Interest shall be paid in cash.

               (v) If the Company is required to pay interest in-kind through
     the issuance of Additional Notes in lieu of cash pursuant to paragraphs
     (ii) and (iv) above, then the Company shall promptly deliver to the Trustee
     an Officers' Certificate notifying the Trustee of the aggregate amount of
     such Additional Notes to be issued, and specifying the amount of Additional
     Notes to be issued through the issuance of Additional Definitive Notes and
     the amounts to be issued through increases in the Global Notes. On or after
     the date of such Officers' Certificate but not less than 2 Business Days
     prior to the

                                       39

<PAGE>

     Relevant Interest Payment Date, the Company shall deliver to the Trustee
     any Additional Definitive Notes to be issued, which Additional Definitive
     Notes shall have been duly executed by the Company in the manner provided
     in Section 2.02. On the Relevant Interest Payment Date the Trustee shall
     record increases in the Global Notes and authenticate Additional Definitive
     Notes, as appropriate, in the aggregate principal amounts required to pay
     such portion of the interest.

               (vi) Each Additional Note is an additional obligation of the
     Company and the Guarantors and shall be governed by, and entitled to the
     benefits of, this Indenture and shall be subject to the terms of this
     Indenture (including the Guaranty provisions), shall rank pari passu with
     and be subject to the same terms (including the rate of interest from time
     to time payable thereon) as all other Notes (except, as the case may be,
     with respect to the issuance date and aggregate principal amount), and
     shall have the benefit of all Liens securing Notes.

          (c) Default Rate Interest. Notwithstanding any other provision of this
Indenture or the Notes, the Company shall pay interest (including Bankruptcy
Interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand in compliance with the provisions
of Section 4.01(b) as to whether such interest shall be paid in cash, in-kind
through the issuance of Additional Notes or some combination thereof at a rate
that is 2.0% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful (the "DEFAULT RATE"). In addition, the Company shall
pay interest (including Bankruptcy Interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand in compliance with the
provisions of Section 4.01(b) as to whether such interest shall be paid in cash,
in-kind through the issuance of Additional Notes or some combination thereof at
the Default Rate to the extent lawful.

          SECTION 4.02. [Intentionally Left Blank].

          SECTION 4.03. Compliance Certificate.

The Company shall deliver to the Trustee within 90 days after the end of each
fiscal year of the Company an Officers' Certificate stating whether or not the
signers know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the Company
is taking or proposes to take with respect thereto. The Company also shall
comply with TIA Section 314(a)(4).

          SECTION 4.04. Change of Control.

          (a) Upon the occurrence of a Change of Control, each Holder shall have
the right to require that the Company repurchase such Holder's Notes at a
purchase price in accordance with the schedule set forth in Section 7 of the
Notes, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date), in accordance with
the terms of Section 4.04(b). In the event that at the time of such Change of
Control, the terms of

                                       40

<PAGE>

any Credit Facility prohibit the Company from making a Change of Control Offer
or from purchasing the Notes pursuant to this Section 4.04, the Company shall,
prior to the mailing of the notice to Holders provided for in Section 4.04(b)
below but, in any event within 30 days following any Change of Control: (1)
repay in full all Indebtedness outstanding under the relevant Credit Facility;
or (2) obtain the requisite consent under the relevant Credit Facility to permit
the purchase of the Notes as provided for in Section 4.04(b).

          (b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee (the "CHANGE OF CONTROL
OFFER") stating:

          (1) that a Change of Control has occurred and that such Holder has the
     right to require the Company to purchase such Holder's Notes at a purchase
     price in accordance with the schedule set forth in Section 7 of the Notes,
     plus accrued and unpaid interest, if any, to the date of purchase (subject
     to the right of Holders of record on the relevant Record Date to receive
     interest on the relevant Interest Payment Date);

          (2) the circumstances and relevant facts regarding such Change of
     Control (including information with respect to pro forma historical income,
     cash flow and capitalization, in each case after giving effect to such
     Change of Control);

          (3) the purchase date (which shall not be earlier than 30 days nor
     later than 60 days from the date such notice is mailed);

          (4) the instructions, reasonably determined by the Company, consistent
     with this Section 4.04, that a Holder must follow in order to have its
     Notes purchased; and

          (5) if applicable, that the Company has the option to redeem any Notes
     not purchased in the Change of Control Offer, and setting forth the
     applicable redemption price or the formula used to determine the applicable
     redemption price.

          (c) Holders electing to have a Note purchased will be required to
surrender the Note, with an appropriate form duly completed, to the Company at
the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Note which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing its
election to have such Note purchased.

          (d) On the purchase date, all Notes purchased by the Company under
this Section 4.04 shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.

          (e) Notwithstanding the foregoing provisions of this Section 4.04, the
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change

                                       41

<PAGE>

of Control Offer made by the Company and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.

          (f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.04. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.04, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.04 by virtue of its
compliance with such securities laws or regulations.

          (g) If, as of the date of any supplemental indenture, pursuant to
which the parties seek to waive or modify the provisions of Section 4.04 or any
relevant definition, no Change of Control has occurred and the Company is not
aware of any pending, proposed or threatened Change of Control, the provisions
of this Indenture and the Notes relative to the Company's obligation to make an
offer to purchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount of the Notes.

          SECTION 4.05. Limitation on Restricted Payments.

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment:

          (1) a Default or Event of Default shall have occurred and be
     continuing (or would result therefrom);

          (2) the Company could not Incur an additional $1.00 of Indebtedness
     under Section 4.06(a); or

          (3) the aggregate amount of such Restricted Payment and all other
     Restricted Payments since the Issue Date made pursuant to this Section
     4.05(a)(3) and all Restricted Payments since the Issue Date made pursuant
     to Section 4.05 (b)(3) and (b)(7) would exceed the sum of (without
     duplication):

               (A) 50% of the Consolidated Net Income of the Company accrued
          during the period (treated as one accounting period) from the
          beginning of the fiscal quarter immediately following the fiscal
          quarter during which the Issue Date occurs to the end of the most
          recent fiscal quarter ended at least 45 days prior to the date of such
          Restricted Payment (or, in case such Consolidated Net Income shall be
          a deficit, minus 100% of such deficit); plus

               (B) 100% of the aggregate Net Cash Proceeds received by the
          Company from the issuance or sale of its Capital Stock (other than
          Disqualified Stock and other than Excluded Contributions) subsequent
          to the Issue Date (other than an issuance or sale to a Subsidiary of
          the Company or to an ESOP) and 100%

                                       42

<PAGE>

          of any cash capital contribution received by the Company from its
          stockholders subsequent to the Issue Date; plus

               (C) the amount by which Indebtedness of the Company is reduced on
          the Company's balance sheet upon the conversion or exchange (other
          than by a Subsidiary of the Company) subsequent to the Issue Date of
          any Indebtedness of the Company convertible or exchangeable for
          Capital Stock (other than Disqualified Stock) of the Company (less the
          amount of any cash, or the fair value of any other property,
          distributed by the Company upon such conversion or exchange); plus

               (D) an amount equal to the sum of (x) the net reduction in the
          Investments (other than Permitted Investments) made by the Company or
          any Restricted Subsidiary in any Person resulting from repurchases,
          repayments or redemptions of such Investments by such Person, proceeds
          realized on the sale of such Investment and proceeds representing the
          return of capital (excluding amounts that contribute to Consolidated
          Net Income), in each case received by the Company or any Guarantor and
          (y) the portion (proportionate to the Company's equity interest in
          such Subsidiary) of the fair market value of the net assets of an
          Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
          designated a Restricted Subsidiary; provided, however, that the
          foregoing sum shall not exceed, in the case of any such Person or
          Unrestricted Subsidiary, the amount of Investments (excluding
          Permitted Investments) previously made (and treated as a Restricted
          Payment) by the Company or any Restricted Subsidiary in such Person or
          Unrestricted Subsidiary;

but in no event shall the sum under this subparagraph (a)(3) of Section 4.05
increase as the result of any action or occurrence under Section 4.05(b).

          (b) The provisions of Section 4.05(a) shall not prohibit (but in the
case of subparagraphs (b)(3), (b)(4), (b)(5), (b)(6) ,(b)(7) and (b)(8) of this
Section 4.05, only if no Event of Default or Payment Default has occurred and is
continuing or would result therefrom):

          (1) any Restricted Payment made out of (A) the Net Cash Proceeds of
     the substantially concurrent issuance or sale of, or made by conversion
     into or exchange for, Capital Stock of the Company (other than Disqualified
     Stock and other than Capital Stock issued or sold to a Subsidiary of the
     Company or an ESOP) and (B) any Excluded Contributions;

          (2) any purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value of Subordinated Obligations of the
     Company or a Subsidiary Guarantor made by exchange for, or out of the
     proceeds of the substantially concurrent issuance or sale of, Indebtedness
     which is permitted to be Incurred pursuant to Section 4.06;

          (3) payment of any dividends within 60 days after the date of
     declaration thereof if at such date of declaration such dividend complied
     with this Section 4.05;

                                       43

<PAGE>

          (4) dividends payable on the Series A Preferred Stock or any Preferred
     Stock issued to redeem, purchase, retire or otherwise acquire any Preferred
     Stock;

          (5) dividends by the Company on and repurchases by the Company of
     Disqualified Stock;

          (6) purchase by the Company or a Restricted Subsidiary of Equity
     Interests in a Restricted Subsidiary from another Person;

          (7) Restricted Payments in an aggregate amount which, when taken
     together with all other Restricted Payments made pursuant to this clause
     (7) and any amounts applied under Sections 4.09(a)(1) and 4.09(a)(2), at
     any one time outstanding do not exceed $200.0 million;

          (8) any purchase, repurchase, redemption or other acquisition by the
     Company of the Series A Preferred Stock;

          (9) dividends or distributions to, or Investments in, the Parent or
     any of its Subsidiaries pursuant to any tax sharing agreement contemplated
     by Section 4.10(b)(10); and

          (10) any Restricted Payment made upon consummation of the
     Restructuring Transactions.

          (c) The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the assets
proposed to be transferred by the Company or such Restricted Subsidiary, as the
case may be, in accordance with the Restricted Payment. The fair market value of
any non-cash Restricted Payment shall be determined in good faith by an
executive officer of the Company (if such fair market value is less than $1.0
million), or by the Board of Directors (in all other cases), in each case
pursuant to an Officers' Certificate delivered to the Trustee.

          SECTION 4.06. Limitation on Indebtedness.

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided,
however, that the Company and any Restricted Subsidiary shall be entitled to
Incur Indebtedness if, on the date of such Incurrence and after giving effect
thereto on a pro forma basis, no Default has occurred and is continuing and the
Consolidated Coverage Ratio exceeds 1.25 to 1.

          (b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries shall be entitled to Incur any or all of the following
Indebtedness:

          (1) Indebtedness of the Company and any Restricted Subsidiary Incurred
     pursuant to Credit Facilities of any Group Member; provided, however, that
     after giving effect to any such Incurrence, the aggregate principal amount
     of all Indebtedness of the Company and the Restricted Subsidiaries Incurred
     under this clause (1) and then outstanding does not exceed $200.0 million;

                                       44

<PAGE>

          (2) Indebtedness of the Company owing to and held by a Wholly Owned
     Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by
     the Company or a Wholly Owned Subsidiary; provided, however, that (A) any
     subsequent issuance or transfer of any Capital Stock which results in any
     such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
     subsequent transfer of such Indebtedness (other than to the Company or a
     Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the
     Incurrence of such Indebtedness by the obligor thereon and (B) if the
     Company or a Subsidiary Guarantor is the obligor on such Indebtedness, such
     Indebtedness is expressly subordinated to the prior payment in full in cash
     of all obligations with respect to the Notes or such Subsidiary Guarantor's
     Guaranty;

          (3) the Notes (including Additional Notes issued pursuant to Section
     4.01(b)) and any Guaranties;

          (4) Indebtedness of a Restricted Subsidiary Incurred and outstanding
     on or prior to the date on which such Subsidiary was acquired by the
     Company (other than Indebtedness Incurred in anticipation of or in
     connection with, or to provide all or any portion of the funds or credit
     support utilized to consummate, the transaction or series of related
     transactions pursuant to which such Subsidiary became a Subsidiary or was
     acquired by the Company); provided, however, that on the date of such
     acquisition and after giving pro forma effect thereto, the Consolidated
     Coverage Ratio of the Company is equal to or greater than the Consolidated
     Coverage Ratio of the Company prior to the consummation of the transaction
     or series of related transactions;

          (5) Refinancing Indebtedness in respect of Indebtedness Incurred
     pursuant to Section 4.06(a) or pursuant to clause (3), (4) or (13) of this
     Section 4.06(b) or this clause (5); provided, however, that to the extent
     such Refinancing Indebtedness directly or indirectly Refinances
     Indebtedness of a Subsidiary Incurred pursuant to clause (4), such
     Refinancing Indebtedness shall be Incurred only by such Subsidiary;

          (6) Hedging Obligations consisting of (A) Interest Rate Agreements
     entered into for nonspeculative purposes, and (B) Currency Agreements
     entered into for nonspeculative purposes;

          (7) obligations in respect of performance, bid and surety bonds and
     completion guarantees provided by the Company or any Restricted Subsidiary
     in the ordinary course of business;

          (8) Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument drawn against
     insufficient funds in the ordinary course of business; provided, however,
     that such Indebtedness is extinguished within two Business Days of its
     Incurrence;

          (9) Indebtedness consisting of any Guarantee by the Company or any
     Restricted Subsidiary of Indebtedness of the Company or any Restricted
     Subsidiary Incurred after the Issue Date to the extent such Indebtedness
     was permitted by this

                                       45

<PAGE>

     Indenture to be Incurred at the time of its Incurrence (other than
     Indebtedness Incurred pursuant to Section 4.06(b)(5) (to the extent of the
     limitation therein));

          (10) Indebtedness consisting of indemnification, adjustment of
     purchase price, earn-out or similar obligations (other than Guarantees of
     Indebtedness), in each case incurred in connection with the acquisition or
     disposition of assets otherwise permitted by this Indenture;

          (11) (a)(i) Indebtedness Incurred to finance the purchase,
     construction, launch, insurance for and other costs with respect to two
     additional satellites at any given time after the Issue Date and (ii) other
     Indebtedness Incurred to finance the purchase, construction, launch,
     insurance for and other costs with respect to additional satellites after
     the Issue Date, in an aggregate principal amount which, when taken together
     with all other Indebtedness under this clause (11)(a) at any one time
     outstanding does not exceed the greatest amount at any one time previously
     outstanding under clause (11)(a)(i), and (b) Indebtedness Incurred to
     finance the cost (including the cost of design, development, construction,
     installation, improvement, transportation or integration) of equipment
     (other than satellites but including transponder capacity) or inventory
     (other than satellites but including transponder capacity) acquired by the
     Company or a Restricted Subsidiary after the Issue Date;

          (12) Indebtedness of the Company and any Restricted Subsidiary (other
     than Indebtedness described in clauses (1)-(11) and clause (13)) in an
     aggregate principal amount which, when taken together with all other
     Indebtedness outstanding under this clause (12) at any one time does not
     exceed $125.0 million; and

          (13) Indebtedness constituting Disqualified Stock issued in connection
     with the refinancing of the Series A Preferred Stock.

          (c) Notwithstanding the foregoing, the Company shall not, and shall
not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to
Section 4.06(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations of the Company or any Subsidiary
Guarantor unless such new Indebtedness shall be subordinated to the Notes or the
applicable Guaranty to at least the same extent as such Subordinated
Obligations.

          (d) For purposes of determining compliance with this Section 4.06, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Indebtedness described in Section 4.06(a) or 4.06(b), (1) the
Company, in its sole discretion, is entitled to classify such item of
Indebtedness at the time of Incurrence, in any manner in compliance with this
Section 4.06, (2) the Company will only be required to include the amount and
type of such Indebtedness in one of the above categories and (3) the Company
will be entitled to divide and classify and reclassify from time to time an item
of Indebtedness in more than one of the categories of Indebtedness described
above.

          (e) Notwithstanding Section 4.06(a) or 4.06(b), the Company shall not,
and shall not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness, unless such

                                       46

<PAGE>

Indebtedness is Incurred in compliance with the other provisions of this
Indenture, including Sections 4.07, and 4.11.

          SECTION 4.07. Limitation on Liens.

The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist or become
effective any Lien to secure Indebtedness on or with respect to any of its
assets, whether owned at the Issue Date or thereafter acquired, other than
Permitted Liens. Notwithstanding anything else herein or elsewhere to the
contrary, any Permitted Lien under clauses (vi), (xviii) and (xxi) of the
definition thereof securing Indebtedness Incurred ("PERMITTED SENIOR
FINANCINGS") pursuant to and in compliance with Sections 4.06(b)(1), 4.06(b)(11)
and 4.06(b)(12) and any Permitted Lien under clause (xv) of the definition
thereof may be superior in priority to any Lien securing the Notes pursuant to
this Agreement or any of the Collateral Documents. The Collateral Agent shall
upon the request and at the expense of the Company execute and deliver any Lien
subordination and related intercreditor agreement requested by the Persons
providing the Permitted Senior Financings, which agreement may contain
provisions, among others, relating to subordination of the Lien for the benefit
of the Holders (including the Lien for the benefit of the Trustee and the
Collateral Agent but shall preserve the priority of such Lien to secure up to
$1,500,000 of claims) under the Collateral Documents on the collateral subject
to such Permitted Secured Financings, sale of such collateral, waivers of rights
relating to certain actions relating to the collateral in bankruptcy and similar
proceedings and other related matters requested by the Persons providing the
Permitted Senior Financing, and which agreement shall include all customary
rights, benefits, privileges and immunities in favor of the Trustee and the
Collateral Agent.

          SECTION 4.08. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.

The Company shall not, and shall not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions on its Capital Stock to the
Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company
or a Restricted Subsidiary, (b) make any loans or advances to the Company or a
Restricted Subsidiary or (c) transfer any of its property or assets to the
Company or a Restricted Subsidiary, except:

          (1)  with respect to clauses (a), (b) and (c),

          (A)  any encumbrance or restriction contained in the terms of any
               Credit Facility entered into pursuant to Section 4.06(b)(1),
               4.06(b)(11) or 4.06(b)(12) if (i) the Company determines at the
               time any such Indebtedness is Incurred (or in the case of
               revolving Indebtedness, at the time such commitment is
               established) and at the time of any modification of the terms of
               any documentation governing such Indebtedness that any such
               encumbrance or restriction will not materially affect the
               Company's ability to make principal and interest payments on the
               Notes and (ii) the encumbrance or restriction is not materially
               more disadvantageous to the

                                       47
<PAGE>

               Holders than is customary in comparable Indebtedness for
               companies similarly situated (as determined by the Board of
               Directors in good faith);

          (B)  any encumbrance or restriction contained in any indenture if such
               indenture is substantially identical to this Indenture;

          (C)  any encumbrance or restriction with respect to a Restricted
               Subsidiary pursuant to an agreement relating to any Indebtedness
               Incurred by such Restricted Subsidiary on or prior to the date on
               which such Restricted Subsidiary was acquired by the Company
               (other than Indebtedness Incurred in anticipation of or in
               connection with, or to provide all or any portion of the funds or
               credit support utilized to consummate, the transaction or series
               of related transactions pursuant to which such Restricted
               Subsidiary became a Restricted Subsidiary or was acquired by the
               Company) and outstanding on such date;

          (D)  any encumbrance or restriction pursuant to an agreement effecting
               an amendment, modification, restatement, renewal, replacement or
               Refinancing of Indebtedness Incurred pursuant to an agreement
               referred to in Section 4.08(1)(B) or (C) or this clause (D) or
               contained in any amendment to an agreement referred to in Section
               4.08(1)(B) or (C) or this clause (D); provided, however, that the
               encumbrances and restrictions with respect to such Restricted
               Subsidiary contained in any such refinancing agreement or
               amendment, taken as a whole, either satisfy the requirements of
               clause (A) above or are no less favorable to the Noteholders than
               encumbrances and restrictions with respect to such Restricted
               Subsidiary contained in such predecessor agreements;

          (E)  any encumbrance or restriction arising under any applicable law,
               rule, regulation or order; and

          (F)  any encumbrance or restriction if (i) such encumbrance or
               restriction is set forth in the documentation governing a Credit
               Linked Hedge, (ii) such encumbrance or restriction is not less
               favorable to the Noteholders than the corresponding encumbrance
               or restriction set forth in the Credit Facility related to such
               Credit Linked Hedge, and (iii) the corresponding encumbrance or
               restriction set forth in such Credit Facility is permitted under
               this covenant;

          (G)  any encumbrance or restriction in effect on the Issue Date; and

          (H)  any encumbrance or restriction entered into in good faith
               contained in any shareholders or similar agreement relating to
               any Subsidiary that is not a Wholly-Owned Subsidiary; and

          (2)  with respect to clause (c) only,

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<PAGE>

          (A)  any encumbrance or restriction consisting of a customary
               nonassignment provision in a lease, license or similar ordinary
               course of business agreement;

          (B)  any restriction contained in a security agreement or mortgage
               securing Indebtedness of a Restricted Subsidiary to the extent
               such restriction restricts the transfer of the property subject
               to such security agreement or mortgage; and

          (C)  any restriction with respect to a Restricted Subsidiary imposed
               pursuant to an agreement entered into for the sale or disposition
               of all or substantially all the Capital Stock or assets of such
               Restricted Subsidiary pending the closing of such sale or
               disposition.

          SECTION 4.09. Limitation on Sales of Assets and Subsidiary Stock.

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless:

          (1) except in the case of an Event of Loss, the Company or such
     Restricted Subsidiary receives consideration at the time of such Asset
     Disposition at least equal to the fair market value (including as to the
     value of all non-cash consideration), as determined in good faith by the
     Board of Directors, of the shares and assets subject to such Asset
     Disposition; provided, however, that the Company may count as consideration
     received for such Asset Disposition any amount available under Section
     4.05(a)(3) and 4.05(b)(7);

          (2) except in the case of an Event of Loss, at least 50% of the
     consideration thereof received (exclusive of earnouts or orbital payments)
     by the Company or such Restricted Subsidiary is in the form of cash or cash
     equivalents or Additional Assets; provided, however, that the Company may
     count as cash received for such Asset Disposition any amount available
     under Section 4.05(a)(3) and 4.05(b)(7) ; and

          (3) an amount equal to 100% of the Net Available Cash from such Asset
     Disposition is applied by the Company (or such Restricted Subsidiary, as
     the case may be):

               (A) to the extent the Company is required to do so by the terms
          of any such Indebtedness, to prepay, repay, purchase, repurchase,
          redeem, defease or otherwise acquire or retire for value Indebtedness
          of the Company or any Wholly Owned Subsidiary that was secured by a
          Lien on the asset that was the subject of such Asset Disposition (in
          each case other than (i) Indebtedness constituting Subordinated
          Obligations and (ii) Indebtedness owed to the Company or an Affiliate
          of the Company) from time to time within 540 days from the later of
          the date of such Asset Disposition or the receipt of such Net
          Available Cash (such later date being herein called, the "MEASUREMENT
          DATE");

                                       49

<PAGE>

               (B) to the extent the Company elects, to enter into contractual
          agreements to acquire Additional Assets from time to time within 540
          days from the Measurement Date and consummates such acquisitions
          within two years after the execution of such contracts; and

               (C) to the extent of the balance of such Net Available Cash after
          application in accordance with clauses (A) and (B), to make an offer
          to the holders of the Notes to purchase Notes pursuant to and subject
          to the conditions contained in this Indenture (an "ASSET DISPOSITION
          OFFER").

          Notwithstanding the foregoing provisions of this Section 4.09, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.09 except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which is not
applied in accordance with this Section 4.09 exceeds $150.0 million. Pending
application of Net Available Cash pursuant to this Section 4.09, such Net
Available Cash may be invested in Temporary Cash Investments, applied to
temporarily reduce revolving credit indebtedness or used in any manner otherwise
permitted by this Indenture.

          For the purposes of clause (a)(2) of this Section 4.09, the following
are deemed to be cash or cash equivalents: (1) the assumption of Indebtedness of
the Company or any Wholly Owned Subsidiary (in each case other than (i)
Indebtedness constituting Subordinated Obligations and (ii) Indebtedness owed to
the Company or an Affiliate of the Company) and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in connection
with such Asset Disposition; and (2) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.

          (b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to Section 4.09(a)(3)(C), the Company shall make such Asset
Disposition Offer to purchase Notes on or before the fifth Business Day
following the 540th day after the Measurement Date, and shall purchase Notes
tendered pursuant to an offer by the Company for the Notes at a purchase price
of 100% of the principal amount thereof on the date of purchase without premium,
plus accrued but unpaid interest in accordance with the procedures set forth in
this Indenture and customary practice. If the aggregate purchase price of the
Notes tendered exceeds the Net Available Cash allotted to their purchase, the
Company shall select the Notes to be purchased on a pro rata basis but in
denominations of $1,000 principal amount or multiples thereof. The Company shall
not be required to make such an offer to purchase Notes pursuant to this Section
4.09 if the Net Available Cash available therefor is less than $150.0 million
(which lesser amount shall be carried forward for purposes of determining
whether such an offer is required with respect to the Net Available Cash from
any subsequent Asset Disposition). Upon completion of any application of Net
Available Cash in accordance with the foregoing provisions of clause (a) (3) of
this Section 4.09, the amount of Net Available Cash shall be reset at zero.

          (c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.09, the

                                       50

<PAGE>

Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.09 by
virtue of its compliance with such securities laws or regulations.

          (d) If, as of the date of any supplemental indenture, pursuant to
which the parties seek to waive or modify the provisions of this Section 4.09 or
any relevant definition, no Asset Disposition has occurred that would, with the
passage of time and the absence of any contrary application of the Net Available
Cash therefrom, give rise to the requirement to make an Asset Disposition Offer,
the Company does not have a present intent to make any Asset Disposition that
would give rise to such requirement, and the Company is not aware of any
pending, proposed or threatened Asset Disposition that would give rise to such
requirement, the provisions under this Indenture relative to the Company's
obligation to make an offer to purchase the Notes as a result of an Asset
Disposition may be waived or modified with the written consent of the holders of
a majority in principal amount of the Notes.

          SECTION 4.10. Limitation on Affiliate Transactions.

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with, or for the benefit of, any
Affiliate of the Company (an "AFFILIATE TRANSACTION") unless:

          (1) the terms of the Affiliate Transaction are no less favorable to
     the Company or such Restricted Subsidiary than those that could be obtained
     at the time of the Affiliate Transaction in arm's-length dealings with a
     Person who is not an Affiliate;

          (2) if such Affiliate Transaction involves an amount in excess of
     $50.0 million, the terms of the Affiliate Transaction are set forth in
     writing and a majority of the non-employee directors of the Company
     disinterested with respect to such Affiliate Transaction shall have
     determined in good faith that the criteria set forth in clause (1) of this
     Section 4.10 are satisfied and shall have approved the relevant Affiliate
     Transaction as evidenced by a resolution of the Board of Directors; and

          (3) if such Affiliate Transaction involves an amount in excess of
     $100.0 million, the Board of Directors shall also have received a written
     opinion from an Independent Qualified Party to the effect that such
     Affiliate Transaction is fair, from a financial standpoint, to the Company
     and its Restricted Subsidiaries or is not less favorable to the Company and
     its Restricted Subsidiaries than could reasonably be expected to be
     obtained at the time in an arm's-length transaction with a Person who was
     not an Affiliate.

          (b) The provisions of Section 4.10(a) shall not prohibit:

          (1) any Investment (other than a Permitted Investment but including
     Permitted Investments made under clause (12) of the definition thereof) or
     other Restricted Payment, in each case permitted to be made pursuant to
     Section 4.05;

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<PAGE>

          (2) any issuance of securities, or other payments, awards or grants in
     cash, securities or otherwise pursuant to, or the funding of, employment
     arrangements, stock options and stock ownership plans approved by the Board
     of Directors;

          (3) loans or advances to employees in the ordinary course of business,
     but in any event not to exceed $1.0 million in the aggregate outstanding at
     any one time;

          (4) the payment of reasonable fees and compensation (including health
     benefits, vacation, severance, compensation and similar benefits) to, and
     provision of customary indemnification on behalf of, directors, employees,
     consultants and agents of the Company or any Restricted Subsidiary as
     determined in good faith by the Board of Directors or the Company's senior
     management;

          (5) any transaction (i) between or among the Company and/or its
     Restricted Subsidiaries or (ii) between or among the Company, a Restricted
     Subsidiary or any other Person that would constitute an Affiliate
     Transaction solely because the Company or a Restricted Subsidiary owns an
     equity interest in or otherwise controls such Person;

          (6) the issuance or sale of Capital Stock (other than Disqualified
     Stock) of the Company;

          (7) the payment of all fees and expenses related to the Transactions;
     and

          (8) any transaction between (i) the Company or any Restricted
     Subsidiary and (ii) any other Group Member entered into in good faith;

          (9) any transaction involving the construction, design, development,
     purchase or acquisition of a satellite and related assets of any Group
     Member;

          (10) any management agreement, tax sharing agreement and shared
     services agreement with any Group Member;

          (11) any transaction set forth on Schedule 4.10;

          (12) any transaction in which the Board of Directors has received a
     written opinion from an Independent Qualified Party to the effect that such
     Affiliate Transaction is fair from a financial standpoint, to the Company
     and its Restricted Subsidiaries or is not less favorable to the Company and
     its Restricted Subsidiaries than could reasonably be expected to be
     obtained at the time in an arm's length transaction with a Person who was
     not an Affiliate; or

          (13) any affiliate transaction in which deficiency, if any, of the
     fair market value of the consideration which would have been received by
     the Company or any Restricted Subsidiary in a transaction complying with
     Section 4.10(a)(1) over the consideration actually received by the Company
     and its Restricted Subsidiaries, as determined in good faith by the Board
     of Directors of the Company, is treated as a Restricted Payment or
     Permitted Investment and otherwise permitted under this Indenture.

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          For purposes of this Indenture, a director is not deemed to be
interested in a transaction between or among Persons solely because such
director is an officer or director of both Persons or their Affiliates.

          SECTION 4.11. Guarantors.

          (a) The Company will cause (1) each Domestic Subsidiary that is a
Wholly Owned Subsidiary, (2) subject to receipt of all necessary consents
contemplated by paragraph (b) of this Section, each Domestic Subsidiary that is
not a Wholly Owned Subsidiary, and (3) each Domestic Subsidiary (notwithstanding
(2) above) that Guarantees any Indebtedness of the Company or a Domestic
Subsidiary, in each case, whether existing on the Issue Date or thereafter
acquired or formed, to at all times be a Guarantor, and if such Subsidiary is
not a party to the Indenture or a Supplemental Guaranty Agreement, to execute
and deliver to the Trustee a Supplemental Guaranty Agreement pursuant to which
such Subsidiary will Guarantee payment of the Notes on the same terms and
conditions as those set forth in this Indenture. Notwithstanding any provision
of this Indenture, the Notes or any Collateral Document to the contrary, no
Unrestricted Subsidiary shall be required to become a Guarantor or grant a Lien
on any of its assets or otherwise be bound by the provisions of this Indenture,
the Notes or any Collateral Document.

          (b) In the case of a Domestic Subsidiary that is not a Wholly Owned
Subsidiary, if such Subsidiary is not permitted to Guarantee the Notes, the
Company shall, and shall cause its Subsidiaries (including such Subsidiary) to,
use Commercially Reasonable Efforts to obtain any and all consents necessary in
order to authorize and allow such Subsidiary to make such Guarantee.

          (c) The Guaranty of a Guarantor shall be released as provided in
Section 10.06.

          SECTION 4.12. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries.

The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary except:

          (1) to the Company or a Wholly Owned Subsidiary;

          (2) issuances of Foreign Required Minority Shares but only to the
     extent required by applicable law and only if the Company, by contract or
     otherwise, controls the management and business of such Foreign Subsidiary
     and derives the economic benefits of ownership of such Foreign Subsidiary
     to substantially the same extent as if such Foreign Subsidiary were a
     Wholly Owned Subsidiary;

          (3) if, immediately after giving effect to such issuance or sale, such
     Restricted Subsidiary would no longer constitute a Restricted Subsidiary,
     provided that any Investment in such Person remaining after giving effect
     to such issuance or sale shall

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<PAGE>

     constitute an "Investment" made at the time of such issuance or sale, and
     such issuance or sale shall only be permitted if such Investment is
     permitted to be made under Section 4.05;

          (4) issuances of Capital Stock (other than Preferred Stock) of any
     Restricted Subsidiary, the Net Cash Proceeds of which are promptly applied
     pursuant to Section 4.09(a)(3); provided that at no time may a Restricted
     Subsidiary the Capital Stock of which has been issued pursuant to this
     clause (4) be the owner of a satellite; and

          (5) issuances and sales made upon consummation of the Restructuring
     Transactions.

          SECTION 4.13. Limitation on Sale/Leaseback Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into any Sale/Leaseback Transaction unless such transaction
is otherwise permitted under this Indenture, including Sections 4.06, 4.07 and
4.09.

          SECTION 4.14. Existence.

Subject to Articles 4 and 5 of this Indenture, the Company will do or cause to
be done all things necessary to preserve and maintain in full force and effect
its existence and the existence of each Restricted Subsidiary in accordance with
the respective organizational documents of the Company and each such Restricted
Subsidiary and the rights (whether pursuant to charter, partnership certificate,
agreement, statute or otherwise), licenses and franchises of the Company and
each such Restricted Subsidiary, provided that the Company shall not be required
to preserve any such right, license or franchise, or maintain the existence of
any entity (other than of the Company) if the preservation or maintenance
thereof is no longer desirable in the conduct of the business of the Company and
its Restricted Subsidiaries, taken as a whole, and the failure to preserve or
maintain such right, license, franchise or entity is not reasonably likely to
have a material adverse effect on the ability of the Company to repay the
principal of, premium, if any, and interest on the Notes.

          SECTION 4.15. Payment of Taxes and Other Claims.

The Company will pay or discharge and shall cause each Restricted Subsidiary to
pay or discharge, or cause to be paid or discharged, before the same shall
become delinquent (i) all material taxes, assessments and governmental charges
levied or imposed upon (a) the Company or any such Restricted Subsidiary, (b)
the income or profits of any such Restricted Subsidiary which is a corporation
or (c) the property of the Company or any such Restricted Subsidiary and (ii)
all material lawful claims for labor, materials and supplies that, if unpaid,
might by law become a Lien upon the property of the Company or any such
Restricted Subsidiary, provided that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such tax, assessment, charge
or claim if either (i) the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings by the Company and its
Restricted Subsidiaries where the failure to effect such payment is not adverse
in any material respect to the Holders and for which adequate reserves (to the
extent required in accordance with GAAP) have been established and maintained or
(ii) the failure to pay or discharge the same is

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<PAGE>

not reasonably likely to have a material adverse effect on the ability of the
Company to repay the principal of, premium, if any, and interest on the Notes.

          SECTION 4.16. Insurance; Maintenance of Properties.

          (a) The Company and each of its Subsidiaries shall provide or cause to
be provided, for itself and each of their respective Subsidiaries, insurance
(including appropriate self-insurance) that is adequate and appropriate, in the
good faith judgment of the Board of Directors of the Company, for the conduct of
the business of the Company and such Subsidiaries in a prudent manner.

          (b) The Company shall cause all properties owned by the Company or any
Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary 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 the Board of Directors of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 4.16 shall prevent the Company from discontinuing the
maintenance of any such properties if the Board of Directors of the Company
reasonably determines in good faith that such discontinuance is not reasonably
likely to have a material adverse effect on the ability of the Company to repay
the principal of, premium, if any, and interest on the Notes.

          SECTION 4.17. Notice of Defaults.

In the event that the Company or any Subsidiary Guarantor becomes aware of any
Event of Default, the Company shall promptly thereafter deliver to the Trustee
an Officers' Certificate specifying such Event of Default and what actions the
Company is taking or proposes to take with respect thereto.

          SECTION 4.18. Business Activities.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
engage in any material business operations in businesses other than Related
Businesses.

          SECTION 4.19. Use of Proceeds.

The Company will use the proceeds of the issuance of the Notes only as permitted
under the Plan.

          SECTION 4.20. Further Instruments and Acts.

Upon request of the Trustee or the Collateral Agent, the Company will, and will
cause its Subsidiaries to, execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

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<PAGE>

                                    ARTICLE 5

                                     Merger

          SECTION 5.01. Merger and Consolidation.

          (a) The Company shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transactions,
directly or indirectly, all or substantially all its assets to, any Person,
unless:

          (1) the resulting, surviving or transferee Person (the "SUCCESSOR
     COMPANY") shall be a corporation organized and existing under the laws of
     the United States of America, any State thereof or the District of Columbia
     and the Successor Company (if not the Company) shall expressly assume, by
     an indenture supplemental hereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee, all the obligations of the Company under
     the Notes, this Indenture and the Collateral Documents;

          (2) immediately after giving pro forma effect to such transaction (and
     treating any Indebtedness of the Successor Company and its Subsidiaries as
     having been Incurred by the Successor Company or each such Subsidiary at
     the time of such transaction), no Default shall have occurred and be
     continuing;

          (3) immediately after giving pro forma effect to such transaction, the
     Successor Company would be able to Incur an additional $1.00 of
     Indebtedness pursuant to Section 4.06(a);

          (4) each Person that is required pursuant to the terms of this
     Indenture to be a Guarantor (i) shall have become a Guarantor pursuant to a
     Supplemental Guaranty Agreement or (ii) shall have confirmed its Guaranty
     pursuant to a supplemental indenture in form reasonably satisfactory to the
     Trustee;

          (5) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger or transfer and such supplemental indenture (if any)
     comply with this Indenture; and

          (6) the Company shall have delivered to the Trustee an Opinion of
     Counsel to the effect that the Holders will not recognize income, gain or
     loss for Federal income tax purposes as a result of such transaction and
     will be subject to Federal income tax on the same amounts, in the same
     manner and at the same times as would have been the case if such
     transaction had not occurred;

provided, however, that clause (3) will not be applicable (A) to a Restricted
Subsidiary consolidating with, merging into, conveying, transferring or leasing
all or part of its assets to the Company, (B) to the Company merging with an
Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction within the United States of
America, or (C) to the conveying, transferring or leasing all or part of the
assets by the Company to a Guarantor. For the avoidance of doubt, for purposes
of this Section 5.01, (a) the determination of whether the sale involves all or
substantially all of the assets of a Person shall

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<PAGE>

be based on the book value of such assets, and (b) conveying, transferring or
leasing after the Issue Date of satellites and transponders in the ordinary
course of business shall be deemed not to constitute the sale of all or
substantially all assets of the Company.

          (b) The Successor Company (if not the Company) shall be the successor
to the Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, and the predecessor
Company, except in the case of a lease, shall be released from the obligation to
pay the principal of and interest on the Notes.

          (c) The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person (except in the case of a Subsidiary Guarantor that has been
disposed of in its entirety to another Person (other than to the Company or an
Affiliate of the Company), whether through a merger, consolidation or sale of
Capital Stock or assets, if in connection therewith the Company provides an
Officers' Certificate to the Trustee to the effect that the Company will comply
with, and the Company does comply with, its obligations under Section 4.09 in
respect of such disposition) unless:

          (1) the resulting, surviving or transferee Person (if not such
     Subsidiary) shall be a Person organized and existing under the laws of the
     jurisdiction under which such Subsidiary was organized or under the laws of
     the United States of America, or any State thereof or the District of
     Columbia, and such Person shall expressly assume, by a Supplemental
     Guaranty Agreement, in a form satisfactory to the Trustee, all the
     obligations of such Subsidiary, if any, under its Guaranty; and

          (2) the Company delivers to the Trustee an Officers' Certificate and
     an Opinion of Counsel, each stating that such consolidation, merger or
     transfer and such Supplemental Guaranty Agreement, if any, complies with
     this Indenture.

          (d) Notwithstanding clauses (a), (b) and (c) of this Section 5.01, if
no Default has occurred and is continuing, any Subsidiary Guarantor may
consolidate with or merge with or into or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to the Company or any Subsidiary Guarantor, and the Company and its Subsidiaries
may consummate the Restructuring Transactions.

                                    ARTICLE 6

                              Defaults and Remedies

          SECTION 6.01. Events of Default.

Each of the following is an "EVENT OF DEFAULT":

          (1) the Company defaults in any payment of interest on any Note when
     the same becomes due and payable, continued for 30 days;

          (2) the Company (A) defaults in the payment of the principal of any
     Note when the same becomes due and payable at its Stated Maturity, upon
     optional

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<PAGE>

     redemption, upon declaration of acceleration or otherwise, or (B) fails to
     purchase any Note when required pursuant to this Indenture or the Notes;

          (3) the Company fails to comply with Section 5.01;

          (4) the Company or any Guarantor that is a Significant Subsidiary
     defaults in the performance of or breaches any covenants or otherwise fails
     to comply with any of its agreements in the Notes, this Indenture or any
     Collateral Document (other than those referred to in clause (1), (2) or (3)
     above) and such default, breach or other failure continues for 30 days
     after the notice specified below;

          (5) Indebtedness of the Company or any Significant Subsidiary (whether
     or not a Guarantor) is not paid within any applicable grace period after
     the due date thereof or is accelerated by the holders thereof because of a
     default and the total amount of such Indebtedness unpaid or accelerated
     exceeds $50.0 million, or its foreign currency equivalent at the time;

          (6) the Company or any Significant Subsidiary (whether or not a
     Guarantor) pursuant to or within the meaning of any Bankruptcy Law:

          (A)  commences a voluntary case;

          (B)  consents to the entry of an order for relief against it in an
               involuntary case;

          (C)  consents to the appointment of a Custodian of it or for any
               substantial part of its property; or

          (D)  makes a general assignment for the benefit of its creditors;

          or takes any comparable action under any foreign laws relating to
insolvency;

          (7) a court of competent jurisdiction enters an order or decree under
     any Bankruptcy Law that:

          (A)  is for relief against the Company or any Significant Subsidiary
               (whether or not a Guarantor) in an involuntary case;

          (B)  appoints a Custodian of the Company or any Significant Subsidiary
               (whether or not a Guarantor)or for any substantial part of its
               property; or

          (C)  orders the winding up or liquidation of the Company or any
               Significant Subsidiary (whether or not a Guarantor); or any
               similar relief is granted under any foreign laws and the order or
               decree remains unstayed and in effect for 30 days;

          (8) any judgment or decree for the payment of money in excess of $50.0
     million (or its foreign currency equivalent at the time) is entered against
     the Company, or any Significant Subsidiary (whether or not a Guarantor),
     remains outstanding for a period

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<PAGE>

     of 30 consecutive days following the entry of such judgment or decree and
     is not discharged, waived or the execution thereof stayed;

          (9) a Guaranty ceases to be in full force and effect (other than in
     accordance with the terms of such Guaranty) or any Guarantor denies or
     disaffirms its obligations under its Guaranty except pursuant to a merger,
     consolidation or dissolution permitted under this Indenture; or

          (10) any Collateral Document ceases to be in full force and effect
     (other than in accordance with its terms), any obligor under any Collateral
     Document denies or disaffirms its obligations thereunder, or any Lien
     purported to be created under any Collateral Document shall cease to be
     enforceable or shall cease to be of the same effect and priority as
     purported to be created by such Collateral Document (other than in
     accordance with the terms thereof or of this Indenture) and the same shall
     continue for a period of 10 days after the notice referred to below.

          The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.

          The term "BANKRUPTCY LAW" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "CUSTODIAN"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

          A Default under clause (4) or (10) of this Section 6.01 is not an
Event of Default until the Trustee or the Holders of at least 33.33% in
principal amount of the outstanding Notes notify the Company of the Default and
the Company does not cure such Default within the time specified after receipt
of such notice.

          SECTION 6.02. Acceleration.

          (a) If an Event of Default (other than an Event of Default specified
in Section 6.01(6) or (7)) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of at least 40.0% in principal amount of the
outstanding Notes by notice to the Company and the Trustee, may declare the
principal of and accrued but unpaid interest, if any, on all the Notes to be due
and payable. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified in Section 6.01(6) or
(7) occurs and is continuing, the principal of and interest, if any, on all the
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Noteholders. The
Holders of a majority in principal amount of the Notes, by notice to the
Trustee, may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.

          In the event of a declaration of acceleration of the Notes because an
Event of Default described in clause (5) of Section 6.01 has occurred and is
continuing, the declaration of

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<PAGE>

acceleration of the Notes shall be automatically annulled if (A) the event of
default or payment default triggering such Event of Default pursuant to clause
(5) of Section 6.01 shall be remedied or cured by the Company or a Restricted
Subsidiary or waived by the holders of the relevant Indebtedness within 20 days
after the declaration of acceleration with respect thereto, (B) the annulment of
the acceleration of the Notes would not conflict with any judgment or decree of
a court of competent jurisdiction and (C) all existing Events of Default, except
nonpayment of principal, premium or interest on the Notes that became due solely
because of the acceleration of the Notes, have been cured or waived.

          (b) The Company agrees to pay, in addition to the amount stated above,
any and all expenses (including reasonable counsel fees and expenses) incurred
by the Trustee acting on behalf of the Noteholders in enforcing any rights under
the Notes.

          SECTION 6.03. Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of 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 even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.

          SECTION 6.04. Waiver of Past Defaults.

The Holders of a majority in principal amount of the Notes by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the principal or interest on a Note, (ii) a Default arising
from the failure to redeem or purchase any Note when required pursuant to this
Indenture or (iii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Noteholder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.

          SECTION 6.05. Control by Majority.

The Holders of a majority in principal amount of the outstanding Notes are given
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or of 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 or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Noteholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.

          SECTION 6.06. Limitation on Suits.

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<PAGE>

Except to enforce the right to receive payment of principal or interest when
due, no Noteholder may pursue any remedy with respect to this Indenture or the
Notes unless:

          (1) the Holder gives to the Trustee written notice stating that an
     Event of Default is continuing;

          (2) notwithstanding the requirements of Section 316(a)(1) of the TIA
     (which are hereby excluded as permitted therein), the Holders of at least
     40% in outstanding principal amount of the Notes make a written request to
     the Trustee to pursue the remedy;

          (3) such Holder or Holders offer to the Trustee reasonable security or
     indemnity against any loss, liability or expense;

          (4) the Trustee does not comply with the request within 60 days after
     receipt of the request and the offer of security or indemnity; and

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

          SECTION 6.07. Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal and interest on the Notes held by such Holder,
on or after the respective due dates expressed in the Notes, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

          SECTION 6.08. Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any Guarantor for the whole amount then
due and owing (together with interest on any unpaid interest to the extent
lawful) and the amounts provided for in Section 7.07.

          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 in order to have the claims of the Trustee and the
Noteholders allowed in any judicial proceedings relative to the Company, its
creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.

          Nothing herein 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,

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<PAGE>

adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceedings.

          SECTION 6.10. Priorities.

If the Trustee collects any money or property pursuant to this Article 6, and,
after an Event of Default, any other money or property distributable in respect
of the Company's or any Guarantor's obligations under this Indenture, it shall
be applied in the following order:

          FIRST, to the Trustee, including any predecessor Trustee, for amounts
     due under Section 7.07;

          SECOND, to Noteholders for amounts due and unpaid on the Notes for
     principal and interest, ratably, without preference or priority of any
     kind, according to the amounts due and payable on the Notes for principal
     and interest, respectively; and

          THIRD, to the Company or any other Person legally entitled thereto.

          The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10. At least 15 days before such record
date, the Company shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.

          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 in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 or a suit by Holders of more than 10% in principal amount of the Notes.

          SECTION 6.12. Waiver of Stay or Extension Laws.

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

          SECTION 6.13. Payment of Premium.

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<PAGE>

In the case of any Event of Default occurring by reason of any willful action or
inaction taken or not taken by or on behalf of the Company, any Guarantor or any
Restricted Subsidiary with the intention of avoiding payment of the premium that
would be due upon an optional redemption of the Notes, upon acceleration of the
Notes following such Event of Default, to the fullest extent permitted by law, a
premium shall immediately become due and payable by the Company in an amount
equal to the premium that would have been due and payable had the Company
elected to optionally redeem the Notes.

                                    ARTICLE 7

                                     Trustee

          SECTION 7.01. Duties of Trustee.

          (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise 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.

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

          (1) the Trustee undertakes to perform such duties and only such duties
     as are specifically set forth in this Indenture and no others, 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 truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     the Trustee shall examine the certificates and opinions to determine
     whether or not they conform to the requirements of this Indenture, but need
     not confirm or investigate the accuracy of the mathematical calculations or
     other facts stated therein.

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

          (1) this Section 7.01(c) does not limit the effect of paragraphs (b)
     and (g) of this Section 7.01;

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

          (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.

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          (d) Every provision of this Indenture, the Notes and the Collateral
Documents that in any way relates to the Trustee is subject to Sections 7.01 and
7.02.

          (e) 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.

          (f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

          (g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur 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 to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

          (h) 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 Section 7.01 and to the provisions of the TIA.

          SECTION 7.02. Rights of Trustee.

          (a) The Trustee may conclusively rely on, and shall be protected in
acting or refraining from acting upon, any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.

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

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

          (d) The respective rights, privileges, protections, immunities and
benefits given to the Trustee and the Collateral Agent, including, without
limitation, its right to be indemnified and its right to appoint co-trustees and
separate trustees, are extended to, and shall be enforceable by, the Trustee and
the Collateral Agent in each of their respective capacities hereunder and under
the Collateral Documents, and each agent, custodian and other Person employed to
act hereunder.

          (e) The Trustee may consult with counsel, and the advice or opinion of
counsel shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.

          (f) 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 pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity

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<PAGE>

satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.

          (g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust 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 at the Corporate Trust Office of the Trustee, and such
notice references the Notes and this Indenture.

          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 Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.

          SECTION 7.04. Trustee's Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Company's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Trustee's certificate of authentication.

          SECTION 7.05. Notice of Defaults.

If a Default or Event of Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default or
Event of Default within 90 days after it occurs or as soon as is practicable
after it becomes known to the Trustee. Except in the case of a Default or Event
of Default in payment of principal or interest on any Note (including payments
pursuant to the mandatory redemption provisions of such Note, if any), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is not opposed to
the interests of Noteholders.

          SECTION 7.06. Reports by Trustee to Holders.

As promptly as practicable after each May 15 beginning with the May 15 following
the date of this Indenture, and in any event prior to July 15 in each year, the
Trustee shall mail to each Noteholder a brief report dated as of May 15 that
complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within the twelve months preceding the reporting date, no
report need be mailed). The Trustee also shall comply with TIA Section 313(b).

          A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC (if appropriate) and each stock exchange (if any) on which
the Notes are listed. The Company agrees to notify promptly the Trustee whenever
the Notes become listed on any stock exchange and of any delisting thereof.

          SECTION 7.07. Compensation and Indemnity.

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The Company shall pay to the Trustee such compensation (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) as shall be agreed upon in writing for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder, except as set forth in the last sentence of this paragraph.
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder unless and to the extent the Company is
prejudiced by such negligent failure. The Company shall defend the claim and 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 consent, which consent shall not be unreasonably withheld. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own willful misconduct,
negligence or bad faith.

          The Company shall defend, indemnify, and hold harmless the Trustee
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of, or in any way related to, (w)
the presence, disposal, release, or threatened release of any Hazardous
Materials which are on, from, or affecting the soil, water, vegetation,
buildings, personal property, persons, animals, or otherwise; (x) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Materials; (y) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Materials, and/or (z) any violation of laws, orders, regulations, requirements
or demands of government authorities, or any policies or requirements of the
Environmental Protection Agency, which are based upon or in any way related to
such Hazardous Materials including, without limitation, attorney and consultant
fees and expenses, investigation and laboratory fees, court costs, and
litigation expenses. For purposes of this paragraph, "Hazardous Material"
includes, without limit, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et. seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 5108, et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 6901, et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or any other Federal, state or local environmental
law, ordinance, rule, or regulation. The provisions of this paragraph shall be
in addition to any and all other obligations and liabilities the Company may
have to the Trustee at common law.

          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 other than money or property held in trust to pay
principal and interest on particular Notes.

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<PAGE>

          The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(6) or (7) with respect to
the Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.

          For the purposes of this Section 7.07, the "Trustee" shall include any
predecessor Trustee; provided, however, that the negligence or willful
misconduct of any Trustee hereunder shall not affect the rights of any other
Trustee hereunder.

          SECTION 7.08. Replacement of Trustee.

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

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

          (2) the Trustee is adjudged bankrupt or insolvent;

          (3) a receiver or other public officer takes charge of the Trustee or
     its property; or

          (4) the Trustee otherwise becomes incapable of acting.

          If the Trustee resigns or is removed by the Company and the Company
does not reasonably promptly appoint a successor Trustee or if the Trustee is
removed by the Holders of a majority in principal amount of the Notes and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any other reason (the Trustee in such event
being referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.

          If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Notes may petition, at the Company's expense, any
court of competent jurisdiction for the appointment of a successor Trustee.

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

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<PAGE>

          Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.

          SECTION 7.09. Successor Trustee by Merger.

If the Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee.

          SECTION 7.10. Eligibility; Disqualification.

The Trustee shall at all times satisfy the requirements of TIA Section 310(a).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.

          SECTION 7.11. Preferential Collection of Claims Against Company.

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

          SECTION 7.12. Co-trustees and Separate Trustees

          At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Collateral may at the time
be located, the Company and the Trustee shall have power to appoint, and, upon
the written request of the Trustee or of the Holders of at least a majority in
principal amount of the Notes then outstanding, the Company shall for such
purpose join with the Trustee in the execution and delivery of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Trustee and, if no Event of Default shall have occurred and be continuing,
by the Company either to act as co-trustee, jointly with the Trustee, of all or
any part of the Collateral, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons, in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Company does not join in such
appointment within fifteen (15) days after the receipt by it of a request so to
do, or if an Event of Default shall have occurred and be continuing, the Trustee
alone shall have power to make such appointment.

          Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.

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<PAGE>

          Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following conditions:

          (a) the Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely, by
the Trustee;

          (b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed either by the
Trustee or by the Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in which
any particular act is to be performed the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee;

          (c) the Company and the Trustee, at any time by an instrument in
writing, executed by them jointly, may accept the resignation of or remove any
such separate trustee or co-trustee, and in that case, by an instrument in
writing executed with the Trustee jointly, may appoint a successor to such
separate trustee or co-trustee, as the case may be, anything herein contained to
the contrary notwithstanding. In the event that the Company shall not have
joined in the execution of any instrument within 10 days after the receipt of a
written request from the Trustee so to do, or in case an Event of Default shall
have occurred and be continuing, the Trustee shall have the power to accept the
resignation of or remove any such separate trustee or co-trustee and to appoint
a successor without the concurrence of the Company, the Company hereby
irrevocably appointing the Trustee its agent and attorney to act for it in such
connection in either of such contingencies;

          (d) subject to Section 7.01, neither the Trustee nor any co-trustee or
separate trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder; and

          (e) any act of Holders delivered to the Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.

                                    ARTICLE 8

                       Discharge of Indenture; Defeasance

          SECTION 8.01. Discharge of Liability on Notes; Defeasance.

          (a) When (1) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation, or (2)
all outstanding Notes have become due and payable, whether at maturity or on a
redemption date as a result of the mailing of a notice of redemption pursuant to
Article 3 hereof, or (3) all outstanding Notes will become due and payable
within one year or are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee and, in the case of clauses
(a)(2) and (a)(3) of

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<PAGE>

this Section 8.01, the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Notes,
including interest thereon to maturity or such redemption date (other than Notes
replaced pursuant to Section 2.07), and if in any case the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 8.01(c), be satisfied and discharged and cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company (accompanied by an Officers' Certificate and
an Opinion of Counsel stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been complied
with and at the cost and expense of the Company).

          (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (1) all its and any Guarantors' Obligations under the Notes, the
Collateral Documents and this Indenture ("LEGAL DEFEASANCE OPTION") or (2) its
and any Guarantors' Obligations under Sections 4.04 through 4.13, 4.16, 4.17 and
4.18 and the operation of Sections 6.01(5), 6.01(8), 6.01(9) and 6.01(10) and
the limitations contained in Sections 5.01(a)(3) and (a)(4) ("COVENANT
DEFEASANCE OPTION"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.

          If the Company exercises its legal defeasance option, payment of the
Notes may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its legal defeasance option or its covenant
defeasance option, any Guarantor shall be released from all of its obligations
with respect to its Guaranty, and all Collateral shall be released.

          Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
Obligations that the Company terminates at the cost and expense of the Company.

          (c) Notwithstanding clauses (a) and (b) of this Section 8.01, the
Company's Obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and
7.08 and in this Article 8 shall survive until the Notes have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.

          SECTION 8.02. Conditions to Defeasance.

The Company may exercise its legal defeasance option or its covenant defeasance
option only if:

          (1) the Company irrevocably deposits in trust with the Trustee money
     in U.S. dollars or U.S. Government Obligations for the payment of principal
     and interest on the Notes to maturity or redemption, as the case may be;

          (2) the Company delivers to the Trustee a certificate from a firm of
     independent accountants expressing their opinion that the payments of
     principal and interest when due and without reinvestment on the deposited
     U.S. Government Obligations plus any deposited money without investment
     will provide cash at such times and in such amounts as will be sufficient
     to pay principal and interest when due on all the Notes to maturity or
     redemption, as the case may be;

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<PAGE>

          (3) 123 days pass after the deposit is made and during the 123-day
     period no Default or Event of Default specified in Sections 6.01(6) or (7)
     with respect to the Company or any Guarantor occurs which is continuing at
     the end of the period;

          (4) the deposit does not constitute a default under any other
     agreement binding on the Company or any of its Subsidiaries;

          (5) the Company delivers to the Trustee an Opinion of Counsel to the
     effect that the trust resulting from the deposit does not constitute, or is
     qualified as, a regulated investment company under the Investment Company
     Act of 1940;

          (6) in the case of the legal defeasance option, the Company shall have
     delivered to the Trustee an Opinion of Counsel stating that (A) the Company
     has received from, or there has been published by, the Internal Revenue
     Service a ruling, or (B) since the date of this Indenture there has been a
     change in the applicable Federal income tax law, in either case to the
     effect that, and based thereon such Opinion of Counsel shall confirm that,
     the Noteholders will not recognize income, gain or loss for Federal income
     tax purposes as a result of such deposit and defeasance and will be subject
     to Federal income tax on the same amounts, in the same manner and at the
     same times as would have been the case if such defeasance had not occurred;

          (7) in the case of the covenant defeasance option, the Company shall
     have delivered to the Trustee an Opinion of Counsel to the effect that the
     Noteholders will not recognize income, gain or loss for Federal income tax
     purposes as a result of such covenant defeasance and will be subject to
     Federal income tax on the same amounts, in the same manner and at the same
     times as would have been the case if such covenant defeasance had not
     occurred; and

          (8) the Company delivers to the Trustee an Officers' Certificate and
     an Opinion of Counsel, each stating that all conditions precedent to the
     defeasance and discharge of the Notes as contemplated by this Article 8
     have been complied with.

          Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article 3.

          SECTION 8.03. Application of Trust Money.

The Trustee shall hold in trust money or U.S. Government Obligations deposited
with it pursuant to this Article 8. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Notes.

          SECTION 8.04. Repayment to Company.

The Trustee and the Paying Agent shall promptly turn over to the Company upon
request any excess money or securities held by them at any time less any amounts
owing under Section 7.07.

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          Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Noteholders entitled to the money shall look solely to the Company
for payment as general creditors.

          SECTION 8.05. Indemnity for Government Obligations.

The Company shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.

          SECTION 8.06. Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article 8 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, and the obligations of the
Guarantors under the Guaranties together with all grants, pledges and
obligations of the Company and the Guarantors under the Collateral Documents,
including the security interests granted therein, shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 8 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of interest on or principal
of 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 9

                                   Amendments

          SECTION 9.01. Without Consent of Holders.

The Company, the Guarantors and the Trustee may amend this Indenture, any
Collateral Document or the Notes without notice to or consent of any Noteholder:

          (1) to cure any ambiguity, omission, defect or inconsistency;

          (2) to provide for the assumption by a Successor Company of the
     Obligations of the Company or any Guarantor under this Indenture, the Notes
     or the Collateral Documents pursuant to Article 5 of this Indenture;

          (3) to provide for uncertificated Notes in addition to or in place of
     certificated Notes; provided, however, that the uncertificated Notes are
     issued in registered form for purposes of Section 163(f) of the Code, or in
     a manner such that the uncertificated Notes are described in Section
     163(f)(2)(B) of the Code;

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<PAGE>

          (4) to add guarantees with respect to the Notes, including any
     Guaranties, or to add Collateral to further secure the Notes;

          (5) to add to the covenants of the Company or any Guarantor for the
     benefit of the Holders or to surrender any right or power herein conferred
     upon the Company or any Guarantor;

          (6) to make any change that does not adversely affect the rights of
     any Noteholder;

          (7) to comply with any requirements of the SEC in connection with
     qualifying, or maintaining the qualification of, this Indenture under the
     TIA; or

          (8) to evidence the release of a Guarantor pursuant to and in
     accordance with the terms of this Indenture.

          Without limiting the foregoing, no consent of any Noteholder shall be
required for the Trustee to enter into the intercreditor agreement contemplated
by Section 4.07 hereof.

          After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 9.01.

          SECTION 9.02. With Consent of Holders.

          (a) Except as provided in Section 9.02(b), the Company, the Guarantors
and the Trustee may amend this Indenture, any Collateral Documents or the Notes
without notice to any Noteholder but with the written consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), including, without limitation, to reflect any amendment to the terms,
conditions and other provisions of clauses (ii)-(v) of Section 4.01(b) of this
Indenture and the defined terms used therein.

          (b) Without the consent of each Noteholder affected thereby, an
amendment may not:

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

          (2) reduce the rate of or extend the time for payment of interest on
     any Note;

          (3) reduce the principal of or extend the Stated Maturity of any Note;

          (4) reduce the amount payable upon the redemption of any Note or
     change the time at which any Note may be redeemed in accordance with
     Article 3;

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<PAGE>

          (5) make any Note payable in money other than that stated in the Note;

          (6) impair the right of any Noteholder to receive payment of principal
     and interest on such Noteholder's Notes on or after the due dates therefor
     or to institute suit for the enforcement of any payment on or with respect
     to such Noteholder's Notes;

          (7) impair the Company's obligation to make an offer to purchase Notes
     pursuant to Section 4.04 or 4.09 except as permitted under Section 4.04(g)
     or 4.09(d), respectively;

          (8) make any change in Section 4.04(g), Section 4.09(d), Section 6.04,
     6.07 or the second sentence of this Section;

          (9) make any change in the ranking or priority of any Note that would
     adversely affect the Noteholders; or

          (10) make any change in any Guaranty or any Collateral Document that
     would adversely affect the Noteholders.

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

          After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 9.02.

          Pursuant to Section 12.06, in certain circumstances a Note may be
disregarded and deemed not to be outstanding for purposes of this Section.

          SECTION 9.03. Compliance with Trust Indenture Act.

Every amendment to this Indenture or the Notes shall comply with the TIA as then
in effect.

          SECTION 9.04. Revocation and Effect of Consents and Waivers.

A consent to an amendment or a waiver by a Holder of a Note shall bind the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder's Note, even if notation of the
consent or waiver is not made on the Note. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Note or
portion of the Note if the Trustee receives the notice of revocation before the
date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Noteholder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.

          The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Noteholders entitled to give their consent or
take any other action described

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above or required or permitted to be taken pursuant to this Indenture. If a
record date is fixed, then notwithstanding the immediately preceding paragraph,
those Persons who were Noteholders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date.

          SECTION 9.05. Notation on or Exchange of Notes.

If an amendment changes the terms of a Note, the Trustee may require the Holder
of the Note to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note regarding the changed terms and return it to the Holder.
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. Failure to make the appropriate notation or to
issue a new Note shall not affect the validity of such amendment.

          SECTION 9.06. Trustee To Sign Amendments.

The Trustee shall sign any amendment authorized pursuant to this Article 9 if
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it. In
signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.01)
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.

                                   ARTICLE 10

                                   Guaranties

          SECTION 10.01. Guaranties.

          (a) Subject to the limitations set forth in this Article 10, each
Guarantor hereby unconditionally and irrevocably guarantees, jointly and
severally, to each Holder and to the Trustee and its successors and assigns (i)
the full and punctual payment of principal of and interest on the Notes when
due, whether at maturity, by acceleration, by redemption or otherwise, and all
other monetary obligations of the Company under this Indenture and the Notes and
(ii) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture, the Notes and the
Collateral Documents (all the foregoing being hereinafter collectively called
the "GUARANTEED OBLIGATIONS").

          (b) As of the Issue Date, the Guarantors of the Notes are: (1) Loral
Skynet International, L.L.C., (2) LAPS (HK), (3) Loral SpaceCom Corporation, (4)
Loral Skynet Network Services, Inc., (5) Loral Communications Services, Inc.,
(6) Loral Ground Services, L.L.C., (7) Loral CyberStar International, Inc., (8)
Loral CyberStar Services, Inc., (9) Loral CyberStar Holdings, L.L.C., (10) Loral
Skynet Network Services Holdings L.L.C., (11) Loral Cyberstar, L.L.C., (12)
Cyberstar, L.L.C., and (13) Loral Satellite, Inc.

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          (c) Each Guarantor further agrees that the Guaranteed Obligations may
be extended or renewed, in whole or in part, without notice or further assent
from such Guarantor and that such Guarantor will remain bound under this Article
10 notwithstanding any extension or renewal of any Guaranteed Obligation.

          (d) Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Guaranteed Obligations and also waives
notice of acceleration, notice of intent to accelerate and notice of protest for
nonpayment. Subject to Section 6.01, each Guarantor waives notice of any default
under the Notes or the Guaranteed Obligations. The obligations of each Guarantor
hereunder shall not be affected by: (i) the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any right or remedy against the
Company or any other Person under this Indenture, the Notes or any other
agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Notes or any other agreement; (iv) the release of any
security held by any Holder or the Trustee for the Guaranteed Obligations or any
of them; (v) the failure of any Holder or the Trustee to exercise any right or
remedy against any other guarantor of the Guaranteed Obligations; or (vi) except
as set forth in Section 10.06, any change in the ownership of any such
Guarantor.

          (e) Each Guarantor further agrees that its Guaranty herein constitutes
a guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Guaranteed
Obligations.

          (f) Except as expressly set forth in Sections 8.01, 10.02 and 10.06,
the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Notes or any other agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
any such Guarantor or would otherwise operate as a discharge of any such
Guarantor as a matter of law or equity.

          (g) Each Guarantor further agrees that its Guaranty herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.

          (h) In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof,

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subject to the limitations set forth in this Article 10, upon the failure of the
Company to pay the principal of or interest on any Guaranteed Obligation when
and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Guaranteed
Obligation, each Guarantor hereby promises to and shall, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (1) the unpaid amount of
such Guaranteed Obligations, (2) accrued and unpaid interest on such Guaranteed
Obligations (but only to the extent not prohibited by law) and (3) all other
monetary Guaranteed Obligations of the Company to the Holders and the Trustee.

          (i) Each Guarantor agrees that it shall not be entitled to any right
of subrogation in respect of any Guaranteed Obligations guaranteed under this
Indenture until payment in full of all Guaranteed Obligations. Each Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (1) the maturity of the Guaranteed Obligations
guaranteed under this Indenture may be accelerated as provided in Article 6 for
the purposes of such Guarantor's Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Guaranteed Obligations guaranteed under this Indenture, and (2) in the event of
any declaration of acceleration of such Guaranteed Obligations as provided in
Article 6, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purposes of this
Section 10.01.

          (j) Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 10.01.

          SECTION 10.02. Limitation on Liability.

Any term or provision of this Indenture to the contrary notwithstanding, the
maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by
any Guarantor shall not exceed the maximum amount that can be hereby guaranteed
without rendering this Indenture, as it relates to such Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.

          SECTION 10.03. Successors and Assigns.

This Article 10 shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges conferred upon
that party in this Indenture and in the Notes shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture.

          SECTION 10.04. No Waiver.

Neither a failure nor a delay on the part of either the Trustee or the Holders
in exercising any right, power or privilege under this Article 10 shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The rights, remedies
and benefits of the Trustee and the Holders herein expressly specified are

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cumulative and not exclusive of any other rights, remedies or benefits which
either may have under this Article 10, at law, in equity, by statute or
otherwise.

          SECTION 10.05. Modification.

No modification, amendment or waiver of any provision of this Article 10, nor
the consent to any departure by any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Trustee, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any Guarantor in any
case shall entitle such Guarantor to any other or further notice or demand in
the same, similar or other circumstances.

          SECTION 10.06. Release of Guarantor.

The Guaranty of a Guarantor will be automatically released:

          (1) upon the sale or other disposition (including by way of
     consolidation or merger or dissolution) of that Guarantor to a Person that
     is not (either before or after giving effect to such transaction) the
     Company or an Affiliate of the Company, if such sale or other disposition
     complies with Section 4.09 and Article 11;

          (2) upon the sale or other disposition of all or substantially all the
     assets of that Guarantor to a Person that is not (either before or after
     giving effect to such transaction) the Company or an Affiliate of the
     Company, if such sale or other disposition complies with Section 4.09 and
     Article 11;

          (3) if the Company designates that Guarantor as an Unrestricted
     Subsidiary in compliance with the applicable provisions of this Indenture;
     or

          (4) upon legal defeasance or covenant defeasance or satisfaction and
     discharge of this Indenture as provided in Article 8.

                                   ARTICLE 11

                                   Collateral

          SECTION 11.01. Collateral Documents; Additional Collateral.

          (a) In order to secure the due and punctual payment of the principal
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, pursuant to an
Asset Disposition Offer or Change of Control Offer, or by acceleration,
redemption or otherwise, and interest on the overdue principal of and (to the
extent permitted by law) interest, if any, on the Notes and the performance of
all other obligations of the Company and the Guarantors to the Holders, the
Trustee and the Collateral Agent under this Indenture, the Notes, the Collateral
Documents and any other documents contemplated hereby, the Company, the
Guarantors and the Collateral Agent have simultaneously with the execution of
this Indenture entered into the Security Agreement, and may in the future enter
into additional Collateral Documents. The Collateral

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Agent, the Trustee, the Company and the Guarantors each hereby agree that the
Collateral Agent holds its interest in the Collateral in trust for its benefit,
the benefit of the Trustee and the benefit of the Holders pursuant to the terms
of the Collateral Documents. Each of the Company and the Guarantors covenants
and agrees that it will execute, acknowledge and deliver to the Collateral Agent
such further assignments, transfers, assurances or other instruments and will do
or cause to be done all such acts and things as may be necessary or proper to
assure and confirm to the Collateral Agent its interest in the Collateral (other
than such acts and things that relate solely to the perfection of the Collateral
Agent's security interest in Unperfected Collateral), or any part thereof, as
from time to time constituted, and the right, title and interest in and to the
Collateral Documents so as to render the same available for the security and
benefit of this Indenture and of the Notes.

          (b) Promptly upon the acquisition or receipt by the Company or any of
the Guarantors of property and assets, whether real, personal or mixed, tangible
or intangible, and including, without limitation, property and assets acquired
or received pursuant to a merger or consolidation of any Person or Persons with
or into the Company or a Guarantor, pursuant to an Asset Disposition, pursuant
to a transaction as a result of which a Guarantor is released as provided in
Section 10.06, or pursuant to a transaction as a result of which a Person
becomes a Guarantor as provided in Section 4.11 (each such item of property and
each such asset so acquired or received, but excluding any of the foregoing
which would constitute Excluded Collateral, being referred to herein as
"AFTER-ACQUIRED PROPERTY"):

               (i) except for Unperfected Collateral, the Company or the
     applicable Guarantor, as the case may be, and the Collateral Agent will
     enter into all supplemental indentures, if any, required pursuant to the
     terms of this Indenture (including, without limitation, Section 4.11
     hereof) and all such amendments or supplements to the Collateral Documents
     or such additional Collateral Documents as shall be necessary in order to
     grant and create a valid first priority Lien on and security interest in
     such After-Acquired Property in favor of the Collateral Agent (subject to
     no prior Liens except as permitted by this Indenture), and the Company
     shall cause appropriate financing statements, mortgages and other papers to
     be filed in such governmental offices as shall be necessary in order to
     perfect any Lien in such After-Acquired Property as to which a Lien may,
     under the Uniform Commercial Code or any other law of the applicable
     jurisdiction, be perfected by filing, and, if any such After-Acquired
     Property consists of stock certificates, promissory notes or other property
     as to which, under the relevant Uniform Commercial Code or other law, a
     Lien may be perfected by possession or control, deliver such certificates,
     promissory notes and other property, together with stock powers or
     assignments duly endorsed in blank, to the Collateral Agent or take such
     other steps as may from time to time be necessary or desirable to grant the
     Collateral Agent control over such After-Acquired Property;

               (ii) for any such After-Acquired Property that constitutes
     Unperfected Collateral, (A) the Company or the applicable Guarantor, as the
     case may be, and the Collateral Agent will enter into all supplemental
     indentures, if any, required pursuant to the terms of this Indenture
     (including, without limitation, Section 4.11 hereof) and all such
     amendments or supplements to the Collateral Documents or such additional

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     Collateral Documents as shall be necessary in order to grant and create a
     valid Lien on and security interest in such After-Acquired Property in
     favor of the Collateral Agent;

               (iii) the Company or the applicable Guarantor, as the case may
     be, shall also deliver to the Trustee the following:

               (A) to the extent such After-Acquired Property consists of real
          property or a leasehold interest in real property, a customary title
          insurance policy;

               (B) any Opinions of Counsel required pursuant to Section 11.02(b)
          below; and

               (C) evidence of payment of all filing fees, recording and
          registration charges, transfer taxes and other costs and expenses,
          including reasonable legal fees and disbursements of counsel for the
          Collateral Agent (and any local counsel), that may be incurred to
          validly and effectively subject the After-Acquired Property to the
          Lien of any applicable Collateral Document and, if required under this
          Indenture, perfect such Lien; and

               (iv) The Company shall deliver to the Collateral Agent an Opinion
     of Counsel and an Officers' Certificate to the effect that the documents
     that have been or are therewith delivered to the Collateral Agent pursuant
     to this Section 11.01(b) (including any amendments, supplements or other
     Collateral Documents referred to in paragraph (i) above) conform to the
     requirements of this Indenture.

          (c) Each Holder, by accepting a Note, agrees to and shall be bound by
all the terms and provisions of the Collateral Documents, as the same may be
amended or supplemented from time to time, and hereby grants the Collateral
Agent full power and authority to execute, deliver, perform and enforce all such
Collateral Documents without any consent or other action by the Holders.

Notwithstanding any provision of this Indenture or any Collateral Document to
the contrary, the Obligors shall not be obligated to take any action under any
foreign law to create or perfect a security interest in any Collateral (other
than satellites, transponders, and Capital Stock of any Person that owns any
satellites or transponders) located outside the United States, and the Obligors
shall have until the number of days described in Schedule 11.01 after the
consummation date to perfect the security interest in Collateral set forth on
Schedule 11.01. To the extent the creation of a Lien requires the consent of a
third party, the Company shall be deemed to have satisfied its obligation to
provide a Lien under this Indenture and the Collateral Documents if it shall,
with consent or by virtue of the provisions of applicable law (including the
applicable UCC), have provided a Lien even though the Collateral Agent may not
be able to transfer the Collateral to third parties, render performance to the
Person party to the Collateral or be able to compel performance from such Person
to the Collateral Agent.

          SECTION 11.02. Recording, Registration and Opinions.

          (a) The Company and the Guarantors shall take or cause to be taken all
action required, and neither the Collateral Agent nor the Trustee shall have any
obligation, to perfect,

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maintain, preserve and protect the Lien on and security interest in the
Collateral granted by the Collateral Documents (subject only to Liens expressly
permitted by this Indenture), including without limitation, the filing of
financing statements, continuation statements and any instruments of further
assurance, in such manner and in such places as may be required by law fully to
preserve and protect the rights of the Holders, the Collateral Agent and the
Trustee under this Indenture and the Collateral Documents to all property
comprising the Collateral. The Company and the Guarantors shall from time to
time promptly pay all financing and continuation statement recording,
registration and/or filing fees, charges and taxes relating to this Indenture
and the Collateral Documents, any amendments thereto and any other instruments
of further assurance required hereunder or pursuant to the Collateral Documents.

          (b) (i) The Company and the Guarantors shall furnish to the Trustee
and the Collateral Agent on the Issue Date a customary Opinion of Counsel
stating that this Indenture, the Notes and the Collateral Documents have been
duly authorized, executed and delivered by, and constitute the valid, binding
and enforceable obligations of, the Company and the Guarantors. Such Opinion of
Counsel shall address perfection of the Liens contemplated by this Indenture and
the Collateral Documents and such other issues as the Trustee and the Collateral
Agent shall reasonably request, and such Opinion of Counsel may be subject to
customary exceptions.

               (ii) The Company shall furnish to the Trustee and the Collateral
Agent, promptly after the execution and delivery of this Indenture, an Opinion
of Counsel in compliance with TIA Section 314(b)(1) either (A) substantially to
the effect that, in the opinion of such counsel, this Indenture and the grant of
the Liens on and security interests in the Collateral intended to be made by the
Collateral Documents and all other instruments of further assurance, including,
without limitation, financing statements, have been properly recorded and filed
to the extent necessary to record or register (as the case may be), and if
applicable, to perfect the Liens on and security interests in the Collateral
created by the Collateral Documents, to the extent that a Lien or security
interest may be perfected by filing, and stating that as to the Liens and
security interests created pursuant to the Collateral Documents, such
recordings, registrations and filings are the only recordings, registrations and
filings necessary to give notice thereof and that no re-recordings,
re-registrations or refilings are necessary to maintain such notice (other than
as stated in such opinion), or (B) to the effect that, in the opinion of such
counsel, no such action is necessary to record or register such Liens or to
perfect such security interests.

               (iii) The Company or the applicable Guarantor shall furnish to
the Trustee and the Collateral Agent, at the time of execution and delivery of
any additional Collateral Documents or any amendments or supplements to existing
Collateral Documents, an Opinion of Counsel either substantially to the effect
set forth in clause (b)(ii)(A) above (but relating only to such additional
Collateral Documents or any amendments or supplements to existing Collateral
Documents and the related After-Acquired Property) or to the effect set forth in
clause (b)(ii)(B) above, and to the further effect that such additional
Collateral Documents or amendments or supplements to existing Collateral
Documents, as the case may be, and, if applicable, such Collateral Documents as
amended and supplemented thereby, have been duly authorized, executed and
delivered by, and constitute the valid, binding and enforceable obligations of
the Company or the relevant Guarantor, as the case may be, subject to customary
exceptions.

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          (c) The Company shall furnish to the Trustee on the anniversary of the
Issue Date in each year, beginning with 2006, an Opinion of Counsel, dated as of
such date, which complies with TIA Section 314(b)(2), either (i)(A) stating
that, in the opinion of such counsel, such action has been taken with respect to
the recording, registration, filing, re-recording, re-registration and refiling
of this Indenture and all supplemental indentures, financing statements,
continuation statements and other documents as is necessary to maintain the Lien
of the Collateral Documents and reciting with respect to the Liens on and
security interests in the Collateral the details of such action or referring to
prior Opinions of Counsel in which such details are given, and (B) stating that,
based on relevant laws as in effect on the date of such Opinion of Counsel, all
financing statements, continuation statements and other documents have been
executed and filed that are necessary as of such date and during the succeeding
24 months fully to maintain the Liens and security interests of the Holders, the
Collateral Agent and the Trustee hereunder and under the Collateral Documents
with respect to the Collateral; provided that if there is a required filing of a
continuation statement within such 24 month period and such continuation
statement is not effective if filed at the time of the opinion, such opinion may
so state and in that case the Company shall cause a continuation statement to be
timely filed so as to maintain such Liens and security interests and shall
provide a further Opinion of Counsel to the effect of this clause (i) upon the
filing of the relevant continuation statement; or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Liens or
security interests.

          SECTION 11.03. Release of Collateral.

          (a) The Collateral Agent shall not at any time release Collateral from
the Liens created by this Indenture and the Collateral Documents unless such
release is in accordance with the provisions of this Indenture and the
Collateral Documents.

          (b) The Collateral Agent shall release Collateral from the Liens
contemplated by this Indenture and the Collateral Documents if, when and to the
extent required by Section 11.05 or 11.07 hereof.

          (c) The release of any Collateral from the Lien of the Collateral
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Collateral Documents. To the extent
applicable, the Company shall cause TIA Section 314(d) relating to the release
of property from the Lien of the Collateral Documents and relating to the
substitution therefor of any property to be subjected to the Lien of 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 in the exercise of reasonable
care.

          SECTION 11.04. Possession and Use of Collateral.

          Subject to and in accordance with the provisions of this Indenture and
the Collateral Documents, so long as the Collateral Agent has not exercised
rights or remedies with respect to the Collateral in connection with an Event of
Default that has occurred and is

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continuing, the Company and the Guarantors shall have the right to remain in
possession and retain exclusive control of and to exercise all rights with
respect to the Collateral (other than monies or U.S. Government Obligations
deposited pursuant to Article 8), to operate, manage, develop, lease, use,
consume and enjoy the Collateral, to alter or repair any Collateral so long as
such alterations and repairs do not impair the Lien of the Collateral Documents
thereon, and to collect, receive, use, invest and dispose of the reversions,
remainders, interest, rents, lease payments, issues, profits, revenues, proceeds
and other income thereof.

          SECTION 11.05. Specified Releases of Collateral.

          (a) Satisfaction and Discharge; Defeasance. The Company and the
Guarantors shall be entitled to obtain a full release of all of the Collateral
from the Liens of this Indenture and of the Collateral Documents upon compliance
with the conditions precedent set forth in Article 8 for legal defeasance,
covenant defeasance or satisfaction and discharge. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel, each to
the effect that such conditions precedent have been complied with (and which may
be the same Officers' Certificate and Opinion of Counsel required by Article 8),
together with such documentation, if any, as may be required by the TIA
(including, without limitation, TIA Section 314(d)) prior to the release of such
Collateral, the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Company) to release and reconvey to the
Company and the applicable Guarantors without recourse all of the Collateral,
and shall deliver such Collateral in its possession to the Company and the
applicable Guarantors including, without limitation, the execution and delivery
of releases and satisfactions wherever required.

          (b) Dispositions of Collateral Permitted by Section 4.09. The Company
and the Guarantors, as the case may be, shall be entitled to obtain a release
of, and the Collateral Agent shall release, items of Collateral (the "RELEASED
COLLATERAL") subject to an Asset Disposition or any other disposition that is
permitted under the terms of this Indenture upon compliance with the conditions
precedent that the Company shall have delivered to the Collateral Agent the
following to the extent applicable:

               (i) An Officers' Certificate of the Company requesting release of
     such Released Collateral (A) specifically describing the proposed Released
     Collateral, (B) certifying that such sale complies with the terms and
     conditions of this Indenture, including, without limitation, Section 4.09
     hereof (but may assume that the proceeds from such sale will be applied in
     compliance with Section 4.09), (C) certifying the extent to which the
     consideration from such sale (the "CONSIDERATION") will constitute
     After-Acquired Collateral and Excluded Collateral, and that all Net
     Available Cash from the sale of any of the Released Collateral will be
     applied pursuant to Section 4.09, (D) certifying there is not and will not
     be a Default or Event of Default in effect or continuing on the date
     thereof, or the date of such sale, (E) certifying that the release of the
     Collateral will not result in a Default or Event of Default hereunder and
     (F) certifying that all conditions precedent to such release have been
     complied with;

               (ii) All documentation required by the TIA (including, without
     limitation, the certificates of fair value required pursuant to TIA Section
     314(d), which include, without limitation, a statement that the proposed
     release will not impair the

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     security granted under this Indenture in contravention of the provisions
     hereof), if any, prior to the release of Collateral by the Collateral
     Agent, and all documentation required to subject the Consideration to the
     Lien of the relevant Collateral Documents, and all documents required by
     Section 11.01 hereof; and

               (iii) An Opinion of Counsel stating that the documents that have
     been or are therewith delivered to the Trustee in connection with such
     release conform to the requirements of this Indenture and that all
     conditions precedent herein provided for relating to such release have been
     complied with.

          Upon compliance by the Company with the conditions precedent set forth
above, the Collateral Agent shall cause to be released and reconveyed to the
Company or the applicable Guarantor the Released Collateral without recourse by
executing a release in the form provided by the Company or the applicable
Guarantor and reasonably acceptable to the Collateral Agent.

          SECTION 11.06. Disposition of Collateral Without Release.

          Notwithstanding the provisions of Section 11.05 and subject to Section
11.07 below, so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, the Company and the Guarantors may,
without any prior release or consent by the Collateral Agent, conduct ordinary
course activities in respect of the Collateral not constituting Asset
Dispositions which do not individually or in the aggregate adversely affect the
value of the Collateral taken as a whole, including (A) selling or otherwise
disposing of, in any single transaction or series of related transactions, any
property subject to the Lien of this Indenture or the Collateral Documents which
has become worn out or obsolete and which either has an aggregate fair market
value of $1.0 million or less or which is replaced by property of substantially
equivalent or greater value which becomes subject to the Lien of the Collateral
Documents as After-Acquired Property; (B) abandoning, terminating, canceling,
releasing or making alterations in or substitutions of any leases or contracts
subject to the Lien of this Indenture or any of the Collateral Documents; (C)
surrendering or modifying any franchise, license or permit subject to the Lien
of this Indenture or any of the Collateral Documents which it may own or under
which it may be operating; (D) altering, repairing, replacing, changing the
location or position of and adding to its structures, machinery, systems,
equipment, fixtures, and appurtenances, provided, however, that no change in the
location of any such Collateral subject to the Lien of any of the Collateral
Documents shall be made which results in such Lien becoming unperfected or
otherwise impairs the Lien of the Collateral Documents; (E) demolishing,
dismantling, tearing down or scrapping any Collateral or abandoning any thereof
if, in the good faith opinion of the Board of Directors of the Company (as
evidenced by a resolution of the Board of Directors delivered to the Collateral
Agent if it involves Collateral having a fair market value in excess of $1.0
million) such demolition, dismantling, tearing down, scrapping or abandonment is
in the best interests of the Company, will not interfere with or impede the
Collateral Agent's ability to realize the value of the remaining Collateral and
will not impair the maintenance and operation of the remaining Collateral, and
the fair market value and utility of the Collateral as an entirety, and the
security for the Notes, will not thereby be otherwise impaired; (F) granting a
nonexclusive license of any intellectual property; and (G) abandoning
intellectual property which has become obsolete and not used in the business of
the Company or its Subsidiaries.

                                       84

<PAGE>

          SECTION 11.07. Form and Sufficiency of Release.

          In the event that the Company or any Guarantor has sold, exchanged, or
otherwise disposed of or proposes to sell, exchange or otherwise dispose of any
portion of the Collateral that under the provisions of Section 11.05 or 11.06
may be sold, exchanged or otherwise disposed of by the Company or any Guarantor,
and the Company or such Guarantor requests the Collateral Agent to furnish a
written disclaimer, release or quitclaim of any interest in such property under
this Indenture and the Collateral Documents, upon being satisfied that the
Company or such Guarantor is selling, exchanging or otherwise disposing of the
Collateral in accordance with the provisions of Section 11.05 or 11.06 (which
may include receipt of an Officers' Certificate and Opinion of Counsel upon the
request of the Collateral Agent), the Collateral Agent shall execute,
acknowledge and deliver to the Company or such Guarantor such an instrument in
the form provided by the Company and reasonably acceptable to the Collateral
Agent providing for release without recourse, promptly after satisfaction of the
conditions set forth herein for delivery of any such release and shall take such
other action as the Company or such Guarantor may reasonably request and is
necessary to effect such release. Notwithstanding the preceding sentence, all
purchasers and grantees of any property or rights purporting to be released
shall be entitled to rely upon any release executed by the Collateral Agent
hereunder as sufficient for the purpose of this Indenture and as constituting a
good and valid release of the property therein described from the Lien of this
Indenture and of the Collateral Documents.

          SECTION 11.08. Purchaser Protected.

          No purchaser or grantee of any property or rights purporting to be
released shall be bound to ascertain the authority of the Collateral Agent to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority.

          SECTION 11.09. Authorization of Actions To Be Taken by the Collateral
Agent Under the Collateral Documents.

          Subject to the provisions of the Collateral Documents:

          (a) the Collateral Agent may, in its sole discretion and without the
consent of the Holders, take all actions it deems necessary or appropriate in
order to (i) comply with, enforce and perform, from time to time, any of the
terms of the Collateral Documents and (ii) collect and receive any and all
amounts payable in respect of the Obligations of the Company and the Guarantors
hereunder and under the Collateral Documents; and

          (b) the Collateral Agent shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any act that may be unlawful or in violation of the Collateral
Documents or this Indenture, and such suits and proceedings as the Collateral
Agent may deem expedient to preserve or protect its interests and the interests
of the Holders in the Collateral (including the 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 thereunder or
be prejudicial to the interests of the Holders or of the Collateral Agent).

                                       85

<PAGE>

          SECTION 11.10. Authorization of Receipt of Funds by the Collateral
Agent Under the Collateral Documents.

          The Collateral Agent is authorized to receive any funds for the
benefit of Holders distributed under the Collateral Documents, to apply such
funds as provided in this Indenture and the Collateral Documents, and to make
further distributions of such funds to the Holders in accordance with the
provisions of Article 11 and the other provisions of this Indenture.

          SECTION 11.11. Third Party Consents to Pledge of Collateral.

          If the Company or any Guarantor is required to obtain the consent of
any third party to permit the Company and/or such Guarantor(s) to grant and
create a valid first priority Lien on and security interest in any item of
Collateral material to the business of the Company and its Subsidiaries taken as
a whole pursuant to the terms of this Agreement or any Collateral Documents, the
Company or the applicable Guarantor shall use its Commercially Reasonable
Efforts to obtain such consent but shall not be required to seek such consent to
the extent that the provisions of Sections 9-406 through 9-409 of the applicable
Uniform Commercial Code permit the granting of the Lien on and security interest
in such item of Collateral without the consent of such third party (even if
enforcement of the Lien and rights and obligations of the parties to such item
of Collateral remain unaffected).

          SECTION 11.12. Collateral Agent.

          (a) The Collateral Agent will be subject to such directions as may be
given it by the Trustee from time to time as required or permitted by this
Indenture.

          (b) The Company will deliver to the Trustee copies of all Collateral
Documents delivered to the Collateral Agent.

          (c) The Collateral Agent will be accountable only for amounts that it
actually receives as a result of the enforcement of the Liens granted pursuant
to the Collateral Documents.

          (d) In acting as Collateral Agent, the Collateral Agent may rely upon
and enforce each and all of the rights, powers, protections, immunities,
indemnities and benefits of the Trustee under Sections 7.01, 7.02, 7.03, 7.04,
7.07, 7.08, 7.09, 7.12 and 9.06, mutatis mutandis, and, in connection therewith,
references to the Trustee shall be deemed to include the Collateral Agent and
references to the Indenture shall be deemed to include the Collateral Documents.

          (e) Each successor Trustee will become the successor Collateral Agent
as and when the successor Trustee becomes the Trustee unless, at the time such
successor Trustee becomes Trustee, the immediately preceding Trustee was not the
Collateral Agent.

          SECTION 11.13. Authorization of Actions to Be Taken.

                                       86

<PAGE>

          (a) Each Holder, by its acceptance of its Note, consents and agrees to
the terms of each Collateral Document, as originally in effect and as amended,
supplemented or replaced from time to time in accordance with its terms or the
terms of this Indenture, authorizes and directs the Trustee and the Collateral
Agent to enter into the Collateral Documents, and authorizes and empowers each
of the Trustee and the Collateral Agent to bind the Holders as set forth in the
Collateral Documents and to perform its obligations and exercise its rights and
powers thereunder.

          (b) The Collateral Agent and the Trustee are authorized and empowered
to receive for the benefit of the Holders any funds collected or distributed
under the Collateral Documents and to make further distributions of such funds
to the Holders according to the provisions of this Indenture and the Collateral
Documents.

          (c) The Trustee may, in its sole discretion and without the consent of
the Holders, direct, on behalf of the Holders, the Collateral Agent to take all
actions it deems necessary or appropriate in order to:

          (i) foreclose upon or otherwise enforce any or all of the Liens
          granted by the Collateral Documents;

          (ii) enforce any of the terms of the Collateral Documents; or

          (iii) collect and receive payment of any and all amounts owing under
          this Indenture, the Notes and the Collateral Documents.

          (d) The Trustee is authorized and empowered to institute and maintain,
or direct the Collateral Agent to institute and maintain, such suits and
proceedings as it may deem expedient to protect or enforce the Liens granted by
the Collateral Documents or to prevent any impairment of 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 or the Collateral Agent
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 Holders, the Trustee or the Collateral Agent.

          (e) The Collateral Agent shall have no duty as to any Collateral in
its possession or control, other than those duties specifically set forth
herein, or the possession or control of any agent or bailee or any income
thereon or as to the preservation or rights against prior parties or any other
rights pertaining thereto. The Collateral Agent shall not be liable or
responsible for any loss or diminution in the value of any of the Collateral by
reason of the act or omission of any carrier, forwarding agency or other agent
or bailee selected by the Collateral Agent in good faith.

                                       87

<PAGE>

          (f) All moneys received by the Collateral Agent under or pursuant to
any provision of this Indenture or any Collateral Document shall be paid over or
delivered to the Trustee in the form received (with any necessary endorsements)
for application by the Trustee pursuant to the provisions of this Indenture.

          (g) The Collateral Agent may execute any power and perform any duty
under this Indenture or any Collateral Document either directly or by or through
agents, nominees or attorneys-in-fact. The Collateral Agent may act and
conclusively rely, and shall be protected in acting and conclusively relying on,
the opinion or advice of, or information obtained from, any counsel (which shall
include counsel to the Company), accountant, appraiser or other expert or
adviser, whether retained or employed by the Collateral Agent or the Trustee in
relation to any matter in connection with this Indenture, the Collateral
Documents or any other document, instrument or writing. The Collateral Agent
shall be entitled to rely on the advice of counsel selected by it concerning all
matters pertaining to such powers and duties. The Collateral Agent shall not be
responsible for any acts or omissions, including any negligence or misconduct,
of any agents, nominees or attorneys-in-fact selected by it with due care.

          (h) If the Collateral Agent has been requested or is otherwise
required to take action pursuant to this Indenture or any Collateral Document,
the Collateral Agent shall not be under any obligation to exercise any of the
rights or powers vested in the Collateral Agent by this Indenture or any
Collateral Document unless the Collateral Agent shall have been provided
adequate security and indemnity against the costs, expenses and liabilities
which may be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Collateral Agent.
Under no circumstances shall the Collateral Agent be required to expend or risk
its own funds or incur or risk any liability.

          (i) The Collateral Agent shall not be responsible for (i) perfecting,
maintaining, monitoring, preserving or protecting the security interest or lien
granted under the Collateral Documents, (ii) the filing, re-filing, recording,
re-recording or continuing of any document, financing statement, mortgage,
assignment, notice, instrument of further assurance or other instrument in any
public office at any time or times or (iii) providing, maintaining, monitoring
or preserving insurance on or the payment of taxes with respect to any property
subject to any of the Collateral Documents.

          (j) In no event shall the Collateral Agent be liable for incidental,
indirect, special or consequential damages, regardless of the form of action and
even if the same were foreseeable. Notwithstanding anything set forth herein to
the contrary, the Collateral Agent shall have a duty of reasonable care with
respect to any Collateral which is delivered to the Collateral Agent and is in
the Collateral Agent's possession and control.

          (k) Except during the existence of an Event of Default, the Collateral
Agent shall have no duty as to any Collateral in its possession or control,
other than those duties specifically set forth herein, or the possession or
control of any agent or bailee or any income thereon or as to the preservation
or rights against prior parties or any other rights pertaining thereto. The
Collateral Agent shall not be liable or responsible for any loss or diminution
in the value of any of the Collateral by reason of the act or omission of any
carrier, forwarding agency or other agent or bailee selected by the Collateral
Agent in good faith.

                                       88

<PAGE>

          (l) All moneys received by the Collateral Agent under or pursuant to
any provision of this Indenture or any Collateral Document shall be paid over or
delivered to the Trustee in the form received (with any necessary endorsements)
for application by the Trustee pursuant to the provisions of this Indenture.

          (m) Subject to Section 7.01, in the absence of its negligence or
willful misconduct, the Collateral Agent may rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Collateral Agent and conforming to the
requirements of this Indenture or any Collateral Document.

                                   ARTICLE 12

                                  Miscellaneous

          SECTION 12.01. Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control. Each Guarantor in addition to performing its
obligations under its Guaranty shall perform such other obligations as may be
imposed upon it with respect to this Indenture by the TIA.

          SECTION 12.02. Notices.

Any notice, request or communication shall be in writing and delivered in person
or mailed by first-class mail, postage prepaid, addressed as follows:

          if to the Company or any Guarantor:
          Loral Skynet Corporation
          600 Third Avenue
          New York, NY 10016
          Attention: Treasurer

          if to the Trustee:
          The Bank of New York
          101 Barclay Street, 8 West
          New York, NY 10286
          Attention: Corporate Trust Division-Corporate Finance Unit

          if to the Collateral Agent:
          The Bank of New York
          101 Barclay Street, 8 West
          New York, NY 10286
          Attention: Corporate Trust Division-Corporate Finance Unit

          The Company, any Guarantor, the Trustee or the Collateral Agent by
notice to the other may designate additional or different addresses for
subsequent notices or communications.

                                       89

<PAGE>

          Such notices or communications to the Trustee or the Collateral Agent
shall be effective when received.

          Any notice or communication mailed to a Noteholder shall be mailed to
the Noteholder at the Noteholder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.

          Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.

          Any notice or communication shall also be so mailed to any Person
described in TIA Section 313(c), to the extent required by the TIA. Copies of
any such communication or notice to a Holder shall also be mailed to the
Trustee, the Registrar, co-registrar, Paying Agent and transfer agent at the
same time.

          Where this Indenture provides for notice in any manner, such notice
may be expressly 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. Waiver 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 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. Communication by Holders with Other Holders.

Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, each Guarantor, the Trustee, the Registrar, the Collateral Agent and
anyone else shall have the protection of TIA Section 312(c).

          SECTION 12.04. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Company to the Trustee or the Collateral
Agent to take or refrain from taking any action under this Indenture, the
Company shall furnish to the Trustee or the Collateral Agent, as applicable:

          (1) an Officers' Certificate in form and substance reasonably
     satisfactory to the Trustee or the Collateral Agent, as applicable, 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 in form and substance reasonably
     satisfactory to the Trustee stating that, in the opinion of such counsel,
     all such conditions precedent have been complied with.

          SECTION 12.05. Statements Required in Certificate or Opinion.

                                       90

<PAGE>

Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:

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

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

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

          (4) a statement as to whether or not, in the opinion of such
     individual, such covenant or condition 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.

          SECTION 12.06. When Notes Disregarded.

In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which a Trust Officer of the Trustee knows are so owned
shall be so disregarded. Also, subject to the foregoing, only Notes outstanding
at the time shall be considered in any such determination. Notwithstanding the
foregoing, Notes owned on the Issue Date by MHR or any Related Party thereof
shall not be so disregarded so long as such Notes are owned by MHR or any
Related Party thereof.

          SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.

The Trustee may make reasonable rules for action by or a meeting of Noteholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.

          SECTION 12.08. Legal Holidays.

A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking institutions
are not required to be open in the State of New York. If a payment date is a
Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.

          SECTION 12.09. Governing Law; Waiver of Jury Trial.

                                       91

<PAGE>

This Indenture and the Notes shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.

          EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS INDENTURE.

          SECTION 12.10. No Recourse Against Others.

No director, officer, employee, incorporator or stockholder, as such, of the
Company or any Guarantor will have any liability for any obligations of the
Company or any Guarantor under the Notes, any Guaranty or this Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.

          SECTION 12.11. Successors.

All agreements of the Company and the Guarantors in this Indenture and the Notes
shall bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successors.

          SECTION 12.12. Multiple 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. One
signed copy is enough to prove this Indenture.

          SECTION 12.13. Table of Contents; Headings.

The table of contents, cross-reference sheet and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not intended to be considered a part hereof and shall not modify or restrict
any of the terms or provisions hereof.

                                       92

<PAGE>

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

                                   LORAL SKYNET CORPORATION
                                   LORAL SKYNET INTERNATIONAL, L.L.C.
                                   LORAL ASIA PACIFIC SATELLITE (HK) LIMITED
                                   LORAL SPACECOM CORPORATION
                                   LORAL SKYNET NETWORK SERVICES, INC.
                                   LORAL COMMUNICATIONS SERVICES, INC.
                                   LORAL GROUND SERVICES, L.L.C.
                                   LORAL CYBERSTAR INTERNATIONAL, INC.
                                   LORAL CYBERSTAR SERVICES, INC.
                                   LORAL CYBERSTAR HOLDINGS, L.L.C.
                                   LORAL SKYNET NETWORK SERVICES HOLDINGS L.L.C.
                                   LORAL CYBERSTAR, L.L.C.
                                   CYBERSTAR, L.L.C.
                                   LORAL SATELLITE, INC.

                                   By: /s/ Richard Mastoloni
                                       -----------------------------------------
                                   Name: Richard P. Mastoloni
                                         ---------------------------------------
                                   Title: Vice President
                                          --------------------------------------

                                        1

<PAGE>

                                   THE BANK OF NEW YORK,
                                   as Trustee and as Collateral Agent

                                   By: /s/ Geovanni Barris
                                       -----------------------------------------
                                   Name: Geovanni Barris
                                         ---------------------------------------
                                   Title: Vice President
                                          --------------------------------------

                                       S-2                             Indenture

<PAGE>

                                                                      APPENDIX A

                        PROVISIONS RELATING TO THE NOTES

          1.   Definitions.

          1.1  Certain Definitions.

          For the purposes of this Appendix A the following terms shall have the
meanings indicated below:

          "APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Note or beneficial interest therein, the rules
and procedures of the Depository as in effect from time to time.

          "DEFINITIVE NOTE" means a certificated Note that does not include the
Global Securities Legend.

          "DEPOSITORY" means The Depository Trust Company, its nominees and
their respective successors.

          "INITIAL NOTES" means the $126.0 million of Notes issued on the Issue
Date.

          "NOTES CUSTODIAN" means the custodian with respect to a Global Note
(as appointed by the Depository), or any successor Person thereto and shall
initially be the Trustee.

          "TRANSFER RESTRICTED NOTES" means Notes that bear or are required to
bear the Transfer Restriction Legend.

          1.2  Other Definitions.

<TABLE>
<CAPTION>
                                                                      Defined in
                                Term                                    Section
                                ----                                  ----------
<S>                                                                   <C>
"Additional Definitive Notes"......................................       2.1(a)
"Additional Global Notes"..........................................       2.1(a)
"Agent Members" ...................................................       2.1(b)
"Global Notes" ....................................................       2.1(a)
"Global Note Legend"...............................................    2.3(g)(i)
"Initial Global Notes" ............................................       2.1(a)
"Restricted Definitive Notes"......................................       2.1(a)
"Restricted Global Notes" .........................................       2.1(a)
"Transfer Restriction Legend"......................................    2.3(g)(i)
"Unrestricted Definitive Notes" ...................................       2.1(a)
"Unrestricted Global Notes"........................................       2.1(a)
</TABLE>

          2. The Notes.

                                       1

<PAGE>

          2.1 Form and Dating.

          (a) General.

          The Initial Notes shall be issued initially (i) in the form of one or
more permanent global notes in definitive, fully registered form (collectively,
the "INITIAL GLOBAL NOTES"), one of which may, if appropriate, bear the Transfer
Restriction Legend, and at least one of which shall not bear such legend, and
(ii) to the extent necessary, in the form of one or more Definitive Notes.

          Additional Notes constituting interest paid in-kind with respect to
Notes evidenced by a Global Note may be issued by the annotation of an increase
in the principal amount of such Global Note or by the issuance of one or more
additional global Notes in definitive, fully registered form ("ADDITIONAL GLOBAL
NOTES"). Additional Global Notes evidencing interest paid in-kind with respect
to Transfer Restricted Notes shall constitute Transfer Restricted Notes.

          Additional Notes constituting interest paid in-kind with respect to
Notes evidenced by a Definitive Note shall be issued in the form of one or more
additional Definitive Notes ("ADDITIONAL DEFINITIVE NOTES"). Additional
Definitive Notes evidencing interest paid in-kind with respect to Transfer
Restricted Notes shall constitute Transfer Restricted Notes.

          The Initial Global Notes and any Additional Global Notes are
collectively referred to herein as "GLOBAL NOTES." All Global Notes shall be
initially issued in each case without interest coupons and with the Global Note
Legend, shall be deposited on behalf of the purchasers of such Notes represented
thereby with the Notes Custodian and registered in the name of the Depository or
a nominee of the Depository, and duly executed by the Company and authenticated
by the Trustee as provided in this Indenture. The aggregate principal amount of
the Global Notes may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depository or its nominee as
hereinafter provided.

          Global Notes that are Transfer Restricted Notes are referred to herein
as "RESTRICTED GLOBAL NOTES," and Global Notes that are not Transfer Restricted
Notes are referred to herein as "UNRESTRICTED GLOBAL NOTES." Definitive Notes
that are Transfer Restricted Notes are referred to herein as "RESTRICTED
DEFINITIVE NOTES," and Definitive Notes that are not Transfer Restricted Notes
are referred to herein as "UNRESTRICTED DEFINITIVE NOTES."

          (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Note deposited with or on behalf of the Depository.

          The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depository for such Global Note
or Global Notes or the nominee of such Depository and (b) shall be delivered by
the Trustee to such Depository or pursuant to such Depository's instructions or
held by the Trustee as custodian for the Depository.

          Members of, or participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the

                                       A-2

<PAGE>

Depository or by the Trustee as the custodian of the Depository or under such
Global Note, and the Company, the Trustee and any agent of the Company or the
Trustee shall be entitled to treat the Depository 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 Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of such Depository
governing the exercise of the rights of a holder of a beneficial interest in any
Global Note.

          (c) Certificated Notes. Except as provided in this Section 2.1 or
Section 2.3, owners of beneficial interests in Global Notes shall not be
entitled to receive physical delivery of Definitive Notes.

          2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, $126.0 million principal amount of Notes, (2) from time to time
to the extent permitted pursuant to Section 4.01(b) of the Indenture, Additional
Notes for original issue in aggregate principal amounts specified in Officers'
Certificates of the Company pursuant to Section 4.01(b), and (3) from time to
time, Notes for issue pursuant to Sections 2.06, 2.07, 2.09, 3.06 and 9.05 of
the Indenture, in each case upon receipt of an Officers' Certificate or a
written order of the Company signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such Officers'
Certificate or order shall specify the amount of the Notes to be authenticated
and the date on which the original issue of Notes is to be authenticated.

          2.3 Transfer and Exchange.

          (a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository,
by a nominee of the Depository to the Depository or to another nominee of the
Depository, or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depository that it is unwilling or unable to continue to act as
Depository or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 120 days after the date of such notice from the Depository, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee, or (iii) there shall have occurred and be
continuing a Default or an Event of Default and such exchange shall be requested
by a written notice given to the Depository by a Holder. Upon the occurrence of
any of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall
be issued in such names as the Depository shall instruct the Trustee. Global
Notes also may be exchanged or replaced, in whole or in part, as provided in
Section 2.07 of the Indenture. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.3(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.3(b) or (c) hereof, in each case subject to the requirements of
Section 2.3(f) hereof.

                                       A-3

<PAGE>

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

               (i) Transfer of Beneficial Interests in the Same Global Note.
     Beneficial interests in a Restricted Global Note may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Restricted Global Note in accordance with Section 2.3(f) hereof
     and the transfer restrictions set forth in the Transfer Restriction Legend.
     Beneficial interests in an Unrestricted Global Note may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Unrestricted Global Note.

               (ii) Transfers and Exchanges of Beneficial Interests in a Global
     Note for Beneficial Interests in the other Global Note. In connection with
     all transfers and exchanges of beneficial interests in a Global Note for
     beneficial interests in the other Global Note, the transferor of such
     beneficial interest must deliver to the Registrar (A) a written order from
     a Participant given to the Depository in accordance with the Applicable
     Procedures directing the Depository to credit or cause to be credited a
     beneficial interest in the applicable Global Note in an amount equal to the
     beneficial interest to be transferred or exchanged, (B) instructions given
     in accordance with the Applicable Procedures containing information
     regarding the Participant account to be credited with such increase, and
     (C) the documentation required by Section 2.3(f) hereof. Upon satisfaction
     of all of the requirements for transfer or exchange of beneficial interests
     in Global Notes contained in this Indenture (including, without limitation,
     Section 2.3(f) hereof) and the Notes or otherwise applicable under the
     Securities Act, the Trustee shall adjust the principal amount of the
     relevant Global Notes pursuant to Section 2.3(h) hereof.

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

          If any holder of a beneficial interest in a Global Note proposes to
exchange such beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Definitive Note, then, upon (i) delivery to the Registrar of (A) a written order
from a Participant given to the Depository in accordance with the Applicable
Procedures directing the Depository to cause to be issued a Definitive Note in
an amount equal to the beneficial interest to be transferred or exchanged, and
(B) instructions given by the Depository to the Registrar containing information
regarding the Person in whose name such Definitive Note shall be registered to
effect such transfer or exchange, and (ii) if the beneficial interest being
transferred or exchanged is a beneficial interest in a Restricted Global Note,
satisfaction of the conditions set forth in Section 2.3(f) hereof, the Trustee
shall cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.3(h) hereof, and the Company shall
execute and, upon receipt of an authentication order pursuant to Section 2.2,
the Trustee shall authenticate and deliver to the Person designated

                                       A-4

<PAGE>

in the instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.3(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depository and the
Participant. The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.

          Any Definitive Note issued upon exchange or transfer of a beneficial
interest in an Unrestricted Global Note that is issued to a Person that may be
deemed to be an "underwriter" within the meaning of 11 U.S.C. Section 1145
("SECTION 1145") or an "affiliate" or a "control person" within the meaning of
the Securities Act and any Definitive Note issued upon exchange or transfer of a
beneficial interest in a Restricted Global Note may, in each case, bear the
Transfer Restriction Legend and, in any event, shall be subject to all
applicable restrictions on transfer.

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

          If any Holder of a Definitive Note proposes to exchange such Note for
a beneficial interest in a Global Note or to transfer such Definitive Note to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Note, then, upon (i) delivery to the Registrar of a written order and
instructions of the types described in Section 2.3(b)(ii) above and an
endorsement or instrument of transfer as described in Section 2.3(e) below, and
(ii) if the Definitive Note being transferred or exchanged is a Restricted
Definitive Note, satisfaction of the conditions set forth in Section 2.3(f)
hereof, the Trustee shall cancel the applicable Definitive Note and increase or
cause to be increased the aggregate principal amount of the applicable Global
Note.

          (e) Transfer and Exchange of Definitive Notes for Definitive Notes.

          Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.3(e) and, if applicable,
Section 2.3(f), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to Section 2.3(f).

          Any Definitive Note issued upon exchange or transfer of an
Unrestricted Definitive Note that is issued to a Person that may be deemed to be
an "underwriter" within the meaning of Section 1145 or an "affiliate" or a
"control person" within the meaning of the Securities Act and any Definitive
Note issued upon exchange or transfer of a Restricted Definitive Note may, in
each case, bear the Transfer Restriction Legend and, in any event, shall be
subject to all applicable restrictions on transfer.

          (f) Transfers and Exchanges of Transfer Restricted Notes. No Person
may transfer or exchange a Restricted Definitive Note, a Restricted Global Note
or a beneficial interest in a Restricted Global Note (including, without
limitation, the removal of the Transfer

                                       A-5

<PAGE>

Restriction Legend thereon) unless such transfer or exchange is made (i)
pursuant to an effective registration statement under the Securities Act, or
(ii) pursuant to an exemption from registration requirements of the Securities
Act and, in the case of clause (ii), if the Registrar or the Company so
requests, the Registrar receives an opinion of counsel in form reasonably
acceptable to the Registrar and the Company stating that (A) such transfer or
exchange is in compliance with the Securities Act and (B) if such transferee or
exchangee seeks the removal of the Transfer Restriction Legend, the restrictions
on transfer contained herein and in the Transfer Restriction Legend are no
longer required in order to maintain compliance with the Securities Act. Upon
satisfaction of the requirements of this Section 2.3(f) with respect to the
removal of the Transfer Restriction Legend, as appropriate, such Restricted
Definitive Note shall be exchanged for an Unrestricted Definitive Note or such
beneficial interest in a Restricted Global Note shall be exchanged for a
beneficial interest in a corresponding Unrestricted Global Note, and the Trustee
shall adjust the principal balances of the Global Notes pursuant to Section
2.3(h) hereof.

          (g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture to the extent
required by the applicable provisions of this Indenture:

               (i) Transfer Restriction Legend. Each Transfer Restricted Note
     shall bear a legend substantially in the following form (the "TRANSFER
     RESTRICTION LEGEND").

          "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
          THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED
          EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
          EFFECTIVE UNDER THE SECURITIES ACT OR (II) PURSUANT TO AN EXEMPTION
          FROM SUCH REGISTRATION, SUBJECT TO THE COMPANY'S RIGHT TO REQUIRE THE
          DELIVERY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
          COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED."

          [INCLUDE THE FOLLOWING TWO PARAGRAPHS ONLY IF THE TRANSFER RESTRICTED
          NOTE IS A DEFINITIVE NOTE:]

          "THE HOLDER OF THIS NOTE AGREES THAT IT WILL, AND EACH SUBSEQUENT
          HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
          THE RESALE RESTRICTIONS REFERRED TO ABOVE.

          IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
          REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS THE REGISTRAR MAY
          REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
          FOREGOING RESTRICTIONS."

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

                                       A-6

<PAGE>

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

          (h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.10 of this
Indenture. At any time prior to such cancellation, if any beneficial interest in
a Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depository at the direction of the Trustee to
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depository at the direction of the Trustee to reflect such
increase.

          (i) General Provisions Relating to Transfers and Exchanges.

               (i) To permit registrations of transfers and exchanges, the
     Company shall execute and the Trustee shall authenticate Global Notes and
     Definitive Notes upon receipt of an authentication order. The Company shall
     make available to the Trustee from time to time upon request a reasonable
     supply of Definitive Notes in definitive, fully registered form without
     interest coupons.

               (ii) No service charge shall be made to a holder of a beneficial
     interest in a Global Note or to a Holder of a Definitive Note for any
     registration of transfer or exchange, but the Company may require payment
     of a sum sufficient to cover any transfer tax or similar governmental
     charge payable in connection therewith (other than any such transfer taxes
     or similar governmental charge payable upon exchange or transfer pursuant
     to Sections 2.09, 3.06, 4.04, 4.09 and 9.05 of this Indenture).

               (iii) All Global Notes and Definitive Notes issued upon any
     registration of transfer or exchange of Global Notes or Definitive Notes
     shall be the valid obligations of the Company, evidencing the same
     Indebtedness, and entitled to the same benefits

                                       A-7

<PAGE>

     under this Indenture, as the Global Notes or Definitive Notes surrendered
     upon such registration of transfer or exchange.

               (iv) Neither the Company nor the Registrar shall be required (A)
     to issue, to register the transfer of or to exchange any Notes during a
     period beginning at the opening of business 15 days before the day of any
     selection of Notes for redemption under Section 3.02 of the Indenture and
     ending at the close of business on the day of selection, (B) to register
     the transfer of or to exchange any Note so selected for redemption in whole
     or in part, except the unredeemed portion of any Note being redeemed in
     part or (C) to register the transfer of or to exchange a Note between a
     Record Date and the next succeeding Interest Payment Date.

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

               (vi) The Trustee shall authenticate Global Notes and Definitive
     Notes in accordance with the provisions of Section 2.2 hereof.

               (vii) All certifications, certificates and Opinions of Counsel
     required to be submitted to the Registrar pursuant to this Section 2.3 to
     effect a registration of transfer or exchange may be submitted by
     facsimile.

                                       A-8

<PAGE>

                                                                      APPENDIX B

                             [FORM OF FACE OF NOTES]

                 [Insert Global Note Legend here if appropriate]

            [Insert Restricted Securities Legend here if appropriate]

No. [____]                                                             $[______]
                                                         CUSIP No. [54387R AA 8]
                                                         ISIN No. [US54387RAA86]

               14% Senior Secured Cash/PIK Notes due 2015

          LORAL SKYNET CORPORATION, a Delaware corporation, promises to pay to
[CEDE & CO.](1) [__], or registered assigns, the principal sum of [__] DOLLARS
[, or such greater or lesser amount as may from time to time be endorsed on the
Schedule of Increases or Decreases in Global Note attached hereto (but in no
event may such amount exceed the aggregate principal amount of Notes
authenticated pursuant to Section 2.2 of Appendix A to the Indenture referred to
below and then outstanding pursuant to Section 2.08 of the Indenture),](1) on
[__], 2015.

          Interest Payment Dates: July 15 and January 15, commencing July 15,
                                  2006.

          Record Dates:           July 1 and January 1.

          Additional provisions of this Note are set forth on the other side of
this Note.

Dated: [_________], 20[___]

                                        LORAL SKYNET CORPORATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

----------
(1)  Use if Global Note.

                                        1

<PAGE>

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Notes referred
to in the Indenture.

By:
    ---------------------------------
    Authorized Signatory

                                       B-2

<PAGE>

                         [FORM OF REVERSE SIDE OF NOTES]

                   14% Senior Secured Cash/PIK Notes due 2015

1.   Interest and Principal

          LORAL SKYNET CORPORATION, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "COMPANY"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. In certain circumstances,
the Company may pay all or a portion of such interest in-kind through the
issuance of Additional Notes in lieu of cash, as more particularly described in
Section 4.01(b) of the Indenture. Subject to Section 4.01(c) of the Indenture,
interest on overdue principal (and, to the extent lawful, on overdue
installments of interest) shall accrue at the rate that is 2.0% per annum in
excess of the rate specified in the preceding sentence. The Company will pay
interest semi-annually in arrears on each Interest Payment Date. Interest on the
Notes (including Additional Notes) will accrue from the date of issuance of each
Note or, if interest has already been paid, from the date it was most recently
paid or provided for. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.

          The Notes will mature on October 15, 2015.

2.   Method of Payment

          The Company will pay interest on the Notes (except defaulted interest)
to the Persons who are registered holders of Notes at the close of business on
the Record Date next preceding the Interest Payment Date even if Notes are
canceled after the Record Date and on or before the Interest Payment Date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company will pay principal, premium, if any, and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Notes represented by a Global Note
(including principal, premium, if any, and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Note (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Note will be made by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

3.   Paying Agent and Registrar

          Initially, The Bank of New York (the "TRUSTEE"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.

4.   Indenture

                                       B-3

<PAGE>

          The Company issued the Notes under an Indenture dated as of November
21, 2005 (as such may be amended or supplemented from time to time,
"INDENTURE"), among the Company, the Guarantors, the Trustee and the Collateral
Agent. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the TIA for a statement of those
terms.

          The Notes are senior obligations of the Company.

          The Indenture contains covenants that limit the ability of the Company
and its subsidiaries to, among other things, incur additional indebtedness;
layer indebtedness; pay dividends or distributions on, or redeem or repurchase
capital stock; make investments; engage in transactions with affiliates; create
liens on assets; transfer or sell assets; restrict dividends or other payments
from subsidiaries; and consolidate, merge or transfer all or substantially all
of its assets and the assets of its subsidiaries. These covenants are subject to
important exceptions and qualifications.

5.   Optional Redemption

          Except as set forth below, the Company will not be entitled to redeem
the Notes at its option.

          On and after October 15, 2009, the Company will be entitled at its
option to redeem all or a portion of the Notes upon not less than 30 nor more
than 60 days' notice, at the redemption prices set forth below (expressed in
percentages of principal amount) on the date of redemption (the "REDEMPTION
DATE"), plus accrued and unpaid interest to the Redemption Date (subject to the
right of Holders of record on the relevant Record Date to receive interest due
on the relevant Interest Payment Date), if redeemed during the 12-month period
commencing on October 15 of the years set forth below:

<TABLE>
<CAPTION>
                                                                      Redemption
Period                                                                   Price
------                                                                ----------
<S>                                                                   <C>
2009...............................................................     110.0%
2010...............................................................     108.0%
2011...............................................................     106.0%
2012...............................................................     104.0%
2013...............................................................     102.0%
2014...............................................................     100.0%
</TABLE>

          Subject to the right of Holders to object, as set forth below in this
paragraph, prior to October 15, 2009, the Company may elect to redeem all or a
portion of the Notes upon not less than 30 nor more than 60 days' notice, at the
redemption price of 110% of the principal amount thereof plus accrued and unpaid
interest to the Redemption Date (subject to the right of Holders of record on
the relevant Record Date to receive interest due on the relevant Interest

                                       B-4

<PAGE>

Payment Date). In such event, (1) the Officers' Certificate required pursuant to
Section 3.01 of the Indenture shall also certify a resolution of the Board of
Directors of the Company approving such redemption and (2) such notice of
redemption shall inform the Holders of their right to object to and prevent such
redemption, and provide a reasonable mechanism by which Holders may exercise
such right. If within twenty (20) Business Days following the date that such
redemption notice is sent to the Holders, written notice is received by the
Company from the Holders of at least two-thirds (2/3) in principal amount of the
then outstanding Notes objecting to such redemption (such notices from the
Holders of such two-thirds or greater amount, collectively, the "REQUISITE
OBJECTION TO REDEMPTION NOTICE"), then the Company shall not consummate such
redemption. If the Requisite Objection to Redemption Notice is not received by
the Company by the expiration of such twenty (20) Business Day-period, then the
Company may consummate such redemption as specified in such redemption notice.

6.   Notice of Redemption

          Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at the Holder's registered address. Notes in denominations
of $1,000 principal amount or less may be redeemed in whole and not in part.
Notes in denominations larger than $1,000 principal amount may be redeemed in
part but only in whole multiples of $1,000. If money sufficient to pay the
redemption price of and accrued interest on all Notes (or portions thereof) to
be redeemed on the Redemption Date is deposited with the Paying Agent on or
before the Redemption Date and certain other conditions are satisfied, on and
after such date interest will cease to accrue on such Notes (or such portions
thereof) called for redemption unless the Company defaults in making the
redemption payment.

7.   Put Provisions

          Upon a Change of Control, each Holder will have the right to require
that the Company repurchase such Holder's Notes at a purchase price set forth
below, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant Record Date to
receive interest due on the related Interest Payment Date), if repurchased
during the 12-month period commencing for calendar year 2005 on the Issue Date
and thereafter on October 15 of the years set forth below:

<TABLE>
<CAPTION>
                                                                        Purchase
Period                                                                    Price
------                                                                  --------
<S>                                                                     <C>
2005.................................................................     104%
2006.................................................................     103%
2007.................................................................     102%
2008 and thereafter..................................................     101%
</TABLE>

in each case as provided in, and subject to the terms of, the Indenture.

                                       B-5

<PAGE>

          In certain circumstances, the Company must use the Net Available Cash
from Asset Dispositions to make an offer to Holders to repurchase Notes at a
purchase price of 100% of the principal amount, plus accrued and unpaid
interest.

8.   Guaranty

          The payment by the Company of the principal of, and premium and
interest on, the Notes is fully and unconditionally guaranteed on a joint and
several senior basis by each of the Guarantors. Not all Subsidiaries of the
Company are required to be Guarantors.

9.   Collateral

          Subject to certain exceptions described in the Indenture, the Notes
are secured by security interests in and liens on the Collateral (as defined in
the Indenture). Collateral may be released under certain circumstances as more
particularly described in the Indenture.

10.  Transfer; Exchange

          The Notes are in registered form without coupons. A Holder may
transfer or exchange Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Notes selected for redemption (except, in the case of a Note to be redeemed in
part, the portion of the Note not to be redeemed) or any Notes for a period of
15 days before the mailing of a notice of redemption of Notes to be redeemed or
15 days before an interest payment date, as applicable.

11.  Persons Deemed Owners

          The registered Holder of this Note may be treated as the Note's owner
for all purposes.

12.  Unclaimed Money

          If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.

13.  Discharge and Defeasance

          Subject to certain conditions, the Company at any time shall be
entitled to terminate some or all of its obligations under the Notes and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Notes to redemption
or maturity, as the case may be.

14.  Amendment, Waiver

                                       B-6

<PAGE>

          Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Collateral Documents and the Notes may be amended with the
written consent of the Holders of at least a majority in principal amount
outstanding of the Notes and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount outstanding of the Notes. Subject to certain exceptions set
forth in the Indenture, without the consent of any Noteholder, the Company, the
Guarantors, and the Trustee shall be entitled to amend the Indenture, the
Collateral Documents or the Notes to cure any ambiguity, omission, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to add
guarantees with respect to the Notes, including any Guaranties, to add
Collateral to further secure the Notes, to add additional covenants or surrender
rights and powers conferred on the Company or any Guarantors, to comply with any
request of the SEC in connection with qualifying the Indenture under the TIA, to
make any change that does not adversely affect the rights of any Noteholder, or
to evidence the release of a Guarantor in accordance with the Indenture.

15.  Defaults and Remedies

          Under the Indenture, Events of Default include: (i) defaults in any
payment of interest on any Note when the same becomes due and payable, continued
for 30 days; (ii) default in payment of principal on the Notes at maturity, upon
optional redemption pursuant to Section 5 of the Notes, upon declaration of
acceleration or otherwise, or failure by the Company to redeem or purchase Notes
when required; (iii) failure by the Company or any Guarantor that is a
Significant Subsidiary to comply with other agreements in the Indenture or the
Notes, in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company, or any Significant Subsidiary
(whether or not a Guarantor) if the amount accelerated (or so unpaid) exceeds
$50.0 million; (v) certain events of bankruptcy or insolvency with respect to
the Company, or any Significant Subsidiary (whether or not a Guarantor); (vi)
certain judgments or decrees for the payment of money in excess of $50.0 million
against the Company or any Significant Subsidiary (whether or not a Guarantor);
and (vii) certain defaults with respect to Guaranties and Collateral Documents
in certain cases subject to notice and lapse of time. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 40.0% in
principal amount of the Notes then outstanding may declare all the Notes to be
due and payable by notice in writing to the Company and the Trustee, and upon
such declaration, the Notes will be due and payable immediately. Certain events
of bankruptcy or insolvency are Events of Default which will result in the Notes
being due and payable immediately upon the occurrence of such Events of Default.

          Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security against any loss,
liability or expense. Subject to certain limitations, Holders of a majority in
principal amount of the Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Noteholders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in the interest of the Holders.

16.  Trustee Dealings with the Company

                                       B-7

<PAGE>

          Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.

17.  No Recourse Against Others

          No director, officer, employee, incorporator or stockholder, as such,
of the Company or any Guarantor will have any liability for any obligations of
the Company or any Guarantor under the Notes, any Guaranty or the Indenture or
for any claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.

18.  Authentication

          This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.

19.  Abbreviations

          Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

20.  CUSIP Numbers

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

21.  Governing Law

          This Note shall be governed by, and construed in accordance with, the
laws of the state of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.

22.  Copies

                                       B-8

<PAGE>

          The Company will furnish to any Noteholder upon written request and
without charge to the Noteholder a copy of the Indenture which has in it the
text of this Note in larger type. Requests may be made to:

          Loral Skynet Corporation
          600 Third Avenue
          New York, NY 10016
          Attention: Treasurer

                                       B-9

<PAGE>

                                 ASSIGNMENT FORM

          To assign this Note, fill in the form below:

          I or we assign and transfer this Note to

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

          (Insert assignee's soc. sec. or tax I.D. No.)

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

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

          Date:                    Your Signature:
                ------------------                 -------------------

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

          Sign exactly as your name appears on the other side of this Note.

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                      B-10

<PAGE>

                        [TO BE ATTACHED TO GLOBAL NOTES]

                SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

    The following increases or decreases in this Global Note have been made:

<TABLE>
<CAPTION>
                   Amount of decrease in      Amount of increase in      Principal amount of this    Signature of authorized
                   principal amount of this   principal amount of this   Global Note following       officer of Trustee or
Date of Exchange   Global Note                Global Note                such decrease or increase   Notes Custodian
----------------   ------------------------   ------------------------   -------------------------   -----------------------
<S>                <C>                        <C>                        <C>                         <C>

</TABLE>

                                      B-11

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.04 or 4.09 of the Indenture, check the box: [ ]

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.04 or 4.09 of the Indenture, state the amount in
principal amount: $_____________

Date:                      Your Signature:
      ------------                         -------------------------------------
                                           (Sign exactly as your name appears on
                                           the other side of this Note.)

Signature Guarantee:
                     -----------------------------------------------------------
                                    (Signature must be guaranteed)

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                      B-12

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