SECOND AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                               ICG HOLDINGS, INC.


     Pursuant to the provisions of the Colorado  Business  Corporation  Act, ICG
Holdings,  Inc.  (the  "Corporation")  adopts the following  Second  Amended and
Restated  Articles of  Incorporation.  These  articles  correctly  set forth the
provisions  of the Articles of  Incorporation,  as amended,  and  supersede  the
original Articles of Incorporation and all amendments thereto.

                                    ARTICLE I

     The name of the Corporation is ICG Holdings, Inc.

                                   ARTICLE II

     The period of its duration is perpetual.

                                   ARTICLE III

     3.1  Purposes.  The  nature,  objects and  purposes  of the  business to be
transacted shall be as follows:

          (a) To own and operate.  To own and operate domestic and international
     telecommunications companies and telecommunications facilities,  including,
     but not limited to, earth satellite  stations,  channels of communications,
     orbital satellite  stations,  satellite  transponders,  very small aperture
     satellite  terminals  ("VSAT") and systems,  microwave  radio  transmission
     systems,  fiber  optic  transmission  systems,   telecommunications  cable,
     telecommunications  conduits,  telephone  systems,  and  telecommunications
     systems of any kind.

          (b) To acquire  business.  To acquire (whether for cash or in exchange
     for its assets or  securities,  or  otherwise),  operate  and deal in other
     businesses of all types and interests therein.

          (c) To engage in other lawful business.  To engage in any other lawful
     business or activity for which  corporations may be incorporated  under the
     laws of Colorado.

                                   ARTICLE IV

     The aggregate  number of shares of stock the  Corporation  is authorized to
issue is 40,000 shares of a class  designated as common stock,  no par value per
share, and

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1,000,000  shares of a class  designated  as preferred  stock,  no par value per
share, and the relative rights of the shares of each class are as follows:

     4.1 Common Stock.

          (a) The  holders of common  stock shall have and possess all rights as
     shareholders of the Corporation except as such rights may be limited by the
     preferences,  privileges  and  voting  powers,  and  the  restrictions  and
     limitations  of the preferred  stock.  All common stock,  when duly issued,
     shall be fully paid and nonassessable. The holders of common stock shall be
     entitled to receive such  dividends as may be declared from time to time by
     the Board of  Directors.  The  holders  of the common  stock  shall also be
     entitled  to  receive  their  pro  rata  share  of the  net  assets  of the
     Corporation upon dissolution.

          (b) The shares of such  class of common  stock  shall  have  unlimited
     voting  rights  and  shall   constitute   the  sole  voting  group  of  the
     Corporation,  except to the  extent  that any  additional  voting  group or
     groups have been or may hereafter be  established  in  accordance  with the
     Colorado  Business  Corporation  Act and except to the extent of the voting
     rights of the holders of preferred stock under Article IV.

          (c) Each  shareholder  of record shall have one vote for each share of
     common  stock  standing  in his name on the  books of the  Corporation  and
     entitled to vote, except that in the election of directors each shareholder
     shall have as many votes for each share held by him as there are  directors
     to be elected and for whose election the  shareholder  has a right to vote.
     Cumulative  voting  shall not be  permitted in the election of directors or
     otherwise.

     4.2 Preferred Stock, Generally.

     The  Corporation  may divide and issue the preferred  stock in series.  The
preferred  shares of each series when issued shall be designated to  distinguish
them from the  shares  of all other  series.  The Board of  Directors  hereby is
expressly  vested with authority to divide the class of preferred stock into one
or more series and to fix and  determine  by  resolution  the  relative  rights,
limitations  and  preferences of the shares of any such series so established to
the full extent  permitted  by these  Second  Amended and  Restated  Articles of
Incorporation and the laws of the State of Colorado in respect of the following:

          (a)  The  number  of  shares  to  constitute  such  series,   and  the
     distinctive designations thereof;

          (b) The rate and  preference  of any dividends and the time of payment
     of any dividends, whether dividends are cumulative or noncumulative and the
     date from which any dividend shall accrue;

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          (c) Whether  shares may be redeemed and, if so, the  redemption  price
     and the terms and conditions of redemption;

          (d) The  amount  payable  with  respect  to  shares  in the  event  of
     involuntary liquidation;

          (e) The  amount  payable  with  respect  to  shares  in the  event  of
     voluntary liquidation;

          (f) Sinking fund or other  provisions,  if any, for the  redemption or
     purchase of shares;

          (g) The terms and conditions on which shares may be converted,  if the
     shares of any series are issued with the privilege of conversion;

          (h) Voting rights, if any; and

          (i) Any  other  relative  rights  and  preferences  of  shares of such
     series,  including without limitation any restriction on an increase in the
     number of shares of any series  theretofore  authorized and any limitations
     or  restrictions  of rights or powers to which shares of any future  series
     shall be subject.

     4.2.1 Cumulative  Exchangeable  Redeemable  Preferred  Stock;  Statement of
Designation of Preferences and Rights.

     A series of preferred stock of the Corporation has been created with
the  designation  and amount  thereof  and the voting  powers,  preferences  and
relative,  optional and other special  rights of the shares of such series,  and
the qualifications, limitations, or restrictions thereof, as follows:

     1. Certain  Definitions:  Set forth below are certain defined terms used in
this Section 4.2.1.

     "Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the  Corporation  and its Restricted  Subsidiaries  for such
period  determined in conformity  with GAAP;  provided that the following  items
shall be  excluded  in  computing  Adjusted  Consolidated  Net  Income  (without
duplication):  (i)  the  net  income  of  any  Person  (other  than  net  income
attributable  to a Restricted  Subsidiary)  in which any Person  (other than the
Corporation or any of its Restricted  Subsidiaries) has a joint interest and the
net income of any Unrestricted Subsidiary, except to the extent of the amount of
dividends or other distributions  actually paid to the Corporation or any of its
Restricted  Subsidiaries  by such other Person or such  Unrestricted  Subsidiary
during such period;  (ii) solely for the purposes of  calculating  the amount of
Restricted  Payments that may be made pursuant to paragraph  11(b)(i)(3) of this
Section  4.2.1 (and in such case,  except to the extent  includable  pursuant to

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clause (i) above),  the net income (or loss) of any Person  accrued prior to the
date it becomes a Restricted  Subsidiary or is merged into or consolidated  with
the Corporation or any of its Restricted  Subsidiaries  or all or  substantially
all of the property and assets of such Person are acquired by the Corporation or
any of its  Restricted  Subsidiaries;  (iii) the net  income  of any  Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions  by such  Restricted  Subsidiary  of such net income is not at the
time  permitted by the  operation of the terms of its charter or any  agreement,
instrument,  judgment,  decree, order, statute, rule or governmental  regulation
applicable  to such  Restricted  Subsidiary;  (iv) any  gains or  losses  (on an
after-tax  basis)  attributable  to Asset  Sales;  (v)  except for  purposes  of
calculating  the amount of  Restricted  Payments  that may be made  pursuant  to
paragraph  11(b)(i)(3)  of this  Section  4.2.1,  any amount  paid or accrued as
dividends on preferred  stock of the  Corporation or any  Restricted  Subsidiary
owned  by  Persons  other  than  the  Corporation  and  any  of  its  Restricted
Subsidiaries; and (vi) all extraordinary gains and extraordinary losses.

     "Affiliate"  means, as applied to any Person,  any other Person directly or
indirectly  controlling,  controlled  by,  or under  direct or  indirect  common
control  with,  such  Person.   For  purposes  of  this  definition,   "control"
(including,  with correlative meanings, the terms "controlling," "controlled by"
and  "under  common  control  with"),  as  applied  to  any  Person,  means  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the  management  and policies of such Person,  whether  through the
ownership of voting  securities,  by contract or otherwise;  provided that, with
respect to the Corporation  and any of its  Subsidiaries,  the term  "Affiliate"
shall be deemed to include  Mr.  William  Becker,  Mr.  Lawrence  Becker and any
person related by blood or marriage to either of them.

     "Asset  Acquisition"  means (i) an investment by the  Corporation or any of
its Restricted  Subsidiaries  in any other Person  pursuant to which such Person
shall become a Restricted  Subsidiary of the Corporation or shall be merged into
or  consolidated  with the  Corporation or any of its  Restricted  Subsidiaries;
provided  that  such  Person's  primary   business  is  related,   ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted
Subsidiaries  on the  date of such  investment  or  (ii) an  acquisition  by the
Corporation or any of its Restricted  Subsidiaries of the property and assets of
any Person other than the Corporation or any of its Restricted Subsidiaries that
constitute  substantially  all of a division or line of business of such Person;
provided  that the  property  and assets  acquired  are  related,  ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted
Subsidiaries on the date of such acquisition.

     "Asset Sale" means any sale,  transfer or other  disposition  (including by
way of merger,  consolidation or sale-leaseback transactions) in one transaction
or a series of related  transactions by the Corporation or any of its Restricted
Subsidiaries  to any Person other than the  Corporation or any of its Restricted
Subsidiaries  of  (i)  all  or  any of  the  Capital  Stock  of  any  Restricted
Subsidiary,  (ii) all or  substantially  all of the  property  and  assets of an
operating  unit  or  business  of the  Corporation  or  any  of  its  Restricted
Subsidiaries or (iii) any other property and assets of the Corporation or any of
its  Restricted  Subsidiaries  outside  the  ordinary  course of business of the
Corporation  or  such  Restricted  Subsidiary  and,  in each  case,  that is not

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governed by the provisions of paragraph  11(g) of this Section  4.2.1;  provided
that  the  meaning  of  "Asset  Sale"  shall  not  include  (A)  sales  or other
dispositions  of  inventory,  receivables  and  other  current  assets,  and (B)
dispositions of assets of the Corporation or any of its Restricted Subsidiaries,
in  substantially  simultaneous  exchanges for  consideration  consisting of any
combination  of cash,  Temporary  Cash  Investments  and assets that are used or
useful in the  telecommunications  business of the Corporation or its Restricted
Subsidiaries,   if  such  consideration  has  an  aggregate  fair  market  value
substantially  equal to the fair  market  value of the  assets so  disposed  of;
provided,  however,  that fair market value shall be determined in good faith by
the  Board  of  Directors  of the  Corporation,  whose  determination  shall  be
conclusive and evidenced by a resolution of the Board of Directors  delivered to
the Transfer Agent.

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

     "Business  Day" means any day except a  Saturday,  Sunday,  or other day on
which  commercial  banks in the City of New York, or in the city of the Transfer
Agent Office, are authorized by law to close.

     "Capital  Stock"  means,  with  respect to any Person,  any and all shares,
interests,  participations or other  equivalents  (however  designated,  whether
voting or  non-voting)  in equity of such  Person,  whether now  outstanding  or
issued after April 29, 1996, including, without limitation, all common stock and
preferred stock.

     "Capitalized  Lease"  means,  as  applied to any  Person,  any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental  obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized
Lease  Obligations" means the discounted present value of the rental obligations
under any such Capitalized Lease.

     "Change of Control"  means such time as (i) a "person"  or "group"  (within
the meaning of Sections  13(d) and  14(d)(2) of the  Exchange  Act)  becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
Voting  Stock having more than 40% of the voting power of the total Voting Stock
of Holdings on a fully diluted basis;  (ii)  individuals who on the Closing Date
constitute  the Board of Directors of Holdings  (together with any new directors
whose  election by the Board of  Directors or whose  nomination  for election by
Holdings'  stockholders  was  approved  by a vote of at least a majority  of the
members of the Board of Directors  then in office who either were members of the
Board of  Directors  on the Closing  Date or whose  election or  nomination  for
election  was  previously  so  approved)  cease for any reason to  constitute  a
majority of the members of the Board of Directors  then in office;  or (iii) all
of the common stock of the  Corporation is not  beneficially  owned by Holdings;

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provided,  however, that a Change of Control shall be deemed not to occur solely
as a result of a Reorganization.

     "Closing  Date"  means  the date on which  the  Exchangeable  Preferred  is
originally issued.

     "Consolidated  EBITDA"  means,  for any period,  the sum of the amounts for
such period of (i) Adjusted  Consolidated Net Income, (ii) Consolidated Interest
Expense,  (iii)  income  taxes,  to the  extent  such  amount  was  deducted  in
calculating  Adjusted  Consolidated  Net Income (other than income taxes (either
positive or negative)  attributable to extraordinary and non-recurring  gains or
losses on sales of assets), (iv) depreciation expense, to the extent such amount
was deducted in calculating  Adjusted  Consolidated Net Income, (v) amortization
expense,  to the  extent  such  amount  was  deducted  in  calculating  Adjusted
Consolidated  Net Income,  and (vi) all other non-cash  items reducing  Adjusted
Consolidated  Net Income  (other than items that will require cash  payments and
for which an accrual or reserve is, or is required  by GAAP to be,  made),  less
all  non-cash  items  increasing  Adjusted   Consolidated  Net  Income,  all  as
determined  on a  consolidated  basis  for the  Corporation  and its  Restricted
Subsidiaries  in  conformity  with  GAAP;   provided  that,  if  any  Restricted
Subsidiary  is not a Wholly Owned  Restricted  Subsidiary,  Consolidated  EBITDA
shall be reduced (to the extent not otherwise  reduced in accordance  with GAAP)
by an amount  equal to (A) the amount of the  Adjusted  Consolidated  Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding  common stock of such Restricted  Subsidiary
not  owned on the  last  day of such  period  by the  Corporation  or any of its
Restricted Subsidiaries divided by (2) the total number of shares of outstanding
common stock of such Restricted Subsidiary on the last day of such period.

     "Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including amortization of original issue
discount on any  Indebtedness  and the interest  portion of any deferred payment
obligation,  calculated in  accordance  with the  effective  interest  method of
accounting;  all  commissions,  discounts  and other fees and charges  owed with
respect to letters of credit and bankers'  acceptance  financing;  the net costs
associated with Interest Rate Agreements; and Indebtedness that is Guaranteed or
secured by the  Corporation or any of its Restricted  Subsidiaries)  and all but
the principal  component of rentals in respect of Capitalized  Lease Obligations
paid,  accrued or scheduled to be paid or to be accrued by the  Corporation  and
its Restricted  Subsidiaries  during such period;  excluding,  however,  without
duplication, (i) any amount of such interest of any Restricted Subsidiary if the
net income of such  Restricted  Subsidiary  is  excluded in the  calculation  of
Adjusted  Consolidated  Net Income  pursuant to clause  (iii) of the  definition
thereof (but only in the same  proportion  as the net income of such  Restricted
Subsidiary is excluded from the calculation of Adjusted  Consolidated Net Income
pursuant to clause (iii) of the definition thereof) and (ii) any premiums,  fees
and expenses  (and any  amortization  thereof)  payable in  connection  with the
offering  of the 132%  Notes  and the  warrants  issued  therewith,  the  Senior
Discount  Notes  and/or  the  Exchangeable  Preferred,  all as  determined  on a
consolidated  basis (without taking into account  Unrestricted  Subsidiaries) in
conformity with GAAP.

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     "Consolidated Net Worth" means, at any date of determination, stockholders'
equity  as  set  forth  on the  most  recently  available  quarterly  or  annual
consolidated  balance sheet of the Corporation  and its Restricted  Subsidiaries
(which  shall be as of a date not  more  than 90 days  prior to the date of such
computation,  and which shall not take into account Unrestricted  Subsidiaries),
less  any  amounts  attributable  to  Redeemable  Stock or any  equity  security
convertible  into or exchangeable for  Indebtedness,  the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the  Corporation  or any of its Restricted  Subsidiaries,  each
item to be determined in conformity  with GAAP (excluding the effects of foreign
currency  exchange   adjustments  under  Financial  Accounting  Standards  Board
Statement of Financial Accounting Standards No. 52).

     "Currency  Agreement"  means any foreign exchange  contract,  currency swap
agreement  or other  similar  agreement or  arrangement  designed to protect the
Corporation  or any of  its  Restricted  Subsidiaries  against  fluctuations  in
currency  values to or under  which  the  Corporation  or any of its  Restricted
Subsidiaries  is a party or a beneficiary on the Closing Date or becomes a party
or a beneficiary thereafter.

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

     "Event of Default"  means a Voting  Rights  Triggering  Event as defined in
paragraph 10(b) of this Section 4.2.1.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "FOTI" means Fiber Optic Technologies Inc., a Colorado corporation.

     "GAAP" means generally accepted accounting  principles in the United States
of  America as in effect as of August 8, 1995,  including,  without  limitation,
those set forth in the opinions and pronouncements of the Accounting  Principles
Board of the American  Institute of Certified Public  Accountants and statements
and pronouncements of the Financial  Accounting Standards Board or in such other
statements  by such other  entity as  approved by a  significant  segment of the
accounting  profession.  All ratios and  computations  contained in this Section
4.2.1 shall be computed in conformity  with GAAP applied on a consistent  basis,
except that  calculations  made for purposes of determining  compliance with the
terms of the covenants and with other  provisions of this Section 4.2.1 shall be
made without giving effect to (i) the  amortization of any expenses  incurred in
connection  with  the  offering  of the  132%  Notes  and  the  warrants  issued
therewith,  the Senior Discount Notes and/or the Exchangeable Preferred and (ii)
except as  otherwise  provided,  the  amortization  of any  amounts  required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.

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     "Guarantee"  means any obligation,  contingent or otherwise,  of any Person
directly or indirectly  guaranteeing any Indebtedness or other obligation of any
other  Person  and,  without  limiting  the  generality  of the  foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (i) to
purchase or pay (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 agreements 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"  shall  not  include
endorsements  for collection or deposit in the ordinary course of business.  The
term "Guarantee" used as a verb has a corresponding meaning.

     "Holders" means the registered holders of shares of Exchangeable Preferred.

     "Holdings," as used in this Section 4.2.1,  means IntelCom  Group,  Inc., a
Canadian federal corporation, or any successor thereto, and, if a Reorganization
is  completed,  shall be deemed  to refer  also to  "Newco"  as  defined  in the
definition of Reorganization.

     "Incur" means, with respect to any Indebtedness,  to incur, create,  issue,
assume,  Guarantee or otherwise  become liable for or with respect to, or become
responsible for, the payment of,  contingently or otherwise,  such Indebtedness,
including an Incurrence of  Indebtedness  by reason of the  acquisition  of more
than 50% of the Capital  Stock of any Person;  provided that neither the accrual
of interest nor the accretion of original  issue discount shall be considered an
Incurrence of Indebtedness.

     "Indebtedness"   means,   with  respect  to  any  Person  at  any  date  of
determination  (without  duplication),  (i) all  indebtedness of such Person for
borrowed  money,  (ii)  all  obligations  of such  Person  evidenced  by  bonds,
debentures,  notes or other similar  instruments,  (iii) all obligations of such
Person in respect of letters of credit or other similar  instruments  (including
reimbursement  obligations with respect  thereto),  (iv) all obligations of such
Person to pay the  deferred and unpaid  purchase  price of property or services,
which  purchase price is due more than six months after the date of placing such
property in service or taking  delivery and title  thereto or the  completion of
such  services,  except trade  payables,  (v) all  obligations of such Person as
lessee under Capitalized  Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any  asset of such  Person,  whether  or not such  Indebtedness  is
assumed by such Person;  provided that the amount of such Indebtedness  shall be
the  lesser  of (A) the  fair  market  value  of  such  asset  at  such  date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other  Persons  Guaranteed  by such  Person to the extent such  Indebtedness  is
Guaranteed  by such  Person and (viii) to the extent not  otherwise  included in
this  definition,  obligations  under  Currency  Agreements  and  Interest  Rate
Agreements.  The amount of  Indebtedness  of any Person at any date shall be the
outstanding  balance at such date of all unconditional  obligations as described
above and, with respect to contingent  obligations,  the maximum  liability upon

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the occurrence of the contingency  giving rise to the  obligation,  provided (i)
that the amount outstanding at any time of any Indebtedness issued with original
issue  discount is the original issue price of such  Indebtedness  and (ii) that
Indebtedness shall not include any liability for federal,  state, local or other
taxes.

     "Indebtedness to EBITDA Ratio" means, as at any date of determination,  the
ratio of (i) the aggregate  amount of  Indebtedness  of the  Corporation and its
Restricted  Subsidiaries on a consolidated basis as at the date of determination
(the  "Determination  Date") to (ii) the Consolidated  EBITDA of the Corporation
for the then most recent four full fiscal  quarters for which  reports have been
filed  pursuant to paragraph  11(i) of this Section 4.2.1 (such four full fiscal
quarter period being referred to herein as the "Four Quarter Period");  provided
that (x) pro forma effect shall be given to any  Indebtedness  Incurred from the
beginning of the Four Quarter Period through the  Determination  Date (including
any Indebtedness  Incurred on the Determination Date), to the extent outstanding
on the Determination  Date, (y) if during the period commencing on the first day
of such Four  Quarter  Period  through the  Determination  Date (the  "Reference
Period"),  the  Corporation  or any of the  Restricted  Subsidiaries  shall have
engaged in any Asset Sale,  Consolidated EBITDA for such period shall be reduced
by an amount equal to the EBITDA (if positive),  or increased by an amount equal
to the EBITDA (if negative),  directly  attributable to the assets which are the
subject of such Asset Sale and any related retirement of Indebtedness as if such
Asset Sale and related  retirement of Indebtedness had occurred on the first day
of such Reference  Period or (z) if during such Reference Period the Corporation
or any of the  Restricted  Subsidiaries  shall have made any Asset  Acquisition,
Consolidated  EBITDA of the Corporation shall be calculated on a pro forma basis
as if such Asset Acquisition and any related financing had occurred on the first
day of such Reference Period. In calculating this ratio for purposes hereof, the
amount of outstanding  Indebtedness  shall be deemed to include the  liquidation
preference of any preferred stock then outstanding.

     "Interest Rate  Agreement"  means any interest rate  protection  agreement,
interest rate future agreement,  interest rate option  agreement,  interest rate
swap  agreement,  interest rate cap agreement,  interest rate collar  agreement,
interest rate hedge agreement or other similar agreement or arrangement designed
to  protect  the  Corporation  or  any of its  Restricted  Subsidiaries  against
fluctuations  in interest rates in respect of Indebtedness to or under which the
Corporation or any of its Restricted Subsidiaries is a party or a beneficiary on
the Closing Date or becomes a party or a beneficiary  thereafter;  provided that
the notional  principal  amount thereof does not exceed the principal  amount of
the Indebtedness of the Corporation and its Restricted  Subsidiaries  that bears
interest at floating rates.

     "Investment"  in any Person means any direct or indirect  advance,  loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement;  but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP,  recorded as accounts  receivable
on the balance  sheet of the  Corporation  or its  Restricted  Subsidiaries)  or
capital  contribution  to (by means of any transfer of cash or other property to
others or any  payment  for  property  or  services  for the  account  or use of
others),  or any  purchase  or  acquisition  of  Capital  Stock,  bonds,  notes,

                                      -9-
<PAGE>

debentures or other similar instruments issued by, such Person and shall include
the designation of a Restricted  Subsidiary as an Unrestricted  Subsidiary.  For
purposes of the definition of  "Unrestricted  Subsidiary" and paragraph 11(b) of
this Section 4.2.1, (i) "Investment"  shall include the fair market value of the
assets (net of liabilities)  of any Restricted  Subsidiary of the Corporation at
the time that such  Restricted  Subsidiary of the  Corporation  is designated an
Unrestricted  Subsidiary  and shall  exclude the fair market value of the assets
(net of  liabilities)  of any  Unrestricted  Subsidiary  at the time  that  such
Unrestricted Subsidiary is designated a Restricted Subsidiary of the Corporation
and (ii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market  value at the time of such  transfer,  in each case as
determined by the Board of Directors in good faith.

     "Lien" means any mortgage, pledge, security interest,  encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller,  or any agreement to give any
security interest).

     "MTN"  means  Maritime   Telecommunications   Network,   Inc.,  a  Colorado
corporation, and its successors.

     "Net Cash Proceeds"  means (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents,  including  payments
in respect of deferred payment  obligations (to the extent  corresponding to the
principal,  but not  interest,  component  thereof) when received in the form of
cash or cash equivalents  (except to the extent such obligations are financed or
sold with  recourse  to the  Corporation  or any  Restricted  Subsidiary  of the
Corporation)  and proceeds from the conversion of other  property  received when
converted to cash or cash  equivalents,  net of (i)  brokerage  commissions  and
other fees and expenses  (including  fees and expenses of counsel and investment
bankers)  related to such Asset Sale,  (ii) provisions for all taxes (whether or
not such taxes will  actually be paid or are  payable) as a result of such Asset
Sale without regard to the consolidated results of operations of the Corporation
and its Restricted Subsidiaries,  taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation  outstanding at the time of such Asset Sale
that  either (A) is secured by a Lien on the  property  or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate  amounts to be
provided by the  Corporation or any Restricted  Subsidiary as a reserve  against
any liabilities associated with such Asset Sale, including,  without limitation,
pension and other  post-employment  benefit liabilities,  liabilities related to
environmental  matters and  liabilities  under any  indemnification  obligations
associated  with such Asset Sale, all as determined in conformity  with GAAP and
(b) with respect to any issuance or sale of Capital Stock,  the proceeds of such
issuance or sale in the form of cash or cash equivalents,  including payments in
respect of deferred  payment  obligations  (to the extent  corresponding  to the
principal,  but not  interest,  component  thereof) when received in the form of
cash or cash equivalents  (except to the extent such obligations are financed or
sold with recourse to the Corporation or any Restricted Subsidiary) and proceeds
from the  conversion of other  property  received when converted to cash or cash
equivalents,  net  of  attorneys'  fees,  accountants'  fees,  underwriters'  or

                                      -10-
<PAGE>

placement agents' fees,  discounts or commissions and brokerage,  consultant and
other fees  incurred in  connection  with such issuance or sale and net of taxes
paid or payable as a result thereof.

     "Offer to  Purchase"  means an offer to  purchase  shares  of  Exchangeable
Preferred by the Corporation  from the Holders  commenced by mailing a notice to
the Transfer Agent and each Holder stating:  (i) the covenant  pursuant to which
the offer is being made and that all shares of  Exchangeable  Preferred  validly
tendered  will be accepted  for payment on a pro rata basis;  (ii) the  purchase
price and the date of purchase (which shall be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed)  (the  "Payment
Date");  (iii) that any  shares of  Exchangeable  Preferred  not  tendered  will
continue  to accrue  dividends  pursuant  to its terms;  (iv)  that,  unless the
Corporation  defaults  in the  payment  of the  purchase  price,  any  shares of
Exchangeable  Preferred  accepted for payment  pursuant to the Offer to Purchase
shall cease to accrue  dividends on and after the Payment Date; (v) that Holders
electing to have any shares of Exchangeable  Preferred purchased pursuant to the
Offer to  Purchase  will be  required to  surrender  the shares of  Exchangeable
Preferred together with a form entitled "Option of the Holder to Elect Purchase"
(the form of which will be mailed  with such  notice)  completed,  to the paying
agent at the address  specified  in the notice prior to the close of business on
the Business Day immediately  preceding the Payment Date; (vi) that Holders will
be entitled to withdraw their election if the paying agent  receives,  not later
than the close of business on the third Business Day  immediately  preceding the
Payment Date, a telegram,  facsimile  transmission  or letter  setting forth the
name of such Holder,  the  liquidation  preference of the shares of Exchangeable
Preferred delivered for purchase and a statement that such Holder is withdrawing
his election to have such shares of Exchangeable Preferred purchased;  and (vii)
that Holders whose shares of Exchangeable  Preferred are being purchased only in
part will be issued new shares of  Exchangeable  Preferred  equal in liquidation
preference to the unpurchased  portion of the shares of  Exchangeable  Preferred
surrendered;  provided that each share of Exchangeable  Preferred  purchased and
each new share of Exchangeable  Preferred  issued shall be in a principal amount
of $1,000 or integral  multiples  thereof.  On the Payment Date, the Corporation
shall  (i)  accept  for  payment  on a pro rata  basis  shares  of  Exchangeable
Preferred or portions  thereof tendered  pursuant to an Offer to Purchase;  (ii)
deposit with the paying agent money  sufficient to pay the purchase price of all
shares of  Exchangeable  Preferred or portions  thereof so  accepted;  and (iii)
deliver,  or  cause  to be  delivered,  to the  Transfer  Agent  all  shares  of
Exchangeable  Preferred  or  portions  thereof  so  accepted  together  with  an
Officers'  Certificate  specifying  the  shares  of  Exchangeable  Preferred  or
portions thereof accepted for payment by the Corporation. The paying agent shall
promptly  mail to the Holders of shares of  Exchangeable  Preferred so accepted,
payment in an amount equal to the purchase  price,  and the Transfer Agent shall
promptly  authenticate  and mail to such  Holders  new  shares  of  Exchangeable
Preferred  equal in  liquidation  preference to any  unpurchased  portion of the
shares of  Exchangeable  Preferred  surrendered;  provided  that  each  share of
Exchangeable  Preferred  purchased and each new share of Exchangeable  Preferred
issued shall be in a principal amount of $1,000 or integral  multiples  thereof.
The  Corporation  will publicly  announce the results of an Offer to Purchase as
soon as practicable  after the Payment Date. The Transfer Agent shall act as the
paying agent for an Offer to  Purchase.  The  Corporation  will comply with Rule
14e-1  under the  Exchange  Act and any other  securities  laws and  regulations

                                      -11-
<PAGE>

thereunder, to the extent such laws and regulations are applicable, in the event
that the Corporation is required to repurchase shares of Exchangeable  Preferred
pursuant to an Offer to Purchase.

     "Ohio LINX" means ICG Ohio LINX, Inc., an Ohio corporation.

     "Permitted  Investment" means (i) an Investment in a Restricted  Subsidiary
or a Person which will, upon the making of such Investment,  become a Restricted
Subsidiary or be merged or  consolidated  with or into or transfer or convey all
or substantially all its assets to, the Corporation or a Restricted  Subsidiary;
provided  that  such  Person's  primary   business  is  related,   ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted
Subsidiaries on the date of such  Investment;  (ii) a Temporary Cash Investment;
(iii) payroll, travel and similar advances to cover matters that are expected at
the time of such  advances  ultimately  to be treated as expenses in  accordance
with GAAP;  (iv) loans or advances to employees  made in the ordinary  course of
business in accordance  with past practice of the  Corporation or its Restricted
Subsidiaries  and that do not in the  aggregate  exceed $2  million  at any time
outstanding;  (v) stock,  obligations or securities  received in satisfaction of
judgments;  and (vi)  Indebtedness  of Holdings owed to the  Corporation,  in an
amount not to exceed the  reasonable  expenses of Holdings as a holding  company
that  are  actually  incurred,  and  paid,  by  Holdings;   provided  that  such
Indebtedness of Holdings is evidenced by an unsubordinated  promissory note that
provides  that  it  will  be  paid  prior  to any  mandatory  redemption  of the
Exchangeable  Preferred if such payment  would be necessary to  effectuate  such
redemption.

     "Permitted  Liens"  means (i) Liens for  taxes,  assessments,  governmental
charges or claims that are being  contested in good faith by  appropriate  legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision,  if any, as shall be required in conformity with
GAAP shall have been made;  (ii)  statutory  Liens of  landlords  and  carriers,
warehousemen,  mechanics,  suppliers,  materialmen,  repairmen or other  similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly  instituted and  diligently  conducted and for which a reserve or other
appropriate  provision,  if any, as shall be required  in  conformity  with GAAP
shall have been made;  (iii) Liens  incurred or  deposits  made in the  ordinary
course of  business  in  connection  with  workers'  compensation,  unemployment
insurance and other types of social  security;  (iv) Liens  incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations,   bankers'  acceptances,   surety  and  appeal  bonds,   government
contracts,  performance  and  return-of-money  bonds and other  obligations of a
similar  nature  incurred  in the  ordinary  course of  business  (exclusive  of
obligations for the payment of borrowed  money);  (v) easements,  rights of way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other  irregularities  that do not  materially  interfere  with the  ordinary
course of business of the  Corporation  or any of its  Restricted  Subsidiaries;
(vi) Liens  (including  extensions  and renewals  thereof) upon real or personal
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing  Indebtedness  Incurred,  in accordance  with
paragraph  11(a) of this Section 4.2.1,  (1) to finance the cost  (including the

                                      -12-
<PAGE>

cost of improvement or  construction)  of the item of property or assets subject
thereto  and such Lien is created  prior to, at the time of or within six months
after  the later of the  acquisition,  the  completion  of  construction  or the
commencement  of  full  operation  of  such  property  or (2) to  refinance  any
Indebtedness previously so secured, (b) the principal amount of the Indebtedness
secured  by such  Lien does not  exceed  100% of such cost and (c) any such Lien
shall not  extend to or cover any  property  or assets  other  than such item of
property or assets and any  improvements on such item; (vii) leases or subleases
granted to others that do not materially  interfere with the ordinary  course of
business of the Corporation and its Restricted  Subsidiaries,  taken as a whole;
(viii)  Liens  encumbering  property or assets under  construction  arising from
progress or partial  payments by a customer of the Corporation or its Restricted
Subsidiaries  relating to such property or assets; (ix) any interest or title of
a lessor in the property  subject to any Capitalized  Lease or operating  lease;
(x) Liens  arising from filing  Uniform  Commercial  Code  financing  statements
regarding  leases;  (xi)  Liens  on  property  of,  or on  shares  of  stock  or
Indebtedness of, any corporation  existing at the time such corporation becomes,
or becomes a part of, any Restricted Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the  Corporation  or any Restricted
Subsidiary other than the property or assets  acquired;  (xii) Liens in favor of
the  Corporation  or any  Restricted  Subsidiary;  (xiii) Liens arising from the
rendering of a final judgment or order against the Corporation or any Restricted
Subsidiary that does not give rise to an Event of Default;  (xiv) Liens securing
reimbursement  obligations  with  respect  to letters  of credit  that  encumber
documents and other property relating to such letters of credit and the products
and  proceeds  thereof;  (xv) Liens in favor of customs and revenue  authorities
arising as a matter of law to secure  payment of  customs  duties in  connection
with the  importation  of  goods;  (xvi)  Liens  encumbering  customary  initial
deposits and margin deposits, and other Liens that are either within the general
parameters  customary in the  industry  and  incurred in the ordinary  course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts,  options,  future contracts,  futures
options  or  similar   agreements  or  arrangements   designed  to  protect  the
Corporation or any of its Restricted Subsidiaries from fluctuations in the price
of commodities;  (xvii) Liens arising out of conditional  sale, title retention,
consignment  or similar  arrangements  for the sale of goods entered into by the
Corporation  or any of its  Restricted  Subsidiaries  in the ordinary  course of
business  in  accordance  with the past  practices  of the  Corporation  and its
Restricted Subsidiaries prior to the Closing Date; and (xviii) Liens on or sales
of receivables.

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability company, an association,  a trust or any other entity or organization,
including a government or political  subdivision or an agency or instrumentality
thereof.

     "Preferred  stock" or "preferred  stock" means, with respect to any Person,
any and all shares,  interests,  participations  or other  equivalents  (however
designated,  whether  voting  or  non-voting)  of  such  Person's  preferred  or
preference  stock,  whether now  outstanding  or issued  after  April 29,  1996,
including,  without  limitation,  all series and  classes of such  preferred  or
preference stock.

                                      -13-
<PAGE>

     "Public  Equity  Offering"  means a bona fide  underwritten  primary public
offering of common stock of Holdings or the Corporation pursuant to an effective
registration statement under the Securities Act.

     "Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or  otherwise  is (i)  required  to be  redeemed  prior to the
mandatory  redemption  date  of  the  shares  of  Exchangeable  Preferred,  (ii)
redeemable  at the option of the holder of such class or series of Capital Stock
at any time prior to the mandatory redemption date of the shares of Exchangeable
Preferred,  or (iii) convertible into or exchangeable for Capital Stock referred
to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior
to the  mandatory  redemption  date of the  shares  of  Exchangeable  Preferred;
provided that any Capital Stock that would not constitute  Redeemable  Stock but
for provisions  thereof giving holders  thereof the right to require such Person
to repurchase  or redeem such Capital Stock upon the  occurrence of a "change of
control"  occurring  prior to the  mandatory  redemption  date of the  shares of
Exchangeable  Preferred shall not constitute  Redeemable Stock if the "change of
control"  provisions  applicable to such Capital Stock are no more  favorable to
the holders of such Capital Stock than the  provisions  contained in the "Change
of Control"  provisions  contained in paragraph  7(b) of this Section  4.2.1 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock  pursuant  to such  provision  prior to the  Corporation's
repurchase  of  Exchangeable  Preferred  as provided in  paragraph  7(b) of this
Section 4.2.1.

     "Reorganization"  means the  transaction or series of transactions in which
the Voting Stock of Holdings is changed into or exchanged  for Voting Stock of a
corporation  organized  under  the  laws  of  any  State  in the  United  States
("Newco").

     "Restricted  Subsidiary" means any Subsidiary of the Corporation other than
an Unrestricted Subsidiary.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Senior  Discount  Notes," as used in this Section 4.2.1,  means the Senior
Discount Notes Due 2006 of the  Corporation,  Guaranteed by Holdings on a senior
unsecured basis and issued on the Closing Date.

     "Senior Discount Notes Indenture," as used in this Section 4.2.1, means the
Indenture dated as of the Closing Date among the  Corporation,  Holdings and the
Trustee pursuant to which the Senior Discount Notes are issued.

     "StarCom"  means  StarCom  International  Optics  Corporation,   a  British
Columbia corporation, and its Subsidiaries.

     "Strategic  Investor"  means any Person  engaged in the  telecommunications
business  which has a net worth or equity market  capitalization  of at least $1
billion.

                                      -14-
<PAGE>

     "Strategic  Investor  Subordinated  Indebtedness" means all Indebtedness of
the Corporation owed to a Strategic  Investor that is contractually  subordinate
in right of  payment  to the shares of  Exchangeable  Preferred  to at least the
following extent: no payment of principal (or premium, if any) or interest on or
otherwise  payable in respect of such  Indebtedness  may be made  (whether  as a
result of a default  or  otherwise)  prior to the  payment in full of all of the
Corporation's obligations under the shares of Exchangeable Preferred;  provided,
however,  that prior to the payment of such  obligations,  interest on Strategic
Investor  Subordinated  Indebtedness  may be payable solely in kind or in common
stock (other than Redeemable Stock) of Holdings or the Corporation.

     "Subsidiary"   means,   with  respect  to  any  Person,   any  corporation,
association or other business  entity of which more than 50% of the  outstanding
Voting Stock is owned,  directly or  indirectly,  by such Person and one or more
other Subsidiaries of such Person.

     "Temporary  Cash  Investment"  means  any  of  the  following:  (i)  direct
obligations of the United States of America or any agency thereof or obligations
fully and  unconditionally  guaranteed  by the  United  States of America or any
agency thereof,  (ii) time deposit  accounts,  certificates of deposit and money
market  deposits  maturing  within 270 days of the date of acquisition  thereof,
bankers'  acceptances with maturities not exceeding 270 days, and overnight bank
deposits,  in each  case  issued  by or with a bank or  trust  company  which is
organized  under the laws of the United States of America,  any state thereof or
any foreign  country  recognized by the United  States,  and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of $100
million (or the foreign  currency  equivalent  thereof) and has outstanding debt
which is rated "A" (or such similar equivalent rating) or higher by at least one
nationally  recognized  statistical rating  organization (as defined in Rule 436
under the  Securities  Act) or any  money-market  fund sponsored by a registered
broker dealer or mutual fund  distributor,  (iii) repurchase  obligations with a
term of not more than 30 days for underlying  securities of the types  described
in  clause  (i)  above  entered  into  with a bank  meeting  the  qualifications
described in clause (ii) above,  (iv) commercial  paper,  maturing not more than
180 days after the date of acquisition,  issued by a corporation  (other than an
Affiliate of Holdings)  organized and in existence  under the laws of the United
States of America,  any state thereof or any foreign  country  recognized by the
United  States of America  with a rating at the time as of which any  investment
therein is made of "P-1" (or higher)  according  to Moody's  Investors  Service,
Inc. or "A-1" (or higher)  according to Standard & Poor's Ratings Group, and (v)
securities  with  maturities of six months or less from the date of  acquisition
issued or fully and  unconditionally  guaranteed by any state,  commonwealth  or
territory of the United States of America,  or by any political  subdivision  or
taxing  authority  thereof,  and rated at least "A" by Standard & Poor's Ratings
Group or Moody's Investors Service, Inc.

     "13 1/2%  Notes"  means the 13 1/2% Senior  Discount  Notes Due 2005 of the
Corporation Guaranteed by Holdings on a senior unsecured basis.

                                      -15-
<PAGE>

     "13 1/2% Notes  Indenture"  means the Indenture  dated as of August 8, 1995
among  the  Corporation,   Holdings  and  the  Trustee  pursuant  to  which  the
Corporation issued the 13 1/2% Notes.

     "Transaction   Date"  means,   with  respect  to  the   Incurrence  of  any
Indebtedness  by the  Corporation or any of its Restricted  Subsidiaries  or the
issuance of any Redeemable Stock of the Corporation,  the date such Indebtedness
is to be  Incurred  or such  issuance  is to be made and,  with  respect  to any
Restricted Payment, the date such Restricted Payment is to be made.

     "Transfer  Agent" means American Stock Transfer and Trust Company,  40 Wall
Street, 46th Floor, New York, New York 10005, or such other Person as may become
the transfer agent with respect to the Exchangeable Preferred.

     "Transfer Agent Office" means the principal office of the Transfer Agent at
any  particular  time,  which office is, at the date hereof,  located at 40 Wall
Street, 46th Floor, New York, New York 10005.

     "Trustee" means Norwest Bank Colorado,  National Association, or such other
Person as may become the trustee under the Indenture,  the Senior Discount Notes
Indenture, or the 132% Notes Indenture, as the context requires.

     "Unrestricted  Subsidiary" means (i) any Subsidiary of the Corporation that
at the time of determination  shall be designated an Unrestricted  Subsidiary by
the Board of Directors in the manner  provided  below and (ii) any Subsidiary of
an Unrestricted Subsidiary.  The Board of Directors may designate any Subsidiary
of the Corporation  (including any newly acquired or newly formed  Subsidiary of
the Corporation),  to be an Unrestricted  Subsidiary unless such Subsidiary owns
any  Capital  Stock  of,  or owns or holds  any  Lien on any  property  of,  the
Corporation  or  any  Restricted  Subsidiary;   provided  that  either  (A)  the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary  has assets  greater  than  $1,000,  that such  designation  would be
permitted under  paragraph  11(b) of this Section 4.2.1.  The Board of Directors
may designate any Unrestricted  Subsidiary to be a Restricted  Subsidiary of the
Corporation;  provided that immediately  after giving effect to such designation
(x) the Corporation could Incur $1.00 of additional Indebtedness under paragraph
11(a)(i) of this Section 4.2.1 and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Transfer Agent by promptly  filing with the Transfer Agent a
copy  of the  resolution  of the  Board  of  Directors  giving  effect  to  such
designation  and an  Officers'  Certificate  certifying  that  such  designation
complied with the foregoing provisions.

     "Voting  Stock"  means,  with respect to any Person,  Capital  Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

                                      -16-
<PAGE>

     "Wholly Owned" means,  with respect to any  Subsidiary of any Person,  such
Subsidiary if all of the  outstanding  Capital Stock in such  Subsidiary  (other
than any  director's  qualifying  shares or  Investments  by  foreign  nationals
mandated by applicable  law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.

     "Zycom" means Zycom Corporation, an Alberta, Canada corporation.

     2. Designation  Amount.  The distinctive  serial designation of this series
shall be "Cumulative  Exchangeable  Redeemable Preferred Stock" (as used in this
Section 4.2.1, "Exchangeable  Preferred").  The number of shares of Exchangeable
Preferred  shall  initially  be 150,000,  which  number may from time to time be
increased (but not above the number that would cause the aggregate number of all
shares of preferred stock of all series to exceed 1,000,000 shares) or decreased
(but not below the number then outstanding) by the Board of Directors. Shares of
Exchangeable  Preferred redeemed,  purchased by the Corporation or exchanged for
Exchange  Debentures  (as defined in paragraph 8(a) of this Section 4.2.1) shall
be canceled and shall  revert to  authorized  but  unissued  shares of preferred
stock  undesignated  as to series;  provided,  however,  that no such issued and
reacquired  shares  of such  series  shall  be  reissued  or sold as  shares  of
Exchangeable Preferred unless reissued as a stock dividend on outstanding shares
of Exchangeable Preferred.

     3. Rank. The Exchangeable  Preferred shall, with respect to dividend rights
and  distribution  rights on  liquidation,  winding-up  and  dissolution  of the
Corporation,  rank (i) senior to all classes of common stock of the  Corporation
and to  each  other  class  of  Capital  Stock  or  series  of  preferred  stock
established  after April 25, 1996,  by the Board of Directors the terms of which
do not  expressly  provide  that it  ranks  senior  to or on a  parity  with the
Exchangeable  Preferred as to dividend  distributions and distributions upon the
liquidation,   winding-up  and  dissolution  of  the  Corporation  (collectively
referred to with the common stock of the  Corporation  as "Junior  Securities");
(ii) on a parity with any class of Capital  Stock or series of  preferred  stock
issued by the  Corporation  established  after April 25,  1996,  by the Board of
Directors,  the terms of which expressly  provide that such class or series will
rank on a parity with the  Exchangeable  Preferred as to dividend  distributions
and  distributions  upon the  liquidation,  winding-up  and  dissolution  of the
Corporation (collectively referred to as "Parity Securities"); and (iii) subject
to certain conditions  described below, junior to each class of Capital Stock or
series of preferred stock issued by the Corporation  established after April 25,
1996, by the Board of Directors,  the terms of which expressly provide that such
class or series will rank senior to the  Exchangeable  Preferred  as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the  Corporation  (collectively  referred  to as  "Senior  Securities").  The
Exchangeable  Preferred  will be  subject  to the  issuance  of series of Junior
Securities,   Parity  Securities  and  Senior  Securities;   provided  that  the
Corporation  may not  issue  any new  class of  Senior  Securities  without  the
approval  of the  Holders of at least a majority  of the shares of  Exchangeable
Preferred then outstanding, voting or consenting, as the case may be, separately
as one class,  except that without such approval of Holders of the  Exchangeable
Preferred, the Corporation may issue shares of Senior Securities (1) in exchange

                                      -17-
<PAGE>

for, or the  proceeds of which are used to redeem or  repurchase,  all,  but not
less than all,  shares of  Exchangeable  Preferred then  outstanding,  or (2) in
exchange  for,  or the  proceeds  of which  are used to repay,  any  outstanding
Indebtedness of the Corporation.

     4. Dividends.

          (a) The  Holders  of shares  of the  Exchangeable  Preferred  shall be
     entitled to receive,  when, as and if declared by the Board of Directors of
     the Corporation,  out of funds legally available therefor, dividends at the
     annual rate of 143% of the liquidation preference per share, subject to the
     provisions of paragraph  4(e) below.  Such  dividends  shall be cumulative,
     whether  or not  earned  or  declared,  on a daily  basis  from the date of
     issuance of the Exchangeable  Preferred,  and shall be payable quarterly in
     arrears  on  February  1, May 1,  August  1, and  November  1 of each  year
     commencing on August 1, 1996 (each of such dates being a "dividend  payment
     date"),  with respect to the period commencing with the date of issuance of
     the  particular  shares  of  Exchangeable   Preferred  or  the  immediately
     preceding  dividend  payment  date and  ending  on the day  preceding  such
     respective  dividend  payment date (each of such periods  being a "dividend
     period"),  to shareholders of record on the preceding January 15, April 15,
     July 15, and October 15,  respectively (each, a "regular record date"). Any
     dividend payments made with respect to shares of Exchangeable  Preferred on
     or before May 1, 2001, may be made, in the sole  discretion of the Board of
     Directors,  in  cash  or in  such  number  of  additional  fully  paid  and
     nonassessable   shares  of  Exchangeable   Preferred  having  an  aggregate
     liquidation  preference  equal to the  amount  of such  dividends,  and the
     issuance  of  such  additional  shares  of  Exchangeable   Preferred  shall
     constitute  full payment of such dividend.  All dividends paid with respect
     to shares of Exchangeable  Preferred  pursuant to this paragraph 4(a) shall
     be paid pro rata to the Holders entitled  thereto.  The Corporation may, at
     the option of the Board of  Directors,  elect not to issue  fractions  of a
     share of  Exchangeable  Preferred  ("Fractional  Shares") in payment of any
     dividend in additional shares of Exchangeable  Preferred. In such event, in
     lieu of any Fractional Shares, each record Holder of Exchangeable Preferred
     otherwise entitled to receive a Fractional Share shall receive a payment in
     cash equal to such Holder's proportionate interest in the net proceeds from
     the sale or sales in the open market by the  Transfer  Agent or other agent
     selected by the Corporation, on behalf of all such Holders of the aggregate
     of all Fractional Shares otherwise  payable as a dividend.  Such sale shall
     be  effected  promptly  after the  record  date fixed for  determining  the
     Holders  entitled to payment of the  dividend.  All shares of  Exchangeable
     Preferred issued as a dividend with respect to the  Exchangeable  Preferred
     will  thereupon  be  duly  authorized,   validly  issued,  fully  paid  and
     nonassessable  and  free of all  liens  and  charges.  After  May 1,  2001,
     dividends on the  Exchangeable  Preferred shall be paid only in cash to the
     Holders of record at the close of business on the regular  record date with
     respect to the applicable dividend payment date.

          (b) Accumulated  unpaid dividends for any past dividend periods may be
     declared by the Board of Directors  and paid on any date fixed by the Board
     of Directors, whether or not a regular dividend payment date, to Holders of
     record on the books of the  Corporation on such record date as may be fixed
     by the Board of Directors.  Holders of  Exchangeable  Preferred will not be

                                      -18-
<PAGE>

     entitled to any dividends,  whether payable in cash,  property or stock, in
     excess of full cumulative  dividends.  If any dividend (or portion thereof)
     payable on any  dividend  payment  date on or before  May 1,  2001,  is not
     declared or paid in full in cash or in shares of Exchangeable  Preferred as
     described in paragraph 4(a) above on such dividend payment date, the amount
     of the accrued and unpaid  dividend will bear interest at the dividend rate
     on the  Exchangeable  Preferred,  compounding  quarterly from such dividend
     payment  date until paid in full.  If any  dividend  (or  portion  thereof)
     payable on any dividend  payment date after May 1, 2001, is not declared or
     paid in full in cash on such  dividend  payment  date,  the  amount  of the
     accrued and unpaid  dividend will bear interest at the dividend rate on the
     Exchangeable  Preferred,  compounding  quarterly from such dividend payment
     date until paid in full.

          (c)  So  long  as  any  shares  of  the  Exchangeable   Preferred  are
     outstanding,  the Corporation  shall not (i) declare,  pay or set apart for
     payment  any  dividend  on  any  shares  of  Junior  Securities  or  Parity
     Securities or (ii) make any payment on account of, or set apart for payment
     money for a sinking or other  similar fund for, the  purchase,  redemption,
     retirement or other  acquisition for value of any of, or redeem,  purchase,
     retire or  otherwise  acquire  for value any of, the Junior  Securities  or
     Parity Securities or any warrants, rights, calls or options exercisable for
     or convertible  into any of the Junior  Securities or Parity  Securities or
     (iii) make any  distribution in respect of the Junior  Securities or Parity
     Securities or any warrants,  rights,  calls or options  exercisable  for or
     convertible into any of the Junior Securities or Parity Securities,  in any
     such case either directly or indirectly,  and whether in cash,  obligations
     or shares of the Corporation or other property (other than distributions or
     dividends of a particular  class or series of Junior  Securities to holders
     of such Junior  Securities  or  distributions  or dividends of a particular
     class or series of Parity Securities to holders of such Parity Securities),
     and shall not permit any corporation or other entity directly or indirectly
     controlled by the Corporation to purchase,  redeem or otherwise acquire for
     value any of the Junior  Securities  or Parity  Securities or any warrants,
     rights,  calls or options  exercisable  for or convertible  into any of the
     Junior  Securities or Parity  Securities,  unless, as to any of the actions
     described in clauses (i),  (ii) or (iii)  above,  prior to or  concurrently
     with  such  declaration,  payment,  setting  apart for  payment,  purchase,
     redemption,  other  acquisition for value or distribution,  as the case may
     be, all accrued and unpaid dividends, if any, on shares of the Exchangeable
     Preferred  not paid on the dates  provided for in  paragraphs  4(a) or 4(b)
     hereof  (including  accrued  dividends,  if any,  not paid by reason of the
     terms and  conditions  of paragraph  4(d)  hereof)  shall have been paid or
     shall have been  declared  and, if payable in cash, a sum in cash set apart
     for  such  payment.  If  full  cumulative  dividends  on  the  Exchangeable
     Preferred are not so paid, the Exchangeable  Preferred will share dividends
     pro rata with the Parity  Securities.  If full cumulative  dividends on the
     Exchangeable  Preferred have not been so paid, the  Exchangeable  Preferred
     may not be  optionally  redeemed in part as provided in  paragraph  6(d) of
     this Section 4.2.1.

          (d) Notwithstanding anything contained herein to the contrary, no cash
     dividends  on  shares of  Exchangeable  Preferred,  or any other  shares of
     Junior   Securities   or  Parity   Securities,   or  other  series  of  the
     Corporation's  preferred stock, shall be declared by the Board of Directors
     or paid or set apart for  payment  by the  Corporation  at such time as the

                                      -19-
<PAGE>

     terms and provisions of any contract or other  agreement of the Corporation
     or any of its Restricted Subsidiaries entered into or assumed prior to, on,
     or after the Closing Date specifically prohibits such declaration,  payment
     or setting apart for payment or provides that such declaration,  payment or
     setting  apart for payment would  constitute a breach  thereof or a default
     thereunder;  provided,  however,  that nothing  contained in this paragraph
     4(d) shall be  construed  or deemed to require  the Board of  Directors  to
     declare,  or the  Corporation  to pay or set  apart for  payment,  any cash
     dividends on shares of the Exchangeable Preferred, whether permitted by any
     of such agreements or not.

          (e) If, on or prior to November 1, 1996, the Corporation  does not, as
     more fully provided in the  Registration  Rights  Agreement with respect to
     the Exchangeable Preferred dated the Closing Date, either (i) consummate an
     offer by the  Corporation  to such  Holders to  exchange  the  Exchangeable
     Preferred  for an issue of preferred  stock of the  Corporation  with terms
     identical  to  the   Exchangeable   Preferred   pursuant  to  an  effective
     registration  statement  under  the  Securities  Act with  respect  to such
     exchange  offer,  or (ii)  file and  cause to  become  effective  under the
     Securities  Act a shelf  registration  statement with respect to resales of
     the Exchangeable  Preferred,  then dividends,  in addition to the dividends
     described  in  paragraph  4(a) of this  Section  4.2.1,  will accrue at the
     annual  rate  of  0.5%  of the  liquidation  preference  per  share  on the
     Exchangeable  Preferred from November 1, 1996, payable in additional shares
     of Exchangeable Preferred quarterly in arrears on February 1, May 1, August
     1, and November 1 of each year commencing on February 1, 1997.

     5. Liquidation Preference.

          (a)  In  the  event  of  any  voluntary  or  involuntary  liquidation,
     dissolution or winding-up of the affairs of the Corporation,  then,  before
     any  distribution  or  payment  shall be made to the  holders of any Junior
     Securities,  including  common  stock of the  Corporation,  the  Holders of
     Exchangeable  Preferred then outstanding  shall be entitled to be paid, out
     of  the  assets  of  the  Corporation  available  for  distribution  to its
     shareholders,  an amount in cash equal to $1,000 for each share outstanding
     (which amount is hereinafter referred to as the "liquidation  preference"),
     plus an  amount in cash  equal to all  accrued  and  unpaid  dividends  and
     interest  thereon  to  the  date  fixed  for  liquidation,  dissolution  or
     winding-up (including an amount equal to a prorated dividend for the period
     from the dividend  payment date  immediately  preceding  the date fixed for
     liquidation,  dissolution or winding-up to the date fixed for  liquidation,
     dissolution or winding-up).  Except as provided in the preceding  sentence,
     Holders of Exchangeable Preferred shall not be entitled to any distribution
     in the event of  liquidation,  dissolution  or winding-up of the affairs of
     the Corporation. If the assets of the Corporation are not sufficient to pay
     in full the  liquidation  payments  payable to the  holders of  outstanding
     shares of the Exchangeable Preferred and all other Parity Securities,  then
     the holders of all such shares shall share ratably in any  distribution  of
     assets of the Corporation  with respect to the  Exchangeable  Preferred and

                                      -20-
<PAGE>


     Parity  Securities in  accordance  with the amount that would be payable on
     such distribution if the amounts to which the holders of outstanding shares
     of Exchangeable Preferred and all other Parity Securities are entitled were
     paid  in  full.  After  payment  of the  full  amount  of  the  liquidation
     preference  and  accrued  and unpaid  dividends  or  interest to which each
     Holder is entitled,  such Holders of shares of Exchangeable  Preferred will
     not be entitled to any further  participation  in any  distribution  of the
     assets of the Corporation.

          (b) For purposes of this paragraph 5, a merger,  consolidation or sale
     of  substantially  all of the  Corporation's  assets that complies with the
     provisions of paragraph  11(g) of this Section 4.2.1 shall not be deemed to
     be a voluntary or involuntary liquidation, dissolution or winding-up of the
     Corporation.

     6. Optional Redemption.

          (a) Subject to  subparagraph  (d) of this  paragraph 6, and subject to
     the legal  availability  of funds therefor and to any contractual and other
     restrictions with respect thereto, at any time on or after May 1, 2001, the
     Corporation,  at the option of the Board of Directors, may redeem, in whole
     or in part, the shares of Exchangeable  Preferred at the time  outstanding,
     at any  time or from  time to  time,  upon  notice  given  as  provided  in
     paragraph 9 of this Section 4.2.1, at the redemption prices (expressed as a
     percentage of the liquidation  preference thereof) set forth below, plus an
     amount in cash equal to all accumulated and unpaid dividends  (including an
     amount  in cash  equal  to a  prorated  dividend  for the  period  from the
     dividend  payment  date  immediately  prior to the  redemption  date to the
     redemption  date,  subject to the right of holders of preferred  stock on a
     record date to receive  dividends on a dividend  payment  date) if redeemed
     during the 12-month  period  beginning May 1 of each of the years set forth
     below:

                  Year                                           Percentage
                  2001     ...................................    107.125%
                  2002     ...................................    104.750%
                  2003     ...................................    102.375%
                  2004 and thereafter.........................    100.000%

          (b)......In  addition,   but  subject  to  subparagraph  (d)  of  this
     paragraph 6, on or prior to May 1, 1999, the Corporation may, at the option
     of the  Board  of  Directors  from  time  to  time,  subject  to the  legal
     availability   of  funds  therefor  and  to  any   contractual   and  other
     restrictions with respect thereto,  redeem shares of Exchangeable Preferred
     having an aggregate  liquidation  preference  of up to 35% of the aggregate
     liquidation  preference of all shares of Exchangeable  Preferred  issued on
     the Closing Date, at a redemption  price equal to 1143% of the  liquidation
     preference  thereof  (subject  to the  right  of  Holders  of  Exchangeable
     Preferred  on relevant  record dates to receive  dividends  due on relevant
     dividend  payment  dates),  plus an  amount  in cash  equal  to a  prorated
     dividend for the period from the dividend payment date immediately prior to
     the redemption  date to the redemption  date,  with proceeds of one or more

                                      -21-
<PAGE>

     Public  Equity  Offerings  of common  stock of (A) the  Corporation  or (B)
     Holdings,  provided  that (i) with  respect  to a  Public  Equity  Offering
     referred  to in clause (B)  above,  cash  proceeds  of such  Public  Equity
     Offering in an amount  sufficient to effect the redemption of  Exchangeable
     Preferred to be so redeemed are  contributed by Holdings to the Corporation
     prior  to such  redemption  and  used by the  Corporation  to  effect  such
     redemption  and  (ii)  such   redemption   occurs  within  180  days  after
     consummation of such Public Equity Offering.

          (c) In the event of partial redemptions of Exchangeable Preferred, the
     shares  to be  redeemed  will be  determined  pro  rata,  except  that  the
     Corporation  may redeem  such  shares  held by any Holder of fewer than 100
     shares without regard to such pro rata redemption requirement.

          (d) Notwithstanding the foregoing  provisions of paragraph 6(a) or (b)
     of this Section 4.2.1,  unless the full  cumulative  dividends for all past
     dividend periods on all outstanding shares of Exchangeable  Preferred shall
     have been paid or contemporaneously  are declared and paid or set apart for
     payment (whether in cash or additional shares of Exchangeable Preferred, as
     permitted under  paragraph 4(a) of this Section 4.2.1),  none of the shares
     of Exchangeable  Preferred shall be redeemed  pursuant to paragraph 6(a) or
     (b) of this Section  4.2.1 unless all  outstanding  shares of  Exchangeable
     Preferred are simultaneously redeemed and all such cumulative dividends are
     paid in cash contemporaneously with such redemption.

     7. Mandatory Redemption.

          (a) The Exchangeable Preferred will be subject to mandatory redemption
     (subject to the legal  availability of funds therefor but without regard to
     any contractual or other  restriction with respect thereto) in whole on May
     1, 2007, at a price,  payable in cash, equal to the liquidation  preference
     thereof,  plus  all  accumulated  and  unpaid  dividends  to  the  date  of
     redemption.

          (b)Upon the occurrence of a Change of Control,  the  Corporation  will
     (subject to any contractual and other restrictions with respect thereto and
     to the legal  availability of funds therefor) offer (the "Change of Control
     Offer") to each Holder of  Exchangeable  Preferred to repurchase all or any
     part of such Holder's Exchangeable Preferred at a cash purchase price equal
     to 101% of the liquidation preference thereof, plus an amount in cash equal
     to all accumulated  and unpaid  dividends per share to the date of purchase
     (including an amount in cash equal to a prorated dividend from the dividend
     payment  date  immediately  preceding  the date of  purchase to the date of
     purchase).  The  Change  of  Control  Offer  will  be made  within  30 days
     following  a Change of  Control,  will  remain open for at least 30 and not
     more than 40 days, and will be made in compliance with the  requirements of
     Rule 14e-1 under the Exchange Act and any other applicable  securities laws
     and regulations.  Notwithstanding  the foregoing,  the Corporation will not
     make a Change of Control  Offer if any of the Senior  Discount  Notes or 13
     1/2%  Notes are  outstanding  upon the  occurrence  of a Change of  Control
     unless all of the Senior Discount Notes and 13 1/2% Notes tendered pursuant
     to the "change of control offers" with respect thereto are repurchased as a

                                      -22-
<PAGE>

     result  of such  Change  of  Control,  in which  case the date on which all
     Senior  Discount  Notes and 13 1/2%  Notes (and any other  Indebtedness  or
     Senior Securities of the Corporation  having provisions  similar to Section
     4.04(x) of the Senior Discount Notes  Indenture) are so repurchased will be
     deemed to be the date on which such Change of Control shall have occurred.

          (c)If the Corporation shall fail to discharge its obligation to redeem
     all outstanding shares of Exchangeable Preferred pursuant to paragraph 7(a)
     or (b) of this Section 4.2.1 (the "Mandatory Redemption  Obligation"),  the
     Corporation shall discharge the Mandatory Redemption  Obligation as soon as
     the  Corporation  is  able  to do  so.  If  and so  long  as any  Mandatory
     Redemption Obligation with respect to the Exchangeable  Preferred shall not
     be fully discharged,  the Corporation shall not declare or pay any dividend
     or make any distribution on, or, directly or indirectly,  purchase,  redeem
     or  satisfy  any  mandatory  redemption,  sinking  fund  or  other  similar
     obligations in respect of, Junior  Securities or Parity  Securities  (other
     than as a result  of a  reclassification  of  Junior  Securities  or Parity
     Securities,  or the exchange or conversion of one class or series of Junior
     Securities for or into another class or series of Junior Securities, or the
     exchange or conversion of one class or series of Parity  Securities  for or
     into another  class or series of Parity  Securities,  or other than through
     the use of the proceeds of a  substantially  contemporaneous  sale of other
     Junior  Securities or Parity  Securities  and in any case not involving the
     payment of cash to holders of such  securities) or any warrants,  rights or
     options exercisable for or convertible into any of the Junior Securities or
     Parity Securities.

     8. Exchange.

          (a) The Corporation  may, at the sole option of the Board of Directors
     (subject to the legal  availability of funds  therefor),  exchange all, but
     not  less  than  all,  of  the  shares  of   Exchangeable   Preferred  then
     outstanding,  including  any  shares of  Exchangeable  Preferred  issued as
     payment for dividends,  for a new series of 14 1/4% Exchange Debentures due
     May 1, 2007, of the  Corporation  (the "Exchange  Debentures") to be issued
     pursuant  to the  indenture  (the  "Indenture")  qualified  under the Trust
     Indenture Act of 1939, as amended,  substantially  in the form agreed to on
     the Closing  Date, a copy of which is on file with and can be obtained from
     the Secretary of the Corporation on request, at any time following the date
     on which such  exchange is  permitted  by the terms of the Senior  Discount
     Notes Indenture,  the 13 1/2% Notes  Indenture,  and the terms of all other
     then-existing Indebtedness of the Corporation and subject to the conditions
     contained in paragraph 8(b) below.  The Exchange  Debentures will be issued
     in registered form, without coupons, be duly executed,  authenticated as of
     the date on which the exchange is effective and dated the date of exchange.
     In the event of an exchange,  Holders of  Exchangeable  Preferred  shall be
     entitled to receive on the date of exchange  Exchange  Debentures having an
     aggregate  principal  amount  equal  to (i) the  total  of the  liquidation
     preference for each share of Exchangeable Preferred exchanged, plus (ii) an
     amount  equal to all  accrued  but unpaid  dividends  payable on such share
     (including  a  prorated  dividend  for  the  period  from  the  immediately
     preceding dividend payment date to the date of exchange). In the event such
     exchange would result in the issuance of Exchange Debentures in a principal

                                      -23-
<PAGE>

     amount  which is less than $1,000 or which is not an  integral  multiple of
     $1,000 (such  principal  amount less than $1,000 or the difference  between
     such principal amount and the highest integral of $1,000 which is less than
     such principal  amount,  as the case may be, is hereinafter  referred to as
     the "Fractional  Principal  Amount"),  the Corporation  may, subject to any
     restrictions  in the  Senior  Discount  Notes  Indenture,  the  132%  Notes
     Indenture,  and the terms of all other  then-existing  Indebtedness  of the
     Corporation,  at the  option  of the Board of  Directors,  pay cash to each
     Holder of Exchangeable Preferred in lieu of Fractional Principal Amounts of
     Exchange  Debentures  otherwise  issuable upon exchange of the Exchangeable
     Preferred.  The Person entitled to receive the Exchange Debentures issuable
     upon exchange shall be treated for all purposes as the registered holder of
     such  Exchange  Debentures as of the date of exchange.  In accordance  with
     paragraph 9 of this Section 4.2.1, the Corporation will mail to each Holder
     of  Exchangeable  Preferred  written notice of its intention to exchange no
     less than 15 nor more than 60 days prior to the date of exchange.

          (b)As a condition of the right of the  Corporation  to issue  Exchange
     Debentures in exchange for the Exchangeable  Preferred under paragraph 8(a)
     of this Section  4.2.1 on the date of exchange,  (A) there shall be legally
     available funds sufficient therefor (including, without limitation, legally
     available  funds  sufficient  therefor  under  Section  7-106-401  (or  any
     successor  provision)  of the Colorado  Business  Corporation  Act);  (B) a
     registration  statement relating to the Exchange Debentures shall have been
     declared  effective  under the  Securities  Act prior to such  exchange and
     shall continue to be effective on the date of exchange,  or the Corporation
     shall have obtained a written opinion of its counsel that an exemption from
     the  registration  requirements of the Securities Act is available for such
     exchange and that upon receipt of such Exchange Debentures pursuant to such
     an  exchange  made in  accordance  with such  exemption,  each holder of an
     Exchange  Debenture that is not an Affiliate of the Corporation will not be
     subject to any  restrictions  imposed by the Securities Act upon the resale
     of such  Exchange  Debenture,  and such  exemption  is  relied  upon by the
     Corporation for such exchange; (C) the Indenture and the Trustee thereunder
     shall  have  been  qualified  under  the Trust  Indenture  Act of 1939,  as
     amended;  (D) immediately after giving effect to such exchange,  no Default
     or Event  of  Default  would  exist;  and (E) the  Corporation  shall  have
     delivered to the Trustee under the Indenture a written  opinion of counsel,
     dated the date of exchange,  regarding the  satisfaction  of the conditions
     set forth in clauses  (A),  (B) and (C). In the event that (i) the issuance
     of the Exchange  Debentures  is not  permitted on the exchange date or (ii)
     any of the conditions set forth in clauses (A) through (E) of the preceding
     sentence are not satisfied on the exchange date, the Corporation  shall use
     its best efforts to satisfy  such  conditions  and effect such  exchange as
     soon as  practicable.  Prior to  initiating  the  exchange  referred  to in
     paragraph (a) above, the Corporation shall certify,  to the satisfaction of
     the trustees under the 132% Notes  Indenture and the Senior  Discount Notes
     Indenture,   that  such  exchange  is  permitted   under  such   respective
     Indentures.  The  Corporation  shall also  provide  such  trustees  with an
     Officer's  Certificate  setting  forth with  specificity  the basis for the
     Corporation's conclusion that such exchange is so permitted.

                                      -24-
<PAGE>

     9. Procedures for Redemption or Exchange.

          (a) In the  event  that  fewer  than  all the  outstanding  shares  of
     Exchangeable  Preferred  are to be  redeemed,  the  number  of shares to be
     redeemed  shall be determined  pro rata,  except that in any  redemption of
     fewer  than all the  outstanding  shares  of  Exchangeable  Preferred,  the
     Corporation  may redeem all shares held by any Holder of a number of shares
     of  Exchangeable  Preferred  not to exceed 100 as may be  specified  by the
     Corporation. In the event of partial redemptions of Exchangeable Preferred,
     new  shares  of  Exchangeable  Preferred  having an  aggregate  liquidation
     preference  equal to the  unredeemed  portion will be issued in the name of
     the Holder thereof upon  cancellation of the original share  certificate of
     Exchangeable  Preferred  without  cost  to  such  Holder.  On and  after  a
     redemption  date,  unless the  Corporation  defaults  in the payment of the
     redemption price,  dividends will cease to accrue on shares of Exchangeable
     Preferred  called for  redemption  and all rights of Holders of such shares
     will terminate except for the right to receive the redemption price. On the
     date  fixed  for  exchange,   the  rights  of  Holders  of  the  shares  of
     Exchangeable  Preferred  exchanged shall cease, except the right to receive
     Exchange  Debentures in exchange for their Exchangeable  Preferred and cash
     or  additional  Exchange  Debentures  in  payment  of  accrued  but  unpaid
     dividends on such shares to the date of exchange.

          (b) In the event that the Corporation  shall redeem or exchange shares
     of Exchangeable Preferred, notice of every redemption or exchange of shares
     of  Exchangeable  Preferred  shall be mailed by first class  mail,  postage
     prepaid,  and mailed,  in the case of  exchange,  not less than 15 nor more
     than 60 days prior to the exchange  date,  and, in the case of  redemption,
     not less than 30 days nor more than 60 days prior to the  redemption  date,
     addressed  to the  Holders  of  record  of the  shares  to be  redeemed  or
     exchanged at their  respective  last  addresses as they shall appear on the
     books of the  Corporation;  provided,  however,  that  failure to give such
     notice or any defect therein or in the mailing thereof shall not affect the
     validity of the  proceeding for the redemption or exchange of any shares so
     to be redeemed or exchanged except as to the Holder to whom the Corporation
     has failed to give such notice or to whom notice was  defective.  Each such
     notice shall state: (i) the redemption or exchange date; (ii) the number of
     shares of  Exchangeable  Preferred to be redeemed or exchanged and, if less
     than all the shares held by such Holder are to be  redeemed,  the number of
     such shares or portion of the liquidation preference to be redeemed;  (iii)
     the  redemption  price or  exchange  rate;  (iv) the place or places  where
     certificates  for such  shares  are to be  surrendered  for  payment of the
     redemption  price or exchanged  for the Exchange  Debentures;  and (v) that
     dividends on the shares to be redeemed or exchanged will cease to accrue on
     such redemption date or exchange date.

          (c) Notice  having been mailed as aforesaid  and provided  that, on or
     before the redemption date or exchange date, as the case may be,  specified
     in such  notice,  all duly  authenticated  and  valid  Exchange  Debentures
     necessary for any such exchange shall have been provided by the Corporation
     and all funds necessary for such redemption or exchange shall have been set

                                      -25-
<PAGE>

     aside by the Corporation, separate and apart from its other funds, in trust
     for the pro rata  benefit  of the  Holders  of the  shares  so  called  for
     redemption  or  exchange,  so as to be  and  to  continue  to be  available
     therefor, then, from and after the redemption date or exchange date, as the
     case may be,  dividends on the shares of  Exchangeable  Preferred so called
     for redemption or exchange,  as the case may be, shall cease to accrue, and
     said shares shall no longer be deemed to be outstanding  and shall not have
     the  status of  shares of  Exchangeable  Preferred,  and all  rights of the
     Holders thereof as  shareholders  of the  Corporation  (except the right to
     receive  from  the  Corporation  the  redemption   price  or  the  Exchange
     Debentures upon exchange and any accrued and unpaid  dividends or the right
     to receive cash payments in lieu of fractional securities from the exchange
     agent or  other  agent  selected  by the  Corporation)  shall  cease.  Upon
     surrender in accordance with said notice of the certificates for any shares
     so redeemed or exchanged  (properly  endorsed or assigned for transfer,  if
     the Board of Directors of the  Corporation  shall so require and the notice
     shall  so  state),  such  shares  shall be  redeemed  or  exchanged  by the
     Corporation at the redemption price or exchange rate aforesaid.

          (d) If such  notice of  redemption  shall have been duly given and if,
     prior to the  redemption  date,  the  Corporation  shall  have  irrevocably
     deposited the funds by the  Corporation  with such bank or trust company in
     trust for the pro rata  benefit of the  holders  of the  shares  called for
     redemption, then, notwithstanding that any certificate for shares so called
     for redemption shall not have been surrendered for  cancellation,  from and
     after the time of such  deposit,  Holders  of the  shares  of  Exchangeable
     Preferred called for redemption shall cease to be shareholders with respect
     to such shares and thereafter  such shares shall no longer be  transferable
     on the books of the  Corporation and such holders shall have no interest in
     or claim  against the  Corporation  with respect to such shares  (including
     dividends  thereon accrued after such redemption  date) except the right to
     receive payment of the redemption  price  (including all dividends  accrued
     and  unpaid  to the date  fixed for  redemption)  upon  surrender  of their
     certificates.  Any funds  deposited  and  unclaimed at the end of two years
     from the date fixed for redemption  shall be repaid to the Corporation upon
     its  request,  after  which  repayment  the  Holders  of shares  called for
     redemption shall look only to the Corporation for payment of the redemption
     price.  The aforesaid  bank or trust company shall be organized and in good
     standing  under the laws of the United States of America or of the State of
     Colorado shall have capital,  surplus and undivided profits  aggregating at
     least $100,000,000  according to its last published statement of condition,
     and shall be identified in the notice of redemption.  Any interest  accrued
     on such funds shall be paid to the Corporation from time to time.

     10. Voting Rights.

          (a) Except as otherwise  provided in this paragraph 10 or as otherwise
     from time to time  provided by law,  the Holders of shares of  Exchangeable
     Preferred shall have no voting rights.

          (b)  (i)  If and  whenever  (A)  (1)  dividends  on  the  Exchangeable
     Preferred are in arrears and remain  unpaid (or if after May 1, 2001,  such
     dividends  have  not been  paid in cash)  with  respect  to four  quarterly
     periods  (whether  or  not  consecutive),  (2)  the  Corporation  fails  to
     discharge  any  redemption  obligation  with  respect  to the  Exchangeable
     Preferred,  (3) a breach or violation by the  Corporation of the provisions

                                      -26-
<PAGE>

     of paragraph 8 of this Section 4.2.1 occurs,  or the  Corporation  fails to
     exchange Debentures for the Exchangeable Preferred tendered for exchange on
     the exchange date, whether or not the Corporation  satisfies the conditions
     to permit  such  exchange,  (4) the  Corporation  fails to make a Change of
     Control  Offer or cash  payment  with  respect  thereto if  required by the
     provisions  of  paragraph  7(b) of this  Section  4.2.1,  (5) a  breach  or
     violation of any provision of paragraph 11 of this Section 4.2.1 occurs and
     is not remedied  within 30 days after notice thereof to the  Corporation by
     Holders of 25% or more of the  liquidation  preference of the  Exchangeable
     Preferred  then  outstanding,  or (6) a default occurs in the obligation to
     pay principal of,  interest on or any other payment  obligation when due (a
     "Payment   Default")  at  final  maturity,   on  one  or  more  classes  of
     Indebtedness  of the  Corporation  or any  Subsidiary  of the  Corporation,
     whether  such  Indebtedness  exists  on the  Closing  Date  or is  Incurred
     thereafter,   having  individually  or  in  the  aggregate  an  outstanding
     principal  amount of $10  million  or more,  or any other  Payment  Default
     occurs  on one or more  such  classes  of  Indebtedness  and such  class or
     classes  of  Indebtedness  are  declared  due and  payable  prior  to their
     respective maturities, and (B) in the case of clauses (A)(5) and (6) above,
     such  event  continues  for a period of 180 days or more  (each  such event
     referred  to as a "Voting  Rights  Triggering  Event"),  then the number of
     directors then constituting the Board of Directors of the Corporation shall
     be increased by two  directors  and the Holders of the majority of the then
     outstanding shares of Exchangeable Preferred, voting separately as a class,
     shall be  entitled  to elect the two  additional  directors  at any  annual
     meeting of shareholders  or special meeting held in place thereof,  or at a
     special  meeting of the  Holders of such shares of  Exchangeable  Preferred
     called as hereinafter  provided.  For the purpose of determining the number
     of quarterly  periods for which accrued  dividends  have not been paid, any
     accrued and unpaid dividend that is subsequently  paid shall not be treated
     as unpaid.  Within 15 days of the time the Corporation becomes aware of the
     occurrence  of  any  default  referred  to  in  clause  (A)(6)  above,  the
     Corporation  shall give  notice  thereof  to  Holders  of the  Exchangeable
     Preferred at their  addresses as they appear on the records of the Transfer
     Agent.

               (ii)  Whenever  a  Voting  Rights  Triggering  Event  shall  have
          occurred,  voting rights of the Holders of shares of the  Exchangeable
          Preferred may be exercised  initially  either at a special  meeting of
          the Holders of Exchangeable Preferred, called as hereinafter provided,
          or at any  annual  meeting  of  shareholders  held for the  purpose of
          electing  directors,  and thereafter at each such annual meeting or by
          the written consent of the Holders of Exchangeable  Preferred pursuant
          to Section  7-107-104 of the Colorado  Business  Corporation  Act. The
          term of office of any such elected  directors shall expire at the next
          annual  meeting  of  shareholders  held for the  purpose  of  electing
          directors,  subject to a new election of two  directors by the Holders
          of shares of Exchangeable Preferred at each successive annual meeting,
          but such  voting  right  and the term of  office  of any such  elected
          directors  shall expire at such time as (A) all dividends  accumulated
          on  Exchangeable  Preferred  shall  have been paid in full (and in the
          case of  dividends  payable  with  respect to any period  after May 1,
          2001,  shall  have been  paid in full in cash)  and (B) each  failure,
          breach or default referred to in paragraph  10(b)(i)(A)(2),  (3), (4),
          (5), and (6) above is remedied.

                                      -27-
<PAGE>

               (iii) At any time after a Voting  Rights  Triggering  Event shall
          have  occurred  and such voting  rights  shall not  already  have been
          initially exercised, a proper officer of the Corporation may, and upon
          the written request of any Holder of shares of Exchangeable  Preferred
          (addressed  to  the   Secretary  at  the   principal   office  of  the
          Corporation) shall, call a special meeting of the Holders of shares of
          Exchangeable  Preferred  for the  election of the two  directors to be
          elected  by them as  herein  provided,  such call to be made by notice
          similar to that  provided  in the Bylaws for a special  meeting of the
          shareholders or as required by law.

               (iv) Such meeting shall be held at the earliest  practicable date
          upon the notice  required for annual  meetings of  shareholders at the
          place for holding annual  meetings of  shareholders of the Corporation
          or,  if  none,  at  a  place   designated  by  the  Secretary  of  the
          Corporation.  If such meeting shall not be called by a proper  officer
          of the Corporation  within 30 days after the personal  service of such
          written  request upon the Secretary of the  Corporation,  or within 30
          days after  mailing the same within the United  States,  by registered
          mail,  addressed to the Secretary of the  Corporation at its principal
          office (such mailing to be evidenced by the registry receipt issued by
          the  postal  authorities),  then the  Holders  of record of 10% of the
          shares of  Exchangeable  Preferred then  outstanding  may designate in
          writing a Holder of Exchangeable Preferred to call such meeting at the
          expense of the  Corporation,  and such  meeting  may be called by such
          person so designated  upon the notice  required for annual meetings of
          shareholders  and  shall  be held at the same  place  as is  elsewhere
          provided in this  paragraph  (10)(b)(iv)  or at such other place as is
          selected  by such  person so  designated.  Any Holder of  Exchangeable
          Preferred  that would be  entitled to vote at any such  meeting  shall
          have access to the stock books of the  Corporation  for the purpose of
          causing  a  meeting  of  shareholders  to be  called  pursuant  to the
          provisions of this paragraph.  Notwithstanding  the provisions of this
          paragraph,  however,  no such special meeting shall be called during a
          period  within 90 days  immediately  preceding  the date fixed for the
          next annual meeting of shareholders.

               (v) At any meeting held for the purpose of electing  directors at
          which the Holders of  Exchangeable  Preferred  shall have the right to
          elect directors as provided herein, the presence in person or by proxy
          of the Holders of the lesser of (A) a majority of the then outstanding
          shares  of  Exchangeable  Preferred  or (B) a  percentage  of the then
          outstanding  shares of  Exchangeable  Preferred,  which  percentage is
          equal to the  percentage  of then  outstanding  shares of common stock
          then  required to constitute a quorum for the election of directors by
          holders  of common  stock,  shall be  required  and be  sufficient  to
          constitute  a quorum of such class for the  election of  directors  by
          such class. At any such meeting or adjournment thereof (x) the absence
          of a quorum of the Holders of Exchangeable Preferred shall not prevent
          the  election  of  directors  other  than  those to be  elected by the
          Holders of stock of such class and the  absence of a quorum or quorums
          of the holders of Capital Stock entitled to elect such other directors
          shall not  prevent  the  election  of  directors  to be elected by the
          Holders of  Exchangeable  Preferred and (y) in the absence of a quorum
          of the holders of any class of stock entitled to vote for the election
          of directors,  a majority of the holders present in person or by proxy
          of such  class  shall have the power to adjourn  the  meeting  for the
          election of directors  which the holders of such class are entitled to
          elect,  from time to time,  without notice (except as required by law)

                                      -28-
<PAGE>

          other  than  announcement  at the  meeting,  until a  quorum  shall be
          present.

               (vi) The term of office of all  directors  elected by the Holders
          of  Exchangeable  Preferred  pursuant to paragraph  (10)(b)(i) of this
          Section 4.2.1 in office at any time when the  aforesaid  voting rights
          are vested in the Holders of  Exchangeable  Preferred  shall terminate
          upon the election of their  successors at any meeting of  shareholders
          for the purpose of electing  directors.  Upon any  termination  of the
          aforesaid  voting rights in accordance  with paragraph  (10)(b)(ii) of
          this Section 4.2.1, the term of office of all directors elected by the
          Holders of Exchangeable  Preferred pursuant to paragraph (10)(b)(i) of
          this Section 4.2.1 then in office  thereupon  shall terminate and upon
          such  termination  the number of directors  constituting  the Board of
          Directors  shall,  without further action,  be reduced by two, subject
          always  to the  increase  of  the  number  of  directors  pursuant  to
          paragraph (10)(b)(i) of this Section 4.2.1 in case of the future right
          of the  Holders  of  Exchangeable  Preferred  to  elect  directors  as
          provided herein.

               (vii) In case of any vacancy  occurring  among the  directors  so
          elected,  the  remaining  director  who shall have been so elected may
          appoint a  successor  to hold  office  for the  unexpired  term of the
          director  whose  place shall be vacant  unless and until such  vacancy
          shall be filled by vote of the Holders entitled to elect the directors
          in  accordance  with  paragraph  10(b) of this Section  4.2.1.  If all
          directors so elected by the Holders of  Exchangeable  Preferred  shall
          cease to serve as  directors  before  their  terms shall  expire,  the
          Holders of Exchangeable  Preferred then  outstanding may, at a special
          meeting of the Holders called as provided above,  elect  successors to
          hold office for the  unexpired  terms of the  directors  whose  places
          shall be vacant.

          (c) In  addition  to any vote or consent of  shareholders  required by
     law,  the  consent of the  Holders of at least a majority  of the shares of
     Exchangeable  Preferred at the time outstanding,  voting or consenting,  as
     the case may be,  separately  as one  class  given in  person  or by proxy,
     either in writing  without a meeting or by vote at any  meeting  called for
     the purpose, shall be necessary for effecting or validating:

               (i) Except as provided in paragraph 13 of this Section 4.2.1, any
          amendment, alteration or repeal of any of the provisions of the Second
          Amended and Restated  Articles of  Incorporation,  or of the Bylaws of
          the Corporation,  which affects  adversely the voting rights,  rights,
          privileges,  or preferences  of the Holders of shares of  Exchangeable
          Preferred  or  authorizes  the  issuance of any  additional  shares of
          Exchangeable  Preferred  (other  than  to pay  dividends  in  kind  on
          Exchangeable Preferred);  provided, however, that the amendment of the
          provisions   of  the  Second   Amended   and   Restated   Articles  of
          Incorporation  so as to  authorize  or  create,  or  to  increase  the
          authorized amount of, any of the Corporation's Junior Securities or to
          authorize  the  issuance  of or to  authorize  or  create  any  Parity
          Securities (up to the amount of authorized  preferred stock) shall not
          be deemed to affect adversely the voting rights,  rights,  privileges,
          or preferences of the Holders of shares of Exchangeable Preferred;

                                      -29-
<PAGE>

               (ii) Any amendment, alteration or repeal of any of the provisions
          of the  Indenture;  provided,  however,  that no such  consent  of the
          Holders  of   Exchangeable   Preferred  shall  be  required  for  such
          amendments  as would be  permitted  under the  terms of the  Indenture
          without the consent of any of the holders of the Exchange  Debentures;
          or

               (iii) The  authorization  or creation  of, or the increase in the
          authorized  amount of, any Senior Securities or shares of any class of
          any  security  convertible  into  shares  of  any  Senior  Securities;
          provided,  however,  that on or after May 1, 2001,  no such consent of
          the Holders of  Exchangeable  Preferred  shall be  required  if, at or
          prior to the time when such amendment, alteration or repeal is to take
          effect  or  when  the  issuance  of  any  such  Senior  Securities  or
          convertible  security is to be made, as the case may be,  provision is
          made,  and funds are set aside,  for the  redemption  of all shares of
          Exchangeable Preferred at the time outstanding.

     11. Certain Covenants.

          (a) Incurrence of Indebtedness and Issuance of Preferred Stock.

               (i) The  Corporation  will not,  and will not  permit  any of its
          Restricted  Subsidiaries  to, Incur any  Indebtedness  (other than the
          Senior  Discount  Notes,  the  Exchange  Debentures  and  Indebtedness
          existing on the Closing Date) or issue any Redeemable Stock;  provided
          that the Corporation may Incur  Indebtedness or issue Redeemable Stock
          if, after giving effect to the Incurrence of such  Indebtedness or the
          issuance of such  Redeemable  Stock and the receipt and application of
          the  proceeds  therefrom,  the  Indebtedness  to EBITDA Ratio would be
          greater than zero and less than 5:1.

               (ii)  Notwithstanding the provisions of paragraph 11(a)(i) above,
          the  Corporation  and any Restricted  Subsidiary  (except as specified
          below) may Incur each and all of the following:  (A)  Indebtedness  of
          the  Corporation or any Restricted  Subsidiary or Redeemable  Stock of
          the  Corporation  outstanding  at  any  time,  which  Indebtedness  or
          Redeemable  Stock generates gross proceeds to the Corporation of up to
          $900  million,  less  (without  duplication)  the  gross  proceeds  of
          Indebtedness  permanently  repaid as provided under the "Limitation on
          Asset Sales"  covenant  contained in the 132% Notes  Indenture and the
          Senior Discount Notes  Indenture;  (B)  Indebtedness to Holdings,  the
          Corporation  or any  of  the  Corporation's  Wholly  Owned  Restricted
          Subsidiaries; provided that any subsequent issuance or transfer of any
          Capital  Stock  which  results  in any such  Wholly  Owned  Restricted
          Subsidiary  ceasing to be a Wholly Owned Restricted  Subsidiary or any
          subsequent transfer of such Indebtedness (other than to Holdings,  the
          Corporation or another Wholly Owned  Restricted  Subsidiary)  shall be
          deemed, in each case, to constitute an Incurrence of such Indebtedness
          not permitted by this clause (B); (C) Indebtedness or Redeemable Stock
          issued  in  exchange  for,  or the net  proceeds  of which are used to
          refinance  or refund,  then  outstanding  Indebtedness  or  Redeemable
          Stock,  other than  Indebtedness  Incurred or Redeemable  Stock issued
          under  clause  (A),  (B),  (E),  (F),  (H),  (I),  (J) or (K) of  this
          paragraph 11(a)(ii),  and any refinancings thereof in an amount not to

                                      -30-
<PAGE>

          exceed the amount so refinanced or refunded  (plus  premiums,  accrued
          interest,  accrued dividends,  fees and expenses);  provided that such
          new  Indebtedness  or Redeemable  Stock,  determined as of the date of
          Incurrence of such new  Indebtedness or issuance of Redeemable  Stock,
          does not mature prior to the stated  maturity of the  Indebtedness  or
          have a mandatory  redemption date prior to the Redeemable  Stock to be
          refinanced or refunded,  and the Average Life of such new Indebtedness
          is at least equal to the remaining Average Life of the Indebtedness to
          be refinanced or refunded;  and provided  further that in no event may
          Indebtedness  or Redeemable  Stock of the Corporation be refinanced by
          means  of any  Indebtedness  or  Redeemable  Stock  of any  Restricted
          Subsidiary  of the  Corporation  pursuant  to  this  clause  (C);  (D)
          Indebtedness  (1) in respect of  performance,  surety or appeal  bonds
          provided  in the  ordinary  course of  business,  (2)  under  Currency
          Agreements and Interest Rate Agreements; provided that such agreements
          do not increase the  Indebtedness  of the obligor  outstanding  at any
          time  other  than as a result  of  fluctuations  in  foreign  currency
          exchange rates or interest rates or by reason of fees, indemnities and
          compensation  payable  thereunder,  and (3)  arising  from  agreements
          providing for indemnification, adjustment of purchase price or similar
          obligations,  or from Guarantees or letters of credit, surety bonds or
          performance  bonds securing any  obligations of the Corporation or any
          of its Restricted  Subsidiaries  pursuant to such  agreements,  in any
          case  Incurred in  connection  with the  disposition  of any business,
          assets  or  Restricted  Subsidiary  of  the  Corporation  (other  than
          Guarantees of Indebtedness Incurred by any Person acquiring all or any
          portion  of such  business,  assets or  Restricted  Subsidiary  of the
          Corporation  for the  purpose of  financing  such  acquisition),  in a
          principal amount at maturity not to exceed the gross proceeds actually
          received by the Corporation or any Restricted Subsidiary in connection
          with such  disposition;  (E)  Indebtedness or Redeemable  Stock of the
          Corporation,  to  the  extent  the  proceeds  referred  to  below  are
          contributed  to the  Corporation,  not to  exceed,  at  any  one  time
          outstanding,  twice  the  amount  of Net  Cash  Proceeds  received  by
          Holdings  after the  Closing  Date from the  issuance  and sale of its
          Capital  Stock  (other  than  Redeemable  Stock or  preferred  stock);
          provided  that such  Indebtedness  does not mature  prior to the final
          mandatory redemption date of the Exchangeable Preferred; (F) Strategic
          Investor  Subordinated  Indebtedness;  (G)  Indebtedness or Redeemable
          Stock of the  Corporation,  to the extent  the  proceeds  thereof  are
          immediately  used after the Incurrence or issuance thereof to purchase
          Exchangeable  Preferred  tendered  in a Change of Control  Offer;  (H)
          Indebtedness of any Restricted  Subsidiary of the Corporation Incurred
          pursuant to any credit  agreement  of such  Restricted  Subsidiary  in
          effect on August 8, 1995 (or any  agreement  refinancing  Indebtedness
          under such credit agreement), up to the amount of the commitment under
          such  credit  agreement  (including  equipment  leasing  or  financing
          agreements) on August 8, 1995; (I) Indebtedness of the Corporation, in
          an amount  not to exceed  $100  million  at any one time  outstanding,
          consisting of  Capitalized  Lease  Obligations  with respect to assets
          that are used or  useful  in the  telecommunications  business  of the
          Corporation  or  its  Restricted  Subsidiaries;  (J)  Indebtedness  or
          Redeemable Stock of any Person that becomes a Restricted Subsidiary of
          the Corporation after the Closing Date, which Indebtedness  exists or,
          with respect to such  Indebtedness  for which there is a commitment to
          lend,  at the time such Person  becomes a Restricted  Subsidiary  and,
          with respect to such Indebtedness,  the subsequent  Incurrence thereof
          ("Acquired  Indebtedness"),  in an  accreted  amount not to exceed $50
          million  at any one time  outstanding  in the  aggregate  for all such

                                      -31-
<PAGE>

          Restricted Subsidiaries; provided that such Acquired Indebtedness does
          not exceed 65% of the  consideration  (calculated  by  including  such
          Acquired  Indebtedness  as a part of such  consideration)  paid by the
          Corporation  and its Restricted  Subsidiaries  for the  acquisition of
          such Person; and (K) Indebtedness of the Corporation, in an amount not
          to exceed  $30  million  at any one time  outstanding,  consisting  of
          letters of credit and similar arrangements used to support obligations
          of the Corporation or any of its Restricted  Subsidiaries with respect
          to the acquisition of (by purchase, lease or otherwise),  construction
          of,  or  improvements  on,  assets  that will be used or useful in the
          telecommunications  business  of the  Corporation  or  its  Restricted
          Subsidiaries.

               (iii)  For  purposes  of  determining  any  particular  amount of
          Indebtedness under paragraphs 11(a)(i) or (ii) above, (A) Indebtedness
          of any Restricted  Subsidiary of the Corporation  incurred on or prior
          to the  Closing  Date  pursuant  to any  credit  agreement  (including
          equipment   leasing  or  financing   agreements)  of  such  Restricted
          Subsidiary  in effect on August 8, 1995,  shall be treated as Incurred
          pursuant to  paragraph  11(a)(ii)(H)  of this Section  4.2.1,  and (B)
          Guarantees,  Liens or  obligations  with  respect to letters of credit
          supporting  Indebtedness  otherwise  included in the  determination of
          such  particular  amount  shall  not  be  included.  For  purposes  of
          determining  compliance  with the  covenants  contained in  paragraphs
          11(a)(i) and (ii) above,  in the event that an item of Indebtedness or
          Redeemable  Stock meets the  criteria of more than one of the types of
          Indebtedness  or  Redeemable  Stock  described  in such  clauses,  the
          Corporation,  in its sole  discretion,  shall  classify  such  item of
          Indebtedness  or Redeemable  Stock and only be required to include the
          amount and type of such  Indebtedness  or  Redeemable  Stock in one of
          such clauses.

          (b) Limitation on Restricted Payments.

               (i) So long  as any  shares  of the  Exchangeable  Preferred  are
          outstanding,  the  Corporation  will  not,  and  will not  permit  any
          Restricted  Subsidiary to, directly or indirectly,  (A) declare or pay
          any dividend or make any  distribution  on Junior  Securities  held by
          Persons  other  than  the   Corporation   or  any  of  its  Restricted
          Subsidiaries (other than dividends or distributions  payable solely in
          shares of its or such Restricted Subsidiary's Junior Securities (other
          than  Redeemable  Stock) of the same class held by such  holders or in
          options,  warrants  or other  rights to acquire  such shares of Junior
          Securities  and other  than pro rata  dividends  or  distributions  on
          common stock of Restricted Subsidiaries); (B) purchase, redeem, retire
          or otherwise  acquire for value any shares of Junior Securities of the
          Corporation or any Restricted Subsidiary (including options,  warrants
          or other rights to acquire such shares of Junior  Securities)  held by
          Persons  other  than  the  Corporation  or  any of  its  Wholly  Owned
          Restricted Subsidiaries (except for Junior Securities of MTN, StarCom,
          Ohio LINX,  FOTI and Zycom to the extent  the  consideration  therefor
          consists  solely of common  stock  (other  than  Redeemable  Stock) of
          Holdings  or  Junior  Securities  of the  Corporation,  in  each  case
          transferred in compliance  with the  Securities  Act); or (C) make any
          Investment,  other than a Permitted  Investment,  in any Person  (such
          payments or any other actions  described in clauses (i)(A) through (C)
          being  collectively  "Restricted  Payments")  if, at the time of,  and
          after giving effect to, the proposed Restricted Payment:  (1) an event
          referred to in clauses (1) through  (6) of  paragraph  10(b)(i)(A)  of

                                      -32-
<PAGE>

          this  Section  4.2.1 shall have  occurred and be  continuing,  (2) the
          Corporation  could  not  Incur at least  $1.00 of  Indebtedness  under
          paragraph  11(a)(i) of this Section  4.2.1,  (3) the aggregate  amount
          expended for all Restricted Payments (the amount so expended, if other
          than  in  cash,  to be  determined  in  good  faith  by the  Board  of
          Directors,  whose determination shall be conclusive and evidenced by a
          board  resolution)  after April 29, 1996 shall  exceed the sum of (aa)
          50% of the aggregate  amount of the Adjusted  Consolidated  Net Income
          (or, if the Adjusted  Consolidated Net Income is a loss, minus 100% of
          such amount)  (determined by excluding income resulting from transfers
          of  assets  by  the  Corporation  or a  Restricted  Subsidiary  to  an
          Unrestricted  Subsidiary)  accrued on a  cumulative  basis  during the
          period (taken as one accounting  period) beginning on the first day of
          the fiscal quarter  immediately  following the Closing Date and ending
          on the last day of the last fiscal quarter  preceding the  Transaction
          Date for which reports have been filed pursuant to paragraph  11(i) of
          this Section 4.2.1 plus (bb) the aggregate Net Cash Proceeds  received
          by the  Corporation  after the Closing  Date (x) from the issuance and
          sale, permitted hereunder, of Junior Securities (other than Redeemable
          Stock) to a Person who is not a Subsidiary of the Corporation, or from
          the issuance to a Person who is not a Subsidiary of the Corporation of
          any options,  warrants or other rights to acquire Junior Securities of
          the  Corporation (in each case,  exclusive of any Redeemable  Stock or
          any  options,  warrants  or other  rights that are  redeemable  at the
          option of the holder,  or are  required to be  redeemed,  prior to the
          stated  maturity of the  Exchangeable  Preferred)  or (y) as a capital
          contribution  from  Holdings  plus  (cc) an  amount  equal  to the net
          reduction  in   Investments   (other  than   reductions  in  Permitted
          Investments)  in any Person  resulting  from  payments  of interest on
          Indebtedness,  dividends,  repayments  of loans or advances,  or other
          transfers of assets, in each case to the Corporation or any Restricted
          Subsidiary  (except to the extent any such  payment is included in the
          calculation   of   Adjusted   Consolidated   Net   Income),   or  from
          redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
          (valued in each case as provided in the definition of  "Investments"),
          not to  exceed  the  amount  of  Investments  previously  made  by the
          Corporation  and its  Restricted  Subsidiaries  in such  Person or (4)
          dividends on the  Exchangeable  Preferred  shall not have been paid in
          full as provided in paragraph 4 of this Section 4.2.1.

               (ii) The  provisions  of  paragraph  11(b)(i)  above shall not be
          violated by reason of: (A) the payment of any dividend  within 60 days
          after the date of declaration thereof if, at said date of declaration,
          such  payment  would comply with  paragraph  11(b)(i)  above;  (B) the
          repurchase,  redemption or other  acquisition of Junior  Securities of
          the Corporation (or options,  warrants or other rights to acquire such
          Junior  Securities)  and with  respect to any Junior  Securities,  the
          payment of accrued dividends  thereon,  in exchange for, or out of the
          proceeds of a substantially  concurrent issuance or sale of, shares of
          Junior  Securities  (other than Redeemable  Stock) of the Corporation;
          provided that the  redemption of any preferred  stock  pursuant to any
          mandatory  redemption  feature thereof and any redemption of any other
          Junior  Securities and, in each case, the payment of accrued dividends
          thereon (or  options,  warrants or other rights to acquire such Junior
          Securities) and with respect to any Junior Securities,  the payment of
          accrued  dividends  thereon,  shall  be  deemed  to be  "substantially
          concurrent"  with such  issuance and sale if the required  notice with
          respect to such redemption is irrevocably  given by a date which is no
          later than five  Business  Days after  receipt of the proceeds of such

                                      -33-
<PAGE>

          issuance  and sale and such  redemption  and  payment  is  consummated
          within  the  period  provided  for  in  the  document  governing  such
          preferred  stock or the  documents  governing  the  redemption of such
          other  Junior  Securities,  as  the  case  may  be;  (C)  payments  or
          distributions,  in the nature of satisfaction  of dissenters'  rights,
          pursuant to or in connection with a consolidation,  merger or transfer
          of assets that complies with the provisions of paragraph 11(g) of this
          Section  4.2.1;  (D)  Investments,  not to exceed  $10  million in the
          aggregate,  each evidenced by a senior  promissory note payable to the
          Corporation that provides that it will become due and payable prior to
          any required repurchase (including pursuant to an Offer to Purchase in
          connection  with a Change of Control) of the  Exchangeable  Preferred;
          (E) Investments,  not to exceed $5 million in the aggregate, that meet
          the  requirements  of clause  (D)  above;  provided  that the Board of
          Directors of the  Corporation  shall have  determined,  in good faith,
          that each such  Investment  under  this  clause  (E) will  enable  the
          Corporation or one of its Restricted Subsidiaries to obtain additional
          business  that it might not be able to obtain  without  the  making of
          such Investment; (F) with respect to Junior Securities permitted to be
          issued and sold by the  provisions of paragraph  11(d) of this Section
          4.2.1,  the payment (1) of  dividends  on such  Junior  Securities  in
          additional  shares of Junior  Securities  and (2) of cash dividends on
          such Junior  Securities  in an amount not to exceed the dividend  rate
          thereon and accrued interest on unpaid  dividends,  in each case after
          May 1, 2001; (G) the repurchase,  in the event of a Change of Control,
          of  Junior  Securities  of the  Corporation  and  Indebtedness  of the
          Corporation  into which such Junior  Securities  have been  exchanged;
          provided  that  prior  to  repurchasing   such  Junior  Securities  or
          Indebtedness,  the  Corporation  shall  have made a Change of  Control
          Offer to repurchase the shares of Exchangeable Preferred in accordance
          with the terms of paragraph  7(b) of this Section  4.2.1 (and an offer
          to repurchase other Indebtedness, if required by the terms thereof, in
          accordance  with the indenture or other document  governing such other
          Indebtedness)  and  shall  have  accepted  and paid for any  shares of
          Exchangeable  Preferred (and other Indebtedness)  properly tendered in
          connection  with  such  Change  of  Control  Offer  for the  shares of
          Exchangeable  Preferred  or change  of  control  offer for such  other
          Indebtedness;  (H) the issuance of Junior  Securities  permitted to be
          issued  hereunder  in exchange  for  Indebtedness;  provided  that the
          Incurrence  of such  Indebtedness  complies  with  the  provisions  of
          paragraph  11(a) of this Section  4.2.1;  and (I) (1) the payment of a
          dividend or other  transfer of funds to Holdings with a portion of the
          proceeds of the issuance of the Exchangeable  Preferred,  in an amount
          not to exceed the amount  required to repurchase  916,666  warrants to
          purchase  common stock of Holdings and (2) the  redemption  of the 12%
          Redeemable  Preferred  Stock of Holdings,  in each case, in accordance
          with the  provisions of the  documents  governing  such  repurchase or
          redemption,  provided  that,  except  in the case of  clause  (A),  no
          Default or Event of Default  shall have  occurred and be continuing or
          occur as a  consequence  of the actions or payments  set forth in this
          paragraph 11(b)(ii).

               (iii) Each  Restricted  Payment  permitted  pursuant to paragraph
          11(b)(ii)  above (other than the  Restricted  Payments  referred to in
          clauses  (F)(1) and (H)  thereof),  and the Net Cash Proceeds from any
          issuance of Junior Securities referred to in clause (B) thereof, shall
          be included in  calculating  whether the  conditions  of clause (3) of
          paragraph 11(b)(i) of this Section 4.2.1 have been met with respect to
          any subsequent Restricted Payments.  Notwithstanding the foregoing, in
          the event the  proceeds of an issuance of Junior  Securities  are used

                                      -34-
<PAGE>

          for  the   redemption,   repurchase  or  other   acquisition   of  the
          Exchangeable  Preferred,  or  Parity  Securities,  then  the Net  Cash
          Proceeds of such issuance shall be included in clause (3) of paragraph
          11(b)(i) of this  Section  4.2.1 only to the extent such  proceeds are
          not used for  such  redemption,  repurchase  or other  acquisition  of
          Exchangeable Preferred or Parity Securities.

          (c)  Limitation on Dividend and Other Payment  Restrictions  Affecting
     Restricted  Subsidiaries.  So long as any shares of Exchangeable  Preferred
     are  outstanding,  the  Corporation  will  not,  and  will not  permit  any
     Restricted  Subsidiary to, create or otherwise  cause or suffer to exist or
     become  effective any consensual  encumbrance or restriction of any kind on
     the ability of any  Restricted  Subsidiary to (i) pay dividends or make any
     other  distributions  permitted by  applicable  law on any Capital Stock of
     such Restricted Subsidiary owned by the Corporation or any other Restricted
     Subsidiary,  (ii) pay any Indebtedness owed to the Corporation or any other
     Restricted  Subsidiary,  (iii) make loans or advances to the Corporation or
     any other  Restricted  Subsidiary  or (iv)  transfer any of its property or
     assets to the Corporation or any other Restricted Subsidiary. The foregoing
     provisions  shall  not  restrict  any  encumbrances  or  restrictions:  (i)
     existing on the  Closing  Date in any  agreements  in effect on the Closing
     Date, and any  extensions,  refinancings,  renewals or replacements of such
     agreements;  provided that the  encumbrances  and  restrictions in any such
     extensions, refinancings, renewals or replacements are no less favorable in
     any  material  respect to the Holders of the  Exchangeable  Preferred  than
     those  encumbrances  or  restrictions  that are then in effect and that are
     being extended,  refinanced, renewed or replaced; (ii) existing under or by
     reason of applicable  law; (iii) existing with respect to any Person or the
     property  or assets  of such  Person  acquired  by the  Corporation  or any
     Restricted  Subsidiary,  existing at the time of such  acquisition  and not
     incurred in contemplation  thereof,  which encumbrances or restrictions are
     not  applicable to any Person or the property or assets of any Person other
     than such Person or the property or assets of such Person so acquired; (iv)
     in the case of clause (iv) of the first sentence of this  paragraph  11(c),
     (A) that  restrict  in a customary  manner the  subletting,  assignment  or
     transfer of any property or asset that is a lease,  license,  conveyance or
     contract  or  similar  property  or asset,  (B)  existing  by virtue of any
     transfer of,  agreement  to  transfer,  option or right with respect to, or
     Lien on,  any  property  or assets  of the  Corporation  or any  Restricted
     Subsidiary not otherwise  prohibited  hereunder or (C) arising or agreed to
     in the ordinary course of business,  not relating to any Indebtedness,  and
     that do not,  individually  or in the aggregate,  detract from the value of
     property or assets of the  Corporation or any Restricted  Subsidiary in any
     manner  material to the  Corporation or any Restricted  Subsidiary;  or (v)
     with  respect  to a  Restricted  Subsidiary  and  imposed  pursuant  to  an
     agreement  that has been entered into for the sale or disposition of all or
     substantially  all of the Capital Stock of, or property and assets of, such
     Restricted  Subsidiary.  Nothing  contained in this  paragraph  11(c) shall
     prevent the  Corporation  or any Restricted  Subsidiary  from (1) creating,
     incurring,  assuming or  suffering to exist any Liens  otherwise  permitted
     pursuant to paragraph  11(f) of this Section 4.2.1 or (2)  restricting  the
     sale or other  disposition of property or assets of the  Corporation or any
     of its Restricted  Subsidiaries that secure Indebtedness of the Corporation
     or any of its Restricted Subsidiaries.

                                      -35-
<PAGE>

          (d)  Limitation  on Issuances  and Sale of Capital Stock of Restricted
     Subsidiaries.  The  Corporation  will not  sell,  and will not  permit  any
     Restricted Subsidiary, directly or indirectly, to issue or sell, any shares
     of Capital Stock of a Restricted Subsidiary (including options, warrants or
     other rights to purchase  shares of such Capital  Stock)  except (i) to the
     Corporation  or a Wholly Owned  Restricted  Subsidiary;  (ii)  issuances or
     sales to foreign nationals of shares of Capital Stock of foreign Restricted
     Subsidiaries,   to  the  extent  required  by  applicable  law;  (iii)  if,
     immediately  after giving effect to such issuance or sale,  such Restricted
     Subsidiary would no longer  constitute a Restricted  Subsidiary;  (iv) with
     respect  to common  stock of MTN,  StarCom  and  Zycom;  provided  that the
     proceeds of any such sale under this clause (iv) shall be reinvested in the
     business of the  Corporation  and its  Restricted  Subsidiaries  or used to
     repay Indebtedness of the Corporation or any of its Restricted Subsidiaries
     or  Senior  Securities;  and (v)  with  respect  to  common  stock of FOTI;
     provided  that FOTI shall not retain  any net  proceeds  from such sales or
     issuances in excess of $10 million in the aggregate and any net proceeds in
     excess of such $10 million  shall be received by, or paid  promptly by FOTI
     to,  the  Corporation  or any Wholly  Owned  Restricted  Subsidiary  of the
     Corporation.

          (e) Limitation on Transactions with  Shareholders and Affiliates.  The
     Corporation  will not, and will not permit any  Restricted  Subsidiary  to,
     directly  or  indirectly,  enter  into,  renew or  extend  any  transaction
     (including,  without limitation,  the purchase,  sale, lease or exchange of
     property or assets,  or the  rendering of any service)  with any holder (or
     any  Affiliate of such holder) of 5% or more of any class of Capital  Stock
     of  the  Corporation  or  with  any  Affiliate  of the  Corporation  or any
     Restricted  Subsidiary,  except  upon  fair  and  reasonable  terms no less
     favorable to the  Corporation or such  Restricted  Subsidiary than could be
     obtained,  at the time of such  transaction or at the time of the execution
     of  the  agreement  providing  therefor,   in  a  comparable   arm's-length
     transaction  with a Person that is not such a holder or an  Affiliate.  The
     foregoing   limitation  does  not  limit,   and  shall  not  apply  to  (i)
     transactions (A) approved by a majority of the disinterested members of the
     Board of Directors of the Corporation or (B) for which the Corporation or a
     Restricted Subsidiary delivers to the Transfer Agent a written opinion of a
     nationally  recognized investment banking firm stating that the transaction
     is fair to the Corporation or such  Restricted  Subsidiary from a financial
     point of view; (ii) any transaction  solely between the Corporation and any
     of its Wholly Owned Restricted  Subsidiaries or solely between Wholly Owned
     Restricted  Subsidiaries;  (iii) the payment of  reasonable  and  customary
     regular fees to directors of the  Corporation  who are not employees of the
     Corporation;  (iv) any  payments  or  other  transactions  pursuant  to any
     tax-sharing  agreement  (or a  similar  agreement  that  is not  materially
     adverse to the interests of Holders of the Exchangeable  Preferred) between
     the  Corporation  and any other Person with which the  Corporation  files a
     consolidated  tax  return  or  with  which  the  Corporation  is  part of a
     consolidated  group for tax purposes;  or (v) any  Restricted  Payments not
     prohibited by paragraph  11(b) of this Section 4.2.1.  Notwithstanding  the
     foregoing,  any transaction covered by the first sentence of this paragraph
     11(e)  and not  covered  by  clauses  (ii)  through  (iv) of the  preceding
     sentence,  the aggregate amount of which exceeds $2 million in value,  must
     be approved or determined  to be fair in the manner  provided for in clause
     (i)(A) or (B) of the preceding sentence.

                                      -36-
<PAGE>

          (f) Limitation on Liens. The Corporation will not, and will not permit
     any Restricted  Subsidiary to, create, incur, assume or suffer to exist any
     Lien on any of its assets or properties,  now or hereafter acquired, or any
     shares of Capital Stock of or  Indebtedness  of any Restricted  Subsidiary.
     The  foregoing  limitation  does not  apply to (i)  Liens  existing  on the
     Closing  Date;  (ii) Liens  granted after the Closing Date on any assets or
     Capital Stock of the Corporation or its Restricted  Subsidiaries created in
     favor of the  Holders  of the  Exchangeable  Preferred;  (iii)  Liens  with
     respect to the assets of a Restricted Subsidiary granted by such Restricted
     Subsidiary to the  Corporation or a Wholly Owned  Restricted  Subsidiary to
     secure  Indebtedness  owing to the  Corporation  or such  other  Restricted
     Subsidiary; (iv) Liens securing Indebtedness which is Incurred to refinance
     secured  Indebtedness  which is  permitted to be Incurred  under  paragraph
     11(a)(ii)(C) of this Section 4.2.1;  provided that such Liens do not extend
     to or cover any  property or assets of the  Corporation  or any  Restricted
     Subsidiary  other than the  property or assets  securing  the  Indebtedness
     being  refinanced;  (v) Liens with respect to assets or  properties  of any
     Person  that  becomes  a  Restricted  Subsidiary  after the  Closing  Date;
     provided that such Liens do not extend to or cover any assets or properties
     of the  Corporation  or any of its Restricted  Subsidiaries  other than the
     assets or properties  of such Person  subject to such Lien on the date such
     Person  becomes a Restricted  Subsidiary;  and  provided  further that such
     Liens are not incurred in  contemplation  of, or in connection  with,  such
     Person becoming a Restricted  Subsidiary;  (vi) Permitted  Liens; and (vii)
     Liens securing Indebtedness.

          (g) Merger,  Consolidation  and Sale of Assets.  The Corporation shall
     not consolidate with, merge with or into, or sell, convey,  transfer, lease
     or otherwise dispose of all or substantially all of its property and assets
     (as an entirety or substantially an entirety in one transaction or a series
     of related  transactions)  to, any Person  (other than a  consolidation  or
     merger with or into a Wholly Owned  Restricted  Subsidiary  with a positive
     net  worth;   provided  that,  in  connection   with  any  such  merger  or
     consolidation,  no consideration  (other than common stock in the surviving
     Person  or  the  Corporation)   shall  be  issued  or  distributed  to  the
     shareholders of the Corporation) or permit any Person to merge with or into
     the Corporation unless: (i) the Corporation shall be the continuing Person,
     or the Person (if other than the Corporation)  formed by such consolidation
     or into which the  Corporation  is merged or that  acquired  or leased such
     property and assets of the Corporation shall be a corporation organized and
     validly  existing  under the laws of the  United  States of  America or any
     jurisdiction thereof and the Exchangeable Preferred shall be converted into
     or exchanged for and shall become shares of such successor company,  having
     in respect of such successor or resulting  company  substantially  the same
     powers,  preferences and relative participating,  optional or other special
     rights and the qualifications, limitations or restrictions thereon that the
     Exchangeable  Preferred had  immediately  prior to such  transaction;  (ii)
     immediately after giving effect to such  transaction,  no event referred to
     under  paragraph  10(b)(i)(A)(1)  through (5) of this Section  4.2.1 or any
     default,  breach or  violation  that would  become  such an event after the
     giving of notice,  the passage of time or both,  shall have occurred and be
     continuing;  (iii) immediately after giving effect to such transaction on a
     pro forma basis,  the  Corporation  or any Person  becoming  the  successor
     issuer of the  Exchangeable  Preferred,  as the case may be,  shall  have a
     Consolidated  Net Worth equal to or greater than the Consolidated Net Worth

                                      -37-
<PAGE>

     of the Corporation immediately prior to such transaction;  (iv) immediately
     after  giving  effect  to  such  transaction  on  a  pro  forma  basis  the
     Corporation,   or  any  Person   becoming  the  successor   issuer  of  the
     Exchangeable  Preferred,  as the case may be, could Incur at least $1.00 of
     Indebtedness  under paragraph  11(a)(i) of this Section 4.2.1;  and (v) the
     Corporation  delivers  to  the  Transfer  Agent  an  Officers'  Certificate
     (attaching  the arithmetic  computations  to  demonstrate  compliance  with
     clauses  (iii) and (iv)  above)  and an opinion  of  counsel,  in each case
     stating  that such  consolidation,  merger or transfer  complies  with this
     provision and that all conditions precedent provided for herein relating to
     such transaction have been complied with; provided,  however,  that clauses
     (iii) and (iv) above shall not apply if, in the good faith determination of
     the Board of Directors of the Corporation  evidenced by a board resolution,
     the principal  purpose of such  transaction is part of a plan to change the
     jurisdiction  of  incorporation  of the Corporation to a different state of
     the United States; and provided further that any such transaction shall not
     have as one of its purposes the evasion of the foregoing limitations.

          (h)  Senior  Subordinated  Indebtedness.  So  long  as any  shares  of
     Exchangeable Preferred are outstanding,  the Corporation will not Incur any
     Indebtedness,  other than the Exchange  Debentures,  that is expressly made
     subordinated in right of payment to any Senior  Indebtedness (as defined in
     the Indenture) unless such  Indebtedness,  by its terms and by the terms of
     any  agreement  or  instrument  pursuant  to  which  such  Indebtedness  is
     outstanding  is expressly  made pari passu with, or subordinate in right of
     payment to, the Exchange  Debentures  pursuant to provisions  substantially
     similar to those  contained in Article  Eleven of the  Indenture;  provided
     that the  foregoing  limitations  shall not apply to  distinctions  between
     categories  of  Senior  Indebtedness  that  exist by reason of any Liens or
     Guarantees  arising  or  created  in  respect  of some  but not all  Senior
     Indebtedness.

          (i)  Reports.  So long as any  shares of  Exchangeable  Preferred  are
     outstanding,  the  Corporation  shall file with the Securities and Exchange
     Commission (the "Commission") the annual reports, quarterly reports and the
     information,  documents  and  other  reports  required  to be  filed by the
     Corporation  with  the  Commission  pursuant  to  Sections  13 or 15 of the
     Exchange Act,  whether or not the  Corporation has or is required to have a
     class of securities registered under the Exchange Act, at the time it is or
     would be required to file the same with the Commission  and, within 15 days
     after  the  Corporation  is or  would be  required  to file  such  reports,
     information  or documents  with the  Commission,  shall mail such  reports,
     information  and  documents  to the Transfer  Agent and to each Holder,  or
     shall  supply such  reports to the Transfer  Agent for  forwarding  to each
     Holder,  at such Holder's  address set forth on the register  maintained by
     the Transfer Agent.

     12.  Transfer  and  Legending  of  Shares.  No  transfer  of  shares of the
Exchangeable  Preferred  shall be effective until such transfer is registered on
the books of the  Corporation.  Until registered under the Securities Act or the
expiration  of the time  period  referred  to in Rule 144(k) (as then in effect)
under the  Securities  Act, all shares of  Exchangeable  Preferred will bear the
following legend:

                                      -38-
<PAGE>

          THIS PREFERRED STOCK HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
          ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"), AND ACCORDINGLY,  MAY
          NOT BE  OFFERED OR SOLD  WITHIN  THE  UNITED  STATES OR TO, OR FOR THE
          ACCOUNT  OR  BENEFIT  OF,  U.S.  PERSONS  EXCEPT  AS SET  FORTH IN THE
          FOLLOWING  SENTENCE.   BY  ITS  ACQUISITION  HEREOF,  THE  HOLDER  (1)
          REPRESENTS  THAT  (A)  IT IS A  "QUALIFIED  INSTITUTIONAL  BUYER"  (AS
          DEFINED IN RULE 144A UNDER THE  SECURITIES  ACT), (B) IT IS NOT A U.S.
          PERSON  AND  IS  ACQUIRING  THIS   PREFERRED   STOCK  IN  AN  OFFSHORE
          TRANSACTION IN COMPLIANCE  WITH REGULATION S UNDER THE SECURITIES ACT,
          OR (C) IT IS AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  (AS DEFINED IN
          RULE  501(a)(1),  (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
          ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL
          NOT,  WITHIN THE TIME PERIOD  REFERRED TO UNDER RULE 144(k)  UNDER THE
          SECURITIES  ACT AS IN  EFFECT  ON THE  DATE  OF THE  TRANSFER  OF THIS
          PREFERRED  STOCK,  RESELL OR OTHERWISE  TRANSFER THIS PREFERRED  STOCK
          EXCEPT (A) TO INTELCOM GROUP (U.S.A.), INC. (THE "CORPORATION") OR ANY
          SUBSIDIARY  THEREOF,  (B)  TO  A  QUALIFIED   INSTITUTIONAL  BUYER  IN
          COMPLIANCE  WITH RULE 144A UNDER THE  SECURITIES  ACT, (C) OUTSIDE THE
          UNITED STATES IN AN OFFSHORE  TRANSACTION IN COMPLIANCE  WITH RULE 904
          UNDER  THE  SECURITIES   ACT,  (D)  PURSUANT  TO  THE  EXEMPTION  FROM
          REGISTRATION  PROVIDED  BY  RULE  144  UNDER  THE  SECURITIES  ACT (IF
          AVAILABLE),   (E)  INSIDE  THE  UNITED  STATES  TO  AN   INSTITUTIONAL
          ACCREDITED  INVESTOR THAT,  PRIOR TO SUCH  TRANSFER,  FURNISHES TO THE
          TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS AND
          AGREEMENTS  RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS PREFERRED
          STOCK (THE FORM OF WHICH  LETTER  CAN BE  OBTAINED  FROM THE  TRANSFER
          AGENT) OR (F) AFTER  REGISTRATION  UNDER  THE  SECURITIES  ACT AND (3)
          AGREES  THAT IT WILL  DELIVER  TO EACH  PERSON TO WHOM THIS  PREFERRED
          STOCK IS  TRANSFERRED  A NOTICE  SUBSTANTIALLY  TO THE  EFFECT OF THIS
          LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS PREFERRED STOCK WITHIN
          THE TIME PERIOD  REFERRED TO ABOVE,  THE HOLDER MUST  EXECUTE A LETTER
          (THE FORM OF WHICH  LETTER CAN BE OBTAINED  FROM THE  TRANSFER  AGENT)
          RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
          THE TRANSFER AGENT. AS USED HEREIN, THE TERMS "OFFSHORE  TRANSACTION,"
          "UNITED  STATES" AND "U.S.  PERSON" HAVE THE MEANINGS GIVEN TO THEM BY

                                      -39-
<PAGE>

          REGULATION  S UNDER  THE  SECURITIES  ACT.  THE  [FIRST]  AMENDED  AND
          RESTATED  ARTICLES  OF  INCORPORATION  OF THE  CORPORATION  CONTAINS A
          PROVISION  REQUIRING  THE  TRANSFER  AGENT TO REFUSE TO  REGISTER  ANY
          TRANSFER  OF  THIS  PREFERRED  STOCK  IN  VIOLATION  OF THE  FOREGOING
          RESTRICTIONS.

The  Corporation  shall refuse to register any  attempted  transfer of shares of
Exchangeable Preferred not in compliance with this paragraph 12.

     13. Amendments and Waivers. Notwithstanding any other provisions hereof and
to the  extent  allowable  from  time to time by  applicable  law,  the Board of
Directors  may, by duly adopted  resolution,  amend any of the provisions of the
Second Amended and Restated Articles of Incorporation,  without notice to or any
consent or  approval of any of the Holders of  Exchangeable  Preferred,  for the
following purposes:

          (1) to cure any  ambiguity,  defect  or  inconsistency  in the  Second
     Amended  and  Restated  Articles  of  Incorporation;   provided  that  such
     amendment  does not and will not  adversely  affect  the  interests  of the
     Holders of Exchangeable Preferred in any material respect; or

          (2) to make any change that the Board of Directors  determines in good
     faith does not materially and adversely  affect the rights of any Holder of
     Exchangeable Preferred.

Except as provided in the preceding sentence, any right,  preference,  privilege
or power of, or  restriction  provided  for the  benefit  of,  the  Exchangeable
Preferred  set forth  herein may be amended  and the  observance  thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively)  only  with  the  written  consent  of the  Corporation  and  the
affirmative vote or written consent of the Holders of at least a majority of the
shares of Exchangeable  Preferred then outstanding,  and any amendment or waiver
so  effected  shall be  binding  upon the  Corporation  and all  Holders  of the
Exchangeable Preferred.

     14. Rules of Construction.  The descriptive  headings in this Section 4.2.1
are inserted for  convenience  of reference only and are not intended to be part
of or affect the meaning or  interpretation  of any  provision  of this  Section
4.2.1.  Words used in this Section  4.2.1,  regardless  of the gender and number
specifically  used,  shall be deemed and  construed to include any other gender,
masculine, feminine, or neuter, and any other number, singular or plural, as the
context  requires.  As used in this Section 4.2.1,  the word  "including" is not
limiting, and the word "or" is not exclusive.

     4.2.2 Cumulative  Exchangeable  Redeemable  Preferred  Stock;  Statement of
Designation of Preferences and Rights.

     A series of preferred  stock of the  Corporation  has been created with the
designation and amount thereof and the voting powers,  preferences and relative,

                                      -40-
<PAGE>

optional  and  other  special  rights  of the  shares  of such  series,  and the
qualifications, limitations, or restrictions thereof, as follows:

     1. Certain  Definitions:  Set forth below are certain defined terms used in
this Section 4.2.2.

     "Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the  Corporation  and its Restricted  Subsidiaries  for such
period  determined in conformity  with GAAP;  provided that the following  items
shall be  excluded  in  computing  Adjusted  Consolidated  Net  Income  (without
duplication):  (i)  the  net  income  of  any  Person  (other  than  net  income
attributable  to a Restricted  Subsidiary)  in which any Person  (other than the
Corporation or any of its Restricted  Subsidiaries) has a joint interest and the
net income of any Unrestricted Subsidiary, except to the extent of the amount of
dividends or other distributions  actually paid to the Corporation or any of its
Restricted  Subsidiaries  by such other Person or such  Unrestricted  Subsidiary
during such period;  (ii) solely for the purposes of  calculating  the amount of
Restricted  Payments that may be made pursuant to paragraph  11(b)(i)(3) of this
Section  4.2.2 (and in such case,  except to the extent  includable  pursuant to
clause (i) above),  the net income (or loss) of any Person  accrued prior to the
date it becomes a Restricted  Subsidiary or is merged into or consolidated  with
the Corporation or any of its Restricted  Subsidiaries  or all or  substantially
all of the property and assets of such Person are acquired by the Corporation or
any of its  Restricted  Subsidiaries;  (iii) the net  income  of any  Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions  by such  Restricted  Subsidiary  of such net income is not at the
time  permitted by the  operation of the terms of its charter or any  agreement,
instrument,  judgment,  decree, order, statute, rule or governmental  regulation
applicable  to such  Restricted  Subsidiary;  (iv) any  gains or  losses  (on an
after-tax  basis)  attributable  to Asset  Sales;  (v)  except for  purposes  of
calculating  the amount of  Restricted  Payments  that may be made  pursuant  to
paragraph  11(b)(i)(C)(3)  of this Section 4.2.2,  any amount paid or accrued as
dividends on preferred  stock of the  Corporation or any  Restricted  Subsidiary
owned  by  Persons  other  than  the  Corporation  and  any  of  its  Restricted
Subsidiaries; and (vi) all extraordinary gains and extraordinary losses.

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

     "Asset  Acquisition"  means (i) an investment by the  Corporation or any of
its Restricted  Subsidiaries  in any other Person  pursuant to which such Person
shall become a Restricted  Subsidiary of the Corporation or shall be merged into
or  consolidated  with the  Corporation or any of its  Restricted  Subsidiaries;
provided  that  such  Person's  primary   business  is  related,   ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted

                                      -41-
<PAGE>

Subsidiaries  on the  date of such  investment  or  (ii) an  acquisition  by the
Corporation or any of its Restricted  Subsidiaries of the property and assets of
any Person other than the Corporation or any of its Restricted Subsidiaries that
constitutes  substantially all of a division or line of business of such Person;
provided  that the  property  and assets  acquired  are  related,  ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted
Subsidiaries on the date of such acquisition.

     "Asset Sale" means any sale,  transfer or other  disposition  (including by
way of merger,  consolidation or sale-leaseback transactions) in one transaction
or a series of related  transactions by the Corporation or any of its Restricted
Subsidiaries  to any Person other than the  Corporation or any of its Restricted
Subsidiaries  of  (i)  all  or  any of  the  Capital  Stock  of  any  Restricted
Subsidiary,  (ii) all or  substantially  all of the  property  and  assets of an
operating  unit  or  business  of the  Corporation  or  any  of  its  Restricted
Subsidiaries or (iii) any other property and assets of the Corporation or any of
its  Restricted  Subsidiaries  outside  the  ordinary  course of business of the
Corporation  or  such  Restricted  Subsidiary  and,  in each  case,  that is not
governed by the provisions of paragraph  11(g) of this Section  4.2.2;  provided
that  the  meaning  of  "Asset  Sale"  shall  not  include  (A)  sales  or other
dispositions  of  inventory,  receivables  and  other  current  assets,  and (B)
dispositions of assets of the Corporation or any of its Restricted Subsidiaries,
in  substantially  simultaneous  exchanges for  consideration  consisting of any
combination  of cash,  Temporary  Cash  Investments  and assets that are used or
useful in the  telecommunications  business of the Corporation or its Restricted
Subsidiaries,   if  such  consideration  has  an  aggregate  fair  market  value
substantially  equal to the fair  market  value of the  assets so  disposed  of;
provided,  however,  that fair market value shall be determined in good faith by
the  Board  of  Directors  of the  Corporation,  whose  determination  shall  be
conclusive and evidenced by a resolution of the Board of Directors  delivered to
the Transfer Agent.

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

     "Business  Day" means any day except a  Saturday,  Sunday,  or other day on
which  commercial  banks in the City of New York, or in the city of the Transfer
Agent Office, are authorized by law to close.

     "Capital  Stock"  means,  with  respect to any Person,  any and all shares,
interests,  participations or other  equivalents  (however  designated,  whether
voting or  non-voting)  in equity of such  Person,  whether now  outstanding  or
issued after the date hereof,  including,  without limitation,  all common stock
and preferred stock.

     "Capitalized  Lease"  means,  as  applied to any  Person,  any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental  obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized

                                      -42-
<PAGE>

Lease  Obligations" means the discounted present value of the rental obligations
under any such Capitalized Lease.

     "Change of Control"  means such time as (i) a "person"  or "group"  (within
the meaning of Sections  13(d) and  14(d)(2) of the  Exchange  Act)  becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
Voting  Stock having more than 40% of the voting power of the total Voting Stock
of ICG on a fully  diluted  basis;  (ii)  individuals  who on the  Closing  Date
constitute the Board of Directors of ICG (together with any new directors  whose
election by the Board of  Directors  or whose  nomination  for election by ICG's
stockholders was approved by a vote of at least a majority of the members of the
Board of  Directors  then in office  who  either  were  members  of the Board of
Directors on the Closing Date or whose  election or nomination  for election was
previously  so  approved)  cease for any reason to  constitute a majority of the
members of the Board of  Directors  then in  office;  or (iii) all of the common
stock of the Corporation is not beneficially owned,  directly or indirectly,  by
ICG.

     "ChoiceCom" means CSW/ICG ChoiceCom, L.P., a Delaware limited partnership.

     "Closing  Date"  means  the date on which  the  Exchangeable  Preferred  is
originally issued.

     "Consolidated  EBITDA"  means,  for any period,  the sum of the amounts for
such period of (i) Adjusted  Consolidated Net Income, (ii) Consolidated Interest
Expense,  (iii)  income  taxes,  to the  extent  such  amount  was  deducted  in
calculating  Adjusted  Consolidated  Net Income (other than income taxes (either
positive or negative)  attributable to extraordinary and non-recurring  gains or
losses or sales of assets), (iv) depreciation expense, to the extent such amount
was deducted in calculating  Adjusted  Consolidated Net Income, (v) amortization
expense,  to the  extent  such  amount  was  deducted  in  calculating  Adjusted
Consolidated  Net Income,  and (vi) all other non-cash  items reducing  Adjusted
Consolidated  Net Income  (other than items that will require cash  payments and
for which an accrual or reserve is, or is required  by GAAP to be,  made),  less
all  non-cash  items  increasing  Adjusted   Consolidated  Net  Income,  all  as
determined  on a  consolidated  basis  for the  Corporation  and its  Restricted
Subsidiaries  in  conformity  with  GAAP;   provided  that,  if  any  Restricted
Subsidiary  is not a Wholly Owned  Restricted  Subsidiary,  Consolidated  EBITDA
shall be reduced (to the extent not otherwise  reduced in accordance  with GAAP)
by an amount  equal to (A) the amount of the  Adjusted  Consolidated  Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding  common stock of such Restricted  Subsidiary
not  owned on the  last  day of such  period  by the  Corporation  or any of its
Restricted Subsidiaries divided by (2) the total number of shares of outstanding
common stock of such Restricted Subsidiary on the last day of such period.

     "Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including amortization of original issue
discount on any  Indebtedness  and the interest  portion of any deferred payment
obligation,  calculated in  accordance  with the  effective  interest  method of
accounting;  all  commissions,  discounts  and other fees and charges  owed with

                                      -43-
<PAGE>

respect to letters of credit and bankers'  acceptance  financing;  the net costs
associated with Interest Rate Agreements; and Indebtedness that is Guaranteed or
secured by the  Corporation or any of its Restricted  Subsidiaries)  and all but
the principal  component of rentals in respect of Capitalized  Lease Obligations
paid,  accrued or scheduled to be paid or to be accrued by the  Corporation  and
its Restricted  Subsidiaries  during such period;  excluding,  however,  without
duplication, (i) any amount of such interest of any Restricted Subsidiary if the
net income of such  Restricted  Subsidiary  is  excluded in the  calculation  of
Adjusted  Consolidated  Net Income  pursuant to clause  (iii) of the  definition
thereof (but only in the same  proportion  as the net income of such  Restricted
Subsidiary is excluded from the calculation of Adjusted  Consolidated Net Income
pursuant to clause (iii) of the definition thereof) and (ii) any premiums,  fees
and expenses  (and any  amortization  thereof)  payable in  connection  with the
offering of the 13 1/2% Notes and the  warrants  issued  therewith,  the 12 1/2%
Notes, the 14 1/4% Exchangeable Preferred,  the Senior Discount Notes and/or the
Exchangeable  Preferred,  all as determined  on a  consolidated  basis  (without
taking into account Unrestricted Subsidiaries) in conformity with GAAP.

     "Consolidated Net Worth" means, at any date of determination, stockholders'
equity  as  set  forth  on the  most  recently  available  quarterly  or  annual
consolidated  balance sheet of the Corporation  and its Restricted  Subsidiaries
(which  shall be as of a date not  more  than 90 days  prior to the date of such
computation,  and which shall not take into account Unrestricted  Subsidiaries),
less  any  amounts  attributable  to  Redeemable  Stock or any  equity  security
convertible  into or exchangeable for  Indebtedness,  the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the  Corporation  or any of its Restricted  Subsidiaries,  each
item to be determined in conformity  with GAAP (excluding the effects of foreign
currency  exchange   adjustments  under  Financial  Accounting  Standards  Board
Statement of Financial Accounting Standards No. 52).

     "Currency  Agreement"  means any foreign exchange  contract,  currency swap
agreement  or other  similar  agreement or  arrangement  designed to protect the
Corporation  or any of  its  Restricted  Subsidiaries  against  fluctuations  in
currency  values to or under  which  the  Corporation  or any of its  Restricted
Subsidiaries  is a party or a beneficiary on the Closing Date or becomes a party
or a beneficiary thereafter.

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

     "Event of Default"  means a Voting  Rights  Triggering  Event as defined in
paragraph 10(b) of this Section 4.2.2.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "FOTI" means Fiber Optic Technologies Inc., a Colorado corporation.

                                      -44-
<PAGE>

     "14 1/4% Exchangeable  Preferred" means the 14 1/4% Cumulative Exchangeable
Redeemable   Preferred  Stock   mandatorily   redeemable  May  1,  2007  of  the
Corporation,  and any  shares  of  preferred  stock  issued as  payment  in kind
dividends thereon.

     "GAAP" means generally accepted accounting  principles in the United States
of  America as in effect as of August 8, 1995,  including,  without  limitation,
those set forth in the opinions and pronouncements of the Accounting  Principles
Board of the American  Institute of Certified Public  Accountants and statements
and pronouncements of the Financial  Accounting Standards Board or in such other
statements  by such other  entity as  approved by a  significant  segment of the
accounting  profession.  All ratios and  computations  contained in this Section
4.2.2 shall be computed in conformity  with GAAP applied on a consistent  basis,
except that  calculations  made for purposes of determining  compliance with the
terms of the covenants and with other  provisions of this Section 4.2.2 shall be
made without giving effect to (i) the  amortization of any expenses  incurred in
connection  with the  offering  of the 13 1/2%  Notes  and the  warrants  issued
therewith,  the 12 1/2% Notes, the 14 1/4%  Exchangeable  Preferred,  the Senior
Discount  Notes and/or the  Exchangeable  Preferred and (ii) except as otherwise
provided,  the  amortization of any amounts  required or permitted by Accounting
Principles Board Opinion Nos. 16 and 17.

     "Guarantee"  means any obligation,  contingent or otherwise,  of any Person
directly or indirectly  guaranteeing any Indebtedness or other obligation of any
other  Person  and,  without  limiting  the  generality  of the  foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (i) to
purchase or pay (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 agreements 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"  shall  not  include
endorsements  for collection or deposit in the ordinary course of business.  The
term "Guarantee" used as a verb has a corresponding meaning.

     "Holders" means the registered holders of shares of Exchangeable Preferred.

     "Holdings  (Canada)" means ICG Holdings  (Canada),  Inc. and its successors
and assigns.

     "ICG" means ICG Communications, Inc. and its successors and assigns.

     "Incur" means, with respect to any Indebtedness,  to incur, create,  issue,
assume,  Guarantee or otherwise  become liable for or with respect to, or become
responsible for, the payment of,  contingently or otherwise,  such Indebtedness,
including an Incurrence of  Indebtedness  by reason of the  acquisition  of more
than 50% of the Capital  Stock of any Person;  provided that neither the accrual
of interest nor the accretion of original  issue discount shall be considered an
Incurrence of Indebtedness.  

                                      -45-
<PAGE>

     "Indebtedness"   means,   with  respect  to  any  Person  at  any  date  of
determination  (without  duplication),  (i) all  indebtedness of such Person for
borrowed  money,  (ii)  all  obligations  of such  Person  evidenced  by  bonds,
debentures,  notes or other similar  instruments,  (iii) all obligations of such
Person in respect of letters of credit or other similar  instruments  (including
reimbursement  obligations with respect  thereto),  (iv) all obligations of such
Person to pay the  deferred and unpaid  purchase  price of property or services,
which  purchase price is due more than six months after the date of placing such
property in service or taking  delivery and title  thereto or the  completion of
such  services,  except Trade  Payables,  (v) all  obligations of such Person as
lessee under Capitalized  Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any  asset of such  Person,  whether  or not such  Indebtedness  is
assumed by such Person;  provided that the amount of such Indebtedness  shall be
the  lesser  of (A) the  fair  market  value  of  such  asset  at  such  date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other  Persons  Guaranteed  by such  Person to the extent such  Indebtedness  is
Guaranteed  by such  Person and (viii) to the extent not  otherwise  included in
this  definition,  obligations  under  Currency  Agreements  and  Interest  Rate
Agreements.  The amount of  Indebtedness  of any Person at any date shall be the
outstanding  balance at such date of all unconditional  obligations as described
above and, with respect to contingent  obligations,  the maximum  liability upon
the occurrence of the contingency  giving rise to the  obligation,  provided (i)
that the amount outstanding at any time of any Indebtedness issued with original
issue  discount is the original issue price of such  Indebtedness  and (ii) that
Indebtedness shall not include (A) any amount of money borrowed,  at the time of
the  Incurrence of the related  Indebtedness,  for the purpose of prefunding any
interest payable on such related  Indebtedness or (B) any liability for federal,
state, local or other taxes.

     "Indebtedness to EBITDA Ratio" means, as at any date of determination,  the
ratio of (i) the aggregate  amount of  Indebtedness  of the  Corporation and its
Restricted  Subsidiaries on a consolidated basis as at the date of determination
(the  "Determination  Date") to (ii) the Consolidated  EBITDA of the Corporation
for the then most recent four full fiscal  quarters for which  reports have been
filed  pursuant to paragraph  11(i) of this Section 4.2.2 (such four full fiscal
quarter period being referred to herein as the "Four Quarter Period");  provided
that (x) pro forma effect shall be given to any  Indebtedness  Incurred from the
beginning of the Four Quarter Period through the  Determination  Date (including
any Indebtedness  Incurred on the Determination Date), to the extent outstanding
on the Determination  Date, (y) if during the period commencing on the first day
of such Four  Quarter  Period  through the  Determination  Date (the  "Reference
Period"),  the  Corporation  or any of the  Restricted  Subsidiaries  shall have
engaged in any Asset Sale,  Consolidated EBITDA for such period shall be reduced
by an amount equal to the EBITDA (if positive),  or increased by an amount equal
to the EBITDA (if negative),  directly  attributable to the assets which are the
subject of such Asset Sale and any related retirement of Indebtedness as if such
Asset Sale and related  retirement of Indebtedness had occurred on the first day
of such Reference  Period or (z) if during such Reference Period the Corporation
or any of the  Restricted  Subsidiaries  shall have made any Asset  Acquisition,
Consolidated  EBITDA of the Corporation shall be calculated on a pro forma basis
as if such Asset Acquisition and any related financing had occurred on the first
day of such Reference Period. In calculating this ratio for purposes hereof, the

                                      -46-
<PAGE>

amount of outstanding  Indebtedness  shall be deemed to include the  liquidation
preference of any preferred stock then outstanding.

     "Interest Rate  Agreement"  means any interest rate  protection  agreement,
interest rate future agreement,  interest rate option  agreement,  interest rate
swap  agreement,  interest rate cap agreement,  interest rate collar  agreement,
interest rate hedge agreement or other similar agreement or arrangement designed
to  protect  the  Corporation  or  any of its  Restricted  Subsidiaries  against
fluctuations  in interest rates in respect of Indebtedness to or under which the
Corporation or any of its Restricted Subsidiaries is a party or a beneficiary on
the Closing Date or becomes a party or a beneficiary  thereafter;  provided that
the notional  principal  amount thereof does not exceed the principal  amount of
the Indebtedness of the Corporation and its Restricted  Subsidiaries  that bears
interest at floating rates.

     "Investment"  in any Person means any direct or indirect  advance,  loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement;  but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP,  recorded as accounts  receivable
on the balance  sheet of the  Corporation  or its  Restricted  Subsidiaries)  or
capital  contribution  to (by means of any transfer of cash or other property to
others or any  payment  for  property  or  services  for the  account  or use of
others),  or any  purchase  or  acquisition  of  Capital  Stock,  bonds,  notes,
debentures or other similar instruments issued by, such Person and shall include
the designation of a Restricted  Subsidiary as an Unrestricted  Subsidiary.  For
purposes of the definition of  "Unrestricted  Subsidiary" and paragraph 11(b) of
this Section 4.2.2, (i) "Investment"  shall include the fair market value of the
assets (net of liabilities)  of any Restricted  Subsidiary of the Corporation at
the time that such  Restricted  Subsidiary of the  Corporation  is designated an
Unrestricted  Subsidiary  and shall  exclude the fair market value of the assets
(net of  liabilities)  of any  Unrestricted  Subsidiary  at the time  that  such
Unrestricted Subsidiary is designated a Restricted Subsidiary of the Corporation
and (ii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market  value at the time of such  transfer,  in each case as
determined by the Board of Directors in good faith.

     "Lien" means any mortgage, pledge, security interest,  encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller,  or any agreement to give any
security interest).

     "MTN"  means  Maritime   Telecommunications   Network,   Inc.,  a  Colorado
corporation, and its successors.

     "Net Cash Proceeds"  means (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents,  including  payments
in respect of deferred payment  obligations (to the extent  corresponding to the
principal,  but not  interest,  component  thereof) when received in the form of
cash or cash equivalents  (except to the extent such obligations are financed or
sold with  recourse  to the  Corporation  or any  Restricted  Subsidiary  of the
Corporation)  and proceeds from the conversion of other  property  received when

                                      -47-
<PAGE>

converted to cash or cash  equivalents,  net of (i)  brokerage  commissions  and
other fees and expenses  (including  fees and expenses of counsel and investment
bankers)  related to such Asset Sale,  (ii) provisions for all taxes (whether or
not such taxes will  actually be paid or are  payable) as a result of such Asset
Sale without regard to the consolidated results of operations of the Corporation
and its Restricted Subsidiaries,  taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation  outstanding at the time of such Asset Sale
that  either (A) is secured by a Lien on the  property  or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate  amounts to be
provided by the  Corporation or any Restricted  Subsidiary as a reserve  against
any liabilities associated with such Asset Sale, including,  without limitation,
pension and other  post-employment  benefit liabilities,  liabilities related to
environmental  matters and  liabilities  under any  indemnification  obligations
associated  with such Asset Sale, all as determined in conformity  with GAAP and
(b) with respect to any issuance or sale of Capital Stock,  the proceeds of such
issuance or sale in the form of cash or cash equivalents,  including payments in
respect of deferred  payment  obligations  (to the extent  corresponding  to the
principal,  but not  interest,  component  thereof) when received in the form of
cash or cash equivalents  (except to the extent such obligations are financed or
sold with recourse to the Corporation or any Restricted Subsidiary) and proceeds
from the  conversion of other  property  received when converted to cash or cash
equivalents,  net  of  attorneys'  fees,  accountants'  fees,  underwriters'  or
placement agents' fees,  discounts or commissions and brokerage,  consultant and
other fees  incurred in  connection  with such issuance or sale and net of taxes
paid or payable as a result thereof.

     "Offer to  Purchase"  means an offer to  purchase  shares  of  Exchangeable
Preferred by the Corporation  from the Holders  commenced by mailing a notice to
the Transfer Agent and each Holder stating:  (i) the covenant  pursuant to which
the offer is being made and that all shares of  Exchangeable  Preferred  validly
tendered  will be accepted  for payment on a pro rata basis;  (ii) the  purchase
price and the date of purchase (which shall be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed)  (the  "Payment
Date");  (iii) that any  shares of  Exchangeable  Preferred  not  tendered  will
continue  to accrue  dividends  pursuant  to its terms;  (iv)  that,  unless the
Corporation  defaults  in the  payment  of the  purchase  price,  any  shares of
Exchangeable  Preferred  accepted for payment  pursuant to the Offer to Purchase
shall cease to accrue  dividends on and after the Payment Date; (v) that Holders
electing to have any shares of Exchangeable  Preferred purchased pursuant to the
Offer to  Purchase  will be  required to  surrender  the shares of  Exchangeable
Preferred together with a form entitled "Option of the Holder to Elect Purchase"
(the form of which will be mailed  with such  notice)  completed,  to the paying
agent at the address  specified  in the notice prior to the close of business on
the Business Day immediately  preceding the Payment Date; (vi) that Holders will
be entitled to withdraw their election if the paying agent  receives,  not later
than the close of business on the third Business Day  immediately  preceding the
Payment Date, a telegram,  facsimile  transmission  or letter  setting forth the
name of such Holder,  the  liquidation  preference of the shares of Exchangeable
Preferred delivered for purchase and a statement that such Holder is withdrawing
his election to have such shares of Exchangeable Preferred purchased;  and (vii)
that Holders whose shares of Exchangeable  Preferred are being purchased only in
part  will  be  issued  new  shares  of  Exchangeable  Preferred  equal  to  the
liquidation  preference of the unpurchased portion of the shares of Exchangeable

                                      -48-
<PAGE>

Preferred  surrendered;  provided  that  each  share of  Exchangeable  Preferred
purchased  and each new share of  Exchangeable  Preferred  issued  shall be in a
principal amount of $1,000 or integral multiples  thereof.  On the Payment Date,
the  Corporation  shall (i)  accept for  payment  on a pro rata basis  shares of
Exchangeable  Preferred  or portions  thereof  tendered  pursuant to an Offer to
Purchase;  (ii)  deposit  with the  paying  agent  money  sufficient  to pay the
purchase price of all shares of  Exchangeable  Preferred or portions  thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Transfer Agent all
shares of Exchangeable  Preferred or portions thereof so accepted  together with
an Officers'  Certificate  specifying  the shares of  Exchangeable  Preferred or
portions thereof accepted for payment by the Corporation. The paying agent shall
promptly  mail to the Holders of shares of  Exchangeable  Preferred so accepted,
payment in an amount equal to the purchase  price,  and the Transfer Agent shall
promptly  authenticate  and mail to such  Holders  new  shares  of  Exchangeable
Preferred  equal in  liquidation  preference to any  unpurchased  portion of the
shares of  Exchangeable  Preferred  surrendered;  provided  that  each  share of
Exchangeable  Preferred  purchased and each new share of Exchangeable  Preferred
issued shall be in a principal amount of $1,000 or integral  multiples  thereof.
The  Corporation  will publicly  announce the results of an Offer to Purchase as
soon as practicable  after the Payment Date. The Transfer Agent shall act as the
paying agent for an Offer to  Purchase.  The  Corporation  will comply with 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 the event
that the Corporation is required to repurchase shares of Exchangeable  Preferred
pursuant to an Offer to Purchase.

     "Ohio LINX" means ICG Ohio LINX, Inc., an Ohio corporation.

     "Permitted  Investment" means (i) an Investment in a Restricted  Subsidiary
or a Person which will, upon the making of such Investment,  become a Restricted
Subsidiary or be merged or  consolidated  with or into or transfer or convey all
or substantially all its assets to, the Corporation or a Restricted  Subsidiary;
provided  that  such  Person's  primary   business  is  related,   ancillary  or
complementary   to  the  businesses  of  the   Corporation  and  its  Restricted
Subsidiaries on the date of such  Investment;  (ii) a Temporary Cash Investment;
(iii) payroll, travel and similar advances to cover matters that are expected at
the time of such  advances  ultimately  to be treated as expenses in  accordance
with GAAP;  (iv) loans or advances to employees  made in the ordinary  course of
business in accordance  with past practice of the  Corporation or its Restricted
Subsidiaries  and that do not in the  aggregate  exceed $2  million  at any time
outstanding;  (v) stock,  obligations or securities  received in satisfaction of
judgments;   (vi)   Indebtedness  of  ICG  or  Holdings  (Canada)  owed  to  the
Corporation,  in an  amount  not to exceed  the  reasonable  expenses  of ICG or
Holdings  (Canada),  as the case may be, as a holding  company that are actually
incurred, and paid, by ICG or Holdings (Canada); provided that such Indebtedness
of  ICG  or  Holdings  (Canada),  as  the  case  may  be,  is  evidenced  by  an
unsubordinated  promissory  note that provides that it will be paid prior to any
mandatory  redemption  of the  Exchangeable  Preferred if such payment  would be
necessary to effectuate such redemption;  and (vii) Investments in an amount not
to exceed, at any one time outstanding, all of the Net Cash Proceeds received by
the Corporation from the sale of common stock of ICG (to a person other than one
of ICG's Subsidiaries) after the Closing Date.

                                      -49-
<PAGE>

     "Permitted  Liens"  means (i) Liens for  taxes,  assessments,  governmental
charges or claims that are being  contested in good faith by  appropriate  legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision,  if any, as shall be required in conformity with
GAAP shall have been made;  (ii)  statutory  Liens of  landlords  and  carriers,
warehousemen,  mechanics,  suppliers,  materialmen,  repairmen or other  similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly  instituted and  diligently  conducted and for which a reserve or other
appropriate  provision,  if any, as shall be required  in  conformity  with GAAP
shall have been made;  (iii) Liens  incurred or  deposits  made in the  ordinary
course of  business  in  connection  with  workers'  compensation,  unemployment
insurance and other types of social  security;  (iv) Liens  incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations,   bankers'  acceptances,   surety  and  appeal  bonds,   government
contracts,  performance  and  return-of-money  bonds and other  obligations of a
similar  nature  incurred  in the  ordinary  course of  business  (exclusive  of
obligations for the payment of borrowed  money);  (v) easements,  rights of way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other  irregularities  that do not  materially  interfere  with the  ordinary
course of business of the  Corporation  or any of its  Restricted  Subsidiaries;
(vi) Liens  (including  extensions  and renewals  thereof) upon real or personal
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing  Indebtedness  Incurred,  in accordance  with
paragraph  11(a) of this Section 4.2.2,  (1) to finance the cost  (including the
cost of improvement or  construction)  of the item of property or assets subject
thereto  and such Lien is created  prior to, at the time of or within six months
after  the later of the  acquisition,  the  completion  of  construction  or the
commencement  of  full  operation  of  such  property  or (2) to  refinance  any
Indebtedness previously so secured, (b) the principal amount of the Indebtedness
secured  by such  Lien does not  exceed  100% of such cost and (c) any such Lien
shall not  extend to or cover any  property  or assets  other  than such item of
property or assets and any  improvements on such item; (vii) leases or subleases
granted to others that do not materially  interfere with the ordinary  course of
business of the Corporation and its Restricted  Subsidiaries,  taken as a whole;
(viii)  Liens  encumbering  property or assets under  construction  arising from
progress or partial  payments by a customer of the Corporation or its Restricted
Subsidiaries  relating to such property or assets; (ix) any interest or title of
a lessor in the property  subject to any Capitalized  Lease or operating  lease;
(x) Liens  arising from filing  Uniform  Commercial  Code  financing  statements
regarding  leases;  (xi)  Liens  on  property  of,  or on  shares  of  stock  or
Indebtedness of, any corporation  existing at the time such corporation becomes,
or becomes a part of, any Restricted Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the  Corporation  or any Restricted
Subsidiary other than the property or assets  acquired;  (xii) Liens in favor of
the  Corporation  or any  Restricted  Subsidiary;  (xiii) Liens arising from the
rendering of a final judgment or order against the Corporation or any Restricted
Subsidiary that does not give rise to an Event of Default;  (xiv) Liens securing
reimbursement  obligations  with  respect  to letters  of credit  that  encumber
documents and other property relating to such letters of credit and the products
and  proceeds  thereof;  (xv) Liens in favor of customs and revenue  authorities

                                      -50-
<PAGE>

arising as a matter of law to secure  payment of  customs  duties in  connection
with the  importation  of  goods;  (xvi)  Liens  encumbering  customary  initial
deposits and margin deposits, and other Liens that are either within the general
parameters  customary in the  industry  and  incurred in the ordinary  course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts,  options,  future contracts,  futures
options  or  similar   agreements  or  arrangements   designed  to  protect  the
Corporation or any of its Restricted Subsidiaries from fluctuations in the price
of commodities;  (xvii) Liens arising out of conditional  sale, title retention,
consignment  or similar  arrangements  for the sale of goods entered into by the
Corporation  or any of its  Restricted  Subsidiaries  in the ordinary  course of
business  in  accordance  with the past  practices  of the  Corporation  and its
Restricted Subsidiaries prior to the Closing Date; and (xviii) Liens on or sales
of receivables.

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability company, an association,  a trust or any other entity or organization,
including a government or political  subdivision or an agency or instrumentality
thereof.

     "Preferred  stock" or "preferred  stock" means, with respect to any Person,
any and all shares,  interests,  participations  or other  equivalents  (however
designated,  whether  voting  or  non-voting)  of  such  Person's  preferred  or
preference  stock,  whether now  outstanding  or issued  after the date  hereof,
including,  without  limitation,  all series and  classes of such  preferred  or
preference stock.

     "Public  Equity  Offering"  means a bona fide  underwritten  primary public
offering of common  stock of ICG or the  Corporation  pursuant  to an  effective
registration statement under the Securities Act.

     "Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or  otherwise  is (i)  required  to be  redeemed  prior to the
mandatory  redemption  date  of  the  shares  of  Exchangeable  Preferred,  (ii)
redeemable  at the option of the holder of such class or series of Capital Stock
at any time prior to the mandatory redemption date of the shares of Exchangeable
Preferred,  or (iii) convertible into or exchangeable for Capital Stock referred
to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior
to the  mandatory  redemption  date of the  shares  of  Exchangeable  Preferred;
provided that any Capital Stock that would not constitute  Redeemable  Stock but
for provisions  thereof giving holders  thereof the right to require such Person
to repurchase  or redeem such Capital Stock upon the  occurrence of a "change of
control"  occurring  prior to the  mandatory  redemption  date of the  shares of
Exchangeable  Preferred shall not constitute  Redeemable Stock if the "change of
control"  provisions  applicable to such Capital Stock are no more  favorable to
the holders of such Capital Stock than the  provisions  contained in the "Change
of Control"  provisions  contained in paragraph  7(b) of this Section  4.2.2 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock  pursuant  to such  provision  prior to the  Corporation's
repurchase  of  Exchangeable  Preferred  as provided in  paragraph  7(b) of this
Section 4.2.2.

                                      -51-
<PAGE>

     "Restricted  Subsidiary" means any Subsidiary of the Corporation other than
an Unrestricted Subsidiary.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Senior  Discount  Notes," as used in this Section 4.2.2,  means the Senior
Discount  Notes  Due  2007 of the  Corporation,  Guaranteed  by ICG on a  senior
unsecured basis and issued on the Closing Date.

     "Senior Discount Notes Indenture," as used in this Section 4.2.2, means the
Indenture  dated as of the  Closing  Date  among  the  Corporation,  ICG and the
Trustee pursuant to which the Senior Discount Notes are issued.

     "StarCom"  means  StarCom  International  Optics  Corporation,   a  British
Columbia corporation, and its Subsidiaries.

     "Strategic  Investor"  means any Person  engaged in the  telecommunications
business  which has a net worth or equity market  capitalization  of at least $1
billion.

     "Strategic  Investor  Subordinated  Indebtedness" means all Indebtedness of
the Corporation owed to a Strategic  Investor that is contractually  subordinate
in right of  payment  to the shares of  Exchangeable  Preferred  to at least the
following extent: no payment of principal (or premium, if any) or interest on or
otherwise  payable in respect of such  Indebtedness  may be made  (whether  as a
result of a default  or  otherwise)  prior to the  payment in full of all of the
Corporation's obligations under the shares of Exchangeable Preferred;  provided,
however,  that prior to the payment of such  obligations,  interest on Strategic
Investor  Subordinated  Indebtedness  may be payable solely in kind or in common
stock (other than Redeemable Stock) of ICG or the Corporation.

     "Subsidiary"   means,   with  respect  to  any  Person,   any  corporation,
association or other business  entity of which more than 50% of the  outstanding
Voting Stock is owned,  directly or  indirectly,  by such Person and one or more
other Subsidiaries of such Person.

     "Temporary  Cash  Investment"  means  any  of  the  following:  (i)  direct
obligations of the United States of America or any agency thereof or obligations
fully and  unconditionally  guaranteed  by the  United  States of America or any
agency thereof,  (ii) time deposit  accounts,  certificates of deposit and money
market  deposits  maturing  within 270 days of the date of acquisition  thereof,
bankers'  acceptances with maturities not exceeding 270 days, and overnight bank
deposits,  in each  case  issued  by or with a bank or  trust  company  which is
organized  under the laws of the United States of America,  any state thereof or
any foreign  country  recognized by the United  States,  and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of $100
million (or the foreign  currency  equivalent  thereof) and has outstanding debt
which is rated "A" (or such similar equivalent rating) or higher by at least one

                                      -52-
<PAGE>

nationally  recognized  statistical rating  organization (as defined in Rule 436
under the  Securities  Act) or any  money-market  fund sponsored by a registered
broker dealer or mutual fund  distributor,  (iii) repurchase  obligations with a
term of not more than 30 days for underlying  securities of the types  described
in  clause  (i)  above  entered  into  with a bank  meeting  the  qualifications
described in clause (ii) above,  (iv) commercial  paper,  maturing not more than
180 days after the date of acquisition,  issued by a corporation  (other than an
Affiliate of ICG) organized and in existence under the laws of the United States
of America,  any state thereof or any foreign  country  recognized by the United
States of America with a rating at the time as of which any  investment  therein
is made of "P-1" (or higher)  according to Moody's  Investors  Service,  Inc. or
"A-1"  (or  higher)  according  to  Standard  & Poor's  Ratings  Group,  and (v)
securities  with  maturities of six months or less from the date of  acquisition
issued or fully and  unconditionally  guaranteed by any state,  commonwealth  or
territory of the United States of America,  or by any political  subdivision  or
taxing  authority  thereof,  and rated at least "A" by Standard & Poor's Ratings
Group or Moody's Investors Service, Inc.

     "13 1/2%  Notes"  means the 13 1/2% Senior  Discount  Notes Due 2005 of the
Corporation Guaranteed by ICG and Holdings (Canada) on a senior unsecured basis.

     "13 1/2% Notes  Indenture"  means the Indenture dated as of August 8, 1995,
as amended, among the Corporation, Holdings (Canada) and the Trustee pursuant to
which the Corporation issued the 13 1/2% Notes.

     "Trade Payables" means, with respect to any Person, any accounts payable or
any other debt or monetary  obligation to trade  creditors  created,  assumed or
Guaranteed  by such Person or any of its  Subsidiaries  arising in the  ordinary
course of business in connection with the acquisition of goods or services.

     "Transaction   Date"  means,   with  respect  to  the   Incurrence  of  any
Indebtedness  by the  Corporation or any of its Restricted  Subsidiaries  or the
issuance of any Redeemable Stock of the Corporation,  the date such Indebtedness
is to be  Incurred  or such  issuance  is to be made and,  with  respect  to any
Restricted Payment, the date such Restricted Payment is to be made.

     "Transfer  Agent" means American Stock Transfer and Trust Company,  40 Wall
Street, 46th Floor, New York, New York 10005, or such other Person as may become
the transfer agent with respect to the Exchangeable Preferred.

     "Transfer Agent Office" means the principal office of the Transfer Agent at
any  particular  time,  which office is, at the date hereof,  located at 40 Wall
Street, 46th Floor, New York, New York 10005.

     "Trustee" means Norwest Bank Colorado,  National Association, or such other
Person as may become the trustee under the Indenture,  the Senior Discount Notes
Indenture,  the 12 1/2% Notes Indenture or the 13 1/2% Notes  Indenture,  as the
context requires.

                                      -53-
<PAGE>

     "12 1/2%  Notes"  means the 12 1/2% Senior  Discount  Notes due 2006 of the
Corporation guaranteed by ICG and Holdings (Canada) on a senior unsecured basis.

     "12 1/2% Notes  Indenture"  means the Indenture dated as of April 30, 1996,
as amended, among the Corporation, Holdings (Canada) and the Trustee pursuant to
which the Corporation issued the 12 1/2% Notes.

     "Unrestricted  Subsidiary" means (i) any Subsidiary of the Corporation that
at the time of determination  shall be designated an Unrestricted  Subsidiary by
the Board of Directors in the manner  provided  below and (ii) any Subsidiary of
an Unrestricted Subsidiary.  The Board of Directors may designate any Restricted
Subsidiary  of the  Corporation  (including  any newly  acquired or newly formed
Subsidiary of the Corporation),  other than the Corporation or a Subsidiary that
has given a Subsidiary Guarantee,  to be an Unrestricted  Subsidiary unless such
Subsidiary  owns any Capital Stock of, or owns or holds any Lien on any property
of, the Corporation or any Restricted  Subsidiary;  provided that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary  has assets  greater  than  $1,000,  that such  designation  would be
permitted under  paragraph  11(b) of this Section 4.2.2.  The Board of Directors
may designate any Unrestricted  Subsidiary to be a Restricted  Subsidiary of the
Corporation;  provided that immediately  after giving effect to such designation
(x) the Corporation could Incur $1.00 of additional Indebtedness under paragraph
11(a)(i) of this Section 4.2.2 and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Transfer Agent by promptly  filing with the Transfer Agent a
copy  of the  resolution  of the  Board  of  Directors  giving  effect  to  such
designation  and an  Officers'  Certificate  certifying  that  such  designation
complied with the foregoing provisions.

     "Voting  Stock"  means,  with respect to any Person,  Capital  Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

     "Wholly Owned" means,  with respect to any  Subsidiary of any Person,  such
Subsidiary if 98% or more of the  outstanding  Capital Stock in such  Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable  law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.

     "Zycom" means Zycom Corporation, an Alberta, Canada corporation.

     2. Designation Amount. The distinctive serial designation of this
series shall be "Cumulative Exchangeable Redeemable Preferred Stock" (as used in
this  Section  4.2.2,  "Exchangeable  Preferred").   The  number  of  shares  of
Exchangeable Preferred shall initially be 200,000, which number may from time to
time be  increased  (but not above the  number  that would  cause the  aggregate
number  of all  shares of  preferred  stock of all  series  to exceed  1,000,000

                                      -54-
<PAGE>

shares) or decreased (but not below the number then outstanding) by the Board of
Directors.   Shares  of  Exchangeable  Preferred  redeemed,   purchased  by  the
Corporation  or exchanged for Exchange  Debentures (as defined in paragraph 8(a)
of this Section  4.2.2) shall be canceled  and shall  revert to  authorized  but
unissued shares of preferred stock undesignated as to series; provided, however,
that no such issued and  reacquired  shares of such series  shall be reissued or
sold as shares of Exchangeable  Preferred unless reissued as a stock dividend on
outstanding shares of Exchangeable Preferred.

     3. Rank. The Exchangeable  Preferred shall, with respect to dividend rights
and  distribution  rights on  liquidation,  winding-up  and  dissolution  of the
Corporation,  rank (i) senior to all classes of common stock of the  Corporation
and to  each  other  class  of  Capital  Stock  or  series  of  preferred  stock
established after March 6, 1997, by the Board of Directors the terms of which do
not  expressly  provide  that  it  ranks  senior  to or  on a  parity  with  the
Exchangeable  Preferred as to dividend  distributions and distributions upon the
liquidation,   winding-up  and  dissolution  of  the  Corporation  (collectively
referred to with the common stock of the  Corporation  as "Junior  Securities");
(ii) on a  parity  with  the 14 1/4%  Exchangeable  Preferred  and any  class of
Capital Stock or series of preferred stock issued by the Corporation established
after March 6, 1997 by the Corporation's Board of Directors,  the terms of which
expressly  provide  that  such  class or series  will rank on a parity  with the
Exchangeable  Preferred as to dividend  distributions and distributions upon the
liquidation,   winding-up  and  dissolution  of  the  Corporation  (collectively
referred to as "Parity  Securities");  and (iii)  subject to certain  conditions
described  below,  junior to each class of Capital  Stock or series of preferred
stock  issued  by  the  Corporation  established  after  March  6,  1997  by the
Corporation's Board of Directors, the terms of which expressly provide that such
class or series will rank senior to the  Exchangeable  Preferred  as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the  Corporation  (collectively  referred  to as  "Senior  Securities").  The
Exchangeable  Preferred  will be  subject  to the  issuance  of series of Junior
Securities,   Parity  Securities  and  Senior  Securities;   provided  that  the
Corporation  may not  issue  any new  class of  Senior  Securities  without  the
approval  of the  Holders of at least a majority  of the shares of  Exchangeable
Preferred then outstanding, voting or consenting, as the case may be, separately
as one class,  except that without such approval of Holders of the  Exchangeable
Preferred, the Corporation may issue shares of Senior Securities (1) in exchange
for, or the  proceeds of which are used to redeem or  repurchase,  all,  but not
less than all,  shares of  Exchangeable  Preferred then  outstanding,  or (2) in
exchange  for,  or the  proceeds  of which  are used to repay,  any  outstanding
Indebtedness of the Corporation.

                                      -55-
<PAGE>

     4. Dividends.

          (a) The  Holders  of shares  of the  Exchangeable  Preferred  shall be
     entitled to receive,  when, as and if declared by the Board of Directors of
     the Corporation,  out of funds legally available therefor, dividends at the
     annual rate of 14% of the liquidation  preference per share, subject to the
     provisions of paragraph  4(e) below.  Such  dividends  shall be cumulative,
     whether  or not  earned  or  declared,  on a daily  basis  from the date of
     issuance of the Exchangeable  Preferred,  and shall be payable quarterly in
     arrears on March 15, June 15,  September  15, and  December 15 of each year
     commencing  on June 15, 1997 (each of such dates being a "dividend  payment
     date"),  with respect to the period commencing with the date of issuance of
     the  particular  shares  of  Exchangeable   Preferred  or  the  immediately
     preceding  dividend  payment  date and  ending  on the day  preceding  such
     respective  dividend  payment date (each of such periods  being a "dividend
     period"),  to  shareholders  of  record on the  preceding  March 1, June 1,
     September 1, and December 1, respectively  (each, a "regular record date").
     Any dividend payments made with respect to shares of Exchangeable Preferred
     on or before March 15, 2002,  may be made,  in the sole  discretion  of the
     Board  of  Directors  of the  Corporation,  in cash or in  such  number  of
     additional fully paid and  nonassessable  shares of Exchangeable  Preferred
     having an  aggregate  liquidation  preference  equal to the  amount of such
     dividends,  and the  issuance  of such  additional  shares of  Exchangeable
     Preferred  shall  constitute  full payment of such dividend.  All dividends
     paid with  respect to shares of  Exchangeable  Preferred  pursuant  to this
     paragraph 4(a) shall be paid pro rata to the Holders entitled thereto.  The
     Corporation  may,  at the  option of the Board of  Directors,  elect not to
     issue fractions of a share of Exchangeable  Preferred ("Fractional Shares")
     in payment of any dividend in additional shares of Exchangeable  Preferred.
     In such event,  in lieu of any  Fractional  Shares,  each record  Holder of
     Exchangeable  Preferred  otherwise  entitled to receive a Fractional  Share
     shall  receive  a  payment  in cash  equal to such  Holder's  proportionate
     interest in the net  proceeds  from the sale or sales in the open market by
     the Transfer Agent or other agent selected by the Corporation, on behalf of
     all such  Holders  of the  aggregate  of all  Fractional  Shares  otherwise
     payable as a  dividend.  Such sale  shall be  effected  promptly  after the
     record date fixed for  determining  the Holders  entitled to payment of the
     dividend.  All shares of Exchangeable  Preferred  issued as a dividend with
     respect to the  Exchangeable  Preferred will thereupon be duly  authorized,
     validly  issued,  fully  paid and  nonassessable  and free of all liens and
     charges.  After March 15,  2002,  dividends on the  Exchangeable  Preferred
     shall  be paid  only in cash to the  Holders  of  record  at the  close  of
     business on the regular record date with respect to the applicable dividend
     payment date.

          (b) Accumulated  unpaid dividends for any past dividend periods may be
     declared by the Board of Directors  and paid on any date fixed by the Board
     of Directors, whether or not a regular dividend payment date, to Holders of
     record on the books of the  Corporation on such record date as may be fixed
     by the Board of Directors.  Holders of  Exchangeable  Preferred will not be
     entitled to any dividends,  whether payable in cash,  property or stock, in
     excess of full cumulative  dividends.  If any dividend (or portion thereof)
     payable on any dividend  payment  date on or before March 15, 2002,  is not
     declared or paid in full in cash or in shares of Exchangeable  Preferred as
     described in paragraph 4(a) above on such dividend payment date, the amount

                                      -56-
<PAGE>

     of the accrued and unpaid  dividend will bear interest at the dividend rate
     on the  Exchangeable  Preferred,  compounding  quarterly from such dividend
     payment  date until paid in full.  If any  dividend  (or  portion  thereof)
     payable on any dividend  payment date after March 15, 2002, is not declared
     or paid in full in cash on such dividend  payment  date,  the amount of the
     accrued and unpaid  dividend will bear interest at the dividend rate on the
     Exchangeable  Preferred,  compounding  quarterly from such dividend payment
     date until paid in full.

          (c)  So  long  as  any  shares  of  the  Exchangeable   Preferred  are
     outstanding,  the Corporation  shall not (i) declare,  pay or set apart for
     payment  any  dividend  on  any  shares  of  Junior  Securities  or  Parity
     Securities or (ii) make any payment on account of, or set apart for payment
     money for a sinking or other  similar fund for, the  purchase,  redemption,
     retirement or other  acquisition for value of any of, or redeem,  purchase,
     retire or  otherwise  acquire  for value any of, the Junior  Securities  or
     Parity Securities or any warrants, rights, calls or options exercisable for
     or convertible  into any of the Junior  Securities or Parity  Securities or
     (iii) make any  distribution in respect of the Junior  Securities or Parity
     Securities or any warrants,  rights,  calls or options  exercisable  for or
     convertible into any of the Junior Securities or Parity Securities,  in any
     such case either directly or indirectly,  and whether in cash,  obligations
     or shares of the Corporation or other property (other than distributions or
     dividends of a particular  class or series of Junior  Securities to holders
     of such Junior  Securities  or  distributions  or dividends of a particular
     class or series of Parity Securities to holders of such Parity Securities),
     and shall not permit any corporation or other entity directly or indirectly
     controlled by the Corporation to purchase,  redeem or otherwise acquire for
     value any of the Junior  Securities  or Parity  Securities or any warrants,
     rights,  calls or options  exercisable  for or convertible  into any of the
     Junior  Securities or Parity  Securities,  unless, as to any of the actions
     described in clauses (i),  (ii) or (iii)  above,  prior to or  concurrently
     with  such  declaration,  payment,  setting  apart for  payment,  purchase,
     redemption,  other  acquisition for value or distribution,  as the case may
     be, all accrued and unpaid dividends, if any, on shares of the Exchangeable
     Preferred  not paid on the dates  provided for in  paragraphs  4(a) or 4(b)
     hereof  (including  accrued  dividends,  if any,  not paid by reason of the
     terms and  conditions  of paragraph  4(d)  hereof)  shall have been paid or
     shall have been  declared  and, if payable in cash, a sum in cash set apart
     for  such  payment.  If  full  cumulative  dividends  on  the  Exchangeable
     Preferred are not so paid, the Exchangeable  Preferred will share dividends
     pro rata with the Parity  Securities.  If full cumulative  dividends on the
     Exchangeable  Preferred have not been so paid, the  Exchangeable  Preferred
     may not be  optionally  redeemed in part as provided in  paragraph  6(d) of
     this Section 4.2.2.

          (d) Notwithstanding anything contained herein to the contrary, no cash
     dividends  on  shares of  Exchangeable  Preferred,  or any other  shares of
     Junior   Securities   or  Parity   Securities,   or  other  series  of  the
     Corporation's  preferred stock, shall be declared by the Board of Directors
     or paid or set apart for  payment  by the  Corporation  at such time as the
     terms and provisions of any contract or other  agreement of the Corporation
     or any of its Restricted Subsidiaries entered into or assumed prior to, on,
     or after the Closing Date specifically prohibits such declaration,  payment
     or setting apart for payment or provides that such declaration,  payment or
     setting  apart for payment would  constitute a breach  thereof or a default

                                      -57-
<PAGE>

     thereunder;  provided,  however,  that nothing  contained in this paragraph
     4(d) shall be  construed  or deemed to require  the Board of  Directors  to
     declare,  or the  Corporation  to pay or set  apart for  payment,  any cash
     dividends on shares of the Exchangeable Preferred, whether permitted by any
     of such agreements or not.

          (e) If, on or prior to September 11, 1997, the  Corporation  does not,
     as more fully provided in the Registration Rights Agreement with respect to
     the Exchangeable Preferred dated the Closing Date, either (i) consummate an
     offer by the  Corporation  to such  Holders to  exchange  the  Exchangeable
     Preferred  for an issue of preferred  stock of the  Corporation  with terms
     identical  to  the   Exchangeable   Preferred   pursuant  to  an  effective
     registration  statement  under  the  Securities  Act with  respect  to such
     exchange  offer,  or (ii)  file and  cause to  become  effective  under the
     Securities  Act a shelf  registration  statement with respect to resales of
     the Exchangeable  Preferred,  then dividends,  in addition to the dividends
     described  in  paragraph  4(a) of this  Section  4.2.2,  will accrue at the
     annual  rate  of  0.5%  of the  liquidation  preference  per  share  on the
     Exchangeable  Preferred  from  September  11, 1997,  payable in  additional
     shares of Exchangeable Preferred quarterly in arrears on March 15, June 15,
     September 15, and December 15 of each year commencing on December 15, 1997.

     5. Liquidation Preference.

          (a)  In  the  event  of  any  voluntary  or  involuntary  liquidation,
     dissolution or winding-up of the affairs of the Corporation,  then,  before
     any  distribution  or  payment  shall be made to the  holders of any Junior
     Securities,  including  common  stock of the  Corporation,  the  Holders of
     Exchangeable  Preferred then outstanding  shall be entitled to be paid, out
     of  the  assets  of  the  Corporation  available  for  distribution  to its
     shareholders,  an amount in cash equal to $1,000 for each share outstanding
     (which amount is hereinafter referred to as the "liquidation  preference"),
     plus an  amount in cash  equal to all  accrued  and  unpaid  dividends  and
     interest  thereon  to  the  date  fixed  for  liquidation,  dissolution  or
     winding-up (including an amount equal to a prorated dividend for the period
     from the dividend  payment date  immediately  preceding  the date fixed for
     liquidation,  dissolution or winding-up to the date fixed for  liquidation,
     dissolution or winding-up).  Except as provided in the preceding  sentence,
     Holders of Exchangeable Preferred shall not be entitled to any distribution
     in the event of  liquidation,  dissolution  or winding-up of the affairs of
     the Corporation. If the assets of the Corporation are not sufficient to pay
     in full the  liquidation  payments  payable to the  holders of  outstanding
     shares of the Exchangeable Preferred and all other Parity Securities,  then
     the holders of all such shares shall share ratably in any  distribution  of
     assets of the Corporation  with respect to the  Exchangeable  Preferred and
     Parity  Securities in  accordance  with the amount that would be payable on
     such distribution if the amounts to which the holders of outstanding shares
     of Exchangeable Preferred and all other Parity Securities are entitled were
     paid  in  full.  After  payment  of the  full  amount  of  the  liquidation
     preference  and  accrued  and unpaid  dividends  or  interest to which each
     Holder is entitled,  such Holders of shares of Exchangeable  Preferred will
     not be entitled to any further  participation  in any  distribution  of the
     assets of the Corporation.

                                      -58-
<PAGE>

          (b) For purposes of this paragraph 5, a merger,  consolidation or sale
     of  substantially  all of the  Corporation's  assets that complies with the
     provisions of paragraph  11(g) of this Section 4.2.2 shall not be deemed to
     be a voluntary or involuntary liquidation, dissolution or winding-up of the
     Corporation.

     6. Optional Redemption.

          (a) Subject to  subparagraph  (d) of this  paragraph 6, and subject to
     the legal  availability  of funds therefor and to any contractual and other
     restrictions with respect thereto,  at any time on or after March 15, 2002,
     the Corporation,  at the option of the Board of Directors,  may redeem,  in
     whole  or in  part,  the  shares  of  Exchangeable  Preferred  at the  time
     outstanding,  at any  time or from  time to  time,  upon  notice  given  as
     provided in paragraph 9 of this Section  4.2.2,  at the  redemption  prices
     (expressed as a percentage of the liquidation preference thereof) set forth
     below, plus an amount in cash equal to all accumulated and unpaid dividends
     (including  an amount in cash equal to a prorated  dividend  for the period
     from the dividend payment date immediately  prior to the redemption date to
     the redemption date,  subject to the right of holders of preferred stock on
     a record date to receive  dividends on a dividend payment date) if redeemed
     during  the  12-month  period  beginning  March 15 of each of the years set
     forth below:

                  Year                                      Percentage
                  2002     ................................       107.0000%
                  2003     ................................       104.6667%
                  2004     ................................       102.3333%
                  2005 and thereafter......................       100.0000%

          (b) In addition,  but subject to subparagraph (d) of this paragraph 6,
     on or prior to March 15, 2000,  the  Corporation  may, at the option of the
     Board of Directors from time to time,  subject to the legal availability of
     funds therefor and to any contractual and other  restrictions  with respect
     thereto,  redeem  shares of  Exchangeable  Preferred  having  an  aggregate
     liquidation preference of up to 35% of the aggregate liquidation preference
     of all shares of  Exchangeable  Preferred  issued on the Closing Date, at a
     redemption  price  equal  to 114%  of the  liquidation  preference  thereof
     (subject  to the right of Holders of  Exchangeable  Preferred  on  relevant
     record dates to receive  dividends due on relevant dividend payment dates),
     plus an amount in cash equal to a prorated dividend for the period from the
     dividend  payment  date  immediately  prior to the  redemption  date to the
     redemption  date,  with proceeds of one or more Public Equity  Offerings of
     common  stock of (A) the  Corporation  or (B) ICG,  provided  that (i) with
     respect to a Public Equity Offering  referred to in clause (B) above,  cash
     proceeds of such Public Equity  Offering in an amount  sufficient to effect
     the redemption of Exchangeable  Preferred to be so redeemed are contributed
     by ICG to  the  Corporation  prior  to  such  redemption  and  used  by the
     Corporation  to effect  such  redemption  and (ii) such  redemption  occurs
     within 180 days after consummation of such Public Equity Offering.

                                      -59-
<PAGE>

          (c) In the event of partial redemptions of Exchangeable Preferred, the
     shares  to be  redeemed  will be  determined  pro  rata,  except  that  the
     Corporation  may redeem  such  shares  held by any Holder of fewer than 100
     shares without regard to such pro rata redemption requirement.

          (d) Notwithstanding the foregoing  provisions of paragraph 6(a) or (b)
     of this Section 4.2.2,  unless the full  cumulative  dividends for all past
     dividend periods on all outstanding shares of Exchangeable  Preferred shall
     have been paid or contemporaneously  are declared and paid or set apart for
     payment (whether in cash or additional shares of Exchangeable Preferred, as
     permitted under  paragraph 4(a) of this Section 4.2.2),  none of the shares
     of Exchangeable  Preferred shall be redeemed  pursuant to paragraph 6(a) or
     (b) of this Section  4.2.2 unless all  outstanding  shares of  Exchangeable
     Preferred are simultaneously redeemed and all such cumulative dividends are
     paid in cash contemporaneously with such redemption.

     7. Mandatory Redemption.

          (a) The Exchangeable Preferred will be subject to mandatory redemption
     (subject to the legal  availability of funds therefor but without regard to
     any  contractual  or other  restriction  with respect  thereto) in whole on
     March 15,  2008,  at a price,  payable  in cash,  equal to the  liquidation
     preference  thereof,  plus all accumulated and unpaid dividends to the date
     of redemption.

          (b) Upon the occurrence of a Change of Control,  the Corporation  will
     (subject to any contractual and other restrictions with respect thereto and
     to the legal  availability of funds therefor) offer (the "Change of Control
     Offer") to each Holder of  Exchangeable  Preferred to repurchase all or any
     part of such Holder's Exchangeable Preferred at a cash purchase price equal
     to 101% of the liquidation preference thereof, plus an amount in cash equal
     to all accumulated  and unpaid  dividends per share to the date of purchase
     (including an amount in cash equal to a prorated dividend from the dividend
     payment  date  immediately  preceding  the date of  purchase to the date of
     purchase).  The  Change  of  Control  Offer  will  be made  within  30 days
     following  a Change of  Control,  will  remain open for at least 30 and not
     more than 40 days, and will be made in compliance with the  requirements of
     Rule 14e-1 under the Exchange Act and any other applicable  securities laws
     and regulations. Notwithstanding the foregoing, the Corporation will not be
     required  to make a Change of Control  Offer if any of the Senior  Discount
     Notes,  122% Notes or 132% Notes are  outstanding  upon the occurrence of a
     Change of Control unless all of the Senior Discount  Notes,  122% Notes and
     132% Notes tendered pursuant to the "change of control offers" with respect
     thereto are  repurchased  as a result of such  Change of Control,  in which
     case the date on which all Senior Discount Notes, 122% Notes and 132% Notes
     (and any other  Indebtedness or Senior Securities of the Corporation having
     provisions  similar  to  Section  4.04(x)  of  the  Senior  Discount  Notes
     Indenture) are so  repurchased  will be deemed to be the date on which such
     Change of Control shall have occurred.

                                      -60-
<PAGE>

          (c) If the  Corporation  shall fail to  discharge  its  obligation  to
     redeem  all  outstanding  shares  of  Exchangeable  Preferred  pursuant  to
     paragraph  7(a) or (b) of this  Section  4.2.2 (the  "Mandatory  Redemption
     Obligation"),  the  Corporation  shall  discharge the Mandatory  Redemption
     Obligation as soon as the  Corporation  is able to do so. If and so long as
     any  Mandatory  Redemption  Obligation  with  respect  to the  Exchangeable
     Preferred shall not be fully discharged,  the Corporation shall not declare
     or  pay  any  dividend  or  make  any  distribution  on,  or,  directly  or
     indirectly,  purchase, redeem or satisfy any mandatory redemption,  sinking
     fund or other  similar  obligations  in respect of,  Junior  Securities  or
     Parity Securities (other than as a result of a  reclassification  of Junior
     Securities or Parity Securities, or the exchange or conversion of one class
     or series  of  Junior  Securities  for or into  another  class or series of
     Junior Securities,  or the exchange or conversion of one class or series of
     Parity Securities for or into another class or series of Parity Securities,
     or  other  than  through  the  use  of  the  proceeds  of  a  substantially
     contemporaneous sale of other Junior Securities or Parity Securities and in
     any case not involving  the payment of cash to holders of such  securities)
     or any warrants,  rights or options exercisable for or convertible into any
     of the Junior Securities or Parity Securities.

     8. Exchange.

          (a) The Corporation  may, at the sole option of the Board of Directors
     (subject to the legal  availability of funds  therefor),  exchange all, but
     not  less  than  all,  of  the  shares  of   Exchangeable   Preferred  then
     outstanding,  including  any  shares of  Exchangeable  Preferred  issued as
     payment for  dividends,  for a new series of 14%  Exchange  Debentures  due
     March 15, 2008, of the Corporation (the "Exchange Debentures") to be issued
     pursuant  to the  indenture  (the  "Indenture")  qualified  under the Trust
     Indenture Act of 1939, as amended,  substantially  in the form agreed to on
     the Closing  Date, a copy of which is on file with and can be obtained from
     the Secretary of the Corporation on request, at any time following the date
     on which such  exchange is  permitted  by the terms of the Senior  Discount
     Notes Indenture,  the 122% Notes Indenture,  the 132% Notes Indenture,  and
     the terms of all other  then-existing  Indebtedness  of the Corporation and
     subject to the conditions  contained in paragraph 8(b) below.  The Exchange
     Debentures  will be issued in registered  form,  without  coupons,  be duly
     executed,  authenticated  as of the date on which the exchange is effective
     and be dated the date of exchange. In the event of an exchange,  Holders of
     Exchangeable Preferred shall be entitled to receive on the date of exchange
     Exchange  Debentures having an aggregate  principal amount equal to (i) the
     total  of  the  liquidation  preference  for  each  share  of  Exchangeable
     Preferred  exchanged,  plus (ii) an amount  equal to all accrued but unpaid
     dividends  payable on such share  (including  a prorated  dividend  for the
     period from the immediately  preceding dividend payment date to the date of
     exchange).  In the event such  exchange  would  result in the  issuance  of
     Exchange  Debentures  in a  principal  amount  which is less than $1,000 or
     which is not an integral  multiple of $1,000  (such  principal  amount less
     than $1,000 or the difference between such principal amount and the highest
     integral of $1,000 which is less than such  principal  amount,  as the case
     may be, is hereinafter  referred to as the "Fractional  Principal Amount"),
     the  Corporation  may,  subject to any  restrictions in the Senior Discount
     Notes Indenture,  the 12 1/2% Notes Indenture, the 13 1/2% Notes Indenture,
     and the terms of all other  then-existing  Indebtedness of the Corporation,
     at

                                      -61-
<PAGE>

     the  option  of the  Board  of  Directors,  pay  cash  to  each  Holder  of
     Exchangeable  Preferred in lieu of Fractional Principal Amounts of Exchange
     Debentures otherwise issuable upon exchange of the Exchangeable  Preferred.
     The Person  entitled  to receive  the  Exchange  Debentures  issuable  upon
     exchange shall be treated for all purposes as the registered holder of such
     Exchange  Debentures  as of  the  date  of  exchange.  In  accordance  with
     paragraph 9 of this Section 4.2.2, the Corporation will mail to each Holder
     of  Exchangeable  Preferred  written notice of its intention to exchange no
     less than 15 nor more than 60 days prior to the date of exchange.

          (b) As a condition of the right of the  Corporation  to issue Exchange
     Debentures in exchange for the Exchangeable  Preferred under paragraph 8(a)
     of this Section  4.2.2 on the date of exchange,  (A) there shall be legally
     available funds sufficient therefor (including, without limitation, legally
     available  funds  sufficient  therefor  under  Section  7-106-401  (or  any
     successor  provision)  of the Colorado  Business  Corporation  Act);  (B) a
     registration  statement relating to the Exchange Debentures shall have been
     declared  effective  under the  Securities  Act prior to such  exchange and
     shall continue to be effective on the date of exchange,  or the Corporation
     shall have obtained a written opinion of its counsel that an exemption from
     the  registration  requirements of the Securities Act is available for such
     exchange and that upon receipt of such Exchange Debentures pursuant to such
     an  exchange  made in  accordance  with such  exemption,  each holder of an
     Exchange  Debenture that is not an Affiliate of the Corporation will not be
     subject to any  restrictions  imposed by the Securities Act upon the resale
     of such  Exchange  Debenture,  and such  exemption  is  relied  upon by the
     Corporation for such exchange; (C) the Indenture and the Trustee thereunder
     shall  have  been  qualified  under  the Trust  Indenture  Act of 1939,  as
     amended;  (D) immediately after giving effect to such exchange,  no Default
     or Event  of  Default  would  exist;  and (E) the  Corporation  shall  have
     delivered to the Trustee under the Indenture a written  opinion of counsel,
     dated the date of exchange,  regarding the  satisfaction  of the conditions
     set forth in clauses  (A),  (B) and (C). In the event that (i) the issuance
     of the Exchange  Debentures  is not  permitted on the exchange date or (ii)
     any of the conditions set forth in clauses (A) through (E) of the preceding
     sentence are not satisfied on the exchange date, the Corporation  shall use
     its best efforts to satisfy  such  conditions  and effect such  exchange as
     soon as  practicable.  Prior to  initiating  the  exchange  referred  to in
     paragraph (a) above, the Corporation shall certify,  to the satisfaction of
     the trustees under the 13 1/2% Notes Indenture, the 12 1/2% Notes Indenture
     and the Senior  Discount Notes  Indenture,  that such exchange is permitted
     under such respective  Indentures.  The Corporation shall also provide such
     trustees with an Officer's  Certificate  setting forth with specificity the
     basis for the Corporation's conclusion that such exchange is so permitted.

                                      -62-
<PAGE>

     9. Procedures for Redemption or Exchange.

          (a) In the  event  that  fewer  than  all the  outstanding  shares  of
     Exchangeable  Preferred  are to be  redeemed,  the  number  of shares to be
     redeemed  shall be determined  pro rata,  except that in any  redemption of
     fewer  than all the  outstanding  shares  of  Exchangeable  Preferred,  the
     Corporation  may redeem all shares held by any Holder of a number of shares
     of  Exchangeable  Preferred  not to exceed 100 as may be  specified  by the
     Corporation. In the event of partial redemptions of Exchangeable Preferred,
     new  shares  of  Exchangeable  Preferred  having an  aggregate  liquidation
     preference  equal to the  unredeemed  portion will be issued in the name of
     the Holder thereof upon  cancellation of the original share  certificate of
     Exchangeable  Preferred  without  cost  to  such  Holder.  On and  after  a
     redemption  date,  unless the  Corporation  defaults  in the payment of the
     redemption price,  dividends will cease to accrue on shares of Exchangeable
     Preferred  called for  redemption  and all rights of Holders of such shares
     will terminate except for the right to receive the redemption price. On the
     date  fixed  for  exchange,   the  rights  of  Holders  of  the  shares  of
     Exchangeable  Preferred  exchanged shall cease, except the right to receive
     Exchange  Debentures in exchange for their Exchangeable  Preferred and cash
     or  additional  Exchange  Debentures  in  payment  of  accrued  but  unpaid
     dividends on such shares to the date of exchange.

          (b) In the event that the Corporation  shall redeem or exchange shares
     of Exchangeable Preferred, notice of every redemption or exchange of shares
     of  Exchangeable  Preferred  shall be mailed by first class  mail,  postage
     prepaid,  and mailed,  in the case of  exchange,  not less than 15 nor more
     than 60 days prior to the exchange  date,  and, in the case of  redemption,
     not less than 30 days nor more than 60 days prior to the  redemption  date,
     addressed  to the  Holders  of  record  of the  shares  to be  redeemed  or
     exchanged at their  respective  last  addresses as they shall appear on the
     books of the  Corporation;  provided,  however,  that  failure to give such
     notice or any defect therein or in the mailing thereof shall not affect the
     validity of the  proceeding for the redemption or exchange of any shares so
     to be redeemed or exchanged except as to the Holder to whom the Corporation
     has failed to give such notice or to whom notice was  defective.  Each such
     notice shall state: (i) the redemption or exchange date; (ii) the number of
     shares of  Exchangeable  Preferred to be redeemed or exchanged and, if less
     than all the shares held by such Holder are to be  redeemed,  the number of
     such shares or portion of the liquidation preference to be redeemed;  (iii)
     the  redemption  price or  exchange  rate;  (iv) the place or places  where
     certificates  for such  shares  are to be  surrendered  for  payment of the
     redemption  price or exchanged  for the Exchange  Debentures;  and (v) that
     dividends on the shares to be redeemed or exchanged will cease to accrue on
     such redemption date or exchange date.

          (c) Notice  having been mailed as aforesaid  and provided  that, on or
     before the redemption date or exchange date, as the case may be,  specified
     in such  notice,  all duly  authenticated  and  valid  Exchange  Debentures
     necessary for any such exchange shall have been provided by the Corporation
     and all funds necessary for such redemption or exchange shall have been set
     aside by the Corporation, separate and apart from its other funds, in trust
     for the pro rata  benefit  of the  Holders  of the  shares  so  called  for
     redemption  or  exchange,  so as to be  and  to  continue  to be  available

                                      -63-
<PAGE>

     therefor, then, from and after the redemption date or exchange date, as the
     case may be,  dividends on the shares of  Exchangeable  Preferred so called
     for redemption or exchange,  as the case may be, shall cease to accrue, and
     said shares shall no longer be deemed to be outstanding  and shall not have
     the  status of  shares of  Exchangeable  Preferred,  and all  rights of the
     Holders thereof as  shareholders  of the  Corporation  (except the right to
     receive  from  the  Corporation  the  redemption   price  or  the  Exchange
     Debentures upon exchange and any accrued and unpaid  dividends or the right
     to receive cash payments in lieu of fractional securities from the exchange
     agent or  other  agent  selected  by the  Corporation)  shall  cease.  Upon
     surrender in accordance with said notice of the certificates for any shares
     so redeemed or exchanged  (properly  endorsed or assigned for transfer,  if
     the Board of Directors of the  Corporation  shall so require and the notice
     shall  so  state),  such  shares  shall be  redeemed  or  exchanged  by the
     Corporation at the redemption price or exchange rate aforesaid.

          (d) If such  notice of  redemption  shall have been duly given and if,
     prior to the  redemption  date,  the  Corporation  shall  have  irrevocably
     deposited the funds by the  Corporation  with such bank or trust company in
     trust for the pro rata  benefit of the  holders  of the  shares  called for
     redemption, then, notwithstanding that any certificate for shares so called
     for redemption shall not have been surrendered for  cancellation,  from and
     after the time of such  deposit,  Holders  of the  shares  of  Exchangeable
     Preferred called for redemption shall cease to be shareholders with respect
     to such shares and thereafter  such shares shall no longer be  transferable
     on the books of the  Corporation and such holders shall have no interest in
     or claim  against the  Corporation  with respect to such shares  (including
     dividends  thereon accrued after such redemption  date) except the right to
     receive payment of the redemption  price  (including all dividends  accrued
     and  unpaid  to the date  fixed for  redemption)  upon  surrender  of their
     certificates.  Any funds  deposited  and  unclaimed at the end of two years
     from the date fixed for redemption  shall be repaid to the Corporation upon
     its  request,  after  which  repayment  the  Holders  of shares  called for
     redemption shall look only to the Corporation for payment of the redemption
     price.  The aforesaid  bank or trust company shall be organized and in good
     standing  under the laws of the United States of America or of the State of
     Colorado shall have capital,  surplus and undivided profits  aggregating at
     least $100,000,000  according to its last published statement of condition,
     and shall be identified in the notice of redemption.  Any interest  accrued
     on such funds shall be paid to the Corporation from time to time.

     10. Voting Rights.

          (a) Except as otherwise  provided in this paragraph 10 or as otherwise
     from time to time  provided by law,  the Holders of shares of  Exchangeable
     Preferred shall have no voting rights.

          (b)  
               (i)  If and  whenever  (A)  (1)  dividends  on  the  Exchangeable
          Preferred  are in  arrears  and remain  unpaid (or if after  March 15,
          2002,  such dividends have not been paid in cash) with respect to four
          quarterly  periods (whether or not  consecutive),  (2) the Corporation
          fails to  discharge  any  redemption  obligation  with  respect to the

                                      -64-
<PAGE>


          Exchangeable  Preferred,  (3) a breach or violation by the Corporation
          of the provisions of paragraph 8 of this Section 4.2.2 occurs,  or the
          Corporation   fails  to  exchange   Debentures  for  the  Exchangeable
          Preferred  tendered for exchange on the exchange date,  whether or not
          the Corporation satisfies the conditions to permit such exchange,  (4)
          the  Corporation  fails  to make a  Change  of  Control  Offer or cash
          payment  with  respect  thereto  if  required  by  the  provisions  of
          paragraph 7(b) of this Section 4.2.2, (5) a breach or violation of any
          provision  of  paragraph  11 of this  Section  4.2.2 occurs and is not
          remedied  within 30 days after notice  thereof to the  Corporation  by
          Holders  of  25%  or  more  of  the  liquidation   preference  of  the
          Exchangeable  Preferred then  outstanding,  or (6) a default occurs in
          the  obligation to pay principal of,  interest on or any other payment
          obligation when due (a "Payment Default") at final maturity, on one or
          more classes of  Indebtedness  of the Corporation or any Subsidiary of
          the Corporation,  whether such Indebtedness exists on the Closing Date
          or is Incurred thereafter,  having individually or in the aggregate an
          outstanding  principal  amount of $10  million  or more,  or any other
          Payment Default occurs on one or more such classes of Indebtedness and
          such class or classes of  Indebtedness  are  declared  due and payable
          prior to their respective  maturities,  and (B) in the case of clauses
          (A)(5) and (6) above, such event continues for a period of 180 days or
          more (each  such  event  referred  to as a "Voting  Rights  Triggering
          Event"),  then the number of directors then  constituting the Board of
          Directors of the  Corporation  shall be increased by two directors and
          the  Holders  of  the  majority  of the  then  outstanding  shares  of
          Exchangeable  Preferred,  voting  separately  as  a  class,  shall  be
          entitled to elect the two  additional  directors at any annual meeting
          of  shareholders  or special  meeting held in place  thereof,  or at a
          special  meeting  of  the  Holders  of  such  shares  of  Exchangeable
          Preferred  called  as  hereinafter   provided.   For  the  purpose  of
          determining  the  number  of  quarterly   periods  for  which  accrued
          dividends have not been paid, any accrued and unpaid  dividend that is
          subsequently  paid shall not be  treated as unpaid.  Within 15 days of
          the time  the  Corporation  becomes  aware  of the  occurrence  of any
          default referred to in clause (A)(6) above, the Corporation shall give
          notice  thereof  to  Holders of the  Exchangeable  Preferred  at their
          addresses as they appear on the records of the Transfer Agent.

               (ii)  Whenever  a  Voting  Rights  Triggering  Event  shall  have
          occurred,  voting rights of the Holders of shares of the  Exchangeable
          Preferred may be exercised  initially  either at a special  meeting of
          the Holders of Exchangeable Preferred, called as hereinafter provided,
          or at any  annual  meeting  of  shareholders  held for the  purpose of
          electing  directors,  and thereafter at each such annual meeting or by
          the written consent of the Holders of Exchangeable  Preferred pursuant
          to Section  7-107-104 of the Colorado  Business  Corporation  Act. The
          term of office of any such elected  directors shall expire at the next
          annual  meeting  of  shareholders  held for the  purpose  of  electing
          directors,  subject to a new election of two  directors by the Holders
          of shares of Exchangeable Preferred at each successive annual meeting,
          but such  voting  right  and the term of  office  of any such  elected
          directors  shall expire at such time as (A) all dividends  accumulated
          on  Exchangeable  Preferred  shall  have been paid in full (and in the
          case of  dividends  payable with respect to any period after March 15,
          2002,  shall  have been  paid in full in cash)  and (B) each  failure,
          breach or default referred to in paragraph  10(b)(i)(A)(2),  (3), (4),
          (5), and (6) above is remedied.

                                      -65-
<PAGE>

               (iii) At any time after a Voting  Rights  Triggering  Event shall
          have  occurred  and such voting  rights  shall not  already  have been
          initially exercised, a proper officer of the Corporation may, and upon
          the written request of any Holder of shares of Exchangeable  Preferred
          (addressed  to  the   Secretary  at  the   principal   office  of  the
          Corporation) shall, call a special meeting of the Holders of shares of
          Exchangeable  Preferred  for the  election of the two  directors to be
          elected  by them as  herein  provided,  such call to be made by notice
          similar to that  provided  in the Bylaws for a special  meeting of the
          shareholders or as required by law.

               (iv) Such meeting shall be held at the earliest  practicable date
          upon the notice  required for annual  meetings of  shareholders at the
          place for holding annual  meetings of  shareholders of the Corporation
          or,  if  none,  at  a  place   designated  by  the  Secretary  of  the
          Corporation.  If such meeting shall not be called by a proper  officer
          of the Corporation  within 30 days after the personal  service of such
          written  request upon the Secretary of the  Corporation,  or within 30
          days after  mailing the same within the United  States,  by registered
          mail,  addressed to the Secretary of the  Corporation at its principal
          office (such mailing to be evidenced by the registry receipt issued by
          the  postal  authorities),  then the  Holders  of record of 10% of the
          shares of  Exchangeable  Preferred then  outstanding  may designate in
          writing a Holder of Exchangeable Preferred to call such meeting at the
          expense of the  Corporation,  and such  meeting  may be called by such
          person so designated  upon the notice  required for annual meetings of
          shareholders  and  shall  be held at the same  place  as is  elsewhere
          provided in this  paragraph  (10)(b)(iv)  or at such other place as is
          selected  by such  person so  designated.  Any Holder of  Exchangeable
          Preferred  that would be  entitled to vote at any such  meeting  shall
          have access to the stock books of the  Corporation  for the purpose of
          causing  a  meeting  of  shareholders  to be  called  pursuant  to the
          provisions of this paragraph.  Notwithstanding  the provisions of this
          paragraph,  however,  no such special meeting shall be called during a
          period  within 90 days  immediately  preceding  the date fixed for the
          next annual meeting of shareholders.

               (v) At any meeting held for the purpose of electing  directors at
          which the Holders of  Exchangeable  Preferred  shall have the right to
          elect directors as provided herein, the presence in person or by proxy
          of the Holders of the lesser of (A) a majority of the then outstanding
          shares  of  Exchangeable  Preferred  or (B) a  percentage  of the then
          outstanding  shares of  Exchangeable  Preferred,  which  percentage is
          equal to the  percentage  of then  outstanding  shares of common stock
          then  required to constitute a quorum for the election of directors by
          holders  of common  stock,  shall be  required  and be  sufficient  to
          constitute  a quorum of such class for the  election of  directors  by
          such class. At any such meeting or adjournment thereof (x) the absence
          of a quorum of the Holders of Exchangeable Preferred shall not prevent
          the  election  of  directors  other  than  those to be  elected by the
          Holders of stock of such class and the  absence of a quorum or quorums
          of the holders of Capital Stock entitled to elect such other directors
          shall not  prevent  the  election  of  directors  to be elected by the
          Holders of  Exchangeable  Preferred and (y) in the absence of a quorum
          of the holders of any class of stock entitled to vote for the election
          of directors,  a majority of the holders present in person or by proxy
          of such  class  shall have the power to adjourn  the  meeting  for the
          election of directors  which the holders of such class are entitled to
          elect,  from time to time,  without notice (except as required by law)

                                      -66-
<PAGE>

          other  than  announcement  at the  meeting,  until a  quorum  shall be
          present.

               (vi) The term of office of all  directors  elected by the Holders
          of  Exchangeable  Preferred  pursuant to paragraph  (10)(b)(i) of this
          Section 4.2.2 in office at any time when the  aforesaid  voting rights
          are vested in the Holders of  Exchangeable  Preferred  shall terminate
          upon the election of their  successors at any meeting of  shareholders
          for the purpose of electing  directors.  Upon any  termination  of the
          aforesaid  voting rights in accordance  with paragraph  (10)(b)(ii) of
          this Section 4.2.2, the term of office of all directors elected by the
          Holders of Exchangeable  Preferred pursuant to paragraph (10)(b)(i) of
          this Section 4.2.2 then in office  thereupon  shall terminate and upon
          such  termination  the number of directors  constituting  the Board of
          Directors  shall,  without further action,  be reduced by two, subject
          always  to the  increase  of  the  number  of  directors  pursuant  to
          paragraph (10)(b)(i) of this Section 4.2.2 in case of the future right
          of the  Holders  of  Exchangeable  Preferred  to  elect  directors  as
          provided herein.

               (vii) In case of any vacancy  occurring  among the  directors  so
          elected,  the  remaining  director  who shall have been so elected may
          appoint a  successor  to hold  office  for the  unexpired  term of the
          director  whose  place shall be vacant  unless and until such  vacancy
          shall be filled by vote of the Holders entitled to elect the directors
          in  accordance  with  paragraph  10(b) of this Section  4.2.2.  If all
          directors so elected by the Holders of  Exchangeable  Preferred  shall
          cease to serve as  directors  before  their  terms shall  expire,  the
          Holders of Exchangeable  Preferred then  outstanding may, at a special
          meeting of the Holders called as provided above,  elect  successors to
          hold office for the  unexpired  terms of the  directors  whose  places
          shall be vacant.

          (c) In  addition  to any vote or consent of  shareholders  required by
     law,  the  consent of the  Holders of at least a majority  of the shares of
     Exchangeable  Preferred at the time outstanding,  voting or consenting,  as
     the case may be,  separately  as one  class  given in  person  or by proxy,
     either in writing  without a meeting or by vote at any  meeting  called for
     the purpose, shall be necessary for effecting or validating:

               (i) Except as provided in paragraph 13 of this Section 4.2.2, any
          amendment, alteration or repeal of any of the provisions of the Second
          Amended and Restated  Articles of  Incorporation,  or of the Bylaws of
          the Corporation,  which affects  adversely the voting rights,  rights,
          privileges,  or preferences  of the Holders of shares of  Exchangeable
          Preferred  or  authorizes  the  issuance of any  additional  shares of
          Exchangeable  Preferred  (other  than  to pay  dividends  in  kind  on
          Exchangeable Preferred);  provided, however, that the amendment of the
          provisions   of  the  Second   Amended   and   Restated   Articles  of
          Incorporation  so as to  authorize  or  create,  or  to  increase  the
          authorized amount of, any of the Corporation's Junior Securities or to
          authorize  the  issuance  of or to  authorize  or  create  any  Parity
          Securities (up to the amount of authorized  preferred stock) shall not
          be deemed to affect adversely the voting rights,  rights,  privileges,
          or preferences of the Holders of shares of Exchangeable Preferred;

                                      -67-
<PAGE>

               (ii) Any amendment, alteration or repeal of any of the provisions
          of the  Indenture;  provided,  however,  that no such  consent  of the
          Holders  of   Exchangeable   Preferred  shall  be  required  for  such
          amendments  as would be  permitted  under the  terms of the  Indenture
          without the consent of any of the holders of the Exchange  Debentures;
          or

               (iii) The  authorization  or creation  of, or the increase in the
          authorized  amount of, any Senior Securities or shares of any class of
          any  security  convertible  into  shares  of  any  Senior  Securities;
          provided, however, that on or after March 15, 2002, no such consent of
          the Holders of  Exchangeable  Preferred  shall be  required  if, at or
          prior to the time when such amendment, alteration or repeal is to take
          effect  or  when  the  issuance  of  any  such  Senior  Securities  or
          convertible  security is to be made, as the case may be,  provision is
          made,  and funds are set aside,  for the  redemption  of all shares of
          Exchangeable Preferred at the time outstanding.

     11. Certain Covenants.

          (a) Incurrence of Indebtedness and Issuance of Preferred Stock.

               (i) The  Corporation  will not,  and will not  permit  any of its
          Restricted  Subsidiaries  to, Incur any  Indebtedness  (other than the
          Senior  Discount  Notes,  the  Exchange  Debentures  and  Indebtedness
          existing on the Closing Date) or issue any Redeemable Stock;  provided
          that the Corporation may Incur  Indebtedness or issue Redeemable Stock
          if, after giving effect to the Incurrence of such  Indebtedness or the
          issuance of such  Redeemable  Stock and the receipt and application of
          the  proceeds  therefrom,  the  Indebtedness  to EBITDA Ratio would be
          greater than zero and less than 5:1.

               (ii)  Notwithstanding the provisions of paragraph 11(a)(i) above,
          the  Corporation  and any Restricted  Subsidiary  (except as specified
          below) may Incur each and all of the following:  (A)  Indebtedness  of
          the  Corporation or any Restricted  Subsidiary or Redeemable  Stock of
          the  Corporation  outstanding  at  any  time,  which  Indebtedness  or
          Redeemable  Stock generates gross proceeds to the Corporation of up to
          $900  million,  less  (without  duplication)  the  gross  proceeds  of
          Indebtedness  permanently  repaid as provided under the "Limitation on
          Asset Sales" covenant contained in the 13 1/2% Notes Indenture, the 12
          1/2% Notes  Indenture and the Senior  Discount  Notes  Indenture;  (B)
          Indebtedness  to  ICG,  the  Corporation  or any of the  Corporation's
          Wholly Owned  Restricted  Subsidiaries;  provided that any  subsequent
          issuance or transfer  of any Capital  Stock which  results in any such
          Wholly  Owned  Restricted  Subsidiary  ceasing  to be a  Wholly  Owned
          Restricted  Subsidiary or any subsequent transfer of such Indebtedness
          (other than to ICG, the Corporation or another Wholly Owned Restricted
          Subsidiary) shall be deemed, in each case, to constitute an Incurrence
          of  such   Indebtedness   not   permitted  by  this  clause  (B);  (C)
          Indebtedness  or  Redeemable  Stock issued in exchange for, or the net
          proceeds of which are used to  refinance or refund,  then  outstanding
          Indebtedness or Redeemable Stock, other than Indebtedness  Incurred or
          Redeemable Stock issued under clause (A), (B), (E), (F), (H), (I), (J)
          or (K) of this paragraph 11(a)(ii), and any refinancings thereof in an
 
                                      -68-
<PAGE>

          amount  not to exceed  the  amount so  refinanced  or  refunded  (plus
          premiums,  accrued interest,  accrued  dividends,  fees and expenses);
          provided that such new Indebtedness or Redeemable Stock, determined as
          of the date of  Incurrence  of such new  Indebtedness  or  issuance of
          Redeemable  Stock, does not mature prior to the stated maturity of the
          Indebtedness  or  have  a  mandatory  redemption  date  prior  to  the
          Redeemable Stock to be refinanced or refunded, and the Average Life of
          such new Indebtedness is at least equal to the remaining  Average Life
          of the Indebtedness to be refinanced or refunded; and provided further
          that  in  no  event  may  Indebtedness  or  Redeemable  Stock  of  the
          Corporation be refinanced by means of any  Indebtedness  or Redeemable
          Stock of any Restricted Subsidiary of the Corporation pursuant to this
          clause (C); (D) Indebtedness (1) in respect of performance,  surety or
          appeal bonds  provided in the ordinary  course of business,  (2) under
          Currency  Agreements and Interest Rate Agreements;  provided that such
          agreements do not increase the Indebtedness of the obligor outstanding
          at any time other than as a result of fluctuations in foreign currency
          exchange rates or interest rates or by reason of fees, indemnities and
          compensation  payable  thereunder,  and (3)  arising  from  agreements
          providing for indemnification, adjustment of purchase price or similar
          obligations,  or from Guarantees or letters of credit, surety bonds or
          performance  bonds securing any  obligations of the Corporation or any
          of its Restricted  Subsidiaries  pursuant to such  agreements,  in any
          case  Incurred in  connection  with the  disposition  of any business,
          assets  or  Restricted  Subsidiary  of  the  Corporation  (other  than
          Guarantees of Indebtedness Incurred by any Person acquiring all or any
          portion  of such  business,  assets or  Restricted  Subsidiary  of the
          Corporation  for the  purpose of  financing  such  acquisition),  in a
          principal amount at maturity not to exceed the gross proceeds actually
          received by the Corporation or any Restricted Subsidiary in connection
          with such  disposition;  (E)  Indebtedness or Redeemable  Stock of the
          Corporation,  to  the  extent  the  proceeds  referred  to  below  are
          contributed  to the  Corporation,  not to  exceed,  at  any  one  time
          outstanding,  twice the amount of Net Cash  Proceeds  received  by ICG
          after the Closing Date from the issuance and sale of its Capital Stock
          (other than Redeemable Stock or preferred  stock);  provided that such
          Indebtedness  does not mature prior to the final mandatory  redemption
          date  of  the   Exchangeable   Preferred;   (F)   Strategic   Investor
          Subordinated Indebtedness; (G) Indebtedness or Redeemable Stock of the
          Corporation,  to the extent the proceeds  thereof are immediately used
          after the  Incurrence  or issuance  thereof to  purchase  Exchangeable
          Preferred or preferred stock, as the case may be, tendered in a Change
          of Control Offer or a change of control offer, as the case may be; (H)
          Indebtedness of any Restricted  Subsidiary of the Corporation Incurred
          pursuant to any credit  agreement  of such  Restricted  Subsidiary  in
          effect on August 8, 1995 (or any  agreement  refinancing  Indebtedness
          under such credit agreement), up to the amount of the commitment under
          such  credit  agreement  (including  equipment  leasing  or  financing
          agreements) on August 8, 1995; (I) Indebtedness of the Corporation, in
          an amount  not to exceed  $100  million  at any one time  outstanding,
          consisting of  Capitalized  Lease  Obligations  with respect to assets
          that are used or  useful  in the  telecommunications  business  of the
          Corporation  or  its  Restricted  Subsidiaries;  (J)  Indebtedness  or
          Redeemable Stock of any Person that becomes a Restricted Subsidiary of
          the Corporation after the Closing Date, which Indebtedness  exists or,
          with respect to such  Indebtedness  for which there is a commitment to
          lend,  at the time such Person  becomes a Restricted  Subsidiary  and,
          with respect to such Indebtedness,  the subsequent  Incurrence thereof
          ("Acquired  Indebtedness"),  in an  accreted  amount not to exceed $50

                                      -69-
<PAGE>

          million  at any one time  outstanding  in the  aggregate  for all such
          Restricted Subsidiaries; provided that such Acquired Indebtedness does
          not exceed 65% of the  consideration  (calculated  by  including  such
          Acquired  Indebtedness  as a part of such  consideration)  paid by the
          Corporation  and its Restricted  Subsidiaries  for the  acquisition of
          such Person; (K) Indebtedness of the Corporation,  in an amount not to
          exceed $30 million at any one time outstanding,  consisting of letters
          of credit and similar  arrangements used to support obligations of the
          Corporation or any of its Restricted  Subsidiaries with respect to the
          acquisition of (by purchase, lease or otherwise),  construction of, or
          improvements   on,   assets  that  will  be  used  or  useful  in  the
          telecommunications  business  of the  Corporation  or  its  Restricted
          Subsidiaries;  and (L)  Indebtedness  Incurred  to  finance  the  cost
          (including the cost of design, development, construction, installation
          or  integration)  of assets,  equipment or inventory used or useful in
          the  telecommunications  business  of ICG  or  any  of the  Restricted
          Subsidiaries  that  is  acquired  by ICG  or  any  of  its  Restricted
          Subsidiaries after the Closing Date.

               (iii)  For  purposes  of  determining  any  particular  amount of
          Indebtedness under paragraphs 11(a)(i) or (ii) above, (A) Indebtedness
          of any Restricted  Subsidiary of the Corporation  incurred on or prior
          to the  Closing  Date  pursuant  to any  credit  agreement  (including
          equipment   leasing  or  financing   agreements)  of  such  Restricted
          Subsidiary  in effect on August 8, 1995,  shall be treated as Incurred
          pursuant to  paragraph  11(a)(ii)(H)  of this Section  4.2.2,  and (B)
          Guarantees,  Liens or  obligations  with  respect to letters of credit
          supporting  Indebtedness  otherwise  included in the  determination of
          such  particular  amount  shall  not  be  included.  For  purposes  of
          determining  compliance  with the  covenants  contained in  paragraphs
          11(a)(i) and (ii) above,  in the event that an item of Indebtedness or
          Redeemable  Stock meets the  criteria of more than one of the types of
          Indebtedness  or  Redeemable  Stock  described  in such  clauses,  the
          Corporation,  in its sole  discretion,  shall  classify  such  item of
          Indebtedness  or Redeemable  Stock and only be required to include the
          amount and type of such  Indebtedness  or  Redeemable  Stock in one of
          such clauses.

          (b) Limitation on Restricted Payments.

               (i) So long  as any  shares  of the  Exchangeable  Preferred  are
          outstanding,  the  Corporation  will  not,  and  will not  permit  any
          Restricted  Subsidiary to, directly or indirectly,  (A) declare or pay
          any dividend or make any  distribution  on Junior  Securities  held by
          Persons  other  than  the   Corporation   or  any  of  its  Restricted
          Subsidiaries (other than dividends or distributions  payable solely in
          shares of its or such Restricted Subsidiary's Junior Securities (other
          than  Redeemable  Stock) of the same class held by such  holders or in
          options,  warrants  or other  rights to acquire  such shares of Junior
          Securities  and other  than pro rata  dividends  or  distributions  on
          common stock of Restricted Subsidiaries); (B) purchase, redeem, retire
          or otherwise  acquire for value any shares of Junior Securities of the
          Corporation or any Restricted Subsidiary (including options,  warrants
          or other rights to acquire such shares of Junior  Securities)  held by
          Persons  other  than  the  Corporation  or  any of  its  Wholly  Owned
          Restricted  Subsidiaries  (except for Junior  Securities of ChoiceCom,
          MTN,   StarCom,   Ohio  LINX,   FOTI  and  Zycom  to  the  extent  the
          consideration  therefor  consists  solely of common  stock (other than

                                      -70-
<PAGE>

          Redeemable Stock) of ICG or Junior  Securities of the Corporation,  in
          each case  transferred in compliance with the Securities  Act); or (C)
          make any Investment,  other than a Permitted Investment, in any Person
          (such  payments  or any other  actions  described  in  clauses  (i)(A)
          through (C) being collectively  "Restricted Payments") if, at the time
          of, and after giving effect to, the proposed Restricted  Payment:  (1)
          an  event  referred  to  in  clauses  (1)  through  (6)  of  paragraph
          10(b)(i)(A)   of  this  Section  4.2.2  shall  have  occurred  and  be
          continuing,  (2) the  Corporation  could not  Incur at least  $1.00 of
          Indebtedness  under paragraph  11(a)(i) of this Section 4.2.2, (3) the
          aggregate  amount expended for all Restricted  Payments (the amount so
          expended, if other than in cash, to be determined in good faith by the
          Board  of  Directors,  whose  determination  shall be  conclusive  and
          evidenced  by a board  resolution)  after the date hereof shall exceed
          the  sum  of  (aa)  50%  of  the  aggregate  amount  of  the  Adjusted
          Consolidated  Net Income (or, if the Adjusted  Consolidated Net Income
          is a loss, minus 100% of such amount)  (determined by excluding income
          resulting from transfers of assets by the  Corporation or a Restricted
          Subsidiary  to an  Unrestricted  Subsidiary)  accrued on a  cumulative
          basis during the period (taken as one accounting  period) beginning on
          the first day of the fiscal quarter immediately  following the Closing
          Date and ending on the last day of the last fiscal  quarter  preceding
          the  Transaction  Date for which  reports have been filed  pursuant to
          paragraph 11(i) of this Section 4.2.2 plus (bb) the aggregate Net Cash
          Proceeds  received by the Corporation  after the Closing Date (x) from
          the  issuance  and sale,  permitted  hereunder,  of Junior  Securities
          (other than  Redeemable  Stock) to a Person who is not a Subsidiary of
          the  Corporation,  or  from  the  issuance  to a  Person  who is not a
          Subsidiary of the Corporation of any options, warrants or other rights
          to  acquire  Junior  Securities  of the  Corporation  (in  each  case,
          exclusive of any  Redeemable  Stock or any options,  warrants or other
          rights  that  are  redeemable  at the  option  of the  holder,  or are
          required  to  be  redeemed,  prior  to  the  stated  maturity  of  the
          Exchangeable Preferred) or (y) as a capital contribution from ICG plus
          (cc) an amount equal to the net reduction in  Investments  (other than
          reductions  in Permitted  Investments)  in any Person  resulting  from
          payments of interest on Indebtedness,  dividends,  repayments of loans
          or  advances,  or  other  transfers  of  assets,  in each  case to the
          Corporation  or any  Restricted  Subsidiary  (except to the extent any
          such payment is included in the  calculation of Adjusted  Consolidated
          Net Income),  or from  redesignations of Unrestricted  Subsidiaries as
          Restricted  Subsidiaries  (valued  in  each  case as  provided  in the
          definition of "Investments"),  not to exceed the amount of Investments
          previously made by the Corporation and its Restricted  Subsidiaries in
          such Person or (4) dividends on the  Exchangeable  Preferred shall not
          have been paid in full as  provided  in  paragraph  4 of this  Section
          4.2.2.

               (ii) The  provisions  of  paragraph  11(b)(i)  above shall not be
          violated by reason of: (A) the payment of any dividend  within 60 days
          after the date of declaration thereof if, at said date of declaration,
          such  payment  would comply with  paragraph  11(b)(i)  above;  (B) the
          repurchase,  redemption or other  acquisition of Junior  Securities of
          the Corporation (or options,  warrants or other rights to acquire such
          Junior  Securities)  and with  respect to any Junior  Securities,  the
          payment of accrued dividends  thereon,  in exchange for, or out of the
          proceeds of a substantially  concurrent issuance or sale of, shares of
          Junior  Securities  (other than Redeemable  Stock) of the Corporation;
          provided that the  redemption of any preferred  stock  pursuant to any
          mandatory  redemption  feature thereof and any redemption of any other

                                      -71-
<PAGE>

          Junior  Securities and, in each case, the payment of accrued dividends
          thereon (or  options,  warrants or other rights to acquire such Junior
          Securities) and with respect to any Junior Securities,  the payment of
          accrued  dividends  thereon,  shall  be  deemed  to be  "substantially
          concurrent"  with such  issuance and sale if the required  notice with
          respect to such redemption is irrevocably  given by a date which is no
          later than five  Business  Days after  receipt of the proceeds of such
          issuance  and sale and such  redemption  and  payment  is  consummated
          within  the  period  provided  for  in  the  document  governing  such
          preferred  stock or the  documents  governing  the  redemption of such
          other  Junior  Securities,  as  the  case  may  be;  (C)  payments  or
          distributions,  in the nature of satisfaction  of dissenters'  rights,
          pursuant to or in connection with a consolidation,  merger or transfer
          of assets that complies with the provisions of paragraph 11(g) of this
          Section  4.2.2;  (D)  Investments,  not to exceed  $10  million in the
          aggregate,  each evidenced by a senior  promissory note payable to the
          Corporation that provides that it will become due and payable prior to
          any required repurchase (including pursuant to an Offer to Purchase in
          connection  with a Change of Control) of the  Exchangeable  Preferred;
          (E) Investments,  not to exceed $5 million in the aggregate, that meet
          the  requirements  of clause  (D)  above;  provided  that the Board of
          Directors of the  Corporation  shall have  determined,  in good faith,
          that each such  Investment  under  this  clause  (E) will  enable  the
          Corporation or one of its Restricted Subsidiaries to obtain additional
          business  that it might not be able to obtain  without  the  making of
          such Investment; (F) with respect to Junior Securities permitted to be
          issued and sold by the  provisions of paragraph  11(d) of this Section
          4.2.2,  the payment (1) of  dividends  on such  Junior  Securities  in
          additional  shares of Junior  Securities  and (2) of cash dividends on
          such Junior  Securities  in an amount not to exceed the dividend  rate
          thereon and accrued interest on unpaid  dividends,  in each case after
          May 1, 2001; (G) the repurchase,  in the event of a Change of Control,
          of  Junior  Securities  of the  Corporation  and  Indebtedness  of the
          Corporation  into which such Junior  Securities  have been  exchanged;
          provided  that  prior  to  repurchasing   such  Junior  Securities  or
          Indebtedness,  the  Corporation  shall  have made a Change of  Control
          Offer to repurchase the shares of Exchangeable Preferred in accordance
          with the terms of paragraph  7(b) of this Section  4.2.2 (and an offer
          to repurchase other Indebtedness, if required by the terms thereof, in
          accordance  with the indenture or other document  governing such other
          Indebtedness)  and  shall  have  accepted  and paid for any  shares of
          Exchangeable  Preferred (and other Indebtedness)  properly tendered in
          connection  with  such  Change  of  Control  Offer  for the  shares of
          Exchangeable  Preferred  or change  of  control  offer for such  other
          Indebtedness;  and (H) the  issuance of  Indebtedness  permitted to be
          issued  hereunder in exchange for preferred  stock;  provided that the
          Incurrence  of such  Indebtedness  complies  with  the  provisions  of
          paragraph  11(a) of this Section 4.2.2;  provided that,  except in the
          case of clause (A), no Default or Event of Default shall have occurred
          and be continuing or occur as a consequence of the actions or payments
          set forth in this paragraph 11(b)(ii).

               (iii) Each  Restricted  Payment  permitted  pursuant to paragraph
          11(b)(ii)  above (other than the  Restricted  Payments  referred to in
          clauses  (F)(1) and (H)  thereof),  and the Net Cash Proceeds from any
          issuance of Junior Securities referred to in clause (B) thereof, shall
          be included in  calculating  whether the  conditions  of clause (3) of
          paragraph 11(b)(i) of this Section 4.2.2 have been met with respect to
          any subsequent Restricted Payments.  Notwithstanding the foregoing, in
          the event the  proceeds of an issuance of Junior  Securities  are used

                                      -72-
<PAGE>

          for  the   redemption,   repurchase  or  other   acquisition   of  the
          Exchangeable  Preferred,  or  Parity  Securities,  then  the Net  Cash
          Proceeds of such issuance shall be included in clause (3) of paragraph
          11(b)(i)(C) of this Section 4.2.2 only to the extent such proceeds are
          not used for  such  redemption,  repurchase  or other  acquisition  of
          Exchangeable Preferred or Parity Securities.

          (c)  Limitation on Dividend and Other Payment  Restrictions  Affecting
     Restricted  Subsidiaries.  So long as any shares of Exchangeable  Preferred
     are  outstanding,  the  Corporation  will  not,  and  will not  permit  any
     Restricted  Subsidiary to, create or otherwise  cause or suffer to exist or
     become  effective any consensual  encumbrance or restriction of any kind on
     the ability of any  Restricted  Subsidiary to (i) pay dividends or make any
     other  distributions  permitted by  applicable  law on any Capital Stock of
     such Restricted Subsidiary owned by the Corporation or any other Restricted
     Subsidiary,  (ii) pay any Indebtedness owed to the Corporation or any other
     Restricted  Subsidiary,  (iii) make loans or advances to the Corporation or
     any other  Restricted  Subsidiary  or (iv)  transfer any of its property or
     assets to the Corporation or any other Restricted Subsidiary. The foregoing
     provisions  shall  not  restrict  any  encumbrances  or  restrictions:  (i)
     existing on the  Closing  Date in any  agreements  in effect on the Closing
     Date, and any  extensions,  refinancings,  renewals or replacements of such
     agreements;  provided that the  encumbrances  and  restrictions in any such
     extensions, refinancings, renewals or replacements are no less favorable in
     any  material  respect to the Holders of the  Exchangeable  Preferred  than
     those  encumbrances  or  restrictions  that are then in effect and that are
     being extended,  refinanced, renewed or replaced; (ii) existing under or by
     reason of applicable  law; (iii) existing with respect to any Person or the
     property  or assets  of such  Person  acquired  by the  Corporation  or any
     Restricted  Subsidiary,  existing at the time of such  acquisition  and not
     incurred in contemplation  thereof,  which encumbrances or restrictions are
     not  applicable to any Person or the property or assets of any Person other
     than such Person or the property or assets of such Person so acquired; (iv)
     in the case of clause (iv) of the first sentence of this  paragraph  11(c),
     (A) that  restrict  in a customary  manner the  subletting,  assignment  or
     transfer of any property or asset that is a lease,  license,  conveyance or
     contract  or  similar  property  or asset,  (B)  existing  by virtue of any
     transfer of,  agreement  to  transfer,  option or right with respect to, or
     Lien on,  any  property  or assets  of the  Corporation  or any  Restricted
     Subsidiary not otherwise  prohibited  hereunder or (C) arising or agreed to
     in the ordinary course of business,  not relating to any Indebtedness,  and
     that do not,  individually  or in the aggregate,  detract from the value of
     property or assets of the  Corporation or any Restricted  Subsidiary in any
     manner  material to the  Corporation or any Restricted  Subsidiary;  or (v)
     with  respect  to a  Restricted  Subsidiary  and  imposed  pursuant  to  an
     agreement  that has been entered into for the sale or disposition of all or
     substantially  all of the Capital Stock of, or property and assets of, such
     Restricted  Subsidiary.  Nothing  contained in this  paragraph  11(c) shall
     prevent the  Corporation  or any Restricted  Subsidiary  from (1) creating,
     incurring,  assuming or  suffering to exist any Liens  otherwise  permitted
     pursuant to paragraph  11(f) of this Section 4.2.2 or (2)  restricting  the
     sale or other  disposition of property or assets of the  Corporation or any
     of its Restricted  Subsidiaries that secure Indebtedness of the Corporation
     or any of its Restricted Subsidiaries.

                                      -73-
<PAGE>

          (d)  Limitation  on Issuances  and Sale of Capital Stock of Restricted
     Subsidiaries.  The  Corporation  will not  sell,  and will not  permit  any
     Restricted Subsidiary, directly or indirectly, to issue or sell, any shares
     of Capital Stock of a Restricted Subsidiary (including options, warrants or
     other rights to purchase  shares of such Capital  Stock)  except (i) to the
     Corporation  or a Wholly Owned  Restricted  Subsidiary;  (ii)  issuances or
     sales to foreign nationals of shares of Capital Stock of foreign Restricted
     Subsidiaries,   to  the  extent  required  by  applicable  law;  (iii)  if,
     immediately  after giving effect to such issuance or sale,  such Restricted
     Subsidiary would no longer  constitute a Restricted  Subsidiary;  (iv) with
     respect to common stock of ChoiceCom, MTN, StarCom and Zycom; provided that
     the proceeds of any such sale under this clause (iv) shall be reinvested in
     the business of the Corporation and its Restricted  Subsidiaries or used to
     repay Indebtedness of the Corporation or any of its Restricted Subsidiaries
     or  Senior  Securities;  and (v)  with  respect  to  common  stock of FOTI;
     provided  that FOTI shall not retain  any net  proceeds  from such sales or
     issuances in excess of $10 million in the aggregate and any net proceeds in
     excess of such $10 million  shall be received by, or paid  promptly by FOTI
     to,  the  Corporation  or any Wholly  Owned  Restricted  Subsidiary  of the
     Corporation.

          (e) Limitation on Transactions with  Shareholders and Affiliates.  The
     Corporation  will not, and will not permit any  Restricted  Subsidiary  to,
     directly  or  indirectly,  enter  into,  renew or  extend  any  transaction
     (including,  without limitation,  the purchase,  sale, lease or exchange of
     property or assets,  or the  rendering of any service)  with any holder (or
     any  Affiliate of such holder) of 5% or more of any class of Capital  Stock
     of  the  Corporation  or  with  any  Affiliate  of the  Corporation  or any
     Restricted  Subsidiary,  except  upon  fair  and  reasonable  terms no less
     favorable to the  Corporation or such  Restricted  Subsidiary than could be
     obtained,  at the time of such  transaction or at the time of the execution
     of  the  agreement  providing  therefor,   in  a  comparable   arm's-length
     transaction  with a Person that is not such a holder or an  Affiliate.  The
     foregoing   limitation  does  not  limit,   and  shall  not  apply  to  (i)
     transactions (A) approved by a majority of the disinterested members of the
     Board of Directors of the Corporation or (B) for which the Corporation or a
     Restricted Subsidiary delivers to the Transfer Agent a written opinion of a
     nationally  recognized investment banking firm stating that the transaction
     is fair to the Corporation or such  Restricted  Subsidiary from a financial
     point of view; (ii) any transaction  solely between the Corporation and any
     of its Wholly Owned Restricted  Subsidiaries or solely between Wholly Owned
     Restricted  Subsidiaries;  (iii) the payment of  reasonable  and  customary
     regular fees to directors of the  Corporation  who are not employees of the
     Corporation;  (iv) any  payments  or  other  transactions  pursuant  to any
     tax-sharing  agreement  (or a  similar  agreement  that  is not  materially
     adverse to the interests of Holders of the Exchangeable  Preferred) between
     the  Corporation  and any other Person with which the  Corporation  files a
     consolidated  tax  return  or  with  which  the  Corporation  is  part of a
     consolidated  group for tax purposes;  or (v) any  Restricted  Payments not
     prohibited by paragraph  11(b) of this Section 4.2.2.  Notwithstanding  the
     foregoing,  any transaction covered by the first sentence of this paragraph
     11(e)  and not  covered  by  clauses  (ii)  through  (iv) of the  preceding
     sentence,  the aggregate amount of which exceeds $2 million in value,  must
     be approved or determined  to be fair in the manner  provided for in clause
     (i)(A) or (B) of the preceding sentence.

                                      -74-
<PAGE>

          (f) Limitation on Liens. The Corporation will not, and will not permit
     any Restricted  Subsidiary to, create, incur, assume or suffer to exist any
     Lien on any of its assets or properties,  now or hereafter acquired, or any
     shares of Capital Stock of or  Indebtedness  of any Restricted  Subsidiary.
     The  foregoing  limitation  does not  apply to (i)  Liens  existing  on the
     Closing  Date;  (ii) Liens  granted after the Closing Date on any assets or
     Capital Stock of the Corporation or its Restricted  Subsidiaries created in
     favor of the  Holders  of the  Exchangeable  Preferred;  (iii)  Liens  with
     respect to the assets of a Restricted Subsidiary granted by such Restricted
     Subsidiary to the  Corporation or a Wholly Owned  Restricted  Subsidiary to
     secure  Indebtedness  owing to the  Corporation  or such  other  Restricted
     Subsidiary; (iv) Liens securing Indebtedness which is Incurred to refinance
     secured  Indebtedness  which is  permitted to be Incurred  under  paragraph
     11(a)(ii)(C) of this Section 4.2.2;  provided that such Liens do not extend
     to or cover any  property or assets of the  Corporation  or any  Restricted
     Subsidiary  other than the  property or assets  securing  the  Indebtedness
     being  refinanced;  (v) Liens with respect to assets or  properties  of any
     Person  that  becomes  a  Restricted  Subsidiary  after the  Closing  Date;
     provided that such Liens do not extend to or cover any assets or properties
     of the  Corporation  or any of its Restricted  Subsidiaries  other than the
     assets or properties  of such Person  subject to such Lien on the date such
     Person  becomes a Restricted  Subsidiary;  and  provided  further that such
     Liens are not incurred in  contemplation  of, or in connection  with,  such
     Person becoming a Restricted  Subsidiary;  (vi) Permitted  Liens; and (vii)
     Liens securing Indebtedness.

          (g) Merger,  Consolidation  and Sale of Assets.  The Corporation shall
     not consolidate with, merge with or into, or sell, convey,  transfer, lease
     or otherwise dispose of all or substantially all of its property and assets
     (as an entirety or substantially an entirety in one transaction or a series
     of related  transactions)  to, any Person  (other than a  consolidation  or
     merger with or into a Wholly Owned  Restricted  Subsidiary  with a positive
     net  worth;   provided  that,  in  connection   with  any  such  merger  or
     consolidation,  no consideration  (other than common stock in the surviving
     Person  or  the  Corporation)   shall  be  issued  or  distributed  to  the
     shareholders of the Corporation) or permit any Person to merge with or into
     the Corporation unless: (i) the Corporation shall be the continuing Person,
     or the Person (if other than the Corporation)  formed by such consolidation
     or into which the  Corporation  is merged or that  acquired  or leased such
     property and assets of the Corporation shall be a corporation organized and
     validly  existing  under the laws of the  United  States of  America or any
     jurisdiction thereof and the Exchangeable Preferred shall be converted into
     or exchanged for and shall become shares of such successor company,  having
     in respect of such successor or resulting  company  substantially  the same
     powers,  preferences and relative participating,  optional or other special
     rights and the qualifications, limitations or restrictions thereon that the
     Exchangeable  Preferred had  immediately  prior to such  transaction;  (ii)
     immediately after giving effect to such  transaction,  no event referred to
     under  paragraph  10(b)(i)(A)(1)  through (5) of this Section  4.2.2 or any
     default,  breach or  violation  that would  become  such an event after the
     giving of notice,  the passage of time or both,  shall have occurred and be
     continuing;  (iii) immediately after giving effect to such transaction on a
     pro forma basis,  the  Corporation  or any Person  becoming  the  successor
     issuer of the  Exchangeable  Preferred,  as the case may be,  shall  have a
     Consolidated  Net Worth equal to or greater than the Consolidated Net Worth

                                      -75-
<PAGE>

     of the Corporation immediately prior to such transaction;  (iv) immediately
     after  giving  effect  to  such  transaction  on  a  pro  forma  basis  the
     Corporation,   or  any  Person   becoming  the  successor   issuer  of  the
     Exchangeable  Preferred,  as the case may be, could Incur at least $1.00 of
     Indebtedness  under paragraph  11(a)(i) of this Section 4.2.2;  and (v) the
     Corporation  delivers  to  the  Transfer  Agent  an  Officers'  Certificate
     (attaching  the arithmetic  computations  to  demonstrate  compliance  with
     clauses  (iii) and (iv)  above)  and an opinion  of  counsel,  in each case
     stating  that such  consolidation,  merger or transfer  complies  with this
     provision and that all conditions precedent provided for herein relating to
     such transaction have been complied with; provided,  however,  that clauses
     (iii) and (iv) above shall not apply if, in the good faith determination of
     the Board of Directors of the Corporation  evidenced by a board resolution,
     the principal  purpose of such  transaction is part of a plan to change the
     jurisdiction  of  incorporation  of the Corporation to a different state of
     the United States; and provided further that any such transaction shall not
     have as one of its purposes the evasion of the foregoing limitations.

          (h)  Senior  Subordinated  Indebtedness.  So  long  as any  shares  of
     Exchangeable Preferred are outstanding,  the Corporation will not Incur any
     Indebtedness,  other than the Exchange  Debentures,  that is expressly made
     subordinated in right of payment to any Senior  Indebtedness (as defined in
     the Indenture) unless such  Indebtedness,  by its terms and by the terms of
     any  agreement  or  instrument  pursuant  to  which  such  Indebtedness  is
     outstanding  is expressly  made pari passu with, or subordinate in right of
     payment to, the Exchange  Debentures  pursuant to provisions  substantially
     similar to those  contained in Article  Eleven of the  Indenture;  provided
     that the  foregoing  limitations  shall not apply to  distinctions  between
     categories  of  Senior  Indebtedness  that  exist by reason of any Liens or
     Guarantees  arising  or  created  in  respect  of some  but not all  Senior
     Indebtedness.

          (i)  Reports.  So long as any  shares of  Exchangeable  Preferred  are
     outstanding,  the  Corporation  shall file with the Securities and Exchange
     Commission (the "Commission") the annual reports, quarterly reports and the
     information,  documents  and  other  reports  required  to be  filed by the
     Corporation  with  the  Commission  pursuant  to  Sections  13 or 15 of the
     Exchange Act,  whether or not the  Corporation has or is required to have a
     class of securities registered under the Exchange Act, at the time it is or
     would be required to file the same with the Commission  and, within 15 days
     after  the  Corporation  is or  would be  required  to file  such  reports,
     information  or documents  with the  Commission,  shall mail such  reports,
     information  and  documents  to the Transfer  Agent and to each Holder,  or
     shall  supply such  reports to the Transfer  Agent for  forwarding  to each
     Holder,  at such Holder's  address set forth on the register  maintained by
     the Transfer Agent.

     12.  Transfer  and  Legending  of  Shares.  No  transfer  of  shares of the
Exchangeable  Preferred  shall be effective until such transfer is registered on
the books of the  Corporation.  Until registered under the Securities Act or the
expiration  of the time  period  referred  to in Rule 144(k) (as then in effect)
under the  Securities  Act, all shares of  Exchangeable  Preferred will bear the
following legend:

                                      -76-
<PAGE>

               THIS  PREFERRED  STOCK  HAS NOT BEEN  REGISTERED  UNDER  THE U.S.
               SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  AND
               ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
               OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.  PERSONS  EXCEPT AS
               SET FORTH IN THE FOLLOWING  SENTENCE.  BY ITS ACQUISITION HEREOF,
               THE  HOLDER  (1)   REPRESENTS   THAT  (A)  IT  IS  A   "QUALIFIED
               INSTITUTIONAL   BUYER"  (AS   DEFINED  IN  RULE  144A  UNDER  THE
               SECURITIES  ACT),  (B) IT IS NOT A U.S.  PERSON AND IS  ACQUIRING
               THIS  PREFERRED  STOCK IN AN OFFSHORE  TRANSACTION  IN COMPLIANCE
               WITH  REGULATION  S UNDER  THE  SECURITIES  ACT,  OR (C) IT IS AN
               INSTITUTIONAL   "ACCREDITED   INVESTOR"   (AS   DEFINED  IN  RULE
               501(a)(1),  (2), (3) OR (7) OF REGULATION D UNDER THE  SECURITIES
               ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT
               WILL NOT,  WITHIN THE TIME  PERIOD  REFERRED TO UNDER RULE 144(k)
               UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER
               OF THIS  PREFERRED  STOCK,  RESELL  OR  OTHERWISE  TRANSFER  THIS
               PREFERRED   STOCK  EXCEPT  (A)  TO  ICG   HOLDINGS,   INC.   (THE
               "CORPORATION")  OR ANY  SUBSIDIARY  THEREOF,  (B) TO A  QUALIFIED
               INSTITUTIONAL  BUYER IN  COMPLIANCE  WITH  RULE  144A  UNDER  THE
               SECURITIES  ACT,  (C)  OUTSIDE  THE UNITED  STATES IN AN OFFSHORE
               TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
               (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION  PROVIDED BY RULE
               144 UNDER THE  SECURITIES  ACT (IF  AVAILABLE),  (E)  INSIDE  THE
               UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
               TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED LETTER
               CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
               RESTRICTIONS  ON  TRANSFER OF THIS  PREFERRED  STOCK (THE FORM OF
               WHICH  LETTER CAN BE  OBTAINED  FROM THE  TRANSFER  AGENT) OR (F)
               AFTER  REGISTRATION  UNDER THE SECURITIES ACT AND (3) AGREES THAT
               IT WILL  DELIVER TO EACH PERSON TO WHOM THIS  PREFERRED  STOCK IS
               TRANSFERRED A NOTICE  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
               IN CONNECTION  WITH ANY TRANSFER OF THIS  PREFERRED  STOCK WITHIN
               THE TIME  PERIOD  REFERRED TO ABOVE,  THE HOLDER  MUST  EXECUTE A
               LETTER  (THE  FORM OF  WHICH  LETTER  CAN BE  OBTAINED  FROM  THE
               TRANSFER  AGENT)  RELATING  TO THE  MANNER OF SUCH  TRANSFER  AND
               SUBMIT THIS  CERTIFICATE TO THE TRANSFER  AGENT.  AS USED HEREIN,
               THE  TERMS  "OFFSHORE  TRANSACTION,"  "UNITED  STATES"  AND "U.S.
               PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE

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<PAGE>

               SECURITIES  ACT.  THE SECOND  AMENDED  AND  RESTATED  ARTICLES OF
               INCORPORATION OF THE CORPORATION  CONTAINS A PROVISION  REQUIRING
               THE  TRANSFER  AGENT TO REFUSE TO REGISTER  ANY  TRANSFER OF THIS
               PREFERRED STOCK IN VIOLATION OF THE FOREGOING RESTRICTIONS.

The  Corporation  shall refuse to register any  attempted  transfer of shares of
Exchangeable Preferred not in compliance with this paragraph 12.

     13. Amendments and Waivers. Notwithstanding any other provisions hereof and
to the  extent  allowable  from  time to time by  applicable  law,  the Board of
Directors  may, by duly adopted  resolution,  amend any of the provisions of the
Second Amended and Restated Articles of Incorporation,  without notice to or any
consent or  approval of any of the Holders of  Exchangeable  Preferred,  for the
following purposes:

          (1) to cure  any  ambiguity,  defect  or  inconsistency  in the  First
     Amended  and  Restated  Articles  of  Incorporation;   provided  that  such
     amendment  does not and will not  adversely  affect  the  interests  of the
     Holders of Exchangeable Preferred in any material respect; or

          (2) to make any change that the Board of Directors  determines in good
     faith does not materially and adversely  affect the rights of any Holder of
     Exchangeable Preferred.

Except as provided in the preceding sentence, any right,  preference,  privilege
or power of, or  restriction  provided  for the  benefit  of,  the  Exchangeable
Preferred  set forth  herein may be amended  and the  observance  thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively)  only  with  the  written  consent  of the  Corporation  and  the
affirmative vote or written consent of the Holders of at least a majority of the
shares of Exchangeable  Preferred then outstanding,  and any amendment or waiver
so  effected  shall be  binding  upon the  Corporation  and all  Holders  of the
Exchangeable Preferred.

     14. Rules of Construction.  The descriptive  headings in this Section 4.2.2
are inserted for  convenience  of reference only and are not intended to be part
of or affect the meaning or  interpretation  of any  provision  of this  Section
4.2.2.  Words used in this Section  4.2.2,  regardless  of the gender and number
specifically  used,  shall be deemed and  construed to include any other gender,
masculine, feminine, or neuter, and any other number, singular or plural, as the
context  requires.  As used in this Section 4.2.2,  the word  "including" is not
limiting, and the word "or" is not exclusive.

                                    ARTICLE V

     Cumulative voting of shares of stock is not permitted.

     Shareholders  shall  not  have  preemptive  rights  to  acquire  additional
unissued or treasury  shares of the  Corporation.  The Corporation may issue and

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<PAGE>

sell shares of its stock to its officers,  directors or employees  without first
offering such shares to its  shareholders for such  consideration  and upon such
terms and  conditions as shall be approved by the Board of Directors and without
approval by the shareholders of the Corporation.

                                   ARTICLE VI

     The Board of Directors may cause any shares issued by the Corporation to be
issued  subject to such  lawful  restrictions,  qualifications,  limitations  or
special rights as they deem fit, which restrictions, qualifications, limitations
or  special  rights  shall  be  created  by  provisions  in  the  Bylaws  of the
Corporation  or in the duly  adopted  resolutions  of the  Board  of  Directors;
provided that notice of such special restrictions,  qualifications,  limitations
or special rights must appear on the  certificate  evidencing  ownership of such
shares.

                                   ARTICLE VII

     Subject  to the  provisions  of  Sections  4.2.1 and 4.2.2 of  Article  IV,
meetings of shareholders  may be held at such time and place as the Bylaws shall
provide.  A majority of the shares entitled to vote  represented in person or by
proxy shall constitute a quorum at any meeting of the shareholders.

                                  ARTICLE VIII

     Subject to the  provisions  of Sections  4.2.1 and 4.2.2 of Article IV, the
number of directors to be elected at the annual meeting of  shareholders or at a
special  meeting  called for the  election of  directors  shall not be less than
three, nor more than nine, the exact number to be fixed by the Bylaws; provided,
however,  that there need be only as many directors as there are shareholders in
the event  that the  outstanding  shares  are held of record by fewer than three
shareholders.

                                   ARTICLE IX

     A  director  of this  Corporation  shall  not be  personally  liable to the
Corporation  or its  shareholders  for monetary  damages for breach of fiduciary
duty as a director except that this provision shall not limit the liability of a
director to the Corporation or to its shareholders for monetary damages for: (i)
any  breach of the  director's  duty of  loyalty  to the  Corporation  or to its
shareholders;  (ii)  acts  or  omissions  not in good  faith  or  which  involve
intentional  misconduct or a knowing  violation of law;  (iii) acts specified in
Section  7-108-403 of the Colorado  Business  Corporation Act as the same may be
amended  from time to time;  or (iv) any  transaction  from  which the  director
derived an improper personal benefit.  If the Colorado Business  Corporation Act
is amended to authorize  corporate  actions further  limiting or eliminating the
personal  liability  of  directors,  then the  liability  of a  director  of the
Corporation  shall be limited or eliminated to the fullest  extent  permitted by
the Colorado Business Corporation Act, as so amended.

                                      -79-
<PAGE>

     Any repeal or modification of the foregoing  Article IX by the shareholders
of the  Corporation  shall not  adversely  affect any right or  protection  of a
director of the Corporation existing at the time of such repeal or modification.

                                    ARTICLE X

     The officers, directors and other members of management of this Corporation
shall be subject to the doctrine of corporate  opportunities  only insofar as it
applies to business  opportunities  in which this  Corporation  has expressed an
interest as determined from time to time by the Corporation's Board of Directors
as evidenced by resolutions  appearing in the Corporation's  Minutes.  When such
areas of interest are delineated,  all such business  opportunities  within such
areas of interest  which come to the  attention of the  officers,  directors and
other members of management of this Corporation  shall be disclosed  promptly to
this Corporation and made available to it. The Board of Directors may reject any
business  opportunity  presented to it and thereafter  any officer,  director or
other member of management may avail himself/herself of such opportunity.  Until
such time as this Corporation, through its Board of Directors, has designated an
area of interest,  the  officers,  directors  and other members of management of
this Corporation  shall be free to engage in such areas of interest on their own
and this doctrine  shall not limit the rights of any officer,  director or other
member of management of this  Corporation to continue a business  existing prior
to the time that such area of interest is designated by this  Corporation.  This
provision  shall not be  construed  to release any  employee of the  Corporation
(other than an officer,  director or member of management) from any duties which
he/she may have to the Corporation.

                                   ARTICLE XI

     Any of the  directors  or  officers of this  Corporation  shall not, in the
absence of fraud,  be disqualified by his/her office from dealing or contracting
with this Corporation whether as vendor,  purchaser or otherwise,  nor shall any
firm, association, or Corporation of which he/she shall be a member, or in which
he/she may be pecuniarily interested in any manner be disqualified.  No director
or  officer,  nor any firm,  association  or  corporation  with which  he/she is
connected as  aforesaid  shall be liable to account to this  Corporation  or its
shareholders  for any  profit  realized  by  him/her  from or  through  any such
transaction or contract; it being the express purpose and intent of this Article
to  permit  this  Corporation  to buy  from,  sell to,  or  otherwise  deal with
partnerships,  firms or corporations of which the directors and officers of this
Corporation, or any one or more of them, may be members, directors, or officers,
or in which they or any of them have pecuniary  interests;  and the contracts of
this  Corporation,  in the  absence of fraud,  shall not be void or  voidable or
affected in any manner by reason of any such membership. The interested director
or directors may be counted in determining the presence of a quorum at a meeting
of the Board of  Directors or a committee  thereof  authorizing,  approving,  or
ratifying  any  such  contract  or  transaction.  Further,  the vote of any such
interested  director at a meeting of the Board of Directors or committee thereof
authorizing,  approving or ratifying  any such  contract or  transaction  may be
counted if his/her relationship or interest with respect to any such contract or

                                      -80-
<PAGE>

transaction  (i) is disclosed and such  transaction  or contract is  authorized,
approved or ratified by a majority of the directors without counting the vote or
consent of such interested director, or (ii) is disclosed to the shareholders of
the Corporation and authorized, approved or ratified by the shareholders by vote
or written consent, or (iii) such contract or transaction is fair and reasonable
to the Corporation.

                                   ARTICLE XII

     When  with  respect  to any  action  to be  taken by  shareholders  of this
Corporation,  the  Colorado  Business  Corporation  Act  requires  the  vote  or
concurrence of the holders of two-thirds of the  outstanding  shares entitled to
vote thereon, or of any class or series, such action may be taken by the vote or
concurrence of a majority of such shares or class or series thereof.

                                  ARTICLE XIII

     Subject to repeal by action of the shareholders,  the Board of Directors of
this Corporation is authorized to adopt, confirm,  ratify, alter, amend, rescind
and repeal Bylaws or any portion thereof from time to time.

                                   ARTICLE XIV

     The  address  of the  Corporation's  registered  office  is 9605 E.  Maroon
Circle,  Englewood,  Colorado 80112 and the name of the registered agent at such
address is James D. Grenfell.


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