ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.

                                    as Issuer

              TV FILME BRASILIA SERVICOS DE TELECOMUNICACOES LTDA.

               TV FILME GOIANIA SERVICOS DE TELECOMUNICACOES LTDA.

                TV FILME BELEM SERVICOS DE TELECOMUNICACOES LTDA.

                            TV FILME OPERACOES LTDA.

                             TV FILME SISTEMAS LTDA.

                 LINK EXPRESS SERVICOS DE TELECOMUNICACOES LTDA.

                                  As Guarantors


                        12% SENIOR SECURED NOTES DUE 2004





                                    INDENTURE


                            Dated as of July 20, 2000





                              THE BANK OF NEW YORK


                                   as Trustee


<PAGE>


CROSS-REFERENCE TABLE1
------------------------------          --------------------
Trust Indenture Act Section              Indenture Section

310   (a)(1)...............                             7.10
      (a)(2)...............                             7.10
      (a)(3)...............                             N.A.
      (a)(4)...............                             N.A.
      (a)(5)...............                             7.10
      (b)..................                        7.3, 7.10
      (c)..................                             N.A.
311   (a)..................                             7.11
      (b)..................                             7.11
      (c)..................                             N.A.
312   (a)..................                              2.5
      (b)..................                             12.3
      (c)..................                             12.3
313   (a)..................                              7.6
      (b)(1)...............                             N.A.
      (b)(2)...............                         7.6, 7.7
      (c)..................                        7.6, 12.2
      (d)..................                              7.6
314   (a)..................                              4.3
         (a)(4)............                             12.5
      (b)..................                             N.A.
      (c)(1)...............                             12.4
      (c)(2)...............                             12.4
      (c)(3)...............                             N.A.
      (d)..................                       10.3, 10.4
      (e)..................                             12.5
      (f)..................                             N.A.
315   (a)..................                           7.1(b)
      (b)..................                        7.5, 12.2
      (c)..................                           7.1(a)
      (d)..................                           7.1(c)
      (e)..................                             6.11
316   (a)(last sentence)...                              2.9
      (a)(1)(A)............                              6.5
      (a)(1)(B)............                              6.4
      (a)(2)...............                             N.A.
      (b)..................                              6.7
      (c)..................                              9.4
317   (a)(1)...............                              6.8
      (a)(2)...............                              6.9
      (b)..................                              2.4
318   (a)..................                             12.1
      (b)..................                             N.A.
      (c)..................                             12.1
------------------------------
N.A. means not applicable


<PAGE>





                                TABLE OF CONTENTS


                                                                            PAGE

ARTICLE 1     DEFINITIONS AND INCORPORATION BY REFERENCE.......................1

SECTION 1.1.  DEFINITIONS......................................................1
SECTION 1.2.  OTHER DEFINITIONS...............................................14
SECTION 1.3.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...............15
SECTION 1.4.  RULES OF CONSTRUCTION...........................................15

ARTICLE 2     THE NOTES.......................................................16

SECTION 2.1.  FORM AND DATING.................................................16
SECTION 2.2.  EXECUTION AND AUTHENTICATION....................................17
SECTION 2.3.  TRUSTEE, REGISTRAR AND PAYING AGENT.............................18
SECTION 2.4.  PAYING AGENT TO HOLD MONEY IN TRUST.............................18
SECTION 2.5.  HOLDER LISTS....................................................19
SECTION 2.6.  TRANSFER AND EXCHANGE...........................................19
SECTION 2.7.  CERTIFICATED NOTES..............................................22
SECTION 2.8.  REPLACEMENT NOTES...............................................23
SECTION 2.9.  OUTSTANDING NOTES...............................................23
SECTION 2.10. TREASURY NOTES..................................................23
SECTION 2.11. TEMPORARY NOTES.................................................23
SECTION 2.12. CANCELLATION....................................................24
SECTION 2.13. DEFAULTED INTEREST..............................................24
SECTION 2.14. PERSONS DEEMED OWNERS...........................................24
SECTION 2.15. CUSIP NUMBERS...................................................24

ARTICLE 3     REDEMPTION AND PREPAYMENT.......................................24

SECTION 3.1.  NOTICES TO TRUSTEE..............................................24
SECTION 3.3.  NOTICE OF REDEMPTION............................................25
SECTION 3.4.  EFFECT OF NOTICE OF REDEMPTION..................................26
SECTION 3.5.  DEPOSIT OF REDEMPTION PRICE.....................................26
SECTION 3.6.  NOTES REDEEMED IN PART..........................................26
SECTION 3.7.  OPTIONAL REDEMPTION.............................................26
SECTION 3.8.  MANDATORY REDEMPTION............................................27

ARTICLE 4     COVENANTS.......................................................27

SECTION 4.1.  PAYMENT OF NOTES................................................27
SECTION 4.2.  MAINTENANCE OF OFFICE OR AGENCY.................................27
SECTION 4.3.  PROVISIONS OF REPORTS AND OTHER INFORMATION.....................28
SECTION 4.4.  COMPLIANCE CERTIFICATE..........................................28
SECTION 4.5.  TAXES...........................................................29
SECTION 4.6.  STAY, EXTENSION AND USURY LAWS..................................29
SECTION 4.7.  LIMITATION ON RESTRICTED PAYMENTS...............................29
SECTION 4.8.  LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
              AFFECTING SUBSIDIARIES..........................................31
SECTION 4.9.  LIMITATION ON INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK...31
SECTION 4.10. LIMITATION ON ASSET SALES.......................................32
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES......................35
SECTION 4.12. LIMITATION ON LIENS.............................................35
SECTION 4.13. GUARANTORS......................................................36
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................36
SECTION 4.15. CORPORATE EXISTENCE.............................................37
SECTION 4.16. LIMITATION ON ASSET SWAPS.......................................38
SECTION 4.17. LIMITATION ON SALE LEASEBACK TRANSACTIONS.......................38
SECTION 4.18. MAINTENANCE OF BUSINESS, PROPERTIES AND INSURANCE...............38
SECTION 4.19. IMPAIRMENT OF SECURITY INTEREST.................................39
SECTION 4.20. PAYMENT OF ADDITIONAL AMOUNTS...................................39

ARTICLE 5     SUCCESSORS......................................................40

SECTION 5.1.  MERGER, CONSOLIDATION, OR SALE OF ASSETS........................40
SECTION 5.2.  SUCCESSOR COMPANY SUBSTITUTED...................................42

ARTICLE 6     DEFAULTS AND REMEDIES...........................................42

SECTION 6.1.  EVENTS OF DEFAULT...............................................42
SECTION 6.2.  ACCELERATION....................................................44
SECTION 6.3.  OTHER REMEDIES..................................................44
SECTION 6.4.  WAIVER OF PAST DEFAULTS.........................................44
SECTION 6.5.  CONTROL BY MAJORITY.............................................44
SECTION 6.6.  LIMITATION ON SUITS.............................................44
SECTION 6.7.  RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................45
SECTION 6.8.  COLLECTION SUIT BY TRUSTEE......................................45
SECTION 6.9.  TRUSTEE MAY FILE PROOFS OF CLAIM................................45
SECTION 6.10. PRIORITIES......................................................46
SECTION 6.11. UNDERTAKING FOR COSTS...........................................46

ARTICLE 7     TRUSTEE.........................................................46

SECTION 7.1.  DUTIES OF TRUSTEE...............................................46
SECTION 7.2.  RIGHTS OF TRUSTEE...............................................47
SECTION 7.3.  INDIVIDUAL RIGHTS OF TRUSTEE....................................48
SECTION 7.4.  TRUSTEE'S DISCLAIMER............................................49
SECTION 7.5.  NOTICE OF DEFAULTS..............................................49
SECTION 7.6.  REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................49
SECTION 7.7.  COMPENSATION AND INDEMNITY......................................49
SECTION 7.8.  REPLACEMENT OF TRUSTEE..........................................50
SECTION 7.9.  SUCCESSOR TRUSTEE BY MERGER, ETC................................51
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................51
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...............51
SECTION 7.12. LIMITATION ON DUTY OF TRUSTEE IN RESPECT OF COLLATERAL;
                INDEMNIFICATION...............................................51

ARTICLE 8.....................................................................52

SECTION 8.1.  OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........52
SECTION 8.2.  LEGAL DEFEASANCE................................................52
SECTION 8.3.  COVENANT DEFEASANCE.............................................52
SECTION 8.4.  CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................52
SECTION 8.5.  DISCHARGE.......................................................53
SECTION 8.6.  DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST...54
SECTION 8.7.  REPAYMENT TO COMPANY............................................54
SECTION 8.8.  REINSTATEMENT...................................................55

ARTICLE 9     AMENDMENT, SUPPLEMENT AND WAIVER................................55

SECTION 9.1.  WITHOUT CONSENT OF HOLDERS OF NOTES.............................55
SECTION 9.2.  WITH CONSENT OF HOLDERS OF NOTES................................55
SECTION 9.3.  COMPLIANCE WITH TRUST INDENTURE ACT.............................56
SECTION 9.4.  REVOCATION AND EFFECT OF CONSENTS...............................57
SECTION 9.5.  NOTATION ON OR EXCHANGE OF NOTES................................57
SECTION 9.6.  TRUSTEE TO SIGN AMENDMENTS, ETC.................................57
SECTION 9.7.  PAYMENTS FOR CONSENT............................................57

ARTICLE 10    COLLATERAL AND SECURITY.........................................58

SECTION 10.1. SECURITY DOCUMENTS..............................................58
SECTION 10.2. OPINIONS........................................................58
SECTION 10.3. RELEASE OF COLLATERAL...........................................59
SECTION 10.4. CERTIFICATES OF THE COMPANY.....................................59
SECTION 10.5. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
              UNDER THE SECURITY DOCUMENTS....................................59
SECTION 10.6. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
              THE SECURITY DOCUMENTS..........................................59
SECTION 10.7. TRUSTEE NOT LIABLE FOR ACTIONS OF COLLATERAL AGENT..............60

ARTICLE 11    GUARANTEE OF NOTES..............................................60
SECTION 11.1.  GUARANTEE......................................................60
SECTION 11.2.  GUARANTEE UNCONDITIONAL, ETC...................................61
SECTION 11.3.  LIMITATION OF GUARANTOR'S LIABILITY............................61
SECTION 11.4.  CONTRIBUTION...................................................62
SECTION 11.5.  RELEASE........................................................62
SECTION 11.6.  ADDITIONAL GUARANTORS..........................................62
SECTION 11.7.  GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.............62
SECTION 11.8.  SUCCESSORS AND ASSIGNS.........................................62
SECTION 11.9.  WAIVER OF STAY, EXTENSION OR USURY LAWS........................63

ARTICLE 12     MISCELLANEOUS..................................................63

SECTION 12.1.  TRUST INDENTURE ACT CONTROLS...................................63
SECTION 12.2.  NOTICES........................................................63
SECTION 12.3.  COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
               HOLDERS OF NOTES...............................................64
SECTION 12.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............64
SECTION 12.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................65
SECTION 12.6.  RULES BY TRUSTEE AND AGENTS....................................65
SECTION 12.7.  NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
               AND OTHERS.....................................................65
SECTION 12.8.  GOVERNING LAW..................................................65
SECTION 12.9.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................65
SECTION 12.10. SUCCESSORS.....................................................65
SECTION 12.11. SEVERABILITY...................................................66
SECTION 12.12. ORIGINALS......................................................66
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC...............................66
SECTION 12.14. COUNTERPARTS...................................................66
SECTION 12.15. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION;
               WAIVER OF IMMUNITIES...........................................66
SECTION 12.16. CURRENCY OF ACCOUNT; CONVERSION OF CURRENCY; FOREIGN
               EXCHANGE RESTRICTIONS..........................................67

<PAGE>

                                                        ANNEX

Annex I       EXISTING INDEBTEDNESS......................................Annex-1
Annex II      GUARANTORS.................................................Annex-2

                                                      EXHIBITS

Exhibit A     FORM OF NOTE...................................................A-1
Exhibit B     CERTIFICATE OF TRANSFEROR......................................B-1
Exhibit C     FORM OF MASTER SECURITY AGREEMENT..............................C-1
Exhibit D     FORM OF MORTGAGE...............................................D-1
Exhibit E     FORM OF COLLATERAL AGENCY AGREEMENT............................E-1


<PAGE>



          This  INDENTURE,   dated  as  of  July  20,  2000,  is  by  and  among
ITSA-Intercontinental  Telecomunicacoes  Ltda.,  a Brazilian  limited  liability
company,   as  issuer   (the   "Company"),   TV  Filme   Brasilia   Servicos  de
Telecomunicacoes  Ltda., a Brazilian limited liability company, TV Filme Goiania
Servicos de  Telecomunicacoes  Ltda., a Brazilian limited liability company,  TV
Filme Belem Servicos de  Telecomunicacoes  Ltda., a Brazilian  limited liability
company,  TV Filme Sistemas Ltda., a Brazilian  limited  liability  company,  TV
Filme Operacoes Ltda., a Brazilian limited liability  company,  and Link Express
Servicos de  Telecomunicacoes  Ltda.,  a Brazilian  limited  liability  company,
guarantors (collectively, the "Guarantors") and The Bank of New York, as trustee
(the "Trustee").

                                    RECITALS

          WHEREAS,  the  Company  has  issued  to TV Filme,  Inc.,  in a private
placement  offering,  its  promissory  note,  dated  December 20,  1996,  in the
principal amount of US$140,000,000  (the "Existing Note"),  the entire principal
amount of which remains outstanding on the date hereof;

          WHEREAS,  TV Filme,  Inc. has  transferred  its assets to ITSA Ltd., a
Cayman Islands corporation ("ITSA CAYMAN"), as a result of which ITSA Cayman has
become the current holder of the Existing Note;

          WHEREAS,  ITSA Cayman,  on the date  hereof,  is  contributing  to the
capital of the Company US$105,000,000 principal amount of the Existing Note;

          WHEREAS, ITSA Cayman and the Company desire to restructure,  amend and
restate the remaining US$35,000,000 outstanding principal amount of the Existing
Note as 12% Senior Secured Notes due 2004 of the Company (the "Notes"),  subject
to the terms and conditions of this Indenture; and

          WHEREAS, for all purposes,  the provisions of this Indenture shall not
be  construed  to mean that the  Existing  Note has been  prepaid or  terminated
before its original final maturity;

          NOW,  THEREFORE,   THIS  INDENTURE   WITNESSETH,   that,  for  and  in
consideration  of the premises,  the parties listed above mutually  covenant and
agree,  for the equal and  ratable  benefit  of all  Holders  of the  Notes,  as
follows:


                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.  DEFINITIONS.

          "Accounts" means all present and future rights of the Company and each
Restricted  Subsidiary  to  payment  for goods  sold or  leased or for  services
rendered,  which are not evidenced by instruments or chattel paper,  and whether
or not earned by performance.

          "Acquired  Debt" means,  with  respect to any  specified  Person,  (i)
Indebtedness  of any other  Person  existing  at the time such  other  Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without   limitation,   Indebtedness   incurred  in   connection   with,  or  in
contemplation  of,  such  other  Person  merging  with  or into  or  becoming  a
Subsidiary  of such  specified  Person and (ii)  Indebtedness  secured by a Lien
encumbering any asset acquired by such specified Person.

          "Affiliate" of any specified Person means any other Person directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with such specified Person.  For purposes of this definition,  "control"
(including,  with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person,  will mean
the  possession,  directly  or  indirectly,  of the power to direct or cause the
direction  of the  management  or policies of such Person,  whether  through the
ownership  of voting  securities,  by  agreement  or  otherwise;  PROVIDED  that
beneficial ownership of 10% or more of the voting securities of a Person will be
deemed to be control.



<PAGE>


          "Agent" means any Registrar or Paying Agent.

          "Applicable Law," except as the context may otherwise  require,  means
all  applicable  laws,  rules,  regulations,   ordinances,  judgments,  decrees,
injunctions,  writs and orders of any court or governmental  agency or authority
and rules,  regulations,  orders,  licenses and permits of any United  States or
Brazilian federal, state, provincial, municipal, regional, or other governmental
body,  instrumentality,  agency or authority, in each case in any way applicable
to the Company,  ITSA Cayman,  any Guarantor or the Collateral (or the ownership
or use  thereof) and with  respect to ITSA Ltd.,  the Company or any  Guarantor,
such  Person's  "Estatutos  Sociales,"  Articles of  Association,  Memorandum of
Association and/or other organizational or governing documents.

          "Asset  Sale"  means  (i)  the  sale,   lease,   conveyance  or  other
disposition of any assets or rights (including,  without limitation, by way of a
sale and leaseback or similar  arrangement)  other than sales or dispositions in
the ordinary course of business  consistent  with past  practices;  and (ii) the
issuance or sale by the Company or any of its Restricted  Subsidiaries of Equity
Interests of any of the Company's Restricted  Subsidiaries.  Notwithstanding the
foregoing, none of the following will be deemed an Asset Sale: (a) a transfer of
assets by the Company to a  Restricted  Subsidiary  that is a Guarantor  or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary that is
a Guarantor;  (b) a Restricted  Payment that is permitted under Section 4.7; (c)
dispositions  in any fiscal year with Net  Proceeds in the  aggregate  amount of
US$500,000 (or the equivalent  thereof at time of determination) or less; (d) an
Asset Swap that is  permitted  under  Section  4.16;  (e) a  contribution  to an
Unrestricted  Subsidiary  which  complies  with  Section  4.7;  (f) a  sale  and
leaseback  which  complies with Section 4.17;  (g) any  liquidation  of any Cash
Equivalent;  (h) the  issuance  or  sale of  Equity  Interests  of a  Restricted
Subsidiary to the Company or one of its other Restricted Subsidiaries; (i) sales
or other dispositions of excess inventory of decoders or antennae;  (j) sales or
other  dispositions  of the  assets or  Capital  Stock of TV Filme  Programadora
Ltda.,  but only if and to the  extent  that  consideration  other  than cash is
received for such sales or other dispositions; and (k) sales or issuances of the
Capital  Stock of a Restricted  Subsidiary  to Persons other than the Company or
another  Restricted  Subsidiary in consideration of the transfer or contribution
to the  Restricted  Subsidiary of assets that (i) have a value at least equal to
the Fair Market Value of such Capital Stock at the time of such  transaction and
(ii)  would  constitute  a  Related  Business  Investment  if  acquired  by such
Restricted Subsidiary with Net Proceeds of an Asset Sale; PROVIDED that, if such
Restricted  Subsidiary  is a Guarantor,  such sale or issuance of Capital  Stock
will not impair the Guarantee given by such Restricted Subsidiary and, PROVIDED,
further, that the acquisition of such assets constitutes a Permitted Investment.

          "Asset Swap" means the  execution of a definitive  agreement,  subject
only to  approvals of the Ministry of  Communications  or such other  applicable
Brazilian   governmental   authority  or  agency  and  other  customary  closing
conditions,  that the Company in good faith  believes will be  satisfied,  for a
substantially  concurrent purchase and sale, or exchange,  of Telecommunications
Assets  between the Company or any of its  Restricted  Subsidiaries  and another
Person or group of Persons who are Affiliates of one another;  PROVIDED that any
amendment to or waiver of any closing  condition  which  individually  or in the
aggregate is material to the Asset Swap will be deemed to be a new Asset Swap.

          "Attributable  Debt" in  respect of a sale and  leaseback  transaction
means, at the time of  determination,  the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental  payments  during the remaining term
of the lease  included in such sale and  leaseback  transaction  (including  any
period  for which  such  lease has been  extended  or may,  at the option of the
lessor, be extended).

          "Authority" means any national, federal, state, provincial,  municipal
or local government or quasi-governmental agency or authority.

          "Bankruptcy  Law" means Title 11,  United  States  Code,  or Brazilian
Decree Law No.  7,661 of June 21, 1945 as each may be amended from time to time,
or any similar federal, state or foreign law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization, "concordata" or relief of
debtors, that is applicable to the Company or any of its Subsidiaries.

          "Brazil" means the Federative Republic of Brazil.

                                       2

<PAGE>


          "Brazilian  GAAP" means generally  accepted  accounting  principles in
Brazil, applied on a consistent basis.

          "Business  Day" means any day other than a  Saturday,  Sunday,  public
holiday or day on which banking  institutions in New York City (or, with respect
to any  payments  or  transfers  to be  made by the  Trustee  or any  Agent,  as
applicable,  in the city where such Trustee or Agent is located) are  authorized
or obligated by law to close.

          "Capital  Lease  Obligation"  means,  at the  time  any  determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be  required  to be  capitalized  on a balance  sheet in
accordance with GAAP.

          "Capital  Stock"  means  (i) in the case of a  corporation,  corporate
stock,  (ii) in the  case of an  association  or  business  entity,  any and all
shares, interests, participations,  rights, quotas or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,  partnership
interests   (whether  general  or  limited)  and  (iv)  any  other  interest  or
participation  that  confers  on a Person  the  right to  receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

          "Cash  Equivalents"  means (i) securities issued or directly and fully
guaranteed or insured by the Brazilian or United States government or any agency
or instrumentality thereof having maturities of not more than twelve months from
the date of  acquisition,  (ii)  certificates  of deposit  and  eurodollar  time
deposits with  maturities of twelve months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits,  in each case with any Brazilian  regulated bank or member bank of the
U.S.   Federal   Reserve   System  having  capital  and  surplus  in  excess  of
US$500,000,000 (or equivalent thereof at the time of determination) (or a branch
of any such bank),  (iii)  repurchase  obligations  with a term of not more than
seven calendar days for underlying  securities of the types described in clauses
(i) and (ii) above  entered  into with any  financial  institution  meeting  the
qualifications  specified in clause (ii) above and (iv) commercial  paper having
the  rating  of at least P-1 from  Moody's  or at least A-1 from S&P and in each
case maturing within 180 calendar days after the date of acquisition.

          "Casualty"  means,  with respect to any Collateral,  loss of, material
damage to or destruction of all or any part of such Collateral.

          "Certificated  Note" means a certificated  Note bearing the securities
legend set forth in Section 2.6(f).

          "Change of Control" means the occurrence of any of the following:  (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation),  in one or a series of related transactions, of all or
substantially  all of the assets of the Company and its Subsidiaries  taken as a
whole to any "person" (as such term is used in Section  13(d)(3) of the Exchange
Act),  (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company,  (iii) the  consummation  of any  transaction  (including,  without
limitation,  any merger or  consolidation,  but excluding any foreclosure on the
Collateral  by the Trustee) the result of which is that any "person" (as defined
above),  becomes the  "beneficial  owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35%
of the voting  stock of the Company or (iv) the first day on which a majority of
the  members  of the  Board  of  Directors  of the  Company  are not  Continuing
Directors.

          "Collateral" means (i) all of the Capital Stock of the Company and its
Restricted  Subsidiaries  which is owned by the  Company or  another  Restricted
Subsidiary  (subject  to  the  limitations  set  forth  in the  Master  Security
Agreement),  (ii) non-cash  consideration received as consideration for an Asset
Sale pursuant to Section 4.10, and Related  Business  Investments  acquired with
Net Proceeds from an Asset Sale,  Insurance  Proceeds or Condemnation  Proceeds,
(iii) all  Collateral  Property and all of the other assets  (other than Capital
Stock  (except  as  provided  for in  clause  (i) or  (ii))  or  cash  and  Cash


                                       3
<PAGE>

Equivalents (except as provided for in this clause (iii)),  whether now existing
or from  time to time  hereafter  acquired,  of the  Company  or any  Restricted
Subsidiary that is a Guarantor,  including, without limitation, any and all real
property and leasehold  interests in real property now or hereafter owned by the
Company  or any  such  Restricted  Subsidiary,  all  Improvements  thereon,  all
Equipment, Fixtures, Inventory, Accounts, the Collateral Account and all monies,
Cash  Equivalents,  securities  and  instruments  deposited  or  required  to be
deposited in the  Collateral  Account,  copyrights  (including  all reissues and
renewals  thereof),  patents  (including  all reissues  and  renewals  thereof),
licenses used in the  Telecommunications  Business,  (subject to the limitations
set forth in the Master Security Agreement),  trademarks,  trade secrets,  trade
secret  rights,   contracts,   contract  rights,  general  intangibles,   goods,
instruments,  documents,  and all  proceeds  and  products of any and all of the
foregoing, and (iv) any other property or assets securing the Notes and proceeds
of any and all of the foregoing  from time to time pursuant to this Indenture or
any Security Document.

          "Collateral  Account" means,  collectively,  each  collateral  account
established by the Company or applicable Guarantor,  as the case may be, and the
Collateral  Agent in  accordance  with the terms and  conditions  of the  Master
Security Agreement.

          "Collateral  Agency  Agreement" means the Collateral Agency Agreement,
dated as of July 20,  2000,  among  ITSA  Cayman,  Sub Inc.,  the  Company,  the
Guarantors,  the Trustee and the Collateral Agent,  substantially in the form of
Exhibit E hereto,  as amended,  supplemented or otherwise  modified from time to
time.

          "Collateral Agent" means, initially,  HSBC Bank USA, and any successor
thereto or other collateral agent appointed by the Trustee or the Holders of the
Notes pursuant to any Security Document.

          "Collateral  Property"  means any and all real  property and leasehold
interests in real property (and all Fixtures and  Improvements  located thereon)
now or hereafter  owned by the Company or any  Restricted  Subsidiary  that is a
Guarantor.

          "Commission"  or "SEC" means the Securities  and Exchange  Commission,
and any successor thereto.

          "Common Equity  Interests" means (i) with respect to a person which is
a corporation,  any and all shares,  interests or other  participations  in, and
other equivalents  (however  designated and whether voting or nonvoting) of such
Person's Common Stock and includes,  without limitation,  all series and classes
of  such  Common  Stock  and  (ii)  with  respect  to a  Person  which  is not a
corporation, Equity Interests which have characteristics similar in all material
respects to those of Common Stock of a corporation.

          "Common  Stock" of any Person means  Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation,  dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.

          "Condemnation" means any taking of the Collateral or any part thereof,
in or by condemnation,  expropriation,  or similar  proceedings,  eminent domain
proceedings,  seizure or forfeiture, pursuant to any law, general or special, or
by  reason  of  the  temporary  requisition  of  the  use  or  occupancy  of the
Collateral, or any part thereof, by any Authority.

          "Condemnation Proceeds" means any awards,  proceeds,  payment or other
compensation arising out of a Condemnation.

          "Consolidated  Cash Flow"  means,  with  respect to any Person for any
period,  the Consolidated Net Income of such Person for such period plus, to the
extent deducted in computing Consolidated Net Income, (i) an amount equal to any
extraordinary  loss plus any net loss realized in connection with an Asset Sale,
(ii)  provision  for taxes  based on income or  profits  of such  Person and its
Restricted Subsidiaries for such period, (iii) Consolidated Interest Expense and
(iv) depreciation,  amortization  (including  amortization of goodwill and other
intangibles  but excluding  amortization of prepaid cash expenses that were paid
in a prior  period) of such  Person  and its  Restricted  Subsidiaries  for such
period,  and other non-cash  charges  (excluding any such non-cash charge to the
extent  that it  represents  an accrual of or  reserve  for cash  charges in any


                                       4
<PAGE>

future period or amortization of a prepaid cash expense that was paid in a prior
period),   minus  (v)  non-cash  items  increasing   consolidated   revenues  in
determining such  Consolidated  Net Income for such period  (excluding any items
which  represent  the  reversal  of  any  accrual  of,  or  cash  reserves  for,
anticipated  cash charges in any prior period and excluding the  recognition  of
deferred sign-on or hook-up fee revenue),  in each case, on a consolidated basis
and  determined  in  accordance  with GAAP and (vi) to the  extent  included  in
computing  Consolidated Net Income, an amount equal to any  extraordinary  gain.
Notwithstanding  the foregoing,  the amounts  referred to in clauses (i) through
(vi) of the preceding sentence with respect to Restricted Subsidiaries will only
be added to (deducted from) Consolidated Net Income to compute Consolidated Cash
Flow to the  extent  (and in the same  proportion)  that the Net  Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and only if a corresponding amount would be permitted at the date of
determination  to be  paid  as a  dividend  to such  Person  by such  Restricted
Subsidiary without direct or indirect  restriction  pursuant to the terms of its
charter and by-laws and all agreements, instruments, judgments, decrees, orders,
statutes,  rules and  governmental  regulations  applicable  to such  Restricted
Subsidiary or its stockholders.

          "Consolidated  Indebtedness"  means,  with respect to any Person as of
any date of determination, the sum, without duplication, of (i) the total amount
of  Indebtedness  of such Person and its Restricted  Subsidiaries  plus (ii) the
aggregate  liquidation  value of all Disqualified  Stock of such Person, in each
case determined on a consolidated basis in accordance with GAAP.

          "Consolidated  Interest Expense" means, with respect to any Person for
any period, the sum of (i) the consolidated  interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without  limitation,  amortization  of debt  issuance  costs and original  issue
discount,  non-cash interest  payments,  the interest  component of any deferred
payment  obligations,  the interest  component of all payments  associated  with
Capital Lease  Obligations,  imputed interest with respect to Attributable Debt,
interest  payments  in  respect  of  Indebtedness  of  another  Person  that  is
Guaranteed by such Person or one of its Restricted  Subsidiaries or secured by a
Lien on assets of such  Person or one of its  Restricted  Subsidiaries  (if such
Guarantee  or Lien is called upon and to the extent such  interest  payments are
satisfied under or by means of such Lien), commissions, discounts and other fees
and  charges  incurred  in  respect of letter of credit or  bankers'  acceptance
financings,  and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized  during such period, in each case, on a consolidated  basis
and in accordance with GAAP.

          "Consolidated  Net Income"  means,  with respect to any Person for any
period,  the  aggregate  of the Net  Income of such  Person  and its  Restricted
Subsidiaries for such period, on a consolidated basis,  determined in accordance
with GAAP; PROVIDED that (i) the Net Income (but not loss) of any Person that is
not a Guarantor or that is accounted for by the equity method of accounting will
be included only to the extent of the amount of dividends or distributions  paid
in cash to the  specified  Person as to which  Consolidated  Net Income is being
calculated or a Restricted Subsidiary thereof which is a Guarantor, (ii) the Net
Income of any  Restricted  Subsidiary  will be  excluded  to the extent that the
declaration or payment of dividends or similar  distributions by such Restricted
Subsidiary of such Net Income to the specified  Person as to which  Consolidated
Net  Income  is  being  calculated  would  not  be  permitted  at  the  date  of
determination  directly or indirectly,  pursuant to the terms of such Restricted
Subsidiary's   constitutional   documents  and  all   agreements,   instruments,
judgments,   decrees,   orders,  statutes,  rules  or  governmental  regulations
applicable  to such  Restricted  Subsidiary or its  stockholders,  (iii) the Net
Income of any Person  acquired  in a pooling of  interests  transaction  for any
period  prior  to the  date  of such  acquisition  will be  excluded,  (iv)  the
cumulative effect of a change in accounting  principles will be excluded and (v)
the Net Income of any  Unrestricted  Subsidiary will be excluded,  except to the
extent  of the  amount  of  dividends  or  distributions  paid  in  cash by such
Unrestricted  Subsidiary to the specified  Person as to which  Consolidated  Net
Income is being calculated or its Restricted Subsidiaries that are Guarantors.

          "Consolidated  Net Worth" means,  (a) with respect to a partnership as
of any date, the sum of the common and preferred  partnership  interests of such
Person  and  its  consolidated  Restricted  Subsidiaries  as of  such  date,  as
determined on a consolidated basis in accordance with GAAP, and (b) with respect
to any other Person as of any date,  the sum of (i) the  consolidated  equity of
the  common  equity  holders  of such  Person  and its  consolidated  Restricted
Subsidiaries as of such date plus (ii) the respective  amounts  reported on such
Person's  balance  sheet as of such date with respect to any series of preferred
equity;  PROVIDED  that the  preferred  partnership  interests or the  preferred


                                       5
<PAGE>

equity,  as the case may be, is not (A) Disqualified  Stock and (B) by its terms
entitled  to the  payment  of  dividends  or other  distributions,  unless  such
dividends  or other  distributions  may be  declared  and  paid  only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash  received  by such Person  upon  issuance  of such  preferred
partnership  interests or preferred  equity,  less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern  business made within 12 months after the  acquisition
of such  business)  subsequent  to the  Effective  Date in the book value of any
asset  owned by such  Person or a  consolidated  Restricted  Subsidiary  of such
Person,  (y) all investments as of such date in unconsolidated  Subsidiaries and
in  Persons  that  are  not  Guarantors   (except,   in  each  case,   Permitted
Investments),  and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing  determined in accordance
with GAAP.

          "Continuing  Director"  means,  as of any date of  determination,  any
member of the Board of  Directors  of the  Company  who (i) was a member of such
Board on the  Effective  Date,  or (ii) was nominated for election or elected to
such Board with the  approval of  two-thirds  of the  following  members of such
Board:  (a) the  members of such Board who are  described  in clause (i) of this
definition  and (b) members of such Board  previously  nominated for election or
elected to such Board as described in this clause (ii).

          "Corporate  Trust Office of the Trustee" will be at the address of the
Trustee  specified in Section 12.2 hereof or such other  address as to which the
Trustee may give notice to the Company.

          "Custodian"  means  any  receiver,   trustee,  assignee,   liquidator,
sequestrator,  custodian,  "sindico," "comissario" or similar official under any
Bankruptcy Law.

          "Default"  means any event that is or with the  passage of time or the
giving of notice or both would be an Event of Default.

          "Depository"  means, The Depository  Trust Company,  until a successor
shall have been appointed and becomes such pursuant to the applicable  provision
of this  Indenture,  and,  thereafter,  "Depository"  will mean or include  such
successor.

          "Disqualified Stock" means any Capital Stock that, by its terms (or by
the  terms of any  security  into  which it is  convertible  or for  which it is
exchangeable),  or upon the  happening of any event,  matures or is  mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder  thereof,  in whole or in part, on or prior to the date
that is 91 calendar days after the date on which the Notes mature.

          "Effective Date" means July 20, 2000.

          "Equipment"  means all equipment now or hereafter owned by the Company
or any Restricted  Subsidiary that is a Guarantor or in which any of them has or
shall acquire an interest, now or hereafter located on, attached to or contained
in or used or usable in connection with any Collateral Property,  and shall also
mean and  include  all  building  materials,  construction  materials,  personal
property constituting  furniture,  fittings,  appliances,  apparatus,  leasehold
improvements,   machinery,   devices,   interior  improvements,   appurtenances,
equipment, plant, furnishings,  computers, electronic data processing equipment,
telecommunications  equipment  and other  fixed  assets  now owned or  hereafter
acquired by the Company or any Restricted Subsidiary that is a Guarantor and now
or hereafter used in the operation of any Collateral Property,  and all proceeds
thereof and all additions to,  substitutions for,  replacements of or accessions
to any of the items recited as aforesaid and all attachments,  components, parts
(including spare parts) and accessories,  whether  installed  thereon or affixed
thereto,  and wherever  located,  now or  hereafter  owned by the Company or any
Restricted  Subsidiary  that is a Guarantor,  and used or intended to be used in
connection  with,  or with the  operation  of, any  Collateral  Property  or the
buildings,  structures,  or other  improvements now or hereafter  located at any
Collateral  Property,  or in connection with any construction being conducted or
which may be conducted  thereon,  all regardless of whether the same are located
on  any  Collateral  Property  or  are  located  elsewhere  (including,  without
limitation, in warehouses or other storage facilities or in the possession of or
on  the  premises  of  a  bailee,   vendor  or  manufacturer)  for  purposes  of
manufacture,  storage,  fabrication  or  transportation  and all  extensions and
replacements to, and proceeds of, any of the foregoing.


                                       6
<PAGE>

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

          "Exchange Act" means the Securities  Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

          "Existing  Indebtedness"  means  Indebtedness  of the  Company and its
Restricted  Subsidiaries in existence on the Effective Date listed on Annex I to
this Indenture, until such amounts are repaid.

          "Fair Market Value" means, with respect to any asset or property,  the
sale value that would be  obtained  in an  arm's-length  transaction  between an
informed  and willing  seller  under no  compulsion  to sell and an informed and
willing buyer under no  compulsion  to buy;  PROVIDED that if such value exceeds
US$1,000,000  (or  equivalent  thereof  at  the  time  of  determination),  such
determination  will be made in good  faith  by the  Board  of  Directors  of the
Company.

          "Fixtures" means all Equipment now owned or hereafter  acquired by the
Company or any Restricted  Subsidiary that is a Guarantor which is so related to
the  building  or land in  which or on which  it is  located  that it is  deemed
fixtures or real property under the laws of the state or province in which it is
located, together with all accessions,  appurtenances,  additions,  replacements
and substitutions for any of the foregoing and the proceeds thereof  (including,
without limitation, gas and electric fixtures,  radiators,  heaters, engines and
machinery,   boilers,  ranges,  elevators  and  motors,  plumbing,  heating  and
ventilating  fixtures,  elevators,  carpeting and other floor  coverings,  water
heaters,  awnings and storm sashes, and cleaning apparatus which are or shall be
attached  to the  building  or land on which  they are  located,  including  any
additions,  enlargements,  extensions,  modifications,  repairs or  replacements
thereto).

          "GAAP"  means,  as  to  any  determination  date,  generally  accepted
accounting  principles in the United States of America set forth in the opinions
and pronouncements of the Accounting  Principles Board of the American Institute
of  Certified  Public  Accountants  and  statements  and  pronouncements  of the
Financial  Accounting  Standards Board or in such other statements by such other
entity  as  have  been  approved  by a  significant  segment  of the  accounting
profession, which are in effect on such date.

          "Government  Securities"  means direct  obligations of, or obligations
fully guaranteed by, or participations in pools consisting solely of obligations
of or obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States of
America is pledged.

          "Guarantee"  means any  obligation,  contingent or  otherwise,  of any
Person, directly or indirectly guaranteeing any Indebtedness or other obligation
of any other  Person  and any  obligation,  direct or  indirect,  contingent  or
otherwise, of such Person (i) to purchase or pay for (or advance or supply funds
for the purchase or payment of) such  Indebtedness  or other  obligation of such
other  Person  (whether  arising by virtue of  partnership  arrangements,  or by
arrangement to keep-well,  to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement  conditions or otherwise) or (ii)
entered  into for  purposes of assuring in any other  manner the obligee of such
Indebtedness  or other  obligation  of the  payment  thereof or to protect  such
obligee  against loss in respect thereof (in whole or in part);  PROVIDED,  that
the term "Guarantee" will not include  endorsements for collection or deposit in
the  ordinary  course of  business.  The term  "Guarantee"  used as a verb has a
corresponding meaning.

          "Guaranteed Obligations" has the meaning provided in Section 11.1.

          "Guarantor"  means each Restricted  Subsidiary of the Company existing
on the Effective Date and identified on Annex II, and each Restricted Subsidiary
created or  acquired  after the  Effective  Date that  executes  and  delivers a
Guarantee of the Obligations under the Notes.

          "Hedging   Obligations"   means,  with  respect  to  any  Person,  the
obligations  of such Person  under (i) interest or currency  exchange  rate swap
agreements,  interest or currency  exchange rate cap  agreements and interest or


                                       7
<PAGE>

currency   exchange  rate  collar   agreements  and  (ii)  other  agreements  or
arrangements,  in any case, designed to protect such Person against fluctuations
in interest or currency exchange rates.

          "Holder"  or  "Securityholder"  means a Person in whose name a Note is
registered on the Register.

          "Improvements"  means all buildings,  structures and  improvements  of
every nature  whatsoever to the extent such items are not owned by tenants or by
equipment  lessors  that  lease such  property  to the  Company or a  Restricted
Subsidiary,  and are situated on the land comprising any Collateral  Property on
the Effective Date or thereafter.

          "Indebtedness" means, with respect to any Person, without duplication,
(i) any  liability,  contingent  or  otherwise,  of such Person (a) for borrowed
money  (whether or not the  recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof),  whether as a cash advance,  bill,
overdraft or money market  facility loan, or (b) evidenced by a note,  debenture
or similar  instrument or, to the extent drawn upon and not reimbursed,  letters
of credit or other similar liability evidenced by book-entry  mechanism,  or (c)
for the  payment  of money  relating  to a  Capital  Lease  Obligation  or other
obligation  relating  to the  deferred  purchase  price of  property;  PROVIDED,
HOWEVER,  that  Indebtedness  will not  include  trade  payables  arising in the
ordinary course of business consistent with past practice,  or (d) in respect of
any Hedging  Obligation;  (ii) any liability of others of the kind  described in
the preceding  clause (i) which the Person has  Guaranteed or which is otherwise
its legal  liability;  and (iii) any  obligation  secured by a Lien to which the
property or assets of such Person are  subject,  whether or not the  obligations
secured  thereby  shall have been assumed by or will  otherwise be such Person's
legal liability;  PROVIDED,  HOWEVER, for purposes of this clause (iii), if such
obligation is not assumed by such Person,  or not otherwise the legal  liability
of such Person,  such  obligation  will only be included in  Indebtedness to the
extent of the Fair Market Value of such property or assets.

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

          "Insurance  Proceeds"  means any  payment,  proceeds or other  amounts
received at any time under any insurance  policy as compensation in respect of a
Casualty,  PROVIDED,  that, business  interruption  insurance proceeds shall not
constitute Insurance Proceeds.

          "Interest  Payment  Date" means June 20 and  December 20 of each year,
commencing on December 20, 2000.

          "Inventory"   means  all  of  the   Company's   and  each   Restricted
Subsidiary's (to the extent such Restricted Subsidiary is a Guarantor) now owned
and hereafter existing or acquired raw materials,  work-in-process  and finished
goods  inventory  held by the Company  and each  Restricted  Subsidiary  (to the
extent such  Restricted  Subsidiary  is a Guarantor)  for  manufacture,  sale or
lease, wherever located.

          "Investments"  means,  with respect to any Person,  all investments by
such Person in other Persons  (including  Affiliates)  in the forms of direct or
indirect loans  (including  guarantees of  Indebtedness  or other  obligations),
advances  or capital  contributions  (excluding  commission,  travel and similar
advances to  directors,  officers and employees  made in the ordinary  course of
business),  purchases or other acquisitions (for consideration) of Indebtedness,
Equity Interests or other securities,  together with all items that are or would
be classified as  investments  on a balance  sheet  prepared in accordance  with
GAAP;  PROVIDED  that an  acquisition  of  assets,  Equity  Interests  or  other
securities  by  the  Company  or  any  of  its   Restricted   Subsidiaries   for
consideration consisting of Common Stock of the Company will not be deemed to be
an Investment.

          "Lien" means,  with respect to any  mortgage,  lien,  pledge,  charge,
security interest or encumbrance of any kind, whether or not filed,  recorded or
otherwise  perfected  under  applicable law (including any  conditional  sale or
other title retention agreement, and any lease in the nature thereof).

          "Loss Event" means a Condemnation  or Casualty  involving an actual or
constructive  total loss or agreed or compromised  actual or constructive  total
loss of all or  substantially  all of any Collateral  Property  except where the
Company reasonably concludes that Restoration of such Collateral Property can be
made in  accordance  with this  Indenture  and  elects to do so in an  Officers'
Certificate  delivered to the Trustee  within 120 calendar  days of the relevant
Condemnation or Casualty.


                                       8
<PAGE>

          "Master Security Agreement" means the Master Security Agreement, dated
as of  July  20,  2000,  among  ITSA  Cayman,  Sub  Inc.,  the  Company  and the
Guarantors, as grantors, and the Collateral Agent,  substantially in the form of
Exhibit C hereto,  as amended,  supplemented or otherwise  modified from time to
time.

          "Material Telecommunications License" means one or more authorizations
issued  by  the  Ministry  of  Communications  or  other  applicable   Brazilian
governmental  authority  or  agency  used  or  useful  in  the  operation  of  a
Telecommunications Business that individually or collectively have a Fair Market
Value   exceeding   US$1,000,000   (or  the   equivalent   thereof  at  time  of
determination).

          "Moody's" means Moody's Investors  Service,  Inc., or any successor to
its rating business.

          "Mortgage"  means the Public  Deed of  Mortgage,  to be  executed  and
delivered as soon as all required documentation therefor is obtained, but in any
case not later than 45 days after the Effective  Date,  among TV Filme  Brasilia
Servicos   de   Telecomunicacoes   Ltda.,   TV   Filme   Goiania   Servicos   de
Telecomunicacoes Ltda., TV Filme Belem Servicos de Telecomunicacoes Ltda. and TV
Filme Sistemas Ltda.,  as mortgagors,  the Collateral  Agent, as mortgagee,  and
ITSA, TV Filme  Operacoes  Ltda. and Link Express  Servicos de  Telecomunicacoes
Ltda., as intervening parties, substantially in the form of Exhibit D hereto, as
amended, supplemented or otherwise modified from time to time.

          "Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any  reduction in respect of preferred  stock  dividends,  excluding,
however,  (i) any gain (but not loss),  together with any related  provision for
taxes on such gain (but not loss),  realized  in  connection  with (a) any Asset
Sales  (including,  without  limitation,   dispositions  pursuant  to  sale  and
leaseback  transactions) or (b) the disposition of any securities by such Person
or any of its Restricted  Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Restricted  Subsidiaries and (ii) any extraordinary
or  nonrecurring  gain (but not loss),  together with any related  provision for
taxes on such extraordinary or nonrecurring gain (but not loss).

          "Net  Proceeds"  means the  aggregate  cash  proceeds  received by the
Company  or any of its  Restricted  Subsidiaries  in  respect  of any Asset Sale
(including,  without  limitation,  any  cash  received  upon  the  sale or other
disposition of any non-cash  consideration  received in any Asset Sale),  net of
the direct costs  relating to such Asset Sale  (including,  without  limitation,
legal,  accounting and  investment  banking fees,  and sales  commissions),  any
relocation  expenses incurred as a result thereof,  any taxes paid or payable by
the Company or any of its  Restricted  Subsidiaries  as a result  thereof (after
taking into account any available tax credits or deductions  and any tax sharing
arrangements),  amounts  required  to be  paid to any  Person  (other  than  the
Company,  its Restricted  Subsidiaries or its  Affiliates)  having a Lien on the
assets  subject to the Asset  Sale,  amounts  required  to be paid to any Person
(other  than the  Company  or any  Restricted  Subsidiary)  owning a  beneficial
interest  in  the  assets  subject  to the  Asset  Sale,  and  any  reserve  for
adjustments in respect of the sale price of such asset or assets  established in
accordance with GAAP; PROVIDED,  HOWEVER,  that if such proceeds are received by
any such  Restricted  Subsidiary,  all of the Equity  Interests of which are not
owned directly or indirectly by the Company, as a result of an Asset Sale by it,
Net  Proceeds  for  purposes of Section  4.10 will mean the  proportion  of such
proceeds (as so  adjusted)  which is the same as the  proportion  of such Equity
Interests owned directly or indirectly by the Company.

          "Non-Recourse  Debt" means  Indebtedness  (i) as to which  neither the
Company nor any of its Restricted  Subsidiaries  (a) provides  credit support of
any  kind  (including  any  undertaking,  agreement  or  instrument  that  would
constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor
or otherwise),  (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement  action against an Unrestricted
Subsidiary) would permit (upon notice,  lapse of time or both) any holder of any
other  Indebtedness  of the  Company or any of its  Restricted  Subsidiaries  to
declare a default on such other  Indebtedness or cause the payment thereof to be
accelerated  or payable  prior to its stated  maturity and (iii) as to which the
lenders have expressly  waived any recourse which they may have, in law,  equity
or  otherwise,  whether  based  on  misrepresentation,   control,  ownership  or


                                       9
<PAGE>

otherwise,  to the  Company or any of its  Restricted  Subsidiaries,  including,
without  limitation,  a waiver of the  benefits  of the  provisions  of  Section
1111(b) of Title 11, United States Code, as amended.

          "Note  Custodian"  means the custodian with respect to the Global Note
or any successor person thereto and shall initially be the Trustee.

          "Notes" means the  Company's 12% Senior  Secured Notes due 2004 issued
under this Indenture as an amendment and restatement of the Existing Note.

          "Obligations"  means  any  principal,   interest,   penalties,   fees,
indemnifications,  reimbursements,  damages and other liabilities  payable under
the documentation governing any Indebtedness.

          "Officer"  means,  with  respect to any  Person,  the chief  executive
officer,  the  president,  the chief  operating  officer,  the  chief  financial
officer, the chief accounting officer,  the treasurer,  any assistant treasurer,
the controller,  the secretary, any assistant secretary or any vice-president of
such Person.

          "Officers'  Certificate"  means a  certificate  signed  on behalf of a
Person  by two  Officers  of  such  Person,  one of whom  must be the  principal
executive officer,  the principal financial officer or the principal  accounting
officer of such Person, that meets the requirements set forth in this Indenture.

          "Operating Agreement" means any and all agreements between the Company
or a Restricted  Subsidiary,  on the one hand, and another Restricted Subsidiary
or  Affiliate  of the Company  that holds any  license or permit  related to the
business of the Company and its Subsidiaries, on the other hand.

          "Opinion of Counsel" means an opinion, to be obtained at the sole cost
and expense of the Company or any Subsidiary of the Company,  from legal counsel
who is reasonably  acceptable  to the Trustee,  that meets the  requirements  of
Section 12.5 hereof.  The counsel may be counsel to the Company,  any Subsidiary
of the Company or the Trustee.

          "Permits"  means  all  licenses,  permits,  variances,  approvals  and
certificates used in connection with the ownership, operation,  improvement, use
or occupancy of or installations at, any Collateral Property (including, without
limitation,  business licenses,  state health department  licenses,  licenses to
conduct business and all such other permits,  licenses and rights, obtained from
any Authority concerning ownership, improvement,  operation, use or occupancy of
such Collateral Property).

          "Permitted  Investments" means (i) any Investment in the Company or in
a Restricted Subsidiary of the Company which is a Guarantor; (ii) any Investment
in  Cash  Equivalents;  (iii)  any  Investment  by  the  Company  or  any of its
Restricted  Subsidiaries in a Person engaged in the Telecommunications  Business
if,  as a result  of such  Investment,  (a) such  Person  becomes  a  Restricted
Subsidiary  of the  Company  and a  Guarantor  or (b)  such  Person  is  merged,
consolidated or amalgamated with or into, or transfers or conveys  substantially
all of its  assets  to, or is  liquidated  into,  the  Company  or a  Restricted
Subsidiary of the Company which is a Guarantor;  (iv)  Investments in Restricted
Subsidiaries  that are not  Guarantors  in an  aggregate  amount  not to  exceed
US$5,000,000 (or the equivalent thereof at the time of determination), PROVIDED,
HOWEVER, that Investments in such Restricted  Subsidiaries will be excluded from
the  calculation  of  such  aggregate  amount  (A)  if  concurrently  with  such
Investment such Restricted  Subsidiary  becomes a Guarantor or (B) from the time
after such  Investment  such  Restricted  Subsidiary  becomes a  Guarantor;  (v)
Investments  in  Persons  engaged  in  the  Telecommunications  Business,  taken
together  with all other  Investments  made  pursuant  to this clause (v), in an
aggregate amount not to exceed  US$5,000,000 (or the equivalent  thereof at time
of  determination);  (vi) any  Investment  made as a result  of the  receipt  of
non-cash  consideration  from an Asset  Sale  that was made  pursuant  to and in
compliance  with Section 4.10;  (vii) loans and advances to officers,  directors
and employees for  business-related  travel expenses,  moving expenses and other
similar  expenses,  in each case  incurred in the  ordinary  course of business;
(viii)  Investments  the  payment  for  which  consists  exclusively  of  Equity
Interests  (excluding  Disqualified  Stock) of the Company;  (ix) any Investment
acquired by the Company or any of its  Restricted  Subsidiaries  (A) in exchange
for any other Investment or accounts  receivable held by the Company or any such
Restricted  Subsidiary  in  connection  with  or as a  result  of a  bankruptcy,
workout,  reorganization  or  recapitalization  of  the  issuer  of  such  other
Investment or accounts  receivable or (B) as a result of the  foreclosure by the
Company  or any of its  Restricted  Subsidiaries  with  respect  to any  secured
Investment;  (x)  Investments  in shares of money market funds having  assets in
excess of US$500,000,000; and (xi) Investments existing on the Effective Date.


                                       10
<PAGE>

          "Permitted   Liens"  means  (i)  Liens  securing  any  senior  secured
Indebtedness  which may be incurred  pursuant  to clause (i) of Section  4.9(b);
(ii) Liens in favor of the Company or any of its Restricted  Subsidiaries  which
are  Guarantors;  (iii) Liens on property of a Person  existing at the time such
Person is merged into or consolidated  with the Company or any of its Restricted
Subsidiaries,   PROVIDED  that  such  Liens  were  in  existence  prior  to  the
contemplation  of such merger or  consolidation  and do not extend to any assets
other than those of the Person merged into or  consolidated  with the Company or
any such Restricted Subsidiary;  (iv) Liens on property or securing any Acquired
Debt and which exist at the time of acquisition thereof by the Company or any of
its Restricted Subsidiaries, PROVIDED that such Liens were in existence prior to
the contemplation of such acquisition; (v) Liens arising under this Indenture in
favor of the Trustee;  (vi) Liens  existing on the Effective  Date;  (vii) Liens
arising by reason of (1) any judgment,  decree or order of any court, so long as
enforcement  of such  Lien is  effectively  stayed  and  any  appropriate  legal
proceedings  which may have been duly initiated for the review of such judgment,
decree or order  shall not have been  finally  terminated  or the period  within
which such  proceedings may be initiated  shall not have expired;  (2) taxes not
yet  delinquent  or which are being  contested  in good faith;  (3) security for
payment of workers' compensation or other insurance;  (4) good faith deposits in
connection  with  tenders,  leases and contracts  (other than  contracts for the
payment of  money),  bids,  licenses,  performance  or  similar  bonds and other
obligations  of a like nature,  in the ordinary  course of business;  (5) zoning
restrictions,   easements,  licenses,   reservations,   provisions,   covenants,
conditions, waivers, restrictions on the use of property or minor irregularities
of title (and with respect to leasehold interests, mortgages, obligations, liens
and other  encumbrances  incurred,  created,  assumed or  permitted to exist and
arising by, through or under a landlord or owner of the leased property, with or
without consent of the lessees), none of which materially impairs the use of any
parcel of property  material to the  operation of the business of the Company or
any Restricted  Subsidiary or the value of such property for the purpose of such
business;  (6) deposits to secure public or statutory  obligations or in lieu of
surety or appeal bonds; (7) surveys,  exceptions,  title defects,  encumbrances,
easements,  reservations  of, or rights of others  for,  rights of way,  sewers,
electric  lines,  telegraph or  telephone  lines and other  similar  purposes or
zoning or other restrictions as to the use of real property not interfering with
the  ordinary  conduct of the  business of the Company or any of its  Restricted
Subsidiaries;  or (8)  operation  of law or statute and incurred in the ordinary
course of business,  including without limitation,  those in favor of mechanics,
materialmen,  suppliers,  laborers or employees, and, if securing sums of money,
for sums which are not yet  delinquent  or are being  contested in good faith by
negotiations or by appropriate proceedings which suspend the collection thereof;
(viii)  Liens  created by the  Security  Documents;  (ix)  Liens  granted by the
Company or any Restricted Subsidiary to secure Indebtedness incurred pursuant to
clause (x) of Section 4.9(b),  in each case representing all or part of the cost
of  purchase,   lease,   construction  or  improvement  of  property   acquired,
constructed  or improved after the date hereof owed to a Person not an Affiliate
of the  Company;  PROVIDED,  HOWEVER,  that (x) in any such case such Lien shall
extend only to the specific property of the Company or any Restricted Subsidiary
leased, acquired, constructed or improved with the proceeds of such Indebtedness
and (y) the aggregate amount of Indebtedness  secured by any such Lien shall not
exceed  the  cost of  purchase,  lease,  construction,  or  improvement  of such
property  and (z) such Liens shall  attach to such  property  within 90 calendar
days  of  the  acquisition  or  lease  of,  or  completion  of  construction  or
improvement  on, such  property;  (x) Liens  incurred in the ordinary  course of
business  of the  Company  or any of its  Restricted  Subsidiaries  which do not
secure  obligations  of the  Company or any  Restricted  Subsidiary,  including,
without  limitation,  licenses and leases  granted or made by the Company or any
Restricted  Subsidiary as licensor or lessor or which secure obligations that in
the aggregate do not exceed  US$2,000,000 (or the equivalent  thereof at time of
determination)  at any one time  outstanding  and that (a) are not  incurred  in
connection  with the  borrowing of money or the  obtaining of advances or credit
(other than trade credit in the ordinary  course of business)  and (b) do not in
the  aggregate  materially  detract from the value of the property or materially
impair the use thereof in the  operation  of business by the Company or any such
Restricted  Subsidiary;  and (xi) any  extension,  renewal  or  replacement  (or
successive  extensions,  renewals or replacements),  in whole or in part, of any
Lien referred to in the foregoing clauses; PROVIDED that the principal amount of
the  Indebtedness  secured  thereby  shall not  exceed the  principal  amount of
Indebtedness so secured immediately prior to the time of such extension, renewal
or  replacement,  and that such extension,  renewal or replacement  Lien will be
limited to all or a part of the  property  which  secured the Lien so  extended,
renewed or replaced (plus improvements on such property).


                                       11
<PAGE>

          "Permitted  Refinancing Debt" means any Indebtedness of the Company or
any of its Restricted  Subsidiaries  issued in exchange for, or the net proceeds
of which are used to extend, refinance,  renew, replace, defease or refund other
Indebtedness  of the Company or any such Restricted  Subsidiary;  PROVIDED that:
(i) the principal  amount (or accreted  value,  if applicable) of such Permitted
Refinancing  Debt does not exceed the principal  amount (or accreted  value,  if
applicable) of the  Indebtedness  so extended,  refinanced,  renewed,  replaced,
defeased or refunded,  plus accrued  interest and the amount of any premiums and
transaction costs and reasonable expenses incurred in connection therewith; (ii)
such Permitted Refinancing Debt has a final maturity date equal to or later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended,  refinanced,  renewed,  replaced,  defeased or refunded;  (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is  subordinated  in right of payment to the Notes,  such Permitted  Refinancing
Debt is  subordinated  in right  of  payment  to the  Notes on terms at least as
favorable  to the  Holders  of  Notes as those  contained  in the  documentation
governing  the  Indebtedness  being  extended,  refinanced,  renewed,  replaced,
defeased or refunded; and (iv) such Indebtedness is incurred only by the Company
or the  Restricted  Subsidiary  that is the  obligor on the  Indebtedness  being
extended, refinanced, renewed, replaced, defeased or refunded.

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

          "Programming Agreement" means the Programming License Agreement, dated
as of June 27, 1996, between Tevecap S.A. and the TV Filme, Inc.

          "Related  Business" means the businesses carried out by the Company or
a  Restricted  Subsidiary  on the  date  hereof  and any  reasonable  extensions
thereof, directly or indirectly, related to the Telecommunications Business.

          "Related Business  Investment" means any expenditure by the Company or
a Restricted  Subsidiary,  as the case may be, to acquire assets,  or the Equity
Interests of any Person that will as a result become a Restricted Subsidiary and
a  Guarantor  and which  owns  assets,  to be used in the  ordinary  course of a
Related Business of the Company or such Restricted  Subsidiary,  as the case may
be, which shall constitute Collateral.

          "Restoration" or "Restore" means the physical  repair,  restoration or
rebuilding  of all or any portion of the  Collateral  following  any Casualty or
Condemnation other than a Loss Event.

          "Restricted  Investment"  means an  Investment  other than a Permitted
Investment.

          "Restricted  Subsidiary"  of a Person  means  any  Subsidiary  of such
Person that is not an Unrestricted Subsidiary.

          "Responsible  Officer,"  when used with respect to the Trustee,  means
any officer  within the Corporate  Trust  Administration  of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee  customarily
performing  functions  similar to those performed by any of the above designated
officers and also means,  with respect to a particular  corporate  trust matter,
any other  officer to whom such matter is referred  because of his  knowledge of
and familiarity with the particular subject.

          "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

          "Security Documents" means the Master Security Agreement, the Mortgage
and the Collateral Agency Agreement.


                                       12
<PAGE>

          "Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated  pursuant to the Securities  Act, as such Regulation is in effect on
the Effective Date.

          "S&P"  means   Standard  and  Poor's  Ratings  Group,  a  division  of
McGraw-Hill, Inc, or any successor to its rating business.

          "Sub Inc." means Filme Sub, Inc., a Delaware corporation.

          "Subsidiary"  means, with respect to any Person,  (i) any corporation,
association or other business  entity of which more than 50% of the total voting
power of shares of Capital Stock entitled  (without  regard to the occurrence of
any  contingency)  to vote in the  election of  directors,  managers or trustees
thereof is at the time owned or  controlled,  directly  or  indirectly,  by such
Person or one or more of the other Subsidiaries of such Person (or a combination
thereof) and (ii) any  partnership  (a) the sole general partner or the managing
general  partner of which is such Person or a  Subsidiary  of such Person or (b)
the only general  partners of which are such Person or one or more  Subsidiaries
of such Person (or any combination thereof).

          "Telecommunications  Assets"  means  assets  used  or  useful  in  the
ownership or operation of a Telecommunications Business.

          "Telecommunications  Business"  means,  when used in  reference to any
Person,  that such Person,  directly or indirectly,  is engaged primarily in the
business of (i) transmitting video, voice or data, (ii) creating,  developing or
packaging  entertainment or communications  programming,  (iii) offering private
telephony  services or (iv)  evaluating,  participating  or  pursuing  any other
activity or  opportunity  that is related to those  identified  in (i),  (ii) or
(iii) above.

          "TIA"  means the Trust  Indenture  Act of 1939,  as amended (15 U.S.C.
Sections 77aaa-77bbbb),  and the rules and regulations thereunder,  as in effect
on the date on which  this  Indenture  is  qualified  under the TIA  (except  as
provided in Sections 9.1(e) and 9.3).

          "Trading  Day" with  respect to a  securities  exchange  or  automated
quotation system means a day on which such exchange or system is open for a full
day of trading.

          "Trustee"  means  the  party  named as such  above  until a  successor
replaces it in accordance  with the applicable  provisions of this Indenture and
thereafter means the successor or any subsequent successor, serving hereunder in
the capacity as Trustee.

          "Unrestricted  Subsidiary"  means any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted  Subsidiary pursuant to
a resolution  of the Board of  Directors of the Company,  but only to the extent
that such Subsidiary (i) has no Indebtedness  other than Non-Recourse Debt, (ii)
does not own any Equity  Interests  of, or own or hold any Lien on, any property
of the Company or any  Subsidiary of the Company  (other than any  Subsidiary of
the Subsidiary to be so designated), (iii) has not, and the Subsidiaries of such
Subsidiary have not at the time of designation, and does not thereafter, create,
incur,  issue,  assume,  guarantee or otherwise  become  directly or  indirectly
liable  with  respect  to any  Indebtedness  pursuant  to which the  lender  has
recourse  to  any of  the  assets  of  the  Company  or  any  of its  Restricted
Subsidiaries, (iv) is not party to any material agreement, contract, arrangement
or understanding with the Company or any of its Restricted  Subsidiaries  unless
the terms of any such agreement,  contract,  arrangement or understanding are no
less  favorable  to the Company or such  Restricted  Subsidiary  than those that
might be  obtained  at the  time  from  Persons  who are not  Affiliates  of the
Company,  (v) is a Person with  respect to which  neither the Company nor any of
its  Restricted  Subsidiaries  has any  direct  or  indirect  obligation  (a) to
subscribe for  additional  Equity  Interests or (b) to maintain or preserve such
Person's  financial  condition or to cause such Person to achieve any  specified
levels of operating  results,  (vi) has not guaranteed or otherwise  directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted  Subsidiaries and (vii) has at least one director on its board of
directors  that is not a director or executive  officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director  or  executive  officer  of  the  Company  or  any  of  its  Restricted
Subsidiaries. Any such designation by the Board of Directors of the Company will


                                       13
<PAGE>

be evidenced  to the Trustee by filing with the Trustee a certified  copy of the
resolution  of the  Board of  Directors  of the  Company  giving  effect to such
designation and an Officers'  Certificate  certifying that (i) such  designation
complied with the foregoing conditions, (ii) was permitted under Section 4.7 and
(iii) no Default or Event of Default  shall have  occurred and be  continuing or
would  occur  as a  consequence  of  such  designation.  If,  at any  time,  any
Unrestricted  Subsidiary  would fail to meet the  foregoing  requirements  as an
Unrestricted  Subsidiary,  it  will  thereafter  cease  to  be  an  Unrestricted
Subsidiary  for  purposes  of  this  Indenture  and  any  Indebtedness  of  such
Subsidiary  will be deemed to be  incurred  by a  Restricted  Subsidiary  of the
Company  as of such date  (and,  if such  Indebtedness  is not  permitted  to be
incurred as of such date under  Section  4.9,  the Company will be in default of
such covenant).  The Board of Directors of the Company may at any time designate
any Unrestricted  Subsidiary to be a Restricted  Subsidiary,  PROVIDED that such
designation  will be deemed to be an incurrence of  Indebtedness by a Restricted
Subsidiary of the Company of any outstanding  Indebtedness of such  Unrestricted
Subsidiary and such designation will only be permitted if (i) such  Indebtedness
is permitted under Section 4.9, and (ii) no Default or Event of Default would be
in existence following such designation.

          "U.S. Dollar Equivalent" means, with respect to any monetary amount in
a  currency  other  than the U.S.  dollar at any one time for the  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the  applicable  foreign  currency as quoted by Reuters at
approximately 11:00 a.m. (New York City time) on the date one Business Day prior
to the date of such determination.

          "Weighted  Average  Life  to  Maturity"  means,  when  applied  to any
Indebtedness  at any date,  the number of years obtained by dividing (i) the sum
of the products  obtained by  multiplying  (a) the amount of each then remaining
installment,  sinking  fund,  serial  maturity  or other  required  payments  of
principal,  including payment at final maturity,  in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.

          "Wholly Owned Restricted  Subsidiary" of any Person means a Restricted
Subsidiary of such Person 95% or more of the outstanding  Capital Stock or other
ownership  interests of which (other than directors'  qualifying shares) will at
the time be owned  by such  Person  or by one or more  Wholly  Owned  Restricted
Subsidiaries of such Person.

SECTION 1.2.  OTHER DEFINITIONS.


                                                       Defined in
Term                                                   Section
----                                                   -------

"Additional Amounts"                                   4.20
"Affiliate Transaction"                                4.11
"Asset Sale Offer"                                     4.10(b)
"Base Currency"                                        14.16(b)(i)
"Change of Control Offer"                              4.14(a)
"Change of Control Payment"                            4.14(a)
"Change of Control Payment Date"                       4.14(b)
"Covenant Defeasance"                                  8.3
"Discharge"                                            8.5
"Event of Default"                                     6.1
"Excess Proceeds Amount"                               4.10(b)
"Excluded Holder"                                      4.20
"Funding Guarantor"                                    11.4
"Global Note"                                          2.1(b)
"incur"                                                4.9(a)


                                       14
<PAGE>

                                                       Defined in
Term                                                   Section
----                                                   -------

"ITSA Cayman"                                          Recitals
"judgment currency"                                    14.16(b)(i)
"Legal Defeasance"                                     8.2
"Net Proceeds Offer Price"                             4.10(b)
"Net Proceeds Purchase Date"                           4.10(b)
"Participant"                                          2.1(b)
"Paying Agent"                                         2.3
"Paying Agent Agreement"                               2.3
"Payment Default"                                      6.1(e)
"rate of exchange"                                     12.16(b)(v)
"Register"                                             2.3
"Registrar"                                            2.3
"Restricted Payments"                                  4.7(a)
"Taxes"                                                4.20

SECTION 1.3.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

          Whenever  this  Indenture  refers  to a  provision  of  the  TIA,  the
provision is incorporated by reference in and made a part of this Indenture.

          The  following  TIA terms used in this  Indenture  have the  following
meanings:

          "indenture securities" means the Notes;

          "indenture security holder" means a Holder;

          "indenture to be qualified" means this Indenture;

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

          "obligor"  on the Notes  means the  Company,  each  Guarantor  and any
successor obligor the Notes.

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

SECTION 1.4.  RULES OF CONSTRUCTION.

          Unless the context otherwise requires:

          (a) a term has the meaning assigned to it;

          (b) an accounting term not otherwise  defined has the meaning assigned
to it in accordance with GAAP;

          (c) "or" is not exclusive;

          (d)  words in the  singular  include  the  plural,  and in the  plural
include the singular;

          (e) provisions apply to successive events and transactions;


                                       15
<PAGE>

          (f) references to sections of or rules under the Securities Act or the
Exchange  Act will be deemed to include  substitute,  replacement  or  successor
sections or rules adopted by the SEC from time to time; and

          (g) "herein," "hereof" and other words or similar import refer to this
Indenture as a whole (as amended or  supplemented  from time to time) and not to
any particular Article, Section or other subdivision.


                                    ARTICLE 2
                                    THE NOTES

SECTION 2.1.  FORM AND DATING.

          (a)  Provisions  relating  to the Notes are set forth in this  Section
2.1. The Notes shall be  substantially  in the form of Exhibit A hereto which is
hereby  incorporated in and expressly made a part of this  Indenture.  Each Note
shall be dated the date of its authentication.

          (b) Global Notes. Notes issued to a Person who has an account with, or
is a member of, the Depository (a  "Participant")  shall be issued  initially in
the form of one or more permanent  global Notes in definitive,  fully registered
form  without  interest  coupons  with the  global  securities  legend and other
securities legend set forth in Exhibit A hereto (each, a " Global Note"),  which
shall be  deposited  on behalf of the Holders of the Notes  represented  thereby
with the Note  Custodian,  and  registered  in the name of the  Depository  or a
nominee of the Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter  provided.  The aggregate  principal amount of the Global
Notes may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee, as the case may be, as
hereinafter provided.

          (c) Book-Entry Provisions. This Section 2.1(c) shall apply only to the
Global Notes deposited with or on behalf of the Depository.

          The Company shall execute and the Trustee  shall,  in accordance  with
this Section 2.1(c), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depository or the nominee of the
Depository  and (b) shall be  delivered  by the  Trustee  to the  Depository  or
pursuant to the  Depository's  instructions  or held by the Trustee as custodian
for the Depository.

          Participants shall have no rights under this Indenture with respect to
any Global Note held on their behalf by the  Depository or by the Trustee as the
custodian of the Depository or under such Global Note, and the Depository may be
treated by the Company,  the Trustee and any agent of the Company or the Trustee
as the  absolute  owner  of  such  Global  Note  for  all  purposes  whatsoever.
Notwithstanding  the foregoing,  nothing  herein shall prevent the Company,  the
Trustee or any agent of the  Company or the Trustee  from  giving  effect to any
written certification,  proxy or other authorization furnished by the Depository
or impair,  as between the  Depository  and its  Participants,  the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Note.

          (d)  Certificated  Notes.  Except as  provided  in this  Section  2.1,
Section 2.6 or Section 2.7, owners of beneficial  interests in Global Notes will
not be entitled to receive physical delivery of Certificated Notes. Notes issued
to a Person who is not a Participant  or will not be holding the Notes through a
Participant  will  receive  Certificated  Notes;  PROVIDED,  HOWEVER,  that upon
transfer of such Certificated Notes to a Participant or a Person holding through
a Participant, such Certificated Notes will, unless the relevant Global Note has
previously  been  exchanged,  be  exchanged  for an  interest  in a Global  Note
pursuant to the provisions of Section 2.6.

          (e) Provisions  Applicable to Forms of Notes.  The Notes may also have
such additional  provisions,  omissions,  variations or substitutions as are not
inconsistent  with the provisions of this Indenture,  and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with this Indenture,  any Applicable Law or
with  any  rules  made  pursuant  thereto  or with the  rules of any  securities
exchange or governmental agency or as may be determined consistently herewith by
the Officer of the Company  executing such Notes, as  conclusively  evidenced by
his/her  execution  of such  Notes.  All Notes will be  otherwise  substantially
identical except as provided herein.


                                       16
<PAGE>

          Subject to the provisions of this Article 2, a registered  Holder of a
beneficial  interest in a Global Note may grant proxies and otherwise  authorize
any  Person to take any  action  that a Holder is  entitled  to take  under this
Indenture or the Notes.

SECTION 2.2.  EXECUTION AND AUTHENTICATION.

          An Officer  will sign the Notes for the Company by manual or facsimile
signature.  The  Company's  seal may be  reproduced  on the  Notes and may be in
facsimile form.

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

          A Note will not be valid or obligatory  for any purpose or entitled to
the benefits of this Indenture until  authenticated  by the manual  signature of
the  Trustee or its  authenticating  agent.  The  signature  will be  conclusive
evidence that the Note has been authenticated under this Indenture.

          The Trustee shall authenticate and deliver Notes for original issue in
an  aggregate  principal  amount of  US$35,000,000  upon a written  order of the
Company signed by two Officers. Such order shall specify the amount of the Notes
to be authenticated and the date on which the original issue of securities is to
be  authenticated.  The aggregate  principal amount of Notes  outstanding at any
time may not exceed  US$35,000,000  except (i) as provided in Section  2.8,  and
(ii) that the  principal  amount of the Notes  will  increase  if, on any of the
first four Interest  Payment Dates occurring after the date hereof,  interest on
the Notes is, at the  option of the  Company,  to be paid in kind  instead of in
cash. Upon such an event,  the Company will issue to each Holder of the Notes on
any such  Interest  Payment  Date,  and the Trustee  will  authenticate,  upon a
written  order  of the  Company  signed  by two  Officers,  an  additional  Note
substantially  in the form set forth in Exhibit A registered in the name of such
Holder and having a principal  amount  equal to the amount of  interest  paid in
kind  on all of the  outstanding  Notes  held by such  Holder  on such  Interest
Payment Date.

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

          An  authenticating  agent may authenticate  Notes whenever the Trustee
may do so. Each  reference in this  Indenture to  authentication  by the Trustee
includes  authentication  by such agent.  An  authenticating  agent has the same
rights as the Trustee to deal with the Company or an Affiliate of the Company.


                                       17
<PAGE>

SECTION 2.3.  TRUSTEE, REGISTRAR AND PAYING AGENT.

          The  Company  will  maintain  an office or agency  where  Notes may be
presented  for  registration  of transfer or for exchange  ("Registrar")  and an
office or agency where Notes may be presented for payment ("Paying Agent").  The
Registrar will keep a register  ("Register")  of the Notes and of their transfer
and  exchange.  The  Company  may also  from  time to time  appoint  one or more
co-registrars  and one or more additional  paying agents.  The term  "Registrar"
includes any  co-registrar  and the term "Paying Agent"  includes any additional
paying agent. The Company may change any Paying Agent or Registrar in accordance
with the terms of the Amended and Restated Paying Agent  Agreement,  dated as of
July 20, 2000, among the Company,  Deutsche Trust Bank Limited and Deutsche Bank
AG  London,  as the same may be  amended  from time to time (the  "Paying  Agent
Agreement").  The  Company  will  notify the  Trustee in writing of the name and
address of any Paying Agent not a party to this Indenture.  If the Company fails
to appoint or maintain  another entity as Registrar or Paying Agent, the Trustee
will act,  subject to the last  paragraph  of this  Section  2.3,  as such.  The
Company  or any of its  Subsidiaries  may  act as  Paying  Agent  or  Registrar;
PROVIDED,  HOWEVER, that none of the Company, its Subsidiaries or the Affiliates
of the foregoing  will act (i) as Paying Agent in connection  with  redemptions,
offers to purchase,  discharges and defeasance,  as otherwise  specified in this
Indenture,  and (ii) as  Paying  Agent or  Registrar  if a  Default  or Event of
Default has occurred and is continuing.

          The Company  hereby  appoints The Bank of New York,  at its  Corporate
Trust Office,  as the Trustee  hereunder and The Bank of New York hereby accepts
such appointment.  The Trustee will have the powers and authority granted to and
conferred  upon it in the Notes and hereby and such further powers and authority
to act on behalf of the  Company as may be  mutually  agreed upon by the Company
and the Trustee,  and the Trustee will keep a copy of this  Indenture  available
for inspection during normal business hours at its Corporate Trust Office.

          The Company initially  appoints The Depository Trust Company to act as
Depository with respect to the Global Notes.

          The Company initially appoints the Trustee to act as the Registrar and
to act as Note Custodian  with respect to the Global Notes.  Deutsche Trust Bank
Limited will continue to act in its capacity as principal  Paying Agent pursuant
to the terms and conditions of the Paying Agent Agreement.

          All of the  terms and  provisions  with  respect  to such  powers  and
authority  contained  in the Notes are subject to and  governed by the terms and
provisions hereof.

          The Trustee may resign as Registrar or Paying  Agent,  if  applicable,
upon 30 calendar days prior written notice to the Company.

SECTION 2.4.  PAYING AGENT TO HOLD MONEY IN TRUST.

          The Company  will  require each Paying Agent other than the Trustee or
the Company to agree in writing that the Paying Agent will hold in trust for the
benefit  of Holders or the  Trustee  all money held by the Paying  Agent for the
payment of principal of, or premium, if any, or interest on, the Notes, and will
notify the  Trustee of any  default by the  Company in making any such  payment.
While any such default continues,  the Trustee may require a Paying Agent to pay
all money  held by it to the  Trustee.  The  Company  at any time may  require a
Paying  Agent to pay all money held by it to the  Trustee.  Upon  payment of all
such money over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary)  will have no further  liability for the money.  If the Company or a
Subsidiary  acts as Paying Agent, it will segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying  Agent.  Upon
any  bankruptcy  or  reorganization  proceedings  relating to the  Company,  the
Trustee will serve as Paying Agent for the Notes.

SECTION 2.5.  HOLDER LISTS.

          The  Trustee  will  preserve  in as  current  a form as is  reasonably
practicable  the most recent list  available to it of the names and addresses of
all Holders pursuant to TIA Section 312(a). If the Trustee is not the Registrar,


                                       18
<PAGE>

the Company will furnish to the Trustee at least seven Business Days before each
Interest  Payment  Date and at such other  times as the  Trustee  may request in
writing,  a list in such form and as of such date as the  Trustee may require of
the names and  addresses of the Holders of Notes and the Company  will  strictly
comply with TIA Section 312(a).

SECTION 2.6.  TRANSFER AND EXCHANGE.

          (a) Transfer and Exchange of Certificated Notes. If Certificated Notes
are presented by a Holder to the Registrar with a request:

          (i) to register the transfer of the Certificated Notes; or

          (ii) to exchange such Certificated Notes for an equal principal amount
of Certificated Notes of other authorized denominations,

the  Registrar  will  register the transfer or make the exchange as requested if
its requirements  for such  transactions are met;  PROVIDED,  HOWEVER,  that the
Certificated Notes presented or surrendered for register of transfer or exchange
shall be duly endorsed or  accompanied  by a written  instruction of transfer in
form  satisfactory  to the  Registrar  duly  executed  by such Holder or by such
Holder's attorney, duly authorized in writing.

          (b) Restrictions on Transfer of a Certificated Note for a beneficial
interest  in a Global  Note.  A  Certificated  Note may not be  exchanged  for a
beneficial   interest  in  a  Global  Note  except  upon   satisfaction  of  the
requirements  set forth  below.  Upon  receipt by the Trustee of a  Certificated
Note,  duly endorsed or accompanied by appropriate  instruments of transfer,  in
form satisfactory to the Trustee, together with:

          (i   certification  from the Holder thereof (in substantially the form
               of  Exhibit  B  hereto)  that  such  Certificated  Note is  being
               transferred   to  a  Participant   or  will  be  held  through  a
               Participant; and

          (ii  written  instructions  from  the  Holder  thereof  directing  the
               Trustee to make,  or to direct  the Note  Custodian  to make,  an
               adjustment  on its books and records  with  respect to the Global
               Note to reflect an increase in the aggregate  principal amount of
               the Notes  represented by such Global Note, such  instructions to
               contain  information  regarding  the  Depository  account  to  be
               credited with such increase;

then the Trustee shall cancel such  Certificated  Note and cause,  or direct the
Note  Custodian  to cause,  in  accordance  with the standing  instructions  and
procedures existing between the Depository and the Note Custodian, the aggregate
principal amount of Notes  represented by the Global Note to be increased by the
aggregate  principal amount of the  Certificated  Note to be exchanged and shall
credit or cause to be credited to the  account of the Person  specified  in such
instructions  a beneficial  interest in such Global Note equal to the  principal
amount of the Certificated  Note so canceled.  If no applicable Global Notes are
then  outstanding,  the Company shall issue and the Trustee shall  authenticate,
upon written order of the Company in the form of an Officers' Certificate, a new
Global Note in the appropriate principal amount.

          (c  Transfer  and  Exchange  of Global  Notes.  (i) The  transfer  and
exchange  of  Global  Notes or  beneficial  interests  in Global  Notes  will be
effected  through the Depository,  in accordance with this Indenture  (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository  therefor.  A transferor of a beneficial  interest in a Global
Note to another Global Note shall deliver to the  Registrar:  (A) if applicable,
instructions given in accordance with the Depository's  procedures directing the
Trustee  to  credit  or  cause  to be  credited  a  beneficial  interest  in the
applicable  Global  Note in an amount  equal to the  beneficial  interest in the
Global Note to be exchanged;  and (B) a written  order given in accordance  with
the Depository's  procedures  containing  information  regarding the Participant
account of the Depository to be credited with such increase.

          The Registrar  shall, in accordance with such  instructions,  instruct
the Depository to increase and reduce,  as applicable,  the principal  amount of
each applicable  Global Note to the extent required and to credit to the account
of the Person  specified  in such  instructions  a  beneficial  interest  in the
applicable  Global Note and to debit from the  account of the Person  making the
transfer the beneficial interest in the Global Note being transferred.


                                       19
<PAGE>

          (ii) Notwithstanding  any provision of this Indenture  (other than the
               provisions  set forth in Section  2.7),  a Global Note may not be
               transferred  as a whole except by the  Depository to a nominee of
               the  Depository  or  by  a  nominee  of  the  Depository  to  the
               Depository  or  another  nominee  of  the  Depository  or by  the
               Depository  or any such  nominee to a successor  Depository  or a
               nominee of such successor Depository.

          (d  Transfer  of  a  Beneficial  Interest  in  a  Global  Note  for  a
Certificated Note. (i) Any person having a beneficial  interest in a Global Note
may transfer such  beneficial  interest in the form of a Certificated  Note to a
Person that is acquiring the Note and is not a Participant or is not holding the
Note through a Participant  upon receipt by the Trustee of an instruction,  duly
endorsed  or  accompanied  by  appropriate  instruments  of  transfer,  in  form
satisfactory to the Trustee,  together with written instructions from the Holder
thereof  directing the Trustee to make, or to direct the Note Custodian to make,
an  adjustment  on its books and  records  with  respect to the  Global  Note to
reflect a decrease in the aggregate principal amount of the Notes represented by
such  Global  Note,  such  instructions  to contain  information  regarding  the
Participant  account  to be  debited  with such  decrease.  Upon  receipt by the
Trustee of such instructions and instruments, the Trustee or the Note Custodian,
at the direction of the Trustee,  will cause,  in  accordance  with the standing
instructions  and  procedures  existing  between  the  Depository  and the  Note
Custodian,  the aggregate  principal  amount of the Global Note to be reduced on
its books and records and,  following such  reduction,  the Company will execute
and the Trustee will authenticate, upon a written order of the Company signed by
two Officers,  and deliver to the  transferee a  Certificated  Note equal to the
principal amount of the Global Note being reduced.

          (ii) Certificated  Notes issued in exchange for a beneficial  interest
               in a  Global  Note  pursuant  to this  Section  2.6(d)  shall  be
               registered in such names and in such authorized  denominations as
               the Depository, pursuant to instructions from its Participants or
               otherwise,  shall instruct the Trustee. The Trustee shall deliver
               such Certificated  Notes to the persons in whose names such Notes
               are so  registered  in accordance  with the  instructions  of the
               Depository.

          (e  Authentication of Certificated  Notes in Absence of Depository. If
at any time:

          (i)  the  Depository  for the  Notes  notifies  the  Company  that the
               Depository is unwilling or unable to continue as  Depository  for
               the Global Notes or, if at any time such Depository  ceases to be
               a "clearing  agency"  registered  under the  Exchange  Act, and a
               successor Depository for the Global Notes is not appointed by the
               Company within 90 calendar days after delivery of such notice; or

          (ii) the  Company,  at its sole  discretion,  notifies  the Trustee in
               writing  that it  elects to cause the  issuance  of  Certificated
               Notes under this Indenture in exchange for all or any part of the
               Notes represented by a Global Note or Global Notes,

the  Depository or the Note  Custodian  will  surrender  such Global Note to the
Trustee,  without  charge,  and then the Company will  execute,  and the Trustee
will,  upon receipt of an  authentication  order in accordance  with Section 2.2
hereof, authenticate and deliver in exchange for such Global Notes, Certificated
Notes in an aggregate  principal  amount equal to the  principal  amount of such
Global Notes.  Such  Certificated  Notes will be registered in such names as the
Depository shall direct in writing.

          (f   Legend.

          (i   Each Note certificate  evidencing  Global Notes will bear legends
               in substantially the following form:

               THIS  IS A  GLOBAL  NOTE  WITHIN  THE  MEANING  OF THE  INDENTURE
               HEREINAFTER REFERRED TO.

               UNLESS  AND  UNTIL  IT IS  EXCHANGED  IN  WHOLE  OR IN  PART  FOR
               SECURITIES  IN  CERTIFICATED  FORM,  THIS  SECURITY  MAY  NOT  BE
               TRANSFERRED  EXCEPT AS A WHOLE BY THE  DEPOSITORY TO A NOMINEE OF


                                       20
<PAGE>

               THE  DEPOSITORY,  OR BY ANY SUCH NOMINEE OF THE  DEPOSITORY  TO A
               SUCCESSOR NOMINEE, OR BY THE DEPOSITORY OR NOMINEE TO A SUCCESSOR
               DEPOSITORY OR TO A NOMINEE OF SUCH SUCCESSOR  DEPOSITORY.  UNLESS
               THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE OF
               THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"), TO
               THE COMPANY OR ITS AGENT FOR  REGISTRATION OF TRANSFER,  EXCHANGE
               OR PAYMENT,  AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
               OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
               REPRESENTATIVE  OF DTC (AND ANY PAYMENT  HEREON IS MADE TO CEDE &
               CO. OR TO SUCH  OTHER  ENTITY AS IS  REQUESTED  BY AN  AUTHORIZED
               REPRESENTATIVE OF DTC ), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
               FOR VALUE OR OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  INASMUCH
               AS THE  REGISTERED  OWNER  HEREOF,  CEDE & CO.,  HAS AN  INTEREST
               HEREIN.

               TRANSFERS  OF THIS GLOBAL NOTE SHALL BE LIMITED TO  TRANSFERS  IN
               WHOLE,  BUT  NOT IN  PART,  TO  NOMINEES  OF  CEDE & CO.  OR TO A
               SUCCESSOR  THEREOF  OR SUCH  SUCCESSOR'S  NOMINEE.  TRANSFERS  OF
               PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO  TRANSFERS  MADE
               IN ACCORDANCE WITH THE  INSTRUCTIONS  SET FORTH IN SECTION 2.6 OF
               THE INDENTURE.

          (ii  Each note  certificate  evidencing  Certificated  Notes will bear
               legends in substantially the following form:

               THIS  IS  A  SECURITY   WITHIN  THE  MEANING  OF  THE   INDENTURE
               HEREINAFTER REFERRED TO.

               TRANSFERS OF THIS SECURITY OR PORTIONS OF THIS SECURITY TO GLOBAL
               FORM SHALL BE LIMITED TO TRANSFERS  MADE IN  ACCORDANCE  WITH THE
               INSTRUCTIONS SET FORTH IN SECTION 2.6 OF THE INDENTURE.

          (g   Cancellation  and/or  Adjustment of Global Notes. At such time as
all beneficial  interests in Global Notes have been  exchanged for  Certificated
Notes,  redeemed,  repurchased or canceled, all Global Notes will be returned to
or retained and canceled by the Trustee or its agent in accordance  with Section
2.12 hereof. At any time prior to such cancellation,  if any beneficial interest
in a Global Note is exchanged for Certificated Notes,  redeemed,  repurchased or
canceled,  the principal amount of Notes represented by such Global Note will be
reduced  accordingly and an endorsement will be made on such Global Note, by the
Trustee or the Note Custodian,  at the direction of the Trustee, to reflect such
reduction.

          (h General Provisions Relating to Transfers and Exchanges.

          (i   To permit  registrations of transfers and exchanges,  the Company
               will execute and the Trustee will authenticate Certificated Notes
               and Global Notes at the Registrar's request.

          (ii  No service  charge will be made to a Holder for any  registration
               of transfer or exchange, but the Company may require payment of a
               sum sufficient to cover any transfer tax or similar  governmental
               charge  payable  in  connection  therewith  (other  than any such
               transfer  taxes  or  similar  governmental  charge  payable  upon
               exchange or transfer  pursuant to Sections 2.2,  2.11,  3.6, 3.7,
               4.10, 4.14 and 9.5 hereto).

          (iii All   Certificated   Notes  and  Global  Notes  issued  upon  any
               registration  of transfer or  exchange of  Certificated  Notes or
               Global  Notes  will  be the  valid  obligations  of the  Company,
               evidencing the same debt, and entitled to the same benefits under
               this  Indenture,  as  the  Certificated  Notes  or  Global  Notes
               surrendered upon such registration of transfer or exchange.


                                       21
<PAGE>

          (iv  Neither the Registrar nor the Company will be required:

               (A0  to issue,  to register the transfer of or to exchange  Notes
                    during a period  beginning  at the  opening of  business  15
                    Business  Days before the day of any  selection of Notes for
                    redemption  under Article III hereof and ending at the close
                    of business on the day of selection; or

               (B0  toregister  the  transfer  of or to  exchange  any  Note  so
                    selected  for  redemption  in whole or in part,  except  the
                    unredeemed portion of any Note being redeemed in part; or

               (C0  to register  the transfer of or to exchange a Note between a
                    record date and the next succeeding Interest Payment Date.

          (v   Upon a written order of the Company  signed by two Officers,  the
               Trustee will authenticate  Certificated Notes and Global Notes in
               accordance with the provisions of Section 2.2 hereof.

SECTION 2.7.  CERTIFICATED NOTES.

          (a  A Global Note deposited with the Depository or with the Trustee as
custodian for the Depository pursuant to Section 2.1 shall be transferred to the
beneficial  owners  thereof in the form of  Certificated  Notes in an  aggregate
principal  amount equal to the principal amount of such Global Note, in exchange
for such Global Note,  only if such  transfer  complies with Section 2.6 and (i)
the  Depository  notifies the Company that it is unwilling or unable to continue
as Depository for such Global Note or if at any time such  Depository  ceases to
be a  "clearing  agency"  registered  under  the  Exchange  Act and a  successor
depository  is not  appointed  by the Company  within 90  calendar  days of such
notice,  or (ii) an Event of Default has occurred and is continuing or (iii) the
Company, in its sole discretion,  notifies the Trustee in writing that it elects
to cause the issuance of Certificated Notes under this Indenture.

          (b  Any Global  Note that is  transferable  to the  beneficial  owners
thereof  pursuant to this Section 2.7 shall be  surrendered by the Depository to
the Trustee located in the Borough of Manhattan,  The City of New York, to be so
transferred,  in whole or from  time to time in part,  without  charge,  and the
Trustee shall  authenticate,  upon a written order of the Company  signed by two
Officers,  and deliver,  upon such transfer of each portion of such Global Note,
an  equal  aggregate  principal  amount  of  Certificated  Notes  of  authorized
denominations. Any portion of a Global Note transferred pursuant to this Section
2.7 shall be executed,  authenticated  and delivered  only in  denominations  of
$1,000 and any integral  multiple  thereof and  registered  in such names as the
Depository shall direct.

          (c  In the event of the  occurrence of any of the events  specified in
Section  2.7(a),  the Company  will  promptly  make  available  to the Trustee a
reasonable  supply of Certificated  Notes in definitive,  fully  registered form
without interest coupons.

SECTION 2.8.  REPLACEMENT NOTES.

          If any mutilated Note is  surrendered  to the Trustee,  or the Company
and the Trustee receive evidence to their satisfaction of the destruction,  loss
or theft of any Note, the Company will,  upon the written  request of the Holder
thereof,  issue and the Trustee, upon the written order of the Company signed by
two  Officers  of the  Company,  will  authenticate  a  replacement  Note if the
Trustee's  requirements  are met. If required by the Trustee or the Company,  an
indemnity  bond  must be  supplied  by such  Holder  that is  sufficient  in the
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Agent and any authenticating  agent from any loss that any of them may suffer if
a Note is replaced. The Company may charge for its expenses in replacing a Note.


                                       22
<PAGE>

          Every replacement Note is an additional  obligation of the Company and
will  be  entitled  to  all  of the  benefits  of  this  Indenture  equally  and
proportionately with all other Notes duly issued hereunder.

          The provisions of this Section 2.8 are exclusive and will preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 2.9.  OUTSTANDING NOTES.

          The Notes  outstanding at any time are all the Notes  authenticated by
the Trustee except for those canceled by it (or its agent),  those  delivered to
it (or its agent) for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof, and those
described  in this  Section as not  outstanding.  Except as set forth in Section
2.10 hereof,  a Note does not cease to be outstanding  because the Company or an
Affiliate of the Company holds the Note.

          If a Note is replaced  pursuant to Section 2.8 hereof, it ceases to be
outstanding  unless  the  Trustee  receives  proof  satisfactory  to it that the
replaced Note (other than a mutilated Note  surrendered for replacement) is held
by a bona  fide  purchaser  (as such term is  defined  in  Section  8-302 of the
Uniform Commercial Code as in effect in the State of New York).

          If the principal  amount of any Note is considered  paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.

          If  the  Paying   Agent   (other  than  the  Company  or  any  of  its
Subsidiaries)  holds,  on a  redemption  date  or  maturity  date,  cash or Cash
Equivalents sufficient to pay Notes payable on that date, then on and after that
date such  Notes  will be deemed to be no longer  outstanding  and will cease to
accrue interest.

SECTION 2.10.  TREASURY NOTES.

          In determining whether the Holders of the required principal amount of
Notes have  concurred in any  direction,  waiver or consent,  Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company,  will be considered as
though not outstanding,  except that for the purposes of determining whether the
Trustee will be protected in relying on any such  direction,  waiver or consent,
only Notes that a Responsible Officer of the Trustee has actual knowledge are so
owned will be so disregarded.

SECTION 2.11.  TEMPORARY NOTES.

          Until  Certificated  Notes are ready for  delivery,  the  Company  may
prepare and the Trustee will  authenticate  temporary Notes upon a written order
of the Company  signed by two Officers of the Company.  Temporary  Notes will be
substantially in the form of Certificated Notes but may have variations that the
Company  considers  appropriate  for  temporary  Notes and as will be reasonably
acceptable to the Trustee.  Without unreasonable delay, the Company will prepare
and the Trustee will authenticate, upon a written order of the Company signed by
two Officers, Certificated Notes in exchange for temporary Notes.

          Until such  exchange,  Holders of temporary  Notes will be entitled to
all of the benefits of this Indenture.

SECTION 2.12.  CANCELLATION.

          The Company at any time may deliver  Notes to the Trustee or its Agent
for cancellation. The Registrar and Paying Agent will forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee  (or its Agent) and no one else will  cancel all Notes  surrendered  for
registration of transfer,  exchange,  payment,  replacement or cancellation  and
will  dispose  of  canceled  Notes in  accordance  with its  procedures  for the
disposition of canceled  securities in effect as of the date of such disposition
(subject to the record retention requirement of the Exchange Act). Certification


                                       23
<PAGE>

of the  disposition  of all canceled Notes will be delivered to the Company from
time to time.  The Company may not issue new Notes to replace  Notes that it has
paid or that have been delivered to the Trustee (or its Agent) for cancellation.
If the Company acquires any of the Notes, such acquisition will not operate as a
redemption or satisfaction of the indebtedness  represented by such Notes unless
and  until  the  same  are  surrendered  to  the  Trustee  (or  its  Agent)  for
cancellation pursuant to this Section 2.12.

SECTION 2.13.  DEFAULTED INTEREST.

          If the Company defaults in a payment of interest on the Notes, it will
pay the  defaulted  interest in any lawful  manner plus,  to the extent  lawful,
interest payable on the defaulted interest,  to the Persons who are Holders on a
subsequent  special  record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company will notify the Trustee in writing of the
amount of  defaulted  interest  proposed to be paid on each Note and the date of
the  proposed  payment.  The  Company  will fix or cause to be fixed  each  such
special record date and payment date,  PROVIDED that no such special record date
will be less than 10 calendar  days prior to the related  payment  date for such
defaulted  interest.  At least 15 calendar days before the special  record date,
the Company (or,  upon the written  request of the  Company,  the Trustee in the
name and at the  expense  of the  Company)  will  mail or cause to be  mailed to
Holders a notice that states the special record date,  the related  payment date
and the amount of such defaulted interest to be paid.

SECTION 2.14.  PERSONS DEEMED OWNERS.

          Prior to due  presentment  for the  registration  of a transfer of any
Note,  the Trustee,  any Agent,  the Company and any agent of the foregoing will
deem and treat the Person in whose name any Note is  registered  as the absolute
owner of such Note for all purposes  (including the purpose of receiving payment
of principal of and interest on such Note; PROVIDED that defaulted interest will
be paid as set forth in Section 2.13),  and none of the Trustee,  any Agent, the
Company  or any  agent  of the  foregoing  will be  affected  by  notice  to the
contrary.

SECTION 2.15.  CUSIP NUMBERS.

          Pursuant to a  recommendation  promulgated by the Committee on Uniform
Security Identification  Procedures, the Company will print CUSIP numbers on the
Notes,  and the  Trustee  may use CUSIP  numbers in notices  of  redemption  and
purchase as a convenience to Holders;  PROVIDED,  HOWEVER, that any such notices
may state that no  representation  is made as to the correctness of such numbers
as  printed  on the Notes  and that  reliance  may be  placed  only on the other
identification numbers printed on the Notes, and any such redemption or purchase
will not be affected by any defect or omission in such numbers.


                                    ARTICLE 3
                            REDEMPTION AND PREPAYMENT

SECTION 3.1.  NOTICES TO TRUSTEE.

          If the  Company  elects  to  redeem  Notes  pursuant  to the  optional
redemption  provisions of Section 3.7 hereof, it will furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption  date,  an Officers'
Certificate  setting  forth (i) the clause of Section 3.7  pursuant to which the
redemption will occur,  (ii) the redemption  date, (iii) the principal amount of
Notes to be redeemed,  (iv) the redemption price and accrued and unpaid interest
and (v) whether it requests the Trustee to give notice of such  redemption.  Any
such  notice may be  canceled at any time prior to the mailing of notice of such
redemption to any Holder and will thereby be void and of no effect.

SECTION 3.2.  SELECTION OF NOTES TO BE REDEEMED.

          If less  than all of the  Notes are to be  redeemed  at any time,  the
Trustee  will select the Notes to be redeemed  among the Holders of the Notes in
compliance  with the  requirements  of any applicable  Depository and securities
exchange  requirements or, if the Notes are not so listed,  on a pro rata basis,


                                       24
<PAGE>

by lot or in  accordance  with any other method the Trustee  considers  fair and
appropriate  and in such manner as complies with any such  requirements  and any
applicable legal requirements; PROVIDED that no Notes of $1,000 principal amount
or less will be redeemed in part. In the event of partial redemption by lot, the
particular  Notes to be redeemed  will be selected,  unless  otherwise  provided
herein,  not less than 30 nor more than 60 days prior to the redemption  date by
the Trustee from the outstanding Notes not previously called for redemption.

          The Trustee will  promptly  notify the Company in writing of the Notes
selected  for  redemption  and,  in the case of any Note  selected  for  partial
redemption,  the principal amount thereof to be redeemed.  Notes and portions of
Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except
that if all of the Notes of a Holder are to be redeemed,  the entire outstanding
amount of Notes held by such Holder,  even if not a multiple of $1,000,  will be
redeemed.  Except as  provided in the  preceding  sentence,  provisions  of this
Indenture  that apply to Notes called for  redemption  also apply to portions of
Notes called for redemption.

SECTION 3.3.  NOTICE OF REDEMPTION.

          At least 30 days but not more than 60 days before a  redemption  date,
the Company  will mail or cause to be mailed,  by first class mail,  a notice of
redemption  to each  Holder  whose  Notes are to be  redeemed  at such  Holder's
registered address.

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

          (a the redemption date;

          (b the redemption price and accrued and unpaid interest;

          (c if any Note is being redeemed in part, the portion of the principal
amount of such Note to be  redeemed  and that,  after the  redemption  date upon
surrender  of such Note,  a new Note or Notes in  principal  amount equal to the
unredeemed portion will be issued upon cancellation of the original Note;

          (d the name and address of the Paying Agent;

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

          (f that,  unless  the  Company  defaults  in  making  such  redemption
payment,  interest on Notes called for redemption  ceases to accrue on and after
the redemption date and the only remaining right of the Holders of such Notes is
to receive payment of the redemption price upon surrender to the Paying Agent of
the Notes redeemed;

          (g the  paragraph  of the  Notes  and/or  Section  of  this  Indenture
pursuant to which the Notes called for redemption are being redeemed; and

          (h that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.

          At the  Company's  request,  the  Trustee  will  give  the  notice  of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company  will  have  delivered  to the  Trustee,  at least 40 days  prior to the
redemption  date (unless a shorter  period is  acceptable  to the  Trustee),  an
Officers'  Certificate  requesting that the Trustee give such notice and setting
forth the  information  to be stated in such notice as provided in the preceding
paragraph.


                                       25
<PAGE>

SECTION 3.4.  EFFECT OF NOTICE OF REDEMPTION.

          Unless otherwise  stated therein,  once notice of redemption is mailed
in  accordance  with  Section 3.3 hereof,  Notes  called for  redemption  become
irrevocably due and payable on the redemption date at the redemption price.

SECTION 3.5.  DEPOSIT OF REDEMPTION PRICE.

          On or prior to the redemption  date, the Company will deposit with the
Paying  Agent  (other  than  the  Company  or  any of  its  Subsidiaries)  money
sufficient in immediately  available  funds to pay the redemption  price of, and
accrued  interest on all,  Notes to be redeemed on that date.  The Paying  Agent
will promptly return to the Company any money deposited with the Paying Agent by
the Company in excess of the amounts  necessary to pay the redemption  price of,
and accrued interest on, all Notes to be redeemed.  If the money is deposited on
the redemption date, such deposit will be made by 11:00 a.m. New York City time.

          If  the  Company   complies  with  the  provisions  of  the  preceding
paragraph,  on and after the redemption  date,  interest will cease to accrue on
the Notes or the  portions of Notes  called for  redemption  whether or not such
Notes are presented for payment,  and the only remaining right of the Holders of
such Notes will be to receive payment of the redemption  price upon surrender to
the Paying  Agent of the Notes  redeemed.  If a Note is  redeemed on or after an
interest record date but on or prior to the related  interest payment date, then
any  accrued and unpaid  interest  will be paid to the Person in whose name such
Note was  registered  at the close of business on such record date.  If any Note
called for redemption will not be so paid upon surrender for redemption  because
of the failure of the Company to comply with the preceding  paragraph,  interest
will be paid on the  unpaid  principal  from  the  redemption  date  until  such
principal  is paid and to the extent  lawful,  on any  interest not paid on such
unpaid principal,  in each case at the rate provided in the Notes and in Section
4.1 hereof.

SECTION 3.6.  NOTES REDEEMED IN PART.

          Upon  surrender  of a Note that is redeemed in part,  the Company will
issue and, upon the Company's written request, the Trustee will authenticate for
the Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.

SECTION 3.7.  OPTIONAL REDEMPTION.

          (a) The Notes  will be  subject  to  redemption  at the  option of the
Company,  in  whole or in part,  upon  not less  than 30 nor more  than 60 days'
notice,  at the redemption prices (expressed as percentages of principal amount)
set forth  below,  plus  accrued  and unpaid  interest,  if any,  thereon to the
applicable redemption date, if redeemed during the twelve month period beginning
on December 20 of the years indicated below:

YEAR                                     PERCENTAGE
-----                                    ----------
2000                                     106.4375%
2001                                     104.2917%
2002                                     102.1458%
2003 and thereafter                      100.0000%

          (b Any  redemption  pursuant to this Section 3.7 will be made pursuant
to the provisions of Sections 3.1 through 3.6 hereof.



                                       26
<PAGE>

SECTION 3.8.  MANDATORY REDEMPTION.

          Except as set forth under  Sections 4.10 and 4.14 hereof,  the Company
will not be required to make mandatory  redemption or sinking fund payments with
respect to the Notes.


                                    ARTICLE 4
                                    COVENANTS

SECTION 4.1.  PAYMENT OF NOTES.

          The Company will pay or cause to be paid in the Borough of  Manhattan,
The City of New York the  principal  of,  premium,  if any,  and interest on the
Notes on the dates and in the manner provided in the Notes. Principal,  premium,
if any,  and  interest  will be  considered  paid on the date due if the  Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m.
New York City time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest  then due. The Paying Agent will return to the Company,  no
later than two Business Days following the date of payment, any money (including
accrued interest) in excess of the amounts paid on the Notes.

          The Company will pay interest (including post-petition interest in any
proceeding  under any  Bankruptcy  Law to the extent  that such  interest  is an
allowed  claim  enforceable  against  the debtor  under any  Bankruptcy  Law) on
overdue principal and premium, if any, at a rate equal to 1% per annum in excess
of the then applicable  interest rate on the Notes to the extent lawful; it will
pay  interest  (including  post-petition  interest in any  proceeding  under any
Bankruptcy  Law to the extent that such interest is an allowed claim against the
debtor under such Bankruptcy Law) on overdue  installments of interest  (without
regard to any  applicable  grace period) from time to time on demand at the same
rate to the extent lawful.

SECTION 4.2.  MAINTENANCE OF OFFICE OR AGENCY.

          The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee,  Registrar or  co-registrar)  where Notes may be surrendered for
registration  of transfer or for  exchange  and where  notices and demands to or
upon the Company in respect of the Notes and this  Indenture may be served.  The
Company will give prompt written notice to the Trustee of the location,  and any
change in the  location,  of such  office or agency.  If at any time the Company
fails to  maintain  any such  required  office or agency or fails to furnish the
Trustee with the address thereof,  such presentations,  surrenders,  notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

          The  Company  may also from time to time  designate  one or more other
offices or agencies where the Notes may be presented or  surrendered  for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER,  that no such  designation or rescission will in any manner relieve the
Company of its  obligation  to  maintain  an office or agency in the  Borough of
Manhattan,  The City of New York for such purposes. The Company will give prompt
written  notice to the Trustee of any such  designation or rescission and of any
change in the location of any such other office or agency.

          The  Company  hereby  designates  the  Corporate  Trust  Office of the
Trustee as one such office or agency of the Company in  accordance  with Section
2.3.

SECTION 4.3.  PROVISIONS OF REPORTS AND OTHER INFORMATION.

          (a  The Company  and each  Guarantor  will  deliver to the Trustee and
each  Holder  within 15  calendar  days  after  the  filing of the same with the
Commission,  copies of the annual reports and of the information,  documents and
other  reports,  if any, which the Company or such Guarantor is required to file
with the  Commission  pursuant  to  Section  13 or 15(d)  of the  Exchange  Act.
Notwithstanding   that  the  Company  may  not  be  subject  to  the   reporting
requirements  of Section 13 or 15(d) of the Exchange  Act, the Company will file
with the  Commission,  to the extent  permitted,  and  provide  the  Trustee and
Holders  with such  annual  reports  and such  other  information  that would be


                                       27
<PAGE>

required to be  contained  in a filing with the  Commission  if the Company were
required to file such  reports  under  Sections 13 and 15(d) of the Exchange Act
PROVIDED,  HOWEVER,  that (i) such  reports may be prepared in  accordance  with
Brazilian  GAAP (with annual U.S. GAAP  reconciliation  in  accordance  with the
Commission's  rules),  (ii) such reports shall include,  without  limitation,  a
balance  sheet,  income  statement  and cash flow  statement  and shall  contain
condensed  consolidating  financial  statements  concerning  the Company and its
Subsidiaries,  and (iii)  such  annual  reports  shall be  furnished  within 105
calendar days following the end of each fiscal year of the Company.  The Company
will include an unaudited  consolidating balance sheet and related statements of
income  and  cash  flows  for  the  Company  and  its  Subsidiaries   separately
identifying  the Company and its  Restricted  Subsidiaries  as one group and the
Company's  Unrestricted  Subsidiaries  as  a  separate  group,  in  all  reports
containing the consolidated  financial  statements  (which in the case of annual
reports will be audited) of the Company and its consolidated  Subsidiaries which
are required to be delivered by the Company to the Holders of Notes  pursuant to
this Section 4.3,  including the Company's  Annual  Reports on Form 20-F and any
interim reports on Form 6-K. If required by the terms thereof,  the Company will
also comply with the provisions of TIA Section 314(a).

          (b  Delivery of such reports, information and documents to the Trustee
is for  information  purposes only and the  Trustee's  receipt of such shall not
constitute   constructive  notice  of  any  information   contained  therein  or
determinable  from  information  contained  therein,   including  the  Company's
compliance  with any of its  covenants  hereunder  (as to which the  Trustee  is
entitled to rely exclusively on Officers' Certificates).

SECTION 4.4.  COMPLIANCE CERTIFICATE.

          (a  The Company will deliver to the Trustee,  within 120 calendar days
after the end of each fiscal  year,  an  Officers'  Certificate  stating  that a
review of the activities of the Company and its Restricted  Subsidiaries  during
the  preceding  fiscal year has been made under the  supervision  of the signing
Officers  with a view to  determining  whether the  Company has kept,  observed,
performed  and  fulfilled  its  obligations  under this  Indenture,  and further
stating,  as to each such Officer signing such certificate,  that to the best of
his or her knowledge  each of the Company and its  Restricted  Subsidiaries  has
kept,  observed,  performed and fulfilled each and every  covenant  contained in
this Indenture and is not in default in the  performance or observance of any of
the terms,  provisions  and  conditions of this  Indenture  (or, if a Default or
Event of Default shall have occurred,  describing all such Defaults or Events of
Default  of which  he or she may have  knowledge  and  what  action  each of the
Company  and the  Restricted  Subsidiaries  is taking or  proposes  to take with
respect  thereto)  and that to the  best of his or her  knowledge  no event  has
occurred and remains in existence by reason of which  payments on account of the
principal  of or  interest  on the Notes are  prohibited  or, if such  event has
occurred, a description of the event and what action each of the Company and its
Restricted Subsidiaries is taking or proposes to take with respect thereto.

          (b  So long as not contrary to the then current recommendations of the
American  Institute  of Certified  Public  Accountants,  the year-end  financial
statements  delivered  pursuant  to Section 4.3 above will be  accompanied  by a
written statement of the Company's independent public accountants (who will be a
firm  of  established  national  reputation)  that  in  making  the  examination
necessary for  certification of such financial  statements,  nothing has come to
their  attention  that would lead them to believe that either the Company or any
of the  Guarantors  has violated any provisions of Article 4 or Article 5 hereof
or, if any such  violation  has  occurred,  specifying  the nature and period of
existence thereof,  it being understood that such accountants will not be liable
directly or indirectly to any Person for any failure to obtain  knowledge of any
such violation.

          (c  The Company and each of the Guarantors will, so long as any of the
Notes are  outstanding,  deliver  to the  Trustee,  forthwith  upon any  Officer
becoming  aware of any Default or Event of  Default,  an  Officers'  Certificate
specifying  such  Default or Event of  Default  and what  action the  Company is
taking or proposes to take with respect thereto.

SECTION 4.5.  TAXES.

          The  Company  will  pay,  and  will  cause  each  of  its   Restricted
Subsidiaries to pay, prior to delinquency,  all material taxes, assessments, and
governmental  levies  except  (i) such as are  contested  in good  faith  and by


                                       28
<PAGE>

appropriate  proceedings,  (ii) such for  which  reserves  or other  appropriate
provision,  if any, as shall be required to be made in conformity with Brazilian
GAAP, has been made therefor,  or (iii) where the failure to effect such payment
is not adverse in any material respect to the Holders of the Notes.

SECTION 4.6.  STAY, EXTENSION AND USURY LAWS.

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

SECTION 4.7.  LIMITATION ON RESTRICTED PAYMENTS.

          (a  The Company  will not,  and will not permit any of its  Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's  Equity  Interests
(including,  without  limitation,  any payment in connection  with any merger or
consolidation  involving the Company) or to any direct or indirect holder of the
Company's  Equity  Interests  in its capacity as such,  other than  dividends or
distributions  (A) paid or payable in Equity Interests (other than  Disqualified
Stock) of the  Company or (B) paid or payable to the  Company or any  Restricted
Subsidiary of the Company or (C) paid or payable in respect of Equity  Interests
of a  Restricted  Subsidiary  to Persons  other than the Company or a Restricted
Subsidiary of the Company on not more favorable terms than a PRO RATA basis with
dividends or distributions being paid in respect of Equity Interests held by the
Company or a Restricted  Subsidiary  of the Company;  (ii)  purchase,  redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
direct or indirect  parent of the Company or other  Affiliate  of the Company or
any Restricted  Subsidiary of the Company (other than any such Equity  Interests
owned by the Company or any  Restricted  Subsidiary  of the  Company  which is a
Guarantor); (iii) make any principal payment on, or purchase, redeem, defease or
otherwise  acquire or retire for value any Indebtedness  that is subordinated to
the Notes,  except at or following final maturity of such Indebtedness;  or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through  (iv) above being  collectively  referred to as  "Restricted
Payments"),  unless,  at the time of and after giving effect to such  Restricted
Payment:

          (I)  no  Default  or Event  of  Default  shall  have  occurred  and be
               continuing or would occur as a consequence thereof; and

          (II) such Restricted  Payment,  together with the aggregate  amount of
               all other Restricted Payments declared or made by the Company and
               its  Restricted  Subsidiaries  after the Effective  Date will not
               exceed,  at the date of  determination,  the sum of (A) an amount
               equal to the Company's  Consolidated Cash Flow from the first day
               of  the  Company's  first  full  fiscal  quarter   following  the
               Effective  Date to the end of the Company's  most recently  ended
               full fiscal quarter for which internal  financial  statements are
               available,  taken as a single accounting period, less the product
               of 1.5 times the Company's Consolidated Interest Expense from the
               first day of the Company's  first full fiscal  quarter  following
               the  Effective  Date to the end of the  Company's  most  recently
               ended full fiscal quarter for which internal financial statements
               are available, taken as a single accounting period, plus (B) 100%
               of  the  aggregate  amount  of  cash  and  marketable  securities
               contributed  to the  capital of the Company  after the  Effective
               Date,  plus (C) 100% of the aggregate net cash proceeds  received
               by the Company from the issue or sale after the Effective Date of
               Equity Interests of the Company or of Disqualified  Stock or debt
               securities  of the  Company  that have been  converted  into such
               Equity  Interests  (other than Equity  Interests (or Disqualified
               Stock or convertible debt securities) sold to a Subsidiary of the
               Company and other than Disqualified Stock or debt securities that
               have been converted  into  Disqualified  Stock),  plus (D) to the
               extent  that any  Restricted  Investment  that was made after the
               Effective Date is sold for cash or otherwise liquidated or repaid


                                       29
<PAGE>

               for cash,  the  lesser of (1) the cash  return  of  capital  with
               respect  to  such  Restricted   Investment   (less  the  cost  of
               disposition,   if  any)  and  (2)  the  initial  amount  of  such
               Restricted Investment,  plus (E) the aggregate amount of any cash
               dividends or distributions  on any Restricted  Investment and any
               repayment in cash of loans  constituting  Restricted  Investments
               and the amount of any  guarantee  that  constituted  a Restricted
               Investment and is or has been released.

          (b The  provisions of Section 4.7(a) will not prohibit (i) the payment
of any dividend or other distribution  within 60 calendar days after the date of
declaration  thereof,  if at said date of  declaration  such payment  would have
complied with the provisions of this Indenture; (ii) the redemption, repurchase,
retirement  or other  acquisition  of any  Equity  Interests  of the  Company in
exchange  for, or out of the  proceeds  of, the  substantially  concurrent  sale
(other than to a Subsidiary  of the  Company) of other  Equity  Interests of the
Company  (other than any  Disqualified  Stock);  PROVIDED that the amount of any
such net cash  proceeds that are utilized for any such  redemption,  repurchase,
retirement or other  acquisition will be excluded from clause (II)(C) of Section
4.7(a); (iii) the defeasance, redemption, retirement or acquisition for value or
repurchase  of  subordinated  Indebtedness  with the net cash  proceeds  from an
incurrence of Permitted  Refinancing Debt or the  substantially  concurrent sale
(other than to a Subsidiary  of the Company) of Equity  Interests of the Company
(other than Disqualified  Stock);  PROVIDED that the amount of any such net cash
proceeds that are utilized for any such  redemption,  repurchase,  retirement or
other  acquisition will be excluded from clause (II)(C) of Section 4.7(a);  (iv)
the  redemption,  repurchase,  retirement  or other  acquisition  of any  Equity
Interests of the Company  from an employee or former  employee of the Company or
any of its Subsidiaries in connection with such employee's death,  disability or
termination of employment;  PROVIDED that the amount  expended by the Company or
any  of  its  Restricted   Subsidiaries  in  connection  with  such  redemption,
repurchase,  retirement or other  acquisition does not exceed US$500,000 (or the
equivalent  thereof at time of determination)  per year; and (v) the redemption,
repurchase, retirement or other acquisition of any Equity Interest of any of the
Company's Wholly Owned Restricted Subsidiaries.

          (c) The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted  Subsidiary if such designation would not cause
a  Default.   For  purposes  of  making  such  determination,   all  outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated  will be deemed to be Restricted
Payments at the time of such  designation  and will reduce the amount  available
for Restricted  Payments under Section 4.7(a). All such outstanding  Investments
will be deemed to  constitute  Investments  in an amount equal to the greater of
(i) the net book value of such Investments at the time of such designation, (ii)
the Fair Market Value of such  Investments at the time of such  designation  and
(iii) the original Fair Market Value of such  Investments  at the time they were
made. Such designation  will only be permitted if such Restricted  Payment would
be permitted at such time and if such Restricted  Subsidiary otherwise meets the
definition  of an  Unrestricted  Subsidiary.  Upon  being  so  designated  as an
Unrestricted  Subsidiary,  any Guarantee  which was previously  executed by such
Unrestricted Subsidiary will be deemed terminated.

          (d) The amount of all Restricted Payments not made in cash will be the
Fair Market Value (which, if it exceeds  US$1,000,000 (or the equivalent thereof
at time of determination), will be determined by, and set forth in, a resolution
of the  Board  of  Directors  of  the  Company  and  described  in an  Officers'
Certificate  delivered to the Trustee) on the date of the Restricted  Payment of
the  asset(s)  proposed  to be  transferred  by the  Company  or any  Restricted
Subsidiary,  as the case may be, pursuant to the Restricted  Payment.  Not later
than the fiscal quarter end following the date of making any Restricted Payment,
the Company will deliver to the Trustee an  Officers'  Certificate  stating that
all Restricted Payments during such quarter were permitted and setting forth the
basis upon which the  calculations  required by this Section 4.7 were  computed,
which  calculations may be based upon the Company's  latest available  financial
statements.

SECTION 4.8.   LIMITATION ON DIVIDEND AND  OTHER PAYMENT RESTRICTIONS  AFFECTING
               SUBSIDIARIES.

          The  Company  will  not,  and will not  permit  any of its  Restricted
Subsidiaries to, directly or indirectly,  create or otherwise cause or suffer to
exist or become  effective any  consensual  encumbrance  or  restriction  on the
ability of any Restricted  Subsidiary to (i) (a) pay dividends or make any other


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<PAGE>

distributions  to the  Company  or any of  its  Restricted  Subsidiaries  on its
Capital  Stock or with  respect to any other  interest or  participation  in, or
measured by, its profits or (b) pay any Indebtedness  owed to the Company or any
of its  Restricted  Subsidiaries,  (ii) make loans or advances to the Company or
any of its  Restricted  Subsidiaries,  (iii)  transfer any of its  properties or
assets to the  Company  or any of its  Restricted  Subsidiaries,  (iv) grant any
Liens or security interests in favor of the Holders of the Notes and the Trustee
(or to the Collateral  Agent on their behalf) or (v) guarantee the Notes and any
renewals or refinancings  thereof,  except for such encumbrances or restrictions
existing under or by reason of (A) Existing  Indebtedness,  (B) Applicable  Law,
(C) any instrument governing  Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time of
such  acquisition  (except to the  extent  such  Indebtedness  was  incurred  in
connection with or in contemplation of such  acquisition),  which encumbrance or
restriction is not applicable to any Person,  or the properties or assets of any
Person,  other than the Person,  or the  property  or assets of the  Person,  so
acquired,  PROVIDED  that in the case of  Indebtedness,  such  Indebtedness  was
permitted by the terms of this  Indenture  to be incurred,  (D) by reason of (x)
customary  non-assignment  provisions in leases,  licenses,  sales agreements or
other  contracts  entered into in the ordinary course of business and consistent
with past practices or (y) restrictions  imposed pursuant to a binding agreement
for the sale or disposition of all or substantially  all of the Equity Interests
or assets of any Restricted Subsidiary,  provided such restrictions apply solely
to the Equity Interests or assets being sold, (E) Indebtedness of the Company or
any Restricted  Subsidiary  represented by Capital Lease  Obligations,  mortgage
financings  or other  purchase  money  obligations  or  obligations  under other
financing  transactions relating to capital  expenditures,  incurred pursuant to
clause (ix) of Section 4.9(b),  (F)  restrictions  imposed by Permitted Liens on
the  transfer  of the assets  that are  subject  to such  Liens,  (G)  Permitted
Refinancing  Debt,  PROVIDED that the  restrictions  contained in the agreements
governing such Permitted  Refinancing Debt are no more restrictive,  as a whole,
than  those  contained  in  the  agreements  governing  the  Indebtedness  being
refinanced or (H)  provisions  in  agreements  with other persons who own Equity
Interests in a  Restricted  Subsidiary  which have the effect of requiring  that
transactions  described  in clauses  (ii) or (iii) above be effected on terms no
more  favorable to the Company or its  Restricted  Subsidiaries  than a PRO RATA
basis in accordance with Equity Interests owned in such Restricted Subsidiary.

SECTION 4.9.  LIMITATION ON INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.

         (a) The  Company  will not,  and will not permit any of its  Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise  become directly or indirectly  liable,  contingently or otherwise,
with respect to  (collectively,  "incur") any Indebtedness  (including  Acquired
Debt)  or  Disqualified  Stock  and  will  not  permit  any  of  its  Restricted
Subsidiaries to issue any shares of preferred stock.

          (b)  The foregoing provisions will not apply to:

          (i)  the   incurrence  by  the  Company  or  any  of  its   Restricted
               Subsidiaries  of  senior  secured  Indebtedness  on  commercially
               reasonable  terms (as determined by the Board of Directors of the
               Company)  in  an  aggregate   principal   amount  not  to  exceed
               US$10,000,000  outstanding at any time, which  Indebtedness  will
               (A) rank PARI PASSU with or  subordinate  to the Notes,  (B),  if
               secured,  be  equally  and  ratably  secured  by  the  Collateral
               pursuant to security  documents  containing  terms and conditions
               substantially  similar  to  the  Security  Documents  and  (C) be
               subject to the terms and  conditions  of customary  intercreditor
               agreements to be executed by the holders of such Indebtedness and
               the Trustee on behalf of the Holders in  accordance  with Section
               7.1(g);  PROVIDED,  that all of the terms and  conditions of such
               Indebtedness and all  documentation  pertaining  thereto shall be
               approved by the Board of Directors of the Company,  such approval
               to be set forth in a  resolution  of the Board of  Directors  and
               described in an Officers'  Certificate  delivered to the Trustee;
               and PROVIDED,  further,  that the Trustee shall be furnished with
               an Opinion of Counsel  to the  effect  that the  requirements  of
               subclauses (A) and (B) of this clause (i) have been met;

          (ii) Indebtedness  of  any  Restricted   Subsidiary  consisting  of  a
               guarantee of any senior secured Indebtedness incurred pursuant to
               clause (i) above, PROVIDED that (A) such Restricted Subsidiary is
               a Guarantor and (B) the obligations of such Restricted Subsidiary
               under its  Guarantee  of the Notes  will rank PARI PASSU with its
               obligations   under  such  guarantees  of  other  senior  secured
               Indebtedness;


                                       31
<PAGE>

          (iii) Existing Indebtedness;

          (iv) the incurrence by the Company of Indebtedness  represented by the
               Notes (including,  without limitation, Notes issued in payment of
               accrued interest on outstanding Notes) and this Indenture;

          (v)  the incurrence of intercompany  Indebtedness between or among the
               Company and any of its Restricted Subsidiaries; PROVIDED that (A)
               if  the  Company  is  an  obligor  on  such  Indebtedness,   such
               Indebtedness  is expressly  subordinate to the payment in full of
               all  Obligations  with respect to the Notes,  (B) if a Restricted
               Subsidiary is an obligor on such  Indebtedness,  such  Restricted
               Subsidiary must be a Guarantor,  (C) such  Indebtedness  shall be
               repaid in full prior to any  subsequent  issuance  or transfer of
               Equity Interests that results in any such Indebtedness being held
               by a Person other than the Company or a Restricted  Subsidiary of
               the  Company,  and (D) no  sale or  other  transfer  of any  such
               Indebtedness  to a Person  that is not  either  the  Company or a
               Restricted Subsidiary of the Company will be permitted;

          (vi) the   incurrence  by  the  Company  or  any  of  its   Restricted
               Subsidiaries  of Hedging  Obligations  that are  incurred for the
               purpose of fixing or hedging  interest  rate risk with respect to
               any Indebtedness that is permitted by the terms of this Indenture
               to be  outstanding  or for  the  purpose  of  fixing  or  hedging
               currency  exchange  risk,  in each case  incurred in the ordinary
               course of business and not for speculative reasons;

          (vii)the   incurrence  by  the  Company  or  any  of  its   Restricted
               Subsidiaries of Permitted Refinancing Debt;

          (viii) issuance of preferred  stock by a Restricted  Subsidiary of the
               Company to the Company or any of its Restricted Subsidiaries; or

          (ix) Indebtedness   of  the  Company  or  any  Restricted   Subsidiary
               represented by Capital Lease Obligations,  mortgage financings or
               other  purchase  money  obligations  or  obligations  under other
               financing transactions relating to capital expenditures,  in each
               case incurred for the purpose of financing all or any part of the
               purchase price or cost of construction or improvement of property
               used in a Telecommunications Business.

SECTION 4.10.  LIMITATION ON ASSET SALES.

          (a) The Company  will not,  and will not permit any of its  Restricted
Subsidiaries  to,  engage  in an  Asset  Sale  unless  (i) the  Company  or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market  Value  (which,  if it exceeds
US$1,000,000  (or the  equivalent  thereof  at time of  determination),  will be
determined  by, and set forth in, a resolution  of the Board of Directors of the
Company and described in an Officers'  Certificate  of the Company  delivered to
the  Trustee)  of the  assets or Equity  Interests  issued or sold or  otherwise
disposed  of, (ii) at least 75% of the  consideration  therefor  received by the
Company  or  such  Restricted  Subsidiary  is  in  the  form  of  cash  or  Cash
Equivalents;  PROVIDED  that any (1)  liabilities  (as shown on the Company's or
such  Restricted  Subsidiary's  most recent balance sheet) of the Company or any
Restricted  Subsidiary  (other than contingent  liabilities and liabilities that
are by their terms  subordinated  to the Notes) that are  canceled or assumed by
the  transferee of any such assets  pursuant to a customary  novation  agreement
that releases the Company or such Restricted  Subsidiary from further liability,
and (2) notes or other  obligations  received by the Company or such  Restricted
Subsidiary from such  transferee that are promptly (but in any event,  within 30
calendar days) converted by the Company or such Restricted  Subsidiary into cash
or Cash Equivalents (to the extent of the cash or Cash Equivalents  received) in
each case will be deemed to be cash or Cash  Equivalents  for  purposes  of this
provision,  (iii)  such  Asset  Sale is not  made by the  Company  to any of its
Restricted  Subsidiaries,   (iv)  the  Company  shall  cause  the  Net  Proceeds
consisting  of  cash or Cash  Equivalents  received  in  respect  thereof  to be
deposited  in the  Collateral  Account and the other  consideration  received to
become  Collateral  as and when  received  by the  Company or by any  Restricted
Subsidiary,  (v) no  Default  or Event of Default  shall  have  occurred  and be
continuing on the date of such proposed Asset Sale and (vi) such Asset Sale will
not materially  adversely affect or materially impair the value of the remaining
Collateral or materially  interfere  with the Trustee's  ability to realize such


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<PAGE>

value and will not  materially  impair  the  maintenance  and  operation  of the
remaining  Collateral,  as  determined by the Board of Directors of the Company,
which determination shall be set forth in a resolution of the Board of Directors
and described in an Officers' Certificate delivered to the Trustee.

          (b) The Company shall apply,  or cause such  Restricted  Subsidiary to
apply,  the Net  Proceeds  of such  Asset  Sale and any  Insurance  Proceeds  or
Condemnation  Proceeds,  as the case may be, resulting from a Loss Event, within
270 calendar days of  consummation  of such Asset Sale or the collection of such
Insurance  Proceeds  or  Condemnation  Proceeds,  as the  case  may be,  for the
following purposes, individually or in combination:

          (i)  (A)  to  purchase  or  otherwise   invest  in  Related   Business
               Investments  which shall constitute  additional  Collateral under
               the relevant  Security  Documents and which shall be subject to a
               first  priority  Lien in favor of the  Trustee for the benefit of
               the  Holders,  subject  to Liens  permitted  under  the  Security
               Documents  in  respect  of  the  relevant  item  of   Collateral;
               PROVIDED,  that such purchase or Investment  shall be made by the
               Company or such Restricted  Subsidiary,  (B) to purchase Notes in
               open-market  transactions;  PROVIDED,  that the Company  shall be
               deemed to have applied such Net Proceeds,  Insurance  Proceeds or
               Condemnation Proceeds pursuant to this clause (B) in satisfaction
               of the  requirements  of this  covenant in an amount equal to the
               lesser  of (x)  the  purchase  price  paid  in  such  open-market
               transactions  and (y) 100% of the  principal  amount of the Notes
               repurchased;  PROVIDED,  further that the aggregate amount of Net
               Proceeds, Insurance Proceeds or Condemnation Proceeds that may be
               deemed to be applied pursuant to this clause (B) shall not exceed
               US$5,000,000 in the aggregate from the Effective Date, and (C) to
               repay  senior  secured   Indebtedness   of  the  Company  or  its
               Restricted  Subsidiaries  incurred  pursuant  to  clause  (i)  of
               Section 4.9(b); and

          (ii) if and to the  extent  that the  Company  fails to expend any Net
               Proceeds,  Insurance Proceeds or Condemnation  Proceeds remaining
               after application  pursuant to the preceding  subparagraph (b)(i)
               (the "Excess Proceeds  Amount"),  the Company shall make an offer
               to  repurchase  Notes  (an  "Asset  Sale  Offer")  in  an  amount
               (expressed  as an  integral  multiple of  US$1,000)  equal to the
               maximum aggregate principal amount of Notes that may be purchased
               with the Excess Proceeds Amount at a purchase price equal to 100%
               of the principal  amount thereof plus accrued and unpaid interest
               thereon,  if any (the "Net Proceeds Offer Price"), to the date of
               purchase (the "Net Proceeds  Purchase  Date") in accordance  with
               the  procedures  set forth in this Section 4.10.  The Company may
               defer the Asset Sale Offer until the aggregate  unutilized Excess
               Proceeds  Amount equals or exceeds  US$10,000,000  resulting from
               one or more Asset Sales or Loss Events (at which time, the entire
               unutilized  Excess  Proceeds  Amount,  and not just the amount in
               excess of US$10,000,000, shall be applied as required pursuant to
               this paragraph).  All amounts remaining after the consummation of
               any Asset Sale Offer  pursuant  to this  paragraph  shall  remain
               subject to the Lien of the Security  Documents and may be used by
               the  Company  only to  purchase  or  otherwise  invest in Related
               Business   Investments   (which   shall   constitute   additional
               Collateral under the Security  Documents) or to purchase Notes in
               open  market  transactions  up to the maximum set forth in clause
               (i)(B) of this paragraph (b) or to permanently repay Indebtedness
               of the Company or any Guarantor that is not  subordinated  to the
               Notes.

          (c) Each  notice of an Asset Sale Offer shall be mailed by first class
mail to the record  Holders as shown on the register of Holders not less than 30
calendar  days nor more than 60 calendar  days before the Net Proceeds  Purchase
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in this Indenture.  Upon receiving  notice of the Asset Sale Offer,  Holders may
elect  to  tender  their  Notes in whole  or in part in  integral  multiples  of
US$1,000  principal  amount in exchange for cash. To the extent Holders properly
tender  Notes in an  amount  exceeding  the  Excess  Proceeds  Amount,  Notes of
tendering  Holders  will be  purchased  on a PRO RATA  basis  (based on  amounts
tendered).  An Asset Sale Offer  shall  remain  open for a period of 20 Business
Days and until the close of business on the Net Proceeds  Purchase  Date or such
longer  period as may be  required  by law.  Each  notice of an Asset Sale Offer
shall contain all instructions and materials necessary to enable such Holders to
tender  Notes  pursuant  to the Asset  Sale Offer and shall  identify  the Notes
(including CUSIP number) and shall state the following terms: (i) that the Asset


                                       33
<PAGE>

Sale  Offer is being  made  pursuant  to this  Section  4.10 and that all  Notes
tendered will be accepted for payment; PROVIDED,  HOWEVER, that if the aggregate
principal  amount of Notes tendered in an Asset Sale Offer plus accrued interest
at the  expiration of such offer exceeds the aggregate  amount of the Asset Sale
Offer,  the Company  shall  select the Notes to be purchased on a PRO RATA basis
(with such adjustments as may be deemed  appropriate by the Company so that only
Notes in  denominations  of US$1,000 or multiples  thereof shall be  purchased);
(ii) the Net Proceeds Offer Price and the Net Proceeds Purchase Date; (iii) that
any Note not tendered will continue to accrue  interest;  (iv) that,  unless the
Company  defaults in making  payment  therefor,  any Note  accepted  for payment
pursuant to the Asset Sale Offer shall  cease to accrue  interest  after the Net
Proceeds  Purchase  Date;  (v) that  Holders  electing to have a Note  purchased
pursuant to an Asset Sale Offer will be required to surrender the Note, with the
form  entitled  "Option of Holder to Elect  Purchase" on the reverse of the Note
completed,  to the Paying Agent at the address  specified in the notice prior to
the close of  business  on the  third  Business  Day  prior to the Net  Proceeds
Purchase Date;  (vi) that Holders will be entitled to withdraw their election if
the Paying Agent  receives,  not later than five  Business Days prior to the Net
Proceeds  Purchase  Date, a facsimile  transmission  or letter setting forth the
name of the Holder,  the principal  amount of the Notes the Holder delivered for
purchase and a statement  that such Holder is  withdrawing  his election to have
such Note  purchased;  and (vii) that Holders whose Notes are purchased  only in
part will be issued new Notes in a  principal  amount  equal to the  unpurchased
portion of the Notes surrendered; PROVIDED that each Note purchased and each new
Note issued shall be in an original  principal amount of US$1,000 or an integral
multiple thereof.

          On or before 11:00 a.m. on the Net Proceeds Purchase Date, the Company
shall (i) accept for payment Notes or portions thereof tendered  pursuant to the
Asset Sale Offer which are to be  purchased  in  accordance  with clause (ii) of
paragraph  (b) above,  (ii)  deposit  with the Paying  Agent U.S.  Legal  Tender
sufficient to pay the Net Proceeds  Offer Price of all Notes to be purchased and
(iii)  deliver to the  Trustee  Notes so  accepted  together  with an  Officers'
Certificate  stating  the  Notes or  portions  thereof  being  purchased  by the
Company.  The  Paying  Agent  shall  promptly  mail to the  Holders  of Notes so
accepted  payment  in an  amount  equal to the Net  Proceeds  Offer  Price.  For
purposes of this Section 4.10, the Trustee shall act as the Paying Agent.

          If an offer is made to repurchase  the Notes pursuant to an Asset Sale
Offer,  the Company will comply with the  requirements  of Section  14(e) of the
Exchange Act, if  applicable,  the  provisions of Rule 13e-4 and Rule 14e-1,  if
applicable,  and any other  tender  offer rules under the  Exchange Act or other
relevant United States Federal and state securities  legislation  which may then
be  applicable  and will  file  Schedule  13E-4 or any other  schedule  required
thereunder  in  connection  with any  offer by the  Company  to  purchase  Notes
pursuant to an Asset Sale  Offer.  Notes  repurchased  pursuant to an Asset Sale
Offer shall be  delivered  to the Trustee for  cancellation  pursuant to Section
2.12.

          (d) All Net Proceeds,  Insurance  Proceeds and  Condemnation  Proceeds
from Loss Events and  non-cash  consideration  from Asset Sales,  including  all
Excess  Proceeds  Amounts,  shall be deposited in the Collateral  Account and be
subject to the perfected  first priority Lien in favor of the Collateral  Agent,
for the benefit of the  Trustee  and the Holders of the Notes,  subject to Liens
permitted  under the  Security  Documents  in  respect of the  relevant  item of
Collateral.  To the extent not applied as set forth above,  such Excess Proceeds
Amounts shall remain on deposit in the  Collateral  Account in  accordance  with
this Indenture and the Security Documents.  Excess Proceeds Amounts so deposited
in the Collateral  Account may be withdrawn from the Collateral Account pursuant
to Section 4.10(b).

          (e) Notwithstanding the foregoing,  any disposition of Collateral that
is governed under and complies with Article 5 shall not be deemed to be an Asset
Sale,  except that in the event of the  transfer of  substantially  all (but not
all) of the  Property  of the  Company  and its  Subsidiaries  to a Person  in a
transaction permitted under Article 5, the successor corporation shall be deemed
to have sold the Collateral  not so  transferred  for purposes of this covenant,
and shall  comply with the  provisions  of this  covenant  with  respect to such
deemed sale as if it were an Asset Sale.  In addition,  the Fair Market Value of
such  Property  of the  Company or its  Subsidiaries  deemed to be sold shall be
deemed to be Net Proceeds for purposes of this Section 4.10.


                                       34
<PAGE>

SECTION 4.11.  LIMITATION ON TRANSACTIONS WITH AFFILIATES.

          The  Company  will  not,  and will not  permit  any of its  Restricted
Subsidiaries  to,  make any payment to, or sell,  lease,  transfer or  otherwise
dispose of any of its  properties  or assets to, or  purchase  any  property  or
assets  from,  or  enter  into  or  make  or  amend  any  contract,   agreement,
understanding,  loan,  advance or  guarantee  with,  or for the  benefit of, any
Affiliate (other than the Company or a Wholly Owned Restricted Subsidiary) (each
of the  foregoing,  an  "Affiliate  Transaction"),  unless  (i)  such  Affiliate
Transaction  is on  terms  that  are no less  favorable  to the  Company  or the
relevant  Restricted  Subsidiary  than those that would have been  obtained in a
comparable transaction with an unrelated Person and (ii) the Company delivers to
the Trustee (a) with respect to any Affiliate  Transaction  or series of related
Affiliate   Transactions   after  the   Effective   Date   involving   aggregate
consideration  in excess of US$2,000,000  (or the equivalent  thereof at time of
determination),  a resolution described in an Officers' Certificate,  certifying
that  such  Affiliate  Transaction  complies  with  clause  (i)  above  and such
Affiliate  Transaction  has been  approved  by a majority  of the  disinterested
members of the Board of  Directors  of the Company  and (b) with  respect to any
Affiliate  Transaction  or series of related  Affiliate  Transactions  after the
Effective Date involving  aggregate  consideration in excess of US$5,000,000 (or
the equivalent thereof at time of determination),  an opinion as to the fairness
to the Holders of the Notes of such Affiliate Transaction from a financial point
of view  issued  by an  accounting,  appraisal  or  investment  banking  firm of
recognized  national standing in Brazil;  PROVIDED that (1) any transaction with
an  officer  or  director  of the  Company  or  any  Restricted  Subsidiary  (in
connection  with such  person's  compensation,  employee  benefit  or  severance
arrangements) entered into by the Company or any of its Restricted  Subsidiaries
in the ordinary  course of business and customary in the industry of the Company
or such Restricted Subsidiary, (2) transactions between or among the Company and
its Restricted  Subsidiaries,  (3) the Programming Agreement,  (4) any Operating
Agreement  that  contains  terms and  conditions  substantially  the same as the
Master Operating  Agreement dated July 24, 1996 between the Company and TV Filme
Servicos,  and (5)  Restricted  Payments  and  Permitted  Investments  that  are
permitted  under  Section  4.7,  in each  case,  will  not be  deemed  Affiliate
Transactions.

SECTION 4.12.  LIMITATION ON LIENS.

          The  Company  will  not,  and will not  permit  any of its  Restricted
Subsidiaries to, directly or indirectly, create, incur, affirm, assume or suffer
to exist any Lien of any kind on any  property  or asset now owned or  hereafter
acquired,  or any income or profits  therefrom  or assign or convey any right to
receive  income  therefrom,   except  for  Liens  securing  any  senior  secured
Indebtedness incurred pursuant to clause (i) of Section 4.9(b), PROVIDED that no
such Lien shall be senior to the Liens on the Collateral  granted to the Trustee
under the Security  Documents;  PROVIDED,  HOWEVER,  that the foregoing will not
prohibit or restrict Permitted Liens.

SECTION 4.13.  GUARANTORS.

          (a) If at any time on or after  the  Effective  Date,  and at any time
that any of the Obligations  remain  outstanding,  the Company or any Restricted
Subsidiary establishes or creates a Restricted Subsidiary and either the Company
elects  to  have  such   Restricted   Subsidiary   become  a  Guarantor  or  the
establishment  or creation of such Restricted  Subsidiary  would be a Restricted
Investment  unless it becomes a Guarantor,  then the Company (or the  Restricted
Subsidiary  directly owning Capital Stock of such other  Restricted  Subsidiary)
shall (i) cause each such  Restricted  Subsidiary  to execute and deliver to the
Trustee  a  supplemental  indenture  pursuant  to  which  each  such  Restricted
Subsidiary  shall  guarantee  the  Obligations  of the Company on a senior basis
together  with an opinion of counsel  (which  counsel  may be an employee of the
Company) to the effect that the  supplemental  indenture  has been duly executed
and  delivered by each such  Restricted  Subsidiary  and is in compliance in all
material  respects with the terms of this Indenture,  (ii) cause such Restricted
Subsidiary  to  execute  and  deliver  to the  Collateral  Agent  such  Security
Documents, and do all other acts and things, as may be required to convey to the
Collateral Agent for the benefit of the Trustee and the Holders a first priority
security interest in all property of such Restricted  Subsidiary included within
the definition of "Collateral"  herein, and (iii) subject to the limitations set
forth in the Master Security Agreement,  deliver to the Collateral Agent for the
benefit of the Trustee and the Holders the stock  certificates  representing the
Capital Stock of any such Restricted Subsidiary, together with stock powers with
respect to such Capital Stock in blank.


                                       35
<PAGE>

          (b) The Company will not permit any  Restricted  Subsidiary  that is a
Guarantor  to issue or sell any  Capital  Stock  other than to the  Company or a
Restricted  Subsidiary,  (i) if such issuance or sale could adversely  affect or
impair the  legality  or  enforceability  of, or the  ability of the  Trustee to
realize upon, the Guarantee  granted by such  Restricted  Subsidiary  hereunder;
(ii) if such issuance or sale would result in any Person or Persons  (other than
the  Company or a  Restricted  Subsidiary),  directly or  indirectly,  owning or
controlling  15% or more of the Capital Stock of any Restricted  Subsidiary that
is a  Guarantor;  PROVIDED,  HOWEVER,  that  any sale of 100% of the  shares  of
Capital  Stock of any  Restricted  Subsidiary  that is a  Guarantor  effected in
accordance with Section 4.10 or Section 5.1 shall be permitted; and (iii) unless
such  Restricted  Subsidiary  receives  the Fair Market  Value for such  Capital
Stock.

SECTION 4.14.  OFFER TO REPURCHASE UPON CHANGE OF CONTROL.

          (a) Upon the occurrence of a Change of Control,  the Company will make
an offer (a "Change of Control  Offer") to repurchase  all or any part (equal to
US$1,000 or an integral  multiple  thereof) of each  Holder's  Notes at an offer
price in cash equal to 101% of the  aggregate  principal  amount  thereof,  plus
accrued and unpaid  interest,  if any,  thereon to the date of  repurchase  (the
"Change of Control  Payment").  Within 30 calendar days  following any Change of
Control,  the  Company  will  mail  a  notice  to  each  Holder  describing  the
transaction  that  constitutes  the Change of Control and offering to repurchase
Notes  pursuant to the  procedures  required by this  Indenture and described in
such notice.  The Company will comply with the  requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent  such  laws  and  regulations  are  applicable  in  connection  with  the
repurchase  of the  Notes as a result  of a Change  of  Control.  The  Change of
Control provisions  described in this Section 4.14 will be applicable whether or
not any other provisions of this Indenture are applicable.

          (b) Notice of a Change of Control Offer will be mailed by the Company,
with a copy to the Trustee,  or, at the Company's option, by the Trustee (at the
Company's expense) not more than 30 calendar days after the Change of Control to
each Holder of the Notes at such Holder's last registered  address  appearing in
the Register.  In such notice,  the Company will describe the  transaction  that
constitutes the Change of Control and offer to repurchase  Notes pursuant to the
procedures  established  by this Section 4.14 and described in such notice.  The
notice will contain all instructions  and materials  necessary to enable Holders
to tender Notes pursuant to the Change of Control Offer. In addition, the notice
will state:  (i) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment;  (ii) the
Change of Control Payment and the purchase date, which will be no sooner than 60
nor later than 90  calendar  days after the  Change of Control  (the  "Change of
Control Payment Date"); (iii) that any Note not tendered will continue to accrue
interest; (iv) that, unless the Company defaults in the payment of the Change of
Control  Payment,  all Notes  accepted  for  payment  pursuant  to the Change of
Control Offer will cease to accrue  interest after the Change of Control Payment
Date; (v) that Holders electing to have any Notes purchased pursuant to a Change
of Control  Offer will be required to deliver the Notes,  with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes  completed,  or
transfer by book-entry transfer, to the Company, the Depository (if appointed by
the Company),  or the Paying Agent at the address  specified in the notice prior
to the close of  business  on the third  Business  Day  preceding  the Change of
Control  Payment  Date;  (vi) that  Holders  will be entitled to withdraw  their
election if the Company, the Depository or the Paying Agent, as the case may be,
receives,  not  later  than the close of  business  on the  third  Business  Day
preceding the Change of Control Payment Date, a telegram, facsimile transmission
or letter  setting forth the name of the Holder,  the principal  amount of Notes
delivered  for purchase,  and a statement  that such Holder is  withdrawing  his
election to have the Notes  purchased;  and (vii) that  Holders  whose Notes are
being purchased only in part will be issued new Notes equal in principal  amount
to  the  unpurchased  portion  of  the  Notes  surrendered  (or  transferred  by
book-entry  transfer),  which  unpurchased  portion  must be  equal  to at least
US$1,000 in principal amount or an integral multiple thereof.


                                       36
<PAGE>


          (c) On the Change of Control Payment Date, the Company will (i) accept
for payment Notes or portions thereof validly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money in immediately available
funds  sufficient to pay the purchase price of all Notes or portions  thereof so
accepted,  and (iii) deliver to the Trustee  Notes so accepted  together with an
Officers' Certificate stating the Notes or portions thereof accepted for payment
by the Company.  If the Company  complies with its  obligations set forth in the
immediately preceding sentence, whether or not a Default or Event of Default has
occurred and is  continuing on the Change of Control  Payment  Date,  the Paying
Agent will as promptly as practicable mail or deliver to each Holder of Notes so
accepted  payment in an amount equal to the purchase price, and the Company will
execute and the Trustee will as promptly as practicable authenticate and mail or
deliver to such Holder a new Note equal in principal  amount to any  unpurchased
portion of the Note  surrendered;  PROVIDED that each such new Note will be in a
principal amount of US$1,000 or an integral multiple  thereof.  Any Notes not so
accepted will be as promptly as  practicable  mailed or delivered by the Trustee
to the Holders  thereof.  The Company will publicly  announce the results of the
Change of Control  Offer on or as  promptly as  practicable  after the Change of
Control Payment Date. For purposes of this Section 4.14, the Trustee will act as
the Paying Agent.

          (d) Prior to complying with the other provisions of this Section 4.14,
but in any event  within 90 calendar  days  following  a Change of Control,  the
Company will either repay all  outstanding  Indebtedness or obtain the requisite
consents,  if any, under all agreements  governing  outstanding  Indebtedness to
permit the repurchase of Notes required by this Section 4.14.

          (e) The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party  makes the Change of Control  Offer in
the manner,  at the times and otherwise in compliance with the  requirements set
forth in this  Indenture  applicable  to a Change of  Control  Offer made by the
Company and purchases all Notes  validly  tendered and not withdrawn  under such
Change of Control Offer.

SECTION 4.15.  CORPORATE EXISTENCE.

          Except  as  otherwise  permitted  pursuant  to the terms  hereof,  the
Company will do or cause to be done all things necessary to preserve and keep in
full  force  and  effect  (i)  its  corporate  existence,   and  the  corporate,
partnership  or  other  existence  of each  of its  Restricted  Subsidiaries  in
accordance with their  respective  organizational  documents (as the same may be
amended  from  time  to  time),  and  (ii)  the  material  rights  (charter  and
statutory),  licenses and  franchises of the Company and each of its  Restricted
Subsidiaries;  PROVIDED,  HOWEVER,  that the  Company  will not be  required  to
preserve  any such right,  license or  franchise  belonging  to it or any of its
Restricted Subsidiaries, or the corporate, partnership or other existence of any
of its  Restricted  Subsidiaries,  if the  Board  of  Directors  of the  Company
determines that the  preservation  thereof is no longer desirable in the conduct
of the business of the Company and its Subsidiaries,  taken as a whole, and that
the loss thereof would not  reasonably be expected to be adverse in any material
respect to the Holders of the Notes.

SECTION 4.16.  LIMITATION ON ASSET SWAPS.

          The  Company  will  not,  and will not  permit  any of its  Restricted
Subsidiaries  to,  in one or a  series  of  related  transactions,  directly  or
indirectly, engage in any Asset Swaps, unless:

          (i)  at the time of  entering  into the  agreement  to swap assets and
               immediately  after giving  effect to the proposed  Asset Swap, no
               Default or Event of Default shall have occurred and be continuing
               or would occur as a consequence thereof;

          (ii) the respective  Fair Market Values of the assets being  purchased
               and sold by the Company or any of its Restricted Subsidiaries are
               substantially the same at the time of entering into the agreement
               to swap assets; and

          (iii)at the time of the  consummation  of the proposed Asset Swap, the
               percentage  of any decline in the Fair Market  Value of the asset
               or  assets  being  acquired  by the  Company  and its  Restricted
               Subsidiaries   will  not  be   significantly   greater  than  the
               percentage  of any decline in the Fair Market Value of the assets
               being disposed of by the Company or its Restricted  Subsidiaries,
               calculated from the time the agreement to swap assets was entered
               into.

SECTION 4.17.  LIMITATION ON SALE LEASEBACK TRANSACTIONS.


                                       37
<PAGE>


          The  Company  will  not,  and will not  permit  any of its  Restricted
Subsidiaries  to, enter into any sale and leaseback  transaction;  PROVIDED that
the Company may enter into a sale and leaseback transaction if the Company could
have (i)  incurred  Indebtedness  in an amount  equal to the  Attributable  Debt
relating  to such sale and  leaseback  transaction  and (ii)  incurred a Lien to
secure such Indebtedness pursuant to Section 4.12.

SECTION 4.18.  MAINTENANCE OF BUSINESS, PROPERTIES AND INSURANCE.

          (a) The Company  will not,  and will not permit any of its  Restricted
Subsidiaries  to,  engage  in any  business  other  than the  Telecommunications
Business and such  business  activities as are  incidental  or directly  related
thereto.

          (b)  The  Company  shall,  and  shall  cause  each  of the  Restricted
Subsidiaries  to,  maintain its material  properties  in good working  order and
condition (subject to ordinary wear and tear) and make all reasonably  necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
to actively conduct and carry on its business;  PROVIDED,  HOWEVER, that nothing
in  this  Section  4.18  shall  prevent  the  Company  or any of the  Restricted
Subsidiaries  from  discontinuing  the operation and  maintenance  of any of its
properties,  if such  discontinuance is, in the good faith judgment of the Board
of Directors of the Company or such Restricted  Subsidiary,  as the case may be,
desirable   in  the  conduct  of  their   respective   businesses   and  is  not
disadvantageous  in any  material  respect to the Holders as  determined  by the
Board of Directors of the Company.

          (c) The Company shall provide or cause to be provided,  for itself and
each  of  its  Restricted   Subsidiaries,   insurance   (including   appropriate
self-insurance)  against  loss or damage of the kinds  that,  in the good  faith
judgment of the Board of Directors of the Company,  are adequate and appropriate
for the conduct of the business of the Company and its  Restricted  Subsidiaries
in a prudent manner, with reputable insurers or with the government of Brazil or
an agency or instrumentality  thereof,  in such amounts,  with such deductibles,
and by such  methods as shall be  customary,  in the good faith  judgment of the
Board of  Directors of the Company,  for  companies in Brazil and for  companies
similarly situated in the industry;  PROVIDED,  HOWEVER,  that the Company shall
provide  or  cause  to be  provided,  for  itself  and  each  of its  Restricted
Subsidiaries,   directors  and  officers  liability   insurance  with  reputable
insurers.

          (d)  The  Company  shall,  and  shall  cause  each  of its  Restricted
Subsidiaries to comply with all Applicable  Laws of any Authority  except to the
extent that noncompliance  could not, singly or in the aggregate,  reasonably be
expected  to  have  a  material  adverse  effect  on the  business,  properties,
condition (financial or otherwise) or prospects of the Company or its Restricted
Subsidiaries, as determined by the Board of Directors of the Company.

          (e) The Company will not permit the  Operating  Agreement to terminate
or be  modified  in any way  which  prevents  the  Company  and  the  Restricted
Subsidiaries  from  operating pay television  systems  relating to the Company's
authorizations, licenses or Permits.

SECTION 4.19.  IMPAIRMENT OF SECURITY INTEREST.

          Neither the Company nor any of its  Subsidiaries  will take or omit to
take any action which action or omission  could  reasonably  be expected to have
the result of  materially  and adversely  affecting or materially  impairing the
security  interests in favor of the Collateral  Agent,  on behalf of the Trustee
and the Holders, with respect to the Collateral.  Neither the Company nor any of
its  Subsidiaries  will enter into any agreement or instrument that by its terms
requires the Net Proceeds  received from any sale of Collateral to be applied to
repay,  redeem,  defease or otherwise  acquire or retire any Indebtedness of any
Person prior to the repayment in full of the Notes,  other than the Indebtedness
permitted  under  Section  4.9(b)(i) to the extent such  repayment,  redemption,
defeasance, acquisition or retirement is permitted under Section 4.10(b).

SECTION 4.20.  PAYMENT OF ADDITIONAL AMOUNTS.


                                       38
<PAGE>


          All  payments by the Company in respect of the Notes or any  Guarantor
in respect  of its  Guarantee  of the Notes  shall be made free and clear of and
without  withholding  or  deduction  for or on account of any  present or future
taxes,  duties,  assessments or other  governmental  charges of whatever nature,
including penalties, interest and any other liabilities related thereto, imposed
or  levied  by or on  behalf  of  Brazil  or any  relevant  jurisdiction  or any
political  subdivision  or  authority  thereof  or therein  having  power to tax
("Taxes").  In the event that the Company or any Guarantor,  as the case may be,
is required to make any  withholding or deduction for or on account of any Taxes
from any payment made under or with respect to the Notes,  or its Guarantee,  as
the case may be, the Company or any Guarantor, as the case may be, will pay such
additional  amounts  ("Additional  Amounts") as may be necessary so that the net
amount  received  by each  Holder  (including  Additional  Amounts)  after  such
withholding  or deduction will not be less than the amount the Holder would have
received  had such  Taxes  not been  withheld  or  deducted;  PROVIDED,  that no
Additional  Amounts will be payable to a Holder (an "Excluded  Holder") (i) with
which the Company or any  Guarantor,  as the case may be, does not deal at arm's
length at the time of making such  payment,  (ii) which is subject to such Taxes
by reason of its being  connected  with Brazil or any political  subdivision  or
authority thereof otherwise than by the mere holding of the Notes or the receipt
of payments  thereunder,  (iii) which presents any Note for payment of principal
more than 60  calendar  days  after  the later of (x) the date on which  payment
first became due and (y) if the full amount payable has not been received by the
Trustee on or prior to such due date, the date on which, the full amount payable
having  been so  received,  notice to that  effect  shall have been given to the
Holders by the  Company,  except to the extent  that the Holder  would have been
entitled to such  Additional  Amounts on presenting such Note for payment on the
last day of the applicable  60-day period,  (iv) which failed to duly and timely
comply with a timely request of the Company to provide information, documents or
other evidence concerning the Holder's  nationality,  residence,  entitlement to
treaty benefits, identity or connection with Brazil or any political subdivision
or authority  thereof,  if and to the extent that due and timely compliance with
such request would have reduced or eliminated  any Taxes as to which  Additional
Amounts  would have  otherwise  been  payable to such Holder but for this clause
(iv), (v) on account of any estate, inheritance,  gift, sale, transfer, personal
property or other similar Tax, (vi) which is a fiduciary, a partnership,  or not
the  beneficial  owner of any  payment on a Note,  if and to the extent that any
beneficiary or settlor of such fiduciary,  any partner in such  partnership,  or
the  beneficial  owner of such  payment (as the case may be) would not have been
entitled to receive  Additional  Amounts  with  respect to such  payment if such
beneficiary,  settlor,  partner or beneficial  owner had been the Holder of such
Note or (vii) any combination of the foregoing numbered clauses of this proviso.

          The Company or any  Guarantor,  as the case may be, will also (i) make
such  withholding  or deduction as required by applicable law and (ii) remit the
full amount  deducted or withheld to the relevant  authority in accordance  with
applicable law. The Company or any Guarantor,  as the case may be, will furnish,
within 60 calendar  days after the date the payment of any Taxes is due pursuant
to applicable  law, to the Trustee copies of tax receipts  evidencing  that such
payment has been made by the Company or such  Guarantor,  as the case may be, in
such form as provided in the normal course by the taxing authority imposing such
Taxes and as is reasonably  available to the Company or such  Guarantor,  as the
case may be. The Trustee  shall make such  evidence  available to the Holders of
Notes upon written request.

          If the  Company  or any  Guarantor,  as the case may be,  has paid any
Additional  Amounts to any Holder or, if different,  the beneficial owners of an
interest  in any Note,  and such  person is entitled to a refund of the Taxes to
which such  Additional  Amounts are  attributable  from any  competent  taxation
authority or other  governmental  body, then (a) such person shall so notify the
Company or such  Guarantor  as promptly as  practicable  after  learning of such
entitlement, and as soon as practicable but in any event within 30 calendar days
after receiving a written  request  therefor from the Company or such Guarantor,
as the case may be,  comply  with any  administrative  procedure  to obtain such
refund and (b) upon receipt of such refund, promptly pay over such refund to the
Company or such Guarantor, as the case may be. If Additional Amounts are paid to
a Holder, or, if different, the beneficial owner of an interest in any Note, and
it is  subsequently  determined  that  such  Person  was  not  entitled  to such
Additional  Amounts,  then such Person shall  promptly  refund to the Company or
such Guarantor,  as the case may be, the amount of all such  Additional  Amounts
previously paid to such Person.

          The Company will indemnify and hold harmless each Holder of Notes that
are outstanding on the date that withholding or deduction was required  pursuant
to  applicable  law (other than an Excluded  Holder)  and upon  written  request
reimburse  each such Holder for the amount of (i) any taxes so levied or imposed
and paid by such  Holder as a result of payments  made under or with  respect to
the  Notes  or  any Guarantee, as the case may be, (ii) any liability (including

                                       39
<PAGE>


penalties, interest and expenses) arising therefrom or with respect thereto, and
(iii) any taxes  imposed with respect to any  reimbursement  under clause (i) or
(ii) above.

          Whenever in this Indenture there is mentioned, in any context, (a) the
payment of principal (and premium,  if any),  (b) purchase  prices in connection
with a repurchase of Notes,  (c) interest or (d) any other amount  payable on or
with  respect  to any of the  Notes,  such  mention  shall be deemed to  include
mention of the payment of Additional Amounts provided for in this section to the
extent that, in such context,  Additional  Amounts are, were or would be payable
in respect thereof.


                                    ARTICLE 5
                                   SUCCESSORS

SECTION 5.1.  MERGER, CONSOLIDATION, OR SALE OF ASSETS.

          (a) The Company may not  consolidate or merge with or into (whether or
not the Company is the surviving  entity),  or sell,  assign,  transfer,  lease,
convey or otherwise  dispose of all or  substantially  all of its  properties or
assets in one or more related  transactions,  to another corporation,  Person or
entity, unless:

          (i)  the  Company  is the  surviving  entity  or the  entity or Person
               formed by or surviving any such consolidation or merger (if other
               than the  Company) or to which such sale,  assignment,  transfer,
               lease,  conveyance or other disposition shall have been made is a
               corporation organized or existing under the laws of Brazil;

          (ii) the   entity  or  Person   formed  by  or   surviving   any  such
               consolidation or merger (if other than the Company) or the entity
               or  Person  to which  such  sale,  assignment,  transfer,  lease,
               conveyance or other  disposition shall have been made assumes all
               the obligations of the Company under the Notes and this Indenture
               pursuant  to  a  supplemental  indenture  in  a  form  reasonably
               satisfactory to the Trustee;

          (iii)immediately after giving effect to such  transaction,  no Default
               or Event of Default exists or would exist;

          (iv) such  transaction  will not result in the loss or  suspension  or
               material impairment of any Material Telecommunications License;

          (v)  except  in the case of a  merger  of the  Company  with or into a
               Wholly Owned Restricted Subsidiary of the Company, the Company or
               the   entity  or  Person   formed  by  or   surviving   any  such
               consolidation  or merger (if other than the  Company) or to which
               such  sale,  assignment,  transfer,  lease,  conveyance  or other
               disposition  shall have been made will (treating any Indebtedness
               not  previously  an  obligation  of  the  Company  or  any of its
               Restricted Subsidiaries as a result of such transaction as having
               been  incurred  at the  time  of  such  transaction)  (A)  have a
               Consolidated Net Worth immediately after the transaction equal to
               or  greater  than  the  Consolidated  Net  Worth  of the  Company
               immediately  prior to the  transaction  and (B) be in  compliance
               with the Indebtedness limitation set forth in Section 4.9(b); and

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

          (b)  Subject  to  the  provisions  described  in  Section  5.1(e),  no
Guarantor may  consolidate  or merge with or into (whether or not such Guarantor
is the surviving entity or Person), or sell, assign, transfer,  lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or  more  related transactions, to another corporation, entity or Person unless:


                                       40
<PAGE>


          (i)  the   entity  or  Person   formed  by  or   surviving   any  such
               consolidation  or merger  (if other than such  Guarantor)  or the
               entity or Person to which such sale, assignment, transfer, lease,
               conveyance or other  disposition shall have been made assumes all
               the  obligations of such Guarantor  under the Guarantee,  in form
               satisfactory to the Trustee;

          (ii) immediately  after  such  transaction,  no  Default  or  Event of
               Default exists;

          (iii)the  Company  and  its  Restricted   Subsidiaries   will  have  a
               Consolidated Net Worth  immediately  after such transaction equal
               to or greater than the  Consolidated Net Worth of the Company and
               its   Restricted   Subsidiaries    immediately   preceding   such
               transaction and be in compliance with the Indebtedness limitation
               set  forth in  Section  4.9(b)  (treating  any  Indebtedness  not
               previously an obligation of the Company or any of its  Restricted
               Subsidiaries  as a result  of such  transaction  as  having  been
               incurred at the time of such transaction);

          (iv) the Company  shall have  delivered  to the  Trustee an  Officers'
               Certificate,  and  an  Opinion  of  Counsel  in  form  reasonably
               satisfactory   to   the   Trustee,   each   stating   that   such
               consolidation,  merger or transfer  complies with this Indenture;
               and

          (v)  such Guarantor shall have delivered a written  instrument in form
               reasonably  satisfactory to the Trustee  confirming its Guarantee
               after giving effect to such consolidation, merger or transfer.

Notwithstanding the foregoing, any Guarantor may merge into, consolidate with or
transfer all or part of its  properties  or assets to the  Company,  one or more
Guarantors or one or more  Restricted  Subsidiaries  of the Company which become
Guarantors concurrently therewith.

          (c)  Notwithstanding  Section  5.1(b),  if no Default  exists or would
exist under this Indenture, concurrently with any sale or disposition (by merger
or otherwise) of any  Guarantor in accordance  with the terms of this  Indenture
(other than a transaction  subject to the  provisions of Section  5.1(b)) by the
Company  or any of its  Restricted  Subsidiaries  to any  Person  that is not an
Affiliate of the Company or any of its Restricted  Subsidiaries,  such Guarantor
will  automatically and  unconditionally  be released from all obligations under
its Guarantee;  PROVIDED,  HOWEVER, that any such release will occur only to the
extent that all obligations of such Guarantor  under,  and all of its guarantees
of, and all of its pledges of assets or other security  interests  which secure,
any other Indebtedness of the Company or any of its Restricted Subsidiaries will
also terminate upon such release, sale or transfer; and PROVIDED,  further, that
the  Company  deposits  the Net  Proceeds  of such Asset Sale in the  Collateral
Account in accordance with Section 4.10.

          (d)  For  purposes  of this  Section  5.1,  the  transfer  (by  lease,
assignment,   sale  or  otherwise,   in  a  single   transaction  or  series  of
transactions) of all or substantially  all of the properties or assets of one or
more of the  Subsidiaries  of the Company or a Guarantor,  the Capital  Stock of
which  constitutes all or substantially  all of the properties and assets of the
Company or such Guarantor, as the case may be, will be deemed to be the transfer
of all or substantially  all of the properties and assets of the Company or such
Guarantor, as the case may be.

          (e)  Notwithstanding  Section  5.1(a),  any Restricted  Subsidiary may
consolidate  with,  merge into or  transfer  all or part of its  properties  and
assets to, the Company or another Restricted Subsidiary.

SECTION 5.2.  SUCCESSOR COMPANY SUBSTITUTED.

          Upon  any   consolidation   or  merger  or  any  transfer  of  all  or
substantially  all of the assets of the Company and its Restricted  Subsidiaries
taken as a whole in  accordance  with  Section 5.1,  the  successor  corporation
formed  by such  consolidation  or into  which  the  Company  or the  Restricted
Subsidiary is merged or to which such transfer is made,  will succeed to, and be
substituted  for, and may  exercise  every right and power of the Company or the
Restricted  Subsidiary  under  this  Indenture  with the same  effect as if such


                                       41
<PAGE>

successor corporation had been named as the Company or the Restricted Subsidiary
herein; and thereafter, if the Company or the Restricted Subsidiary is dissolved
following a transfer  of all or  substantially  all of its assets in  accordance
with this Indenture, the Company or the Restricted Subsidiary will be discharged
and released  from all  obligations  and  covenants  under this  Indenture,  the
Security  Documents  and the Notes.  The Trustee will enter into a  supplemental
indenture to evidence the succession and  substitution of such successor  Person
and such discharge and release of the Company or the Restricted Subsidiary.


                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

SECTION 6.1.  EVENTS OF DEFAULT.

          An  "Event  of  Default"  occurs if one of the  following  shall  have
occurred and be continuing:

          (a) the  Company  defaults  in the  payment  when due of any  interest
payable with respect to the Notes at any time,  which  default  continues  for a
period of 30 calendar days;

          (b) the Company  defaults in payment  when due of the  principal of or
premium, if any, on the Notes at maturity,  upon repurchase (including,  without
limitation,  pursuant to a Change of Control Offer or an Asset Sale Offer), upon
acceleration, redemption or otherwise;

          (c) the granting by the Company or any  Restricted  Subsidiary  of any
Lien to secure  Indebtedness  in excess of  US$100,000  (other  than a Permitted
Lien);

          (d) the Company fails to comply with the  provisions of Sections 4.10,
4.14, 4.19 or 5.1;

          (e) the Company  fails to comply with any of its other  agreements  in
this  Indenture or the Notes and such  failure  continues  for 30 calendar  days
after notice from the Trustee or Holders of at least 25% in aggregate  principal
amount of the Notes then outstanding;

          (f) the Company  defaults under any mortgage,  indenture or instrument
under which  there may be issued or by which  there may be secured or  evidenced
any  Indebtedness  for money  borrowed of the  Company or any of its  Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted  Subsidiaries),  whether such Indebtedness or Guarantee now exists or
is created after the Effective Date, which default (i) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness  following
the expiration of the grace period provided in such  Indebtedness on the date of
such default (a "Payment  Default") or (ii) results in the  acceleration of such
Indebtedness  prior to its express  maturity  and, in each case,  the  principal
amount of any such Indebtedness, together with the principal amount of any other
such  Indebtedness  under which there has been a Payment Default or the maturity
of which has been so  accelerated,  aggregates  US$5,000,000  (or the equivalent
thereof at time of determination) or more;

          (g) the  Company or any of its  Restricted  Subsidiaries  fails to pay
final  non-appealable  judgments  rendered  against  the  Company  or any of its
Restricted Subsidiaries aggregating in excess of US$2,500,000 (or the equivalent
thereof at time of determination),  which judgments are not paid,  discharged or
stayed for a period of 60 calendar  days after such  judgments  become final and
non-appealable;

          (h) the Company or any Restricted  Subsidiary of the Company  pursuant
to or within the meaning of any  Bankruptcy  Law: (i) commences a voluntary case
or  proceeding,  (ii) consents to the entry of an order for relief against it in
an  involuntary  case or  proceeding,  (iii)  consents to the  appointment  of a
Custodian of it or for all or  substantially  all of its property,  (iv) makes a
general  assignment for the benefit of its creditors,  (v) admits in writing its
inability  to pay its  debts  generally  as they  become  due or (vi)  takes any
comparable action under any foreign laws relating to insolvency;


                                       42
<PAGE>


          (i) a court of competent  jurisdiction enters an order or decree under
any  Bankruptcy  Law  that:  (i)  is  for  relief  against  the  Company  or any
Significant Subsidiary of the Company in an involuntary case or proceeding, (ii)
appoints a Custodian of the Company or any Significant Subsidiary of the Company
or for all or substantially  all of its respective  properties,  or (iii) orders
the liquidation of the Company or any Significant  Subsidiary of the Company, or
any similar relief is granted under any foreign laws, and in each case the order
or decree remains unstayed and in effect for 60 calendar days;

          (j) (a) a default in the  observance or performance of any covenant or
agreement  contained in any Security  Document  which  default  continues for 20
calendar  days  after  notice has been  given to the  Company by the  Collateral
Agent,  the  Trustee or the holders of at least 25% in  principal  amount of the
outstanding Notes, or (b) for any reason other than the satisfaction in full and
discharge of all  obligations  secured  thereby or any action or inaction of the
Collateral  Agent,  the Trustee or the  Holders  after  receiving  notice of the
requirement  to take  any such  action  from the  Company,  any of the  Security
Documents  ceases to be in full force and effect (other than in accordance  with
its  respective  terms),  or any of the  Security  Documents  ceases to give the
Collateral  Agent the Liens,  rights,  powers  and  privileges  purported  to be
created  thereby,  or any Security  Document is declared  null and void,  or the
Company or any of its  Restricted  Subsidiaries  denies  any of its  obligations
under any  Security  Document,  in each  case with  respect  to  Collateral  the
aggregate value of which is in excess of US$100,000,  or the Collateral  becomes
subject to one or more Liens other than  Permitted  Liens  securing  one or more
obligations in excess of US$100,000 in the aggregate; or

          (k) any  Guarantee  is declared  null and void or ceases to be in full
force and effect  (except as permitted  under this  Indenture)  or any Guarantor
shall deny or disaffirm its obligations under its Guarantee.

          Notwithstanding  the  foregoing,  if an Event of Default  specified in
clause  (f) above  occurs  and is  continuing,  such  Event of  Default  and all
consequences  thereof  (including,   without  limitation,  any  acceleration  or
resulting  payment  default) will be annulled and rescinded,  automatically  and
without  any  action by the  Trustee or the  Holders  of the  Notes,  if (i) the
Indebtedness  that is the subject of such Event of Default has been  repaid,  or
(ii) the default  relating to such  Indebtedness is waived or cured (and if such
Indebtedness has been accelerated, when the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness).

          In the case of any Event of Default occurring by reason of any willful
action (or  inaction)  taken (or not taken) by or on behalf of the Company  with
the intention of avoiding payment of the premium that the Company would have had
to pay if the  Company  then had  elected  to redeem the Notes  pursuant  to the
optional  redemption  provisions of this Indenture,  an equivalent  premium will
also become and be  immediately  due and payable to the extent  permitted by law
upon the acceleration of the Notes.

SECTION 6.2.  ACCELERATION.

          If any Event of Default  (other than an Event of Default  specified in
Section  6.1 (h) or (i))  occurs  and is  continuing,  then the  Trustee  or the
Holders of at least 25% in  principal  amount of the then  outstanding  Notes by
written  notice to the Company and the Trustee may declare the unpaid  principal
of,  and  any  accrued  interest  on,  all  the  Notes  to be  due  and  payable
immediately.  If any Event of Default  specified in Section 6.1(h) or (i) hereof
occurs with respect to the Company, any Significant Subsidiary of the Company or
any group of Restricted Subsidiaries of the Company that, taken together,  would
constitute a Significant  Subsidiary of the Company,  all outstanding  principal
and  interest  on the Notes will be  immediately  due and  payable  without  any
declaration  or other act on the part of the Trustee or any Holder.  The Holders
of a majority  in  principal  amount of the Notes then  outstanding,  by written
notice to the Trustee and to the Company, may rescind an acceleration (except an
acceleration  due to a default  in payment  of the  principal  of, or premium or
interest on, any of the Notes) if the  rescission  would not  conflict  with any
judgment or decree and if all existing Events of Default  (except  nonpayment of
principal,  premium,  interest  that  have  become  due  solely  because  of the
acceleration) have been cured or waived.

SECTION 6.3.  OTHER REMEDIES.


                                       43
<PAGE>

          Subject  to  Section  6.2,  if an  Event  of  Default  occurs  and  is
continuing,  the Trustee may pursue any available remedy by proceeding at law or
in equity to collect any payment due on the Notes or to enforce the  performance
of any provision of the Notes, this Indenture or the Security Documents.

          The Trustee may maintain a proceeding  even if it does not possess any
of the  Notes  or does not  produce  any of them in the  proceeding.  A delay or
omission  by the  Trustee  or any  Holder of a Note in  exercising  any right or
remedy  accruing upon an Event of Default will not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

SECTION 6.4.  WAIVER OF PAST DEFAULTS.

          Subject to Section 9.2,  Holders of a majority in aggregate  principal
amount of the then outstanding  Notes by notice to the Trustee may, on behalf of
the Holders of all of the Notes,  waive an existing  Default or Event of Default
and its consequences  hereunder  (including without limitation  acceleration and
its consequences,  including any related payment default that resulted from such
acceleration)  except a continuing Default or Event of Default in the payment of
the  principal  of, or premium or interest on the Notes.  Upon any such  waiver,
such Default  will cease to exist,  and any Event of Default  arising  therefrom
will be deemed to have been cured for every  purpose of this  Indenture;  but no
such waiver will extend to any  subsequent  or other Default or impair any right
consequent thereon.

SECTION 6.5.  CONTROL BY MAJORITY.

          The Holders of a majority in  aggregate  principal  amount of the then
outstanding  Notes may  direct  the time,  method  and place of  conducting  any
proceeding  for any remedy  available to the Trustee or exercising  any trust or
power conferred on it.  However,  the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or that the Trustee  determines may be
unduly  prejudicial to the rights of another Holder or that involves the Trustee
in personal  liability.  The Trustee may take any other action  deemed proper by
the Trustee that is not inconsistent with such direction.

SECTION 6.6.  LIMITATION ON SUITS.

          Subject to the  provisions of Section 6.7 hereof,  no Holder of a Note
may pursue any remedy with respect to this  Indenture  or the Notes  (including,
without  limitation,  the institution of any proceeding,  judicial or otherwise,
with respect to the Notes or this Indenture or for the appointment of a receiver
or trustee for the Company and/or any of its Subsidiaries) unless:

          (a) the Holder has given to the Trustee written notice of a continuing
Event of Default;

          (b) the Holders of at least 25% in aggregate  principal  amount of the
Notes then  outstanding have made a written request to the Trustee to pursue the
remedy;

          (c) such  Holders  have  offered to provide to the  Trustee  indemnity
reasonably satisfactory to the Trustee against any loss, liability or expense;

          (d) the Trustee has not complied  with the request  within 60 calendar
days after receipt of the request and the offer of indemnity; and

          (e) during such 60-day period,  the Holders of a majority in aggregate
principal  amount of the Notes  then  outstanding  have not given the  Trustee a
direction  which,  in the  opinion  of the  Trustee,  is  inconsistent  with the
request.

          A Holder of a Note may not use this  Indenture to prejudice the rights
of another  Holder of a Note or to obtain a preference  or priority over another
Holder of a Note.


                                       44
<PAGE>

SECTION 6.7.  RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.

          The right of any Holder of a Note to receive  payment of principal of,
and premium,  if any, or interest on, such Note, on or after the  respective due
dates  expressed  in such  Note  (including  in the  case of a  redemption,  the
applicable redemption price on the applicable redemption date), or to bring suit
for the enforcement of any such payment on or after such respective  dates, will
not be impaired or affected without the consent of such Holder.

SECTION 6.8.  COLLECTION SUIT BY TRUSTEE.

          If an Event of Default  specified in Section  6.1(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for principal of, premium, if
any, and interest  on, the Notes and interest on overdue  principal  and, to the
extent lawful,  interest, and such further amount as will be sufficient to cover
the costs and expenses of  collection,  including the  reasonable  compensation,
expenses,  disbursements and advances of the Trustee, its agents and counsel and
any other amounts due to the Trustee under Section 7.7.

SECTION 6.9.  TRUSTEE MAY FILE PROOFS OF CLAIM.

          The  Trustee  is  authorized  to file  such  proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable  compensation,  expenses,
disbursements  and  advances of the  Trustee,  its agents and  counsel)  and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and will be
entitled and  empowered to collect,  receive and  distribute  any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee,  and in the event that the Trustee  shall  consent to the making of
such payments  directly to the Holders,  to pay to the Trustee any amount due to
it for the reasonable compensation,  expenses, disbursements and advances of the
Trustee,  its agents and counsel,  and any other  amounts due the Trustee  under
Section  7.7  hereof.  To the extent  that the  payment  of any such  reasonable
compensation,  expenses,  disbursements and advances of the Trustee,  its agents
and counsel,  and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same  will be  secured  by a Lien on,  and will be paid out of,  any and all
distributions,  dividends,  money,  securities  and  other  properties  that the
Holders may be entitled to receive in such proceeding  whether in liquidation or
under any plan of  reorganization  or arrangement  or otherwise.  Nothing herein
contained  will be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize  the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

SECTION 6.10.  PRIORITIES.

          If the Trustee  collects any money pursuant to this Article 6, it will
pay out the money in the following order:

          First: to the Trustee,  its agents and attorneys for amounts due under
Section  7.7  hereof,  including  payment  of  all  compensation,   expense  and
liabilities  incurred,  and all advances  made, by the Trustee and the costs and
expenses of collection;

          Second:  to Holders of Notes for  amounts  due and unpaid on the Notes
for principal,  premium,  if any, and interest,  ratably,  without preference or
priority of any kind,  according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and

          Third:  the  remainder  to the  Company or to such party as a court of
competent jurisdiction may direct.


                                       45
<PAGE>

          The Trustee may fix a record date and payment  date for any payment to
Holders of Notes pursuant to this Section 6.10.

SECTION 6.11.  UNDERTAKING FOR COSTS.

          In any suit for the  enforcement  of any  right or remedy  under  this
Indenture  or in any suit against the Trustee for any action taken or omitted by
it as a Trustee,  each party to this  Indenture  agrees,  and each Holder by its
acceptance  of its Notes  will be deemed to have  agreed,  that any court in its
discretion  may  require  the  filing  by any party  litigant  in the suit of an
undertaking  to pay the costs of the suit,  and the court in its  discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant  in the suit,  having  due  regard to the  merits and good faith of the
claims or defenses made by the party litigant.  This Section does not apply to a
suit by the  Trustee,  a suit by a Holder  of a Note  pursuant  to  Section  6.7
hereof,  or a suit by Holders of more than 10% in  principal  amount of the then
outstanding Notes.


                                    ARTICLE 7
                                     TRUSTEE

SECTION 7.1.  DUTIES OF TRUSTEE.

          (a)  If a  Default  or  an  Event  of  Default  has  occurred  and  is
continuing, the Trustee will exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in its exercise, as
a prudent Person would exercise or use under the circumstances in the conduct of
its own affairs.

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

              (i)   the  Trustee  will not be liable  hereunder  except for such
                    duties of the Trustee which will be determined solely by the
                    express  provisions  of this  Indenture and the Trustee need
                    perform only those duties that are specifically set forth in
                    this  Indenture and no others,  and no implied  covenants or
                    obligations  will be read into this  Indenture  against  the
                    Trustee; and

              (ii)  in the  absence of bad faith on its part,  the  Trustee  may
                    conclusively rely, as to the truth of the statements and the
                    correctness  of  the  opinions   expressed   therein,   upon
                    Officers'  Certificates or Opinions of Counsel  furnished to
                    the  Trustee  and  conforming  to the  requirements  of this
                    Indenture.   However,   the   Trustee   will   examine   the
                    certificates  and opinions to determine  whether or not such
                    documents conform to the requirements of this Indenture.

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

              (i)   this paragraph does not limit the effect of paragraph (b) of
                    this Section;

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

              (iii) the Trustee will not be liable with respect to any action it
                    takes or omits to take in good  faith in  accordance  with a
                    direction received by it pursuant to Section 6.5 hereof.

          (d) Whether or not therein  expressly so provided,  every provision of
this  Indenture  that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.1.

          (e) No provision of this  Indenture will require the Trustee to expend
or risk its own funds or incur any liability  whatsoever in the  performance  of
any of its duties  hereunder  or in the  exercise of any of its rights or powers


                                       46
<PAGE>

hereunder. The Trustee will be under no obligation to exercise any of its rights
or powers  vested in it by this  Indenture at the request or direction of any of
the Holders,  unless such Holders shall have offered to the Trustee security and
indemnity  satisfactory to the Trustee in its sole subjective  discretion (which
discretion  will be  exercised  in good faith)  against the costs,  expenses and
liabilities  that might be incurred  by it in  compliance  with such  request or
direction.

          (f) The Trustee will not be liable for interest on any money  received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the  Trustee  need not be  segregated  from other  funds  except to the
extent required by law.

          (g) In the  event  the  Company  incurs  senior  secured  Indebtedness
pursuant to clause (i) of Section  4.9(b),  the Trustee  shall,  and the Holders
shall be deemed to have  authorized  the  Trustee  to,  enter  into  appropriate
intercreditor  agreements  providing for the ratable  sharing of the  Collateral
between  the  holders of senior  secured  Indebtedness  and the  Trustee for the
benefit  of  the  Holders  of the  Notes  and  otherwise  giving  effect  to the
provisions of clause (i) of Section  4.9(b).  For this purpose,  the Trustee may
consult with counsel and rely on Opinions of Counsel and Officers' Certificates.

SECTION 7.2.  RIGHTS OF TRUSTEE.

          (a) Subject to Section 7.1, the Trustee may conclusively rely upon any
document  believed by it to be genuine and to have been signed or  presented  by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.

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

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

          (d) The Trustee will not be liable for any action it takes or omits to
take in good faith that it believes  in its sole  subjective  discretion  (which
discretion  will be  exercised  in good  faith) to be  authorized  or within the
rights or powers conferred upon it by this Indenture.

          (e) The  permissive  right of the Trustee to act hereunder will not be
construed as a duty.

          (f) Unless  otherwise  specifically  provided in this  Indenture,  any
demand,  request,  direction  or notice from the Company will be  sufficient  if
signed by an authorized Officer of the Company.

          (g) The Trustee  will be under no  obligation  to exercise  any of the
rights or powers  vested in it by this  Indenture at the request or direction of
any of the  Holders,  unless  such  Holders  shall have  offered to the  Trustee
security  or  indemnity  satisfactory  to the  Trustee  in its  sole  subjective
discretion (which discretion will be exercised in good faith) against the costs,
expenses and  liabilities  that might be incurred by it in compliance  with such
request or direction.

          (h) The Trustee  will not be required to take notice or deemed to have
notice of any Event of Default hereunder,  except failure by the Company to make
any of the payments to the Trustee  pursuant to Section 6.1(a) or (b),  unless a
Responsible  Officer of the Trustee has actual  knowledge  thereof or unless the
Trustee  shall be  specifically  notified in writing of such Event of Default by
the  Company or by one or more of the Holders  and such  notice  references  the
Notes and this Indenture.

          (i) The Trustee may conclusively rely and shall be protected in acting
or  refraining  from  acting  upon  any  resolution,   certificate,   statement,


                                       47
<PAGE>


instrument,  opinion, report, notice, request, direction,  consent, order, bond,
debenture,  note,  other  evidence  of  indebtedness  or other paper or document
believed by it to be genuine and to have been signed or  presented by the proper
party or parties.

          (j) The Trustee shall not be bound to make any investigation  into the
facts or matters stated in any resolution,  certificate,  statement, instrument,
opinion,  report, notice, request,  direction,  consent, order, bond, debenture,
note,  other  evidence  of  indebtedness  or other  paper or  document,  but the
Trustee, in its discretion,  may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall  determine to
make such further inquiry or investigation,  it shall be entitled to examine the
books,  records and premises of the Company,  personally or by agent or attorney
at the sole cost of the  Company  and shall  incur no  liability  or  additional
liability of any kind by reason of such inquiry or investigation.

          (k) The rights, privileges, protections, immunities and benefits given
to the Trustee, including,  without limitation, its right to be indemnified, are
extended to, and shall be enforceable  by, the Trustee in each of its capacities
hereunder,  and to each  agent,  custodian  and  other  Person  employed  to act
hereunder.

          (l) The  Trustee may request  that the  Company  deliver an  Officers'
Certificate  setting  forth the names of  individuals  and/or titles of officers
authorized at such time to take specified  actions  pursuant to this  Indenture,
which Officers'  Certificate  may be signed by any person  authorized to sign an
Officers'  Certificate,  including any person  specified as so authorized in any
such certificate previously delivered and not superseded.

SECTION 7.3.  INDIVIDUAL RIGHTS OF TRUSTEE.

          The Trustee in its  individual  or any other  capacity  may become the
owner or  pledgee  of Notes  and may  otherwise  deal  with the  Company  or any
Affiliate  of the  Company  with the same  rights  it would  have if it were not
Trustee.  However,  in the  event  that the  Trustee  acquires  any  conflicting
interest (as such term is defined in TIA Section 310(b)), it must eliminate such
conflict within 90 calendar days, apply to the SEC for permission to continue as
trustee (to the extent permitted under TIA Section 310(b)) or resign.  Any Agent
may do the same with like  rights and  duties.  The  Trustee is also  subject to
Sections 7.10 and 7.11 hereof.

SECTION 7.4.  TRUSTEE'S DISCLAIMER.

          The Trustee will not be responsible for and makes no representation as
to the  validity  or  adequacy of this  Indenture  or the Notes,  it will not be
accountable  for the  Company's  use of the proceeds from the Notes or any money
paid to the Company or upon the Company's  direction under any provision of this
Indenture,  it will not be  responsible  for the use or application of any money
received  by any  Paying  Agent  other  than  the  Trustee,  and it will  not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection  with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

SECTION 7.5.  NOTICE OF DEFAULTS.

          If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee,  the Trustee will mail to Holders of Notes a notice of the
Default or Event of Default  within 90  calendar  days after such event  occurs.
Except in the case of a Default or Event of Default under Section  6.1(a) or (b)
(including,  without limitation, the payment of the Change of Control Payment on
the Change of Control  Payment Date,  the payment of the  applicable  redemption
price on the redemption  date and the payment of the Net Proceeds Offer Price on
the Net Proceeds  Purchase  Date),  the Trustee may  withhold  such notice if it
determines that withholding the notice is in the interests of the Holders of the
Notes.


                                       48
<PAGE>


SECTION 7.6.  REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

          Within 60 calendar  days after each May 15  beginning  with the May 15
following the Effective Date, and for so long as Notes remain  outstanding,  the
Trustee  will mail to the Holders of the Notes a brief  report  dated as of such
reporting date that complies with TIA Section 313(a) (but if no event  described
in TIA  Section  313(a) has  occurred  within the twelve  months  preceding  the
reporting  date,  no report need be  transmitted).  The Trustee also will comply
with TIA Section  313(b)(2).  The Trustee will also transmit by mail all reports
as required by TIA Section 313(c).

          A copy of each  report at the time of its  mailing  to the  Holders of
Notes  will be  mailed to the  Company  and  filed  with the SEC and each  stock
exchange,  if any, on which the Notes are listed in  accordance  with and to the
extent  required by TIA Section  313(d).  The Company will  promptly  notify the
Trustee if the Notes become listed on any stock exchange or automatic  quotation
system or any delisting thereof.

SECTION 7.7.  COMPENSATION AND INDEMNITY.

          Absent any other  agreement to the  contrary,  the Company will pay to
the  Trustee  from time to time  compensation  as may be agreed  upon in writing
between the Company and the Trustee for its  acceptance  of this  Indenture  and
services hereunder. The Trustee's compensation will not be limited by any law on
compensation  of a trustee of an express  trust.  The Company will reimburse the
Trustee  promptly upon request for all  reasonable  disbursements,  advances and
expenses  incurred  or  made  by it in  addition  to the  compensation  for  its
services. Such expenses will include the reasonable compensation,  disbursements
and expenses of the Trustee's agents and counsel.

          The Company will indemnify the Trustee and any predecessor Trustee and
their agents, against any and all losses, liabilities or expenses incurred by it
arising out of or in connection  with the  acceptance or  administration  of its
duties under this Indenture,  including the costs and expenses of enforcing this
Indenture against the Company  (including this Section 7.7) and defending itself
against  any claim  (whether  asserted by the Company or any Holder or any other
Person) or liability in connection  with the exercise or  performance  of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be  attributable to its gross  negligence or bad faith.  The Trustee
will promptly  notify the Company of any claim for which it may seek  indemnity.
The Company will defend the claim and the Trustee will cooperate in the defense.
The Trustee may have  separate  counsel and the Company will pay the  reasonable
fees  and  expenses  of such  counsel;  PROVIDED  that the  Company  will not be
required to pay such fees and expenses if it assumes the Trustee's  defense with
counsel  acceptable  to and  approved by the Trustee  (such  approval  not to be
unreasonably  withheld) and there is no conflict of interest between the Company
and the Trustee in connection  with such  defense.  The Company need not pay for
any  settlement  made  without its written  consent,  which  consent will not be
unreasonably  withheld.  The  Company  need not  reimburse  the  Trustee for any
expense or indemnity  against any liability or loss of the Trustee to the extent
such expense,  liability or loss is  attributable to the gross  negligence,  bad
faith or willful misconduct of the Trustee.

          The obligations of the Company under this Section 7.7 will survive the
satisfaction and discharge of this Indenture.

          To secure the  Company's  payment  obligations  in this  Section,  the
Trustee  will have a Lien  prior to the Notes on all money or  property  held or
collected  by the  Trustee,  except  that  held in  trust to pay  principal  and
interest  on  particular  Notes.  Such Lien will  survive the  satisfaction  and
discharge of this Indenture.

          When the Trustee incurs expenses or renders services after an Event of
Default  specified in Section 6.1(h) or (i) hereof occurs,  the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel)  are  intended  to  constitute  expenses  of  administration  under any
Bankruptcy Law.

          The Trustee will comply with the provisions of TIA Section 313(b)(2) .


                                       49
<PAGE>


SECTION 7.8.  REPLACEMENT OF TRUSTEE.

          A resignation or removal of the Trustee and appointment of a successor
Trustee will become  effective only upon the successor  Trustee's  acceptance of
appointment as provided in this Section.

          The Trustee may resign in writing upon 30 calendar  days notice and be
discharged from the trust hereby created by so notifying the Company in writing.
The Holders of a majority in principal amount of the then outstanding  Notes may
remove the  Trustee by so  notifying  the Trustee and the Company in writing and
may appoint a successor trustee with the consent of the Company. The Company may
remove the Trustee if:

          (a) the Trustee fails to comply with Section 7.10 hereof;

          (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

          (c) a  receiver,  Custodian  or  public  officer  takes  charge of the
Trustee or its property; or

          (d) the Trustee becomes incapable of acting.

          If the  Trustee  resigns or is  removed or if a vacancy  exists in the
office of Trustee for any reason,  the Company will promptly  appoint or request
the Trustee to appoint a successor Trustee.  Within one year after the successor
Trustee takes office,  the Holders of a majority in principal amount of the then
outstanding  Notes may  appoint a  successor  Trustee to replace  the  successor
Trustee appointed by the Company.

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

          If the Trustee,  after written request by any Holder of a Note who has
been a Holder of a Note for at least six months,  fails to comply  with  Section
7.10,  such Holder may  petition  any court of  competent  jurisdiction  for the
removal of the Trustee and the appointment of a successor Trustee.

          A  successor  Trustee  will  deliver  a  written   acceptance  of  its
appointment  to  the  retiring  Trustee  and  to  the  Company.  Thereupon,  the
resignation or removal of the retiring  Trustee will become  effective,  and the
successor  Trustee  will have all the  rights,  powers and duties of the Trustee
under this Indenture. The successor Trustee will mail a notice of its succession
to Holders  of the Notes.  The  retiring  Trustee  will  promptly  transfer  all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee  hereunder have been paid and subject to the Lien provided for in
Section 7.7 hereof.  Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the  Company's  obligations  under Section 7.7 hereof will continue
for the benefit of the retiring Trustee.

SECTION 7.9.  SUCCESSOR TRUSTEE BY MERGER, ETC.

          If the Trustee consolidates, merges or converts into, or transfers all
or  substantially  all of its corporate trust business to, another  corporation,
the resulting, surviving or transferee corporation without any further act will,
if the  resulting,  surviving or transferee  corporation  is otherwise  eligible
hereunder, be the successor Trustee.

SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION.

          There will at all times be a Trustee  hereunder  that is a corporation
organized and doing  business  under the laws of the United States of America or
of any state  thereof that is authorized  under such laws to exercise  corporate
trustee power, that is subject to supervision or examination by federal or state
authorities   and  that  has  a  combined   capital  and  surplus  of  at  least
US$100,000,000  as set  forth in its most  recent  published  annual  report  of
condition.


                                       50
<PAGE>

          This   Indenture   will  always  have  a  Trustee  who  satisfies  the
requirements  of TIA Section  310(a) (1), (2) and (5). The Trustee  shall comply
with TIA Section 310(b) .

SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

SECTION 7.12.  LIMITATION   ON   DUTY   OF  TRUSTEE  IN  RESPECT  OF COLLATERAL;
               INDEMNIFICATION

          (a) Beyond the exercise of reasonable care in the custody thereof, the
Trustee shall have no duty as to any  Collateral in its possession or control or
in the  possession or control of any agent or bailee or any income thereon or as
to preservation  of rights against prior parties or any other rights  pertaining
thereto and the Trustee  shall not be  responsible  for filing any  financing or
continuation  statements or recording any documents or instruments in any public
office  at any  time  or  times  or  otherwise  perfecting  or  maintaining  the
perfection  of any security  interest in the  Collateral.  The Trustee  shall be
deemed to have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment  substantially  equal to that
which it accords its own property and shall not be liable or responsible for any
loss or diminution in the value of any of the  Collateral,  by reason of the act
or omission of any carrier,  forwarding agency or other agent or bailee selected
by the Trustee in good faith.

          (b)  The  Trustee  shall  not  be   responsible   for  the  existence,
genuineness or value of any of the  Collateral or for the validity,  perfection,
priority  or  enforceability  of the  Liens  in any of the  Collateral,  whether
impaired  by  operation  of law or by reason of any action or omission to act on
its part  hereunder,  except to the extent such  action or omission  constitutes
gross negligence, bad faith or wilful misconduct on the part of the Trustee, for
the validity or  sufficiency  of the  Collateral  or any agreement or assignment
contained therein, for the validity of the title of the Company or any Guarantor
to the  Collateral,  for  insuring the  Collateral  or for the payment of taxes,
charges,  assessments  or  Liens  upon the  Collateral  or  otherwise  as to the
maintenance  of the  Collateral.  The Trustee shall have no duty to ascertain or
inquire  as to the  performance  or  observance  of any of  the  terms  of  this
Indenture, the Master Security Agreement, the Collateral Agency Agreement or the
Mortgage by the Company, any Guarantors, or the Collateral Agent. ARTICLE 8

SECTION 8.1.  OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

          The Company may, at the option of its Board of Directors  evidenced by
a resolution set forth in an Officers'  Certificate,  at any time, elect to have
either  Section  8.2  or  8.3  hereof  applied  to all  outstanding  Notes  upon
compliance with the conditions set forth below in this Article 8.


                                       51
<PAGE>

SECTION 8.2.  LEGAL DEFEASANCE.

          Upon the  Company's  exercise  under  Section 8.1 hereof of the option
applicable to this Section 8.2, the Company will, subject to the satisfaction of
the  conditions  set  forth in  Section  8.4  hereof,  be  deemed  to have  been
discharged  from its obligations  with respect to all  outstanding  Notes on the
date  the  conditions  set  forth  below  are  satisfied  (hereinafter,   "Legal
Defeasance").  For this purpose, Legal Defeasance means that the Company will be
deemed to have paid and  discharged the entire  Indebtedness  represented by the
outstanding  Notes, which will thereafter be deemed to be "outstanding" only for
the  purposes  of Section 8.6 hereof and the other  Sections  of this  Indenture
referred  to in (a)  and  (b)  below,  and  to  have  satisfied  all  its  other
obligations  under such Notes and this Indenture (and the Trustee,  on demand of
and at the expense of the Company, will execute proper instruments acknowledging
the  same),  except  for the  following  provisions  which  will  survive  until
otherwise terminated or discharged pursuant to this Indenture: (a) the rights of
Holders of outstanding  Notes to receive solely from the trust fund described in
Section 8.4  hereof,  and as more fully set forth in such  Section,  payments in
respect of the  principal  of, and premium,  if any, and interest on, such Notes
when such payments are due, (b) the Company's  obligations  with respect to such
Notes under Article 2 and, to the extent such  obligations  are not satisfied by
payment  from such trust  fund,  Section 4.1  hereof,  (c) the  rights,  powers,
trusts,  duties  and  immunities  of the  Trustee  hereunder  and the  Company's
obligations  in  connection  therewith  and  (d)  this  Article  8.  Subject  to
compliance  with this  Article 8, the Company may exercise its option under this
Section 8.2  notwithstanding  the prior exercise of its option under Section 8.3
hereof.

SECTION 8.3.  COVENANT DEFEASANCE.

          Upon the  Company's  exercise  under  Section 8.1 hereof of the option
applicable  to  this  Section  8.3,  and  subject  to  the  satisfaction  of the
conditions  set forth in Section 8.4 hereof,  the Company will be released  from
its  obligations  under the covenants  contained in Sections 4.3, 4.4, 4.5, 4.7,
4.8, 4.9, 4.10,  4.11,  4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19, 4.20, 5.1, and
5.2 with respect to the  outstanding  Notes on and after the date the conditions
set forth below are  satisfied  (hereinafter,  "Covenant  Defeasance"),  and the
Notes  will  thereafter  be deemed not  "outstanding"  for the  purposes  of any
direction,   waiver,   consent  or  declaration  or  act  of  Holders  (and  the
consequences  of any  thereof)  in  connection  with  such  covenants,  but will
continue to be deemed  "outstanding" for all other purposes  hereunder (it being
understood  that  such  Notes  will not be  deemed  outstanding  for  accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding  Notes,  the Company need not comply with and will have no liability
in respect of any term,  condition or limitation set forth in any such covenant,
whether directly or indirectly,  by reason of any reference  elsewhere herein to
any such  covenant  or by reason of any  reference  in any such  covenant to any
other provision herein or in any other document and such omission to comply will
not  constitute a Default or an Event of Default under Section 6.1 hereof,  but,
except as specified  above,  the remainder of this Indenture and such Notes will
be unaffected  thereby.  In addition,  upon the Company's exercise under Section
8.1 hereof of the option  applicable to this Section 8.3 hereof,  subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(d),
(f) and (g) hereof will not constitute Events of Default.

SECTION 8.4.  CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

          In order to exercise either Legal  Defeasance or Covenant  Defeasance,
the Company must irrevocably deposit, or cause to be deposited, with the Trustee
(or another trustee satisfying the requirements of this Indenture), in trust for
such purpose,  (1) money in an amount,  (2) non-callable  Government  Securities
which through the scheduled payment of principal,  interest and premium, if any,
in respect  thereof in  accordance  with their terms will provide not later than
one day  before  the due  date  of any  payment  money  in an  amount,  or (3) a
combination  thereof,  sufficient,  without  reinvestment,  in the  opinion of a
nationally  recognized  firm of independent  public  accountants  expressed in a
written certification thereof delivered to the Trustee, to pay the principal of,
and premium,  if any, and interest on, the outstanding Notes at maturity or upon
redemption,  together with all other  amounts  payable by the Company under this
Indenture.  Such Legal  Defeasance or Covenant  Defeasance will become effective
123 calendar days after such deposit if and only if:


                                       52
<PAGE>

          (i)  no Default or Event of Default  with  respect to the Notes  shall
               have occurred and be continuing  immediately prior to the time of
               such deposit;

          (ii) no  Default  or Event of Default  pursuant  to Section  6.1(h) or
               6.1(i)  shall have  occurred at any time in the period  ending on
               the  123rd  day  after  the  date of  such  deposit  and  will be
               continuing on such 123rd day;

          (iii)such  defeasance  does not result in a breach or violation of, or
               constitute  a default  under,  any other  material  agreement  or
               instrument  to  which  the  Company  is a party or by which it is
               bound (and, in furtherance of such condition, no Default or Event
               of Default will result under this Indenture due to the incurrence
               of  Indebtedness  to fund such deposit and the  entering  into of
               customary documentation in connection therewith, even though such
               documentation  may contain  provisions  that would otherwise give
               rise to a Default or Event of Default); and

          (iv) the Company has  delivered  to the Trustee (A) (1) in the case of
               Legal  Defeasance,  an Opinion of Counsel to the effect  that (x)
               there has been published by the Internal Revenue Service a ruling
               or (y) since the Effective  Date,  there has been a change in the
               applicable  federal  income tax law, in either case to the effect
               that,  and based  thereon  such  Opinion of Counsel  will confirm
               that, the Holders of the Notes will not recognize income, gain or
               loss for  federal  income tax  purposes as a result of such Legal
               Defeasance  and will be subject to federal income tax on the same
               amounts,  in the same  manner and at the same times as would have
               been the case if such Legal  Defeasance had not occurred,  or (2)
               in the case of Covenant Defeasance,  an Opinion of Counsel to the
               effect that the Holders of the Notes will not  recognize  income,
               gain or loss for federal  income tax purposes as a result of such
               Covenant  Defeasance and will be subject to federal income tax on
               the same  amount,  in the same  manner  and at the same  times as
               would  have  been the case if such  Covenant  Defeasance  had not
               occurred;  (B) an Opinion of Counsel to the effect that after the
               123rd day after the date of such  deposit,  the trust  funds will
               not be  subject  to the  effect  of  any  applicable  bankruptcy,
               insolvency,  reorganization or similar laws affecting  creditors'
               rights generally;  (C) an Officers' Certificate stating that such
               deposit was not made by the Company with the intent of preferring
               the Holders of Notes over the other creditors of the Company with
               the  intent  of  defeating,  hindering,  delaying  or  defrauding
               creditors  of  the  Company  or  others;  and  (D)  an  Officers'
               Certificate  and an Opinion of  Counsel,  each  stating  that all
               conditions   precedent  relating  to  such  Legal  Defeasance  or
               Covenant Defeasance have been complied with.


                                       53
<PAGE>


SECTION 8.5.  DISCHARGE.

          If   (i)  either  (a) all such  Notes  theretofore  authenticated  and
               delivered  except lost,  stolen or destroyed Notes that have been
               replaced  or  paid  and  Notes  for  whose   payment   money  has
               theretofore   been  deposited  in  trust  with  the  Trustee  and
               thereafter  repaid to the Company or discharged  from such trust)
               have been delivered to the Trustee for  cancellation;  or (b) all
               such  Notes  not   heretofore   delivered   to  the  Trustee  for
               cancellation  have  become due and payable by their terms and the
               Company has irrevocably  deposited or caused to be deposited with
               the  Trustee  funds  in  an  amount  of  money  in  U.S.  dollars
               sufficient to pay and discharge  the entire  indebtedness  on the
               Notes not theretofore  delivered to the Trustee for cancellation,
               for the principal  amount,  premium,  if any,  accrued and unpaid
               interest,  to the date of such deposit  together with irrevocable
               instructions from the Company directing the Trustee to apply such
               funds to the payment thereof; (ii) the Company has paid all other
               sums  payable by it under this  Indenture;  and (iii) the Company
               has delivered  irrevocable  instructions  to the Trustee to apply
               the deposited money toward the payment of the Notes (except lost,
               stolen or  destroyed  Notes that have been  replaced  or paid and
               Notes for whose payment money has been  theretofore  deposited in
               trust with the  Trustee and  thereafter  repaid to the Company or
               discharged from such trust) at maturity, as the case may be, then
               this  Indenture  will cease to be of further force or effect and,
               at  the  written  request  of  the  Company,  accompanied  by  an
               Officers'  Certificate and Opinion of Counsel,  each stating that
               all  conditions  precedent  provided  for herein  relating to the
               satisfaction  and discharge of this  Indenture have been complied
               with,  and  upon  payment  of the  costs,  charges  and  expenses
               incurred or to be incurred by the Trustee in relation  thereto or
               in carrying out the  provisions  of this  Indenture,  the Trustee
               will satisfy and discharge this Indenture ("Discharge"); PROVIDED
               that the  Company's  obligations  with  respect to the payment of
               principal, premium, if any, and interest will not terminate until
               the Trustee shall apply the moneys so deposited to the payment to
               the Holders of Notes of all sums due and to become due thereon.

SECTION 8.6.  DEPOSITED  MONEY  AND  GOVERNMENT  SECURITIES TO BE HELD IN TRUST;
              OTHER MISCELLANEOUS PROVISIONS.

          Subject to Section 8.7  hereof,  all money and  Government  Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee,  collectively for purposes of this Section 8.6, the "Trustee") pursuant
to Section 8.4 or 8.5 hereof in respect of the outstanding Notes will be held in
trust and applied by the Trustee,  in  accordance  with the  provisions  of such
Notes and this Indenture,  to the payment, either directly or through any Paying
Agent (including the Company or any of its Subsidiaries or Affiliates  acting as
Paying Agent) as the Trustee may determine,  to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest  but such money need not be  segregated  from other funds except to the
extent required by law.

          The Company will pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed  against the money or Government  Securities
deposited pursuant to this Section 8.6 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Notes.

          Anything  in  this  Article  8 to the  contrary  notwithstanding,  the
Trustee will deliver or pay to the Company from time to time upon the request of
the Company any money or  Government  Securities  held by it as provided in this
Section 8.6 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion  delivered  under Section 8.4 hereof),  are in
excess of the amount  thereof  that would then be  required to be  deposited  to
effect an equivalent Legal Defeasance, Covenant Defeasance or Discharge.


SECTION 8.7.  REPAYMENT TO COMPANY.

          Any money deposited with the Trustee or any Paying Agent, or then held
by the  Company  or any of its  Subsidiaries  or  Affiliates,  in trust  for the
payment of the  principal  of, or premium,  if any, or interest on, any Note and
remaining  unclaimed  for one year after such  principal,  premium,  if any,  or
interest  has become due and payable  will be paid to the Company on its request
or (if then held by the Company or any of its  subsidiaries or Affiliates)  will
be discharged from such trust; and the Holder of such Note will  thereafter,  as
an unsecured general creditor, look only to the Company for payment thereof, and


                                       54
<PAGE>

all  liability  of the Trustee or such Paying  Agent with  respect to such trust
money, and all liability of the Company or any of its Subsidiaries or Affiliates
as trustee thereof, will thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent,  before being required to make any such repayment,  shall, at
the pre-paid expense of the Company, cause to be published once, in The New York
Times and The Wall Street  Journal  (national  edition),  notice that such money
remains  unclaimed and that, after a date specified  therein,  which will not be
less than 30 calendar days from the date of such  notification  or  publication,
any  unclaimed  balance  of such  money  then  remaining  will be  repaid to the
Company.

SECTION 8.8.  REINSTATEMENT.

          If the  Trustee or Paying  Agent is unable to apply any United  States
dollars or  Government  Securities  in  accordance  with Section 8.2, 8.3 or 8.5
hereof,  as the case may be, by reason of any order or  judgment of any court or
governmental  authority  enjoining,  restraining or otherwise  prohibiting  such
application,  then the Company's  obligations under this Indenture and the Notes
will be revived and  reinstated  as though no deposit had  occurred  pursuant to
Section 8.2, 8.3 or 8.5 hereof until such time as the Trustee or Paying Agent is
permitted  to apply all such assets in  accordance  with Section 8.2, 8.3 or 8.5
hereof,  as the case may be; PROVIDED,  HOWEVER,  that, if the Company makes any
payment of principal of, or premium,  if any, or interest on, any Note following
the  reinstatement  of its  obligations,  the Company will be  subrogated to the
rights of the Holders of such Notes to receive  such  payment  from the money or
Government Securities held by the Trustee or Paying Agent.


                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.1.  WITHOUT CONSENT OF HOLDERS OF NOTES.

          Notwithstanding  Section  9.2 of this  Indenture,  the Company and the
Trustee may amend or supplement  this Indenture,  the Security  Documents or the
Guarantees without the consent of any Holder:

          (a) to cure any ambiguity, defect or inconsistency;

          (b) to provide for uncertificated  Notes in addition to or in place of
Certificated Notes;

          (c) to provide for the assumption of the Company's  obligations to the
Holders of Notes in the case of a merger or consolidation  pursuant to Article 5
hereof;

          (d) to make any change  that would  provide any  additional  rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any such Holder; or

          (e) to  comply  with  requirements  of the SEC in order to  effect  or
maintain the qualification of this Indenture under the TIA as then in effect.

          Upon the request of the Company  accompanied  by a  resolution  of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof,  the  Trustee  will join with the  Company in the  execution  of any
amended or supplemental  Indenture  authorized or permitted by the terms of this
Indenture and to make any further  appropriate  agreements and stipulations that
may be therein contained.

SECTION 9.2.  WITH CONSENT OF HOLDERS OF NOTES.

          Except as  provided  in  Section  9.1 and in this  Section  9.2,  this
Indenture, the Notes, the Security Documents or the Guarantees may be amended or
supplemented by the Company, each Guarantor, and the Trustee with the consent of
the  Holders  of at least a  majority  in  principal  amount of the  Notes  then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for,  Notes),  and,  subject to


                                       55
<PAGE>

Sections  6.4 and 6.7 and the  second to last  paragraph  of  Section  6.1,  any
existing Default,  Event of Default (other than a Default or Event of Default in
the payment of principal of, premium,  if any, or interest on, the Notes, except
a payment  default  resulting from an  acceleration  that has been rescinded) or
non-compliance  with any provision of this  Indenture,  the Notes,  the Security
Documents or the  Guarantees  may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding  Notes (including  consents
obtained in connection  with a purchase of, or a tender offer or exchange  offer
for, the Notes).

          Upon the request of the Company  accompanied  by a  resolution  of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture  (or  amendment  or  supplement  to  the  Security  Documents  or  the
Guarantees,  as the case  may be),  and upon  the  filing  with the  Trustee  of
evidence  satisfactory  to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
7.2 hereof,  the Trustee  will join with the  Company in the  execution  of such
amended or  supplemental  Indenture  (or amendment or supplement to the Security
Documents  or the  Guarantees,  as the  case may  be),  and to make any  further
appropriate  agreements and stipulations that may be therein contained,  but the
Trustee  will not be  obligated  to enter  into  such  amended  or  supplemental
Indenture or any other document in connection with this Indenture that adversely
affects its own rights,  duties,  liabilities or immunities under this Indenture
or otherwise.

          It will not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the  particular  form of any  proposed  amendment or
waiver,  but it will  be  sufficient  if such  consent  approves  the  substance
thereof.

          After an  amendment,  supplement  or waiver  under  this  Section  9.2
becomes  effective,  the  Company  will mail to the  Holders  of Notes  affected
thereby a notice briefly  describing the  amendment,  supplement or waiver.  Any
failure of the Company to mail such  notice,  or any defect  therein,  will not,
however,  in any way  impair or  affect  the  validity  of any such  amended  or
supplemental  Indenture or waiver.  Subject to Sections 6.4 and 6.7 hereof,  the
Holders of a majority  in  principal  amount of the Notes then  outstanding  may
waive  compliance in a particular  instance by the Company with any provision of
this  Indenture  or the Notes.  However,  without  the  consent  of each  Holder
affected,  an amendment  or waiver may not (with  respect to any Notes held by a
non-consenting Holder):

          (a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;

          (b) reduce the  principal of or change the fixed  maturity of any Note
or alter the provisions  with respect to the redemption of the Notes (other than
provisions relating to Section 3.7);

          (c) reduce the rate of or change the time for  payment of  interest on
any Note;

          (d) waive a Default or Event of Default  in the  payment of  principal
of, or  premium,  if any,  or  interest  on the Notes  (except a  rescission  of
acceleration  of the Notes by the  Holders of at least a majority  in  aggregate
principal  amount of the Notes and a waiver of the payment default that resulted
from  such  acceleration)  or reduce  the  Change of  Control  Payment,  the Net
Proceeds Offer Price or the applicable redemption price;

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

          (f) make any change in the  provisions of this  Indenture  relating to
waivers of past  Defaults or the rights of Holders of Notes to receive  payments
of principal of, premium, if any, or interest on, the Notes;

          (g) waive a  redemption  payment  with respect to any Note (other than
provisions relating to Section 3.7);

          (h)  release  any  Collateral  from the Lien  created by the  Security
Documents, except in accordance with the terms thereof, or amend such terms; or

          (i) make any change in the foregoing amendment and waiver provisions.


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<PAGE>

SECTION 9.3.  COMPLIANCE WITH TRUST INDENTURE ACT.

          Every  amendment or supplement to this  Indenture or the Notes will be
set forth in an amended or supplemental  Indenture that complies with the TIA as
then in effect.

SECTION 9.4.  REVOCATION AND EFFECT OF CONSENTS.

          Until an amendment,  supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing  consent by the Holder of a Note and
every  subsequent  Holder of a Note or portion of a Note that evidences the same
debt as the  consenting  Holder's  Note,  even if notation of the consent is not
made on any Note.  However,  any such Holder of a Note or subsequent Holder of a
Note may  revoke  the  consent as to its Note if the  Trustee  receives  written
notice of  revocation  before the date the waiver,  supplement  or amendment has
been  approved by the  requisite  Holders.  An  amendment,  supplement or waiver
becomes  effective  when approved by the  requisite  Holders and executed by the
Trustee (or, if otherwise provided in such waiver,  supplement or amendment,  in
accordance with its terms) and thereafter binds every Holder.

          The Company may,  but will not be obligated  to, fix a record date for
the purpose of  determining  the Holders  entitled to consent to any  amendment,
supplement or waiver. If a record date is fixed, then  notwithstanding  the last
sentence of the immediately preceding paragraph,  those Persons who were Holders
at such record date (or their duly designated proxies),  and only those Persons,
will be  entitled to consent to such  amendment  or waiver or revoke any consent
previously given,  whether or not such Persons continue to be Holders after such
record date.  No consent  will be valid or  effective  for more than 90 calendar
days after such record date  except to the extent that the  requisite  number of
consents to the amendment,  supplement or waiver have been obtained  within such
90-day period or as set forth in the next paragraph of this Section 9.4.

          After an amendment,  supplement or waiver becomes  effective,  it will
bind every  Holder,  unless it makes a change  described  in any of clauses  (a)
through (i) of Section 9.2, in which case, the  amendment,  supplement or waiver
will  bind  only  each  Holder  of a Note  who  has  consented  to it and  every
subsequent  Holder  of a Note or  portion  of a Note  that  evidences  the  same
indebtedness  as the  consenting  Holder's  Note,  PROVIDED that any such waiver
shall not impair or affect the right of any other  Holder to receive  payment of
principal,  premium, or interest on a Note, on or after the respective dates set
for such amounts to become due and payable  expressed in such Note,  or to bring
suit for the enforcement of any such payment on or after such respective dates.

SECTION 9.5.  NOTATION ON OR EXCHANGE OF NOTES.

          If an amendment, supplement or waiver changes the terms of a Note, the
Trustee  may  require  the Holder of the Note to  deliver  it to the  Trustee or
require the Holder to put an  appropriate  notation on the Note. The Trustee may
place an appropriate  notation on the Note about the changed terms and return it
to the Holder.  Alternatively,  if the Company or the Trustee so determines, the
Company in exchange for the Note will issue and the Trustee will  authenticate a
new Note that reflects the changed  terms.  Any failure to make the  appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.

SECTION 9.6.  TRUSTEE TO SIGN AMENDMENTS, ETC.

          The Trustee will sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the  amendment or  supplement  does not  adversely
affect  the  rights,  duties,  liabilities  or  immunities  of the  Trustee.  In
executing any amended or supplemental indenture, the Trustee will be entitled to
receive and (subject to Section 7.1) will be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel to the effect that the execution
of such amended or  supplemental  indenture is  authorized  or permitted by this
Indenture.


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<PAGE>

SECTION 9.7.  PAYMENTS FOR CONSENT.

          The Company will not, and will not permit any of its  Subsidiaries to,
directly or indirectly,  pay or cause to be paid any  consideration,  whether by
way of  interest,  fee or  otherwise,  to any  Holder  of any Notes for or as an
inducement  to any consent,  waiver or amendment of any terms or  provisions  of
this Indenture,  the Notes, the Security Documents or the Guarantees unless such
consideration  is offered to be paid or is paid to all Holders of the Notes that
so consent,  waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.


                                   ARTICLE 10
                             COLLATERAL AND SECURITY

SECTION 10.1.  SECURITY DOCUMENTS.

          The due and punctual payment of the principal and premium, if any, of,
and  interest  on,  the  Notes  when and as the same  shall be due and  payable,
whether on an Interest Payment Date, at maturity,  by acceleration,  repurchase,
redemption or otherwise,  interest on the overdue  principal of and interest (to
the extent  permitted by law), if any, on the Notes and performance of all other
Obligations  of the Company to the  Holders of the Notes and the  Trustee  under
this  Indenture  with respect to the Notes,  shall be secured as provided in the
Security Documents.

          The Company shall, and shall cause each of its Restricted Subsidiaries
to,  do or cause to be done all such  acts and  things  as may be  necessary  or
proper,  or as may be required by the provisions of the Security  Documents,  to
assure and confirm to the Trustee and the Collateral  Agent,  for the benefit of
the  Trustee  and  the  Holders  of the  Notes,  the  security  interest  in the
Collateral  contemplated hereby and by the Security  Documents,  as from time to
time  constituted,  so as to render  the same  available  for the  security  and
benefit of this  Indenture  and the Notes  according  to the intent and purposes
herein and therein  expressed.  The Company  shall,  and shall cause each of its
Restricted  Subsidiaries to, take, upon request of the Trustee or the Collateral
Agent,  any and all actions  required to cause the Security  Documents to create
and maintain,  valid and enforceable,  perfected  (except as expressly  provided
herein  or  therein),  Liens  in and on all  the  Collateral,  in  favor  of the
Collateral  Agent for the  benefit of the  Trustee  and the Holders of the Notes
superior to and prior to the rights of all other third  Persons,  and subject to
no other Liens, other than Permitted Liens.

          The  Company  represents,  covenants  and agrees  that it has,  at all
relevant times has had, and that it and its Restricted Subsidiaries shall at all
times have,  full right,  power and lawful  authority to grant,  bargain,  sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the
property  constituting  the  Collateral,  in the manner and form provided in the
Security  Documents,   free  and  clear  of  all  Liens,  pledges,  charges  and
encumbrances  whatsoever  (other  than  Permitted  Liens),  and that (i) it will
forever  warrant  and  defend  the title to the same  against  the claims of all
persons whatsoever  (except as to Permitted Liens),  (ii) to the extent provided
by the  Master  Security  Agreement,  it and  the  Restricted  Subsidiaries,  as
applicable,  will  execute,  acknowledge  and  deliver  to  the  Trustee  or the
Collateral  Agent  such  further  assignments,  transfers,  assurances  or other
instruments  as the Trustee or the Collateral  Agent may  reasonably  require or
request,  and (iii) to the extent provided by the Master Security Agreement,  it
and the Restricted Subsidiaries,  as applicable, will do or cause to be done all
such acts and things as may be necessary or proper, or as may be required by the
Trustee or the  Collateral  Agent,  to assign and confirm to the Trustee and the
Collateral  Agent  the  Collateral,  or any part  thereof,  as from time to time
constituted,  so as to render the same available for the security and benefit of
the  Security  Documents,  this  Indenture  and the Notes.  The Company and each
Restricted  Subsidiary  further  covenants  and agrees that the Master  Security
Agreement  and the Mortgage  each creates or will create,  as the case may be, a
valid  first-ranking Lien (subject to Permitted Liens) on the Collateral subject
thereto.


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<PAGE>
SECTION 10.2.  OPINIONS.

          The Company  shall  furnish to the Trustee  within  three months after
each  anniversary  of the date hereof,  an Opinion of Counsel,  dated as of such
date of delivery,  stating  either that (i) in the opinion of such counsel,  all
action has been taken with respect to the recording,  registering,  filing,  re-
recording,  re-registering  and  refiling  of the  Security  Documents  and  all
supplements  thereto or to this Indenture,  financing  statements,  continuation
statements or other instruments of further assurance as is necessary to maintain
the Liens of the Security  Documents  and reciting the details of such action or
(ii) in the opinion of such  Counsel,  no such action is  necessary  to maintain
such  Liens,  which  Opinion of Counsel  also shall  state what  actions it then
believes are  necessary to maintain the  effectiveness  of such Liens during the
next two years.

SECTION 10.3.  RELEASE OF COLLATERAL.

          (a) Unless a Default or Event of Default  shall have  occurred  and be
continuing,  Collateral shall be released from the Liens created by the Security
Documents from time to time at the sole cost and expense of the Company:

          (i)upon payment in full of the Notes and all other  Obligations of the
Company to the Holders of the Notes and the Trustee  under this  Indenture  with
respect to the Notes then due and owing, or

          (ii) upon the sale or other disposition of such Collateral pursuant to
an Asset Sale made in  accordance  with  Section  4.10  hereof or  pursuant to a
transaction  which  is  deemed  not  to be an  Asset  Sale  as  provided  in the
definition of such term,

PROVIDED,  that the Trustee shall not release any Lien on any Collateral  unless
and until it shall have received an Officers'  Certificate  certifying  that all
conditions  precedent  hereunder have been met and such other documents required
by Section 10.4 hereof.  Upon compliance with the above provisions,  the Trustee
shall  execute,  deliver or  acknowledge  any necessary or proper  instrument of
termination,  satisfaction  or release to evidence the release of any Collateral
permitted to be released pursuant to this Indenture or the Security Documents;

          (b) The disposition of Inventory or Accounts in the ordinary course of
business may be made without delivery to the Trustee of certificates required by
TIA ss.314(d); and

          (c) The  release  of any  Collateral  from the  terms of the  Security
Documents  shall not be deemed to impair the  security  under this  Indenture in
contravention of the provisions  hereof and of the Security  Documents if and to
the extent the  Collateral is released  pursuant to the terms of this  Indenture
and the Security Documents.

SECTION 10.4.  CERTIFICATES OF THE COMPANY.

          The  Company  shall  furnish  to the  Trustee  prior to each  proposed
release  of  Collateral  other  than by reason of  transactions  referred  to in
Section 10.3(b),  all documents  required by TIA ss. 314(d). The Trustee may, to
the extent  permitted  by  Sections  7.1 and 7.2  hereof,  accept as  conclusive
evidence of compliance with the foregoing provisions the appropriate  statements
contained in such  instruments.  Any certificate or opinion  required by TIA ss.
314(d) may be made by an Officer of the  Company  except in cases  where TIA ss.
314(d)  requires  that such  certificate  or opinion  be made by an  independent
engineer, appraiser or other expert within the meaning of TIA ss. 314(d).

SECTION 10.5. AUTHORIZATION OF  ACTIONS  TO  BE  TAKEN  BY THE TRUSTEE UNDER THE
              SECURITY DOCUMENTS.

          The Trustee may, in its sole discretion and without the consent of the
Holders,  on behalf of the  Holders,  take all  actions  it deems  necessary  or
appropriate  in order to (a) enforce any of the terms of the Security  Documents
and (b)  collect  and  receive  any and all  amounts  payable  in respect of the
Obligations of the Company and the Guarantors hereunder.  The Trustee shall have
the power to institute and to maintain such suits and proceedings as it may deem


                                       59
<PAGE>

expedient to prevent any  impairment  of the  Collateral by any acts that may be
unlawful or in violation of the Security  Documents or this Indenture,  and such
suits and  proceedings  as the Trustee may deem expedient to preserve or protect
its  interests  and the  interests of the Holders in the  Collateral  (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental  enactment,  rule or
order that may be  unconstitutional  or otherwise invalid if the enforcement of,
or  compliance  with,  such  enactment,  rule or order would impair the security
interest  hereunder  or be  prejudicial  to the  interests of the Holders or the
Trustee).

SECTION 10.6. AUTHORIZATION  OF  RECEIPT  OF  FUNDS  BY  THE  TRUSTEE  UNDER THE
              SECURITY DOCUMENTS.

          The Trustee is  authorized to receive any funds for the benefit of the
Holders  distributed  under  the  Security   Documents,   and  to  make  further
distributions  of such funds to the Holders  according to the provisions of this
Indenture and the Security Documents.


SECTION 10.7.TRUSTEE NOT LIABLE FOR ACTIONS OF COLLATERAL AGENT.

          Each of the Company and each Holder of a Note hereby  acknowledges and
agrees  that in no event  shall the Trustee be liable for any action or inaction
of the Collateral Agent hereunder or under any Security Document.


                                   ARTICLE 11
                               GUARANTEE OF NOTES

SECTION 11.1.  GUARANTEE.

          (a) Each  Guarantor  hereby  jointly  and  severally  irrevocably  and
unconditionally  guarantees,  as a primary  obligor  and not a  surety,  to each
Holder of a Note now or hereafter authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns,  irrespective of the validity and
enforceability  of this  Indenture,  the Notes or the Obligations of the Company
hereunder  or  thereunder,  (i) the due and punctual  payment of the  principal,
premium,  if any, interest (including  post-petition  interest in any proceeding
under any Bankruptcy Law whether or not an allowed claim in such  proceeding) on
overdue principal,  premium,  if any, and interest,  if lawful on such Note, and
(ii) all other monetary Obligations payable by the Company, under this Indenture
(including  under Section 7.7 hereof) and the Notes (all of the foregoing  being
hereinafter collectively called the "Guaranteed  Obligations"),  when and as the
same shall become due and payable,  whether by  acceleration  thereof,  call for
redemption  or  otherwise  (including  amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code), in
accordance  with  the  terms of any such  Note and of this  Indenture,  subject,
however,  in the case of (i) and (ii)  above,  to the  limitations  set forth in
Section  11.3  hereof.   Each  Guarantor   hereby  agrees  that  the  Guaranteed
Obligations hereunder shall be absolute and unconditional,  irrespective of, and
shall be unaffected  by, any failure to enforce the  provisions of any such Note
or this Indenture, any waiver, modification or indulgence granted to the Company
with respect  thereto,  the recovery of any  judgment  against the Company,  any
action  to  enforce  the  same  by the  Holders  or the  Trustee,  or any  other
circumstances which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.  Each  Guarantor  hereby waives  diligence,  presentment,
filing of claims  with a court in the  event of a merger  or  bankruptcy  of the
Company,  any right to require a  proceeding  first  against  the  Company,  the
benefit of  discussion,  protest or notice with  respect to any such Note or the
Indebtedness  evidenced thereby and all demands  whatsoever,  and covenants that
this Guarantee  shall not be discharged as to any such Note except by payment in
full of the  principal  thereof,  premium,  if any,  and  all  accrued  interest
thereon.

          (b) Each Guarantor  further  agrees that this Guarantee  constitutes a
guarantee of payment,  performance  and compliance when due (and not a guarantee
of  collection)  and waives  any right to require  that any resort be had by any
Holder  or  the  Trustee  to  any  Note  held  for  payment  of  the  Guaranteed
Obligations.


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<PAGE>

          (c) Each  Guarantor  agrees  that it will not  exercise  any  right of
subrogation  in  relation  to the  Holders  or the  Trustee  in  respect  of any
Guaranteed  Obligations  until  such time as the Notes and all other  Guaranteed
Obligations are indefeasibly  paid in full. Each Guarantor  further agrees that,
as between such Guarantor,  on the one hand, and the Holders and the Trustee, on
the  other  hand,  (i)  the  maturity  of  the  Guaranteed  Obligations  may  be
accelerated  as  provided  in  Article 6 for the  purposes  of such  Guarantor's
Guarantee,  notwithstanding any stay, injunction or other prohibition preventing
such  acceleration  in respect of the  Guaranteed  Obligations,  and (ii) in the
event of any  declaration  of  acceleration  of such  Guaranteed  Obligations as
provided in Article 6 hereof,  such Guaranteed  Obligations  (whether or not due
and payable)  shall  forthwith  become due and payable by such Guarantor for the
purpose of this Article 11.

          (d) Each  Guarantor  also agrees to pay any and all costs and expenses
(including  reasonable  attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Article 11.

          (e) The  Guarantee  set forth in this Article 11 shall not be valid or
become  obligatory for any purpose with respect to a Note until the  certificate
of  authentication  on such Note shall  have been  signed by or on behalf of the
Trustee.

          (f) Each  Guarantee is secured by a first priority  security  interest
(subject to Permitted Liens) in the Collateral.

SECTION 11.2.  GUARANTEE UNCONDITIONAL, ETC.

          Upon  failure of payment  when due of any  Guaranteed  Obligation  for
whatever reason,  each Guarantor will be obligated to pay the same  immediately.
Each Guarantor hereby agrees that its obligations hereunder shall be continuing,
absolute  and  unconditional,  irrespective  of: the  recovery  of any  judgment
against  the  Company or any  Guarantor;  any  extension,  renewal,  settlement,
compromise,  waiver or release in respect of any obligation of the Company under
this Indenture or any Note, by operation of law or otherwise;  any  modification
or amendment of or supplement to this  Indenture or any Note;  any change in the
corporate  existence,  structure or ownership of the Company, or any insolvency,
bankruptcy,  reorganization or other similar proceeding affecting the Company or
its  assets or any  resulting  release or  discharge  of any  obligation  of the
Company  contained in this  Indenture or any Note;  the  existence of any claim,
set-off or other  rights  which any  Guarantor  may have at any time against the
Company,  the Trustee,  any Holder or any other  Person,  whether in  connection
herewith or any  unrelated  transactions;  PROVIDED,  that nothing  herein shall
prevent  the  assertion  of any  such  claim  by  separate  suit  or  compulsory
counterclaim;  any  invalidity  or  unenforceability  relating to or against the
Company  for any  reason of this  Indenture  or any Note,  or any  provision  of
applicable  law or regulation  purporting to prohibit the payment by the Company
of the  principal,  premium,  if any,  or  interest  on any  Note  or any  other
Guaranteed Obligation;  or any other act or omission to act or delay of any kind
by the  Company,  the  Trustee,  any  Holder  or any  other  Person or any other
circumstance  whatsoever  which might,  but for the  provisions  of this Section
11.2,  constitute a legal or equitable discharge of the Guarantors'  obligations
hereunder.  Subject to Section 11.5,  each  Guarantor  hereby waives  diligence,
presentment,  demand of  payment,  filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company,  protest,  notice and all demand  whatsoever  and covenants
that this Guarantee will not be discharged except by the complete performance of
the obligations  contained in the Notes,  this Indenture and in this Article 11.
Each  Guarantor's  obligations  hereunder  shall remain in full force and effect
until the Indenture  shall have  terminated and the principal of and interest on
the Notes and all other Guaranteed  Obligations shall have been paid in full. If
at any time any payment of the principal of or interest on any Note or any other
payment  in  respect  of any  Guaranteed  Obligation  is  rescinded  or  must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, each Guarantor's obligations hereunder with respect
to such payment  shall be reinstated as though such payment had been due but not
made at such time,  and this  Article  11, to the extent  therefore  discharged,
shall be reinstated in full force and effect. Each Guarantor  irrevocably waives
any  and  all  rights  to  which  it may be  entitled,  by  operation  of law or
otherwise,  upon making any payment  hereunder to be subrogated to the rights of
the payee  against the Company  with  respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Company in respect thereof.


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<PAGE>

SECTION 11.3.  LIMITATION OF GUARANTOR'S LIABILITY.

          Each  Guarantor  and by  its  acceptance  hereof  each  Holder  hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor  pursuant to its  Guarantee  not  constitute a fraudulent  transfer or
conveyance  for purposes of the  Bankruptcy  Law,  federal,  state or provincial
fraudulent  conveyance  laws  or  other  legal  principles.  To  effectuate  the
foregoing  intention,  the Holders and each Guarantor hereby  irrevocably  agree
that the  obligations of each Guarantor  under its Guarantee shall be limited to
the maximum amount which,  after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments  made  by or on  behalf  of  any  other  Guarantor  in  respect  of the
obligations of such other Guarantor under its Guarantee of the Notes or pursuant
to Section 11.4 hereof,  will result in the  obligations of such Guarantor under
its Guarantee not  constituting  such  fraudulent  transfer or conveyance  under
applicable law.

SECTION 11.4.  CONTRIBUTION.

          In order to  provide  for just and  equitable  contribution  among the
Guarantors,  the  Guarantors  agree,  INTER SE, that in the event any payment or
distribution  is  made  by any  Guarantor  (a  "Funding  Guarantor")  under  its
Guarantee,  such Funding  Guarantor shall be entitled to a contribution from all
other  Guarantors  in a PRO RATA amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor), determined in accordance with GAAP,
for all  payments,  damages and expenses  incurred by that Funding  Guarantor in
discharging  the  Company's  obligations  with respect to the Notes or any other
Guarantor's obligations with respect to the Guarantee.

SECTION 11.5.  RELEASE.

          Upon the  sale or  disposition  of all of the  Equity  Interests  of a
Guarantor to an entity which is not the Company or a  Restricted  Subsidiary  of
the  Company,  which is  otherwise  in  compliance  with  this  Indenture,  such
Guarantor shall be deemed released from all its obligations under this Indenture
without  any further  action  required on the part of the Trustee or any Holder;
PROVIDED,  HOWEVER,  that any such  termination  shall  occur if and only to the
extent that all  Obligations of such  Guarantor  under all of its guarantees of,
and under all of its pledges of assets which secure, Indebtedness of the Company
and the  other  Guarantors  shall  also  terminate  upon such  release,  sale or
transfer;  PROVIDED further,  that without limiting the foregoing,  any proceeds
received by the Company or any  Restricted  Subsidiary  of the Company from such
transaction  shall be applied as provided  in Section  4.10.  The Trustee  shall
deliver an  appropriate  instrument  evidencing  such  release upon receipt of a
request by the Company accompanied by an Officers' Certificate  certifying as to
the compliance  with this Section 11.5. Any Guarantor not released in accordance
with the first sentence of this Section 11.5, remains liable for the full amount
of  principal,  premium,  if any,  and interest on the Notes as provided in this
Article 11.

SECTION 11.6.  ADDITIONAL GUARANTORS.

          Any Person that was not a Guarantor on the Effective Date may become a
Guarantor  by  executing  and  delivering  to  the  Trustee  (a) a  supplemental
indenture in form and substance satisfactory to the Trustee, which subjects such
Person to the provisions (including, without limitation, the representations and
warranties  in this Article 11 and Article 10) of this  Indenture as a Guarantor
and (b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly  authorized  and  executed by such Person and  constitutes  the legal,
valid,  binding  and  enforceable  obligation  of such  Person  (subject to such
customary  exceptions  concerning  creditors' rights and equitable principles as
may be  acceptable  to the Trustee in its  discretion).  The  Guarantee  of each
Person described in this Section 11.6 shall apply to all Notes whether executed,
authenticated  and delivered on, before or after the date such Person  becomes a
Guarantor.

SECTION 11.7.  GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.


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<PAGE>

          Nothing  contained  in this  Indenture  or in any of the  Notes  shall
prevent any  consolidation  or merger of a Guarantor with or into the Company or
another  Guarantor or shall  prevent any sale or conveyance of the property of a
Guarantor  as an entirety or  substantially  as an  entirety,  to the Company or
another Guarantor. Upon any such consolidation,  merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.

SECTION 11.8.  SUCCESSORS AND ASSIGNS.

          This  Article  11  shall  be  binding  upon  each  Guarantor  and  its
successors  and assigns and shall  inure to the  benefit of the  successors  and
assigns of the Trustee and the Noteholders  and, in the event of any transfer or
assignment  of rights by any Holder or the  Trustee,  the rights and  privileges
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.

SECTION 11.9.  WAIVER OF STAY, EXTENSION OR USURY LAWS.

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

                                   ARTICLE 12
                                  MISCELLANEOUS

SECTION 12.1.  TRUST INDENTURE ACT CONTROLS.

          If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such TIA-imposed duties will control.

SECTION 12.2.  NOTICES.

          Any  notice or  communication  by the  Company or a  Guarantor  or the
Trustee  to the other is duly  given if in writing  and  delivered  in Person or
mailed by first class mail (registered or certified,  return receipt requested),
telecopier  or overnight  air courier  guaranteeing  next day  delivery,  to the
other's address:

          If to the Company or a Guarantor:

              ITSA-Intercontinental Telecomunicacoes Ltda.
              SCS, Quadra 07-B1.A
              Ed. Executive Tower
              Sala 601
              70.300.911 Brasilia-DF Brazil
              Phone No.: 011-55-61-314-9908
              Telecopier No.: 011-55-61-323-5660
              Attention: Hermano Studart Lins de Albuquerque

              With a copy to:

              Kelley Drye & Warren LLP


                                       63
<PAGE>

              Two Stamford Plaza
              281 Tresser Boulevard
              Stamford, CT 06901-3229
              Phone No.:  (203) 324-1400
              Telecopier No.: (203) 964-3188
              Attention: John T. Capetta, Esq.

          If to the Trustee:

              The Bank of New York
              101 Barclay Street, Floor 21 West
              New York, NY 10286
              Phone No.:  (212) 815-5919
              Telecopier No.:  (212) 815-5595
              Attention: Luis Perez

              With a copy to:

              Emmet, Marvin & Martin, LLP
              120 Broadway
              New York, New York 10271-3291
              Phone No.: (212) 238-3000
              Telecopier No.: (212) 238-3100
              Attention: Edward P. Zujkowski, Esq.
                         Bryant K. Berg, Esq.

          The  Company or the  Trustee,  by notice to the other,  may  designate
additional or different addresses for subsequent notices or communications.

          All notices and communications (other than those sent to Holders) will
be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; ten Business Days after being deposited in the mail, postage prepaid,
if mailed; when receipt acknowledged,  if telecopied;  and the next Business Day
after  timely  delivery  to the  courier,  if  sent  by  overnight  air  courier
guaranteeing  next  day  delivery,  in each  case to the  address  shown  above.
Notwithstanding  the  foregoing,  notices to the Trustee  will only be effective
upon actual receipt  thereof by the Trustee at the Corporate Trust Office of the
Trustee.

          Any notice or  communication to a Holder will be mailed by first class
mail,  certified or registered,  return receipt  requested,  or by overnight air
courier guaranteeing next day delivery to its address shown on the Register. Any
notice or  communication  will also be so mailed to any Person  described in TIA
Section 313(c),  to the extent required by the TIA.  Failure to mail a notice or
communication  to a Holder or any defect in it will not  affect its  sufficiency
with respect to other Holders.

          If a notice or  communication  is mailed in the manner  provided above
within the time  prescribed,  it is duly  given,  whether  or not the  addressee
receives it.

          If the Company  mails a notice or  communication  to Holders,  it will
mail a copy to the Trustee and each Agent at the same time.

SECTION 12.3.  COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.

          Holders may  communicate  pursuant  to TIA  Section  312(b) with other
Holders  with respect to their  rights  under this  Indenture or the Notes.  The
Company,  the Trustee, the Registrar and anyone else will have the protection of
TIA Section 312(c).


                                       64
<PAGE>

SECTION 12.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

          Upon any request or  application by the Company to the Trustee to take
any action under this Indenture, the Company will furnish to the Trustee:

          (a)  an  Officers'   Certificate  in  form  and  substance  reasonably
satisfactory  to the Trustee  (which will  include the  statements  set forth in
Section 12.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants,  if any, provided for in this Indenture relating to the
proposed action have been satisfied; and

          (b)  an  Opinion  of   Counsel  in  form  and   substance   reasonably
satisfactory  to the Trustee  (which will  include the  statements  set forth in
Section 12.5 hereof)  stating  that,  in the opinion of such  counsel,  all such
conditions precedent and covenants have been satisfied.

SECTION 12.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

          Each  certificate  or  opinion  with  respect  to  compliance  with  a
condition or covenant  provided for in this Indenture  (other than a certificate
provided  pursuant to TIA Section 314(a) (4)) will comply with the provisions of
TIA Section 314(e) and will include:

          (a) a statement that the Person making such certificate or opinion has
read such covenant or condition;

          (b) a brief statement as to the nature and scope of the examination or
investigation   upon  which  the  statements  or  opinions   contained  in  such
certificate or opinion are based;

          (c) a statement  that,  in the opinion of such  Person,  he or she has
made such  examination or  investigation as is necessary to enable him or her to
express an informed  opinion as to whether or not such covenant or condition has
been satisfied; and

          (d) a statement  as to whether or not, in the opinion of such  Person,
such condition or covenant has been satisfied.

SECTION 12.6.  RULES BY TRUSTEE AND AGENTS.

          The Trustee may make reasonable rules for action by or at a meeting of
Holders.  The  Registrar  or  Paying  Agent  may make  reasonable  rules and set
reasonable requirements for its functions.

SECTION 12.7.   NO  PERSONAL  LIABILITY  OF  DIRECTORS , OFFICERS, EMPLOYEES AND
                OTHERS.

          No past, present or future director, officer, employee,  incorporator,
partner or stockholder of either of the Company or any of its  Subsidiaries,  as
such,  will  have  any  liability  for any  obligations  of the  Company  or its
Subsidiaries  under the Notes,  the Security  Documents,  the Guarantees or this
Indenture  or for any  claim  based  on,  in  respect  of or by  reason  of such
obligations or their creation.  Each Holder of a Note by accepting a Note waives
and  releases  all  such  liability.  The  waiver  and  release  are part of the
consideration for issuance of the Notes and the Guarantees.

SECTION 12.8.  GOVERNING LAW.

          THE  INTERNAL  LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.

SECTION 12.9.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.


                                       65
<PAGE>

          This Indenture may not be used to interpret any other indenture,  loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such  indenture,  loan or debt  agreement  may  not be  used to  interpret  this
Indenture.

SECTION 12.10.  SUCCESSORS.

          This  Indenture  will inure to the benefit of and be binding  upon the
parties hereto and each of their respective successors and assigns,  except that
the Company may not assign this Indenture or its obligations hereunder except as
expressly  permitted by Sections 5.1 and 5.2. Without limiting the generality of
the foregoing, this Indenture will inure to the benefit of all Holders from time
to time.  Nothing  expressed or mentioned in this Indenture is intended or shall
be construed to give any Person, other than the parties hereto, their respective
successors and assigns, and the Holders, any legal or equitable right, remedy or
claim under or in respect of this Indenture or any provision herein contained.

SECTION 12.11.  SEVERABILITY.

          In case any  provision  in this  Indenture  or in the  Notes  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 12.12.  ORIGINALS.

          The  parties  may sign any  number of copies of this  Indenture.  Each
signed copy will be an original,  but all of them  together  represent  the same
agreement.

SECTION 12.13.  TABLE OF CONTENTS, HEADINGS, ETC.

          The  Table of  Contents,  Cross-Reference  Table and  Headings  of the
Articles and Sections of this  Indenture  have been inserted for  convenience of
reference only, are not to be considered a part of this Indenture and will in no
way modify or restrict any of the terms or provisions hereof.

SECTION 12.14.  COUNTERPARTS.

          This  Indenture  may be signed in  counterparts  and by the  different
parties  hereto in  separate  counterparts,  each of which  will  constitute  an
original and all of which together will constitute one  and the same instrument.

SECTION 12.15.  AGENT  FOR  SERVICE;  SUBMISSION  TO  JURISDICTION;  WAIVER  OF
                IMMUNITIES.


                                       66
<PAGE>


          By the  execution  and delivery of this  Indenture or any amendment or
supplement hereto,  each of the Company and the Guarantors (i) acknowledges that
it has, by separate  written  instrument,  designated and appointed  Corporation
Service  Company  currently  located at Two World Trade Center,  Suite 8746, New
York, New York  10048-0203,  as its  authorized  agent upon which process may be
served in any suit,  action or  proceeding  with respect to,  arising out of, or
relating to, the Notes, this Indenture (other than an insolvency, liquidation or
bankruptcy  proceeding  or any other  proceeding  in the  nature of an in rem or
quasi in rem  proceeding),  that may be instituted in any Federal or state court
in the State of New York,  The City of New York,  the Borough of  Manhattan,  or
brought  under  Federal  or state  securities  laws or  brought  by the  Trustee
(whether in its  individual  capacity or in its capacity as Trustee  hereunder),
and acknowledges that Corporation Service Company has accepted such designation,
(ii) submits to the  jurisdiction of any such court in any such suit,  action or
proceeding,  and (iii) agrees that service of process upon  Corporation  Service
Company shall be deemed in every respect  effective  service of process upon the
Company in any such suit,  action or  proceeding.  Each of the  Company and each
Guarantor further agrees to take any and all action, including the execution and
filing of any and all such  documents  and  instruments  as may be  necessary to
continue such designation and appointment of Corporation Service Company in full
force and effect so long as this  Indenture  shall be in full force and  effect;
PROVIDED  that the  Company  and each  Guarantor  may and shall  (to the  extent
Corporation  Service  Company  ceases  to be  able  to be  served  on the  basis
contemplated  herein),  by  written  notice  to  the  Trustee,   designate  such
additional or alternative agents for service of process under this Section 12.15
that (i) maintains an office  located in the Borough of  Manhattan,  The City of
New York in the State of New York,  (ii) are either (a)  counsel for the Company
or the Guarantor,  as the case may be, or (b) a corporate  service company which
acts as agent for service of process for other persons in the ordinary course of
its  business  and (iii)  agrees  to act as agent  for  service  of  process  in
accordance with this Section 12.15.  Such notice shall identify the name of such
agent for  process  and the  address of such agent for process in the Borough of
Manhattan,  The City of New York,  State of New York.  Upon the  request  of any
Holder of a Note,  the Trustee  shall deliver such  information  to such Holder.
Notwithstanding the foregoing,  there shall, at all times, be at least one agent
for service of process for the Company and each  Guarantor  appointed and acting
in accordance with this Section 12.15.

          To the extent that the Company or any  Guarantor  has or hereafter may
acquire any immunity  from  jurisdiction  of any court or from any legal process
(whether through service of notice, attachment prior to judgment,  attachment in
aid of  execution,  execution  or  otherwise)  with  respect  to  itself  or its
property,  the Company or the Guarantor,  as the case may be, hereby irrevocably
waives such immunity in respect of its obligations  under this Indenture and the
Notes, to the extent permitted by law.

SECTION 12.16.   CURRENCY OF ACCOUNT; CONVERSION  OF  CURRENCY; FOREIGN EXCHANGE
                 RESTRICTIONS.

          (a) U.S.  dollars are the sole currency of account and payment for all
sums  payable  by the  Company  under or in  connection  with the  Notes or this
Indenture,  including  damages.  Any amount  received or recovered in a currency
other than U.S.  dollars  (whether as a result of, or of the  enforcement  of, a
judgment  or  order  of a  court  of  any  jurisdiction,  in the  winding-up  or
dissolution  of the Company or  otherwise) by any Holder of a Note in respect of
any sum  expressed  to be due to it from the  Company  will  only  constitute  a
discharge  to the  Company to the  extent of the U.S.  dollar  amount  which the
recipient  is able to purchase  with the amount so received or recovered in that
other  currency  on the  date of that  receipt  or  recovery  (or,  if it is not
practicable to make that purchase on that date, on the first date on which it is
practicable to do so). If that U.S.  dollar amount is less than the U.S.  dollar
amount  expressed to be due to the  recipient  under any Note,  the Company will
indemnify  it  against  any loss  sustained  by it as a result  as set  forth in
Section 12.16(b). In any event, the Company will indemnify the recipient against
the cost of making any such purchase. For the purposes of this Section 12.16, it
will be sufficient for the Holder of a Note to certify in a satisfactory  manner
(indicating  sources of information used) that it would have suffered a loss had
an actual purchase of U.S. dollars been made with the amount so received in that
other  currency  on the date of receipt or  recovery  (or, if a purchase of U.S.
dollars  on such date had not been  practicable,  on the first  date on which it
would have been  practicable,  it being  required  that the need for a change of
date be certified in the manner mentioned  above).  The indemnities set forth in
this Section 12.16 constitute a separate and independent cause of action,  shall
apply  irrespective of any indulgence  granted by any Holder of a Note and shall
continue in full force and effect despite any other  judgment,  order,  claim or
proof for a liquidated amount in respect of any sum due under any Note.


                                       67
<PAGE>

          (b) The Company  covenants  and agrees that the  following  provisions
shall  apply  to  conversion  of  currency  in the  case of the  Notes  and this
Indenture:

               (i) If for the purpose of obtaining judgment in, or enforcing the
          judgment of, any court in any country, it becomes necessary to convert
          into a currency (the  "judgment  currency") an amount due in any other
          currency (the "Base  Currency"),  then the conversion shall be made at
          the rate of exchange  (as defined in clause (v) below)  prevailing  on
          the  Business Day before the day on which the judgment is given or the
          order of enforcement is made, as the case may be (unless a court shall
          otherwise determine).

               (ii) If  there is a change  in the  rate of  exchange  prevailing
          between the Business Day before the day on which the judgment is given
          or an order of  enforcement is made, as the case may be (or such other
          date as a court  shall  determine),  and the  date of  receipt  of the
          amount due, the Company will pay such  additional (or, as the case may
          be,  such  lesser)  amount,  if any, as may be  necessary  so that the
          amount paid in the  judgment  currency  when  converted at the rate of
          exchange  prevailing on the date of receipt will produce the amount in
          the Base Currency originally due.

               (iii) In the event of the  winding-up  of the Company at any time
          while any amount or damages owing under the Notes and this  Indenture,
          or any  judgment or order  rendered in respect  thereof,  shall remain
          outstanding,  the Company will  indemnify  and hold the Holders of the
          Notes and the  Trustee  harmless  against  any  deficiency  arising or
          resulting from any variation in rates of exchange between (1) the date
          as  of  which  the  U.S.  Dollar  Equivalent  of  the  amount  due  or
          contingently  due under the Notes and this Indenture (other than under
          this  subsection  (b) (iii) is  calculated  for the  purposes  of such
          winding-up and (2) the final date for the filing of proofs of claim in
          such  winding-up.  For the purpose of this  subsection (b) (iii),  the
          final date for the filing of proofs of claim in the  winding-up of the
          Company  will be the date  fixed by the  liquidator  or  otherwise  in
          accordance with the relevant provisions of applicable law as being the
          latest  practicable date as at which liabilities of the Company may be
          ascertained for such winding-up  prior to payment by the liquidator or
          otherwise in respect thereof.

               (iv) The obligations  contained in subsections  (a), (b) (ii) and
          (b)  (iii)  of  this  Section  12.16  shall  constitute  separate  and
          independent  obligations  from the other Indenture  obligations of the
          Company,  shall give rise to separate and independent causes of action
          against  the  Company,  shall  apply  irrespective  of any  waiver  or
          extension  granted by any Holder of a Note or the Trustee or either of
          them from time to time and shall  continue  in full  force and  effect
          notwithstanding  any  judgment  or order or the filing of any proof of
          claim in the winding-up of the Company for a liquidated sum in respect
          of amounts due hereunder (other than under subsection (b) (iii) above)
          or under any such judgment or order.  Any such deficiency as aforesaid
          shall be deemed to  constitute  a loss  suffered by the Holders of the
          Note or the  Trustee,  as the case may be, and no proof or evidence of
          any actual loss shall be required by the Company or the  liquidator or
          otherwise or any of them. In the case of  subsection  (b) (iii) above,
          the amount of such deficiency shall not be deemed to be reduced by any
          variation in rates of exchange  occurring  between the said final date
          and the date of any liquidating distribution.

               (v)The term "rate(s) of exchange" shall mean the rate of exchange
          quoted  by  Reuters  at 10:00  a.m.  (New  York  City  time)  for spot
          purchases of the Base Currency with the judgment  currency  other than
          the Base  Currency  referred  to in  subsections  (b) (i) and (b) (ii)
          above and includes any premiums and costs of exchange payable.

          (c) In the event that on any payment date in respect of the Notes, any
restrictions or prohibition of access to the Brazilian  foreign  exchange market
exists,  the Company  agrees to pay all amounts  payable  under the Notes in the
currency  of  the  Notes  by all  reasonable  means  (which  shall  not  include
commencement  of legal  proceedings  against the  Central  Bank of Brazil or any
other  governmental  agency or authority or central  bank),  on any due date for
payment  under the Notes,  for the purchase of the  currency of such Notes.  All
costs and taxes payable in connection  with the  procedures  referred to in this
Section 12.16 shall be borne by the Company.


                                       68
<PAGE>





                                       69
<PAGE>


IN WITNESS  WHEREOF,  the parties  hereto have executed this Indenture this July
20, 2000.


                                   ITSA-INTERCONTINENTAL TELECOMUNICACOES
                                   LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                      ------------------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:

                                   TV    FILME    BRASILIA  SERVICOS   DE
                                   TELECOMUNICACOE  LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                       -----------------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:

                                   TV    FILME   GOIANIA   SERVICOS   DE
                                   TELECOMUNICACOES LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                     -------------------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:
                                   TV    FILME    BELEM    SERVICOS    DE
                                   TELECOMUNICACOES LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                     -----------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:
                           * Signature notarized by Brazilian notary as follows:
                                ___________________________________________
                               |        2ND OFICIO DE NOTAS E PROTESTO     |
                               |   SRTV/SUL DD.701 BL.01 LOJA 24 - TERREO  |
                               |    ED.ASSIS CHATEAUERIAND - BRASILIA-DF   |
                               |        CGC/MF 00.618.421/0001-80          |
                               |        -------------------------          |
                               |  RECONHECO e dou fe'por AUTENTICIDADE a/s |
                               |  firma(s)  de:                            |
                               |  0045264-HERMANO STUDART LINS DE..........|
                               |          ALBUQUERQUE......................|
                               |                                           |
                               |      Em testamento________da verdade.     |
                               |       BRASILIA, 29 de Junho de 2000       |
                               |                                           |
                               |  GOIANIO BORGES TEIXEIRA -    TABELIAO    |
                               |  ENOQUES ALVES GOUVEIA   - ESC. NOT. AUT. |
                               |  RITA OLIDES B.P. PAES   - ESC. NOT. AUT. |
                               |  GUILHERMANDO H. DA SILVA- ESC. NOT. AUT. |
                               |___________________________________________|

<PAGE>

                                   TV FILME SISTEMAS LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                      -----------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:

                                   TV FILME OPERACOES LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                      -----------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:


Name:

                                   LINK      EXPRESS      SERVICOS     DE
                                   TELECOMUNICACOES LTDA.

                                   By: /s/ Hermano Studart Lins de Albuquerque *
                                      -----------------------------------
                                       Name: Hermano Studart Lins de Albuquerque
                                       Title: Chief Executive Officer

WITNESSES:


Name:
                           * Signature notarized by Brazilian notary as follows:
                                ___________________________________________
                               |        2ND OFICIO DE NOTAS E PROTESTO     |
                               |   SRTV/SUL QD.701 BL.01 LOJA 24 - TERREO  |
                               |    ED.ASSIS CHATEAUERIAND - BRASILIA-DF   |
                               |        CGC/MF 00.618.421/0001-80          |
                               |        -------------------------          |
                               |  RECONHECO e dou fe'por AUTENTICIDADE a/s |
                               |  firma(s)  de:                            |
                               |  0045264-HERMANO STUDART LINS DE..........|
                               |          ALBUQUERQUE......................|
                               |                                           |
                               |      Em testamento________da verdade.     |
                               |       BRASILIA, 29 de Junho de 2000       |
                               |                                           |
                               |  GOIANIO BORGES TEIXEIRA -    TABELIAO    |
                               |  ENOQUES ALVES GOUVEIA   - ESC. NOT. AUT. |
                               |  RITA OLIDES B.P. PAES   - ESC. NOT. AUT. |
                               |  GUILHERMANDO H. DA SILVA- ESC. NOT. AUT. |
                               |___________________________________________|

<PAGE>


Name:

                                   THE BANK OF NEW YORK, as trustee

                                   By: /s/ Carlos J. Capellan
                                      -----------------------------------
                                       Name: Carlos J. Capellan
                                       Title: Assistant Treasurer





<PAGE>

STATE OF NEW YORK        )
                              :  ss.
COUNTY OF NEW YORK       )

          On this 10 day of July,  2000,  before me, a notary  public within and
for said county,  personally appeared Carlos J. Capellan, to me personally known
who being duly sworn, did say that he was the Assistant Treasurer of The Bank of
New York,  one of the persons  described  in and which  executed  the  foregoing
instrument, and acknowledges said instrument to be the free act and deed of said
corporation.


Notary Public


[NOTARIAL SEAL]
                                _____________________________________
                               |  William J. Cassels                 |
                               |  Notary Public, State of New York   |
                               |  No. 01CA5027729                    |
                               |  Qualified in Bronx County          |
                               |                                     |
                               |  Commission Expires May 16, 2002    |
                               |_____________________________________|






<PAGE>

                                                                         ANNEX I

                              EXISTING INDEBTEDNESS

None.


<PAGE>

                                                                        ANNEX II

                                   GUARANTORS



TV Filme Brasilia Servicos de Telecomunicacoes Ltda.

TV Filme Goiania Servicos de Telecomunicacoes Ltda.

TV Filme Belem Servicos de Telecomunicacoes Ltda.

TV Filme Sistemas Ltda.

TV Filme Operacoes Ltda.

Link Express Servicos de Telecomunicacoes Ltda.



<PAGE>

                                                                       EXHIBIT A


                                 (Face of Note)

          [IF GLOBAL  NOTE:]  THIS IS A GLOBAL  NOTE  WITHIN THE  MEANING OF THE
INDENTURE  HEREINAFTER REFERRED TO. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN  PART  FOR  SECURITIES  IN  CERTIFICATED  FORM,  THIS  SECURITY  MAY  NOT  BE
TRANSFERRED  EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY,
OR BY ANY SUCH  NOMINEE OF THE  DEPOSITORY  TO A  SUCCESSOR  NOMINEE,  OR BY THE
DEPOSITORY  OR  NOMINEE  TO A  SUCCESSOR  DEPOSITORY  OR TO A  NOMINEE  OF  SUCH
SUCCESSOR  DEPOSITORY.  UNLESS THIS  CERTIFICATE  IS PRESENTED BY AN  AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),
TO THE COMPANY OR ITS AGENT FOR  REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT
HEREON  IS MADE TO CEDE & CO. OR TO SUCH  OTHER  ENTITY  AS IS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART,  TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR  THEREOF OR SUCH  SUCCESSOR'S
NOMINEE. TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS
MADE IN  ACCORDANCE  WITH  THE  INSTRUCTIONS  SET  FORTH IN  SECTION  2.6 OF THE
INDENTURE.


          [IF  CERTIFICATED  NOTE:] THIS IS A SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO.

TRANSFERS OF THIS  SECURITY OR PORTIONS OF THIS SECURITY TO GLOBAL FORM SHALL BE
LIMITED TO  TRANSFERS  MADE IN  ACCORDANCE  WITH THE  INSTRUCTIONS  SET FORTH IN
SECTION 2.6 OF THE INDENTURE.



                                      A-1
<PAGE>


                  ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.

                        12% Senior Secured Notes due 2004

No.  __________                                                    US$__________
                                                         [CUSIP No. __________]1
                                                         [CUSIP No. __________]2


ITSA-Intercontinental  Telecomunicacoes  Ltda.,  a Brazilian  limited  liability
company (the  "Company")  promises to pay to  ______________________________  or
registered  assigns,  the principal sum of  ________________________  Dollars on
December 20, 2004

Interest  Payment  Dates:  June 20 and December 20 of each year,  commencing  on
December 20, 2000.

Record Dates: June 1 and December 1.

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

                                        Dated: __________, 2000

                                        ITSA-INTERCONTINENTAL   TELECOMUNICACOES
                                        LTDA.


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



________________
*    CUSIP NO. for the Global Note.

**   CUSIP NO. for the Certificated Notes










                                      A-2
<PAGE>


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

THE BANK OF NEW YORK,
  as Trustee


By:_______________________________
         Authorized Signatory

Dated:____________________________













                                      A-3
<PAGE>


                                 (Back of Note)

                        12% Senior Secured Notes due 2004

          Capitalized  terms used herein but not defined  will have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.

          1. INTEREST.

          On any of the first four Interest  Payment Dates  occurring  after the
date of the  Indenture,  interest  on the  Notes  shall,  at the  option  of the
Company,  be paid in kind  instead of in cash.  Upon such an event,  the Company
will issue to Holders of the Notes on any such Interest  Payment  Date,  and the
Trustee will  authenticate,  an additional Note substantially in the form hereof
registered in the name of such Holder and having a principal amount equal to the
amount of  interest  paid in kind on all of the  outstanding  Notes held by such
Holder on such  Interest  Payment  Date.  The Notes will mature on December  20,
2004. The Company  promises to pay interest on the principal amount of this Note
from  December  20,  1999  until   maturity.   The  Company  will  pay  interest
semi-annually on June 20 and December 20 of each year,  commencing  December 20,
2000, or if any such day is not a Business Day, on the next succeeding  Business
Day (each an "Interest Payment Date").  Interest on the Notes will accrue at the
rate of 12% per annum from the most recent date to which  interest has been paid
or, if no interest has been paid,  from December 20, 1999.  The Company will pay
interest  (including   post-petition   interest  in  any  proceeding  under  any
Bankruptcy Law to the extent that such interest is an allowed claim  enforceable
against the debtor under such Bankruptcy Law) on overdue  principal and premium,
if any,  from time to time on demand at the rate equal to 1% per annum in excess
of the then applicable  interest rate on this Note to the extent lawful; it will
pay  interest  (including  post-petition  interest in any  proceeding  under any
Bankruptcy  Law to the extent that such interest is an allowed claim against the
debtor under such Bankruptcy Law) on overdue  installments of interest  (without
regard to any applicable  grace periods) from time to time on demand at the same
rate to the extent  lawful.  Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.

          2. METHOD OF PAYMENT.

          The Company will pay the principal  of, and premium,  and interest on,
the Notes on the dates and in the manner  provided  herein and in the Indenture.
Principal, premium, if any, and interest on, Certificated Notes will be payable,
and  Certificated  Notes  may be  presented  for  registration  of  transfer  or
exchange,  at the office or agency of the Company  maintained  for such purpose.
Principal  of, and premium and interest on,  Global Notes will be payable by the
Company  through the Trustee to the Depository in immediately  available  funds.
Holders of Certificated  Notes will be entitled to receive interest  payments by
wire  transfer in  immediately  available  funds if  appropriate  wire  transfer
instructions  have been  received  in  writing by the  Trustee  not less than 15
calendar  days  prior  to  the  applicable  Interest  Payment  Date.  Such  wire
instructions,  upon receipt by the Trustee,  will remain in effect until revoked
by such Holder.  If wire instructions have not been received by the Trustee with
respect to any Holder of a Certificated Note, payment of interest may be made by
check in  immediately  available  funds mailed to such Holder at the address set
forth upon the Register maintained by the Registrar.

          3. PAYING AGENT AND REGISTRAR.

          Initially,  Deutsche  Trust Bank Limited will act as principal  Paying
Agent,  and The Bank of New York, the Trustee under the  Indenture,  will act as
Registrar.  The Company may change any Paying Agent or  Registrar in  accordance
with  the  terms  of the  Paying  Agent  Agreement.  The  Company  or any of its
Subsidiaries may act in any such capacity,  PROVIDED,  HOWEVER, that none of the
Company,  its  Subsidiaries  or the  Affiliates of the foregoing will act (i) as
Paying Agent in connection with any redemption,  offer to purchase, discharge or
defeasance, as otherwise specified in the Indenture, and (ii) as Paying Agent or
Registrar if a Default or Event of Default has occurred and is continuing.

          4. INDENTURE.


                                      A-4
<PAGE>

          The Company  issued the Notes under an Indenture  dated as of July 20,
2000 (as such may be amended,  supplemented  or restated from time to time,  the
"Indenture") between the Company and the Trustee. The terms of the Notes include
those stated in the  Indenture and those made part of the Indenture by reference
to the  Trust  Indenture  Act  of  1939,  as  amended  (15  U.S.  Code  Sections
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the  Indenture  and such Act for a  statement  of such  terms.  The Notes are
senior  obligations  of the Company  ranking PARI PASSU in right of payment with
all existing and future senior Indebtedness of the Company and ranking senior in
right of payment to any future subordinated Indebtedness of the Company.

          5. OPTIONAL REDEMPTION.

          The Notes will be subject to  redemption at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption  prices  (expressed  as  percentages  of principal  amount) set forth
below,  plus  accrued  and unpaid  interest  if any,  thereon to the  applicable
redemption  date,  if  redeemed  during the twelve  month  period  beginning  on
December 20 of the years indicated below:

                         Year                                 Percentage
                        ------                               ------------

                         2000                                 106.4375%

                         2001                                 104.2917%

                         2002                                 102.1458%

                         2003 and thereafter                  100.0000%

          6. MANDATORY REDEMPTION.

          Except as set forth in  paragraph  7 below,  the  Company  will not be
required to make  mandatory  redemption or sinking fund payments with respect to
the Notes.

          7. REPURCHASE AT OPTION OF HOLDER.

          (a) Upon a Change of Control,  the Company will be required to make an
offer to Holders to repurchase all or any part (equal to US$1,000 or an integral
multiple thereof) of each Holder's Notes at an offer price in cash equal to 101%
of the aggregate  principal  amount  thereof,  plus accrued and unpaid  interest
thereon to the date of  repurchase  as provided in, and subject to the terms of,
the Indenture.

          (b) If the Company or any Restricted Subsidiary  consummates any Asset
Sale,  the Company may be required,  subject to the terms and  conditions of the
Indenture, to utilize a certain portion of the proceeds received from such Asset
Sale to repurchase  Notes at a purchase  price equal to Net Proceeds Offer Price
on the Net Proceeds Purchase Date.

          8. DENOMINATIONS, TRANSFER, EXCHANGE.

          The Notes are in registered form without coupons in  denominations  of
US$1,000  and  integral  multiples  of  US$1,000.  The  transfer of Notes may be
registered  and  Notes  may be  exchanged  as  provided  in the  Indenture.  The
Registrar and the Trustee may require a Holder,  among other things,  to furnish
appropriate  endorsements  and transfer  documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the  Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for  redemption,  except for the unredeemed  portion of any Note
being  redeemed in part.  Also, it need not exchange or register the transfer of
any Notes for a period of 15 calendar  days  before a  selection  of Notes to be
redeemed  or during the  period  between a record  date and the next  succeeding
Interest Payment Date.


                                      A-5
<PAGE>

          9. PERSONS DEEMED OWNERS.

          The  registered  Holder of a Note may be  treated as its owner for all
purposes.

          10. UNCLAIMED MONEY.

          If money for the payment of  principal,  premium or  interest  remains
unclaimed for one year, the Trustee and the Paying Agent will pay the money back
to the Company at its request. After that, all liability of the Trustee and such
Paying Agent with respect to such money will cease.

          11. DEFEASANCE PRIOR TO REDEMPTION OR MATURITY.

          Subject to certain conditions contained in the Indenture,  the Company
at any time may terminate some or all of its obligations under the Notes and the
Indenture  if  the  Company  deposits  with  the  Trustee  money  or  Government
Securities  sufficient to pay the principal  of,  premium,  and interest on, the
Notes to redemption or maturity, as the case may be.

          12. AMENDMENT, SUPPLEMENT AND WAIVER.

          Subject  to  certain  exceptions,  the  Indenture  or the Notes may be
amended or  supplemented  with the consent of the Holders of at least a majority
in principal amount of the Notes then  outstanding,  and any existing Default or
Event or Default or compliance  with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal  amount
of the then outstanding Notes.  Without the consent of any Holder of a Note, the
Indenture  or the Notes may be amended or  supplemented  to cure any  ambiguity,
defect or inconsistency,  to provide for uncertificated  Notes in addition to or
in place of  Certificated  Notes, to provide for the assumption of the Company's
obligations  to Holders of Notes in case of a merger or  consolidation,  to make
any change that would provide any  additional  rights or benefits to the Holders
of the Notes or that  does not  adversely  affect  the  legal  rights  under the
Indenture of any such Holder,  or to comply with the  requirements of the SEC in
order to effect or maintain the  qualification of the Indenture under the TIA as
then in effect.

          13. DEFAULTS AND REMEDIES.

          An  "Event  of  Default"  occurs if one of the  following  shall  have
occurred and be continuing:

          (a) the  Company  defaults  in the  payment  when due of any  interest
payable with respect to the Notes at any time,  which  default  continues  for a
period of 30 calendar days;

          (b) the Company  defaults in payment  when due of the  principal of or
premium, if any, on the Notes at maturity,  upon repurchase (including,  without
limitation,  pursuant to a Change of Control Offer or an Asset Sale Offer), upon
acceleration, redemption or otherwise;

          (c) the granting by the Company or any  Restricted  Subsidiary  of any
Lien to secure  Indebtedness  in excess of  US$100,000  (other  than a Permitted
Lien);

          (d) the Company fails to comply with the  provisions of Sections 4.10,
4.14, 4.19 or 5.1 of the Indenture;

          (e) the Company  fails to comply with any of its other  agreements  in
this  Indenture or the Notes and such  failure  continues  for 30 calendar  days
after notice from the Trustee or Holders of at least 25% in aggregate  principal
amount of the Notes then outstanding;

          (f) the Company  defaults under any mortgage,  indenture or instrument
under which  there may be issued or by which  there may be secured or  evidenced
any  Indebtedness  for money  borrowed of the  Company or any of its  Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted  Subsidiaries),  whether such Indebtedness or Guarantee now exists or
is created after the Effective Date, which default (i) is caused by a failure to


                                      A-6
<PAGE>

pay principal of or premium, if any, or interest on such Indebtedness  following
the expiration of the grace period provided in such  Indebtedness on the date of
such default (a "Payment  Default") or (ii) results in the  acceleration of such
Indebtedness  prior to its express  maturity  and, in each case,  the  principal
amount of any such Indebtedness, together with the principal amount of any other
such  Indebtedness  under which there has been a Payment Default or the maturity
of which has been so  accelerated,  aggregates  US$5,000,000  (or the equivalent
thereof at time of determination) or more;

          (g) the  Company or any of its  Restricted  Subsidiaries  fails to pay
final  non-appealable  judgments  rendered  against  the  Company  or any of its
Restricted Subsidiaries aggregating in excess of US$2,500,000 (or the equivalent
thereof at time of determination),  which judgments are not paid,  discharged or
stayed for a period of 60 calendar  days after such  judgments  become final and
non-appealable;

          (h) the Company or any Restricted  Subsidiary of the Company  pursuant
to or within the meaning of any  Bankruptcy  Law: (i) commences a voluntary case
or  proceeding,  (ii) consents to the entry of an order for relief against it in
an  involuntary  case or  proceeding,  (iii)  consents to the  appointment  of a
Custodian of it or for all or  substantially  all of its property,  (iv) makes a
general  assignment for the benefit of its creditors,  (v) admits in writing its
inability  to pay its  debts  generally  as they  become  due or (vi)  takes any
comparable action under any foreign laws relating to insolvency;

          (i) a court of competent  jurisdiction enters an order or decree under
any  Bankruptcy  Law  that:  (i)  is  for  relief  against  the  Company  or any
Significant Subsidiary of the Company in an involuntary case or proceeding, (ii)
appoints a Custodian of the Company or any Significant Subsidiary of the Company
or for all or substantially  all of its respective  properties,  or (iii) orders
the liquidation of the Company or any Significant  Subsidiary of the Company, or
any similar relief is granted under any foreign laws, and in each case the order
or decree remains unstayed and in effect for 60 calendar days;

          (j) (a) a default in the  observance or performance of any covenant or
agreement  contained in any Security  Document  which  default  continues for 20
calendar  days after  notice has been given to the Company by the Trustee or the
holders of at least 25% in principal amount of the outstanding Notes, or (b) for
any reason other than the  satisfaction in full and discharge of all obligations
secured  thereby or any action or inaction  of the Trustee or the Holders  after
receiving  notice of the  requirement  to take any such action from the Company,
any of the Security  Documents ceases to be in full force and effect (other than
in  accordance  with its  respective  terms),  or any of the Security  Documents
ceases to give the Trustee the Liens, rights, powers and privileges purported to
be created thereby,  or any Security  Document is declared null and void, or the
Company or any of its  Restricted  Subsidiaries  denies  any of its  obligations
under any  Security  Document,  in each  case with  respect  to  Collateral  the
aggregate value of which is in excess of US$100,000,  or the Collateral  becomes
subject to one or more Liens other than  Permitted  Liens  securing  one or more
obligations in excess of US$100,000 in the aggregate; or

          (k) any  Guarantee  is declared  null and void or ceases to be in full
force and effect  (except as permitted  under this  Indenture)  or any Guarantor
shall deny or disaffirm its obligations under its Guarantee.

          Notwithstanding  the  foregoing,  if an Event of Default  specified in
clause  (f) above  occurs  and is  continuing,  such  Event of  Default  and all
consequences  thereof  (including,   without  limitation,  any  acceleration  or
resulting  payment  default) will be annulled and rescinded,  automatically  and
without  any  action by the  Trustee or the  Holders  of the  Notes,  if (i) the
Indebtedness  that is the subject of such Event of Default has been  repaid,  or
(ii) the default  relating to such  Indebtedness is waived or cured (and if such
Indebtedness has been accelerated, when the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness).

          In the case of any Event of Default occurring by reason of any willful
action (or  inaction)  taken (or not taken) by or on behalf of the Company  with
the intention of avoiding payment of the premium that the Company would have had
to pay if the  Company  then had  elected  to redeem the Notes  pursuant  to the
optional  redemption  provisions of this Indenture,  an equivalent  premium will
also become and be  immediately  due and payable to the extent  permitted by law
upon the acceleration of the Notes.


                                      A-7
<PAGE>

          If any Event of Default  (other than an Event of Default  specified in
clause  (h) or (i) above  occurs  and is  continuing),  then the  Trustee or the
Holders of at least 25% in  principal  amount of the then  outstanding  Notes by
written  notice to the Company and the Trustee may declare the unpaid  principal
of,  and  any  accrued  interest  on,  all  the  Notes  to be  due  and  payable
immediately.  If any Event of Default with  respect to the Company  specified in
clause (h) or (i) hereof  occurs with  respect to the Company,  any  Significant
Subsidiary of the Company or any group of Restricted Subsidiaries of the Company
that, taken together,  would constitute a Significant Subsidiary of the Company,
all outstanding  principal and interest on the Notes will be immediately due and
payable  without any  declaration or other act on the part of the Trustee or any
Holder.  The  Holders  of a  majority  in  principal  amount of the  Notes  then
outstanding, by written notice to the Trustee and to the Company, may rescind an
acceleration  (except  an  acceleration  due  to a  default  in  payment  of the
principal  of, or premium or  interest  on, any of the Notes) if the  rescission
would not conflict  with any  judgment or decree and if all  existing  Events of
Default (except nonpayment of principal,  premium, interest that have become due
solely because of the acceleration) have been cured or waived.

          Subject to the preceding paragraph,  if an Event of Default occurs and
is continuing,  the Trustee may pursue any available remedy by proceeding at law
or in equity to collect any payment  due, or to enforce the  performance  of any
provision,  under the Notes,  this  Indenture  or the  Security  Documents.  The
Trustee  may refuse to enforce  the  Indenture  or the Notes  unless it receives
indemnity or security  reasonably  satisfactory  to it. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture.  Subject
to certain  limitations,  Holders of a majority in principal amount of the Notes
may direct the Trustee in its  exercise  of any trust or power.  The Trustee may
withhold from Holders of the Notes notice of any continuing  Default or Event of
Default  (except  under  clauses  (a)  or  (b)  above)  if  it  determines  that
withholding notice is in their interest.

          14. INDIVIDUAL RIGHTS OF TRUSTEE.

          The Trustee in its  individual  or any other  capacity  may become the
owner or  pledgee  of Notes  and may  otherwise  deal  with the  Company  or any
Affiliate  of the  Company  with the same  rights  it would  have if it were not
Trustee.  However,  in the  event  that the  Trustee  acquires  any  conflicting
interest (as such term is defined in TIA Section 310(b)), it must eliminate such
conflict within 90 calendar days, apply to the SEC for permission to continue as
trustee (to the extent permitted under TIA Section 310(b)) or resign.  Any Agent
may do the same with like rights and duties.

          15. NO  PERSONAL  LIABILITY  OF  DIRECTORS,  OFFICERS,  EMPLOYEES  AND
OTHERS.

          No past, present or future director, officer, employee,  incorporator,
partner or stockholder of either of the Company or any of its  Subsidiaries,  as
such,  will  have  any  liability  for any  obligations  of the  Company  or its
Subsidiaries  under the Notes,  the Security  Documents,  the  Guarantees or the
Indenture  or for any  claim  based  on,  in  respect  of or by  reason  of such
obligations or their creation.  Each Holder of a Note by accepting a Note waives
and  releases  all  such  liability.  The  waiver  and  release  are part of the
consideration for issuance of the Notes and the Guarantees.

          16. AUTHENTICATION.

          This  Note  will  not be  valid  until  authenticated  by  the  manual
signature of the Trustee or an authenticating agent.

          17. ABBREVIATIONS.

          Customary  abbreviations  may be used in the  name of a  Holder  or an
assignee,  such as:  TEN COM (= tenants  in  common),  TEN ENT (= tenants by the
entireties),  JT TEN (= joint  tenants  with  right of  survivorship  and not as
tenants in common),  CUST (= Custodian),  and U/G/M/A (= Uniform Gifts to Minors
Act).

          18. CUSIP NUMBERS.


                                      A-8
<PAGE>

          Pursuant to a  recommendation  promulgated by the Committee on Uniform
Security Identification  Procedures,  the Company has caused CUSIP numbers to be
printed  on the Notes  and the  Trustee  may use CUSIP  numbers  in  notices  of
redemption  as a convenience  to Holders.  No  representation  is made as to the
accuracy of such  numbers  either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

          19. GOVERNING LAW.

          THE  INTERNAL  LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO
CONSTRUE THE INDENTURE AND THE NOTES.

          The  Company  will  furnish to any Holder  upon  written  request  and
without charge a copy of the Indenture. Requests may be made to:

              ITSA-Intercontinental Telecomunicacoes Ltda.
              SCS, Quadra 07-B1.A
              Ed. Executive Tower
              Sala 601
              70.300.911 Brasilia-DF Brazil
              Phone No.: 011-55-61-314-9908
              Telecopier No.: 011-55-61-323-5660
              Attention: Hermano Albuquerque








                                      A-9
<PAGE>


                                Assignment Form

          To assign  this Note,  fill in the form below and have your  signature
guaranteed: (I) or (we) assign and transfer this Note to


--------------------------------------------------------------------------------
                 (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address and zip code)

and irrevocably appoint  _____________________________________  to transfer this
Note on the books of the Company.  The agent may  substitute  another to act for
him.

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

Date:                      Your Name:
     ------------------              -------------------------------------------
                                     (Print  your  name  exactly  as  it appears
                                      on the face of this Note)

                                     Your Signature:
                                                    ----------------------------
                                                    (Sign  exactly  as your name
                                                     appears on the face of this
                                                     Note)

                                     Signature Guarantee*:
                                                          ----------------------













*    Participant in a recognized Signature Guarantee Medallion Program (or other
     signature guarantor acceptable to the Trustee).


                                      A-10
<PAGE>

Option of Holder to Elect Purchase

          If you elect to have this Note  purchased  by the Company  pursuant to
Section 4.10 or Section 4.14 of the Indenture, check the appropriate box below:

         | __ | Section 4.10                | __ | Section 4.14

          If you elect to have only part of this Note  purchased  by the Company
pursuant to Section 4.10 or Section 4.14 of the Indenture,  state the amount (in
minimum  denominations of US$1,000 or integral  multiples  thereof) you elect to
have purchased: US$_________

Date:                      Your Name:
     ------------------              -------------------------------------------
                                     (Print  your  name  exactly  as  it appears
                                      on the face of this Note)

                                     Your Signature:
                                                    ----------------------------
                                                    (Sign  exactly  as your name
                                                     appears on the face of this
                                                     Note)

                                     Signature Guarantee**:
                                                          ----------------------













**   Participant in a recognized Signature Guarantee Medallion Program (or other
     signature guarantor acceptable to the Trustee).



                                      A-11
<PAGE>


                  SCHEDULE OF EXCHANGES OF CERTIFICATED NOTE1

          The following exchanges of a part of this Global Note for Certificated
Notes have been made:




Date of Exchange  Amount of decrease in   Amount of increase in Principal Amount
                   Principal Amount of     Principal Amount of     Global Note
                     this Global Note        this Global Note    following such
                                                                  (or increase)

















---------------------
*    This schedule should be included only if the Note is issued in global form.


                                      A-12
<PAGE>


                                                                       EXHIBIT B

                  CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
                        REGISTRATION OF TRANSFER OF NOTES


Re:       12%    Senior    Secured   Notes  due  2004  of  ITSA-Intercontinental
          Telecomunicacoes Ltda.

          This Certificate relates to US$ principal amount of Notes held in *|_|
global or *|_| certificated form by ________________________ (the "Transferor").

The  Transferor*  has  requested  the  Trustee by written  order to  exchange or
register the transfer of a Note or Notes as follows:


Date:                      Your Name:
     ------------------              -------------------------------------------
                                     (Print  your  name  exactly  as  it appears
                                      on the face of this Note)

                                     Your Signature:
                                                    ----------------------------
                                                    (Sign  exactly  as your name
                                                     appears on the face of this
                                                     Note)

                                     Social Security or Tax Identification No:

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

                                     Signature Guarantee*:
                                                          ----------------------












------------------------
*    Participant in a recognized Signature Guarantee Medallion Program (or other
     signature guarantor acceptable to the Trustee).


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                                                                       EXHIBIT C

                        FORM OF MASTER SECURITY AGREEMENT

See attached.



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                                                                       EXHIBIT D

                                FORM OF MORTGAGE

See attached.



<PAGE>


EXHIBIT E

                       FORM OF COLLATERAL AGENCY AGREEMENT

See attached.