EXECUTION COPY


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                      DATA TRANSMISSION NETWORK CORPORATION

                    11.25% Senior Subordinated Notes due 2004
                        Warrants to Purchase Common Stock






                                NOTE AND WARRANT
                               PURCHASE AGREEMENT








                            Dated as of June 30, 1994







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                               TABLE OF CONTENTS



1.  Authorization of Notes and Warrants........................................1

2.  Sale and Purchase of Notes and Warrants....................................2

3.  Closing; Fees..............................................................2
        3.1.  Closing..........................................................2
        3.2.  Legal Fees.......................................................3

4.  Conditions to Closing......................................................3
        4.1.  Representations and Warranties...................................3
        4.2.  Performance; No Default..........................................3
        4.3.  Compliance Certificate...........................................3
        4.4.  Opinions of Counsel..............................................4
        4.5.  Bank Loan Agreement..............................................4
        4.6.  Purchase Permitted By Applicable Law, etc........................4
        4.7.  Proceedings and Documents........................................5
        4.8.  Fees.............................................................5

5.  Representations and Warranties, etc........................................5
        5.1.  Organization, Standing, etc......................................5
        5.2.  Subsidiaries.....................................................5
        5.3.  Qualification....................................................5
        5.4.  Business; Financial Statements...................................5
        5.5.  Changes, etc.....................................................6
        5.6.  Tax Returns and Payments.........................................7
        5.7.  Debt.............................................................7
        5.8.  Title to Properties; Liens.......................................8
        5.9.  Litigation, etc..................................................8
        5.10. Compliance with Other Instruments, etc...........................9
        5.11. Governmental Consent.............................................9
        5.12. Patents, Trademarks, Authorizations, etc.........................9
        5.13. Offer of Notes..................................................10
        5.14  Use of Proceeds.................................................10
        5.15. Federal Reserve Regulations.....................................10
        5.16. Environmental Matters...........................................11
        5.17. Status Under Certain Federal Statutes...........................11
        5.18. Foreign Assets Control Regulations, etc.........................11
        5.19. Compliance with ERISA...........................................12
        5.20. Disclosure......................................................14

6.  Purchase Intent; Source of Funds..........................................14
        6.1.  Purchase Intent.................................................14
        6.2.  Source of Funds.................................................15

7.  Furnishing of Information.................................................15

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        7.1.  Accounting; Financial Statements and Other
              Information.....................................................15
        7.2.  Rule 144A.......................................................20

8.  Inspection; Confidentiality...............................................20
        8.1.  Inspection......................................................20
        8.2.  Confidentiality.................................................21

9.  Prepayment of Notes.......................................................21
        9.1.  Required Prepayments............................................21
        9.2.  Optional Prepayments with Premium...............................22
        9.3.  Contingent Prepayments Upon Change of Control
              ................................................................22
        9.4.  Contingent Prepayment Upon Sale of Certain Assets
              ................................................................23
        9.5.  Master Premium Table............................................24
        9.6.  Notice of Optional Prepayments; Officers'
              Certificate.....................................................24
        9.7.  Allocation of Partial Prepayments...............................25
        9.8.  Maturity; Surrender, etc........................................25
        9.9.  Acquisition of Notes............................................25

10. Business and Financial Covenants..........................................26
       10.1.  Debt............................................................26
       10.2.  Liens, etc......................................................27
       10.3.  Investments, Guaranties, etc....................................28
       10.4.  Restricted Payments and Restricted Investments
              ................................................................31
       10.5.  Minimum Net Worth...............................................32
       10.6.  Transactions with Affiliates....................................32
       10.7.  Consolidation, Merger, Sale of Assets, etc......................33
       10.8.  Corporate Existence, etc.; Business.............................36
       10.9.  Payment of Taxes and Claims.....................................36
       10.10. Compliance with ERISA...........................................37
       10.11. Maintenance of Properties; Insurance............................39
       10.12. Senior Loan Agreements..........................................39

11.  Events of Default; Acceleration..........................................39

12.  Remedies on Default, etc.................................................43
13.  Subordination of Subordinated Notes......................................44
       13.1.  General.........................................................44
       13.2.  Superior Debt...................................................44
       13.3.  Default in Respect of Superior Debt.............................45
       13.4.  Insolvency, etc.................................................46
       13.5.  Payments and Distributions Received.............................47
       13.6   No Prejudice or Impairment......................................48
       13.7.  Payment of Superior Debt, Subrogation, etc......................48
  
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14.  Definitions..............................................................49

15.  Registration, Transfer and Substitution of Notes;
     Action by Noteholders....................................................61
       15.1.  Note Register; Ownership of Notes...............................61
       15.2.  Transfer and Exchange of Notes..................................61
       15.3.  Replacement of Notes............................................61
       15.4.  Notes held by Company, etc., Deemed Not
              Outstanding.....................................................62

16.  Payments on Notes........................................................62
       16.1.  Place of Payment................................................62
       16.2.  Home Office Payment.............................................62

17.  Expenses, etc............................................................63

18.  Survival of Representations and Warranties...............................64

19.  Amendments and Waivers...................................................64

20.  Notices, etc.............................................................65

21.  Miscellaneous............................................................66


SCHEDULE A                          Schedule of Purchasers

EXHIBIT A                           Form of Senior Subordinated Note

EXHIBIT B                           Form of Warrant

EXHIBIT C-1                         Form of Opinion of Counsel to Company

EXHIBIT C-2                         Form of Opinion of Counsel to Purchaser

EXHIBIT D                           Debt and Liens of Company


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                      Data Transmission Network Corporation
                              9110 West Dodge Road
                                    Suite 200
                              Omaha, Nebraska 68114


               11.25% Senior Subordinated Notes due June 30, 2004
                        Warrants to Purchase Common Stock

                            Dated as of June 30, 1994


TO EACH OF THE PURCHASERS LISTED IN
         THE ATTACHED SCHEDULE A

Ladies and Gentlemen:

                  Data Transmission Network Corporation,  a Delaware corporation
(the "Company"), agrees with you as follows:

                  1.  AUTHORIZATION  OF NOTES AND  WARRANTS.  The  Company  will
authorize the issue and sale of (a) $15,000,000  aggregate  principal  amount of
its 11.25% Senior  Subordinated Notes due June 30, 2004 (the "Notes",  such term
to include any such notes issued in  substitution  therefor  pursuant to section
15), to be substantially in the form of the Note set out in Exhibit A, with such
changes  therefrom,  if any, as may be approved by you and the Company,  and (b)
warrants  (the  "Warrants",   such  term  to  include  any  warrants  issued  in
substitution  therefor  pursuant to section 15) to purchase 25,000 shares of the
Common Stock, par value $.001 per share (the "Common Stock"),  of the Company at
an initial  exercise price per share equal to the average daily Market Price (as
defined in the form of Warrant set out in Exhibit A) of the Common  Stock during
the period of the most  recent  five  consecutive  Business  Days  ending on the
second day preceding the Closing  Date, to be  substantially  in the form of the
Warrant  set out in Exhibit B, with such  changes  therefrom,  if any, as may be
approved  by you  and  the  Company.  Certain  capitalized  terms  used  in this
Agreement are defined in section 14;  references to a "Schedule" or an "Exhibit"
are, unless  otherwise  specified,  to a Schedule or an Exhibit attached to this
Agreement.

                  2. SALE AND PURCHASE OF NOTES AND  WARRANTS.  In reliance upon
the  representations  and warranties  made by you in section 6, the Company will
issue and sell to you and, in reliance upon the  representations  and warranties
made by the  Company in section 5, and  subject to the terms and  conditions  of
this Agreement,  you will purchase from the Company, at the Closing provided for
in section 3, (a) Notes

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in the  principal  amount  specified  opposite  your name in  Schedule A and (b)
Warrants for the number of shares of Common Stock  specified  opposite your name
in Schedule A; at the  purchase  price of 100% of the  principal  amount of such
Notes.

                  3. CLOSING; FEES. 3.1. CLOSING. The sales of the Notes and the
Warrants  to be  purchased  by you shall take  place at the  offices of Bruce A.
Rich,  Esq., at 10:00 a.m., New York City time, at a closing (the  "Closing") on
June 30, 1994 or on such other  Business Day  thereafter on or prior to July 28,




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1994 as may be agreed  upon by the  Company  and you. At the Closing the Company
will deliver to you (a) the Notes to be purchased by you in the form of a single
Note (or such greater number of Notes in  denominations  of at least $100,000 as
shall be set forth in  Schedule A or as you may  request)  dated the date of the
Closing and  registered in your name (or in the name of your  nominee),  and (b)
the Warrants to be purchased by you in the form of a single warrant  certificate
(or such  greater  number  of  warrant  certificates  as  shall be set  forth in
Schedule A or as you may request)  dated the date of the Closing and  registered
in your name (or in the name of your  nominee);  against  delivery by you to the
Company  or its  order  of  immediately  available  funds in the  amount  of the
purchase price therefor. If at the Closing the Company shall fail to tender such
Notes or such Warrants to you as provided above in this section 3, or any of the
conditions  specified  in  section  4 shall  not  have  been  fulfilled  to your
satisfaction,   you  shall,  at  your  election,  be  relieved  of  all  further
obligations  under this Agreement,  without thereby waiving any other rights you
may have by reason of such failure or such nonfulfillment.

                  3.2. LEGAL FEES. On the date of the Closing,  the Company will
pay the reasonable fees and  disbursements  of your special counsel  incurred in
connection with the transactions contemplated by this Agreement and set forth in
a statement delivered to the Company on or prior to the date of the Closing, and
thereafter  the  Company  will pay,  promptly  upon  receipt  of a  supplemental
statement therefor, additional reasonable fees and disbursements of your special
counsel, if any, incurred in connection with such transactions.

                  4. CONDITIONS TO CLOSING.  Your obligation to purchase and pay
for the Notes and  Warrants  to be sold to you at the  Closing is subject to the
fulfillment to your satisfaction,  prior to or at the Closing,  of the following
conditions:
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<PAGE>
                  4.1.  REPRESENTATIONS AND WARRANTIES.  The representations and
warranties of the Company  contained in this Agreement and those  otherwise made
in writing by or on behalf of the Company in  connection  with the  transactions
contemplated by this Agreement shall be correct when made and at the time of the
Closing, except as affected by the consummation of such transactions.

                  4.2. PERFORMANCE; NO DEFAULT. The Company shall have performed
and complied with all  agreements  and  conditions  contained in this  Agreement
required to be performed  or complied  with by it prior to or at the Closing and
at the time of the  Closing no Event of Default  or  Potential  Event of Default
shall have occurred and be continuing.

                  4.3. COMPLIANCE CERTIFICATE.  The Company shall have delivered
to you an Officers' Certificate,  dated the date of the Closing, certifying that
the  conditions  specified  in  sections  4.1 and 4.2 have  been  fulfilled  and
demonstrating  that, after giving effect to the issuance of all of the Notes and
Warrants,  the Company will be in compliance  in all material  respects with the
most stringent limitations on the incurrence or maintenance of Debt contained in
any  instrument  or  agreement  applicable  to or  binding  on  the  Company  or
certifying that a complete and correct copy of a waiver or waivers of compliance
with such limitations is attached to such Officers' Certificate.

                  4.4.  OPINIONS OF COUNSEL.  You shall have  received  (a) from
Abrahams, Kaslow & Cassman, counsel for the Company, and (b) from Bruce A. Rich,
Esq., your special counsel in connection with the  transactions  contemplated by
this  Agreement,  favorable  opinions  substantially  in the  forms set forth in
Exhibits C-1 and C-2, respectively,  and covering such other matters incident to
such  transactions as you may reasonably  request,  each addressed to you, dated
the date of the Closing and otherwise satisfactory in substance and form to you.

                  4.5. BANK LOAN  AGREEMENT.  The Bank Loan Agreement shall have
been  amended,  and as amended  shall have been  executed  and  delivered by the
Company and the Banks,  and shall be  satisfactory in form and substance to you.
You  shall  have  received  a copy of the Bank  Loan  Agreement  as so  amended,
certified as a true and complete copy thereof by an officer of the Company.


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<PAGE>
                  4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the date of
the Closing  your  purchase of Notes and  Warrants (a) shall be permitted by the
laws and regulations of each jurisdiction to which you are subject and (b) shall
not  subject  you to any tax,  penalty or, in your  reasonable  judgment,  other
onerous  condition by reason of any change  after the date of this  Agreement in
any applicable law or  governmental  regulation.  If requested by you, you shall
have  received,  at least five Business Days prior to the Closing,  an Officers'
Certificate  certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.

                  4.7.  PROCEEDINGS  AND  DOCUMENTS.  All  corporate  and  other
proceedings in connection with the  transactions  contemplated by this Agreement
and all  documents  and  instruments  incident  to such  transactions  shall  be
satisfactory to you and your special  counsel,  and you and your special counsel
shall have received all such counterpart  originals or certified or other copies
of such documents as you or they may reasonably request.

                  4.8.  FEES.  The fees required to be paid by section 3.2 shall
have been paid as therein provided.

                  5. REPRESENTATIONS AND WARRANTIES, ETC. The Company represents
and warrants that:

                  5.1. ORGANIZATION, STANDING, ETC. The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate  its  properties,  to  carry on its  business  as now  conducted  and as
proposed to be conducted,  to enter into this  Agreement,  to issue and sell the
Notes and the Warrants and to carry out the terms of this  Agreement,  the Notes
and the Warrants.

                  5.2.  SUBSIDIARIES.  As of the  date  of this  Agreement,  the
Company has no Subsidiaries.

                  5.3. QUALIFICATION.  The Company is duly qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
(other than the  jurisdiction of its  incorporation)  in which the nature of its
activities  or the  character  of the  properties  it owns or leases  makes such
qualification  necessary  and in which the  failure so to  qualify  would have a
materially adverse effect on the Company.

                                        4

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                  5.4. BUSINESS; FINANCIAL STATEMENTS. The Company has delivered
to you complete and correct copies of (a) its annual reports to stockholders for
the fiscal years ended  December  31, 1991 through 1993 (the "Annual  Reports"),
(b) its  annual  reports  on Form 10-K for such  fiscal  years as filed with the
Securities and Exchange Commission (the "Forms 10-K") and (c) a memorandum dated
May, 1994 prepared by Furman Selz  Incorporated  for use in connection  with the
Company's  private placement of the Notes and Warrants (the  "Memorandum").  The
Annual Reports,  the Forms 10-K and the Memorandum  correctly  describe,  in all
material respects, as of their respective dates, the business then conducted and
proposed to be  conducted  by the Company,  PROVIDED,  however,  with respect to
projections  contained in the Memorandum,  that such  projections are based upon
the good faith  estimates and  assumptions  of management of the Company and are
subject to the uncertainty and approximation inherent in any projections.  There
are included in the Forms 10-K  financial  statements of the Company for each of
the fiscal years ended December 31, 1991 through 1993,  accompanied in each case
by the opinion thereon of Deloitte and Touche (or one of its predecessor firms),
independent public  accountants.  The Company has also delivered to you complete
and  correct  copies  of its  quarterly  reports  to  stockholders  sent or made
available to stockholders, and its quarterly reports on Form 10-Q filed with the
Securities and Exchange  Commission,  in each case for fiscal periods subsequent
to  December  31,  1993,  and  current  reports on Form 8-K,  proxy  statements,
registration statements and prospectuses,  if any, filed by the Company with the
Securities and Exchange  Commission  since such date.  All financial  statements
included  in the  foregoing  materials  delivered  to you  (except as  otherwise
specified  therein)  have been prepared in accordance  with  generally  accepted
accounting  principles  applied on a  consistent  basis  throughout  the periods
specified  and present  fairly the  financial  position of the Company as of the
respective  dates specified and the results of its operations and its cash flows
for the respective periods specified.

                  5.5. Changes, etc. Since December 31, 1993, (a) there has been
no change in the assets,  liabilities  or  financial  condition  of the Company,
other  than  changes in the  ordinary  course of  business  which have not been,
either in any case or in the aggregate,  materially adverse to the Company,  (b)
neither the business,  operations or affairs nor any of the properties or assets
of the Company have been affected by any occurrence or  development  (whether or
not insured against) which has been, either in any case or in

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the aggregate,  materially adverse to the Company and (c) the Company has not as
of the date of this Agreement directly or indirectly  declared,  ordered,  paid,
made or set apart any sum or property for any Restricted Payment or agreed to do
so.

                  5.6. TAX RETURNS AND  PAYMENTS.  The Company has filed all tax
returns  required  by law to be filed by it and has paid all taxes,  assessments
and  other  governmental  charges  levied  upon  the  Company  and  any  of  its
properties,  assets, income or franchises which are due and payable,  other than
those  presently  payable  without penalty or interest and those presently being
contested in good faith by  appropriate  proceedings  diligently  conducted  for
which such reserves or other appropriate provision, if any, as shall be required
by generally accepted accounting principles shall have been made, and other than
those,  the  failure  to file or pay  which  would  not,  in any  case or in the
aggregate, have a material adverse effect on the Company. The Federal income tax
liabilities of the Company have been finally  determined by the Internal Revenue
Service and satisfied, or the time for audit has expired, for all fiscal periods
through  December 31, 1990.  The charges,  accruals and reserves on the books of
the Company in respect of Federal, state and foreign income taxes for all fiscal
periods are adequate in the opinion of the Company,  and the Company knows of no
unpaid assessment for additional Federal,  state or foreign income taxes for any
period or any basis for any such assessment.

                  5.7.  DEBT.  Exhibit D  correctly  describes  all  secured and
unsecured  Debt  of the  Company  outstanding,  or for  which  the  Company  has
commitments,  on the  date of this  Agreement,  and  identifies  the  collateral
securing  any secured  Debt.  The Company is not in default  with respect to any
Debt or any  instrument  or agreement  relating  thereto,  and no  instrument or
agreement  applicable  to or binding on the  Company  (other  than the Bank Loan
Agreement)  contains  any  restrictions  on the  incurrence  by the  Company  of
additional Debt.

                  5.8.  TITLE TO  PROPERTIES;  LIENS.  The  Company has good and
sufficient  title to its  properties  and assets,  including the  properties and
assets reflected in the financial statements as of December 31, 1993 referred to
in section 5.4 (except  properties and assets disposed of since such date in the
ordinary  course of business and properties and assets held under Capital Leases
referred to in Exhibit D), and none of such  properties  or assets is subject to
any

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Liens except such as are of the character permitted by section 10.2. The Company
enjoys peaceful and  undisturbed  possession  under all leases  necessary in any
material  respect for the operation of its properties  and assets,  and all such
leases  are valid and  subsisting  and are in full force and  effect.  Except to
perfect and protect  security  interests of the  character  permitted by section
10.2,  and except for  precautionary  financing  statements  filed in respect of
operating leases, no presently  effective  financing statement under the Uniform
Commercial Code which names the Company as debtor is on file in any jurisdiction
and the Company has not signed any presently  effective  financing  statement or
any  presently  effective  security  agreement  authorizing  any  secured  party
thereunder to file any such financing statement.

                  5.9.  LITIGATION,  ETC.  There  is no  action,  proceeding  or
investigation pending or threatened (or any basis therefor known to the Company)
which questions the validity of this Agreement, the Notes or the Warrants or any
action  taken  or to be  taken  pursuant  to this  Agreement,  the  Notes or the
Warrants, or which might result, either in any case or in the aggregate,  in any
adverse change in the business,  operations,  affairs,  condition  (financial or
otherwise),  properties or assets of the Company or in any liability on the part
of the Company, which would be material to the Company.

                  5.10.  COMPLIANCE WITH OTHER INSTRUMENTS,  ETC. The Company is
not in violation of any term of its certificate of incorporation or by-laws, and
is not in violation of any term of any  agreement or instrument to which it is a
party or by which it is bound or any term of any applicable law, ordinance, rule
or regulation of any governmental authority or any term of any applicable order,
judgment  or decree of any court,  arbitrator  or  governmental  authority,  the
consequences of which  violation  might have a materially  adverse effect on the
business, operations, affairs, condition (financial or otherwise), properties or
assets  of  the  Company;  the  execution,  delivery  and  performance  of  this
Agreement,  the Notes and the Warrants will not result in any violation of or be
in conflict  with or  constitute a default  under any such term or result in the
creation  of (or impose any  obligation  on the Company to create) any Lien upon
any of the  properties or assets of the Company  pursuant to any such term;  and
there is no such term which  materially  adversely  affects or in the future may
(so  far as the  Company  can  now  foresee)  materially  adversely  affect  the
business, operations, affairs, condition (financial or otherwise), properties or
assets of the Company.

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                                      163
<PAGE>
                  5.11.   GOVERNMENTAL   CONSENT.   No   consent,   approval  or
authorization  of, or declaration or filing with, any governmental  authority on
the part of the Company is required for the valid execution and delivery of this
Agreement  or the valid  offer,  issue,  sale and  delivery  of the Notes or the
Warrants pursuant to this Agreement.

                  5.12. PATENTS,  TRADEMARKS,  AUTHORIZATIONS,  ETC. The Company
owns  or  possesses  all  patents,  trademarks,   service  marks,  trade  names,
copyrights,  licenses  and  authorizations,  and all rights with  respect to the
foregoing, necessary for the conduct of its businesses as now conducted, without
any known material conflict with the rights of others.

                  5.13.  OFFER OF NOTES.  Neither  the  Company  nor Furman Selz
Incorporated (the only Person authorized or employed by the Company as financial
adviser or  otherwise  as agent in  connection  with the offering or sale of the
Notes or Warrants or any similar  securities  of the  Company)  has  directly or
indirectly  offered the Notes or the Warrants or any part thereof or any similar
securities  for sale to, or solicited  any offer to buy any of the same from, or
otherwise  approached or negotiated in respect  thereof with,  anyone other than
you and not more than 42 other institutional investors.  Neither the Company nor
anyone  acting  on its  behalf  has taken or will take any  action  which  would
subject the issuance  and sale of the Notes or the Warrants to the  registration
and prospectus delivery provisions of the Securities Act.

                  5.14. USE OF PROCEEDS.  The Company will apply the proceeds of
the sale of the Notes and  Warrants,  simultaneously  with the  Closing,  to the
repayment of  approximately  $14,000,000  principal  amount of Debt  outstanding
under the Bank Loan  Agreement  and the balance of such proceeds will be used to
augment working capital.

                  5.15.  FEDERAL  RESERVE  REGULATIONS.  The  Company  will not,
directly  or  indirectly,  use any of the  proceeds of the sale of the Notes and
Warrants for the purpose, whether immediate, incidental or ultimate, of buying a
"margin  stock"  or  of  maintaining,  reducing  or  retiring  any  indebtedness
originally  incurred to purchase a stock that is currently a "margin stock",  or
for any other  purpose  which  might  constitute  this  transaction  a  "purpose
credit", in each case within the meaning of Regulation G of the Board of

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Governors  of the  Federal  Reserve  System  (12  C.F.R.  207,  as  amended)  or
Regulation  U of such Board (12 C.F.R.  221, as amended),  or otherwise  take or
permit to be taken any action which would involve a violation of such Regulation
G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or Regulation X
(12 C.F.R. 224, as amended) or any other regulation of such Board. No Debt being
reduced or retired out of the proceeds of the sale of the Notes and Warrants was
incurred for the purpose of purchasing or carrying any such "margin stock",  and
the Company  neither own nor has any present  intention  of  acquiring  any such
"margin stock".

                  5.16.  ENVIRONMENTAL MATTERS. The Company (a) has obtained all
permits,  licenses  and other  authorizations  which are required to be obtained
under Environmental Laws, (b) is in full compliance with all Environmental Laws,
except where the failure to comply would not have a material  adverse  effect on
the  business,  operations,   condition  (financial  or  otherwise),  assets  or
properties  of the Company,  (c) has not received any notice of any violation of
an  Environmental  Law and no actions,  suits or proceedings have been commenced
or, to the  knowledge  of the Company,  threatened  by any party with respect to
Environmental  Laws, and (d) the Company is not aware of any prior use of any of
its owned or leased properties, by any tenant, subtenant,  prior tenant or prior
subtenant of any of such properties,  that  constitutes a material  violation of
any provision of any Environmental Laws.

                  5.17.  STATUS UNDER CERTAIN FEDERAL  STATUTES.  The Company is
not (a) an "investment  company",  or a company - "controlled" by an "investment
company",  within the meaning of the Investment Company Act of 1940, as amended;
(b) a "holding company" or a "subsidiary company" of a "holding company",  or an
"affiliate"  of a "holding  company" or of a "subsidiary  company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended;  (c) a "public utility" as such term is defined in the Federal
Power Act,  as  amended;  or (d) a "rail  carrier or a person  controlled  by or
affiliated  with a rail carrier",  within the meaning of Title 49, U.S.C.,  or a
"carrier" to which 49 U.S.C.ss. 11301(b)(1) is applicable.

                  5.18.  Foreign Assets Control  Regulations,  etc.  Neither the
issue and sale of the  Notes  and  Warrants  by the  Company  nor its use of the
proceeds  thereof as  contemplated  by this  Agreement  will violate the Foreign
Assets Control  Regulations,  the  Transaction  Control  Regulations,  the Cuban

                                        9

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<PAGE>
Assets Control Regulations,  the Foreign Funds Control Regulations,  the Iranian
Assets Control  Regulations,  the Iranian  Transactions  Regulations,  the Iraqi
Sanctions  Regulations,   the  Haitian  Transactions  Regulations,   the  Libyan
Sanctions Regulations,  or the Soviet Gold Coin Regulations of the United States
Treasury  Department  (31  C.F.R.,  Subtitle  B,  Chapter V as  amended)  or the
restrictions set forth in Executive Orders No. 8389, 9193, 12543 (Libya),  12544
(Libya),  12801  (Libya),  12722 (Iraq),  12724  (Iraq),  12775 (Haiti) or 12779
(Haiti),  as amended, of the President of the United States of America or of any
rules or regulations issued thereunder.

                  5.19.  COMPLIANCE WITH ERISA. (a) The Company has not breached
the  fiduciary  rules of ERISA  or  engaged  in any  prohibited  transaction  in
connection with which the Company could be subjected to (in the case of any such
breach) a suit for damages or (in the case of any such  prohibited  transaction)
either a civil penalty  assessed  under section 502(i) of ERISA or a tax imposed
by section 4975 of the Code,  which suit,  penalty or tax, in any case, would be
materially adverse to the Company.

                  (b) No Plan  (other  than a  Multiemployer  Plan) or any trust
created under any such Plan has been terminated since September 2, 1974. Neither
the Company nor any Related Person has within the past six years  contributed to
a single  employer plan which has at least two  contributing  sponsors not under
common control or ceased operations at a facility in a manner which could result
in liability  under section  4062(f) of ERISA. No liability to the PBGC has been
or is expected by the  Company to be  incurred  with  respect to any Plan (other
than a  Multiemployer  Plan) by the  Company  which  is or  would be  materially
adverse to the Company.  There has been no reportable  event (within the meaning
of section 4043(b) of ERISA) or any other event or condition with respect to any
Plan (other than a  Multiemployer  Plan) which presents a risk of termination of
any such Plan by the PBGC under  circumstances which in any case could result in
liability which would be materially adverse to the Company.

(c) Full  payment has been made of all amounts  which the Company or any Related
Person is required under the terms of each Plan to have paid as contributions to
such Plan as of the last day of the most  recent  fiscal year of such Plan ended
prior to the date hereof,  and no accumulated  funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, exists

                                       10

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<PAGE>
with respect to any Plan (other than a Multiemployer Plan).

                  (d) The present value of all vested accrued benefits under all
Plans  (other  than  Multiemployer  Plans),  determined  as of  the  end  of the
Company's most recently  ended fiscal year on the basis of reasonable  actuarial
assumptions,  did not  exceed  the  current  value of the  assets of such  Plans
allocable to such vested accrued benefits.  The terms "present value",  "current
value", and "accrued benefit" have the meanings specified in section 3 of ERISA.

                  (e) The  Company  is not  and  has  never  been  obligated  to
contribute  to any  "multiemployer  plan" (as such term is  defined  in  section
4001(a)(3) of ERISA).

                  (f) The execution and delivery of this Agreement and the issue
and sale of the  Notes  hereunder  will not  involve  any  transaction  which is
subject to the  prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975 of the Code. The  representation
by the Company in the preceding sentence is made in reliance upon and subject to
the accuracy of your  representation  in section 6.2 of this Agreement as to the
source of the funds used to pay the  purchase  price of the Notes  purchased  by
you.  The Company has  delivered  to you, if  requested  by you, a complete  and
correct list of all employee  benefit plans with respect to which the Company is
a party in  interest  and with  respect  to which its  securities  are  employer
securities.  As used in this section 5.19(f), the terms "employee benefit plans"
and "party in interest" have the respective  meanings  specified in section 3 of
ERISA and the term "employer  securities"  has the meaning  specified in section
407(d)(1) of ERISA.

                  5.20. DISCLOSURE.  Neither this Agreement, the Memorandum, the
Annual Reports, the Forms 10-K nor any other document, certificate or instrument
delivered  to  you by or on  behalf  of  the  Company  in  connection  with  the
transactions  contemplated  by this Agreement  contains (in each case, as of its
date) any untrue  statement of a material fact or omits to state a material fact
necessary in order to make the  statements  contained in this  Agreement  and in
such other  documents,  certificates or instruments not misleading.  There is no
fact (other than matters of a general  economic or political nature which do not
affect the Company  uniquely)  known to the Company which  materially  adversely
affects or in the future may (so far as the Company can now foresee)  materially
adversely affect the business,

                                       11

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<PAGE>
operations, affairs, condition (financial or otherwise), properties or assets of
the  Company  which  has not been set  forth in this  Agreement  or in the other
documents,  certificates and instruments delivered to you by or on behalf of the
Company specifically for use in connection with the transactions contemplated by
this Agreement.

                  6. PURCHASE INTENT; SOURCE OF FUNDS. 6.1. PURCHASE INTENT. You
represent that you are purchasing the Notes and Warrants  hereunder for your own
account,  not  with a view  to the  distribution  thereof  or with  any  present
intention  of  distributing  or selling any of such Notes or Warrants  except in
compliance  with the Securities Act and any applicable  state  securities  laws,
PROVIDED that the disposition of your property shall at all times be within your
control.  You represent that you are an "accredited  investor",  as such term is
defined in Rule 501 under the Securities Act. You acknowledge that the Notes and
Warrants have not been  registered  under the  Securities Act and you understand
that the Notes and Warrants may not be  transferred  unless they are  registered
under the Securities Act or an exemption from registration is available.

                  6.2.  SOURCE OF FUNDS.  You represent that all or a portion of
the funds to be used by you to pay the purchase  price of the Notes and Warrants
consists of funds which do not  constitute  assets of any employee  benefit plan
(other  than a  governmental  plan  exempt  from the  coverage of ERISA) and the
remaining  portion,  if any, of such funds consists of funds which may be deemed
to constitute  assets of one or more specific  employee benefit plans,  complete
and accurate  information as to the identity of each of which you have delivered
to the Company.  As used in this section 6.2, the terms "employee  benefit plan"
and "government plan" shall have the respective  meanings assigned to such terms
in section 3 of ERISA.

                  7.  FURNISHING  OF  INFORMATION.  7.1.  ACCOUNTING;  FINANCIAL
STATEMENTS AND OTHER INFORMATION. The Company will maintain, and will cause each
of its Subsidiaries, if any, to maintain, a system of accounting established and
administered in accordance with generally accepted  accounting  principles,  and
will  accrue,  and will  cause  each of its  Subsidiaries  to  accrue,  all such
liabilities as shall be required by generally  accepted  accounting  principles.
The Company will deliver (in duplicate) to you, so long as you shall be entitled
to  purchase  Notes under this  Agreement  or you or your  nominee  shall be the
holder of any Notes, and to each other institutional holder of any Notes:

                                       12

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<PAGE>
                  (a) not later than the earlier to occur of (i) the forty-fifth
         day after the end of each of the first three  quarterly  fiscal periods
         in each  fiscal  year of the  Company  and (ii) the date of the  filing
         thereof  with the  Securities  and  Exchange  Commission,  consolidated
         balance  sheets of the  Company and its  Subsidiaries  as at the end of
         such  period  and  the  related  consolidated   statements  of  income,
         stockholders' equity and cash flows of the Company and its Subsidiaries
         for such  period  and (in the case of the  second  and third  quarterly
         periods) for the period from the  beginning of the current  fiscal year
         to the end of such  quarterly  period,  setting  forth in each  case in
         comparative form the consolidated figures for the corresponding periods
         of the previous fiscal year, all in reasonable  detail and certified by
         a principal  financial officer of the Company as presenting  fairly, in
         accordance with generally  accepted  accounting  principles (except for
         the absence of notes thereto) applied (except as specifically set forth
         therein) on a basis  consistent  with such prior  fiscal  periods,  the
         information contained therein, subject to changes resulting from normal
         year-end  audit  adjustments;  PROVIDED  that so long as the Company is
         subject to the reporting  provisions  of the Exchange Act,  delivery of
         copies of the Company's  quarterly  report on Form 10-Q for such period
         will satisfy the requirements of this paragraph (a);

                  (b) not later than the  earlier to occur of (i) the  ninetieth
         day after the end of each  fiscal year of the Company and (ii) the date
         of the filing  thereof with the  Securities  and  Exchange  Commission,
         consolidated  balance sheets of the Company and its  Subsidiaries as at
         the end of such year and the related consolidated statements of income,
         stockholders' equity and cash flows of the Company and its Subsidiaries
         for such fiscal year,  setting forth in each case in  comparative  form
         the  consolidated   figures  for  the  previous  fiscal  year,  all  in
         reasonable  detail and  accompanied by a report thereon of Deloitte and
         Touche or other independent public  accountants of recognized  national
         standing  selected by the Company (and reasonably  satisfactory to you,
         so long as you shall be entitled to purchase Notes under this Agreement
         or you or your nominee shall be the holder of any of the Notes,  and to
         the holder or holders of more than 50% in principal amount of the Notes
         then outstanding) (subject to section 15.4), which report shall state

                                       13

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<PAGE>
         that  such  consolidated   financial   statements  present  fairly  the
         financial  position of the Company and its Subsidiaries as at the dates
         indicated and the results of their  operations and their cash flows for
         the periods indicated in conformity with generally accepted  accounting
         principles  applied on a basis  consistent  with prior years (except as
         otherwise  specified  in  such  report)  and  that  the  audit  by such
         accountants in connection with such consolidated  financial  statements
         has been made in accordance with generally accepted auditing standards;
         provided  that so long  as the  Company  is  subject  to the  reporting
         provisions  of the Exchange  Act,  delivery of copies of the  Company's
         annual   report  on  Form  10-K  for  such  period  will   satisfy  the
         requirements of this paragraph (b);

                  (c) not later than the tenth day  following  each  delivery of
         financial  statements  pursuant  to  subdivisions  (a)  and (b) of this
         section 7 (or, if earlier,  not later than the date a similar Officers'
         Certificate  or  compliance  certificate  is  delivered  to  the  Banks
         pursuant to section 4.1 of the Bank Loan  Agreement as in effect on the
         date hereof or similar  provision  as from time to time in effect),  an
         Officers'  Certificate  (i) stating that the signers have  reviewed the
         terms of this Agreement and of the Notes and have made, or caused to be
         made under  their  supervision,  a review in  reasonable  detail of the
         transactions and condition of the Company and its  Subsidiaries  during
         the accounting period covered by such financial state-

         ments and that such review has not disclosed the existence during or at
         the end of such  accounting  period,  and that the  signers do not have
         knowledge of the existence as at the date of the Officers' Certif-

         icate, of any condition or event which  constitutes an Event of Default
         or  Potential  Event of  Default,  or, if any such  condition  or event
         existed or  exists,  specifying  the  nature  and  period of  existence
         thereof  and what action the Company has taken or is taking or proposes
         to take with respect  thereto,  (ii) specifying the amount available at
         the end of such accounting period for Restricted Payments in compliance
         with section  10.4 and showing in  reasonable  detail all  calculations
         required  in  arriving  at such  amount,  and  (iii)  demonstrating  in
         reasonable  detail  compliance during and at the end of such accounting
         period with the restrictions contained in sections 10.1, 10.3, 10.5 and
         10.7;
                                       14

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<PAGE>
                  (d)  together  with  each  delivery  of  financial  statements
         pursuant to subdivision  (b) of this section 7, a written  statement by
         the  independent  public  accountants  giving  the report  thereon  (i)
         stating that their audit examination has included a review of the terms
         of this Agreement and of the Notes as they relate to accounting matters
         and that such review is sufficient to enable them to make the statement
         referred  to  in  clause  (iii)  of  this  subdivision  (d)  (it  being
         understood that no special audit procedures,  other than those required
         by generally  accepted  auditing  standards,  shall be required),  (ii)
         stating  whether,  in the  course  of  their  audit  examination,  they
         obtained  knowledge  (and  whether,  as of the  date  of  such  written
         statement,  they have  knowledge)  of the existence of any condition or
         event  which  constitutes  an Event of  Default or  Potential  Event of
         Default,  and,  if so,  specifying  the nature and period of  existence
         thereof,  and  (iii)  stating  that they have  examined  the  Officers'
         Certificate  delivered in connection  therewith pursuant to subdivision
         (c) of this section 7 and that the matters set forth in such  Officers'
         Certificate  pursuant to clauses (ii) and (iii) of such subdivision (c)
         have  been  properly  stated  in  accordance  with  the  terms  of this
         Agreement;

                  (e) promptly upon receipt thereof, copies of all final reports
         submitted  to  the  Company  by  independent   public   accountants  in
         connection  with each annual,  interim or special audit of the books of
         the  Company or any  Subsidiary  made by such  accountants,  including,
         without  limitation,   the  final  comment  letter  submitted  by  such
         accountants to management in connection with their annual audit;

                  (f) promptly  upon, but in no event later than ten days after,
         their becoming available, copies of all financial statements,  reports,
         notices and proxy  statements  sent or made available  generally by the
         Company to its public  security  holders,  of all regular and  periodic
         reports and all registration  statements and prospectuses  filed by the
         Company or any  Subsidiary  with any  securities  exchange  or with the
         Securities  and  Exchange  Commission  or  any  governmental  authority
         succeeding to any of its functions, and of all press releases and other
         statements made available generally by the Company or any Subsidiary to
         the public  concerning  material  developments  in the  business of the
         Company or its Subsidiaries;

                                       15

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<PAGE>
                  (g) immediately  upon any principal  officer of the Company or
         any  other   officer  of  the  Company   involved   in  its   financial
         administration  obtaining  knowledge  of any  condition  or event which
         constitutes an Event of Default or Potential Event of Default,  or that
         the holder of any Note has given any  notice or taken any other  action
         with  respect  to a claimed  Event of  Default  or  Potential  Event of
         Default under this Agreement or that any Person has given any notice to
         the Company or any Subsidiary or taken any other action with respect to
         a claimed  default or event or  condition  of the type  referred  to in
         section  11(f),  an Officers'  Certificate  describing the same and the
         period of existence  thereof and what action the Company has taken,  is
         taking and proposes to take with respect thereto;

                  (h) immediately  upon any principal  officer of the Company or
         any  other   officer  of  the  Company   involved   in  its   financial
         administration  obtaining  knowledge  of  the  occurrence  of  any  (i)
         "reportable  event",  as such term is defined in section 4043 of ERISA,
         or (ii)  "prohibited  transaction",  as such term is defined in section
         4975 of the Code,  in  connection  with any Plan or any  trust  created
         thereunder, a written notice specifying the nature thereof, what action
         the Company  has taken,  is taking and  proposes  to take with  respect
         thereto,  and,  when  known,  any  action  taken or  threatened  by the
         Internal  Revenue  Service or the PBGC with respect  thereto,  provided
         that,  with respect to the occurrence of any  "reportable  event" as to
         which  the PBGC has  waived  the  30-day  reporting  requirement,  such
         written  notice  need be given only at the time  notice is given to the
         PBGC; and

                  (i) with reasonable  promptness,  such other financial reports
         and  information  and data with  respect  to the  Company or any of its
         Subsidiaries as from time to time may be reasonably requested.

                  7.2. RULE 144A.  The Company agrees that, if at any time it is
not subject  either to Section 13 or to Section  15(d) of the  Exchange  Act, it
will furnish to any holder of Notes or Warrants or to a prospective purchaser of
any Note or Warrant designated by such a holder, upon the request of such holder
or such prospective  purchaser,  on or prior to the date such Note or Warrant is
to  be  sold  to  such  prospective  purchaser,  subject  to  a  confidentiality
undertaking by such  prospective  purchaser,  the following  information  (which
shall be reasonably current in relation

                                       16

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<PAGE>
to the date of such sale under this  paragraph):  a very brief  statement of the
nature of the  business of the Company and the  products and services it offers;
and the Company's most recent audited consolidated balance sheets and profit and
loss and retained earnings statement,  and similar financial  statements for the
two preceding fiscal years.

                  8. INSPECTION;  CONFIDENTIALITY.  8.1. Inspection. The Company
will permit any  authorized  representatives  designated  by you, so long as you
shall be entitled to purchase  Notes under this Agreement or you or your nominee
shall be the holder of any Notes,  or by any other  institutional  holder of any
Notes,  without  expense  to  the  Company,  to  visit  and  inspect  any of the
properties  of the Company or any of its  Subsidiaries,  including its and their
books of account, and to make copies and take extracts therefrom, and to discuss
its and their  affairs,  finances and accounts  with its and their  officers and
independent public accountants, all at such reasonable times and as often as may
be reasonably requested.

                  8.2.  CONFIDENTIALITY.  You agree  that you will not  disclose
without the prior consent of the Company (other than to your employees, auditors
or counsel or to another  holder of the Notes) any  information  with respect to
the Company or any Subsidiary  which is furnished  pursuant to section 7 or this
section  8 and  which  is  designated  by  the  Company  to you  in  writing  as
confidential,  provided  that you may disclose any such  information  (a) as has
become generally  available to the public, (b) as may be required or appropriate
in any report,  statement or  testimony  submitted  to any  municipal,  state or
Federal  regulatory body having or claiming to have  jurisdiction over you or to
the National Association of Insurance  Commissioners or similar organizations or
their  successors,  (c) as may be  required  or  appropriate  in response to any
summons or subpoena or in connection with any litigation, (d) to the extent that
you believe it appropriate  in order to protect your  investment in the Notes or
in order to comply with any law, order,  regulation or ruling  applicable to you
or (e)  to the  prospective  transferee  in  connection  with  any  contemplated
transfer of any of the Notes by you.

                  9. Prepayment of Notes. 9.1. Required Prepayments. On June 30,
2000 and on each June 30 thereafter to and including  June 30, 2003, the Company
will prepay  $3,000,000  principal  amount (or such lesser  principal  amount as
shall then be outstanding) of the Notes, at the principal amount of the Notes so
prepaid, without premium, provided
                                       17

                                      173
<PAGE>
that,  upon any partial  prepayment of the Notes pursuant to section 9.2, 9.3 or
9.4 or any  prepayment  pursuant to section 9.3 or 9.4 of the Notes held by some
but not all holders,  the principal  amount of each  required  prepayment of the
Notes  becoming  due  under  this  section  9.1 on and  after  the  date of such
prepayment  under  section 9.2, 9.3 or 9.4, as the case may be, shall be reduced
in the same proportion as the aggregate  unpaid principal amount of the Notes is
reduced as a result of such prepayment under section 9.2, 9.3 or 9.4.

                  9.2.  OPTIONAL  PREPAYMENTS WITH PREMIUM.  The Company may, at
its option,  upon notice as  provided in section  9.6,  prepay at any time after
June 30,  1997 all,  or from time to time after such date any part (an  integral
multiple of $1,000)  of, the Notes at the  principal  amount so prepaid,  plus a
premium (a percentage of such principal  amount)  applicable in accordance  with
the premium table set forth in section 9.5,  depending upon the 12-month  period
in which the date fixed for such prepayment occurs.

                  9.3.  CONTINGENT  PREPAYMENTS  UPON CHANGE OF CONTROL.  In the
event of the  occurrence  of a Change of Control,  then the  Company  shall give
prompt written notice  thereof to each holder of the Notes,  by registered  mail
(and shall  confirm  such notice by prompt  telephonic  advice to an  investment
officer of each such holder), which notice shall contain a written,  irrevocable
offer by the Company to prepay,  on a date  specified in such notice (which date
shall be not less than 30 days and not more than 60 days  after the date of such
notice),  the Notes  held by such  holder  in full  (and not in part).  Upon the
acceptance  of such offer by such holder  mailed to the Company at least 10 days
prior  to the  date  of  prepayment  specified  in  the  Company's  offer,  such
prepayment shall be made at the principal amount of the Notes so prepaid, plus a
premium (a percentage of such principal  amount)  applicable in accordance  with
the premium table set forth in section 9.5,  depending upon the 12-month  period
in which the date fixed for such prepayment  occurs. Any offer by the Company to
prepay  the  Notes  pursuant  to this  section  9.3 shall be  accompanied  by an
Officers'  Certificate  certifying  that the conditions of this section 9.3 have
been fulfilled and specifying the particulars of such fulfillment. If the holder
of any Notes shall accept such offer,  the principal  amount of such Notes shall
become due and payable on the date  specified  in such offer.  In the event that
there shall have been a partial  prepayment of the Notes under this section 9.3,
the Company shall promptly give notice to the holders of the Notes,  accompanied
by an
                                       18

                                      174
<PAGE>
Officers'  Certificate  setting forth the principal  amount of each of the Notes
that was prepaid and specifying how each such amount was determined, and if some
but not all of the Notes were prepaid,  setting forth the reduced amount of each
required  prepayment  thereafter  becoming  due with  respect to the Notes under
section 9.1 and  certifying  that such reduction has been computed in accordance
with section 9.1.

                  9.4. CONTINGENT PREPAYMENT UPON SALE OF CERTAIN ASSETS. In the
event that at any time there  shall be Excess  Sale  Proceeds,  then the Company
shall  give  prompt  written  notice  thereof to each  holder of the  Notes,  by
registered mail (and shall confirm such notice by prompt telephonic advice to an
investment  officer of each such holder),  which notice shall contain a written,
irrevocable  offer by the Company to prepay,  on a date specified in such notice
(which  date  shall be not less than 30 days and not more than 60 days after the
date of such notice),  the Notes in an aggregate  principal  amount equal to the
amount of Excess Sale Proceeds. Upon the acceptance of such offer by such holder
mailed to the Company at least 10 days prior to the date of prepayment specified
in the Company's offer, such prepayment shall be made at the principal amount of
the Notes so prepaid,  plus a premium (a  percentage of such  principal  amount)
applicable  in  accordance  with the  premium  table set forth in  section  9.5,
depending upon the 12-month  period in which the date fixed for such  prepayment
occurs.  Any offer by the Company to prepay the Notes  pursuant to this  section
9.4  shall  be  accompanied  by an  Officers'  Certificate  certifying  that the
conditions  of  this  section  9.4  have  been   fulfilled  and  specifying  the
particulars  of such  fulfillment.  If the holder of any Notes shall accept such
offer,  the  principal  amount of such Notes to be prepaid  shall become due and
payable on the date specified in such offer.  In the event that there shall have
been a partial prepayment of the Notes under this section 9.4, the Company shall
promptly  give notice to the holders of the Notes,  accompanied  by an Officers'
Certificate  setting  forth the  principal  amount of each of the Notes that was
prepaid and specifying how each such amount was determined,  and if some but not
all of the Notes were prepaid, setting forth the reduced amount of each required
prepayment  thereafter  becoming due with respect to the Notes under section 9.1
and certifying  that such reduction has been computed in accordance with section
9.1.

                  9.5.  MASTER PREMIUM TABLE.  For the purposes of sections 9.2,
9.3, 9.4 and 13, whenever a premium is required to be paid upon  prepayment,  or
acceleration as
                                       19

                                      175
<PAGE>
provided in Section 13, of any Note, the applicable  premium shall be determined
in accordance with the following  table,  depending upon the period in which the
date fixed for such prepayment or acceleration occurs:
<TABLE>
<CAPTION>

          12-Month Period
        Commencing June 30,                 Premium
        -------------------                 -------
<S>            <C>                           <C>
               1994                          12.00%
               1995                          10.50%
               1996                           9.00%
               1997                           7.50%
               1998                           6.00%
               1999                           4.50%
               2000                           3.00%
               2001                           1.50%
               2002                           0.00%
               2003                           0.00%

</TABLE>

                  9.6. NOTICE OF OPTIONAL  PREPAYMENTS;  OFFICERS'  CERTIFICATE.
The Company will give each holder of any Notes  written  notice of each optional
prepayment  under  section  9.2 not less  than 30 days and not more than 60 days
prior to the date fixed for such prepayment,  in each case specifying such date,
the aggregate principal amount of the Notes to be prepaid,  the principal amount
of each  Note  held by such  holder  to be  prepaid,  and the  premium,  if any,
applicable to such prepayment.  Such notice shall be accompanied by an Officers'
Certificate  certifying  that the conditions of such section have been fulfilled
and specifying the particulars of such fulfillment.

                  9.7.  ALLOCATION OF PARTIAL  PREPAYMENTs.  In the case of each
partial  prepayment  paid or to be  prepaid  (except a  prepayment  pursuant  to
section 9.3 or 9.4 of the Notes held by some but not all holders), the principal
amount of the Notes to be prepaid shall be allocated  (in integral  multiples of
$1,000) among all of the Notes at the time outstanding in proportion,  as nearly
as  practicable,   to  the  respective  unpaid  principal  amounts  thereof  not
theretofore called for prepayment,  with adjustments, to the extent practicable,
to compensate for any prior prepayments not made exactly in such proportion.

                  9.8. MATURITY; SURRENDER, ETC. In the case of each prepayment,
the principal  amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such

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principal amount accrued to such date and the applicable  premium,  if any. From
and after such date,  unless the Company shall fail to pay such principal amount
when so due and payable,  together  with the  interest  and premium,  if any, as
aforesaid,  interest on such  principal  amount shall cease to accrue.  Any Note
paid or prepaid in full shall be  surrendered  to the Company and  cancelled and
shall  not be  reissued,  and no Note  shall be  issued  in lieu of any  prepaid
principal amount of any Note.

                  9.9.  ACQUISITION OF NOTES. The Company will not, and will not
permit any Subsidiary or Affiliate to, purchase, redeem or otherwise acquire any
Note except upon the payment or prepayment  thereof in accordance with the terms
of this Agreement and such Note.

                  10. BUSINESS AND FINANCIAL  COVENANTS.  The Company  covenants
that from the date of this Agreement  through the Closing and thereafter so long
as any of the Notes are outstanding:

                  10.1.  DEBT.  The  Company  will not,  and will not permit any
Subsidiary to, directly or indirectly,  create,  incur,  assume,  guarantee,  or
otherwise  become or remain  directly or indirectly  liable with respect to, any
Debt, except that:

                  (a)  the Company may become and remain liable with
         respect to the Debt evidenced by the Notes;

                  (b)  the  Company  may  remain  liable  with  respect  to Debt
         outstanding on the date of this Agreement and referred to in Exhibit D,
         but may not  extend,  renew or refund any thereof  except as  otherwise
         permitted by this section 10.1; and

                  (c) the Company may become and remain  liable with  respect to
         Debt  in  addition  to  that  otherwise   permitted  by  the  foregoing
         provisions of this section 10.1, provided that:

                           (i) on the  date  the  Company  becomes  liable  with
                  respect  to any such  additional  Debt and  immediately  after
                  giving effect thereto and to the concurrent  retirement of any
                  other  Debt,  total  Debt of the  Company  shall not exceed an
                  amount equal to sixty times Monthly Operating Cash Flow; and

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                           (ii) in the case of any such  additional Debt that is
                  subordinate  and  junior in right of payment to any other Debt
                  of the  Company,  such Debt  shall be  Permitted  Subordinated
                  Debt.

For the  purposes  of this  section  10.1,  any Person  extending,  renewing  or
refunding  any Debt  shall be deemed to have  incurred  such Debt at the time of
such  extension,  renewal or refunding.  The Company shall not permit any Person
having  outstanding Debt to become a Subsidiary of the Company after the date of
this Agreement unless the Company shall concurrently have assumed such Debt (and
caused such Person to be discharged  therefrom) in compliance  with this section
10.1.

                  10.2.  LIENS,  ETC.  The Company will not, and will not permit
any Subsidiary to,  directly or indirectly  create,  incur,  assume or permit to
exist  any Lien on or with  respect  to any  property  or asset  (including  any
document  or  instrument  in respect  of goods or  accounts  receivable)  of the
Company or any Subsidiary,  whether now owned or held or hereafter acquired,  or
any income or profits therefrom, except:

                  (a) Liens for taxes, assessments or other governmental charges
         the payment of which is not at the time required by section 10.9;

                  (b)  statutory  Liens of  landlords  and  Liens  of  carriers,
         warehousemen, mechanics and materialmen incurred in the ordinary course
         of business  for sums not yet due or the payment of which is not at the
         time required by section 10.9;

                  (c) Liens (other than any Lien imposed by ERISA or the Code in
         connection  with a Plan)  incurred  or  deposits  made in the  ordinary
         course  of  business  (i) in  connection  with  workers'  compensation,
         unemployment  insurance and other types of social security,  or (ii) to
         secure (or to obtain letters of credit that secure) the  performance of
         tenders, statutory obligations,  surety and appeal bonds, bids, leases,
         performance bonds, purchase,  construction or sales contracts and other
         similar  obligations,  in each case not incurred or made in  connection
         with the borrowing of money, the obtaining of advances or credit or the
         payment of the deferred purchase price of property;

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                  (d) any  attachment or judgment  Lien,  unless the judgment it
         secures shall not,  within 60 days after the entry  thereof,  have been
         discharged or execution  thereof  stayed pending  appeal,  or shall not
         have been  discharged  within 60 days after the  expiration of any such
         stay;

                  (e)  leases  or  subleases   granted  to  others,   easements,
         rights-of-way,  restrictions and other similar charges or encumbrances,
         in each case  incidental  to, and not  interfering  with,  the ordinary
         conduct of the business of the Company or any Subsidiary; and

                  (f) Liens incurred to secure the Debt (other than subordinated
         Debt) of the Company  outstanding in compliance with section 10.1(b) or
         (c).

For the purposes of this section 10.2,  any Person  becoming a Subsidiary  after
the date of this  Agreement  shall be  deemed to have  incurred  all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person extending,
renewing  or  refunding  any Debt  secured  by any Lien  shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.

          10.3.  INVESTMENTS, GUARANTIES, ETC.  The Company
will not, and will not permit any Subsidiary to, directly or
indirectly (a) make or own any Investment in any Person, or
(b) create or become or be liable with respect to any
Guaranty, except:

                  (i)  the Company and its Subsidiaries may make and
         own Investments in

                           (t)   marketable   direct   obligations   issued   or
                  unconditionally  guaranteed by the United States of America or
                  issued by any agency thereof maturing within one year from the
                  date of acquisition thereof,

                           (u) marketable direct obligations issued by any state
                  of the United States of America or any  political  subdivision
                  of any  such  state  or  any  public  instrumentality  thereof
                  maturing within one year from the date of acquisition  thereof
                  and having as at any date of determination  the highest rating
                  obtainable  from  either  Standard  &  Poor's  Corporation  or
                  Moody's Investors Service, Inc.,

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                           (v)  commercial  paper maturing no more than 270 days
                  from the date of creation thereof and having as at any date of
                  determination   the  highest  rating  obtainable  from  either
                  Standard & Poor's  Corporation or Moody's  Investors  Service,
                  Inc.,

                           (w)  certificates of deposit maturing within one year
                  from the date of  acquisition  thereof  issued  by  commercial
                  banks  incorporated  under  the laws of the  United  States of
                  America or any state thereof or the District of Columbia, each
                  having as at any date of  determination  combined  capital and
                  surplus of not less than $100,000,000 ("Permitted Banks") or a
                  foreign branch thereof,

                           (x)  bankers'  acceptances  eligible  for  rediscount
                  under  requirements  of The Board of  Governors of the Federal
                  Reserve System and accepted by Permitted Banks,

                           (y)  obligations of the type described in clauses (t)
                  through  (w)  above   purchased   from  a  securities   dealer
                  designated as a "primary  dealer" by the Federal  Reserve Bank
                  of New York or a Permitted Bank as counterparty  pursuant to a
                  repurchase   agreement   obligating   such   counterparty   to
                  repurchase  such  obligations not later than 14 days after the
                  purchase thereof and which provides that the obligations which
                  are the  subject  thereof  are  held  for the  benefit  of the
                  Company  and  its  Subsidiaries  by  a  custodian  which  is a
                  Permitted  Bank  and  which  is not  the  counterparty  to the
                  repurchase agreement in question, and

                           (z)  the   securities  of  any   investment   company
                  registered under the Investment Company Act of 1940 which is a
                  "money market fund" within the meaning of  regulations  of the
                  Securities and Exchange Commission, or an interest in a pooled
                  fund   maintained  by  a  Permitted  Bank  having   comparable
                  investment restrictions;

                  (ii)  the  Company  and  its  Subsidiaries  may  make  and own
         Investments  in any  Subsidiary  or  any  Person  which  simultaneously
         therewith becomes a Subsidiary,  if such Subsidiary or such Person is a
         corporation  organized under the laws of the United States or any state
         thereof or the District of Columbia or Canada and  substantially all of
         whose assets are located and

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         substantially all of whose business is conducted within
         the United States and Canada;

                  (iii)  any Wholly-Owned Subsidiary may make and
         permit to be outstanding loans and advances to the
         Company;

                  (iv) the Company may become and remain  liable with respect to
         Guaranties of the obligations of Subsidiaries  incurred in the ordinary
         course of the business of such Subsidiaries; and

                  (v) the Company and its  Subsidiaries  may, in addition to the
         Investments and Guaranties  permitted by the foregoing  subdivisions of
         this section 10.3,  make and continue to own Investments in, and become
         and remain liable with respect to Guaranties of the obligations of, any
         Person (other than a Wholly-Owned  Subsidiary or any Person which would
         simultaneously  therewith  become  a  Wholly-Owned  Subsidiary)  if the
         Company would be permitted to make such Investment or Guaranty pursuant
         to, and within the  limitations  specified  in,  section 10.4 (any such
         Investment  or Guaranty made  pursuant to this  subdivision  (vi) being
         referred to as a "Restricted Investment").

Notwithstanding  the  foregoing,  no Guaranty shall be permitted by this section
10.3 unless either the maximum dollar amount of the obligation  being guaranteed
is readily  ascertainable  by the terms of such  obligation  or the agreement or
instrument evidencing such Guaranty specifically limits the dollar amount of the
maximum exposure of the guarantor thereunder.

                  10.4. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.  (a) The
Company will not directly or indirectly  declare,  order, pay, make or set apart
any sum or property  for any  Restricted  Payment,  and the Company will not and
will  not  permit  any  Subsidiary  to  make or  become  obligated  to make  any
Restricted  Investment,  unless,  immediately  after  giving  effect to any such
proposed action:

                  (i) no  condition  or event shall exist which  constitutes  an
         Event of Default or Potential Event of Default;

                  (ii) the Company could incur at least $1 of additional Debt in
         compliance with section 10.1(c); and

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                  (iii)  the sum of (x) the  aggregate  amount  of all  sums and
         property  included in all  Restricted  Payments  directly or indirectly
         declared,  ordered,  paid,  made or set apart by the Company during the
         period after the date of the Closing to and  including the date of such
         proposed  action  plus  (y)  the  aggregate  amount  of all  Restricted
         Investments  directly  or  indirectly  made  by  the  Company  and  its
         Subsidiaries,  or which they have become obligated to make, during such
         period in any Person (but disregarding any Investment or Guaranty which
         was a  Restricted  Investment  when  made  but  which  on the  date  of
         determination  could have been made pursuant to one of the subdivisions
         of section 10.3 other than  subdivision  (vi)) shall not exceed the sum
         of:

                           (x) $1,000,000; plus

                           (y) 50% (but, in the case of a deficit, 100%)
                  of Consolidated Net Income for such period; plus

                           (z) the  aggregate  amount  of the net cash  proceeds
                  received  by the  Company  during such period from the sale of
                  its Common Stock or its  nonredeemable  preferred stock during
                  such period;

provided that any dividend  which could be paid in compliance  with this section
10.4 at the date of its declaration may continue to be paid  notwithstanding any
subsequent change.

                  (b) For the purposes of this section 10.4, the amount involved
in any Restricted Payment directly or indirectly declared,  ordered,  paid, made
or set apart in property  shall be the greater of the fair market  value of such
property  (as  determined  in good  faith by the  Board)  and the net book value
thereof on the books of the Company  (determined  in accordance  with  generally
accepted accounting principles) on the date such Restricted Payment is declared,
ordered,  paid,  made or set apart.  The Company  will not declare any  dividend
(other than a dividend  payable solely in shares of its own stock) on any shares
of any class of its stock  which is payable  more than 60 days after the date of
declaration  thereof.  The Company will not permit any  Subsidiary,  directly or
indirectly,  to declare,  order,  pay or make any  Restricted  Payment or to set
apart any sum or property for any such purpose.

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                  10.5.  MINIMUM NET WORTH.  The Company will not at
any time permit Consolidated Tangible Net Worth to be less
than $9,000,000.

                  10.6. TRANSACTIONS WITH AFFILIATES.  The Company will not, and
will not  permit  any  Subsidiary  to,  directly  or  indirectly,  engage in any
transaction  material  to the  Company  or any of its  Subsidiaries  (including,
without limitation, the purchase, sale or exchange of assets or the rendering of
any service) with any Affiliate of the Company, except in the ordinary course of
and  pursuant  to  the  reasonable   requirements   of  the  Company's  or  such
Subsidiary's  business  and upon  fair  and  reasonable  terms  that are no less
favorable  to the  Company or such  Subsidiary,  as the case may be,  than those
which might be obtained,  in the good faith judgment of the Company, in an arm's
length  transaction  at the time from Persons  which are not such an  Affiliate,
provided  that the  foregoing  restrictions  shall not apply to any  transaction
between the Company and a  Wholly-Owned  Subsidiary or between one Wholly- Owned
Subsidiary and another Wholly-Owned Subsidiary.

                  10.7.  CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly,

                  (a) consolidate  with or merge into any other Person or permit
         any other Person to consolidate with or merge into it, except that:

                           (i) any Subsidiary may consolidate with or merge into
                  the  Company or a  Wholly-Owned  Subsidiary  if the Company or
                  such Wholly-Owned Subsidiary, as the case may be, shall be the
                  surviving  corporation and if, immediately after giving effect
                  to such  transaction,  no condition or event shall exist which
                  constitutes an Event of Default or Potential Event of Default;

                           (ii) any  corporation  (other than a Subsidiary)  may
                  consolidate  with or merge  into the  Company  if the  Company
                  shall be the surviving  corporation and if,  immediately after
                  giving effect to such  transaction,  (x) no condition or event
                  shall exist which constitutes an Event of Default or Potential
                  Event of Default,  (y)  substantially all of the assets of the
                  Company shall be located and substantially all of its business
                  shall be conducted within the United

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                  States and Canada, and (z) the Company could incur at least $1
                  of additional Debt in compliance with section 10.1(c); and

                           (iii) the Company may consolidate  with or merge into
                  any other  corporation  if (w) the surviving  corporation is a
                  corporation  organized  and  existing  under  the  laws of the
                  United  States of America or a state  thereof or Canada,  with
                  substantially  all of its assets located and substantially all
                  of its business conducted within the United States and Canada,
                  (x)  such  corporation  expressly  assumes,  by  an  agreement
                  satisfactory in substance and form to the holders of more than
                  50% of the Notes outstanding  (subject to section 15.4) (which
                  agreement  may require the  delivery in  connection  with such
                  assumption  of such  opinions  of counsel as such  holders may
                  reasonably require), the obligations of the Company under this
                  Agreement and under the Notes,  (y)  immediately  after giving
                  effect  to such  transaction,  such  corporation  shall not be
                  liable  with  respect to any Debt or allow its  property to be
                  subject  to any Lien  which it could not  become  liable  with
                  respect to or allow its  property  to become  subject to under
                  this  Agreement  on the  date  of  such  transaction,  and (z)
                  immediately  after giving effect to such transaction (and such
                  assumption),  such  corporation  could  incur  at  least $1 of
                  additional  Debt in  compliance  with  section  10.1(c) and no
                  condition or event shall exist which  constitutes  an Event of
                  Default or a Potential Event of Default; or

                  (b)  sell,  lease,  abandon  or  otherwise  dispose  of all or
          substantially all its assets, except that:



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                           (i) any  Subsidiary  may  sell,  lease  or  otherwise
                  dispose of all or substantially  all its assets to the Company
                  or a Wholly-Owned Subsidiary;

                           (ii) the Company may sell, lease or otherwise dispose
                  of all or substantially all its assets to any corporation into
                  which  the  Company  could  be   consolidated   or  merged  in
                  compliance  with  subdivision  (a)(iii) of this section  10.7,
                  provided  that (x) each of the  conditions  set  forth in such
                  subdivision (a)(iii) shall have been

                  fulfilled,  and  (y) no such  disposition  shall  relieve  the
                  Company  from its  obligations  under  this  Agreement  or the
                  Notes; or

                  (c) sell,  lease,  abandon or otherwise  dispose of any of its
         assets  (except in the ordinary  course of business or in a transaction
         permitted by subdivision (b)(ii) of this section 10.7), except that the
         Company or its Subsidiaries

                           (A) may sell  obsolete  equipment and other assets in
                  an aggregate amount not to exceed $100,000 in any fiscal year,
                  and

                           (B) in addition to the asset sales  permitted  by the
                  foregoing   paragraph   (A)  may  sell   assets   for  a  cash
                  consideration  at least  equal to the fair value  thereof  (as
                  determined  in good  faith by the  Board)  at the time of such
                  sale, if the proceeds  thereof shall, on or prior to the 180th
                  day following such sale, be applied either

                                    (x) to the  acquisition  of like  assets  or
                           other assets useful in the  businesses of the Company
                           or such Subsidiary; or

                                    (y)  to  the   prepayment  of  Debt  of  the


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                           Company,  first to  senior  Debt of the  Company  and
                           second to the  Notes in the  manner  contemplated  by
                           section  9.4;

                  it being  agreed that if the  Company  shall not prior to such
                  180th day have performed or given notice to the holders of the
                  Notes of its  election to perform  under one of the  foregoing
                  clauses  (x) or (y),  it shall be  deemed to have  elected  to
                  perform the obligation set forth in the foregoing  clause (y),
                  and the provisions of section 9.4 shall be applicable.

                  10.8. CORPORATE EXISTENCE, ETC.; BUSINESS. The Company will at
all times  preserve and keep in full force and effect its  corporate  existence,
and rights and franchises deemed material to its business,  and those of each of
its Subsidiaries, except as otherwise specifically permitted by section 10.7 and
except that the corporate  existence of any  Subsidiary may be terminated if, in
the good faith judgment of the Board,  such  termination is in the best interest
of the Company and is not disadvantageous to

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the  holders  of the  Notes.  The  Company  will not,  and will not  permit  any
Subsidiary  to,  engage in any business  other than the  business of  delivering
electronic  information  services and other activities  incidental or related to
such business.

                  10.9.  PAYMENT OF TAXES AND CLAIMS. The Company will, and will
cause each  Subsidiary  to, pay all taxes,  assessments  and other  governmental
charges  imposed upon it or any of its properties or assets or in respect of any
of its  franchises,  business,  income or profits before any penalty or interest
accrues  thereon,  and all claims  (including,  without  limitation,  claims for
labor,  services,  materials  and  supplies)  for sums which have become due and
payable and which by law have or might become a Lien upon any of its  properties
or assets, PROVIDED that no such charge or claim need be paid if being contested
in good faith by  appropriate  proceedings  promptly  initiated  and  diligently
conducted and if such reserves or other appropriate provision,  if any, as shall
be required by generally  accepted  accounting  principles  shall have been made
therefor.

                  10.10.  COMPLIANCE WITH ERISA.  The Company will
not, and will not permit any Subsidiary to,

                  (a) engage in any  transaction  in  connection  with which the
         Company or any  Subsidiary  could be subject to either a civil  penalty
         assessed  pursuant  to  section  502(i)  of ERISA or a tax  imposed  by
         section 4975 of the Code,  terminate  or withdraw  from any Plan (other
         than a Multiemployer  Plan) in a manner,  or take any other action with
         respect to any such Plan (including,  without limitation, a substantial
         cessation  of  operations  within the  meaning  of  section  4062(f) of
         ERISA),  which  could  result in any  liability  of the  Company or any
         Subsidiary  to the PBGC,  to a trust  established  pursuant  to section
         4041(c)(3)(B)(ii)  or  (iii)  or  4042(i)  of  ERISA,  or to a  trustee
         appointed under section 4042(b) or (c) of ERISA, incur any liability to
         the PBGC on account of a  termination  of a Plan under  section 4064 of
         ERISA,  fail to make full payment when due of all amounts which,  under
         the  provisions of any Plan,  the Company or any Subsidiary is required
         to pay as  contributions  thereto,  or permit to exist any  accumulated
         funding  deficiency,  whether or not waived,  with  respect to any Plan
         (other than a Multiemployer  Plan),  if, in any such case, such penalty
         or tax or such liability, or the failure to make such

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          payment,  or the  existence  of such  deficiency,  as the case may be,
          could  have a  material  adverse  effect on the  Company or any of its
          Subsidiaries;

                  (b) permit the present  value of all vested  accrued  benefits
         under  all  Plans  maintained  at  such  time  by the  Company  and any
         Subsidiary (other than  Multiemployer  Plans) guaranteed under Title IV
         of ERISA to  exceed  the  current  value of the  assets  of such  Plans
         allocable to such vested accrued benefits by more than $1,000,000;

                  (c)  permit  the  aggregate  complete  or  partial  withdrawal
         liability under Title IV of ERISA with respect to  Multiemployer  Plans
         incurred by the Company and its Subsidiaries to exceed $1,000,000; or

                  (d)  permit  the sum of (i) the  amount by which  the  current
         value of all vested accrued benefits  referred to in subdivision (b) of
         this section 10.10 exceeds the current value of the assets  referred to
         in such  subdivision (b) and (ii) the amount of the aggregate  incurred
         withdrawal  liability  referred to in  subdivision  (c) of this section
         10.10 to exceed $1,000,000.

For the purposes of subdivisions  (c) and (d) of this section 10.10,  the amount
of the  withdrawal  liability  of the Company and its  Subsidiaries  at any date
shall be the aggregate present value of the amount claimed to have been incurred
less any portion  thereof as to which the  Company  reasonably  believes,  after
appropriate  consideration of possible  adjustments  arising under sections 4219
and 4221 of ERISA, it and its Subsidiaries will have no liability, provided that
the Company  shall  obtain  prompt  written  advice from  independent  actuarial
consultants  supporting such determination.  The Company agrees (i) once in each
calendar year to request and obtain a current statement of withdrawal  liability
from each  Multiemployer  Plan and (ii) to transmit a copy of such  statement to
you,  so long as you or your  nominee  shall be the holder of any Notes,  and to
each other  institutional  holder of any Notes, within 15 days after the Company
receives the same. As used in this section 10.10, the term "accumulated  funding
deficiency" has the meaning specified in section 302 of ERISA and section 412 of
the Code, and the terms "present value",  "current value" and "accrued  benefit"
have the meanings specified in section 3 of ERISA.

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                  10.11. MAINTENANCE OF PROPERTIES;  INSURANCE. The Company will
maintain or cause to be maintained  in good repair,  working order and condition
all  properties  used  or  useful  in  the  business  of  the  Company  and  its
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs,  renewals and replacements  thereof. The Company will maintain or cause
to be maintained, with financially sound and reputable insurers,  insurance with
respect to its  properties  and business and the  properties and business of its
Subsidiaries  against loss or damage of the kinds customarily insured against by
corporations of established  reputation  engaged in the same or similar business
and  similarly  situated,  of such types and in such amounts as are  customarily
carried under similar  circumstances by such other corporations.  Such insurance
may be subject to  co-insurance,  deductibility  or similar  clauses  which,  in
effect,  result  in  self-insurance  of  certain  losses,   PROVIDED  that  such
self-insurance  is  in  accord  with  the  approved  practices  of  corporations
similarly  situated and adequate insurance reserves are maintained in connection
with such self-insurance.

                  10.12.  Senior  Loan  Agreements.  The Company  will  promptly
deliver to each  holder of the Notes a copy of each  amendment  to the Bank Loan
Agreement  and each  agreement or  instrument  evidencing  any other Debt of the
Company entered into after the date of the Closing.

                  11.  Events of Default; Acceleration.  If any of
the following conditions or events ("Events of Default")
shall occur and be continuing:

                  (a)  if the  Company  shall  default  in  the  payment  of any
         principal of or premium,  if any, on any Note when the same becomes due
         and payable,  whether at maturity or at a date fixed for  prepayment or
         by declaration or otherwise; or

                  (b)  if the  Company  shall  default  in  the  payment  of any
         interest  on any Note for more than 15 days after the same  becomes due
         and payable; or

                  (c) if the  Company  shall  default in the  performance  of or
         compliance  with section 10.1 through 10.7,  inclusive and such default
         shall not have been  remedied  within 15 days after such failure  shall
         first have become known to any officer of the Company or written notice
         thereof  shall have been received by the Company from any holder of any
         Note; or
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<PAGE>
                  (d) if the  Company  shall  default in the  performance  of or
         compliance  with any term contained in this Agreement  other than those
         referred to above in this  section 11 and such  default  shall not have
         been remedied within 30 days after such failure shall first have become
         known to any officer of the  Company or written  notice  thereof  shall
         have been received by the Company from any holder of any Note; or

                  (e) if any representation or warranty made in writing by or on
         behalf of the Company in this Agreement or in any instrument  furnished
         in  compliance  with or in reference to this  Agreement or otherwise in
         connection with the  transactions  contemplated by this Agreement shall
         prove to have been false or incorrect  in any  material  respect on the
         date as of which made; or

                  (f) if the  Company  or any  Subsidiary  shall  default in the
         payment of any principal of or premium or interest on any Debt which is
         outstanding under the Bank Loan Agreement,  or if any event shall occur
         or  condition  shall exist in respect of the Bank Loan  Agreement,  the
         effect  of  which   default,   event  or  condition  is  to  cause  the
         acceleration  of the payment of such Debt before its stated maturity or
         before its regularly scheduled dates of payment; or

                  (g) if  the  Company  or  any  Subsidiary  shall  default  (as
         principal or guarantor or other surety) in the payment of any principal
         of or  premium  or  interest  on any  Debt  which is  outstanding  in a
         principal  amount of at least  $1,000,000  (other than the Notes or the
         Bank Loan  Agreement),  or if any event shall occur or condition  shall
         exist in respect of any such Debt which is  outstanding  in a principal
         amount of at least $1,000,000 or under any evidence of any such Debt or
         of any mortgage,  indenture or other agreement  relating  thereto,  the
         effect of which default,  event or condition is to cause,  or to permit
         the holders of such Debt to cause,  the  acceleration of the payment of
         such Debt before its stated maturity or before its regularly  scheduled
         dates of payment; or

                  (h) if a final judgment or judgments shall be rendered against
         the  Company or any  Subsidiary  for the  payment of money in excess of
         $1,000,000 in the aggregate and any one of such judgments shall not be

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<PAGE>
         discharged or execution  thereon stayed pending appeal,  within 60 days
         after entry  thereof,  or, in the event of such a stay,  such  judgment
         shall not be discharged within 60 days after such stay expires; or

                  (i) if the Company or any  Subsidiary  shall (i) be  generally
         not  paying its debts as they  become  due,  (ii)  file,  or consent by
         answer or otherwise to the filing  against it of, a petition for relief
         or  reorganization  or arrangement or any other petition in bankruptcy,
         for  liquidation  or to take  advantage of any bankruptcy or insolvency
         law of any  jurisdiction,  (iii) make an assignment  for the benefit of
         its  creditors,  (iv)  consent  to  the  appointment  of  a  custodian,
         receiver,  trustee or other officer with similar powers with respect to
         it or with  respect to any  substantial  part of its  property,  (v) be
         adjudicated  insolvent or (vi) take corporate action for the purpose of
         any of the foregoing; or

                  (j)  if  a  court  or  governmental   authority  of  competent
         jurisdiction  shall enter an order  appointing,  without consent by the
         Company or any  Subsidiary,  a  custodian,  receiver,  trustee or other
         officer with  similar  powers with respect to it or with respect to any
         substantial  part of its  property,  or if an order for relief shall be
         entered in any case or proceeding for liquidation or  reorganization or
         otherwise to take  advantage of any bankruptcy or insolvency law of any
         jurisdiction, or ordering the dissolution, winding-up or liquidation of
         the Company or any  Subsidiary,  or if any petition for any such relief
         shall be filed  against the Company or a Subsidiary  and such  petition
         shall not be dismissed within 30 days;


then, (x) upon the  occurrence of any Event of Default  described in subdivision
(i) or (j) of this  section 11 with  respect to the Company  (other than such an
Event of Default  described  in clause (i) of  subdivision  (i) or  described in
clause (vi) of subdivision (i) by virtue of the reference in such clause (vi) to
such clause (i)),  the unpaid  principal  amount of and accrued  interest on the
Notes shall  automatically  become due and payable or (y) upon the occurrence of
any other  Event of Default,  any holder or holders of 25% or more in  principal
amount of the Notes at the time outstanding (subject to section 15.4) may at any
time (unless all defaults shall  theretofore have been remedied) at its or their
option, by written notice or

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<PAGE>
notices to the Company,  declare all the Notes to be due and payable,  whereupon
the same  shall  forthwith  mature and become  due and  payable,  together  with
interest accrued thereon, and there shall also be due and payable, to the extent
permitted by applicable law, a premium determined in accordance with the premium
table set forth in section  9.5,  all without  presentment,  demand,  protest or
notice, which are hereby waived,  provided that during the existence of an Event
of  Default  described  in  subdivision  (a) or (b) of this  section  11,  then,
irrespective of whether the holder or holders of 25% or more in principal amount
of Notes  then  outstanding  shall  have  declared  all the  Notes to be due and
payable  pursuant to this  section  11, any holder of the Notes  (other than the
Company or any of its Subsidiaries or Affiliates) may, at its option,  by notice
in writing to the Company,  declare the Notes then held by such holder to be due
and payable, whereupon the Notes then held by such holder shall forthwith mature
and become due and payable,  together with interest  accrued thereon and, to the
extent permitted by applicable law, a premium  determined in accordance with the
premium table set forth in section 9.5, without presentment,  demand, protest or
notice, all of which are hereby waived.

                  At any time after the principal  of, and interest  accrued on,
any or all of the Notes are declared  due and  payable,  the holders of not less
than 75% in aggregate principal amount of the Notes then outstanding (subject to
section  15.4),  by written notice to the Company may rescind and annul any such
declaration  and its  consequences  if (x) the  Company  has  paid  all  overdue
interest on the Notes, the principal of and premium,  if any, on any Notes which
have become due otherwise  than by reason of such  declaration,  and interest on
such overdue  principal  and premium and (to the extent  permitted by applicable
law) any  overdue  interest  in  respect  of the Notes at the rate of 13.25% per
annum,  (y) all Events of Default,  other than non-payment of amounts which have
become due solely by reason of such  declaration,  and all conditions and events
which  constitute  Events of Default or  Potential  Events of Default  have been
cured or waived  pursuant  to section 19, and (z) no judgment or decree has been
entered  for the  payment  of any  monies  due  pursuant  to the  Notes  or this
Agreement;  but no such  rescission and annulment  shall extend to or affect any
subsequent  Event of Default or  Potential  Event of Default or impair any right
consequent thereon.

                  12.  Remedies on Default, etc.  In case any one or
more Events of Default or Potential Events of Default shall

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<PAGE>
occur and be  continuing,  the  holder of any Note at the time  outstanding  may
proceed to protect  and  enforce  the rights of such holder by an action at law,
suit in  equity  or  other  appropriate  proceeding,  whether  for the  specific
performance  of any  agreement  contained  herein  or in  such  Note,  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power  granted  hereby or thereby or by law or otherwise.
In case of a default in the payment of any  principal of or premium,  if any, or
interest on any Note,  the Company  will pay to the holder  thereof such further
amount as shall be  sufficient  to cover the cost and  expenses  of  collection,
including,   without  limitation,   reasonable  attorneys'  fees,  expenses  and
disbursements.  No course of  dealing  and no delay on the part of any holder of
any Note in  exercising  any right,  power or remedy  shall  operate as a waiver
thereof or otherwise  prejudice  such holder's  rights,  powers or remedies.  No
right,  power or  remedy  conferred  by this  Agreement  or by any Note upon any
holder thereof shall be exclusive of any other right,  power or remedy  referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise.

                  13.  SUBORDINATION OF SUBORDINATED NOTES. 13.1.  GENERAL.  The
Notes (the  "Subordinated  Debt")  shall be  subordinate  and junior in right of
payment to all Superior  Debt (as defined in section  13.2) to the extent and in
the manner provided in this section 13.

                  13.2.  SUPERIOR  DEBT.  As used in this  section  13, the term
"Superior  Debt"  shall  mean (a) all  principal  of and  premium,  if any,  and
interest  on Debt of the  Company  outstanding  from time to time under the Bank
Loan Agreement and (b) other Debt of the Company  outstanding in compliance with
section  10.1(c) other than (i) Debt which by its terms is  subordinated  to any
other Debt of the Company and (ii) Debt outstanding  between the Company and any
Affiliate of the Company or between any  Subsidiary  and another  Subsidiary  or
Affiliate of the Company).  The Superior Debt shall continue to be Superior Debt
and entitled to the benefits of these subordination  provisions  irrespective of
any  amendment,  modification  or  waiver  of any term of the  Superior  Debt or
extension or renewal of the Superior Debt.

                  13.3.  DEFAULT IN RESPECT OF SUPERIOR  DEBT.  (a) In the event
the Company shall  default in the payment of any  principal  of, or premium,  if
any, or interest on any  Superior  Debt when the same  becomes due and  payable,
whether at maturity or at a date fixed for payment or prepayment

                                       36

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<PAGE>
thereof or by  declaration  or  otherwise,  then,  unless and until such default
shall have been remedied or waived in writing or shall have ceased to exist,  no
direct or indirect  payment (in cash,  property or  securities  or by set-off or
otherwise,  except  securities  which  are  subordinate  and  junior in right of
payment to the payment of Superior Debt at least to the extent  provided in this
section 13) shall be made on account of the principal of, or premium, if any, or
interest on any Subordinated  Debt, or as a sinking fund for Subordinated  Debt,
or in respect of any redemption,  retirement,  purchase or other  acquisition of
any Subordinated Debt.

                  (b) Upon the  happening of an event of default with respect to
any Superior Debt, as defined therein or in the instrument  under which the same
is  outstanding,  permitting  the holders  thereof to  accelerate  the  maturity
thereof (other than under  circumstances  when the terms of section  13.3(a) are
applicable),  then,  unless  and until  such  event of  default  shall have been
remedied  or waived  in  writing  or shall  have  ceased to exist,  no direct or
indirect  payment (in cash,  property or  securities or by set-off or otherwise,
except  securities  which are  subordinate and junior in right of payment to the
payment of Superior  Debt at least to the extent  provided  in this  section 13)
shall be made on account of the principal of or premium,  if any, or interest on
any  Subordinated  Debt or as a sinking fund for the  Subordinated  Debt,  or in
respect of any  redemption,  retirement,  purchase or other  acquisition  of any
Subordinated Debt, during any period:

                           (i) of up to 180 days (a  "Suspension  Period") after
                  written  notice of such  default  specifying  an  election  to
                  effect such 180-day  prohibition  shall have been given to the
                  Company (and the Company  shall  forward a copy to each holder
                  of  Subordinated  Debt)  by  the  holders  of  a  majority  in
                  principal  amount  of the  Superior  Debt,  provided  that (x)
                  following  the  commencement  of any  Suspension  Period  as a
                  result of any such  default the  duration  of such  Suspension
                  Period shall not be extended as a result of the  occurrence of
                  any additional or subsequent default,  (y) a Suspension Period
                  shall  terminate  upon  the  earlier  to  occur of (A) cure or
                  waiver of the event of default giving rise to such  Suspension
                  Period and (B) the expiration of such Suspension  Period,  and
                  (z) following the termination of any Suspension Period as

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<PAGE>
                  contemplated  by the foregoing  clause (y), no new  Suspension
                  Period may be commenced  until at least ninety days shall have
                  elapsed during which  payments in respect of the  Subordinated
                  Debt may be made; or

                           (ii)  in  which  any  judicial  proceeding  shall  be
                  pending in respect of such default or an  effective  notice of
                  acceleration  of the maturity of the Superior  Debt shall have
                  been transmitted to the Company in respect of such default.

                  13.4.  Insolvency, etc.  In the event of:

                  (a) any  insolvency,  bankruptcy,  receivership,  liquidation,
         reorganization,  readjustment,  composition or other similar proceeding
         relating to the Company, its creditors as such or its property,

                  (b) any proceeding for the  liquidation,  dissolution or other
         winding-up  of the Company,  voluntary or  involuntary,  whether or not
         involving insolvency or bankruptcy proceedings,

                  (c)  any   assignment  by  the  Company  for  the  benefit  of
         creditors, or

                  (d) any other marshalling of the assets of the Company,

all Superior  Debt shall first be paid in full in cash or cash  equivalents  (or
with other assets acceptable to the holders of the Superior Debt) before payment
or distribution, whether in cash, securities or other property, shall be made to
any holder of any  Subordinated  Debt on account of any  Subordinated  Debt. Any
payment or  distribution,  whether in cash,  securities or other property (other
than securities of the Company or any other  corporation  provided for by a plan
of reorganization or readjustment the payment of which is subordinate,  at least
to the extent provided in this section 13 with respect to the Subordinated Debt,
to  the  payment  of  all  Superior  Debt  at the  time  outstanding  and to any
securities  issued in respect thereof under any such plan of  reorganization  or
readjustment), which would otherwise (but for these subordination provisions) be
payable  or  deliverable  in  respect  of  Subordinated  Debt  shall  be paid or
delivered  directly  to the  holders of  Superior  Debt in  accordance  with the
priorities then existing among such holders until all Superior Debt

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<PAGE>
shall have been paid in full in cash or cash  equivalents  (or with other assets
acceptable to the holders of the Superior Debt).

                  13.5. Payments and Distributions  Received.  If any payment or
distribution  of any character or any security,  whether in cash,  securities or
other property  (other than  securities of the Company or any other  corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate,  at least to the extent provided in this section 13 with respect to
Subordinated  Debt, to the payment of all Superior Debt at the time  outstanding
and to any  securities  issued  in  respect  thereof  under  any  such  plan  of
reorganization  or  readjustment),  shall  be  received  by  any  holder  of any
Subordinated Debt in contravention of any of the terms hereof and before all the
Superior Debt shall have been paid in full in cash or cash  equivalents (or with
other assets  acceptable to the holders of the Superior  Debt),  such payment or
distribution  or  security  shall be  received  in trust for the benefit of, and
shall be paid over or delivered and  transferred to, the holders of the Superior
Debt at the time  outstanding in accordance  with the  priorities  then existing
among such holders for application to the payment of all Superior Debt remaining
unpaid,  to the extent  necessary to pay all such  Superior Debt in full in cash
(or with other assets acceptable to the holders of the Superior Debt).

                  13.6. No Prejudice or Impairment.  No present or future holder
of any Superior Debt shall be  prejudiced in the right to enforce  subordination
of the Subordinated Debt by any act or failure to act on the part of the Company
or the holders of the Subordinated  Debt. Nothing contained herein shall impair,
as between the Company and the holder of any  Subordinated  Debt, the obligation
of the Company to pay to the holder  thereof the principal  thereof and interest
thereon as and when the same shall become due and payable in accordance with the
terms thereof and of this Agreement,  or prevent the holder of any  Subordinated
Debt from  exercising  all rights,  powers and remedies  otherwise  permitted by
applicable  law or  hereunder  upon a  Potential  Event of  Default  or Event of
Default hereunder, all subject to the terms of this section 13 and the rights of
the holders of the Superior Debt to receive cash,  securities or other  property
otherwise payable or deliverable to the holders of Subordinated Debt.

                  13.7.  Payment of Superior  Debt,  Subrogation,  etc. Upon the
payment in full of all Superior Debt in cash (or


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<PAGE>
with other assets  acceptable to the holders of the Superior Debt),  the holders
of  Subordinated  Debt  shall be  subrogated  to all  rights of any  holders  of
Superior Debt to receive any further payments or distributions applicable to the
Superior Debt until the Subordinated Debt shall have been paid in full, and, for
the purposes of such  subrogation,  no payment or  distribution  received by the
holders of Superior  Debt of cash,  securities,  or other  property to which the
holders of Subordinated Debt would have been entitled except for this section 13
shall,  as between  the  Company  and its  creditors  other than the  holders of
Superior  Debt, on the one hand,  and the holders of  Subordinated  Debt, on the
other,  be deemed to be a payment or  distribution  by the Company on account of
Superior  Debt.  Nothing in this section 13.7 shall be deemed to confer upon the
holders  of the  Subordinated  Debt any  rights  with  respect  to any  security
agreement  securing  any  Superior  Debt,  or to impose  upon the holders of the
Superior Debt any liability to the holders of the Subordinated Debt with respect
to any further payments or distributions applicable to the Superior Debt.

                  14.  DEFINITIONS.  As used herein the following
terms have the following respective meanings:

                  AFFILIATE:  any Person  directly or indirectly  controlling or
controlled  by or under  common  control  with the  Company  or any  Subsidiary,
including (without  limitation) any Person  beneficially owning or holding 5% or
more of any class of voting  securities of the Company or any  Subsidiary or any
other  corporation  of which the Company or any  Subsidiary  owns or holds 5% or
more of any class of voting  securities,  PROVIDED  that,  for  purposes of this
definition,   "control"  (including,   with  correlative  meanings,   the  terms
"controlled  by" and "under common control  with"),  as used with respect to any
Person,  shall mean the  possession,  directly  or  indirectly,  of the power to
direct or cause the  direction  of the  management  and policies of such Person,
whether through the ownership of voting  securities or by contract or otherwise,
and  PROVIDED  FURTHER  that  neither  you  nor any  other  Person  which  is an
institution  shall be deemed to be an  Affiliate  of the  Company  or any of its
Subsidiaries  solely  by reason of  ownership  of the Notes or other  securities
issued in  exchange  for the Notes or by reason of having  the  benefits  of any
agreements or covenants of the Company contained in this Agreement.

                  BANK LOAN AGREEMENT:  the 1993 Restated Loan Agreement,  dated
as of November 8, 1993, among the Company

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and  the  Banks   (including  any  successor,   assignee  or  replacement   Bank
thereunder),  as amended by First Amendment to Restated Loan Agreement, dated as
of April 11, 1994, and by Second Amendment to Restated Loan Agreement,  dated as
of June 29, 1994,  and as further  amended  from time to time;  and the "Related
Loan Agreement" referred to in such Agreement.

                  BANKS: First National Bank of Omaha;  Firstier Bank,  National
Association,  Lincoln, Nebraska; First National Bank, Wahoo, Nebraska; NBD Bank,
N.A.; Norwest Bank Nebraska, N.A.; and The Boatmen's National Bank of St.
Louis.

                  BOARD:  the Board of Directors of the Company or a
committee of three or more directors lawfully exercising the
relevant powers of the Board.

                  BUSINESS DAY:  any day except a Saturday, a Sunday
or other day on which commercial banks in New York City are
required or authorized by law to be closed.

                  CAPITAL  LEASE:  as  applied to any  Person,  any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with generally accepted accounting  principles,  be required to be
classified  and  accounted  for as a capital  lease on a  balance  sheet of such
Person,  other than, in the case of the Company or a Subsidiary,  any such lease
under which the Company or a Wholly-Owned Subsidiary is the lessor.

                  CAPITAL LEASE  OBLIGATION:  with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder which would, in accordance
with generally accepted accounting principles, appear on a balance sheet of such
lessee in respect of such Capital Lease.

                  CHANGE  OF  CONTROL:  (a) at any time  when any of the  equity
securities of the Company  shall be registered  under Section 12 of the Exchange
Act,  (i) any Person or "group"  (within the meaning of Section  13(d)(3) of the
Exchange Act) (other than any Person which is a management employee, or any such
"group" which consists entirely of management  employees,  of the Company) being
or becoming the beneficial  owner,  directly or indirectly,  of more than 50% of
the Voting  Stock of the  Company or (ii) a majority of the members of the Board
consisting of persons other than Continuing Directors (as hereinafter  defined);
and (b) at any other  time,  less than 50% of the  Voting  Stock of the  Company
being owned beneficially, directly or indirectly, by

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<PAGE>
employees  of  the  Company  or its  Subsidiaries.  As  used  herein,  the  term
"Continuing  Director"  means any member of the Board on the date hereof and any
other  member of the Board who shall be  recommended  or  elected  to  succeed a
Continuing Director by a majority of Continuing Directors who are the members of
the Board.

                  CODE: the Internal  Revenue Code of 1986, as amended from time
to time.
                  COMMON STOCK:  the meaning specified in section 1.

                  CONSOLIDATED  OPERATING CASH FLOW:  with respect to any fiscal
period,  Consolidated Net Income for such period, adjusted by adding thereto all
interest  expense and all  provisions  for  depreciation  and taxes  (other than
current tax expense) that were deducted in arriving at  Consolidated  Net Income
for such period, and further adjusted by adding or subtracting all non-recurring
non-cash losses and gains that were deducted or added, respectively, in arriving
at  Consolidated  Net  Income  for such  period.  For  purposes  of  calculating
Consolidated  Operating  Cash  Flow,  the  Company  shall  not  permit  deferred
commission  expenses  to be  capitalized  over any  period  in  excess of twelve
months.

                  CONSOLIDATED NET INCOME: with reference to any period, the net
income (or deficit) of the Company and its  Subsidiaries  for such period (taken
as a cumulative whole),  after deducting all operating expenses,  provisions for
all taxes and  reserves  and all other  proper  deductions,  all  determined  in
accordance  with  generally  accepted  accounting  principles on a  consolidated
basis,  after  eliminating  all  intercompany  transactions  and after deducting
portions of income properly  attributable to minority interests,  if any, in the
stock and surplus of Subsidiaries, provided that there shall be excluded (a) the
income  (or  deficit)  of any  Person  accrued  prior to the date it  becomes  a
Subsidiary or is merged into or  consolidated  with the Company or a Subsidiary,
(b) the income (or deficit) of any Person (other than a Subsidiary) in which the
Company or any Subsidiary has an ownership  interest,  except to the extent that
any such income has been actually  received by the Company or such Subsidiary in
the form of dividends or similar  distributions,  (c) the undistributed earnings
of any Subsidiary to the extent that the  declaration or payment of dividends or
similar  distributions  by such  Subsidiary is not at the time  permitted by the
terms of its charter or any  agreement,  instrument,  judgment,  decree,  order,
statute, rule or governmental regulation applicable to such

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Subsidiary,  (d) any deferred  credit  representing  the excess of equity in any
Subsidiary at the date of  acquisition  over the cost of the  investment in such
Subsidiary,  and (e) in the case of a successor to the Company by  consolidation
or merger or as a  transferee  of its  assets,  any  earnings  of the  successor
corporation  prior to such  consolidation,  merger or  transfer  of  assets.  In
addition,  in  calculating  Consolidated  Net Income for purposes of determining
compliance  with section 10.4,  there shall also be excluded,  with reference to
any period, (i) any restoration to income of any contingency reserve,  except to
the extent that provision for such reserve was made out of income accrued during
such period, (ii) any aggregate net gain (but not any aggregate net loss) during
such period  arising  from the sale,  exchange or other  disposition  of capital
assets (such term to include all fixed assets,  whether  tangible or intangible,
all inventory sold in conjunction with the disposition of fixed assets,  and all
securities),  (iii)  any  write-up  of any  asset,  (iv) any net  gain  from the
collection of the proceeds of life insurance policies, (v) any gain arising from
the  acquisition  of any  securities,  or the  extinguishment,  under  generally
accepted accounting  principles,  of any Debt, of the Company or any Subsidiary,
and (vi) any net income or gain (but not any net loss)  during  such period from
any change in accounting,  from any  discontinued  operations or the disposition
thereof, from any extraordinary events or from any prior period adjustments.

                   CONSOLIDATED  NET WORTH:  the sum of the  capital  stock (but
excluding  treasury stock and capital stock subscribed and unissued) and surplus
(including earned surplus, capital surplus and the balance of the current profit
and loss  account not  transferred  to surplus)  accounts of the Company and its
Subsidiaries  appearing on a  consolidated  balance sheet of the Company and its
Subsidiaries   prepared  in  accordance  with  generally   accepted   accounting
principles as of the date of  determination,  after eliminating all intercompany
transactions and all amounts  properly  attributable to minority  interests,  if
any, in the stock and surplus of Subsidiaries.

                  CONSOLIDATED TANGIBLE NET WORTH: Consolidated Net Worth, after
deducting therefrom (without duplication of deductions):

                  (a) the net book amount of all  assets,  after  deducting  any
         reserves applicable thereto, which would be treated as intangible under
         generally   accepted   accounting   principles,    including,   without
         limitation,
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<PAGE>
         such items as good will, trademarks,  trade names, service marks, brand
         names, copyrights, patents and licenses, and rights with respect to the
         foregoing,   unamortized  debt  discount  and  expense,  organizational
         expenses and the excess of cost of purchased  Subsidiaries  over equity
         in the net assets thereof at the date of acquisition;

                  (b) any  write-up  in the book value of any asset on the books
         of the Company or any Subsidiary  resulting from a revaluation  thereof
         subsequent  to December  31, 1993 (other than the  write-up of the book
         value of an asset made in accordance with generally accepted accounting
         principles in connection with the purchase of such asset);

                  (c) the  amounts,  if any, at which any shares of stock of the
         Company or any Subsidiary appear on the asset side of the balance sheet
         from which  Consolidated  Net Worth is  determined  for the purposes of
         this definition;

                  (d) all deferred charges (other than prepaid expenses); and

                  (e) the amounts at which any  Investment  in any Person (other
         than  Investments  which are  permitted  by clauses  (t) through (z) of
         section 10.3) appear on the asset side of such balance sheet.

                  DEBT:  as applied to any Person (without duplication):

                  (a)  any indebtedness for borrowed money which
         such Person has directly or indirectly created,
         incurred or assumed; and

                  (b)  any  indebtedness  secured  by any  Lien  in  respect  of
         property  owned by such Person,  whether or not such Person has assumed
         or  become  liable  for the  payment  of such  indebtedness  (not  here
         referring  to any Lien  described  in  paragraphs  (a)  through  (e) of
         section 10.2); and

                  (c) any  indebtedness  with  respect to which such  Person has
         become directly or indirectly  liable and which  represents or has been
         incurred to finance the  purchase  price (or a portion  thereof) of any
         property or services or business acquired by such Person,

                                       44

                                      201
<PAGE>
         whether by purchase, consolidation, merger or otherwise; and

                  (d) any  indebtedness  of any other  Person  of the  character
         referred to in  subdivision  (a),  (b) or (c) of this  definition  with
         respect to which the Person whose Debt is being  determined  has become
         liable by way of a Guaranty.

                  ENVIRONMENTAL  LAWS:  Federal,  state,  provincial,  local and
foreign laws, rules and regulations relating to emissions,  discharges, releases
or threatened  releases of  pollutants,  contaminants,  chemicals or industrial,
toxic or hazardous substances or wastes into the environment (including, without
limitation,  air, surface water, ground water or land), or otherwise relating to
the manufacture,  processing,  distribution,  use, treatment, storage, disposal,
transport or handling of  pollutants,  contaminants,  chemicals  or  industrial,
toxic or hazardous substances or wastes.

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

                  EXCHANGE ACT:  the Securities Exchange Act of
1934, as amended from time to time.

                  EXCESS SALE  PROCEEDS:  as of any date of  determination,  the
excess  of (a)  the  proceeds  of  sales  of  assets  of  the  Company  and  its
Subsidiaries  which are required to be applied to the  prepayment of Debt of the
Company  pursuant to section  10.7(c)(y),  over (b) the amount of senior Debt of
the Company outstanding as of such date and required to be prepaid pursuant to a
provision of the agreement or instrument  evidencing such senior Debt similar in
effect to section 10.7 hereof.

                  EVENT OF DEFAULT:  the meaning specified in section 11.

                  GUARANTY:  as applied to any  Person,  any direct or  indirect
liability,  contingent  or  otherwise,  of  such  Person  with  respect  to  any
indebtedness, lease, dividend or other obligation of another, including, without
limitation,  any such  obligation  directly or indirectly  guaranteed,  endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted  or sold with  recourse by such  Person,  or in respect of which such
Person  is  otherwise   directly  or  indirectly  liable,   including,   without
limitation, any such obligation in effect guaranteed by such

                                       45

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<PAGE>
Person through any agreement  (contingent or otherwise) to purchase,  repurchase
or otherwise  acquire such  obligation or any security  therefor,  or to provide
funds for the payment or  discharge of such  obligation  (whether in the form of
loans,  advances,  stock purchases,  capital contributions or otherwise),  or to
maintain the solvency or any balance sheet or other  financial  condition of the
obligor of such  obligation,  or to make payment for any products,  materials or
supplies or for any transportation or services regardless of the non-delivery or
nonfurnishing  thereof,  in any  such  case if the  purpose  or  intent  of such
agreement  is to  provide  assurance  that  such  obligation  will  be  paid  or
discharged,  or that any agreements  relating  thereto will be complied with, or
that the holders of such  obligation  will be protected  against loss in respect
thereof. The amount of any Guaranty shall be equal to the outstanding  principal
amount of the  obligation  guaranteed.  For the  purposes of section  10.4,  the
amount involved in any Guaranty which  constitutes a Restricted  Investment made
during any period shall be the aggregate  amount of the  obligation  guaranteed,
less any amount by which the  guarantor  may have been  discharged  with respect
thereto  (including  any  discharge  by way of a reduction  in the amount of the
obligation guaranteed),  PROVIDED that the guarantor shall not be deemed to have
been  discharged  with respect to any Guaranty to the extent the guarantor shall
have been required to perform such Guaranty  (except to the extent that any loss
on such Guaranty has been recognized in reducing Consolidated Net Income).

                  INVESTMENT:  as applied to any Person,  any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person,  or any direct or indirect  loan,  advance (other than advances to
employees  for  moving  and  travel  expenses,   drawing  accounts  and  similar
expenditures in the ordinary course of business) or capital contribution by such
Person to any other Person, including all Debt and accounts receivable from such
other  Person  which are not current  assets or did not arise from sales to such
other  Person in the  ordinary  course of  business.  In  computing  the  amount
involved in any Investment at the time outstanding,  (a) undistributed  earnings
of, and interest  accrued in respect of Debt owing by, such other Person accrued
after the date of such Investment shall not be included,  (b) there shall not be
deducted from the amounts  invested in such other Person any amounts received as
earnings (in the form of dividends, interest or otherwise) on such Investment or
as loans from such other Person,  and (c)  unrealized  increases or decreases in
value, or
                                       46

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<PAGE>
write-ups,  write-downs or write-offs, of Investments in such other Person shall
be  disregarded.  For the  purposes  of section  10.4,  the amount  involved  in
Investments which constitute Restricted Investments made during any period shall
be  the  aggregate  cost  to the  Company  and  its  Subsidiaries  of  all  such
Investments  made, or which they became  obligated to make,  during such period,
determined in accordance  with generally  accepted  accounting  principles,  but
without  regard to  unrealized  increases or decreases in value,  or  write-ups,
write-downs  or  write-offs,  of such  Investments  (except to the  extent  that
Consolidated Net Income has been increased or reduced as the result thereof) and
without  regard  to the  existence  of any  undistributed  earnings  or  accrued
interest with respect thereto  accrued after the respective  dates on which such
Investments  were  made,  less any net return of capital  realized  during  such
period  upon the  sale,  repayment  or  other  liquidation  of such  Investments
(determined in accordance with generally  accepted  accounting  principles,  but
without  regard to any amounts  received  during such period as earnings (in the
form of dividends,  interest or otherwise) on such  Investments or as loans from
any Persons in whom such Investments have been made).

                  LIEN: as to any Person, any mortgage,  lien,  pledge,  adverse
claim, charge,  security interest or other encumbrance in or on, or any interest
or title of any  vendor,  lessor,  lender or other  secured  party to or of such
Person under any conditional sale or other title retention  agreement or Capital
Lease with respect to, any  property or asset owned or held by such  Person,  or
the  signing or filing of a  financing  statement  which  names  such  Person as
debtor, or the signing of any security agreement  authorizing any other party as
the secured party thereunder to file any financing statement.

                  MONTHLY OPERATING CASH FLOW:  as of any date of
determination, the monthly average of Consolidated Operating
Cash Flow for the two calendar months ending immediately
prior to such date of determination.

                   MULTIEMPLOYER PLAN: any Plan which is a "multiemployer  plan"
(as such term is defined in section 4001(a)(3) of ERISA).

                   OFFICERS'  CERTIFICATE:  a certificate  executed on behalf of
the  Company by the  Chairman of the Board of  Directors  (if an officer) or its
President or one of its
                                       47

                                      204
<PAGE>
Vice Presidents and its Treasurer or one of its Assistant Treasurers.

                  PBGC:  the Pension Benefit Guaranty Corporation or
any governmental authority succeeding to any of its
functions.

                  PERMITTED  SUBORDINATED  DEBT:  unsecured  Debt of the Company
which (a) has a final  maturity  on or  subsequent  to June 30, 2004 (or, if the
Company  shall have made any  prepayment  of Notes  pursuant to section 9.2, the
last date on which a payment or  prepayment of principal of the Notes is, on the
date  the  Company  becomes  liable  with  respect  to such  subordinated  Debt,
scheduled to be made under this  Agreement and the Notes);  (b) does not provide
for any required prepayments,  fixed sinking fund payments, serial maturities or
similar payments in respect of the principal of such  subordinated Debt prior to
June 30, 1997 or which  would,  in any case,  amortize in any  calendar  year an
amount in excess of 20% of the original  principal  amount of such  subordinated
Debt;  (c) does not permit any holder of such Debt to declare all or any part of
such Debt to be due and  payable,  or to  require  (upon the  occurrence  of any
contingency  or otherwise)  all or any part of such Debt to be paid,  before its
expressed  maturity  for any reason  other than the  occurrence  of a default in
respect  thereof;  and  (d) is  created  under  or  evidenced  by an  instrument
containing  provisions for the  subordination of such Debt to senior Debt of the
Company  on a basis  either on a parity  with or junior and  subordinate  to the
Notes.

                  PERSON:  a corporation,  an  association,  a  partnership,  an
organization,  a business, an individual,  a government or political subdivision
thereof or a governmental  agency.

                  PLAN:  an  "employee  pension  benefit  plan" (as  defined  in
section 3 of ERISA) which is or has been established or maintained,  or to which
contributions  are or have  been  made,  by the  Company  or any of its  Related
Persons,  or an employee  pension benefit plan as to which the Company or any of
its Related  Persons  would be treated as a  contributory  sponsor under section
4069 of ERISA if it were to be terminated.

                  POTENTIAL EVENT OF DEFAULT:  any condition or
event which, with notice or lapse of time or both, would
become an Event of Default.
                                       48

                                      205
<PAGE>
                  RELATED  PERSON:  any  trade  or  business,   whether  or  not
incorporated,  which,  together with the Company,  is under common  control,  as
described in section 414(b) or (c) of the Code.

                  RESTRICTED  INVESTMENT:   the  meaning  specified  in  section
10.3(vi).

                  RESTRICTED  PAYMENT:  (a) any dividend or other  distribution,
direct  or  indirect,  on  account  of any  shares  of any class of stock of the
Company now or hereafter outstanding, except a dividend payable solely in shares
of Common Stock or  nonredeemable  preferred  stock of the Company;  and (b) any
redemption,  retirement,  purchase or other acquisition,  direct or indirect, of
any shares of any class of stock of the Company now or hereafter outstanding, or
of any  warrants,  rights or options to acquire any such  shares,  except to the
extent  that the  consideration  therefor  consists  of  shares  of stock of the
Company.

                  SECURITIES  ACT: the  Securities  Act of 1933, as amended from
time to time.

                  SUBSIDIARY:  any corporation at least 50% (by number of votes)
of the Voting  Stock of which is at the time  owned by the  Company or by one or
more Subsidiaries or by the Company and one or more Subsidiaries.

                  VOTING STOCK: with reference to any corporation,  stock of any
class or classes (or equivalent interests),  if the holders of the stock of such
class or classes (or  equivalent  interests) are  ordinarily,  in the absence of
contingencies,  entitled to vote for the election of the  directors  (or Persons
performing similar  functions) of such corporation,  even though the right so to
vote has been suspended by the happening of such a contingency.

                  WARRANTS:  the meaning specified in section 1.

                  WHOLLY-OWNED:  as applied to any Subsidiary,  a Subsidiary all
the outstanding shares (other than directors'  qualifying shares, if required by
law) of every class of stock of which are at the time owned by the Company or by
one  or  more  Wholly-Owned  Subsidiaries  or by the  Company  and  one or  more
Wholly-Owned Subsidiaries.
                                       49

                                      206
<PAGE>
                  15.  REGISTRATION,  TRANSFER AND SUBSTITUTION OF NOTES; ACTION
BY NOTEHOLDERS.

                  15.1. NOTE REGISTER; OWNERSHIP OF NOTES. The Company will keep
at its  principal  office a register in which the Company  will  provide for the
registration of Notes and the  registration  of transfers of Notes.  The Company
may treat the Person in whose name any Note is  registered  on such  register as
the owner  thereof for the purpose of receiving  payment of the principal of and
the  premium,  if any,  and  interest  on such Note and for all other  purposes,
whether or not such Note shall be overdue, and the Company shall not be affected
by any notice to the contrary. All references in this Agreement to a "holder" of
any Note shall mean the Person in whose name such Note is at the time registered
on such register.

                  15.2.  TRANSFER AND EXCHANGE OF NOTES.  Upon  surrender of any
Note  for  registration  of  transfer  or for  exchange  to the  Company  at its
principal  office,  the  Company at its  expense  will  execute  and  deliver in
exchange  therefor a new Note or Notes in  denominations  of at least $1,000,000
(except  one Note may be  issued  in a lesser  principal  amount  if the  unpaid
principal  amount of the surrendered Note is not evenly divisible by, or is less
than $1,000,000), as requested by the holder or transferee,  which aggregate the
unpaid principal amount of such surrendered  Note,  registered as such holder or
transferee may request,  dated so that there will be no loss of interest on such
surrendered Note and otherwise of like tenor.

                  15.3.   REPLACEMENT   OF  NOTES.   Upon  receipt  of  evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation of any Note and, in the case of any such loss,  theft or  destruction
of any Note, upon delivery of an indemnity bond in such reasonable amount as the
Company  may  determine  (or,  in the  case of any Note  held by you or  another
institutional  holder or your or its nominee, of an indemnity agreement from you
or such other holder) or, in the case of any such mutilation, upon the surrender
of such Note for  cancellation  to the  Company  at its  principal  office,  the
Company at its expense will execute and deliver,  in lieu thereof, a new Note in
the unpaid principal amount of such lost,  stolen,  destroyed or mutilated Note,
dated so that there will be no loss of  interest on such Note and  otherwise  of
like tenor. Any Note in lieu of which any such new Note has been so executed and
delivered by the Company shall not be deemed to be an  outstanding  Note for any
purpose of this Agreement.
                                       50

                                      207
<PAGE>
                  15.4. NOTES HELD BY COMPANY, ETC., DEEMED NOT OUTSTANDING. For
the purposes of  determining  whether the holders of the Notes of the  requisite
principal  amount at the time  outstanding  have taken any action  authorized by
this  Agreement  with  respect to the giving of  consents or  approvals  or with
respect  to  acceleration  upon an Event  of  Default,  any  Notes  directly  or
indirectly  owned by the Company or any of its  Subsidiaries or Affiliates shall
be disregarded and deemed not to be outstanding.

                  16.  PAYMENTS ON NOTES.  16.1.  PLACE OF PAYMENT.  Payments of
principal,  premium,  if any, and interest becoming due and payable on the Notes
shall be made at the principal  office of The Chase Manhattan Bank, N.A., in the
Borough of  Manhattan,  the City and State of New York,  unless the Company,  by
written notice to each holder of any Notes, shall designate the principal office
of another bank or trust  company in such  Borough as such place of payment,  in
which  case the  principal  office of such  other  bank or trust  company  shall
thereafter be such place of payment.

                  16.2.  HOME  OFFICE  PAYMENT.  So long as you or your  nominee
shall be the  holder of any Note,  and  notwithstanding  anything  contained  in
section  16.1 or in such Note to the  contrary,  the  Company  will pay all sums
becoming due on such Note for  principal,  premium,  if any, and interest by the
method and at the address  specified  for such purpose in Schedule A, or by such
other  method  or at such  other  address  as you  shall  have from time to time
specified to the Company in writing for such purpose,  without the  presentation
or surrender of such Note or the making of any notation thereon, except that any
Note  paid or  prepaid  in full  shall  be  surrendered  to the  Company  at its
principal  office or at the place of payment  maintained by the Company pursuant
to section 16.1 for cancellation.  Prior to any sale or other disposition of any
Note held by you or your  nominee you will,  at your  election,  either  endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid  thereon or  surrender  such Note to the Company in exchange for a
new Note or Notes pursuant to section 15.2. The Company will afford the benefits
of this  section  16.2 to any  institutional  investor  which is the  direct  or
indirect  transferee of any Note purchased by you under this Agreement and which
has made the  same  agreement  relating  to such  Note as you have  made in this
section 16.2.

                  17.   EXPENSES,   ETC.   Whether   or  not  the   transactions
contemplated by this Agreement  shall be  consummated,  the Company will pay all
expenses in connection with such
                                       51

                                      208
<PAGE>
transactions  and in connection  with any amendments or waivers  (whether or not
the same become  effective)  under or in respect of this Agreement or the Notes,
including,  without  limitation:  (a) the cost and  expenses  of  preparing  and
reproducing  this Agreement and the Notes, of furnishing all opinions by counsel
for the Company  (including any opinions requested by your special counsel as to
any  legal  matter  arising  hereunder)  and all  certificates  on behalf of the
Company, and of the Company's  performance of and compliance with all agreements
and  conditions  contained  herein on its part to be performed or complied with;
(b)  the  cost  of  delivering  to  your  principal  office,   insured  to  your
satisfaction,  the Notes sold to you  hereunder  and any Notes  delivered to you
upon any substitution of Notes pursuant to section 15 and of your delivering any
Notes,  insured  to your  satisfaction,  upon  any  such  substitution;  (c) the
reasonable  fees,  expenses  and  disbursements  of one special  counsel for the
holders of the Notes (and,  in addition,  any local  counsel  determined  by the
holders of the Notes to be necessary in the  circumstances)  in connection  with
such  transactions  and any such  amendments or waivers;  and (d) the reasonable
out-of-pocket  expenses incurred by you in connection with such transactions and
any such amendments or waivers. The Company also will pay, and will save you and
each holder of any Notes  harmless  from,  all claims in respect of the fees, if
any,  of brokers and finders  and any and all  liabilities  with  respect to any
taxes (including  interest and penalties) which may be payable in respect of the
execution  and  delivery  of this  Agreement,  the  issue of the  Notes  and any
amendment  or waiver  under or in respect of this  Agreement  or the Notes.  The
obligation of the Company under this section 17 shall survive any disposition or
payment of the Notes and the termination of this Agreement.

                  18.   SURVIVAL  OF   REPRESENTATIONS   AND   WARRANTIES.   All
representations and warranties contained in this Agreement or made in writing by
or on behalf of the Company in connection with the transactions  contemplated by
this Agreement shall survive the execution and delivery of this  Agreement,  any
investigation  at any time made by you or on your  behalf,  the  purchase of the
Notes by you under this  Agreement and any  disposition or payment of the Notes.
All statements  contained in any certificate or other instrument delivered by or
on behalf of the Company  pursuant to this  Agreement or in connection  with the
transactions  contemplated by this Agreement shall be deemed representations and
warranties of the Company under this Agreement.

                                       52

                                      209
<PAGE>
                  19.  AMENDMENTS AND WAIVERS.  Any term of this Agreement or of
the Notes may be amended and the  observance of any term of this Agreement or of
the Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the  holders  of more  than 50% in  principal  amount  of the  Notes at the time
outstanding (subject to section 15.4),  PROVIDED that, without the prior written
consent of the  holders  of all the Notes at the time  outstanding  (subject  to
section 15.4),  no such amendment or waiver shall (a) change the maturity or the
principal  amount  of,  or  reduce  the rate or change  the time of  payment  of
interest  on, or change the amount or the time of  payment of any  principal  or
premium  payable  on any  prepayment  of, any Note,  (b)  reduce  the  aforesaid
percentages  of the  principal  amount  of the Notes  the  holders  of which are
required to consent to any such  amendment or waiver,  (c) change the percentage
of the principal  amount of the Notes the holders of which may declare the Notes
to be due and  payable as  provided in section 11, (d) modify the proviso to the
first  sentence of section 11, or (e) decrease the  percentage  of the principal
amount  of the  Notes  the  holders  of which  may  rescind  and  annul any such
declaration  as  provided  in section 11. Any  amendment  or waiver  effected in
accordance with this section 19 shall be binding upon each holder of any Note at
the time outstanding, each future holder of any Note and the Company.

                  20.  Notices,  etc.  Except  as  otherwise  provided  in  this
Agreement,  notices and other  communications  under this Agreement  shall be in
writing  and  shall be  delivered  by hand or  courier  service,  or  mailed  by
registered or certified mail,  return receipt  requested,  addressed,  (a) if to
you,  at the  address  set forth in  Schedule A or at such other  address as you
shall have furnished to the Company in writing,  except as otherwise provided in
section 16.2 with respect to payments on Notes held by you or your  nominee,  or
(b) if to any other  holder of any Note,  at such  address as such other  holder
shall have furnished to the Company in writing,  or, until any such other holder
so furnishes  to the Company an address,  then to and at the address of the last
holder of such Note who has  furnished an address to the  Company,  or (c) if to
the Company, at its address set forth at the beginning of this Agreement, to the
attention  of Chief  Financial  Officer,  or at such  other  address,  or to the
attention of such other officer,  as the Company shall have furnished to you and
each such other holder in writing. Any notice so addressed and delivered by hand
or courier shall be deemed to be given when received, and any notice so

                                       53

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<PAGE>
addressed and mailed by registered or certified mail shall be deemed to be given
three business days after being so mailed.

                  21.  MISCELLANEOUS.  This Agreement  shall be binding upon and
inure to the benefit of and be  enforceable  by the  respective  successors  and
assigns of the parties hereto,  whether so expressed or not, and, in particular,
shall inure to the benefit of and be enforceable by any holder or holders at the
time of the Notes or any part  thereof.  Except as stated in  section  18,  this
Agreement  embodies the entire agreement and  understanding  between you and the
Company and supersedes all prior agreements and  understandings  relating to the
subject  matter  hereof.  This  Agreement  and the Notes shall be construed  and
enforced in  accordance  with and  governed by the law of the State of New York.
The headings in this  Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.  This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

                                       54

                                      211
<PAGE>
                  If you are in agreement  with the  foregoing,  please sign the
form of agreement on the accompanying counterparts of this letter and return one
of the same to the  Company,  whereupon  this  letter  shall  become  a  binding
agreement between you and the Company.

                                Very truly yours,

                              DATA TRANSMISSION NETWORK
                                   CORPORATION



                                            By:        /s/ Steve C. Ball
                                                     --------------------------
                           Title: Secretary/Treasurer
                           and Chief Financial Officer


The foregoing Agreement is
hereby agreed to as of the
date thereof.

EQUITABLE CAPITAL PRIVATE INCOME
  AND EQUITY PARTNERSHIP II, L.P.

By:  EQUITABLE CAPITAL MANAGEMENT CORPORATION
       Its General Partner

         By:    /s/  U. Peter C. Gummeson
                -------------------------
            Title: Investment Officer

                                       55

                                      212
<PAGE>

                                                                     SCHEDULE A

                             SCHEDULE OF PURCHASERS

        Name and Address                                   Principal Amount of
          of Purchaser                                      Notes; Number of
                                     Shares


EQUITABLE CAPITAL PRIVATE INCOME AND
EQUITY PARTNERSHIP II, L.P.                              Principal Amount of
                                Subordinated Note
(1) All payments by wire transfer of
immediately available funds to:                              $15,000,000

  The Chase Manhattan Bank, N.A.
  110 West 52nd Street                                    Number of Warrants
  New York, New York 10019
                                  25,000 Shares
  A/C Equitable Capital Private  Income
  and Equity Partnership L.P. Operating
  Account
  Account No. 037-2-415703

Each such wire  transfer  shall set forth the name of the  Company and the CUSIP
number, if applicable, and the due date of the payment being made.


(2) All notices of payment and written confirmation of such wire transfers to be
sent to:

  Equitable Capital Private Income and
  Equity Partnership II, L.P.
  c/o Alliance Corporate Finance Group
  Incorporated
  1285 Avenue of the Americas
  19th Floor
  New York, New York 10019

(3) All other communications to be sent
to:

  Equitable Capital Private Income and
  Equity Partnership II, L.P.
  c/o Alliance Corporate Finance Group
  Incorporated
  1285 Avenue of the Americas
  19th Floor
  New York, New York 10019

  Attention: Corporate Finance
       Department

(4) Securities to be delivered to:

  Alliance Corporate Finance Group
 Incorporated  135 West 50th Street
  5th Floor
  New York, New York 10128

  Attention: Susan Tomaselli


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<PAGE>

                                                                       EXHIBIT A

                                   DATA TRANSMISSION NETWORK CORPORATION

                             11.25% SENIOR SUBORDINATED NOTE DUE JUNE 30, 2004

PPN# 238017 A* 8
R-1                                                           New York, New York
$15,000,000                                                        June 30, 1994


                  DATA TRANSMISSION NETWORK CORPORATION,  a Delaware corporation
(the "Company"),  for value received,  hereby promises to pay to , or registered
assigns,  the principal amount of FIFTEEN MILLION DOLLARS  ($15,000,000) on June
30, 2004,  with interest  (computed on the basis of twelve 30-day months) on the
unpaid balance of such principal amount at the rate of 11.25% per annum from the
date hereof,  payable  quarterly on each September 30, December 30, March 30 and
June 30 after the date hereof,  commencing September 30, 1994, until such unpaid
balance shall become due and payable (whether at maturity or at a date fixed for
prepayment or by  declaration  or  otherwise),  and with interest on any overdue
principal  (including  any overdue  prepayment of principal)  and (to the extent
permitted by applicable law) on any overdue interest,  at the rate of 13.25% per
annum until paid, payable quarterly as aforesaid or, at the option of the holder
hereof, on demand. Payments of principal and interest on this Note shall be made
in lawful money of the United States of America at the principal office of Chase
Manhattan  Bank,  N.A., in the Borough of  Manhattan,  the City and State of New
York,  or at such other  office or agency in such  Borough as the Company  shall
have  designated by written notice to the holder of this Note as provided in the
Note and Warrant Purchase Agreement referred to below.

                  This Note is one of the Company's  11.25% Senior  Subordinated
Notes due June 30, 2004 (the "Notes"), originally issued in the aggregate amount
of $15,000,000 pursuant to Note and Warrant Purchase Agreement, dated as of June
30, 1994, as from time to time amended,  among the Company and the institutional
investor named  therein.  The holder of this Note is entitled to the benefits of
such Note and Warrant Purchase Agreement,  as from time to time amended, and may
enforce  the  agreements  of the Company  contained  therein  and  exercise  the
remedies provided for thereby or otherwise available in respect thereof.

                  Payments of principal and interest in respect of the Notes are
subordinate,  to  the  extent  specified  in  such  Note  and  Warrant  Purchase
Agreement,  to all Superior  Debt of the Company as such term is defined in such
Note and Warrant Purchase Agreement.

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<PAGE>
                  This Note is a registered Note and is  transferable  only upon
surrender  of  this  Note  for  registration  of  transfer,  duly  endorsed,  or
accompanied  by a written  instrument of transfer duly  executed,  by the holder
hereof or such holder's  attorney duly authorized in writing.  Reference in this
Note to a "holder"  shall mean the person in whose name this Note is at the time
registered  on the  register  kept by the  Company as  provided in such Note and
Warrant Purchase Agreement and the Company may treat such person as the owner of
this Note for the purpose of receiving  payment and for all other purposes,  and
the Company shall not be affected by any notice to the contrary.

                  The  Notes  are  under   certain   circumstances   subject  to
prepayment  at the option of the  company or at the  option of the  holders,  in
whole or in part, as specified in such Note and Warrant Purchase Agreement.

                  In case an Event  of  Default,  as  defined  in such  Note and
Warrant Purchase Agreement, shall occur and be continuing, the unpaid balance of
the principal of this Note may become due and payable in the manner and with the
effect provided in such Note and Warrant Purchase Agreement.

                                        2

                                      215
<PAGE>
                  This  Note is made and  delivered  in New York,  NewYork,  and
shall be governed by the laws of the State of New York.


                            DATA TRANSMISSION NETWORK CORPORATION


                               By:     /s/ Steve C. Ball
                                      -----------------------------
                               Title: Secretary/Treasurer
                                      Chief Financial Officer


                                        3

                                      216
<PAGE>

                                                                  EXECUTION COPY


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







                      DATA TRANSMISSION NETWORK CORPORATION







                          COMMON STOCK PURCHASE WARRANT








                             Expiring June 30, 2004







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

                                      217
<PAGE>

                                TABLE OF CONTENTS



1.  Exercise of Warrant........................................................1
    1.1.    Manner of Exercise.................................................1
    1.2.    When Exercise Deemed Effected......................................2
    1.3.    Delivery of Stock Certificates, etc................................2
    1.4.    Company to Reaffirm Obligations....................................3
    1.5.    Payment by Application of the Notes................................3

2.  Adjustments; Dividends.....................................................4
    2.1.    Number of Shares; Warrant Price....................................4
    2.2.    Adjustment of Warrant Price; Payment of Regular
            Dividends..........................................................4
    2.2.1.  Issuance of Additional Shares of Common Stock
            ...................................................................4
    2.2.2.  Extraordinary Dividends and Distributions..........................5
    2.2.3.  Payment of Regular Dividends.......................................6
    2.3.    Treatment of Options and Convertible Securities....................6
    2.4.    Treatment of Stock Dividends, Stock Splits, etc...................10
    2.5.    Computation of Consideration......................................10
    2.6     Adjustments for Combinations, etc.................................12
    2.7.    Dilution in Case of Other Securities..............................12
    2.8.    Minimum Adjustment of Warrant Price...............................13
 
3.  Consolidation, Merger, Sale of Assets, Reorganization, etc
    ..........................................................................13
    3.1.   General Provisions.................................................13
    3.2.   Assumption of Obligations..........................................16

4.  Other Dilutive Events.....................................................17

5.  No Dilution or Impairment.................................................17

6.  Accountants' Report as to Adjustments.....................................18

7.  Notices of Corporate Action...............................................19

8.  Restrictions on Transfer..................................................20
    8.1.   Restrictive Legends................................................20
    8.2.   Notice of Proposed Transfer; Opinions of Counsel...................20
    8.3.   Termination of Restrictions........................................22

9.  Registration under Securities Act, etc....................................22
    9.1.  Registration on Request.............................................22
    9.2.  Incidental Registration.............................................26
    9.3.  Registration Procedures.............................................28
    9.4.  Underwritten Offerings..............................................34

                                        i

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<PAGE>
    9.5.  Preparation; Reasonable Investigation...............................36
    9.6.  Rights of Requesting Holders........................................37
    9.7.  Indemnification.....................................................37
    9.8.  Adjustments Affecting Registrable Securities........................41
    9.9.  Registration Rights to Others.......................................42
    9.10. Other Registration of Common Stock..................................42
    9.11. Nominees for Beneficial Owners......................................42
    9.12. Rule 144 and Rule 144A..............................................43

10. Availability of Information...............................................43

11. Reservation of Stock, etc.................................................43

12. Listing on Securities Exchange............................................43

13. Ownership, Transfer and Substitution of Warrants..........................44
    13.1.  Ownership of Warrants..............................................44
    13.2.  Transfer and Exchange of Warrants..................................44
    13.3.  Replacement of Warrants............................................44

14.  Definitions..............................................................45

15.  Remedies.................................................................53

16.  No Rights or Liabilities as Stockholder..................................53

17.  Notices..................................................................53

18.  Expiration; Notice.......................................................54

19.  Miscellaneous............................................................54

                                       ii

                                      219
<PAGE>


                          Common Stock Purchase Warrant
                             Expiring June 30, 2004


                               New York, New York
                                  June 30, 1994

PPN #238017 2* 7
No. W-1


                  DATA TRANSMISSION NETWORK CORPORATION,  a Delaware corporation
(the "Company"),  for value received,  hereby  certifies that EQUITABLE  CAPITAL
PRINVATE INCOME AND EQUITY PARTNERSHIP II, or registered assigns, is entitled to
purchase from the Company TWENTY-FIVE THOUSAND duly authorized,  validly issued,
fully paid and nonassessable  shares of Common Stock, par value $.001 per share,
of the Company (the "Common  Stock") at the purchase  price per share of $22.17,
at any time or from time to time prior to 3 P.M.,  New York City  time,  on June
30, 2004, all subject to the terms,  conditions and  adjustments set forth below
in this Warrant.

                  This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants",  such term to include all Warrants issued in substitution  therefor)
originally  issued  in  connection  with the issue  and sale by the  Company  of
$15,000,000  aggregate  principal amount of its 11.25% Senior Subordinated Notes
due June 30, 2004 (together with all notes issued in substitution  therefor, the
"Notes"),  pursuant to the Note and Warrant  Purchase  Agreement  (the "Purchase
Agreement"),   dated  as  of  June  30,  1994,   between  the  Company  and  the
institutional investor named therein (the "Purchaser").  The Warrants originally
so issued  evidence  rights to purchase an aggregate of 25,000  shares of Common
Stock, subject to adjustment as provided herein.  Certain capitalized terms used
in this Warrant are defined in section 14.

                  1. EXERCISE OF WARRANT. 1.1. MANNER OF EXERCISE.  This Warrant
may be  exercised  by the  holder  hereof,  in whole or in part,  during  normal
business  hours on any Business Day prior to the  expiration  of this Warrant by
surrender of this Warrant, with the form of subscription at the end hereof (or a
reasonable  facsimile  thereof) duly executed by such holder,  to the Company at
its  principal  office  (or, if such  exercise  shall be in  connection  with an
underwritten  Public  Offering of shares of Common  Stock (or Other  Securities)
subject to this Warrant,  at the location at which the Company shall have agreed
to deliver  the  shares of Common  Stock (or Other  Securities)  subject to such
offering),  accompanied  by payment,  in cash or by certified  or official  bank
check  payable  to the order of the  Company or by  application  of Notes in the
manner  provided in section 1.5 (or by a combination  of such  methods),  in the
amount obtained by

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<PAGE>
multiplying  (a) the number of shares of Common Stock (without  giving effect to
any  adjustment  therein)  designated  in such form of  subscription  by (b) the
Warrant Price, and such holder shall thereupon be entitled to receive the number
of duly  authorized,  validly  issued,  fully paid and  nonassessable  shares of
Common Stock (or Other Securities)  determined as provided in sections 2 through
4.

                  1.2.  WHEN  EXERCISE  DEEMED  EFFECTED.  Each exercise of this
Warrant shall be deemed to have been effected  immediately prior to the close of
business on the Business Day on which this Warrant  shall have been  surrendered
to the  Company  as  provided  in  section  1.1,  and at such time the person or
persons in whose name or names any  certificate  or  certificates  for shares of
Common  Stock (or Other  Securities)  shall be  issuable  upon such  exercise as
provided  in section 1.3 shall be deemed to have become the holder or holders of
record thereof.

                  1.3.  DELIVERY  OF  STOCK   CERTIFICATES,   ETC.  As  soon  as
practicable after the exercise of this Warrant,  in whole or in part, and in any
event within ten Business  Days  thereafter  (unless such  exercise  shall be in
connection  with an  underwritten  Public Offering of shares of Common Stock (or
Other Securities) subject to this Warrant, in which event concurrently with such
exercise),  the Company at its expense (including the payment by it of any taxes
(other than transfer  taxes)  applicable to the Company) will cause to be issued
in the name of and delivered to the holder  hereof or,  subject to section 8, as
such holder (upon payment by such holder of any applicable  transfer  taxes) may
direct,

                  (a) a  certificate  or  certificates  for the  number  of duly
         authorized,  validly  issued,  fully paid and  nonassessable  shares of
         Common  Stock (or  Other  Securities)  to which  such  holder  shall be
         entitled upon such exercise  plus, in lieu of any  fractional  share to
         which such holder would otherwise be entitled,  cash in an amount equal
         to the same fraction of the Market Price per share of such Common Stock
         (or Other  Securities)  on the Business Day next  preceding the date of
         such exercise, and

                  (b) in case such  exercise  is in part only,  a new Warrant or
         Warrants of like tenor,  calling in the  aggregate on the face or faces
         thereof for the number of shares of Common Stock equal (without  giving
         effect to any  adjustment  therein) to the number of such shares called
         for on the  face  of this  Warrant  minus  the  number  of such  shares
         designated by the holder upon such exercise as provided in section 1.1.

                                        2

                                      221
<PAGE>
                1.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the
time of or at any time after each exercise of this Warrant,  upon the request of
the holder hereof or of any shares of Common Stock (or Other Securities)  issued
upon such exercise,  acknowledge in writing its continuing  obligation to afford
to  such  holder  all  rights  (including,  without  limitation,  any  right  of
registration of any shares of Common Stock (or Other  Securities)  issuable upon
exercise  of this  Warrant  pursuant  to section 9) to which such  holder  shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant,  provided  that if any such holder shall fail to make any such request,
the failure shall not affect the continuing  obligation of the Company to afford
such rights to such holder.

                  1.5. PAYMENT BY APPLICATION OF THE NOTES. Upon any exercise of
this Warrant, the holder hereof may, at its option,  instruct the Company, by so
specifying  in the form of  subscription  submitted  therewith  as  provided  in
section 1.1, to apply to the payment  required by section 1.1 all or any part of
the principal  amount then unpaid and of the interest on such  principal  amount
then accrued on any one or more Notes at the time held by such holder,  in which
case the  Company  will accept the  aggregate  amount of  principal  and accrued
interest  on  such  principal   specified  in  such  form  of   subscription  in
satisfaction  of a like  amount of such  payment.  In case less than the  entire
unpaid principal amount of any Note shall be so specified,  the principal amount
so specified  shall be credited,  as of the date of such  exercise,  against the
installments  of principal  then  remaining  unpaid on such Note pro rata to all
such remaining  installments.  Within ten days after receipt of any such notice,
the  Company  will  pay to the  holder  of the  Notes  submitting  such  form of
subscription,  in the manner provided in such Notes and the Purchase  Agreement,
all unpaid  interest  accrued  to the date of  exercise  of such  Warrant on the
principal  amount so specified in such form of subscription  that is not applied
to the payment required by section 1.1 under this section 1.5. In the event that
the  entire  unpaid  principal  amount  of any Note is  applied  to the  payment
required  by section  1.1 under this  section  1.5,  such Note shall be promptly
surrendered  and  cancelled in  accordance  with the Purchase  Agreement.  It is
understood  that  no  prepayment  premium  will be  payable  in  respect  of any
principal  amount of the Notes applied to the payment required by section 1.1 as
contemplated by this section 1.5.

                  2.  ADJUSTMENTS;  DIVIDENDS.  2.1.  NUMBER OF SHARES;  WARRANT
PRICE.  The number of shares of Common  Stock  which the holder of this  Warrant
shall be entitled to receive upon each  exercise  hereof shall be  determined by
multiplying  the number of shares of Common Stock which would otherwise (but for
the
                                        3

                                      222
<PAGE>
provisions of this section 2) be issuable upon such  exercise,  as designated by
the holder  hereof  pursuant  to  section  1.1,  by a fraction  of which (a) the
numerator is $[insert  initial  Warrant  Price] and (ii) the  denominator is the
Warrant Price in effect on the date of such exercise.  The "Warrant Price" shall
initially be $______ per share,  shall be adjusted and  readjusted  from time to
time as provided in this  section 2 and,  as so  adjusted or  readjusted,  shall
remain in effect until a further adjustment or readjustment  thereof is required
by this section 2.

                  2.2.   ADJUSTMENT  OF  WARRANT   PRICE;   PAYMENT  OF  REGULAR
DIVIDENDS.  2.2.1.  ISSUANCE OF ADDITIONAL  SHARES OF COMMON STOCK.  In case the
Company,  at any time or from time to time  after  June 30,  1994 (the  "Initial
Date"),  shall  issue or sell  Additional  Shares  of  Common  Stock  (including
Additional Shares of Common Stock deemed to be issued pursuant to section 2.3 or
2.4) without  consideration or for a consideration  per share less than the Base
Price in effect,  in each  case,  on the date of and  immediately  prior to such
issue or sale, then, and in each such case, subject to section 2.8, such Warrant
Price  shall be  reduced,  concurrently  with  such  issue  or sale,  to a price
(calculated  to the  nearest  .001 of a cent)  determined  by  multiplying  such
Warrant Price by a fraction,

                  (a) the  numerator  of which shall be (i) the number of shares
         of Common  Stock  outstanding  immediately  prior to such issue or sale
         plus (ii) the  number of shares  of Common  Stock  which the  aggregate
         consideration  received  by the  Company  for the total  number of such
         Additional  Shares of Common Stock so issued or sold would  purchase at
         the Base Price, and

                  (b) the  denominator of which shall be the number of shares of
          Common Stock outstanding immediately after such issue or sale,

PROVIDED that, for the purposes of this section 2.2.1 (x) immediately  after any
Additional  Shares of common  Stock are deemed to have been  issued  pursuant to
section 2.3 or 2.4, such  Additional  Shares shall be deemed to be  outstanding,
and (y) treasury shares shall not be deemed to be outstanding.

                  2.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS.  In case the
Company at any time or from time to time after the Initial  Date shall  declare,
order,  pay  or  make a  dividend  or  other  distribution  (including,  without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off,

                                        4

                                      223
<PAGE>
reclassification,  recapitalization  or similar corporate  rearrangement) on any
Common Stock,  other than (a) a dividend payable in Additional  Shares of Common
Stock or in  Options  for  Common  Stock or (b) a  dividend  payable in cash and
declared out of the earned surplus of the Company,  then, and in each such case,
subject to section 2.8,  the Warrant  Price in effect  immediately  prior to the
close of business on the record date fixed for the  determination  of holders of
any class of securities  entitled to receive such dividend or distribution shall
be reduced,  effective  as of the close of business  on such record  date,  to a
price  (calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,

                  (x) the  numerator of which shall be the Current  Market Price
         in effect on such  record  date or, if the  Common  Stock  trades on an
         ex-dividend basis, on the date prior to the commencement of ex-dividend
         trading, less the value of such dividend or distribution (as determined
         in good faith by the Board of Directors of the Company)  applicable  to
         one share of Common Stock, and

                  (y)  the denominator of which shall be such Current
         Market Price.

                  2.2.3.  PAYMENT OF REGULAR  DIVIDENDs.  In case the Company at
         any time or from time to time after the  Initial  Date  shall  declare,
         order,  pay or make a dividend on its Common Stock  payable in cash and
         declared out of the earned  surplus of the Company,  then,  and in each
         such case,  the holder of this Warrant shall be entitled to receive the
         amount in cash to which such holder would  actually  have been entitled
         as a shareholder upon the payment thereof by the Company if such holder
         had exercised this Warrant  immediately  prior to the close of business
         on the  record  date fixed for the  determination  of holders of Common
         Stock entitled to receive such dividend.

                  2.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES.  In case
the Company at any time or from time to time after the Initial Date shall issue,
sell,  grant or  assume,  or shall fix a record  date for the  determination  of
holders  of any  class  of  securities  entitled  to  receive,  any  Options  or
Convertible  Securities,  then,  and in each such case,  the  maximum  number of
Additional  Shares of Common  Stock  (as set  forth in the  instrument  relating
thereto,  without  regard to any provisions  contained  therein for a subsequent
adjustment of such number) issuable upon the exercise of such options or, in the
case of Convertible  Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be issued for

                                        5

                                      224
<PAGE>
purposes of section 2.1 as of the time of such issue,  sale, grant or assumption
or,  in case  such a record  date  shall  have  been  fixed,  as of the close of
business on such record date (or, if the Common Stock  trades on an  ex-dividend
basis, on the date prior to the commencement of ex-dividend  trading),  PROVIDED
that such  Additional  Shares of Common  Stock  shall not be deemed to have been
issued unless the consideration  per share (determined  pursuant to section 2.5)
of such shares would be less than the Base Price in effect, in each case, on the
date of and  immediately  prior to such  issue,  sale,  grant or  assumption  or
immediately  prior to the close of  business  on such  record  date (or,  if the
Common  Stock  trades  on an  ex-dividend  basis,  on  the  date  prior  to  the
commencement of ex-dividend trading), as the case may be, and PROVIDED, FURTHER,
that in any such case in which  Additional  Shares of Common Stock are deemed to
be issued,

                  (a) no further  adjustment  of the Warrant Price shall be made
         upon the subsequent issue or sale of Additional  Shares of Common Stock
         or  Convertible  Securities  upon the  exercise of such  Options or the
         conversion or exchange of such Convertible Securities;

                  (b) if such Options or  Convertible  Securities by their terms
         provide, with the passage of time or otherwise, for any increase in the
         consideration  payable to the  Company,  or  decrease  in the number of
         Additional  Shares  of  Common  Stock  issuable,   upon  the  exercise,
         conversion or exchange  thereof (by change of rate or  otherwise),  the
         Warrant  Price  computed  upon  the  original  issue,  sale,  grant  or
         assumption  thereof (or upon the occurrence of the record date, or date
         prior to the commencement of ex-dividend  trading,  as the case may be,
         with respect  thereto),  and any subsequent  adjustments based thereon,
         shall,  upon any such  increase  or  decrease  becoming  effective,  be
         recomputed to reflect such  increase or decrease  insofar as it affects
         such  Options,  or the  rights of  conversion  or  exchange  under such
         Convertible Securities, which are outstanding at such time;

                  (c) upon the  expiration  of any such Options or of the rights
         of conversion or exchange under any such  Convertible  Securities which
         shall not have been  exercised  (or upon  purchase  by the  Company and
         cancellation  or  retirement  of any such Options  which shall not have
         been  exercised  or of any such  Convertible  Securities  the rights of
         conversion or exchange under which shall not have been exercised),  the
         Warrant  Price  computed  upon  the  original  issue,  sale,  grant  or
         assumption  thereof (or upon the occurrence of the record date, or date
         prior to the commencement of ex-dividend  trading,  as the case may be,
         with respect thereto), and any

                                        6

                                      225
<PAGE>
         subsequent  adjustments based thereon,  shall, upon such expiration (or
         such cancellation or retirement,  as the case may be), be recomputed as
         if:

                           (x) in the case of  options  for  Common  Stock or of
                  Convertible  Securities,  the only Additional Shares of Common
                  Stock  issued  or sold  were the  Additional  Shares of Common
                  Stock,  if any,  actually  issued or sold upon the exercise of
                  such Options or the conversion or exchange of such Convertible
                  Securities and the consideration  received therefor was (i) an
                  amount equal to (A) the consideration actually received by the
                  Company for the issue,  sale,  grant or assumption of all such
                  options, whether or not exercised,  plus (B) the consideration
                  actually received by the Company upon such exercise, minus (C)
                  the consideration paid by the Company for any purchase of such
                  Options which were not  exercised,  or (ii) an amount equal to
                  (A) the consideration actually received by the Company for the
                  issue,  sale,  grant or  assumption  of all  such  Convertible
                  Securities  which were actually  converted or exchanged,  plus
                  (B) the additional consideration, if any, actually received by
                  the Company upon such  conversion  or exchange,  minus (C) the
                  consideration  paid by the  Company  for any  purchase of such
                  Convertible  Securities  the rights of  conversion or exchange
                  under which were not exercised, and

                           (y)  in  the   case  of   Options   for   Convertible
                  Securities,  only the Convertible Securities, if any, actually
                  issued or sold upon the  exercise of such  Options were issued
                  at the time of the issue,  sale,  grant or  assumption of such
                  options, and the consideration received by the Company for the
                  Additional  Shares  of Common  Stock  deemed to have then been
                  issued was an amount equal to (i) the  consideration  actually
                  received  by  the  Company  for  the  issue,  sale,  grant  or
                  assumption of all such options, whether or not exercised, plus
                  (ii) the  consideration  deemed to have been  received  by the
                  Company  (pursuant  to section  2.5) upon the issue or sale of
                  the Convertible  Securities with respect to which such options
                  were actually exercised, minus (iii) the consideration paid by
                  the Company for any  purchase of such  Options  which were not
                  exercised;

                  (d) no  readjustment  pursuant to subdivision (b) or (c) above
         shall have the effect of  increasing  the Warrant Price by an amount in
         excess of the amount of the adjustment

                                        7

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<PAGE>
         thereof  originally  made in  respect  of the  issue,  sale,  grant  or
         assumption of such options or Convertible Securities; and

                  (e) in the  case of any such  Options  which  expire  by their
         terms not more than 30 days  after  the date of issue,  sale,  grant or
         assumption  thereof,  no  adjustment of the Warrant Price shall be made
         until the  expiration or exercise of all such Options,  whereupon  such
         adjustment  shall be made in the manner  provided  in  subdivision  (c)
         above.

          In case at any  time  after  the  Initial  Date the  Company  shall be
required to increase the number of Additional  Shares of Common Stock subject to
any Option or into which any  Convertible  Securities  (other than the Warrants)
are  convertible  or  exchangeable  pursuant to the  operation of  anti-dilution
provisions  applicable  thereto,  such  Additional  Shares shall be deemed to be
issued for purposes of section 2.1 as of the time of such increase.

                  2.4. TREATMENT OF STOCK DIVIDENDS,  STOCK SPLITS, ETC. In case
the  Company  at any time or from time to time  after  the  Initial  Date  shall
declare or pay any dividend or other  distribution  on any class of stock of the
Company  payable  in  Common  Stock,  or  shall  effect  a  subdivision  of  the
outstanding  shares of Common  Stock  into a greater  number of shares of Common
Stock (by  reclassification or otherwise than by payment of a dividend in Common
Stock), then, and in each such case,  Additional Shares of Common Stock shall be
deemed to have been  issued  (a) in the case of any such  dividend,  immediately
after the close of business on the record date for the  determination of holders
of any class of securities entitled to receive such dividend, or (b) in the case
of any such  subdivision,  at the close of business on the day immediately prior
to the day upon which such corporate action becomes effective.

                  2.5.  COMPUTATION OF CONSIDERATION.  For the purposes
of this section 2:

                  (a) The  consideration for the issue or sale of any Additional
         Shares of Common Stock or for the issue,  sale,  grant or assumption of
         any Options or Convertible  Securities,  irrespective of the accounting
         treatment of such consideration, shall

                           (x) insofar as it  consists  of cash,  be computed at
                  the amount of cash received by the Company,  without deducting
                  any   expenses   paid  or  incurred  by  the  Company  or  any
                  commissions or  compensation  paid or concessions or discounts
                  allowed to underwriters, dealers or others

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<PAGE>
                  performing similar services and any accrued interest or
                  dividends in connection with such issue or sale,

                           (y)   insofar  as  it   consists   of   consideration
                  (including  securities)  other than cash,  be  computed at the
                  fair  value  thereof  at the time of such  issue  or sale,  as
                  determined  in good  faith by the  Board of  Directors  of the
                  Company,  without  deducting  any expenses paid or incurred by
                  the  Company  for  any  commissions  or  compensation  paid or
                  concessions or discounts  allowed to underwriters,  dealers or
                  others performing similar services and any accrued interest or
                  dividends in connection with such issue or sale, and

                           (z) in case  Additional  Shares of  Common  Stock are
                  issued or sold or  Convertible  Securities  are issued,  sold,
                  granted or assumed  together with other stock or securities or
                  other assets of the Company for a  consideration  which covers
                  both,  be the  proportion of such  consideration  so received,
                  computed  as  provided  in  subdivisions  (x) and  (y)  above,
                  allocable  to  such  Additional  Shares  of  Common  Stock  or
                  Convertible Securities,  as the case may be, all as determined
                  in good faith by the Board of Directors of the Company.

                  (b) All options issued, sold, granted or assumed together with
         other  stock  or  securities  or  other  assets  of the  Company  for a
         consideration which covers both, all Additional Shares of Common Stock,
         Options or Convertible  Securities issued in payment of any dividend or
         other  distribution  on any  class  of  stock  of the  Company  and all
         Additional Shares of Common Stock issued to effect a subdivision of the
         outstanding  shares of Common Stock into a greater  number of shares of
         Common Stock (by  reclassification  or  otherwise  than by payment of a
         dividend in Common  Stock) shall be deemed to have been issued  without
         consideration.

                  (c)  Additional  Shares  of Common  Stock  deemed to have been
         issued for  consideration  pursuant to section 2.3, relating to Options
         and Convertible  Securities,  shall be deemed to have been issued for a
         consideration per share determined by dividing

                           (x) the total amount, if any, received and receivable
                  by the Company as consideration for the issue,  sale, grant or
                  assumption  of  the  Options  or  Convertible   Securities  in
                  question,  plus the  minimum  aggregate  amount of  additional
                  consideration (as set

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<PAGE>
                  forth in the instruments  relating thereto,  without regard to
                  any provision contained therein for a subsequent adjustment of
                  such  consideration)  payable to the Company upon the exercise
                  in full of such Options or the  conversion or exchange of such
                  Convertible   Securities  or,  in  the  case  of  Options  for
                  Convertible  Securities,  the  exercise  of such  Options  for
                  Convertible  Securities and the conversion or exchange of such
                  Convertible   Securities,   in  each   case   computing   such
                  consideration as provided in the foregoing sub-

                  division (a), by

                           (y) the maximum  number of shares of Common Stock (as
                  set forth in the instruments relating thereto,  without regard
                  to any provision contained therein for a subsequent adjustment
                  of such number)  issuable upon the exercise of such Options or
                  the conversion or exchange of such Convertible Securities.

                  (d) Additional Shares of Common Stock issued or deemed to have
         been  issued  pursuant to the  operation  of  anti-dilution  provisions
         applicable to Convertible Securities (other than the Warrants), Options
         or  other  securities  of  the  Company  (either  as a  result  of  the
         adjustments  provided for by the Warrants or otherwise) shall be deemed
         to have been issued without consideration.

                  2.6.   ADJUSTMENTS   FOR   COMBINATIONS,   ETC.  In  case  the
outstanding  shares  of Common  Stock  shall be  combined  or  consolidated,  by
reclassification  or otherwise,  into a lesser number of shares of Common Stock,
the  Warrant  Price  in  effect   immediately   prior  to  such  combination  or
consolidation shall,  concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.

                  2.7. DILUTION IN CASE OF OTHER  SECURITIES.  In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other  Securities or any other Person referred to in section 3) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a  consideration
such as to dilute,  on a basis consistent with the standards  established in the
other provisions of this section 2, the purchase rights granted by this Warrant,
then, and in each such case, the  computations,  adjustments  and  readjustments
provided for in this  section 2 with respect to the Warrant  Price shall be made
as nearly as  possible in the manner so provided  and applied to  determine  the
amount of

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Other Securities from time to time receivable upon the exercise of the Warrants,
so as to  protect  the  holders  of the  Warrants  against  the  effect  of such
dilution.

                  2.8. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any
adjustment  of the Warrant  Price  required  pursuant to this section 2 would be
less than  one-tenth  of one percent of the Warrant  Price in effect at the time
such  adjustment  is  otherwise  so  required to be made,  such amount  shall be
carried  forward and  adjustment  with  respect  thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried  forward,  shall aggregate at least one-tenth
of one percent of such Warrant Price;  PROVIDED that,  upon the exercise of this
Warrant,  all adjustments  carried  forward and not  theretofore  made up to and
including  the  date  of  such  exercise  shall  be  made  to  the  nearest  one
one-hundredth of a cent.

                  3. CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC.
3.1. GENERAL PROVISIONS.  In case the Company, after the Initial Date, (a) shall
consolidate  with or merge into any other Person and shall not be the continuing
or surviving  corporation of such  consolidation or merger,  or (b) shall permit
any other Person to  consolidate  with or merge into the Company and the Company
shall be the  continuing  or  surviving  Person  but,  in  connection  with such
consolidation or merger,  Common Stock or Other Securities shall be changed into
or  exchanged  for cash,  stock or other  securities  of any other Person or any
other property, or (c) shall transfer all or substantially all of its properties
and assets to any other Person, or (d) shall effect a capital  reorganization or
reclassification  of  Common  Stock or Other  Securities  (other  than a capital
reorganization or  reclassification  resulting in the issue of Additional Shares
of Common Stock for which adjustment in the Warrant Price is provided in section
2.2.1 or 2.2.2),  then,  and in the case of each such  transaction,  the Company
shall give written notice thereof to each holder of any Warrant not less than 30
days prior to the  consummation  thereof and proper  provision  shall be made so
that, upon the basis and the terms and in the manner provided in this section 3,
the  holder of this  Warrant,  upon the  exercise  hereof at any time  after the
consummation of such transaction, shall be entitled to receive, at the aggregate
Warrant  Price in effect at the time of such  consummation  for all Common Stock
(or other  Securities)  issuable  upon such exercise  immediately  prior to such
consummation,  in lieu of the Common Stock (or Other  Securities)  issuable upon
such  exercise  prior to such  consummation,  either of the  following,  as such
holder  shall  elect by  written  notice to the  Company  on or before  the date
immediately preceding the date of the consumma-

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<PAGE>
tion of such transaction (and, in the absence of such notice,  the provisions of
subdivision (y) below shall be deemed to have been elected by such holder):

                  (x) the highest  amount of cash,  securities or other property
         to which such holder would actually have been entitled as a shareholder
         upon such  consummation  if such  holder  had  exercised  this  Warrant
         immediately prior thereto,  subject to adjustments  (subsequent to such
         consummation)  as nearly  equivalent  as  possible  to the  adjustments
         provided  for in  section  2 and this  section  3,  PROVIDED  that if a
         purchase, tender or exchange offer shall have been made to and accepted
         by the  holders of Common  Stock  under  circumstances  in which,  upon
         completion  of such  purchase,  tender  or  exchange  offer,  the maker
         thereof,  together  with  members of any group  (within  the meaning of
         Section  13(d)(3) of the  Exchange  Act) of which such maker is a part,
         and together  with any affiliate or associate of such maker (within the
         meaning of Rule 12b-2  under the  Exchange  Act) and any members of any
         such group of which any such  affiliate  or  associate  is a part,  own
         beneficially  (within the meaning of Rule 13d-3 under the Exchange Act)
         more than 50% of the  outstanding  shares of Common  Stock,  and if the
         holder  of this  Warrant  so  designates  in such  notice  given to the
         Company,  the holder of this  Warrant  shall be entitled to receive the
         highest  amount of cash,  securities  or other  property  to which such
         holder would actually have been entitled as a shareholder if the holder
         of this Warrant had exercised  this Warrant prior to the  expiration of
         such purchase, tender or exchange offer, accepted such offer and all of
         the Common  Stock held by such  holder had been  purchased  pursuant to
         such purchase,  tender or exchange offer,  subject to adjustments (from
         and after the consummation of such purchase,  tender or exchange offer)
         as nearly  equivalent  as possible to the  adjustments  provided for in
         section 2 and this section 3; or

                  (y) the number of shares of Voting Common Stock (or equivalent
         equity  interests) of the Acquiring  Person or, if the Acquiring Person
         fails to meet, but its Parent meets,  the requirements set forth in the
         proviso below,  of its Parent,  subject to  adjustments  (subsequent to
         such  corporate  action)  as  nearly  equivalent  as  possible  to  the
         adjustments provided for in section 2 and this section 3, determined by
         dividing  (i) the  product  obtained by  multiplying  (A) the number of
         shares of Common  Stock (or Other  Securities)  to which the  holder of
         this Warrant  would have been entitled had such holder  exercised  this
         Warrant  immediately  prior to the  consummation  of such  transaction,
         times (B) the greater

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<PAGE>
         of the  Acquisition  Price and the Warrant  Price in effect on the date
         immediately  preceding  the  date of  such  consummation,  by (ii)  the
         Current  Market  Price  per  share  of  the  Voting  Common  Stock  (or
         equivalent  equity interests) of the Acquiring Person or its Parent, as
         the case may be,  on the date  immediately  preceding  the date of such
         consummation;

PROVIDED that the Company shall not effect any of the transactions  described in
subdivisions  (a) through (d) above  unless,  immediately  after the date of the
consummation of such transaction, the Acquiring Person or its Parent is required
to file,  by virtue of having an  outstanding  class of Voting  Common Stock (or
equivalent equity interests), reports with the Commission pursuant to section 13
or section  15(d) of the  Exchange  Act,  and such Voting  Stock (or  equivalent
equity  interest)  is listed or  admitted  to trading  on a national  securities
exchange or is quoted in the NASD automated  quotation system. In the event that
the Acquiring  Person  fulfills the  requirements  contained in the  immediately
preceding proviso,  then, if the holder of this Warrant shall elect (or shall be
deemed to elect) to receive Voting Common Stock (or equivalent equity interests)
pursuant to  subdivision  (y) above,  such holder  shall be entitled to receive,
upon the basis stated in such  subdivision (y), only the Voting Common Stock (or
equivalent equity interests) of the Acquiring Person.

                  3.2.  ASSUMPTION  OF  OBLIGATIONS.   Notwithstanding  anything
contained in this Warrant or the Purchase Agreement to the contrary, the Company
will not effect any of the  transactions  described in subdivisions  (a) through
(d) of section 3.1 unless, prior to the consummation thereof, each Person (other
than the  Company)  which may be required  to deliver  any cash,  stock or other
securities  or other  property  upon the  exercise  of this  Warrant as provided
herein  shall  assume,  by  written  instrument  delivered  to,  and  reasonably
satisfactory to, the holder of this Warrant,  (a) the obligations of the Company
under this Warrant (and if the Company  shall survive the  consummation  of such
transaction,  such assumption shall be in addition to, and shall not release the
Company from, any continuing  obligations of the Company under this Warrant) and
(b) the  obligation  to  deliver  to such  holder  such  cash,  stock  or  other
securities or other property as, in accordance with the foregoing  provisions of
this  section 3, such holder may be entitled to receive,  and such Person  shall
have  similarly  delivered to such holder an opinion of counsel for such Person,
which counsel shall be reasonably satisfactory to such holder, stating that this
Warrant shall thereafter  continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of section

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<PAGE>
2 and this section 3) shall be applicable to the cash, stock or other securities
or other property which such Person may be required to deliver upon any exercise
of this Warrant or the exercise of any rights pursuant  hereto.  Nothing in this
section 3 or in section 7 shall be deemed to authorize the Company to enter into
any transaction not otherwise permitted by the Purchase Agreement.

                  4. OTHER DILUTIVE EVENTS.  In case any event shall occur as to
which the  provisions of section 2 or section 3 are not strictly  applicable but
the failure to make any adjustment  would not fairly protect the purchase rights
represented  by this  Warrant  in  accordance  with  the  essential  intent  and
principles of such sections,  then, in each such case, the Company shall appoint
a firm of independent public accountants of recognized  national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the  adjustment,  if any, on a basis  consistent  with the essential  intent and
principles  established  in sections 2 and 3,  necessary  to  preserve,  without
dilution,  the purchase rights represented by this Warrant. Upon receipt of such
opinion  the Company  will  promptly  mail a copy  thereof to the holder of this
Warrant and shall make the adjustments described therein.

                  5. NO  DILUTION  OR  IMPAIRMENT.  The  Company  will  not,  by
amendment of its  certificate  of  incorporation  or through any  consolidation,
merger,  reorganization,  transfer  of  assets,  dissolution,  issue  or sale of
securities or any other voluntary action,  avoid or seek to avoid the observance
or  performance  of any of the terms of this  Warrant,  but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the  holder  of this  Warrant  against  dilution  or other  impairment.  Without
limiting the  generality of the  foregoing,  the Company (a) will not permit the
par value of any shares of stock receivable upon the exercise of this Warrant to
exceed the amount payable  therefor upon such  exercise,  (b) will take all such
action as may be necessary or  appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock upon the exercise
of all of the Warrants from time to time outstanding,  and (c) will not take any
action which results in any  adjustment of the Warrant Price if the total number
of shares of Common Stock (or Other  Securities)  issuable after the action upon
the exercise of all of the  Warrants  would exceed the total number of shares of
Common Stock (or other Securities) then authorized by the Company's  certificate
of incorporation and available for the purpose of issue upon such exercise.

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<PAGE>
                  6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS.  In each case of any
adjustment or readjustment  in the shares of Common Stock (or Other  Securities)
issuable  upon the  exercise of the  Warrants,  the Company at its expense  will
promptly compute such adjustment or readjustment in accordance with the terms of
the Warrants,  and will prepare a certificate of the chief financial  officer of
the  Company  setting  forth such  adjustment  or  readjustment  and  showing in
reasonable  detail the method of  calculation  thereof  and the facts upon which
such  adjustment  or  readjustment  is based,  including  without  limitation  a
statement of (a) the consideration received or to be received by the Company for
any  Additional  Shares  of Common  Stock  issued or sold or deemed to have been
issued,  (b) the number of shares of Common  Stock  outstanding  or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
or sale and as adjusted  and  readjusted  (if  required by section 2) on account
thereof. The Company will forthwith mail a copy of each such certificate to each
holder of a Warrant and will, upon the written request at any time of any holder
of a  Warrant,  furnish  to such  holder a like  certificate  setting  forth the
Warrant Price at the time in effect and showing in reasonable  detail how it was
calculated.  In addition,  with respect to any fiscal year of the Company during
which any such adjustment or readjustment shall have been made, the Company will
cause the independent public accountants  reporting upon the Company's financial
statements for such fiscal year to verify,  concurrently with their annual audit
of the Company's  financial  statements,  the  computations  made by the Company
during  such  fiscal  year and to prepare  and to  deliver  to each  holder of a
Warrant a report setting forth substantially the information  described above in
this  section 6 with  respect to all such  adjustments  and  readjustments.  The
Company  will  also keep  copies of all such  certificates  and  reports  at its
principal  office and will cause the same to be available for inspection at such
office  during  normal  business  hours  by  any  holder  of a  Warrant  or  any
prospective purchaser of a Warrant designated by the holder thereof.


                  7. NOTICES OF CORPORATE ACTION. In the event of

                  (a) any taking by the  Company  of a record of the  holders of
         any class of  securities  for the  purpose of  determining  the holders
         thereof who are entitled to receive any dividend or other distribution,
         or any right to subscribe for, purchase or otherwise acquire any shares
         of stock of any  class  or any  other  securities  or  property,  or to
         receive any other right, or

                  (b)  any capital reorganization of the Company, any
         reclassification or recapitalization of the capital stock of

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<PAGE>
         the Company or any consolidation or merger involving the
         Company and any other Person or any transfer of all or
         substantially all the assets of the Company to any other
         Person, or

                  (c)  any voluntary or involuntary dissolution,
         liquidation or winding-up of the Company,

the Company  will mail to each holder of a Warrant a notice  specifying  (x) the
date or expected date on which any such record is to be taken for the purpose of
such  dividend,  distribution  or right,  and the amount and  character  of such
dividend,  distribution or right, and (y) the date or expected date on which any
such reorganization, reclassification,  recapitalization, consolidation, merger,
transfer, dissolution,  liquidation or winding-up is to take place and the time,
if any such time is to be fixed,  as of which  the  holders  of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other  Securities)  for the securities or other  property  deliverable
upon such  reorganization,  reclassification,  recapitalization,  consolidation,
merger, transfer,  dissolution,  liquidation or winding-up. Such notice shall be
mailed at least 20 days prior to the date therein specified,  in the case of any
date referred to in the foregoing subdivision (x), and at least 30 days prior to
the date therein specified, in the case of the date referred to in the foregoing
subdivision (y).

          8. RESTRICTIONS ON TRANSFER. 8.1. RESTRICTIVE LEGENDS. Except
as  otherwise  permitted  by this  section  8, each  Warrant  originally  issued
pursuant  to the  Purchase  Agreement  and each  Warrant  issued  upon direct or
indirect  Transfer or in  substitution  for any  Warrant  pursuant to section 13
shall be stamped  or  otherwise  imprinted  with a legend in  substantially  the
following form:

         "This Warrant and any shares acquired upon the exercise of this Warrant
         have not been  registered  under the Securities Act of 1933 and may not
         be transferred  except in compliance with such Act and applicable state
         securities  laws.  This  Warrant  and such  shares are also  subject to
         certain  restrictions  on  transferability   imposed  by  Common  Stock
         Purchase Warrants expiring June 30, 2004, a copy of which is on file at
         the offices of the Company."

Except as otherwise  permitted by this  section 8, each  certificate  for Common
Stock (or Other  Securities)  issued  upon the  exercise of any Warrant and each
certificate issued upon the direct or indirect Transfer of any such Common Stock
(or Other Securities)
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<PAGE>
shall be stamped  or  otherwise  imprinted  with a legend in  substantially  the
following form:

         "The shares  represented by this  certificate  have not been registered
         under the Securities  Act of 1933 and may not be transferred  except in
         compliance  with such Act and applicable  state  securities  laws. Such
         shares  are also  subject to certain  restrictions  on  transferability
         imposed by Common Stock  Purchase  Warrants  expiring  June 30, 2004, a
         copy of which is on file at the offices of the Company."

                  8.2. NOTICE OF PROPOSED TRANSFER;  OPINIONS OF COUNSEL.  Prior
to any Transfer of any Restricted  Securities  which are not registered under an
effective registration statement under the Securities Act (other than a Transfer
pursuant to Rule 144 or any comparable  rule under such Act), the holder thereof
will give  written  notice to the Company of such  holder's  intention to effect
such  Transfer and to comply in all other  respects  with this section 8.2. Each
such notice (a) shall  describe  the manner and  circumstances  of the  proposed
Transfer in sufficient  detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
may be internal  counsel for such  holder).  The holder  giving such notice will
submit a copy thereof to the counsel  designated  in such notice and the Company
will promptly  submit a copy thereof to its counsel.  The  following  provisions
shall then apply:

                  (x) If in the  opinion  of such  counsel  for the  holder  the
         proposed Transfer may be effected without registration (a copy of which
         opinion  shall be  delivered  to the  Company),  and if such opinion is
         reasonably  satisfactory to the Company, such holder shall thereupon be
         entitled to Transfer such Restricted  Securities in accordance with the
         terms of the  notice  delivered  by such  holder to the  Company.  Each
         Warrant or certificate,  if any, issued upon or in connection with such
         Transfer  shall bear the  appropriate  restrictive  legend set forth in
         section 8.1 unless,  in the opinion of such  counsel and the  Company's
         counsel,  such legend is no longer  required to insure  compliance with
         the Securities Act.

                  (y) If the  opinion of such  counsel  for the holder is not to
         the effect that the proposed  Transfer may legally be effected  without
         registration  of such Restricted  Securities  under the Securities Act,
         such  holder  shall  not  be  entitled  to  Transfer  such   Restricted
         Securities  (other  than in a  Transfer  pursuant  to  Rule  144 or any
         comparable   rule  under  the  Securities  Act)  until  the  conditions
         specified in
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<PAGE>
         subdivision (x) above shall be satisfied or until  registration of such
         Restricted Securities under the Securities Act has become effective.

Notwithstanding the foregoing  provisions of this section 8.2, the holder of any
Restricted  Securities  shall be  permitted  to  Transfer  any  such  Restricted
Securities  pursuant to Rule 144A under the Securities  Act,  PROVIDED that each
transferee  agrees in writing to be bound by all the restrictions on transfer of
such Restricted Securities contained in this section 8.2.

                  8.3. TERMINATION OF RESTRICTIONS.  The restrictions imposed by
this section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular  Restricted  Securities (a) when such  securities
shall have been effectively  registered under the Securities Act and disposed of
in  accordance  with  the  registration   statement   covering  such  Restricted
Securities, (b) when, in the opinions of both counsel for the holder thereof and
counsel for the Company,  such  restrictions  are no longer required in order to
insure compliance with the Securities Act, or (c) when such securities have been
beneficially owned, by a person who has not been an affiliate of the Company for
at least three months,  for a period of at least three years,  all as determined
under  Rule 144 under the  Securities  Act.  Whenever  such  restrictions  shall
terminate as to any Restricted Securities, as soon as practicable thereafter and
in any event within ten Business  Days,  the holder thereof shall be entitled to
receive from the Company,  without  expense (other than transfer taxes, if any),
new  securities  of like tenor not  bearing the  applicable  legend set forth in
section 8.1 hereof.

                  9. REGISTRATION  UNDER SECURITIES ACT, ETC. 9.1.  REGISTRATION
ON REQUEST.  (a) REQUEST.  At any time and from time to time after  December 30,
1994,  upon the written request of one or more  Initiating  Holders,  requesting
that the Company effect the registration under the Securities Act of all or part
of such Initiating Holders'  Registrable  Securities and specifying the intended
method of disposition  thereof, the Company will promptly give written notice of
such  requested   registration   to  all  holders  of  outstanding   Registrable
Securities,  and thereupon will use its best efforts to effect its  registration
under the Securities Act, including by means of a shelf registration pursuant to
Rule 415 under the  Securities  Act if so  requested in such request (but in the
case of a shelf  registration  only if the Company is then  eligible to use Form
S-2 or S-3 (or any successor forms)), of

                  (x) the Registrable  Securities  which the Company has been so
         requested to register by such Initiating Holder or

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<PAGE>
         Holders for  disposition  in  accordance  with the  intended  method of
         disposition stated in such request, and

                  (y) all other Registrable Securities the Holders of which have
         made written requests to the Company for registration thereof within 20
         Business  Days after the giving of such  written  notice by the Company
         (which  request  shall  specify  the  intended  method  of  disposition
         thereof),

all to the extent  requisite to permit the  disposition  (in accordance with the
intended  methods thereof as aforesaid) of the  Registrable  Securities so to be
registered;  PROVIDED  that the  Company  shall not be  required  to effect  the
registration pursuant to this section 9.1 of any Warrants (but shall be required
to effect the  registration of Registrable  Securities  described in clauses (b)
and (c) of the definition of  Registrable  Securities),  and PROVIDED,  FURTHER,
that  any  holder  of  Registrable   Securities  to  be  included  in  any  such
registration, by written notice to the Company within 10 Business Days after its
receipt of a copy of a notice from the managing  underwriter  delivered pursuant
to section  9.1(g),  may withdraw such request and, on receipt of such notice of
the withdrawal of such request from holders  comprising  the Requisite  Holders,
the Company may elect not to effect such  registration.  Subject to  subdivision
(g) the Company may include in such  registration  other securities for sale for
its own account or for the account of any other Person.

                  (b) NUMBER OF REGISTRATIONS. The Company shall not be required
to effect more than one registration pursuant to this section 9.1, PROVIDED that
such  registration  shall  permit  the  disposition  of  at  least  80%  of  the
Registrable  Securities  which the Company has been so  requested  to  register,
PROVIDED,  FURTHER,  that if one or more such  registrations,  in the aggregate,
shall not permit the disposition of at least 80% of such Registrable Securities,
the Company  shall be required to effect  additional  registrations  pursuant to
this section 9.1 until they have  permitted the  disposition  of at least 80% of
such Registrable Securities.

                  (c) REGISTRATION STATEMENT FORM. The Company may, if permitted
by law, effect any  registration  requested under this section 9.1 by the filing
of a registration  statement on Form S-3 (or any successor or similar short form
registration  statement)  unless the  holders  holding  at least a majority  (by
number of shares) of the  Registrable  Securities as to which such  registration
relates (and, if such registration  involves an underwritten  Public Offering of
such Registrable  Securities,  the managing underwriter of such Public Offering)
shall notify the Company in writing  that, in the judgment of such holders (and,
if

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<PAGE>
applicable,  such  managing  underwriter),  the  use  of a  more  detailed  form
specified in such notice is of material  importance to the success of the Public
Offering of such Registrable  Securities,  in which case such registration shall
be effected on the form so specified.

                  (d) EXPENSES.  The Company will pay all Registration  Expenses
in connection with any registration  and sale effected  pursuant to this section
9.1.

                  (e) SELECTION OF  UNDERWRITERS.  If, in the  discretion of the
holders of a majority (by number of shares) of the Registrable  Securities,  any
offering pursuant to this section 9.1 shall constitute an underwritten offering,
the underwriter or underwriters  thereof shall be selected,  after  consultation
with the Company, by such holders and shall be acceptable to the Company,  which
shall  not   unreasonably   withhold  its  acceptance  of  such  underwriter  or
underwriters.

                  (f) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this section 9.1 will not be deemed to have been effected (x) unless
it has become  effective,  provided  that a  registration  which does not become
effective  after the Company has filed a  registration  statement  with  respect
thereto  solely by reason of the  refusal to proceed of the  Initiating  Holders
shall be deemed to have been  effected  by the  Company  at the  request of such
Initiating Holders, unless such Initiating Holders shall have elected to pay all
Registration Expenses in connection with such registration, (y) if, after it has
become  effective,  such  registration  is  interfered  with by any stop  order,
injunction or other order or requirement of the Commission or other governmental
agency or court,  or (z) if the conditions to closing  specified in the purchase
agreement  or  underwriting  agreement  entered  into in  connection  with  such
registration  are not satisfied  other than by reason of some act or omission by
such Initiating Holders.

                  (g)  PRIORITY  IN  REQUESTED  REGISTRATIONS.  If  a  requested
registration pursuant to this section 9.1 involves an underwritten offering, and
the managing  underwriter  shall  advise the Company in writing  (with a copy to
each holder of  Registrable  Securities  requesting  registration)  that, in its
opinion,  the number of securities requested to be included in such registration
(including  securities  of the  Company  which are not  Registrable  Securities)
exceeds the number which can be sold in such offering,  the Company will include
in any such  registration  to the extent of the number  which the  Company is so
advised can be sold in such offering (x) first, Registrable Securities requested
to be included in such registration by the holder or

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<PAGE>
holders of  Registrable  Securities  pro rata among such holders on the basis of
the number of Registrable  Securities  requested to be included by such holders,
and (y) second,  other securities of the Company proposed to be included in such
registration, in accordance with the priorities, if any, then existing among the
Company and the holders of such other securities.

                  (h)  COMPANY  REQUEST  FOR  DELAY.  Except  with  respect to a
registration  statement  covering a shelf  registration,  the  Company  shall be
entitled to postpone  for a  reasonable  period of time (but not  exceeding  180
days) the filing of any registration statement otherwise required to be prepared
and filed by it pursuant to this  section 9.1 if the Board of  Directors  of the
Company  determines,  in its reasonable  judgment,  that such  registration  and
offering   would   interfere   with  any   financing,   acquisition,   corporate
reorganization or other material transaction involving the Company or any of its
affiliates and promptly gives the holders of Registrable  Securities  requesting
registration  thereof  pursuant  to this  section  9.1  written  notice  of such
determination,   containing  a  general   statement  of  the  reasons  for  such
postponement  and  approximation  of the anticipated  delay. The Company may not
postpone a filing under this section  9.1(h) more than once in any  twelve-month
period. If the Company shall so postpone the filing of a registration statement,
holders of Registrable  Securities  requesting  registration thereof pursuant to
section 9.1,  representing not less than 15% of the Registrable  Securities with
respect to which registration has been requested, and constituting not less than
50% of the Initiating Holders,  shall have the right to withdraw the request for
registration  by giving  written  notice  to the  Company  within 30 days  after
receipt of the notice of postponement and, in the event of such withdrawal, such
request  shall not be counted for purposes of the requests for  registration  to
which holders of Registrable Securities are entitled pursuant to section 9.1.

                  (i) SHELF REGISTRATION STATEMENT.  The Company shall be deemed
to have complied  with a request for  registration  made by  Initiating  Holders
pursuant to this section 9.1 if, at the time of such request,  there shall be an
effective shelf registration  statement on file with the Commission  pursuant to
Rule 415 under the Securities Act covering the Registrable Securities which such
holders shall have requested to be registered,  if such  registration  statement
complies  with the  provisions of this section 9.1 and of section 9.3 and if the
Company otherwise fulfills the requirements of section 9.1 and 9.3 in respect of
such registration.
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<PAGE>
                  9.2. INCIDENTAL REGISTRATION. (A) RIGHT TO INCLUDE REGISTRABLE
SECURITIES.  Notwithstanding  any  limitation  contained  in section 9.1, if the
Company at any time on or prior to June 30, 2004 proposes to register any of its
securities under the Securities Act (other than by a registration on Form S-4 or
S-8 or any  successor  or  similar  forms),  whether or not for sale for its own
account, in a manner which would permit  registration of Registrable  Securities
for sale to the public  under the  Securities  Act,  it will each such time give
prompt written notice to all holders of Registrable  Securities of its intention
to do so and of such  holders'  rights under this section 9.2.  Upon the written
request of any such holder made within 20 days after  receipt of any such notice
(which request shall specify the Registrable  Securities intended to be disposed
of by such holder and the intended method of disposition  thereof),  the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable  Securities  which the Company has been so requested to register
by the holders  thereof,  to the extent  requisite to permit the disposition (in
accordance  with the intended  methods  thereof as aforesaid) of the Registrable
Securities so to be registered,  by inclusion of such Registrable  Securities in
the  registration  statement  which  covers  the  securities  which the  Company
proposes to  register,  PROVIDED  that (x) the Company  shall not be required to
effect the registration  pursuant to this section 9.2 of any Warrants (but shall
be required to effect the  registration of Registrable  Securities  described in
clauses (b) and (c) of the definition of Registrable  Securities) and (y) if, at
any time after giving written notice of its intention to register any securities
and  prior  to  the  effective  date  of the  registration  statement  filed  in
connection  with such  registration,  the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its  election,  give  written  notice of such  determination  to each  holder of
Registrable Securities and, thereupon, (i) in the case of a determination not to
register,  shall be  relieved of its  obligation  to  register  any  Registrable
Securities in connection with such  registration (but not from its obligation to
pay the  Registration  Expenses in  connection  therewith),  without  prejudice,
however,  to the  rights of any  holder or  holders  of  Registrable  Securities
entitled  to  do  so  to  request  that  such  registration  be  effected  as  a
registration under section 9.1, and (ii) in the case of a determination to delay
registering,  shall be permitted to delay registering any Registrable Securities
for the same  period as the  delay in  registering  such  other  securities.  No
registration  effected  under this section 9.2 shall  relieve the Company of its
obligation to effect any registration  statement upon request under section 9.1.
The Company will pay all Registration

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<PAGE>
Expenses  in  connection  with  each  registration  of  Registrable   Securities
requested pursuant to this section 9.2.

                  (b) PRIORITY IN INCIDENTAL  REGISTRATIONS.  If a  registration
pursuant to this section 9.2 involves an underwritten  offering and the managing
underwriter  advises the Company in writing that, in its opinion,  the number of
securities  requested  to be  included in such  registration  exceeds the number
which  can  be  sold  in  such  offering,  the  Company  will  include  in  such
registration  to the extent of the number which the Company is so advised can be
sold in such offering securities determined as follows:

                  (x) if such registration as initially  proposed by the Company
         was solely a primary  registration  of its securities,  (i) first,  the
         securities proposed by the Company to be sold for its own account, (ii)
         second,  any  Registrable  Securities  requested to be included in such
         registration,  pro rata  among  the  holders  thereof  requesting  such
         registration  on the basis of the  number of shares of such  securities
         requested to be included by such  holders,  and (iii) third,  any other
         securities of the Company proposed to be included in such registration,
         in accordance  with the  priorities,  if any,  then existing  among the
         Company and the holders of such other securities, and

                  (y) if such registration as initially  proposed by the Company
         was in whole or in part  requested  by  holders  of  securities  of the
         Company,  other than  holders of  Registrable  Securities,  pursuant to
         demand  registration  rights,  (i) first,  such  securities held by the
         holders   initiating   such   registration,   in  accordance  with  the
         priorities,  if any, then existing among the Company and the holders of
         such securities,  (ii) second, any Registrable  Securities requested to
         be included in such  registration,  pro rata among the holders  thereof
         requesting  such  registration  on the basis of the number of shares of
         such  securities  requested  to be included  by such  holders and (iii)
         third,  any other  securities of the Company proposed to be included in
         such  registration,  in accordance  with the  priorities,  if any, then
         existing among the Company and the holders of such other securities.

                  9.3. Registration Procedures.  If and whenever (x) the Company
is  required  to  use  its  best  efforts  to  effect  the  registration  of any
Registrable  Securities under the Securities Act as provided in sections 9.1 and
9.2 or (y) there is a Requesting Holder in connection with any other proposed

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<PAGE>
registration  by the Company  under the  Securities  Act,  the  Company  will as
expeditiously as possible:

                  (a)  prepare  and  file  with  the  Commission  the  requisite
         registration  statement (including such audited financial statements as
         may be  required  by the  Securities  Act or the rules and  regulations
         promulgated  thereunder) to effect such  registration  and use its best
         efforts  to cause  such  registration  statement  to become  effective,
         PROVIDED  that  before  filing  such  registration   statement  or  any
         amendments thereto, the Company will furnish to the counsel selected by
         the holders of Registrable  Securities whose Registrable Securities are
         to be  included  in such  registration  copies  of all  such  documents
         proposed to be filed,  which documents will be subject to the review of
         such counsel, and PROVIDED,  FURTHER,  that the Company may discontinue
         any registration of its securities which are not Registrable Securities
         at any time prior to the effective date of the  registration  statement
         relating thereto;

                  (b) prepare and file with the Commission  such  amendments and
         supplements to such  registration  statement and the prospectus used in
         connection  therewith as may be necessary to maintain the effectiveness
         of such registration statement and to comply with the provisions of the
         Securities  Act  with  respect  to the  disposition  of all  securities
         covered by such  registration  statement until the earlier of such time
         as all of such  securities have been disposed of in accordance with the
         intended  methods of disposition  by the seller or sellers  thereof set
         forth in such  registration  statement  and the  expiration  of 90 days
         after  such  registration  statement  becomes  effective,  except  with
         respect to any such  registration  statement filed pursuant to Rule 415
         (or any successor  Rule) under the  Securities  Act, in which case such
         period shall be 2 years;

                  (c) furnish to each seller of Registrable  Securities  covered
         by such  registration  statement and each Requesting Holder such number
         of conformed  copies of such  registration  statement  and of each such
         amendment and supplement thereto (in each case including all exhibits),
         such number of copies of the prospectus  contained in such registration
         statement  (including  each  preliminary  prospectus  and  any  summary
         prospectus)  and any other  prospectus  filed  under Rule 424 under the
         Securities Act, in conformity  with the  requirements of the Securities
         Act, and such other documents, as such seller may reasonably request;

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<PAGE>
                  (d)  use  its  best   efforts  to   register  or  qualify  all
         Registrable   Securities   and  other   securities   covered   by  such
         registration  statement under such other securities or blue sky laws of
         such  jurisdictions  as each seller thereof and each Requesting  Holder
         shall reasonably request, to keep such registration or qualification in
         effect for so long as such  registration  statement  remains in effect,
         and  take  any  other  action  which  may be  reasonably  necessary  or
         advisable to enable such seller to consummate  the  disposition in such
         jurisdictions of the securities  owned by such seller,  except that the
         Company shall not for any such purpose be required to qualify generally
         to do business as a foreign corporation in any jurisdiction  wherein it
         would not but for the requirements of this subdivision (d) be obligated
         to be so qualified  or to consent to general  service of process in any
         such jurisdiction;

                  (e) use its best efforts to cause all  Registrable  Securities
         covered  by  such  registration  statement  to be  registered  with  or
         approved by such other  governmental  agencies or authorities as may be
         necessary  to enable the seller or sellers  thereof to  consummate  the
         disposition of such Registrable Securities;

                  (f) furnish to each seller of Registrable  Securities and each
         Requesting Holder a signed  counterpart,  addressed to such seller (and
         the underwriters, if any), of

                           (x) an opinion of counsel for the Company,  dated the
                  effective date of such  registration  statement  (and, if such
                  registration  includes an underwritten Public Offering,  dated
                  the date of any  closing  under the  underwriting  agreement),
                  reasonably  satisfactory in form and substance to such seller,
                  and

                           (y) a "comfort"  letter,  dated the effective date of
                  such   registration   statement  (and,  if  such  registration
                  includes an underwritten  Public  Offering,  dated the date of
                  any closing under the underwriting  agreement),  signed by the
                  independent   public   accountants   who  have  certified  the
                  Company's  financial  statements included in such registration
                  statement (it being  understood that such letter,  if the cost
                  thereof does not constitute a "Registration Expense", is to be
                  delivered  only at the  request of, and at the expense of, any
                  seller of Registrable Securities or Requesting Holder),

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<PAGE>
         covering   substantially   the  same   matters  with  respect  to  such
         registration  statement (and the prospectus  included  therein) and, in
         the case of the accountants'  letter, with respect to events subsequent
         to the date of such financial statements, as are customarily covered in
         opinions of issuer's counsel and in accountants'  letters  delivered to
         the underwriters in underwritten Public Offerings of securities and, in
         the case of the accountants'  letter,  such other financial matters, as
         such seller (or the underwriters, if any) may reasonably request;

                  (g)  immediately   notify  each  seller  of  such  Registrable
         Securities,  and (if requested by any such seller)  confirm such advice
         in writing,  (w) when the  prospectus or any  prospectus  supplement or
         post-effective  amendment  has been  filed,  and,  with  respect to the
         registration statement or any post-effective  amendment,  when the same
         has  become  effective,  (x)  of any  request  by  the  Commission  for
         amendments  or  supplements  to  the  registration   statement  or  the
         prospectus or for  additional  information,  (y) of the issuance by the
         Commission  of any  stop  order  suspending  the  effectiveness  of the
         registration  statement or the initiation of any  proceedings  for that
         purpose and (z) of the receipt by the Company of any notification  with
         respect  to the  suspension  of the  qualification  of the  Registrable
         Securities  for  sale  in  any   jurisdiction   or  the  initiation  or
         threatening of any proceeding for such purpose;

                  (h) use its  reasonable  best efforts to obtain the withdrawal
         of any order suspending the effectiveness of the registration statement
         at the earliest possible time;

                  (i) immediately  notify each holder of Registrable  Securities
         covered by such registration  statement and each Requesting  Holder, at
         any time when a prospectus relating thereto is required to be delivered
         under the Securities  Act, of the happening of any event as a result of
         which the prospectus included in such registration  statement,  as then
         in effect,  includes an untrue statement of a material fact or omits to
         state any material fact  required to be stated  therein or necessary to
         make  the  statements  therein  not  misleading  in  the  light  of the
         circumstances  under  which they were made,  and at the  request of any
         such holder  promptly  prepare and furnish to such seller a  reasonable
         number of copies of a supplement to or an amendment of such  prospectus
         as may be necessary so that, as thereafter  delivered to the purchasers
         of such  securities,  such  prospectus  shall  not  include  an  untrue
         statement of a material  fact or omit to state a material fact required
         to
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<PAGE>
         be stated  therein or  necessary  to make the  statements  therein  not
         misleading  in the light of the  circumstances  under  which  they were
         made;

                  (j)  otherwise  use  its  best  efforts  to  comply  with  all
         applicable rules and regulations of the commission,  and make available
         to its security holders, as soon as reasonably practicable, an earnings
         statement  covering the period of at least twelve months,  but not more
         than eighteen  months,  beginning  with the first full  calendar  month
         after the effective date of such registration statement, which earnings
         statement  shall  satisfy  the  provisions  of  Section  11(a)  of  the
         Securities  Act,  and not  file any  amendment  or  supplement  to such
         registration  statement or  prospectus  to which any such seller or any
         Requesting  Holder shall have  reasonably  objected on the grounds that
         such amendment or supplement  does not comply in all material  respects
         with  the  requirements  of  the  Securities  Act or of  the  rules  or
         regulations  thereunder,  having been  furnished with a copy thereof at
         least five business days prior to the filing thereof;

                  (k) provide and cause to be  maintained  a transfer  agent and
         registrar for all Registrable  Securities  covered by such registration
         statement  not  later  than  the  effective  date of such  registration
         statement;

                  (l) cooperate with the sellers of such Registrable  Securities
         to  facilitate  the timely  preparation  and  delivery of  certificates
         representing  Registrable Securities to be sold, which securities shall
         not bear any  restrictive  legends and shall be in a form  eligible for
         deposit with The Depository Trust Company;  and enable such Registrable
         Securities to be in such  denominations and registered in such names as
         such sellers may request at least two  business  days prior to any sale
         of Registrable Securities;

                  (m) use its best  efforts  (x) to cause  all such  Registrable
         Securities  covered by such  registration  statement  to be listed on a
         national  securities  exchange (if such Registrable  Securities are not
         already so listed) and on each additional  national securities exchange
         on which similar  securities  issued by the Company are then listed, if
         the listing of such Registrable  Securities is then permitted under the
         rules  of such  exchange,  or (y) to  secure  designation  of all  such
         Registrable  Securities  covered by such  registration  statement  as a
         NASDAQ  "national  market system  security"  within the meaning of Rule
         llAa2-1 of the Commission or, failing that, secure NASDAQ authorization
         for
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<PAGE>
         such Registrable Securities and, without limiting the generality of the
         foregoing,  to arrange  for at least two market  makers to  register as
         such with respect to such Registrable Securities with the NASD;

                  (n)  provide a CUSIP number for all Registrable
         Securities, not later than the effective date of the
         applicable registration statement; and

                  (o) enter into such  agreements and take such other actions as
         the Requisite Holders shall reasonably  request in order to expedite or
         facilitate the disposition of such Registrable Securities.

The Company may require each holder of  Registrable  Securities  as to which any
registration is being effected to furnish the Company such information regarding
such holder and the distribution of such securities as the Company may from time
to time reasonably request in writing.

                  9.4.  UNDERWRITTEN   OFFERINGS.   (A)  REQUESTED  UNDERWRITTEN
OFFERINGS.  If requested by the underwriters  for any  underwritten  offering by
holders of Registrable  Securities pursuant to the registration  requested under
section  9.1, the Company will enter into an  underwriting  agreement  with such
underwriters  for such offering,  such agreement to be satisfactory in substance
and  form  to  each  such  holder  and  the  underwriters  and to  contain  such
representations  and  warranties  by the  Company  and such  other  terms as are
customarily contained in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in section 9.7. The holders
of  Registrable  Securities  to be  distributed  by such  underwriters  shall be
parties to such  underwriting  agreement and may, at their option,  require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters  shall also
be made to and for the benefit of such  holders of  Registrable  Securities  and
that  any or all  of  the  conditions  precedent  to  the  obligations  of  such
underwriters  under such underwriting  agreement be conditions  precedent to the
obligations of such holders of Registrable Securities.  No holder of Registrable
Securities  shall be required to make any  representations  or  warranties to or
agreements  with the  Company or the  underwriters  other than  representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution and any other representation required by law.

                  (b)  INCIDENTAL UNDERWRITTEN OFFERINGS.  If the Company
at any time proposes to register any of its securities under the

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Securities  Act as  contemplated  by section 9.2 and such  securities  are to be
distributed by or through one or more underwriters, the Company will, subject to
the  provisions of section  9.2(b),  use its best  efforts,  if requested by any
holder of Registrable  Securities,  to arrange for such  underwriters to include
the  Registrable  Securities  to be offered  and sold by such  holder  among the
securities to be  distributed by such  underwriters.  The holders of Registrable
Securities  to be  distributed  by such  underwriters  shall be  parties  to the
underwriting  agreement  between the Company and such  underwriters  and may, at
their option,  require that any or all of the representations and warranties by,
and the other  agreements  on the part of, the Company to and for the benefit of
such  underwriters  shall also be made to and for the benefit of such holders of
Registrable  Securities and that any or all of the  conditions  precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the  obligations  of such  holders of  Registrable  Securities.  No
holder of Registrable  Securities shall be required to make any  representations
or warranties to or agreements with the Company or the  underwriters  other than
representations,  warranties  or  agreements  regarding  such  holder  and  such
holder's intended method of distribution and any other  representation  required
by law.

                  (c)  HOLDBACK  AGREEMENTS.  (x)  Each  holder  of  Registrable
Securities agrees, if so required by the managing underwriter, not to effect any
public sale or  distribution  of  securities of the Company of the same class as
the securities  included in such Registration  Statement,  during the seven days
prior to the date on which any underwritten registration pursuant to section 9.1
or 9.2 has become effective and the 90 days  thereafter,  except as part of such
underwritten  registration  or to the extent that such holder is  prohibited  by
applicable law from agreeing to withhold Registrable  Securities from sale or is
acting in its capacity as a fiduciary or an investment adviser. Without limiting
the scope of the term  "fiduciary,"  a holder  shall be deemed to be acting as a
fiduciary or an investment adviser if its actions or the Registrable  Securities
proposed to be sold are subject to ERISA, the Investment  Company Act of 1940 or
the Investment  Advisers Act of 1940 or if such Registrable  Securities are held
in a separate account under applicable insurance law or regulation.

                  (y) The  Company  agrees (i) not to effect any public  sale or
distribution  of  its  equity  securities  or  securities  convertible  into  or
exchangeable  or exercisable  for any of such  securities  during the seven days
prior to the date on which any underwritten registration pursuant to section 9.1
or 9.2 has become effective and the 90 days thereafter, except as part of

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such underwritten  registration and except pursuant to registrations on Form S-4
or S-8 or any successor or similar forms thereto,  and (ii) to cause each holder
of its equity  securities or of any securities  convertible into or exchangeable
or  exercisable  for any of such  securities,  in each case  purchased  from the
Company at any time  after the date of this  Agreement  (other  than in a Public
Offering),  to agree not to effect any such public sale or  distribution of such
securities,   during  such   period,   except  as  part  of  such   underwritten
registration.

                  9.5. PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each  registration  statement under the Securities
Act,  the Company  will give the holders of  Registrable  Securities  registered
under such registration statement,  their underwriters,  if any, each Requesting
Holder  and  their  respective  counsel  and  accountants,  the  opportunity  to
participate in the preparation of such registration  statement,  each prospectus
included  therein or filed with the  Commission,  and each amendment  thereof or
supplement  thereto,  and will give  each of them  such  access to its books and
records and such  opportunities  to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements  as shall be  necessary,  in the  opinion of such  holders'  and such
underwriters'  respective counsel, to conduct a reasonable  investigation within
the meaning of the Securities Act.

                  9.6. RIGHTS OF REQUESTING  HOLDERS.  The Company will not file
any registration  statement under the Securities Act, whether or not pursuant to
registration  rights  granted to other holders of its  securities and whether or
not for sale for its own account (other than by a registration  on Form S-4, S-8
or any successor form thereto),  unless it shall first have given to each Person
which holds any Registrable  Securities  issued by the Company at least 30 days'
prior written  notice  thereof.  Any such holder who shall so request  within 30
days  after  such  notice (a  "Requesting  Holder")  shall  have the rights of a
Requesting  Holder  provided in sections  9.3, 9.5 and 9.7. In addition,  if any
registration  statement refers to any Requesting  Holder by name or otherwise as
the holder of any  securities  of the  Company,  then such holder shall have the
right to require (a) the  insertion  therein of language,  in form and substance
reasonably satisfactory to such holder, to the effect that, if true, the holding
by such  holder of such  securities  does not  necessarily  make  such  holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be  construed  as a  recommendation  by such holder of the  investment
quality of the Company's debt or equity securities covered thereby and that such
holding does not imply that such holder will assist in meeting

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any future financial  requirements of the Company, or (b) in the event that such
reference to such holder by name or otherwise is not required by the  Securities
Act or any rules and  regulations  promulgated  thereunder,  the deletion of the
reference to such holder.

                  9.7.  INDEMNIFICATION.  (a) The Company will, and hereby does,
indemnify, to the extent permitted by applicable law, each holder of Registrable
Securities and its Affiliates and their  respective  officers and directors,  if
any, and each Person,  if any,  who controls  such holder  within the meaning of
Section  15  of  the  Securities  Act,  against  all  losses,  claims,  damages,
liabilities  (or  proceedings  in  respect  thereof)  and  expenses  (under  the
Securities  Act or common law or  otherwise),  joint or  several,  caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration  statement or  prospectus  (and as amended or  supplemented  if the
Company shall have  furnished  any  amendments  or  supplements  thereto) or any
preliminary  prospectus  or caused by any omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein  not  misleading,  except  insofar as such  losses,  claims,
damages,  liabilities (or proceedings in respect thereof) or expenses are caused
by any untrue  statement  or alleged  untrue  statement  contained  in or by any
omission  or  alleged  omission  from  information  furnished  in writing to the
Company by such holder  expressly for use therein.  If the offering  pursuant to
any  registration  statement  provided for under this  Agreement is made through
underwriters,  no  action  or  failure  to act on the part of such  underwriters
(whether  or  not  any  such  underwriter  is an  Affiliate  of  any  holder  of
Registrable Securities) shall affect the obligations of the Company to indemnify
any  holder of  Registrable  Securities  or any  other  Person  pursuant  to the
preceding  sentence.  If the  offering  pursuant to any  registration  statement
provided  for under this  Agreement is made  through  underwriters,  the Company
agrees to enter  into an  underwriting  agreement  in  customary  form with such
underwriters  and the  Company  agrees to  indemnify  such  underwriters,  their
officers  and  directors,  if any, and each  Person,  if any, who controls  such
underwriters  within the meaning of Section 15 of the Securities Act to the same
extent as  hereinbefore  provided  with  respect to the  indemnification  of the
holders  of  Registrable  Securities;  PROVIDED  that the  Company  shall not be
required to indemnify any such  underwriter,  or any officer or director of such
underwriter  or any Person who controls such  underwriter  within the meaning of
Section 15 of the Securities  Act, to the extent that the loss,  claim,  damage,
liability   (or   proceedings   in  respect   thereof)   or  expense  for  which
indemnification  is claimed results from such  underwriter's  failure to send or
give a copy of the amended or
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<PAGE>
supplemented  final  prospectus to the Person  asserting an untrue  statement or
alleged  untrue  statement  or omission  or alleged  omission at or prior to the
written  confirmation  of the sale of  Registrable  Securities to such Person if
such statement or omission was corrected in such amended or  supplemented  final
prospectus  prior to such written  confirmation  and the  underwriter  was given
notice of the availability of such amended or supplemented final prospectus.

                  (b) In connection with any  registration  statement in which a
holder  of  Registrable  Securities  is  participating,  each such  holder  will
indemnify,  to the extent permitted by applicable law, the Company, its officers
and  directors  and each Person,  if any,  who  controls the Company  within the
meaning  of  Section 15 of the  Securities  Act,  against  any  losses,  claims,
damages,  liabilities (or proceedings in respect thereof) and expenses resulting
from any untrue  statement or alleged untrue statement of a material fact or any
omission  or alleged  omission of a material  fact  required to be stated in the
registration  statement or prospectus or preliminary prospectus or any amendment
thereof or supplement  thereto or necessary to make the  statements  therein not
misleading, but only to the extent that such untrue statement is contained in or
such  omission  is from  information  so  furnished  in writing  by such  holder
expressly for use therein,  PROVIDED that such  holder's  obligations  hereunder
shall be  limited  to an  amount  equal to the  proceeds  to such  holder of the
Registrable Securities sold pursuant to such registration statement.

                  (c)  Any  Person   entitled  to   indemnification   under  the
provisions of this section 9.7 shall (x) give prompt notice to the  indemnifying
party of any  claim  with  respect  to which it seeks  indemnification  (but the
failure of any  indemnified  party to give notice as provided  herein  shall not
relieve  the  indemnifying   party  of  its  obligations   under  the  preceding
subdivisions  of this  section 9.7,  except to the extent that the  indemnifying
party is actually prejudiced by such failure) and (y) unless in such indemnified
party's reasonable  judgment a conflict of interest between such indemnified and
indemnifying   parties  may  exist  in  respect  of  such  claim,   permit  such
indemnifying  party to assume the defense of such claim, with counsel reasonably
satisfactory to the indemnified  party; and if such defense is so assumed,  such
indemnifying  party shall not enter into any  settlement  without the consent of
the indemnified party if such settlement attributes liability to the indemnified
party and such indemnifying  party shall not be subject to any liability for any
settlement made without its consent (which shall not be unreasonably  withheld);
and any  underwriting  agreement  entered into with respect to any  registration
statement provided for under this Agreement shall so provide. In the event

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<PAGE>
an  indemnifying  party  shall not be  entitled,  or elects  not,  to assume the
defense of a claim,  such  indemnifying  party shall not be obligated to pay the
fees and  expenses  of more than one  counsel or firm of counsel for all parties
indemnified by such indemnifying  party in respect of such claim,  unless in the
reasonable  judgment of any such  indemnified  party a conflict of interest  may
exist between such indemnified  party and any other of such indemnified  parties
in respect to such claim.  Such indemnity  shall remain in full force and effect
regardless of any investigation  made by or on behalf of a participating  holder
of Registrable  Securities,  its officers,  directors or any Person, if any, who
controls  such  holder as  aforesaid,  and shall  survive  the  transfer of such
securities by such holder.

                  (d) If the  indemnification  provided  for in this section 9.7
shall for any  reason  be held by a court to be  unavailable  to an  indemnified
party under section 9.7(a) or (b) hereof in respect of any loss,  claim,  damage
or liability, or any action in respect thereof, then, in lieu of the amount paid
or  payable  under  section  9.7(a)  or  (b),  the  indemnified  party  and  the
indemnifying party under section 9.7(a) or (b) shall contribute to the aggregate
losses,  claims,  damages and  liabilities  (including  legal or other  expenses
reasonably  incurred in connection  with  investigating  the same),  (x) in such
proportion as is  appropriate  to reflect the relative  fault of the Company and
the prospective  sellers of Registrable  Securities  covered by the registration
statement which resulted in such loss, claim, damage or liability,  or action or
proceeding in respect thereof, with respect to the statements or omissions which
resulted in such loss,  claim,  damage or liability,  or action or proceeding in
respect thereof,  as well as any other relevant equitable  considerations or (y)
if the  allocation  provided by clause (x) above is not  permitted by applicable
law, in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and such  prospective  sellers  from the offering of the
securities covered by such registration  statement,  PROVIDED, that for purposes
of clauses (x) or (y), the relative benefits received by the prospective sellers
shall  be  deemed  not to  exceed  the  amount  of  proceeds  received  by  such
prospective sellers and no holder of Registrable Securities shall be required to
contribute  any  amount in excess of the  amount  such  holder  could  have been
required to pay to an indemnified party if the indemnity under subsection (a) of
this section 9.7 was available. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  Person   who  was  not   guilty  of  such   fraudulent
misrepresentation.  Such sellers'  obligations to contribute as provided in this
section 9.7(d) are several in proportion to the relative value of their

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<PAGE>
respective Registrable Securities covered by such registration statement and not
joint.  In addition,  no Person shall be obligated to  contribute  hereunder any
amounts in payment for any  settlement of any action or claim  effected  without
such Person's consent, which consent shall not be unreasonably withheld.

                  (e) Indemnification and contribution similar to that specified
in  the   preceding   subdivisions   of  this  section  9.7  (with   appropriate
modifications)  shall be given by the  Company  and each  seller of  Registrable
Securities with respect to any required  registration or other  qualification of
securities  under any  federal or state law or  regulation  of any  governmental
authority other than the Securities Act.

                  (f) An  indemnifying  party shall make payments of all amounts
required to be made pursuant to the foregoing  provisions of this section 9.7 to
or for the  account of the  indemnified  party from time to time  promptly  upon
receipt of bills or invoices relating thereto or when otherwise due or payable.

                  9.8. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company
will not  effect or permit to occur any  combination  or  subdivision  of shares
which  would  materially  and  adversely  affect the  ability of the  holders of
Registrable   Securities   to  include  such   Registrable   Securities  in  any
registration   of  its  securities   contemplated  by  this  section  9  or  the
marketability of such Registrable Securities under any such registration.

                  9.9.  REGISTRATION  RIGHTS TO OTHERS.  If the Company shall at
any time after the Initial Date provide to any holder of any  securities  of the
Company rights with respect to the  registration  of such  securities  under the
Securities  Act, (a) such rights shall not be in conflict with any of the rights
provided in this section 9 to the holders of  Registrable  Securities and (b) if
such rights are provided on terms or  conditions  more  favorable to such holder
than the terms and  conditions  provided  in this  section  9 the  Company  will
provide (by way of amendment to this Warrant or otherwise)  such more  favorable
terms or conditions to the holders of Registrable Securities.  The Company shall
provide to the holders of Registrable  Securities copies of any agreements which
purport to grant rights with respect to the registration of any of the Company's
securities to any holder or prospective  holder thereof  promptly upon executing
the same.

                  9.10. Other Registration of Common Stock. If any shares of the
Common Stock  required to be reserved for purposes of issuance  upon exercise of
this Warrant in connection with their sale in a registration pursuant to section
9.1 or 9.2
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<PAGE>
require  registration  with or approval of any governmental  authority under any
federal or state law (other than the  Securities  Act) before such shares may be
issued upon such exercise, the Company will, at its expense and as expeditiously
as possible,  use its best efforts to cause such shares to be duly registered or
approved, as the case may be.

                  9.11.  NOMINEES FOR  BENEFICIAL  OWNERS.  For purposes of this
section 9, in the event that any  Registrable  Securities  are held by a nominee
for the  beneficial  owner  thereof,  the  beneficial  owner thereof may, at its
election,  be treated as the holder of such Registrable  Securities for purposes
of any  request  or  other  action  by any  holder  or  holders  of  Registrable
Securities  pursuant  to this  section 9 or any  determination  of any number or
percentage of shares of Registrable  Securities held by any holder or holders of
Registrable  Securities  contemplated by this section 9. If the beneficial owner
of any  Registrable  Securities  so elects,  the Company may require  assurances
reasonably  satisfactory  to it of such  owner's  beneficial  ownership  of such
Registrable Securities.

                  9.12.  RULE 144 AND RULE  144A.  The  Company  shall  take all
actions reasonably necessary to enable holders of Registrable Securities to sell
such  securities  without  registration  under the  Securities  Act  within  the
limitation of the provisions of Rule 144 and Rule 144A under the Securities Act,
as such  Rules  may be  amended  from  time to  time,  or any  similar  rules or
regulations hereafter adopted by the Commission,  including, without limitation,
filing on a timely  basis  all  reports  required  to be filed  pursuant  to the
Exchange Act.

                  10.  AVAILABILITY OF  INFORMATION.  The Company will cooperate
with each holder of any Restricted  Securities in supplying such  information as
may be necessary for such holder to complete and file any information  reporting
forms  presently or hereafter  required by the  Commission as a condition to the
availability  of an  exemption  from  the  Securities  Act for  the  sale of any
Restricted Securities.  The Company will furnish to each holder of any Warrants,
promptly upon their  becoming  available,  copies of all  financial  statements,
reports,  notices and proxy  statements sent or made available  generally by the
Company to its stockholders,  and copies of all regular and periodic reports and
all  registration  statements  and  prospectuses  filed by the Company  with any
securities exchange or with the commission.

                  11.  RESERVATION OF STOCK,  ETC. The Company will at all times
reserve and keep  available,  solely for issuance and delivery  upon exercise of
the Warrants,  the number of shares of Common Stock (or Other  Securities)  from
time to time issuable
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<PAGE>
upon  exercise  of all  Warrants at the time  outstanding.  All shares of Common
Stock (or Other  Securities) shall be duly authorized and, when issued upon such
exercise,  shall be validly  issued and,  in the case of shares,  fully paid and
nonassessable, with no liability on the part of the holders thereof.

                  12. LISTING ON SECURITIES EXCHANGE.  The Company will (a) list
on each national  securities  exchange on which any Common Stock may at any time
be listed, subject to official notice of issuance upon exercise of the Warrants,
and will  maintain such listing of, all shares of Common Stock from time to time
issuable upon exercise of the Warrants or (b) secure and maintain designation of
all  shares of Common  Stock from time to time  issuable  upon  exercise  of the
Warrants as a NASDAQ  "national  market system  security"  within the meaning of
Rule llAa2-1 of the Commission or, failing that, secure NASDAQ authorization for
such shares of Common Stock.

                  13.  OWNERSHIP,  TRANSFER AND SUBSTITUTION OF WARRANTS.  13.1.
OWNERSHIP  OF  WARRANTS.  The  Company  may treat the  person in whose  name any
Warrant  is  registered  on the  register  kept at the  principal  office of the
Company as the owner and holder  thereof for all purposes,  notwithstanding  any
notice  to the  contrary,  except  that,  if and when any  Warrant  is  properly
assigned in blank,  the Company  may (but shall not be  obligated  to) treat the
bearer  thereof as the owner of such Warrant for all  purposes,  notwithstanding
any  notice to the  contrary.  Subject  to  section  8 a  Warrant,  if  properly
assigned,  may be exercised by a new holder  without  first having a new Warrant
issued.

                  13.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon the surrender of
any Warrant,  properly endorsed, for registration of transfer or for exchange at
the principal office of the Company, the Company at its expense will (subject to
compliance  with  section 8, if  applicable)  execute and deliver to or upon the
order of the  holder  thereof  a new  Warrant  or  Warrants  of like  tenor,  in
denominations  of at least 1,666  shares,  in the name of such holder or as such
holder  (upon  payment  by such  holder of any  applicable  transfer  taxes) may
direct,  calling in the aggregate on the face or faces thereof for the number of
shares  of  Common  Stock  called  for on the face or faces  of the  Warrant  or
Warrants so surrendered.

                  13.3.  REPLACEMENT  OF  WARRANTS.  Upon  receipt  of  evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation  of any  Warrant  and,  in  the  case  of any  such  loss,  theft  or
destruction  of any Warrant  held by a Person  other than the  Purchaser  or any
institutional  investor,  upon delivery of indemnity reasonably  satisfactory to
the Company
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<PAGE>
in form and amount or, in the case of any such  mutilation,  upon  surrender  of
such  Warrant for  cancellation  at the  principal  office of the  Company,  the
Company at its expense will execute and deliver,  in lieu thereof, a new Warrant
of like tenor.

                  14.  DEFINITIONS.  As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:

                  ACQUIRING PERSON: the continuing or surviving corporation of a
consolidation  or merger  with the  Company  (if other  than the  Company),  the
transferee of substantially all of the properties and assets of the Company, the
corporation consolidating with or merging into the Company in a consolidation or
merger in  connection  with which the Common  Stock is changed into or exchanged
for stock or other securities of any other Person or cash or any other property,
or, in the case of a capital reorganization or reclassification, the Company.

                  ACQUISITION  PRICE:  as  applied  to the  Common  Stock,  with
respect to any  transaction to which section 3 applies,  (a) the price per share
equal to the greater of the  following,  determined  in each case as of the date
immediately  preceding the date of  consummation  of such  transaction:  (x) the
Market  Price of the Common  Stock and (y) the  highest  amount of cash plus the
Fair Value of the  highest  amount of  securities  or other  property  which the
holder of this Warrant would have been entitled as a shareholder to receive upon
such  consummation if such holder had exercised this Warrant  immediately  prior
thereto,  or (b) if a  purchase,  tender  or an  exchange  offer  is made by the
Acquiring  Person  (or by any of its  affiliates)  to the  holders of the Common
Stock  and  such  offer  is  accepted  by the  holders  of more  than 50% of the
outstanding  shares of Common Stock,  the greater of (i) the price determined in
accordance  with the  foregoing,  subdivision  (a) and (ii) the  price per share
equal to the greater of the  following,  determined  in each case as of the date
immediately  preceding the  acceptance of such offer by the holders of more than
50% of the  outstanding  shares of Common  Stock:  (A) the  Market  Price of the
Common  Stock and (B) the  highest  amount  of cash  plus the Fair  Value of the
highest  amount of securities or other property which the holder of this Warrant
would be entitled  as a  shareholder  to receive  pursuant to such offer if such
holder had exercised  this Warrant  immediately  prior to the expiration of such
offer and accepted the same.

                  ADDITIONAL  SHARES  OF COMMON  STOCK:  all  shares  (including
treasury shares) of Common Stock issued or sold (or,  pursuant to section 2.3 or
2.4, deemed to be issued) by the Company after the Initial Date hereof,  whether
or not
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<PAGE>
subsequently  reacquired  or  retired by the  Company,  other than (a) shares of
Common  Stock issued upon the exercise of Warrants and (b) not more than 730,000
shares of Common  Stock  issued upon the  exercise of stock  options  granted to
directors, officers and other employees of the Company pursuant to the DTN Stock
Option Plan of 1989, as amended,  and the DTN Non-Employee  Director Option Plan
and (c) 66,550  shares of Common  Stock  issuable  upon the exercise of existing
warrants.

                  BASE PRICE: on any date specified herein, the lesser of
(a) the Current Market Price and (b) the Warrant Price.

                  BUSINESS  DAY:  any day other than a Saturday or a Sunday or a
day on  which  commercial  banking  institutions  in the  City of New  York  are
authorized by law to be closed,  provided that, in determining the period within
which  certificates  or  Warrants  are to be issued and  delivered  pursuant  to
section  1.3 at a time when  shares of Common  Stock (or Other  Securities)  are
listed or  admitted  to trading on any  national  securities  exchange or in the
over-the-counter  market and in  determining  the Market Price of any securities
listed or  admitted  to trading on any  national  securities  exchange or in the
over-the-counter  market,  "Business  Day" shall mean any day when the principal
exchange in which  securities are then listed or admitted to trading is open for
trading or, if such securities are traded in the over-the-counter  market in the
United States, such system is open for trading, and provided,  further, that any
reference to "days"  (unless  Business Days are  specified)  shall mean calendar
days.

                  COMMISSION: the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities
Act or the Exchange Act, whichever is the relevant statute for
the particular purpose.

                  COMMON STOCK:  the Company's common stock, par value $.001 per
share, as constituted on the date hereof, any stock into which such common stock
shall have been changed or any stock resulting from any reclassification of such
common stock, and all other stock of any class or classes  (however  designated)
of the  Company the holders of which have the right,  without  limitation  as to
amount,  either to all or to a share of the  balance  of current  dividends  and
liquidating  dividends after the payment of dividends and  distributions  on any
shares entitled to preference.

                  COMPANY: Data Transmission Network Corporation, a
Delaware corporation.

                  CONVERTIBLE SECURITIES: any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities

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<PAGE>
directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.

                  CURRENT MARKET PRICE: on any date specified  herein,  (a) with
respect  to  Common  Stock or to  Voting  Common  Stock  (or  equivalent  equity
interests)  of an Acquiring  Person or its Parent,  (x) the average daily Market
Price during the period of the most recent 20  consecutive  Business Days ending
on such date,  or (y) if shares of Common Stock or such Voting  Common Stock (or
equivalent  equity  interests),  as the case  may be,  are not  then  listed  or
admitted to trading on any national  securities  exchange and if the closing bid
and  asked   prices   thereof   are  not  then  quoted  or   published   in  the
over-the-counter  market, the Market Price on such date; and (b) with respect to
any other securities, the Market Price on such date.

                  EXCHANGE ACT: the Securities Exchange Act of 1934, or
any similar Federal statute, and the rules and regulations of the
commission thereunder, all as the same shall be in effect at the
time of determination.

                  FAIR VALUE:  with respect to any securities or other property,
the fair  value  thereof  as of a date which is within 15 days of the date as of
which the determination is to be made (a) determined by an agreement between the
Company  and the  Requisite  Holders  or (b) if the  Company  and the  Requisite
Holders fail to agree,  determined jointly by an independent  investment banking
firm  retained by the  Company and by an  independent  investment  banking  firm
retained by the Requisite  Holders,  either of which firms may be an independent
investment  banking firm regularly retained by the Company or any such holder or
(c) if the  Company  or such  holders  shall  fail so to retain  an  independent
investment  banking firm within five Business Days of the retention of such firm
by such holders or the  Company,  as the case may be,  determined  solely by the
firm so  retained  or (d) if the firms so  retained  by the  Company and by such
holders shall be unable to reach a joint  determination  within 15 Business Days
of the retention of the last firm so retained, determined by another independent
investment  banking firm which is not a regular  investment  banking firm of the
Company  or any such  holder  chosen by the first  two such  firms.  Each of the
Company and the holders of the Warrants  shall be  responsible  for the fees and
expenses of the  investment  banking firm  retained by them under the  foregoing
clause (b) and shall  share  equally  the fees and  expenses  of any  investment
banking firm retained under the foregoing clause (d).

                  INITIAL DATE: the meaning specified in section 2.2.

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<PAGE>
                  INITIATING  HOLDERS:  any holder or holders of at least 50% of
all outstanding  Registrable  Securities  making a written  request  pursuant to
section 9.1 for the  registration of all or part of the  Registrable  Securities
(but not less than 50% of all outstanding  Registrable  Securities) held by such
holder or holders.

                  MARKET PRICE: on any date specified  herein,  (a) with respect
to Common Stock or to Voting Common Stock (or equivalent equity interests) of an
Acquiring Person or its Parent,  the amount per share equal to (x) the last sale
price of shares of such security,  regular way, on such date or, if no such sale
takes  place on such date,  the  average  of the  closing  bid and asked  prices
thereof on such  date,  in each case as  officially  reported  on the  principal
national  securities  exchange  on which the same are then listed or admitted to
trading,  or (y) if no shares of such  security  are then  listed or admitted to
trading on any national securities exchange but such security is designated as a
national  market  system  security by the NASD,  the last trading  price of such
security on such date, or if such security is not so designated,  the average of
the reported  closing bid and asked prices  thereof on such date as shown by the
NASDAQ  system  or, if no shares  thereof  are then  quoted in such  system,  as
published  by the  National  Quotation  Bureau,  Incorporated  or any  successor
organization,  and in either case as reported by any member firm of the New York
Stock Exchange selected by the Company, or (z) if no shares of such security are
then listed or admitted to trading on any national  exchange or  designated as a
national  market system  security and if no closing bid and asked prices thereof
are then so quoted or published in the  over-the-counter  market,  the higher of
(x) the book value thereof as  determined  by agreement  between the Company and
the  Requisite  Holders,  or if the Company and the  Requisite  Holders  fail to
agree,  by any firm of independent  public  accountants  of recognized  standing
selected by the Board of  Directors  of the  Company,  as of the last day of any
month ending within 60 days preceding the date as of which the  determination is
to be made and (y) the fair value thereof  determined in good faith by the Board
of Directors  of the issuer  thereof as of a date which is within 15 days of the
date as of which the  determination  is to be made;  and (b) with respect to any
other securities,  the fair value thereof  determined in good faith by the Board
of  Directors of the Company as of a date which is within 15 days of the date as
of which the determination is to be made.

                  NASD: the National Association of Securities Dealers.

                  NASDAQ: the Automated Quotation System of the NASD.

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<PAGE>
                  NOTES: the meaning specified in the opening paragraphs
of this Warrant.

                  OPTIONS: rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common
Stock or Convertible Securities.

                  OTHER  SECURITIES:  any stock  (other than  Common  Stock) and
other  securities  of the Company or any other Person  (corporate  or otherwise)
which the holders of the  Warrants at any time shall be entitled to receive,  or
shall  have  received,  upon  the  exercise  of the  Warrants,  in lieu of or in
addition to Common  Stock,  or which at any time shall be issuable or shall have
been  issued  in  exchange  for or in  replacement  of  Common  Stock  or  Other
Securities pursuant to section 3 or otherwise.

                  PARENT: as to any Acquiring Person,  any corporation which (a)
controls  the  Acquiring  Person  directly  or  indirectly  through  one or more
intermediaries,  (b)  is  required  to  include  the  Acquiring  Person  in  its
consolidated financial statements under generally accepted accounting principles
and (c) is not itself included in the consolidated  financial  statements of any
other Person (other than its consolidated subsidiaries).

                  PERSON: an individual, a partnership, an association, a
joint venture, a corporation, a business, a trust, an
unincorporated organization or a government or any department,
agency or subdivision thereof.

                  PUBLIC OFFERING: any offering of Common Stock to the
public pursuant to an effective registration statement under the
Securities Act.

                  PURCHASE AGREEMENT: the meaning specified in the
opening paragraphs of this Warrant.

                  PURCHASER: the meaning specified in the opening
paragraphs of this Warrant.

                  REGISTRABLE  SECURITIES:  (a) the Warrants,  (b) any shares of
Common  Stock or other  Securities  issued  or  issuable  upon  exercise  of the
Warrants and (c) any  securities  issued or issuable  with respect to any common
Stock  or  Other  Securities  referred  to in  subdivision  (b) by way of  stock
dividend  or  stock  split  or in  connection  with  a  combination  of  shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular  Registrable  Securities,  once issued such  securities  shall
cease to be  Registrable  Securities  when  (x) a  registration  statement  with
respect to the sale of
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<PAGE>
such  securities  shall have become  effective under the Securities Act and such
securities  shall have been  disposed of in  accordance  with such  registration
statement,  (y) they  shall have been sold as  permitted  under Rule 144 (or any
successor  provision) under the Securities Act, or (z) they shall have ceased to
be outstanding.

                  REGISTRATION  EXPENSES: all expenses incident to the Company's
performance of or compliance with section 9, including,  without limitation, all
registration,  filing and NASD fees,  all fees and  expenses of  complying  with
securities  or blue sky laws,  all word  processing,  duplicating  and  printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for  the  Company  and of its  independent  public  accountants,  including  the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance  (provided that "Registration  Expenses" will
not  include  any "cold  comfort"  letter  requested  solely by the  holders  of
Registrable  Securities in connection with any registration if the Company shall
not have  elected or been  required  by the  underwriters  with  respect to such
registration  to cause such a letter to be delivered),  the reasonable  fees and
disbursements of a single counsel and single firm of accountants retained by the
holders of the Registrable Securities being registered, premiums and other costs
of policies of insurance against  liabilities arising out of the public offering
of the Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting  discounts and commissions  and transfer  taxes,  if any,  provided
that,  in any  case  where  Registration  Expenses  are not to be  borne  by the
Company,  such  expenses  shall not  include  salaries of Company  personnel  or
general  overhead  expenses of the  Company,  auditing  fees,  premiums or other
expenses  relating  to  liability  insurance  required  by  underwriters  of the
Company, or other expenses for the preparation of financial  statements or other
data normally  prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event.

                  REQUESTING HOLDER: the meaning specified in section 9.6.

                  REQUISITE HOLDERS: the holders of more than 50% of all
the Warrants at the time outstanding determined on the basis of
the number of shares of Common Stock or Other Securities
deliverable upon exercise thereof.

                  RESTRICTED SECURITIES: (a) any Warrants bearing the
applicable legend set forth in section 8.1, (b) any shares of

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<PAGE>
Common Stock (or Other  Securities)  which have been issued upon the exercise of
Warrants and which are evidenced by a certificate  or  certificates  bearing the
applicable  legend  set  forth  in such  section,  and (c)  unless  the  context
otherwise  requires,  any shares of Common Stock (or Other Securities) which are
at the time  issuable  upon the exercise of Warrants and which,  when so issued,
will be evidenced by a certificate or certificates bearing the applicable legend
set forth in such section.

                  SECURITIES ACT: the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time of determination.

                  SUBSIDIARY: any corporation, association or other
business entity a majority (by number of votes) of the Voting
Common Stock of which is at the time owned by the Company or by
one or more Subsidiaries or by the Company and one or more
Subsidiaries.

                  TRANSFER:  unless the context  otherwise  requires,  any sale,
assignment,  pledge or other  disposition  of any  security,  or of any interest
therein, which could constitute a "sale" as that term is defined in section 2(3)
of the Securities Act.

                  VOTING  COMMON  STOCK:   with  respect  to  any   corporation,
association  or other  business  entity,  stock  of any  class  or  classes  (or
equivalent  interest) , if the holders of the stock of such class or classes (or
equivalent interests) are ordinarily, in the absence of contingencies,  entitled
to vote for the election of a majority of the directors  (or persons  performing
similar functions) of such corporation,  association or business entity, even if
the right so to vote has been suspended by the happening of such a contingency.

                  WARRANT PRICE: the meaning specified in section 2.1.

                  WARRANTS: the meaning specified in the opening
paragraphs of this Warrant.

                  15. REMEDIES.  The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened  default
by the Company in the performance of or compliance with any of the terms of this
Warrant  are not and  will not be  adequate  and  that,  to the  fullest  extent
permitted by law,  such terms may be  specifically  enforced by a decree for the
specific  performance  of any  agreement  contained  herein or by an  injunction
against a violation of any of the terms hereof or otherwise.

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                                      262
<PAGE>
                  16. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained
in this  Warrant  shall be construed as  conferring  upon the holder  hereof any
voting or other  rights as a  stockholder  of the  Company  or as  imposing  any
liabilities on such holder to purchase any securities or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.

                  17. NOTICES.  All notices and other  communications under this
Warrant shall be in writing and shall be mailed by registered or certified mail,
return receipt  requested,  addressed (a) if to any holder of any Warrant or any
holder of any Common Stock (or Other  Securities),  at the registered address of
such holder as set forth in the  register  kept at the  principal  office of the
Company,  or (b) if to the  Company,  to the  attention  of its Chief  Financial
Officer at its principal office, provided that the exercise of any Warrant shall
be effected in the manner provided in section 1.

                  18.  EXPIRATION;  NOTICE.  The Company will give the holder of
this  Warrant  no less  than 45 days'  nor  more  than 90  days"  notice  of the
expiration  of the right to exercise  this  Warrant.  The right to exercise this
Warrant  shall  expire  at 3 P.M.,  New  York  City  time,  June 30,  2004.  The
registration  rights provided in section 9 shall expire at 3 P.M., New York City
time, June 30, 2004 with respect to any shares of Common Stock issued previously
to such time upon the exercise hereof.

                  19.  MISCELLANEOUS.  This  Warrant  and any term hereof may be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  The  agreements  of the Company  contained  in this
Warrant  other than those  applicable  solely to the  Warrants  and the  holders
thereof  shall  inure to the  benefit  of and be  enforceable  by any  holder or
holders at the time of any Common  Stock (or Other  Securities)  issued upon the
exercise  of  Warrants,  whether so  expressed  or not.  This  Warrant  shall be
construed and enforced in accordance with and governed by the laws of the State

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                                      263
<PAGE>
of New  York.  The  section  headings  in  this  Warrant  are  for  purposes  of
convenience only and shall not constitute a part hereof.


                            DATA TRANSMISSION NETWORK CORPORATION

                            By:______________________
                                     Title:



                                       45

                                      264
<PAGE>


                              FORM OF SUBSCRIPTION


                 (To be executed only upon exercise of Warrant)



To _________________

                  The undersigned registered holder of the within Warrant hereby
irrevocably  exercises  such Warrant for, and purchases  thereunder,  __________
shares of Common  Stock of Data  Transmission  Network  Corporation,  a Delaware
corporation,  and herewith makes payment of $_________  therefor [by application
pursuant to section 1.5 of such Warrant of $ ________ aggregate principal amount
of Notes (as defined in such Warrant) plus $ _______ accrued interest  thereon],
and requests that the certificates for such shares be issued in the name of, and
delivered to ______________, whose address is ______________.


Dated: ________________




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

                                        (Signature must conform in all respects
                                         to name of holder as specified on the
                                         face of this Warrant)


                                                 [insert address]

                                       46



                                      265
<PAGE>


                               FORM OF ASSIGNMENT


                 (To be executed only upon transfer of Warrant)

                  For value received,  the undersigned  registered holder of the
within  Warrant hereby sells,  assigns and transfers unto  _____________________
the right  represented by such Warrant to purchase  __________  shares of Common
Stock of Data Transmission Network Corporation, a Delaware corporation, to which
such Warrant relates, and appoints ______________ Attorney to make such transfer
on the books of  _____________  maintained for such purpose,  with full power of
substitution in the premises.

Dated: ________________



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

                                         (Signature must conform in all respects
                                          to name of holder as specified on the
                                          face of this Warrant)

                                                   [insert address]



Signed in the presence of:


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

                                       47


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<PAGE>