EXHIBIT 2.2

                         UNITED STATES BANKRUPTCY COURT
                              DISTRICT OF DELAWARE

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In re:                                                 Chapter 11
TV FILME, INC.,                                        Case No. 00-342 (PJW)

                  Debtor.

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                                  FIRST AMENDED
                             PLAN OF REORGANIZATION







February 29, 2000
                                           KELLEY DRYE & WARREN LLP
                                           Mark I. Bane (MB 4883)
                                           Karen Ostad (KO 5596)
                                           101 Park Avenue
                                           New York, New York 10178
                                           (212) 808-7800

                                           SAUL, EWING, REMICK & SAUL LLP
                                           Norman L. Pernick ( DE#2290)
                                           222 Delaware Avenue, Suite 1200
                                           Wilmington, Delaware 19899
                                           (302) 421-6824


                                           COUNSEL TO THE DEBTOR AND DEBTOR
                                           IN POSSESSION



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                                TABLE OF CONTENTS

                                                                            PAGE

SECTION 1.        DEFINITIONS AND INTERPRETATION...............................1

         A.       Definitions..................................................1

         B.       Interpretation; Application of Definitions
                  and Rules of Construction....................................7

SECTION 2.        PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE
                  CLAIMS AND PRIORITY TAX CLAIMS...............................7

         2.1      Administrative Expense Claims................................7

         2.2      Priority Tax Claims..........................................8

SECTION 3.        CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS................8

SECTION 4.        PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY
                  INTERESTS UNDER THIS PLAN....................................8

         4.1      Priority Non-Tax Claims (Class 1)............................8

         4.2      Senior Secured Claims (Class 2)..............................8

                  (a)      Allowance of Senior Secured Claims..................8

                  (b)      Treatment of Senior Secured Claims..................8

         4.3      General Unsecured Claims (Class 3)...........................9

         4.4      Equity Interests in the Debtor (Class 4).....................9

SECTION 5.        IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
                  IMPAIRED AND NOT IMPAIRED UNDER THIS PLAN;
                  ACCEPTANCE OR REJECTION OF THIS PLAN.........................9

         5.1      Holders of Claims and Equity Interests
                  Entitled to Vote.............................................9

         5.2      Acceptance by Unimpaired Classes.............................9

         5.3      Elimination of Classes.......................................9

         5.4      Revocation of Plan..........................................10

SECTION 6.        MEANS OF IMPLEMENTATION.....................................10

         6.1      Means of Implementing the Plan..............................10

         6.2      Exit Financing..............................................10

         6.3      Distributions under this Plan...............................11

         6.4      Secured Notes and Indenture.................................11

SECTION 7.        PROVISIONS GOVERNING DISTRIBUTIONS..........................11

         7.1      Date of Distributions.......................................11

         7.2      Disbursing Agent............................................11



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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

         7.3      Source of Distributions.....................................12

         7.4      Delivery of Distributions...................................12

         7.5      Manner of Payment Under this Plan...........................12

         7.6      Distributions After Effective Date..........................12

SECTION 8.        RIGHTS AND POWERS OF DISBURSING AGENT.......................13

         8.1      Exculpation.................................................13

         8.2      Powers of the Disbursing Agent..............................13

         8.3      Expenses Incurred on or After the Effective Date............13

         8.4      Successor Disbursing Agent..................................13

SECTION 9.        PROCEDURES FOR RESOLVING AND TREATING DISPUTED
                  CLAIMS AND EQUITY INTERESTS UNDER THIS PLAN.................14

         9.1      Prosecution of Objections...................................14

         9.2      No Distributions Pending Allowance..........................14

         9.3      Claims Reserve..............................................14

         9.4      Distributions After Allowance...............................14

         9.5      Distributions After Disallowance............................15

SECTION 10.       PROVISIONS GOVERNING EXECUTORY CONTRACTS
                  AND UNEXPIRED LEASES UNDER THIS PLAN........................15

         10.1     General Treatment...........................................15

         10.2     Amendments to Schedule of Assumed Executory
                  Contacts; Effects of Amendments.............................15

         10.3     Bar to Rejection Damages....................................15

SECTION 11.       CONDITIONS PRECEDENT TO CONFIRMATION AND
                  EFFECTIVE DATE..............................................15

         11.1     Conditions Precedent to Confirmation of this Plan...........15

                  (a)      Entry of Confirmation Order........................16

                  (b)      Form of Confirmation Order.........................16

         11.2     Conditions Precedent to Effective Date of this Plan.........16

                  (a)      Finality of the Confirmation Order.................16

                  (b)      Governmental Approvals.............................17

                  (c)      Approval of the Central Bank.......................17


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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

                  (d)      Distributions......................................17

                  (e)      Execution of Documents.............................17

         11.3     Waiver of Conditions Precedent..............................17

SECTION 12.       EFFECT OF CONFIRMATION......................................17

         12.1     Custody.....................................................17

         12.2     Liens.......................................................17

         12.3     Term of Injunctions or Stays................................17

SECTION 13.       RELEASES, INJUNCTION AND WAIVER OF CLAIMS...................18

         13.1     Releases of the Affiliate Releasees.........................18

                  (a)      Release of the Debtor..............................18

                  (b)      Release of the Affiliate Releasees.................18

         13.2     Release of the Plan Releasees...............................19

         13.3     Injunction..................................................19

         13.4     Vesting of Property in Reorganized Debtor...................20

SECTION 14.       RETENTION OF JURISDICTION...................................20

         14.1     Retention of Jurisdiction...................................20

         14.2     Modification of Plan........................................21

SECTION 15.       MISCELLANEOUS PROVISIONS....................................21

         15.1     Payment of Statutory Fees...................................21

         15.2     Dissolution of Creditors' Committee.........................21

         15.3     Fees and Expenses of Professional Persons...................21

         15.4     Severability of Plan Provisions.............................22

         15.5     Governing Law...............................................22

         15.6     Payment of Withholding of Taxes; Allocation
                  of Payments.................................................22

         15.7     Notices.....................................................22

SCHEDULE 1    List of Subsidiaries

SCHEDULE 2    List of Assumed Executory Contracts

EXHIBIT A     Form of New Indenture

EXHIBIT B     Restructuring Agreement





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                             PLAN OF REORGANIZATION


     TV  Filme,   Inc.   (the   "Debtor")   proposes  the   following   Plan  of
Reorganization:

SECTION 1.     DEFINITIONS AND INTERPRETATION

A.   DEFINITIONS.

     The following terms used herein shall have the respective  meanings defined
below:

     1.1. AD HOC NOTEHOLDERS' COMMITTEE means an unofficial committee consisting
of certain unaffiliated holders of the Secured Notes.

     1.2.  AFFILIATE  RELEASEES  means,  collectively,  (a) the Debtor,  (b) the
Subsidiaries,  (c)  the  respective  successors,   predecessors,   assignors  or
assignees of any of the foregoing,  (d) all current or former partners,  members
or owners of any of the foregoing (including current or former partners, members
or owners of any direct or indirect  interest in any of the  foregoing)  and (e)
all current and former affiliates,  officers,  directors,  trustees,  employees,
agents, attorneys, counsel, accountants, financial advisors, investment bankers,
appraisers and engineers of any of the foregoing.

     1.3. ADMINISTRATIVE EXPENSE CLAIM means any right to payment constituting a
cost or expense of  administration  of the  Reorganization  Case  allowed  under
sections 503(b) and 507 (a) (1), or 507(b) of the Bankruptcy Code, including (a)
any actual and  necessary  costs and  expenses of  preserving  the estate of the
Debtor,  (b) any  actual and  necessary  costs and  expenses  of  operating  the
business of the Debtor, (c) any indebtedness or obligations  incurred or assumed
by the Debtor in connection  with the conduct of its business,  the rendition of
services or the transfer of the Assets,  (d) any allowances of compensation  and
reimbursement  of expenses to the extent  allowed by Final Order under  sections
330 or 503 of the Bankruptcy Code, whether arising before or after the Effective
Date,  (e) any fees or charges  assessed  against the estate of the Debtor under
section  1930,  chapter 123,  title 28,  United States Code and (f) the fees and
expenses  payable to the  Indenture  Trustee  under the Indenture for the period
from and after the Petition Date through and including the Effective Date to the
extent that such amounts have not been paid to the Indenture  Trustee during the
Reorganization Case.

     1.4. ALLOWED means, with reference to any Claim or Equity Interest, (a) any
Claim against or Equity Interest in the Debtor,  proof of which was filed within
the applicable  period of limitation fixed by the Bankruptcy Court in accordance
with Rule  3003(c) (3) of the  Bankruptcy  Rules (i) as to which no objection to
the  allowance  thereof  has been  interposed  within the  applicable  period of
limitation  fixed by this Plan, the Bankruptcy  Code, the Bankruptcy  Rules or a
Final Order or (ii) as to which an objection has been interposed,  to the extent
such Claim or Equity Interest has been allowed by a Final Order, (b) if no proof
of claim or interest  was so filed,  (i) any Claim  against the Debtor which has
been listed by the Debtor in its  Schedules,  as such  Schedules  may be amended
from  time to time in  accordance  with Rule 1009 of the  Bankruptcy  Rules,  as
liquidated  in  amount  and not  disputed  or  contingent,  and (ii) any  Equity
Interest  that is  registered  in the  official  records of the  Debtor's  stock
transfer  agent,  (c) any Claim  arising  from the  recovery of  property  under
section 550 or 553 of the Bankruptcy Code and allowed in accordance with section
502(h) of the Bankruptcy Code and (d) any Claim expressly allowed hereunder.



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     1.5. ASSETS means all assets of the Debtor, including,  without limitation,
any stock of or membership  interest in the Subsidiaries,  the ITSA Note and all
Causes of Action of the Debtor.

     1.6.  BALLOT  means  the form or forms  distributed  to each  holder  of an
impaired  Claim or Equity  Interest on which is to be  indicated  acceptance  or
rejection of this Plan.

     1.7.  BALLOT  DATE means the date by which all Ballots  for  acceptance  or
rejection of this Plan must be received.

     1.8.  BANKRUPTCY  CODE means the Bankruptcy  Reform Act of 1978, as amended
and as codified at Title 11, United States Code.

     1.9.  BANKRUPTCY  COURT  means the  United  States  District  Court for the
District of Delaware  and, to the extent of any  reference  under  section  157,
title 28, United States Code, the unit of such District Court  constituted under
section  151,  title  28,  United  States  Code  having  jurisdiction  over  the
Reorganization Case.

     1.10.  BANKRUPTCY RULES means the Federal Rules of Bankruptcy  Procedure as
promulgated  by the United States  Supreme  Court under section 2075,  title 28,
United States Code, and any Local Rules of the Bankruptcy Court.

     1.11. BUSINESS DAY means any day other than a Saturday, a Sunday, any other
day on  which  banking  institutions  in New  York,  New York  are  required  or
authorized to close by law or executive order or Rosh Hashanah (both days),  Yom
Kippur and the Friday after Thanksgiving.

     1.12. CASH means legal tender of the United States of America.

     1.13.  CAUSES  OF  ACTION  means any and all  actions,  causes  of  action,
liabilities,   obligations,  rights,  suits,  debts,  sums  of  money,  damages,
judgments,  claims and demands  whatsoever,  whether  known or unknown,  in law,
equity or otherwise,  including,  without limitation,  any avoidance or recovery
actions  under  sections  544,  545,  547,  548,  549,  550,  551 and 553 of the
Bankruptcy Code or any other causes of action,  or rights to payments of claims,
that belong to the Debtor.

     1.14. CENTRAL BANK means the Central Bank of Brazil.

     1.15.  CENTRAL BANK Fee means the fee, if any,  imposed by the Central Bank
in  connection  with the  Central  Bank's  approval  of the  debt  restructuring
contemplated by the Plan.

     1.16. CLAIM means (a) any right to payment from the Debtor,  whether or not
such right is reduced to judgment, liquidated,  unliquidated, fixed, contingent,
matured,  unmatured,   disputed,   undisputed,  legal,  equitable,  secured,  or
unsecured or (b) any right to an equitable  remedy for breach of  performance if
such breach  gives rise to a right of payment  from the  Debtor,  whether or not
such right to an  equitable  remedy is reduced to judgment,  fixed,  contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.


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     1.17.  CLAIMS  RESERVE  means  one or more  segregated  accounts  in  which
Distributable Cash shall be held in accordance with Section 9 hereof.

     1.18.  COLLATERAL  means any property or interest in property of the estate
of the Debtor subject to a Lien to secure the payment or performance of a Claim,
which Lien is not subject to avoidance under the Bankruptcy Code.

     1.19. CONFIRMATION DATE means the date on which the Clerk of the Bankruptcy
Court enters the Confirmation Order.

     1.20.  CONFIRMATION  HEARING means the hearing held by the Bankruptcy Court
on confirmation of this Plan, as such hearing may be adjourned or continued from
time to time.

     1.21.  CONFIRMATION ORDER means an order of the Bankruptcy Court confirming
this Plan.

     1.22.  CREDITORS'  COMMITTEE means the statutory creditors'  committee,  if
any, appointed in the  Reorganization  Case under section 1102 of the Bankruptcy
Code.

     1.23. DEBTOR means TV Filme, Inc., as debtor and debtor in possession under
the Bankruptcy Code.

     1.24.  DEFICIENCY CLAIM means,  with reference to a Claim secured by a Lien
against Collateral,  an amount equal to the difference between (a) the aggregate
amount of such Claim and (b) the value of the Collateral securing such Claim.

     1.25.  DISBURSING  AGENT means the Reorganized  Debtor or such Entity as is
designated by the Debtor prior to the  Confirmation  Hearing and approved in the
Confirmation  Order,  in its  capacity as a disbursing  agent under  Section 7.2
hereof.

     1.26.  DISCLOSURE  STATEMENT means the First Amended  Disclosure  Statement
relating  to this Plan,  dated as of the date  hereof,  including  the  exhibits
thereto, as the same may be amended, modified or supplemented from time to time.

     1.27. DISPUTED CLAIM means a Claim or Equity Interest against the Debtor to
the extent that the allowance of such Claim or Equity Interest is the subject of
a notice of  dispute  issued by, or a timely  objection  to such Claim or Equity
Interest, interposed by the Debtor in accordance with Section 9.1 hereof.

     1.28. DISTRIBUTABLE CASH means, as of the applicable date of determination,
(i) the $25  million of Cash to be  distributed  to  holders  of Senior  Secured
Claims,  (ii) the  estimated  amount for the payment of  Administrative  Expense
Claims which are projected to be allowed  subsequent to the Effective  Date, and
(iii) such other sums as may be needed to pay  Allowed  Claims  pursuant to this
Plan.



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     1.29.  EFFECTIVE  DATE  means  the later to occur of (a) the  eleventh  day
(calculated  under Bankruptcy Rule 9006) after the Confirmation  Date if no stay
of the  Confirmation  Order is then in effect or (b) such other date as is fixed
from time to time after the  Confirmation  Date by the Debtor by filing a notice
thereof with the  Bankruptcy  Court,  but in no event shall the  Effective  Date
occur  earlier  than  the  date of the  satisfaction  of each of the  conditions
precedent to the  occurrence of the Effective  Date of this Plan in Section 11.2
hereof unless waived as provided in Section 11.3 hereof.

     1.30.  ENTITY has the meaning  assigned to such term in section  101(15) of
the Bankruptcy Code.

     1.31.  EQUITY INTEREST means any shares of common stock or other instrument
evidencing an ownership interest in the Debtor, whether or not transferable, and
any warrant,  option or right to purchase,  sell or subscribe for an interest or
security in the Debtor.

     1.32.  EXIT  FINANCIERS  means  each  holder of in excess of $1  million in
principal amount of Secured Notes which (i) commits in writing at least five (5)
business days prior to the  Confirmation  Hearing to participate,  on a PRO RATA
basis,  as a lender in the Exit Financing,  and (ii) actually  participates on a
PRO RATA basis in the Exit Financing.

     1.33.  EXIT  FINANCING  means the $10 million  secured line of credit to be
provided by the Exit Financiers in accordance with Section 6.2 of this Plan.

     1.34.  FINAL ORDER means (a) an order or judgment of the Bankruptcy  Court,
or other court of competent jurisdiction,  which has not been reversed,  vacated
or stayed and as to which the time to appeal,  petition for  certiorari  or move
for a new trial,  reargument or rehearing has expired and as to which no appeal,
petition for  certiorari  or other  proceedings  for a new trial,  reargument or
rehearing  shall then be pending or (b) if an appeal,  writ of  certiorari,  new
trial,  reargument or rehearing  thereof has been sought,  such order shall have
been  affirmed  by the  highest  court to which  such  order  was  appealed,  or
certiorari shall have been denied or a new trial,  reargument or rehearing shall
have been denied or resulted in no modification  of such order,  and the time to
take any  further  appeal,  petition  for  certiorari  or move for a new  trial,
reargument or rehearing shall have expired;  provided, that the possibility that
a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous
rule under the Bankruptcy Rules, may be filed,  relating to such order shall not
cause such order not to be a Final Order.

     1.35.  GENERAL  UNSECURED  CLAIM means any Unsecured  Claim  (including any
Deficiency  Claim)  that is not an  Administrative  Expense  Claim,  a  Priority
Non-Tax Claim, or a Priority Tax Claim.

     1.36.  IMPLEMENTATION  DOCUMENTS means the Restructuring Agreement, the New
Secured  Notes,  the New  Indenture,  certificates  evidencing  the  New  Equity
Interests,   documents  evidencing  the  Exit  Financing  and  such  agreements,
instruments or documents as the Debtor may reasonably  request to implement this
Plan  and  the  transactions   contemplated  hereby  and  by  the  Restructuring
Agreement.

     1.37. INDENTURE means the Indenture, dated as of December 20, 1996, between
TV Filme, Inc. and IBJ Schroeder Bank and Trust Company, as indenture trustee.

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<PAGE>


     1.38.  INDENTURE  TRUSTEE  means The Bank of New York as  successor  to IBJ
Schroeder Bank and Trust  Company,  (later known as IBJ Whitehall Bank and Trust
Company),  in its  capacity as indenture  trustee  under the  Indenture,  or any
successor  indenture  trustee  appointed  in  accordance  with the  terms of the
Indenture.

     1.39. ITSA means  ITSA-Intercontinental  Telecomuncacoes Ltda., a Brazilian
limited liability company.

     1.40. ITSA NOTE means that certain  promissory Note in the principal amount
of $140  million  from ITSA as payor to the Debtor as payee,  and all  documents
executed in connection therewith.

     1.41.  LIABILITIES means any and all costs,  expenses,  actions,  causes of
action, suits,  controversies,  damages,  claims,  liabilities or demands of any
nature,  whether  known  or  unknown,   foreseen  or  unforeseen,   existing  or
hereinafter  arising,  liquidated  or  unliquidated,  matured  or  not  matured,
contingent  or direct,  whether  arising at common law, in equity,  or under any
statute,  based in whole or in part upon any act or omission or other occurrence
taking place on or prior to the Effective Date.

     1.42. LIEN has the meaning  assigned to such term in section 101(37) of the
Bankruptcy Code.

     1.43.  NEW  EQUITY  INTEREST  means any shares of stock to be issued by the
Reorganized Debtor pursuant to this Plan and the Restructuring Agreement.

     1.44.  NEW  INDENTURE  means the  Indenture  to be  entered  into as of the
Effective  Date between the  Reorganized  Debtor and an  indenture  trustee with
respect to the New Secured  Notes,  pursuant  to the terms of the  Restructuring
Agreement, substantially in the form annexed to this Plan as EXHIBIT A.

     1.45. NEW INDENTURE TRUSTEE means the entity appointed as indenture trustee
under  the New  Indenture,  or any  successor  indenture  trustee  appointed  in
accordance with the terms of the New Indenture.

     1.46.  NEW NOTE AMOUNT means an amount equal to the sum of $35 million plus
an amount equal to the amount of the Central Bank Fee.

     1.47. NEW SECURED NOTES means the new secured note or notes,  substantially
in the form  annexed to the New  Indenture as Exhibit A, to be issued by ITSA to
the Reorganized Debtor in the aggregate principal amount of the New Note Amount,
which will then be  assigned to the  holders of the  Secured  Notes  pursuant to
Section 4.2 of this Plan and the terms of the New Indenture.

     1.48.  PETITION DATE means  January 26, 2000,  the date on which the Debtor
filed with the  Bankruptcy  Court its  voluntary  petition  for relief under the
Bankruptcy Code.

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     1.49. PLAN means this First Amended Plan of  Reorganization,  including the
schedules  and  exhibits  hereto,  as the  same  may  be  amended,  modified  or
supplemented from time to time in accordance with the terms hereof.

     1.50. PLAN RELEASEES means,  collectively,  (a) the Indenture Trustee,  the
Specified  Holders who are  signatories to the  Restructuring  Agreement and the
members of the  Creditors'  Committee,  if any, (b) the  respective  successors,
predecessors, assignors or assignees of any of the foregoing, (c) all current or
former partners, members or owners of any of the foregoing (including current or
former partners,  members or owners of any direct or indirect interest in any of
the foregoing)  and (d) all current and former  officers,  directors,  trustees,
employees,   agents,  counsel,  attorneys,   accountants,   financial  advisors,
investment bankers, appraisers and engineers of any of the foregoing.

     1.51. PLAN RELEASES means the releases granted under Sections 13.1 and 13.2
hereof.

     1.52. PRIORITY NON-TAX CLAIM means any Claim of a kind specified in section
507(a) (3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.

     1.53. PRIORITY TAX CLAIM means any Claim of a governmental unit of the kind
specified in section 507(a) (8) of the Bankruptcy Code.

     1.54.  RATABLE PORTION means, with reference to any distribution on account
of any Allowed Claim or Allowed  Equity  Interest in any class,  a  distribution
equal in amount to the ratio (expressed as a percentage) that the amount of such
Allowed Claim or Allowed Equity Interest bears to the aggregate amount of Claims
or Equity Interests in the same class.

     1.55.  REORGANIZATION CASE means the case commenced under chapter 11 of the
Bankruptcy Code by the Debtor on the Petition Date.

     1.56.  REORGANIZED  DEBTOR means a new Cayman  Islands entity which will be
the successor in interest to the Debtor as of the Effective Date.

     1.57.  RESTRUCTURING  AGREEMENT means that certain  agreement dated January
24,  2000,  among  the  Debtor  and the  holders  of  Secured  Notes  which  are
signatories thereto, a copy of which is annexed to this Plan as EXHIBIT B.

     1.58.  SCHEDULES  means the  schedules  of assets and  liabilities  and the
statements of financial affairs filed or to be filed by the Debtor under section
521 of the Bankruptcy Code and the Official  Bankruptcy  Forms of the Bankruptcy
Rules,  as such schedules and  statements  have been or may be  supplemented  or
amended.

     1.59.  SECURED  CLAIM means a Claim  secured by a Lien on Collateral to the
extent of the value of the Collateral,  as determined in accordance with section
506(a) of the Bankruptcy Code.

     1.60.  SECURED  NOTES means the "12-7/8%  Senior Notes Due 2004" issued and
outstanding under the Indenture.


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     1.61.  SECURITIES ACT means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     1.62. SEC means the United States Securities and Exchange Commission.

     1.63.  SENIOR  SECURED CLAIM means any Secured Claim  governed by,  arising
under or related to the Indenture or evidenced by any of the Secured Notes.

     1.64.  SPECIFIED  HOLDERS  means  the  holders  of  Secured  Notes  who are
signatories to the Restructuring Agreement.

     1.65.  SUBSIDIARIES  means the Entities  which are identified on Schedule 1
hereto and all direct and indirect subsidiaries of the Debtor and ITSA.

     1.66.  UNSECURED  CLAIM  means any Claim  against  the Debtor that is not a
Secured Claim.

     1.67.  VOTING AGENT means such Entity as is designated by the Debtor in the
Disclosure  Statement in its capacity as Voting Agent to distribute  Ballots and
tabulate votes with respect to the Plan.

B.   INTERPRETATION; APPLICATION OF DEFINITIONS AND RULES OF CONSTRUCTION.

     Unless  otherwise  specified,  all  section,  article,  schedule or exhibit
references  in this  Plan are to the  respective  section  in,  article  of,  or
schedule  or exhibit  to,  this Plan,  as the same may be  amended,  waived,  or
modified from time to time. The words "herein," "hereof," "hereto," "hereunder,"
and other words of similar  import  refer to this Plan as a whole and not to any
particular section,  article,  subsection, or clause contained in this Plan. Any
defined term used herein that is not  otherwise  defined  shall have the meaning
assigned  to  that  term in the  Bankruptcy  Code.  The  rules  of  construction
contained in section 102 of the Bankruptcy Code shall apply to the  construction
of this Plan.  The headings in this Plan are for  convenience  of reference only
and shall not limit or otherwise affect the provisions of this Plan.

SECTION 2.     PROVISIONS  FOR  PAYMENT  OF  ADMINISTRATIVE  EXPENSE  CLAIMS AND
               PRIORITY TAX CLAIMS

2.1  ADMINISTRATIVE EXPENSE CLAIMS.

     Except  as  provided  herein,  on the  Effective  Date,  each  holder of an
Administrative  Expense  Claim shall  receive on account of such  Administrative
Expense  Claim an amount  in Cash  equal to the  amount  of such  Administrative
Expense Claim  allowed by the  Bankruptcy  Court,  except to the extent that any
Entity  entitled  to payment of any  Administrative  Expense  Claim  agrees to a
different treatment of such Administrative  Expense Claim. All Entities that are
awarded allowance of compensation or reimbursement of expenses by the Bankruptcy
Court under  sections  503(b) (2),  503(b) (3),  503(b) (4) or 503(b) (5) of the
Bankruptcy  Code  shall be paid in full in such  amounts  as are  allowed by the
Bankruptcy  Court (a) upon the later of (i) the Effective Date and (ii) the date
upon  which  an  order  of  the  Bankruptcy  Court  with  respect  to  any  such
Administrative  Expense Claim becomes a Final Order or (b) upon such other terms
as may be mutually agreed upon between such holder of an Administrative  Expense
Claim and the Debtor.  The  post-Petition  Date  reasonable fees and expenses of
professionals  retained by the Ad Hoc Noteholders' Committee will be paid on the
Effective Date.


                                       7
<PAGE>

2.2  PRIORITY TAX CLAIMS.

     On the Effective Date,  each holder of an Allowed  Priority Tax Claim shall
receive on account of such Allowed Priority Tax Claim a payment in Cash equal to
the amount of its Allowed  Priority  Tax Claim,  unless the holder of such Claim
has agreed to a different treatment.

SECTION 3.     CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS

     Claims  against and Equity  Interests  in the Debtor are  divided  into the
following classes:

     Class 1 -- Priority Non-Tax Claims

     Class 2 -- Senior Secured Claims

     Class 3 -- Unsecured Claims

     Class 4 -- Equity Interests

SECTION 4.     PROVISIONS  FOR  TREATMENT  OF  CLAIMS AND EQUITY INTERESTS UNDER
               THIS PLAN

4.1  PRIORITY NON-TAX CLAIMS (CLASS 1).

     On the Effective  Date,  each holder of an Allowed  Priority  Non-Tax Claim
shall  receive on account of such Allowed  Priority  Non-Tax  Claim a payment in
Cash equal to the amount of its Allowed Priority Non-Tax Claim unless the holder
of such Claim has agreed to a different treatment.

4.2  SENIOR SECURED CLAIMS (CLASS 2).

     (a) ALLOWANCE OF SENIOR SECURED CLAIMS. By virtue of an affirmative vote in
favor of the Plan,  holders of Senior  Secured Claims will be making an election
pursuant to section  1111(b)(2)  of the  Bankruptcy  Code to treat their  entire
claim as a Senior  Secured  Claim.  The Senior Secured Claims against the Debtor
shall be deemed to be Allowed  Claims as of the Petition Date in an amount equal
to  $140,000,000,  plus all interest  accrued under the Indenture from and after
December 15, 1998 through the Petition Date. By operation of section 1111(b) (1)
(A) (i) of the  Bankruptcy  Code,  any  Deficiency  Claim relating to the Senior
Secured Claims shall be extinguished.

     (b) TREATMENT OF SENIOR SECURED  CLAIMS.  On the Effective Date, or as soon
as practicable  thereafter,  in exchange for the Secured Notes, each holder of a
Secured Note shall receive its Ratable  Portion of (i) $25 million in Cash, (ii)
New Secured Notes in the aggregate  principal amount of the New Note Amount; and
(iii)  eighty  percent  (80%) of the New  Equity  Interests  in the  Reorganized
Debtor.  Distributions  to  holders  of  Secured  Notes  shall  be  made  by the
Disbursing  Agent to the  Indenture  Trustee  for the  benefit of the holders of
Secured Notes. The Indenture Trustee shall in turn make distributions  under the
Plan to holders of the Secured Notes. Subsequent distributions to holders of the
New Secured Notes will be made in accordance with the New Indenture.

                                       8
<PAGE>

4.3  GENERAL UNSECURED CLAIMS (CLASS 3).

     To the extent unpaid prior to the Effective Date and except to the extent a
holder of an Allowed General  Unsecured  Claim agrees to a different  treatment,
Allowed General  Unsecured Claims shall be unimpaired in accordance with section
1124(2) of the Bankruptcy Code.

4.4  EQUITY INTERESTS IN THE DEBTOR (CLASS 4).

     On the  Effective  Date,  all  Equity  Interests  in the  Debtor  shall  be
extinguished.  On the  Effective  Date  or as soon  as  practicable  thereafter,
holders of Allowed  Equity  Interests  shall  receive a Ratable  Portion of five
percent (5%) of the New Equity Interests in the Reorganized Debtor.

SECTION 5.    IDENTIFICATION  OF  CLASSES OF CLAIMS  AND INTERESTS  IMPAIRED AND
              NOT IMPAIRED UNDER THIS PLAN; ACCEPTANCE OR REJECTION OF THIS PLAN

5.1  HOLDERS OF CLAIMS AND EQUITY INTERESTS ENTITLED TO VOTE.

     Each  holder  of an  Allowed  Claim or an  Allowed  Equity  Interest  in an
impaired  class of Claims  against or Equity  Interests  in the Debtor  shall be
entitled  to vote  separately  to accept or reject  this Plan as provided in the
Disclosure Statement.

     Each of Classes 2 and 4 is impaired  hereunder and the holders of Claims or
Equity Interests in such Classes are entitled to vote on this Plan.

5.2  ACCEPTANCE BY UNIMPAIRED CLASSES.

     Classes 1 and 3 are  unimpaired  under  this Plan and  holders of Claims in
such classes are conclusively presumed to have accepted this Plan.

5.3  ELIMINATION OF CLASSES.

     Any class of Claims that is not occupied as of the date of the commencement
of the  Confirmation  Hearing  by an  Allowed  Claim  or by a Claim  temporarily
allowed  under Rule 3018 of the  Bankruptcy  Rules shall be deemed  deleted from
this Plan for purposes of  determining  acceptance  or rejection of this Plan by
such class under section 1129(a) (8) of the Bankruptcy Code.


                                       9
<PAGE>

5.4  REVOCATION OF PLAN.

     The Debtor  reserves the right to revoke and withdraw this Plan at any time
prior  to  entry  of the  Confirmation  Order.  If this  Plan is so  revoked  or
withdrawn, then this Plan shall be deemed null and void.

SECTION 6.        MEANS OF IMPLEMENTATION

6.1  MEANS OF IMPLEMENTING THE PLAN.

     To implement the Plan, the Debtor will form the Reorganized  Debtor. On the
Effective  Date, the Assets of the Debtor will be transferred to the Reorganized
Debtor and the  Reorganized  Debtor  will be the  successor  in  interest to the
Debtor. On the Effective Date, the Reorganized  Debtor will contribute as equity
to its  subsidiary,  ITSA, $105 million of the ITSA Note less an amount equal to
the amount of any Central Bank Fee. The terms of the remaining amount due on the
ITSA Note,  which  amount  shall equal $35 million  plus an amount  equal to the
amount of the Central Bank Fee, will be amended and restated.  In addition,  New
Secured Notes in the aggregate  principal  amount of the New Note Amount will be
issued to the Reorganized  Debtor,  which will then assign the New Secured Notes
to holders of the Secured Notes,  together with (i) $25 million in Cash and (ii)
80% of the  New  Equity  Interests.  On or as  soon  as  practicable  after  the
Effective  Date,  holders of Allowed  Equity  Interests  and certain  members of
management  of the  Reorganized  Debtor,  or their  designee,  will  receive the
allocations  of the New Equity  Interests,  as  provided in this Plan and in the
Restructuring Agreement.

     On or  prior  to the  Effective  Date,  each  party  to the  Implementation
Documents,  including,  without  limitation,  the  Indenture  Trustee,  the  New
Indenture  Trustee  and the  Disbursing  Agent,  shall  execute  and deliver the
Implementation Documents to which it is a party.

6.2  EXIT FINANCING.

     On the Effective  Date,  the  Reorganized  Debtor will obtain a $10 million
secured line of credit from the Exit Financiers on the following terms:

     o Maturity: twelve months from the Effective Date of the Plan.

     o Interest: 15% annual interest rate, payable monthly, in cash.

     o Fees:

          (i)  $400,000  (U.S.)  upfront  underwriting  fee  to be  paid  on the
               Effective Date of the Plan PRO rata to the Specified Holders, who
               have agreed in the  Restructuring  Agreement  to  underwrite  and
               ensure the  availability of the Exit Financing to the Reorganized
               Debtor;

                                       10
<PAGE>

          (ii) $100,000  (U.S.)  upfront  administration  fee to be  paid on the
               Effective Date of the Plan to Resurgence Asset Management LLC, as
               administrator of the Exit Financing; and

          (iii)$300,000  (U.S.)  facility  fee to be paid only upon the  initial
               draw  down  under  the  Exit  Financing,   payable  to  the  Exit
               Financiers on a PRO RATA basis.

     o    Each  draw  down  under  the Exit  Financing  will  require  the prior
          approval of the board of directors of the Reorganized Debtor.

     o    Security:  The Exit  Financing  will be secured on a PARI PASSU  basis
          with the New Secured Notes.

     o    Participation:  Each  holder of in excess of $1 million  in  principal
          amount of  Secured  Notes may  participate  on a PRO RATA basis in the
          Exit Financing if such party commits to do so in writing at least five
          (5) business days prior to the Confirmation Hearing.

6.3  DISTRIBUTIONS UNDER THIS PLAN.

     On the  Effective  Date,  the  Disbursing  Agent shall make,  or shall make
adequate reserve for, the distributions required to be made under this Plan from
the sources of Cash described in Section 7.3 hereof.

6.4  SECURED NOTES AND INDENTURE.

     As of the  Effective  Date,  the  Secured  Notes,  the  Indenture  and  all
guarantees  and other  documents  executed or delivered in connection  therewith
shall be of no further  force or effect other than,  with respect to the Secured
Notes,  to entitle the holders  thereof to the  distributions  described in this
Plan.  On the  Effective  Date,  the Debtor and the  Indenture  Trustee shall be
discharged from all further responsibilities under the Indenture.

SECTION 7.     PROVISIONS GOVERNING DISTRIBUTIONS

7.1  DATE OF DISTRIBUTIONS.

     Any  distributions and deliveries to be made hereunder shall be made on the
Effective Date or as soon as practicable thereafter. If any payment or act under
this Plan is required to be made or  performed  on a date that is not a Business
Day,  then the  making of such  payment  or the  performance  of such act may be
completed on the next succeeding  Business Day, but shall be deemed to have been
completed as of the required date.

7.2  DISBURSING AGENT.

     All  distributions  under this Plan shall be made by the Disbursing  Agent,
except as otherwise  provided herein. The Disbursing Agent shall not be required
to give any bond or surety or other  security for the  performance of its duties
unless otherwise ordered by the Bankruptcy Court.


                                       11
<PAGE>

7.3  SOURCE OF DISTRIBUTIONS.

     All Cash distributions required to be made under this Plan on the Effective
Date on  account of Allowed  Claims  required  under this Plan to be made on the
Effective Date, shall be made from Distributable Cash.

7.4  DELIVERY OF DISTRIBUTIONS.

     Subject to Rule 9010 of the Bankruptcy  Rules, all distributions to holders
of Allowed Claims and Allowed Equity  Interests  shall be made at the address of
each such holder as set forth on the Schedules  filed with the Bankruptcy  Court
unless  superseded  by the  address  set  forth on  proofs of claim or proofs of
equity  interest  filed by such holders (or at the last known  address of such a
holder  if no proof of claim  or  proof of  equity  interest  is filed or if the
Debtor or the  Disbursing  Agent has been  notified  in  writing  of a change of
address).  For  holders  of  Secured  Notes,  the  Disbursing  Agent  shall make
distributions to the Indenture Trustee for the benefit of the holders of Secured
Notes who surrender their Secured Notes for cancellation to the Disbursing Agent
or its designee. Any holder of a Secured Note who fails to surrender its Secured
Note(s)  within  one (1) year from the  Effective  Date  shall be deemed to have
forfeited  all rights and Claims and will not  participate  in any  distribution
under the Plan. If any  distribution to any holder of a Claim or Equity Interest
is returned as undeliverable,  the Disbursing Agent shall use reasonable efforts
to determine the current  address of such holder,  but no  distribution  to such
holder shall be made unless and until the  Disbursing  Agent has  determined the
then current address of such holder,  at which time such  distribution  shall be
made to such holder without  interest.  Amounts in respect of any  undeliverable
distributions  shall be returned to the Disbursing Agent until such distribution
is claimed.  Any such  distribution or the proceeds  thereof shall be set aside,
and in the case of Cash,  held in a segregated  interest  bearing  account to be
maintained by the Disbursing  Agent. If no proofs of claim or interest are filed
and the Schedules  filed with the Bankruptcy  Court fail to state  addresses for
holders of Allowed Claims or Allowed Equity  Interests,  such  distributions  in
respect of such  Allowed  Claims or  Allowed  Equity  Interests  shall be deemed
unclaimed property under section 347(b) of the Bankruptcy Code at the expiration
of one year from the Effective  Date.  After such date,  all unclaimed  property
shall  revert to and be  property  of the  Reorganized  Debtor  and the Claim or
Equity  Interest of any holder to such property  shall be discharged and forever
barred.

7.5  MANNER OF PAYMENT UNDER THIS PLAN.

     At the option of the Disbursing Agent, any Cash payment to be made pursuant
to this Plan may be made by a check or wire transfer or as otherwise required or
provided in any applicable Implementation Document.

7.6  DISTRIBUTIONS AFTER EFFECTIVE DATE.

     Distributions  made after the Effective Date to holders of Claims or Equity
Interests  that are not Allowed as of the Effective  Date but which later become
Allowed shall be deemed to have been made on the Effective Date.

                                       12
<PAGE>


SECTION 8.     RIGHTS AND POWERS OF DISBURSING AGENT

8.1  EXCULPATION.

     The  Disbursing  Agent,  from and  after  the  Effective  Date,  is  hereby
exculpated by all Entities, including all holders of Claims and Equity Interests
and other  parties in  interest,  from any and all claims,  causes of action and
other assertions of liability  (including  breach of fiduciary duty) arising out
of the discharge by the Disbursing Agent of the powers and duties conferred upon
it by this Plan or any order of the Bankruptcy  Court entered  pursuant to or in
furtherance  of this Plan,  or  applicable  law,  except  solely for  actions or
omissions  arising  out of the gross  negligence  or willful  misconduct  of the
Disbursing  Agent.  No holder of a Claim or an Equity Interest or other party in
interest  shall  have or  pursue  any  claim  or  cause of  action  against  the
Disbursing  Agent  for  making  payments  in  accordance  with  this Plan or for
implementing the provisions of this Plan.

8.2  POWERS OF THE DISBURSING AGENT.

     The  Disbursing  Agent  shall be  empowered  to (a) effect all  actions and
execute all instruments and documents necessary to implement this Plan, (b) make
all distributions  contemplated by this Plan, (c) liquidate property as required
to make  distributions  contemplated by this Plan, (d) comply with this Plan and
the  obligations  thereunder,  (e) employ  professionals  to  represent  it with
respect to its  responsibilities  and (f)  exercise  such other powers as may be
vested in the Disbursing  Agent  pursuant to an order of the  Bankruptcy  Court,
pursuant to this Plan, or as deemed by the Disbursing  Agent to be necessary and
proper to implement the provisions of this Plan.

8.3  EXPENSES INCURRED ON OR AFTER THE EFFECTIVE DATE.

     Except as  otherwise  ordered by the  Bankruptcy  Court,  the amount of any
reasonable  fees and expenses  incurred by the Disbursing  Agent on or after the
Effective Date (including reasonable fees and expenses of counsel) shall be paid
in Cash by the Reorganized Debtor.

8.4  SUCCESSOR DISBURSING AGENT.

     Upon  thirty  (30) days prior  written  notice to the Debtor or,  after the
Effective  Date, the  Reorganized  Debtor,  the Disbursing  Agent may resign its
position as the Disbursing  Agent. The Debtor or the Reorganized  Debtor, as the
case may be,  shall  designate  a  successor  Disbursing  Agent to  replace  the
existing  Disbursing  Agent and shall provide written notice of such designation
to the  resigning  Disbursing  Agent and the  Indenture  Trustee.  Any successor
Disbursing  Agent  shall  perform all the duties and  obligations,  and shall be
entitled to all of the rights and remedies of the Disbursing Agent hereunder.

                                       13
<PAGE>

SECTION 9.     PROCEDURES FOR RESOLVING  AND TREATING DISPUTED CLAIMS AND EQUITY
               INTERESTS UNDER THIS PLAN

9.1  PROSECUTION OF OBJECTIONS.

     Unless otherwise  provided herein or by order of the Bankruptcy  Court, all
objections to Claims or Equity  Interests shall be filed and served on or before
the Confirmation  Date (except with respect to any claim filed by a governmental
unit  which  deadline  for the  filing of any  objections  thereto  shall be two
hundred  ten (210)  days  after  the  Effective  Date).  All  objections  may be
litigated  to Final  Order.  The  Debtor  or,  after  the  Effective  Date,  the
Reorganized Debtor, may compromise and settle any objections to Claims or Equity
Interests. In addition, the Debtor or, after the Effective Date, the Reorganized
Debtor,  may file a request that the  Bankruptcy  Court estimate for purposes of
distribution  the  amount  of any  contingent  or  unliquidated  Claim or Equity
Interest,  if liquidation of the Claim or Equity Interest would unduly delay the
administration of the Reorganization Case.

9.2  NO DISTRIBUTIONS PENDING ALLOWANCE.

     Notwithstanding  any other provision  hereof,  if any portion of a Claim or
Equity  Interest  is a  Disputed  Claim,  no payment  or  distribution  provided
hereunder  shall be made on account of such Claim or Equity  Interest unless and
until such Disputed Claim becomes Allowed.

9.3  CLAIMS RESERVE.

     On the Effective  Date, the Disbursing  Agent shall transfer to one or more
segregated  accounts  constituting the Claims Reserve an amount of Distributable
Cash equal to (i) the $25 million of Cash to be distributed to holders of Senior
Secured  Claims,  (ii) the  estimated  amount for the payment of  Administrative
Expense  Claims which are  projected to be allowed  subsequent  to the Effective
Date, and (iii) such other sums as may be needed to pay Allowed Claims  pursuant
to this Plan. The Distributable Cash held in the Claims Reserve shall be held in
trust for the benefit of holders of such Claims pending  determination  of their
entitlement thereto.

9.4  DISTRIBUTIONS AFTER ALLOWANCE.

     Payments and  distributions to each holder of a Disputed Claim or any other
Claim  that is not  Allowed,  to the extent  that such Claim or Equity  Interest
ultimately  becomes Allowed,  shall be made in accordance with the provisions of
this Plan  governing the Class of Claims in which such Claim or Equity  Interest
is classified.  As soon as practicable after the date that the order or judgment
of the  Bankruptcy  Court allowing any Disputed Claim or any other Claim that is
not Allowed becomes a Final Order,  the Disbursing Agent shall distribute to the
holder of such Claim or Equity  Interest any payment or property that would have
been distributed to such holder if the Claim or Equity Interest had been allowed
on the Effective Date,  without any interest thereon,  which in the case of Cash
distributions shall be made from Distributable Cash held in the Claims Reserve.


                                       14
<PAGE>

9.5  DISTRIBUTIONS AFTER DISALLOWANCE.

     Cash held in the  Claims  Reserve  after all  Claims  have been  allowed or
disallowed shall be distributed to the Reorganized Debtor.

SECTION 10.    PROVISIONS  GOVERNING EXECUTORY  CONTRACTS  AND  UNEXPIRED LEASES
               UNDER THIS PLAN

10.1 GENERAL TREATMENT.

     This Plan constitutes a motion by the Debtor to reject, as of the Effective
Date,  all executory  contracts  and  unexpired  leases to which the Debtor is a
party,  except for an executory  contract or  unexpired  lease that (a) has been
assumed  pursuant to Final Order of the Bankruptcy  Court prior to the Effective
Date, (b) is specifically listed on Schedule 2 hereto or (c) is the subject of a
separate motion filed under section 365 of the Bankruptcy Code by the Debtor and
pending on the Effective Date.

10.2 AMENDMENTS  TO  SCHEDULE  OF  ASSUMED   EXECUTORY   CONTACTS;   EFFECTS  OF
     AMENDMENTS.

     The Debtor  shall  assume and assign each of the  executory  contracts  and
unexpired  leases listed on Schedule 2 hereto;  provided that, the Debtor may at
any time on or before the  Confirmation  Date amend  Schedule 2 hereto to delete
therefrom or add any executory  contract or unexpired  lease  thereto,  in which
event such executory  contract or unexpired lease shall be deemed to be rejected
or assumed,  respectively,  as of the Effective  Date.  The Debtor shall provide
notice of any  amendments  to Schedule 2 hereto to the parties to the  executory
contracts or unexpired  leases affected  thereby.  The fact that any contract or
lease is scheduled on Schedule 2 hereto shall not  constitute or be construed to
constitute  an  admission by the Debtor that such  contract or lease  (including
related  agreements  and rights) is an  executory  contract or  unexpired  lease
within the meaning of section 365 of the Bankruptcy  Code or that the Debtor has
any liability thereunder.

10.3 BAR TO REJECTION DAMAGES.

     If the rejection of an executory  contract or unexpired lease by the Debtor
results in damages to the other party or parties to such  contract  or lease,  a
Claim for such damages, if not theretofore  evidenced by a filed proof of claim,
shall be forever barred and shall not be enforceable  against the Debtor, or its
properties or its interests in property or its agents,  successors,  or assigns,
unless a proof of claim is filed with the  Bankruptcy  Court and served upon the
Disbursing  Agent with a copy to the Debtor on or before  thirty (30) days after
the later to occur of (a) the entry of the Confirmation  Order and (b) the entry
of an  order by the  Bankruptcy  Court  authorizing  rejection  of a  particular
executory contract or lease.

SECTION 11.       CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE

11.1 CONDITIONS PRECEDENT TO CONFIRMATION OF THIS PLAN.

     The confirmation of this Plan is subject to:

                                       15
<PAGE>

     (a) ENTRY OF CONFIRMATION  ORDER.  The Clerk of the Bankruptcy  Court shall
have entered the Confirmation Order of the Bankruptcy Court, which shall:

          (i) decree that the  transfers  contemplated  to be made shall be free
     and clear of all  Claims,  Liens  and  encumbrances,  except  as  expressly
     provided herein or in the Implementation Documents;

          (ii) approve the terms of the Restructuring Agreement and the exhibits
     thereto, including the New Indenture and the employment agreements with key
     management  personnel of the Reorganized  Debtor,  approve the terms of the
     Exit Financing, and authorize and direct the Debtor, the Indenture Trustee,
     the New Indenture  Trustee and the Disbursing  Agent to execute and deliver
     the  Implementation  Documents,  and decree that each of the Implementation
     Documents shall constitute a legal, valid and binding agreement, instrument
     or document, as applicable;

          (iii)  decree  that  the   Confirmation   Order  shall  supersede  any
     Bankruptcy Court orders issued prior to the  Confirmation  Date that may be
     inconsistent with the Confirmation Order;

          (iv) authorize the  implementation of this Plan in accordance with its
     terms;

          (v) provide that any transfers to be effected under this Plan shall be
     and are exempt from transfer taxes, and any applicable stamp or similar tax
     under section 1146 (c) of the Bankruptcy Code;

          (vi)  authorize  the  formation  of the  Reorganized  Debtor  and  the
     issuance of the New Secured Notes and New Equity Interests;

          (vii) decree that the New Secured  Notes and New Equity  Interests are
     exempt from  registration  under the  Securities  Act  pursuant to sections
     1125(e),  1126(b) and 1145 of the Bankruptcy Code and other applicable law;
     and

          (viii) confirm this Plan.

     (b) FORM OF  CONFIRMATION  ORDER.  The Clerk of the Bankruptcy  Court shall
have entered the  Confirmation  Order in form and substance  satisfactory to the
Debtor, the Specified Holders and the Creditors' Committee, if one is appointed.

11.2 CONDITIONS PRECEDENT TO EFFECTIVE DATE OF THIS PLAN.

     The   occurrence  of  the  Effective  Date  of  this  Plan  is  subject  to
satisfaction of the following conditions precedent:

     (a) FINALITY OF THE  CONFIRMATION  ORDER. The Clerk of the Bankruptcy Court
shall have entered the Confirmation  Order and the Confirmation Order shall have
become a Final Order.

                                       16
<PAGE>

     (b)  GOVERNMENTAL  APPROVALS.  The  Subsidiaries  shall have  received  all
necessary  approvals to implement  the structure  contemplated  by the Plan from
Brazilian government regulatory agencies having jurisdiction with respect to the
licenses held by the Subsidiaries.

     (c) APPROVAL OF THE CENTRAL  BANK.  All  required  approvals of the Central
Bank shall have been received in form and substance  satisfactory to the Debtor,
the Specified Holders and the Creditors' Committee, if one is appointed.

     (d) DISTRIBUTIONS.  The Disbursing Agent shall have fully funded the Claims
Reserve.  The  Disbursing  Agent shall have received the  Distributable  Cash in
existence on the Effective Date.

     (e) EXECUTION OF DOCUMENTS. All other actions and documents,  including the
Implementation  Documents,  necessary to implement  the  provisions of this Plan
shall have been respectively, effected or executed and delivered.

11.3 WAIVER OF CONDITIONS PRECEDENT.

     Each of the  conditions  precedent in Sections  11.1 and 11.2 hereof may be
waived,  in whole or in part,  by the Debtor with the  consent of the  Indenture
Trustee,  which consent shall not be unreasonably withheld. Any such waiver of a
condition  precedent in Section 11.1 or 11.2 hereof may be effected at any time,
on two  (2)  Business  Days'  notice  to the  Entities  that  are  party  to the
Restructuring  Agreement,  without  leave or order of the  Bankruptcy  Court and
without any formal action other than  proceeding  to confirm or consummate  this
Plan.

SECTION 12.    EFFECT OF CONFIRMATION

12.1 CUSTODY.

     Until the Effective  Date,  the  Bankruptcy  Court shall retain custody and
jurisdiction  of the Debtor,  its properties and interests in property and their
operations.  On the Effective Date, the Debtor,  its properties and interests in
property and its operations  shall be released from the custody and jurisdiction
of the Bankruptcy Court, except as provided in Section 14.1 hereof.

12.2 LIENS.

     On the Effective  Date,  all Liens against any  properties and interests in
property of the Debtor,  except to the extent provided  herein,  shall be deemed
extinguished and discharged, provided that, on the Effective Date, the Indenture
Trustee  shall have and shall  retain all rights  granted  under and pursuant to
this Plan.

12.3 TERM OF INJUNCTIONS OR STAYS.

     Unless  otherwise  provided,  all  injunctions or stays provided for in the
Reorganization  Case pursuant to sections 105 or 362 of the Bankruptcy  Code, or
otherwise, and in existence on the Confirmation Date, shall remain in full force
and effect until the Effective Date.


                                       17
<PAGE>

SECTION 13.    RELEASES, INJUNCTION AND WAIVER OF CLAIMS

     Nothing in this  Section 13 shall be  construed  to operate to release  any
Entity from the obligations expressly contemplated by this Plan.

13.1 RELEASES OF THE AFFILIATE RELEASEES.

     (a) RELEASE OF THE DEBTOR.  The Debtor's  estate shall be released from all
Liabilities except those expressly preserved under this Plan.

     (b)  RELEASE OF THE  AFFILIATE  RELEASEES.  Without  limiting  the  release
provided in Section  13.1(a) and except as provided in the last sentence of this
Section  13.1(b),  the Affiliate  Releasees are released from all Liabilities in
any way relating to (a) the Debtor, the  Reorganization  Case, or this Plan, and
(b) the Secured Notes or the Indenture.  Subject to the limitations  provided in
the  last  sentence  of this  Section  13.1(b),  the  release  of the  Affiliate
Releasees  provided in this Section 13.1(b)  includes a release from Liabilities
relating to:

          (i) the offer,  sale,  purchase,  resale or  ownership  of the Secured
     Notes or the Equity Interests, any sales brochure,  registration statement,
     preliminary  prospectus,   prospectus,  offering  memorandum  or  circular,
     appraisal,  report or inspection,  or any disclosure or omission related to
     any of the foregoing, and any engagement, underwriting, placement agency or
     other role of, or services  rendered by, any Entity in connection  with any
     of the foregoing;

          (ii) the involvement of any of the Affiliate  Releasees in or with the
     sale of the Secured Notes;

          (iii) the  ownership,  management and operation of any property by any
     of the Affiliate Releasees;

          (iv) the  preparation  by any of the Affiliate  Releasees of financial
     statements,  appraisals, or other reports or certificates in respect of the
     Debtor or the other Subsidiaries;

          (v) the  actions,  payments  and  obligations  required  of any of the
     Affiliate  Releasees under, among other things, the Indenture,  the Secured
     Notes and all agreements,  instruments and documents executed and delivered
     pursuant to or in connection with any of the foregoing;

          (vi) the use of proceeds by any of the  Affiliate  Releasees  from the
     Secured Notes or revenues of the property of the Affiliate Releasees; and

          (vii) the undertaking by any of the Affiliate Releasees to restructure
     the  obligations  governed by the  Indenture  and  evidenced by the Secured
     Notes,  including any actions taken or not taken in respect of formulating,
     negotiating, soliciting acceptances to and implementing this Plan.


                                       18
<PAGE>

     The  release  provided  in this  Section  13.1  shall not  release  (a) any
defenses of the Debtor or the other Affiliate  Releasees to any Liability or (b)
any  obligations  of the  Reorganized  Debtor  arising  under  this  Plan or the
Implementation Documents.

13.2 RELEASE OF THE PLAN RELEASEES.

     Except as provided  in the last  sentence of this  Section  13.2,  the Plan
Releasees  are  released  from all  Liabilities  in any way  relating to (a) the
Debtor, the Reorganization  Case, or this Plan, and (b) the Secured Notes or the
Indenture.  Subject to the  limitations  provided  in the last  sentence of this
Section 13.2,  the release of the Plan  Releasees  provided in this Section 13.2
includes a release from Liabilities relating to:

          (i)  the   undertaking  by  the  Plan  Releasees  to  restructure  the
     obligations  governed by the Indenture and evidenced by the Secured  Notes,
     including  any  actions  taken or not  taken  in  respect  of  formulating,
     negotiating and implementing this Plan;

          (ii) all actions effected or not effected by the Indenture  Trustee or
     the Specified Holders, or their respective advisors, under the Indenture or
     under  any other  agreements,  instruments  or  documents  relating  to the
     Debtor;

          (iii)  the  preparation  by any of the  Plan  Releasees  of  financial
     statements,  appraisals, or other reports or certificates in respect of the
     Debtor or the Subsidiaries or their properties;

          (iv) the actions,  payments,  and  obligations  required of any of the
     Plan Releasees under, among other things, the Indenture, the Secured Notes,
     and all  agreements,  instruments  and  documents  executed  and  delivered
     pursuant to or in connection with any of the foregoing; and

          (v) the use of proceeds by any of the Plan  Releasees from the Secured
     Notes or the revenues of property of the Subsidiaries.

     The  release  provided  in this  Section  13.2  shall not  release  (a) any
defenses of the Plan  Releasees to any Liability or (b) any  obligations  of the
Plan Releasees arising under this Plan or the Implementation Documents.

13.3 INJUNCTION.

     The  Confirmation  Order shall be an injunction to  permanently  enjoin and
restrain all Entities from asserting against the Affiliate Releasees or the Plan
Releasees,  or  their  respective  properties  or  interests  in  property,  any
Liabilities  that are released by the Plan Releases or any Claims based upon any
act or  omission,  transaction  or other  activity  of any kind or  nature  that
occurred  prior to the  Effective  Date (other than actions  provided for by the
Plan). The Confirmation  Order shall also be an injunction to enjoin permanently
and restrain all Entities from taking any of the following  actions  (other than
actions  brought to enforce any right or  obligation  provided  for by the Plan)
against  the  Affiliate  Releasees  or the Plan  Releasees  or their  respective
properties or interests in property:


                                       19
<PAGE>

          (i) the commencement or continuation of any action or proceeding;

          (ii) the enforcement, attachment, collection or recovery by any manner
     or means of any judgment, award, decree or order;

          (iii) creating,  perfecting, or enforcing any encumbrance of any kind;
     and

          (iv) asserting any right of setoff,  subrogation, or recoupment of any
     kind against any obligation due from any such party.

13.4 VESTING OF PROPERTY IN REORGANIZED DEBTOR.

     Effective  as of the  Effective  Date all  Assets  of the  Debtor  shall be
transferred to and shall vest in the Reorganized Debtor.

SECTION 14.    RETENTION OF JURISDICTION

14.1 RETENTION OF JURISDICTION.

     The Bankruptcy Court may retain  jurisdiction,  and if the Bankruptcy Court
exercises its retained jurisdiction,  shall have exclusive jurisdiction,  of all
matters  arising out of, and related to, the  Reorganization  Case and this Plan
pursuant  to,  and for  the  purposes  of,  sections  105  (a)  and  1142 of the
Bankruptcy Code and for, among other things, the following purposes:

     (a) To hear  and  determine  pending  applications  for the  assumption  or
rejection of executory  contracts or unexpired leases,  if any are pending,  and
the allowance of Claims resulting therefrom;

     (b) To  determine  any  and all  adversary  proceedings,  applications  and
contested matters;

     (c)  To  ensure  that  distributions  to  holders  of  Allowed  Claims  are
accomplished as provided herein;

     (d) To hear and determine any timely objections to  Administrative  Expense
Claims or to proofs of claim and equity interests  filed,  both before and after
the Confirmation  Date,  including any objections to the  classification  of any
Claim or Equity Interest,  and to allow or disallow any Disputed Claim, in whole
or in part;

     (e) To enter and implement  such orders as may be  appropriate in the event
the Confirmation Order is for any reason stayed, revoked, modified, or vacated;

     (f) To issue such orders in aid of  execution  of this Plan,  to the extent
authorized by section 1142 of the Bankruptcy Code;

     (g) To  consider  any  modifications  of this  Plan,  to cure any defect or
omission,  or reconcile any  inconsistency in any order of the Bankruptcy Court,
including the Confirmation Order;


                                       20
<PAGE>

     (h) To hear and determine all  applications  for awards of compensation for
services rendered and  reimbursement of expenses related to  implementation  and
consummation of this Plan;

     (i) To hear and  determine  any  disputes  regarding  the fees and expenses
incurred by the Disbursing Agent;

     (j)  To  hear  and  determine  disputes  arising  in  connection  with  the
interpretation, implementation, or enforcement of this Plan;

     (k) To hear and determine matters concerning state, local and federal taxes
in accordance with sections 346, 505 and 1146 of the Bankruptcy Code; and

     (l) To enter a final decree closing the Reorganization Case.

14.2 MODIFICATION OF PLAN.

     Modifications  of this Plan may be proposed in writing by the Debtor at any
time before  confirmation,  provided that this Plan, as modified,  satisfies the
requirements  of sections  1122 and 1123 of the  Bankruptcy  Code and the Debtor
shall have complied with section 1125 of the Bankruptcy  Code.  This Plan may be
modified  by the  Debtor  at any  time  after  confirmation  hereof  and  before
substantial consummation hereof, provided that this Plan, as modified, satisfies
the  requirements  of  sections  1122  and 1123 of the  Bankruptcy  Code and the
Bankruptcy  Court,  after notice and a hearing,  confirms  this Plan as modified
under section 1129 of the  Bankruptcy  Code and the  circumstances  warrant such
modifications.  A holder of a Claim or Equity  Interest  that has accepted  this
Plan shall be deemed to have  accepted  this Plan as  modified  if the  proposed
modification does not materially and adversely change the treatment of the Claim
or Equity Interest of such holder.

SECTION 15.    MISCELLANEOUS PROVISIONS

15.1 PAYMENT OF STATUTORY FEES.

     All fees payable  pursuant to section  1930,  title 28,  United States Code
shall be paid on the Effective Date.

15.2 DISSOLUTION OF CREDITORS' COMMITTEE.

     If a Creditors'  Committee has been appointed,  it shall  automatically  be
dissolved on the Effective Date.

15.3 FEES AND EXPENSES OF PROFESSIONAL PERSONS.

     Except as may  otherwise be or have been ordered by the  Bankruptcy  Court,
all professionals seeking payment of reasonable fees and expenses incurred after
the Effective  Date in  connection  with the  implementation  of this Plan shall
transmit a written  invoice of such request to the Disbursing  Agent with a copy
to the Reorganized  Debtor.  If no written objection to the payment of such fees
and expenses is received by the Disbursing  Agent within thirty (30) days of the
receipt by the Disbursing Agent of such request,  the Disbursing Agent shall pay


                                       21
<PAGE>

from the  Distributable  Cash held in the Claims Reserve such fees and expenses.
If an  objection  to the  payment of such fees and  expenses  is received by the
Disbursing Agent within such 30-day period,  the Disbursing Agent shall pay such
fees and expenses only upon order of the  Bankruptcy  Court or the withdrawal of
such objection.

15.4 SEVERABILITY OF PLAN PROVISIONS.

     If, prior to the  Confirmation  Date, any term or provision of this Plan is
held  by  the  Bankruptcy  Court  to be  invalid,  void  or  unenforceable,  the
Bankruptcy Court shall, with the consent of the Debtor,  have the power to alter
and  interpret  such term or  provision to make it valid or  enforceable  to the
maximum extent practicable,  consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable,  and such term or provision
shall then be applicable  as altered or  interpreted.  Notwithstanding  any such
holding, alteration or interpretation, the remainder of the terms and provisions
of this Plan  shall  remain  in full  force  and  effect  and shall in no way be
affected, impaired or invalidated by such holding, alteration or interpretation.
The  Confirmation  Order shall  constitute  a judicial  determination  and shall
provide that each term and  provision of this Plan,  as it may have been altered
or  interpreted  in  accordance  with the  foregoing,  is valid and  enforceable
pursuant to its terms.

15.5 GOVERNING LAW.

     Except to the  extent  that the  Bankruptcy  Code or other  federal  law is
applicable,  or to the extent an Exhibit hereto provides otherwise,  the rights,
duties  and  obligations  arising  under  this Plan  shall be  governed  by, and
construed and enforced in accordance with, the laws of the State of New York.

15.6 PAYMENT OF WITHHOLDING OF TAXES; ALLOCATION OF PAYMENTS.

     Except as otherwise  specifically  provided in the Plan, all  distributions
made pursuant to the Plan shall,  where  applicable,  be subject to  information
reporting to appropriate  governmental  authorities and to withholding of taxes.
Except as otherwise prohibited by applicable tax law, the consideration received
by Class 2  Creditors  shall,  for all income tax  purposes,  be  allocated  and
applied first to the unpaid principal amount of the Secured Notes and thereafter
to the unpaid accrued interest on the Secured Notes.

15.7 NOTICES.

     All  notices,  requests,  and demands to be  effective  shall be in writing
(including by facsimile  transmission) and, unless otherwise  expressly provided
herein,  shall be deemed to have been duly given or made when actually delivered
or,  in the  case  of  notice  by  facsimile  transmission,  when  received  and
telephonically confirmed, addressed as follows:


                                       22
<PAGE>

     If to the Debtor:

                                 TV Filme, Inc.
                                 SCS, Quadra 07-Bloco A
                                 Ed. Executive Tower, Sala 601
                                 70.300-911 Brasilia-DF
                                 Brazil

                                 with a copy to:

                                 Kelley Drye and Warren, LLP
                                 101 Park Avenue
                                 New York, New York 10178
                                 Attn:  Mark I. Bane, Esq.
                                 Telephone: (212) 808-7800
                                 Telecopier: (212) 808-7897

     If to the Indenture Trustee:

                                 The Bank of New York
                                 101 Barclay Street
                                 Floor 21 West
                                 New York, New York  10286
                                 Attn:  Ms. Loretta Lundberg
                                 Telephone:  (212) 815-5080
                                 Telecopier:  (212) 815-5915

                                 with a copy to:

                                 Battle Fowler LLP
                                 75 East 55th Street
                                 New York, New York 10022
                                 Attn:  Douglas L. Furth, Esq.
                                 Telephone: (212) 856-6978
                                 Telecopier: (212) 230-7639


                                       23
<PAGE>

     Ad Hoc Noteholders' Committee:

                                 Resurgence Asset Management, LLC
                                 10 New King Street
                                 White Plains, New York
                                 Attn:  Steven Audi

                                 with a copy to:

                                 Jones Day Reavis & Pogue LLP
                                 599 Lexington Avenue
                                 New York, New York 10022
                                 Attn:  Marc S. Kirschner, Esq.
                                 Telephone: (212) 326-3939
                                 Telecopier: (212) 755-7306


                                       24
<PAGE>

Dated:        February 29, 2000

                                Respectfully submitted,

                                TV FILME, INC.

                                By: S/ HERMANO ALBUQUERQUE
                                    ----------------------
                                    Name: Hermano Albuquerque
                                    Title:  President and CEO


                                       25
<PAGE>


                      SCHEDULE 1 TO PLAN OF REORGANIZATION

                              LIST OF SUBSIDIARIES




ITSA-INTERCONTINENTAL   TELECOMUNICACOES
TV   FILME   BRASILIA   SERVICOS   DE TELECOMUNICACOES
TV FILME GOIANIA SERVICOS DE  TELECOMUNICACOES
TV FILME BELEM SERVICOS   DE   TELECOMUNICACOES
TV   FILME   CAMPINA   GRANDE   SERVICOS   DE TELECOMUNICACOES LTDA.
TV FILME PROGRAMADORA LTDA.
TV FILME SISTEMAS LTDA.
TV FILME ITSA OF CAYMAN, LTD.
TV FILME SERVICOS DE TELECOMUNICACOES LTDA.
TV FILME OPERACOES LTDA.
TV FILME OF CAYMAN, LTD.


<PAGE>


                      SCHEDULE 2 TO PLAN OF REORGANIZATION

                       LIST OF ASSUMED EXECUTORY CONTRACTS


1.   Agreement  dated May 11,  1999,  between  the  Debtor  and  Chanin  Capital
     Partners relating to the retention of Chanin Capital Partners by the Ad Hoc
     Noteholders' Committee.



<PAGE>

                                                                       EXHIBIT A

                  ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.

                                    as Issuer

              TV FILME BRASILIA SERVICOS DE TELECOMUNICACOES LTDA.

               TV FILME GOIANIA SERVICOS DE TELECOMUNICACOES LTDA.

                TV FILME BELEM SERVICOS DE TELECOMUNICACOES LTDA.

           TV FILME CAMPINA GRANDE SERVICOS DE TELECOMUNICACOES LTDA.

                           TV FILME PROGRAMADORA LTDA.

                             TV FILME SISTEMAS LTDA.

                   TV FILME SERVICOS DE TELECOMUNICACOES LTDA.
                              -------------------
                            TV FILME OPERACOES LTDA.

                                  As Guarantors


                        12% SENIOR SECURED NOTES DUE 2004


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


                                    INDENTURE


                               Dated as of , 2000





                              THE BANK OF NEW YORK


                                   as Trustee


<PAGE>


                            CROSS-REFERENCE TABLE(1)

Trust Indenture Act Section                                    Indenture Section
---------------------------                                    -----------------

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

<PAGE>

                                TABLE OF CONTENTS


                                                                            PAGE

ARTICLE 1   DEFINITIONS AND INCORPORATION BY REFERENCE.........................1
SECTION 1.1.  DEFINITIONS......................................................1
SECTION 1.2.  OTHER DEFINITIONS...............................................15
SECTION 1.3.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...............15
SECTION 1.4.  RULES OF CONSTRUCTION...........................................16

ARTICLE 2   THE NOTES.........................................................16
SECTION 2.1.  FORM AND DATING.................................................16
SECTION 2.2.  EXECUTION AND AUTHENTICATION....................................17
SECTION 2.3.  TRUSTEE, REGISTRAR AND PAYING AGENT.............................18
SECTION 2.4.  PAYING AGENT TO HOLD MONEY IN TRUST.............................18
SECTION 2.5.  HOLDER LISTS....................................................19
SECTION 2.6.  TRANSFER AND EXCHANGE...........................................19
SECTION 2.7.  CERTIFICATED NOTES..............................................22
SECTION 2.8.  REPLACEMENT NOTES...............................................23
SECTION 2.9.  OUTSTANDING NOTES...............................................23
SECTION 2.10.  TREASURY NOTES.................................................23
SECTION 2.11.  TEMPORARY NOTES................................................23
SECTION 2.12.  CANCELLATION...................................................24
SECTION 2.13.  DEFAULTED INTEREST.............................................24
SECTION 2.14.  PERSONS DEEMED OWNERS..........................................24
SECTION 2.15.  CUSIP NUMBERS..................................................24

ARTICLE 3   REDEMPTION AND PREPAYMENT.........................................24
SECTION 3.1.  NOTICES TO TRUSTEE..............................................24
SECTION 3.3.  NOTICE OF REDEMPTION............................................25
SECTION 3.4.  EFFECT OF NOTICE OF REDEMPTION..................................26
SECTION 3.5.  DEPOSIT OF REDEMPTION PRICE.....................................26
SECTION 3.6.  NOTES REDEEMED IN PART..........................................26
SECTION 3.7.  OPTIONAL REDEMPTION.............................................26
SECTION 3.8.  MANDATORY REDEMPTION............................................27

ARTICLE 4   COVENANTS.........................................................27
SECTION 4.1.  PAYMENT OF NOTES................................................27
SECTION 4.2.  MAINTENANCE OF OFFICE OR AGENCY.................................27
SECTION 4.3.  PROVISIONS OF REPORTS AND OTHER INFORMATION.....................28
SECTION 4.4.  COMPLIANCE CERTIFICATE..........................................28
SECTION 4.5.  TAXES...........................................................29
SECTION 4.6.  STAY, EXTENSION AND USURY LAWS..................................29
SECTION 4.7.  LIMITATION ON RESTRICTED PAYMENTS...............................29
SECTION 4.8.  LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
              AFFECTING SUBSIDIARIES..........................................31
SECTION 4.9.  LIMITATION ON INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK...31
SECTION 4.10.  LIMITATION ON ASSET SALES......................................32
SECTION 4.11.  LIMITATION ON TRANSACTIONS WITH AFFILIATES.....................35
SECTION 4.12.  LIMITATION ON LIENS............................................35
SECTION 4.13.  GUARANTORS.....................................................35
SECTION 4.14.  OFFER TO REPURCHASE UPON CHANGE OF CONTROL.....................36
SECTION 4.15.  CORPORATE EXISTENCE............................................37

<PAGE>

SECTION 4.16.  LIMITATION ON ASSET SWAPS......................................37
SECTION 4.17.  LIMITATION ON SALE LEASEBACK TRANSACTIONS......................38
SECTION 4.18.  MAINTENANCE OF BUSINESS, PROPERTIES AND INSURANCE..............38
SECTION 4.19.  IMPAIRMENT OF SECURITY INTEREST................................39
SECTION 4.20.  PAYMENT OF ADDITIONAL AMOUNTS..................................39

ARTICLE 5  SUCCESSORS.........................................................40
SECTION 5.1.  MERGER, CONSOLIDATION, OR SALE OF ASSETS........................40
SECTION 5.2.  SUCCESSOR COMPANY SUBSTITUTED...................................42

ARTICLE 6   DEFAULTS AND REMEDIES.............................................42
SECTION 6.1.  EVENTS OF DEFAULT...............................................42
SECTION 6.2.  ACCELERATION....................................................44
SECTION 6.3.  OTHER REMEDIES..................................................44
SECTION 6.4.  WAIVER OF PAST DEFAULTS.........................................44
SECTION 6.5.  CONTROL BY MAJORITY.............................................44
SECTION 6.6.  LIMITATION ON SUITS.............................................44
SECTION 6.7.  RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................45
SECTION 6.8.  COLLECTION SUIT BY TRUSTEE......................................45
SECTION 6.9.  TRUSTEE MAY FILE PROOFS OF CLAIM................................45
SECTION 6.10.  PRIORITIES.....................................................46
SECTION 6.11.  UNDERTAKING FOR COSTS..........................................46

ARTICLE 7   TRUSTEE...........................................................46
SECTION 7.1.  DUTIES OF TRUSTEE...............................................46
SECTION 7.2.  RIGHTS OF TRUSTEE...............................................47
SECTION 7.3.  INDIVIDUAL RIGHTS OF TRUSTEE....................................48
SECTION 7.4.  TRUSTEE'S DISCLAIMER............................................48
SECTION 7.5.  NOTICE OF DEFAULTS..............................................48
SECTION 7.6.  REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................48
SECTION 7.7.  COMPENSATION AND INDEMNITY......................................49
SECTION 7.8.  REPLACEMENT OF TRUSTEE..........................................49
SECTION 7.9.  SUCCESSOR TRUSTEE BY MERGER, ETC................................50
SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION..................................50
SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..............50

ARTICLE 8   DEFEASANCE AND DISCHARGE..........................................51
SECTION 8.1.  OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........51
SECTION 8.2.  LEGAL DEFEASANCE................................................51
SECTION 8.3.  COVENANT DEFEASANCE.............................................51
SECTION 8.4.  CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................52
SECTION 8.5.  DISCHARGE.......................................................52
SECTION 8.6.  DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST...53
SECTION 8.7.  REPAYMENT TO COMPANY............................................53
SECTION 8.8.  REINSTATEMENT...................................................54

ARTICLE 9   AMENDMENT, SUPPLEMENT AND WAIVER..................................54
SECTION 9.1.  WITHOUT CONSENT OF HOLDERS OF NOTES.............................54
SECTION 9.2.  WITH CONSENT OF HOLDERS OF NOTES................................54
SECTION 9.3.  COMPLIANCE WITH TRUST INDENTURE ACT.............................56
SECTION 9.4.  REVOCATION AND EFFECT OF CONSENTS...............................56
SECTION 9.5.  NOTATION ON OR EXCHANGE OF NOTES................................56
SECTION 9.6.  TRUSTEE TO SIGN AMENDMENTS, ETC.................................56
SECTION 9.7.  PAYMENTS FOR CONSENT............................................57

ARTICLE 10   COLLATERAL AND SECURITY..........................................57

<PAGE>

SECTION 10.1.  SECURITY DOCUMENTS.............................................57
SECTION 10.2.  OPINIONS.......................................................57
SECTION 10.3.  RELEASE OF COLLATERAL..........................................57
SECTION 10.4.  CERTIFICATES OF THE COMPANY....................................58
SECTION 10.5.  AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
               UNDER THE SECURITY DOCUMENTS...................................58
SECTION 10.6.  AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
               THE SECURITY DOCUMENTS.........................................58

ARTICLE 11   GUARANTEE OF NOTES...............................................59
SECTION 11.1.  GUARANTEE......................................................59
SECTION 11.2.  GUARANTEE UNCONDITIONAL, ETC...................................60
SECTION 11.3.  LIMITATION OF GUARANTOR'S LIABILITY............................60
SECTION 11.4.  CONTRIBUTION...................................................60
SECTION 11.5.  RELEASE........................................................61
SECTION 11.6.  ADDITIONAL GUARANTORS..........................................61
SECTION 11.7.  GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.............61
SECTION 11.8.  SUCCESSORS AND ASSIGNS.........................................61
SECTION 11.9.  WAIVER OF STAY, EXTENSION OR USURY LAWS........................61

ARTICLE 12   MISCELLANEOUS....................................................62
SECTION 12.1.  TRUST INDENTURE ACT CONTROLS...................................62
SECTION 12.2.  NOTICES........................................................62
SECTION 12.3.  COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF  NOTES.63
SECTION 12.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............63
SECTION 12.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................63
SECTION 12.6.  RULES BY TRUSTEE AND AGENTS....................................64
SECTION 12.7.  NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
               AND OTHERS.....................................................64
SECTION 12.8.  GOVERNING LAW..................................................64
SECTION 12.9.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................64
SECTION 12.10. SUCCESSORS....................................................64
SECTION 12.11. SEVERABILITY..................................................64
SECTION 12.12. ORIGINALS.....................................................65
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC..............................65
SECTION 12.14. COUNTERPARTS..................................................65
SECTION 12.15. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION;
               WAIVER OF IMMUNITIES..........................................65
SECTION 12.16. CURRENCY OF ACCOUNT; CONVERSION OF CURRENCY; FOREIGN
               EXCHANGE RESTRICTIONS.........................................66


                                      ANNEX

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


                                    EXHIBITS

Exhibit A     FORM OF NOTE...................................................A-1
Exhibit B     CERTIFICATE OF TRANSFEROR......................................B-1


                                    SCHEDULE

Schedule I    SECURITY DOCUMENTS.............................................S-1


<PAGE>

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

                                    RECITALS

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

     WHEREAS,  TV Filme,  Inc. has transferred its assets to [NEW CAYMAN],  as a
result of which [NEW CAYMAN] has become the current holder of the Existing Note;

     WHEREAS,  [NEW CAYMAN],  on the date hereof, is contributing to the capital
of the Company US$105,000,000 principal amount of the Existing Note;

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

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

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


                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.  DEFINITIONS.

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

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

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

<PAGE>

ownership  of voting  securities,  by  agreement  or  otherwise;  PROVIDED  that
beneficial ownership of 10% or more of the voting securities of a Person will be
deemed to be control.

     "Agent" means any Registrar or Paying Agent.

     "Amendment Effective Date" means , 2000.

     "Applicable  Law," except as the context may otherwise  require,  means all
applicable   laws,   rules,   regulations,   ordinances,   judgments,   decrees,
injunctions,  writs and orders of any court or governmental  agency or authority
and rules,  regulations,  orders,  licenses  and  permits  of any United  States
federal,   state,    municipal,    regional,   or   other   governmental   body,
instrumentality,  agency or authority, in each case in any way applicable to the
Company, any Guarantor or the Collateral (or the ownership or use thereof).

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

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

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

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

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


                                       2
<PAGE>

     "Brazil" means the Federative Republic of Brazil.

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

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

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

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

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

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

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

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

     "Collateral"  means (i) all of the  Capital  Stock of the  Company  and its
Restricted  Subsidiaries  which is owned by the  Company or  another  Restricted
Subsidiary,  (ii) non-cash  consideration received as consideration for an Asset
Sale pursuant to Section 4.10, and Related  Business  Investments  acquired with
Net Proceeds from an Asset Sale,  Insurance  Proceeds or Condemnation  Proceeds,
(iii) all  Collateral  Property and all of the other assets  (other than Capital
Stock  (except  as  provided  for in  clause  (i) or  (ii))  or  cash  and  Cash
Equivalents (except as provided for in this clause (iii)),  whether now existing
or from  time to time  hereafter  acquired,  of the  Company  or any  Restricted


                                       3
<PAGE>

Subsidiary that is a Guarantor,  including, without limitation, any and all real
property and leasehold  interests in real property now or hereafter owned by the
Company or any such Restricted Subsidiary, all Equipment, the Collateral Account
and all monies,  Cash  Equivalents,  securities  and  instruments  deposited  or
required to be deposited in the Collateral  Account,  copyrights  (including all
reissues and renewals  thereof),  patents  (including  all reissues and renewals
thereof), licenses used in the Telecommunications  Business,  trademarks,  trade
secrets, trade secret rights,  contracts,  contract rights, general intangibles,
goods, chattel paper,  instruments,  documents, and all proceeds and products of
any and all of the foregoing, and (iv) any other property or assets securing the
Notes and proceeds of any and all of the foregoing from time to time pursuant to
this Indenture or any Security Document.

     "Collateral  Account"  means  the  collateral  account  established  by the
Trustee in accordance with the terms and conditions of [------------].

     "Collateral Agent" means the Trustee or a collateral agent appointed by the
Trustee pursuant to any Security Document.

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

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

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

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

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

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

     "Consolidated  Cash Flow" means, with respect to any Person for any period,
the  Consolidated  Net Income of such Person for such period plus, to the extent
deducted  in  computing  Consolidated  Net  Income,  (i) an amount  equal to any
extraordinary  loss plus any net loss realized in connection with an Asset Sale,
(ii)  provision  for taxes  based on income or  profits  of such  Person and its
Restricted Subsidiaries for such period, (iii) Consolidated Interest Expense and
(iv) depreciation,  amortization  (including  amortization of goodwill and other
intangibles  but excluding  amortization of prepaid cash expenses that were paid
in a prior  period) of such  Person  and its  Restricted  Subsidiaries  for such
period,  and other non-cash  charges  (excluding any such non-cash charge to the
extent  that it  represents  an accrual of or  reserve  for cash  charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period),   minus  (v)  non-cash  items  increasing   consolidated   revenues  in
determining such  Consolidated  Net Income for such period  (excluding any items
which  represent  the  reversal  of  any  accrual  of,  or  cash  reserves  for,
anticipated  cash charges in any prior period and excluding the  recognition  of
deferred sign-on or hook-up fee revenue),  in each case, on a consolidated basis
and  determined  in  accordance  with GAAP and (vi) to the  extent  included  in
computing  Consolidated Net Income, an amount equal to any  extraordinary  gain.
Notwithstanding  the foregoing,  the amounts  referred to in clauses (i) through
(vi) of the preceding sentence with respect to Restricted Subsidiaries will only
be added to (deducted from) Consolidated Net Income to compute Consolidated Cash
Flow to the  extent  (and in the same  proportion)  that the Net  Income of such


                                       4
<PAGE>

Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and only if a corresponding amount would be permitted at the date of
determination  to be  paid  as a  dividend  to such  Person  by such  Restricted
Subsidiary without direct or indirect  restriction  pursuant to the terms of its
charter and by-laws and all agreements, instruments, judgments, decrees, orders,
statutes,  rules and  governmental  regulations  applicable  to such  Restricted
Subsidiary or its stockholders.

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

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

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

         "Consolidated Net Worth" means, (a) with respect to a partnership as of
any date,  the sum of the common and  preferred  partnership  interests  of such
Person  and  its  consolidated  Restricted  Subsidiaries  as of  such  date,  as
determined on a consolidated basis in accordance with GAAP, and (b) with respect
to any other Person as of any date,  the sum of (i) the  consolidated  equity of
the  common  equity  holders  of such  Person  and its  consolidated  Restricted
Subsidiaries as of such date plus (ii) the respective  amounts  reported on such
Person's  balance  sheet as of such date with respect to any series of preferred
equity;  PROVIDED  that the  preferred  partnership  interests or the  preferred
equity,  as the case may be, is not (A) Disqualified  Stock and (B) by its terms
entitled  to the  payment  of  dividends  or other  distributions,  unless  such
dividends  or other  distributions  may be  declared  and  paid  only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash  received  by such Person  upon  issuance  of such  preferred
partnership  interests or preferred  equity,  less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern  business made within 12 months after the  acquisition
of such business)  subsequent to the Amendment  Effective Date in the book value
of any asset owned by such Person or a  consolidated  Restricted  Subsidiary  of


                                       5
<PAGE>

such Person, (y) all investments as of such date in unconsolidated  Subsidiaries
and in  Persons  that  are  not  Guarantors  (except,  in each  case,  Permitted
Investments),  and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing  determined in accordance
with GAAP.

     "Contaminant" means any pollutant,  contaminant (as those terms are defined
in 42 U.S.C.  ss. 9601(33) toxic pollutant (as that term is defined in 33 U.S.C.
ss.  1362(13)),  hazardous  substance (as that term is defined in 42 U.S.C.  ss.
9601(14)),   hazardous  chemical  (as  that  term  is  defined  by  29  CFR  ss.
1910.1200(c)),  hazardous  waste  (as that  term is  defined  in 42  U.S.C.  ss.
6903(5)),  or any  state  oR local  equivalent  of such  laws  and  regulations,
including, without limitation,  radioactive material, polychlorinated biphenyls,
asbestos,  petroleum,  including crude oil or any  petroleum-derived  substance,
waste, or breakdown or decomposition  product thereof, or any constituent of any
such substance or waste.

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

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

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

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

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

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

     "Environment"  means  all  components  of  the  earth,  including,  without
limitation, air (and all layers of the soil, underground spaces and cavities and
all land  submerged  under  water) and water (and all  surface  and  underground
water),  organic and inorganic  matter and living  organisms and the interacting
natural  systems  that  include  the  components   referred  to  above  in  this
definition.

     "Environmental  Laws"  means all  Applicable  Laws  imposing  liability  or
standards  of conduct  for or  relating to the  protection  of the  Environment,
including,  without  limitation,  (i) any  actual or  potential  Release  of any
Contaminant into the Environment;  (ii) the required notification of same; (iii)
preventive  or remedial  measures  in  connection  with any event or  occurrence
referred to in clause (i) of this definition above; and (iv) the  manufacturing,
processing,  use,  handling,  packaging,  labeling,  sale,  storage,  recycling,
disposal,  destruction,  incineration,  or transportation of any Contaminant, or
any solicitation or offer to do any activity  referred to in this clause (iv) in
connection with any Contaminant.

     "Equipment"  means all equipment  now or hereafter  owned by the Company or
any  Restricted  Subsidiary  that is a Guarantor  or in which any of them has or
shall acquire an interest, now or hereafter located on, attached to or contained
in or used or usable in connection with any Collateral Property,  and shall also
mean and  include  all  building  materials,  construction  materials,  personal
property constituting  furniture,  fittings,  appliances,  apparatus,  leasehold
improvements,   machinery,   devices,   interior  improvements,   appurtenances,


                                       6
<PAGE>

equipment, plant, furnishings,  fixtures, computers,  electronic data processing
equipment,  telecommunications  equipment  and other  fixed  assets now owned or
hereafter  acquired  by the  Company  or any  Restricted  Subsidiary  that  is a
Guarantor and now or hereafter used in the operation of any Collateral Property,
and all proceeds thereof and all additions to,  substitutions for,  replacements
of or accessions  to any of the items recited as aforesaid and all  attachments,
components,  parts (including spare parts) and  accessories,  whether  installed
thereon or affixed thereto,  and wherever located, now or hereafter owned by the
Company or any Restricted  Subsidiary that is a Guarantor,  and used or intended
to be used in connection with, or with the operation of, any Collateral Property
or the buildings,  structures, or other improvements now or hereafter located at
any Collateral Property,  or in connection with any construction being conducted
or which may be  conducted  thereon,  all  regardless  of  whether  the same are
located on any Collateral Property or are located elsewhere (including,  without
limitation, in warehouses or other storage facilities or in the possession of or
on  the  premises  of  a  bailee,   vendor  or  manufacturer)  for  purposes  of
manufacture,  storage,  fabrication  or  transportation  and all  extensions and
replacements to, and proceeds of, any of the foregoing.

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

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

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

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

     "Fixtures"  means all  Equipment  now owned or  hereafter  acquired  by the
Company or any Restricted  Subsidiary that is a Guarantor which is so related to
the  building  or land in  which or on which  it is  located  that it is  deemed
fixtures or real property under the laws of the state or province in which it is
located, together with all accessions,  appurtenances,  additions,  replacements
and substitutions for any of the foregoing and the proceeds thereof.

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

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

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


                                       7
<PAGE>

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

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

     "Hedging Obligations" means, with respect to any Person, the obligations of
such  Person  under (i)  interest  or currency  exchange  rate swap  agreements,
interest or  currency  exchange  rate cap  agreements  and  interest or currency
exchange rate collar  agreements and (ii) other agreements or  arrangements,  in
any case,  designed to protect such Person against  fluctuations  in interest or
currency exchange rates.

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

     "Improvements" means all buildings,  structures,  Fixtures and improvements
of every nature  whatsoever to the extent such items are not owned by tenants or
by  equipment  lessors  that lease such  property to the Company or a Restricted
Subsidiary,  and are situated on the land comprising any Collateral  Property on
the Amendment Effective Date or thereafter (including,  without limitation,  gas
and electric  fixtures,  radiators,  heaters,  engines and  machinery,  boilers,
ranges,  elevators  and  motors,  plumbing,  heating and  ventilating  fixtures,
elevators, carpeting and other floor coverings, water heaters, awnings and storm
sashes,  and  cleaning  apparatus  which are or shall be attached to the land or
said  buildings,   structures  or  improvements  and  including  any  additions,
enlargements, extensions, modifications, repairs or replacements thereto).

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

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

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

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

     "Inventory" means all of the Company's and each Restricted Subsidiary's (to
the extent such  Restricted  Subsidiary is a Guarantor)  now owned and hereafter
existing or acquired inventory used or useful in the business of the Company and
each  Restricted  Subsidiary  (to the extent  such  Restricted  Subsidiary  is a
Guarantor), wherever located.

     "Investments"  means,  with respect to any Person,  all investments by such
Person  in other  Persons  (including  Affiliates)  in the  forms of  direct  or
indirect loans  (including  guarantees of  Indebtedness  or other  obligations),
advances  or capital  contributions  (excluding  commission,  travel and similar
advances to  directors,  officers and employees  made in the ordinary  course of
business),  purchases or other acquisitions (for consideration) of Indebtedness,


                                       8
<PAGE>

Equity Interests or other securities,  together with all items that are or would
be classified as  investments  on a balance  sheet  prepared in accordance  with
GAAP;  PROVIDED  that an  acquisition  of  assets,  Equity  Interests  or  other
securities  by  the  Company  or  any  of  its   Restricted   Subsidiaries   for
consideration consisting of Common Stock of the Company will not be deemed to be
an Investment.

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

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

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

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

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

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

     "Non-Recourse  Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted  Subsidiaries  (a) provides credit support of any kind
(including  any  undertaking,  agreement  or  instrument  that would  constitute
Indebtedness)  or (b) is  directly  or  indirectly  liable  (as a  guarantor  or
otherwise), (ii) no default with respect to which (including any rights that the
holders  thereof may have to take  enforcement  action  against an  Unrestricted
Subsidiary) would permit (upon notice,  lapse of time or both) any holder of any
other  Indebtedness  of the  Company or any of its  Restricted  Subsidiaries  to
declare a default on such other  Indebtedness or cause the payment thereof to be
accelerated  or payable  prior to its stated  maturity and (iii) as to which the
lenders have expressly  waived any recourse which they may have, in law,  equity
or  otherwise,  whether  based  on  misrepresentation,   control,  ownership  or
otherwise,  to the  Company or any of its  Restricted  Subsidiaries,  including,
without  limitation,  a waiver of the  benefits  of the  provisions  of  Section
1111(b) of Title 11, United States Code, as amended.


                                       9
<PAGE>

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

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

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

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

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

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

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

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

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


                                       10
<PAGE>

workout,  reorganization  or  recapitalization  of  the  issuer  of  such  other
Investment or accounts  receivable or (B) as a result of the  foreclosure by the
Company  or any of its  Restricted  Subsidiaries  with  respect  to any  secured
Investment;  (x)  Investments  in shares of money market funds having  assets in
excess  of  US$500,000,000;  and  (xi)  Investments  existing  on the  Amendment
Effective Date.

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


                                       11
<PAGE>

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

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

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

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

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

     "Release"  means any  releasing,  spilling,  emitting,  emptying,  leaking,
pumping,  pouring,  injecting,   depositing,   disposing,   dumping,  discharge,
dispersing,  leaching,  escaping,  emanating or migrating of any Contaminant in,
on, into or onto the Environment,  including without  limitation the movement of
any  Contaminant  through or in the  environment,  the abandonment or discard of
barrels,  containers,  tanks or other receptacles containing any Contaminant, or
any  release,   emission  or  discharge   other  than  as  permitted  under  any
Environmental Laws.

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

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

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

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


                                       12
<PAGE>

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

     "Security Documents" means all of the security documents listed on Schedule
I hereto.

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

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

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

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

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

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

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

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

     "TV Filme  Servicos" means TV Filme Servicos de  Telecomunicacoes  Ltda., a
Brazilian limited liability company.

     "Unrestricted  Subsidiary"  means any Subsidiary  that is designated by the
Board of Directors of the Company as an  Unrestricted  Subsidiary  pursuant to a
resolution of the Board of Directors of the Company, but only to the extent that
such Subsidiary (i) has no Indebtedness  other than Non-Recourse Debt, (ii) does
not own any Equity Interests of, or own or hold any Lien on, any property of the
Company or any  Subsidiary  of the  Company  (other than any  Subsidiary  of the
Subsidiary to be so  designated),  (iii) has not, and the  Subsidiaries  of such
Subsidiary have not at the time of designation, and does not thereafter, create,
incur,  issue,  assume,  guarantee or otherwise  become  directly or  indirectly
liable  with  respect  to any  Indebtedness  pursuant  to which the  lender  has
recourse  to  any of  the  assets  of  the  Company  or  any  of its  Restricted
Subsidiaries, (iv) is not party to any material agreement, contract, arrangement
or understanding with the Company or any of its Restricted  Subsidiaries  unless
the terms of any such agreement,  contract,  arrangement or understanding are no
less  favorable  to the Company or such  Restricted  Subsidiary  than those that
might be  obtained  at the  time  from  Persons  who are not  Affiliates  of the


                                       13
<PAGE>

Company,  (v) is a Person with  respect to which  neither the Company nor any of
its  Restricted  Subsidiaries  has any  direct  or  indirect  obligation  (a) to
subscribe for  additional  Equity  Interests or (b) to maintain or preserve such
Person's  financial  condition or to cause such Person to achieve any  specified
levels of operating  results,  (vi) has not guaranteed or otherwise  directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted  Subsidiaries and (vii) has at least one director on its board of
directors  that is not a director or executive  officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director  or  executive  officer  of  the  Company  or  any  of  its  Restricted
Subsidiaries. Any such designation by the Board of Directors of the Company will
be evidenced  to the Trustee by filing with the Trustee a certified  copy of the
resolution  of the  Board of  Directors  of the  Company  giving  effect to such
designation and an Officers'  Certificate  certifying that (i) such  designation
complied with the foregoing conditions, (ii) was permitted under Section 4.7 and
(iii) no Default or Event of Default  shall have  occurred and be  continuing or
would  occur  as a  consequence  of  such  designation.  If,  at any  time,  any
Unrestricted  Subsidiary  would fail to meet the  foregoing  requirements  as an
Unrestricted  Subsidiary,  it  will  thereafter  cease  to  be  an  Unrestricted
Subsidiary  for  purposes  of  this  Indenture  and  any  Indebtedness  of  such
Subsidiary  will be deemed to be  incurred  by a  Restricted  Subsidiary  of the
Company  as of such date  (and,  if such  Indebtedness  is not  permitted  to be
incurred as of such date under  Section  4.9,  the Company will be in default of
such covenant).  The Board of Directors of the Company may at any time designate
any Unrestricted  Subsidiary to be a Restricted  Subsidiary,  PROVIDED that such
designation  will be deemed to be an incurrence of  Indebtedness by a Restricted
Subsidiary of the Company of any outstanding  Indebtedness of such  Unrestricted
Subsidiary and such designation will only be permitted if (i) such  Indebtedness
is permitted under Section 4.9, and (ii) no Default or Event of Default would be
in existence following such designation.

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

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

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

SECTION 1.2.  OTHER DEFINITIONS.

                                                               Defined in
Term                                                           Section

"Additional Amounts"                                           4.20
"Affiliate Transaction"                                        4.11
"Asset Sale Offer"                                             4.10(b)
"Base Currency"                                                14.16(b)(i)
"Change of Control Offer"                                      4.14(a)
"Change of Control Payment"                                    4.14(a)
"Change of Control Payment Date"                               4.14(b)
"Covenant Defeasance"                                          8.3
"Discharge"                                                    8.5


                                       14
<PAGE>

"Event of Default"                                             6.1
"Excess Proceeds Amount"                                       4.10(b)
"Excluded Holder"                                              4.20
"Funding Guarantor"                                            11.4
"Global Note"                                                  2.1(b)
"incur"                                                        4.9(a)
"judgment currency"                                            14.16(b)(i)
"Legal Defeasance"                                             8.2
"Net Proceeds Offer Price"                                     4.10(b)
"Net Proceeds Purchase Date"                                   4.10(b)
"Participant"                                                  2.1(b)
"Paying Agent"                                                 2.3
"Paying Agent Agreement"                                       2.3
"Payment Default"                                              6.1(e)
"rate of exchange"                                             12.16(b)(v)
"Register"                                                     2.3
"Registrar"                                                    2.3
"Restricted Payments"                                          4.7(a)
"Taxes"                                                        4.20

SECTION 1.3.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

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

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

     "indenture securities" means the Notes;

     "indenture security holder" means a Holder;

     "indenture to be qualified" means this Indenture;

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

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

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

SECTION 1.4.  RULES OF CONSTRUCTION.

     Unless the context otherwise requires:

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

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

     (c) "or" is not exclusive;


                                       15
<PAGE>

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

     (e) provisions apply to successive events and transactions;

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

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


                                    ARTICLE 2
                                    THE NOTES

SECTION 2.1.  FORM AND DATING.

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

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

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

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

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

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


                                       16
<PAGE>

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

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

SECTION 2.2.  EXECUTION AND AUTHENTICATION.

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

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

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

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

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

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


                                       17
<PAGE>

SECTION 2.3.  TRUSTEE, REGISTRAR AND PAYING AGENT.

     The Company will  maintain an office or agency where Notes may be presented
for  registration  of transfer or for  exchange  ("Registrar")  and an office or
agency where Notes may be presented for payment ("Paying Agent").  The Registrar
will  keep a  register  ("Register")  of the  Notes  and of their  transfer  and
exchange.  The  Company  may  also  from  time  to  time  appoint  one  or  more
co-registrars  and one or more additional  paying agents.  The term  "Registrar"
includes any  co-registrar  and the term "Paying Agent"  includes any additional
paying agent. The Company may change any Paying Agent or Registrar in accordance
with the terms of Paying Agent  Agreement,  dated as of December 20, 1996, among
the Company, Japan Bankers Trust Company, Ltd. and Bankers Trust Company, as may
be amended from time to time (the "Paying  Agent  Agreement").  The Company will
notify the  Trustee in writing of the name and  address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent,  the Trustee will act,  subject to the last paragraph
of this Section 2.3, as such. The Company or any of its  Subsidiaries may act as
Paying Agent or  Registrar;  PROVIDED,  HOWEVER,  that none of the Company,  its
Subsidiaries  or the Affiliates of the foregoing will act (i) as Paying Agent in
connection with redemptions,  offers to purchase,  discharges and defeasance, as
otherwise specified in this Indenture,  and (ii) as Paying Agent or Registrar if
a Default or Event of Default has occurred and is continuing.

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

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

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

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

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

SECTION 2.4.  PAYING AGENT TO HOLD MONEY IN TRUST.

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

SECTION 2.5.  HOLDER LISTS.

         The  Trustee  will  preserve  in as  current  a form  as is  reasonably
practicable  the most recent list  available to it of the names and addresses of
all Holders pursuant to TIA Section 312(a). If the Trustee is not the Registrar,
the Company will furnish to the Trustee at least seven Business Days before each
Interest  Payment  Date and at such other  times as the  Trustee  may request in
writing,  a list in such form and as of such date as the  Trustee may require of
the names and  addresses of the Holders of Notes and the Company  will  strictly
comply with TIA Section 312(a).


                                       18
<PAGE>

SECTION 2.6.  TRANSFER AND EXCHANGE.

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

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

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

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

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

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

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

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

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

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


                                       19
<PAGE>

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

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

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

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

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

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

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

     (f) Legend.

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

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

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


                                       20
<PAGE>

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

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

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

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

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

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

     (h) General Provisions Relating to Transfers and Exchanges.

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

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

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

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


                                       21
<PAGE>

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

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

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

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

SECTION 2.7.  CERTIFICATED NOTES.

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

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

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

SECTION 2.8.  REPLACEMENT NOTES.

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

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


                                       22
<PAGE>

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

SECTION 2.9.  OUTSTANDING NOTES.

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

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

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

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

SECTION 2.10.  TREASURY NOTES.

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

SECTION 2.11.  TEMPORARY NOTES.

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

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

SECTION 2.12.  CANCELLATION.

     The Company at any time may  deliver  Notes to the Trustee or its Agent for
cancellation.  The  Registrar  and Paying  Agent will forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee  (or its Agent) and no one else will  cancel all Notes  surrendered  for
registration of transfer,  exchange,  payment,  replacement or cancellation  and
will destroy cancelled Notes (subject to the record retention requirement of the
Exchange Act).  Certification  of the destruction of all cancelled Notes will be
delivered to the Company from time to time.  The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee (or
its Agent) for  cancellation.  If the Company  acquires  any of the Notes,  such
acquisition will not operate as a redemption or satisfaction of the indebtedness
represented  by such  Notes  unless  and until the same are  surrendered  to the
Trustee (or its Agent) for cancellation pursuant to this Section 2.12.


                                       23
<PAGE>

SECTION 2.13.  DEFAULTED INTEREST.

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

SECTION 2.14.  PERSONS DEEMED OWNERS.

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

SECTION 2.15.  CUSIP NUMBERS.

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


                                    ARTICLE 3
                            REDEMPTION AND PREPAYMENT

SECTION 3.1.  NOTICES TO TRUSTEE.

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

SECTION 3.2.  SELECTION OF NOTES TO BE REDEEMED.

     If less than all of the Notes are to be redeemed  at any time,  the Trustee
will  select  the  Notes  to be  redeemed  among  the  Holders  of the  Notes in
compliance  with the  requirements  of any applicable  Depository and securities
exchange  requirements or, if the Notes are not so listed,  on a pro rata basis,
by lot or in  accordance  with any other method the Trustee  considers  fair and
appropriate  and in such manner as complies with any such  requirements  and any
applicable legal requirements; PROVIDED that no Notes of $1,000 principal amount
or less will be redeemed in part. In the event of partial redemption by lot, the


                                       24
<PAGE>

particular  Notes to be redeemed  will be selected,  unless  otherwise  provided
herein,  not less than 30 nor more than 60 days prior to the redemption  date by
the Trustee from the outstanding Notes not previously called for redemption.

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

SECTION 3.3.  NOTICE OF REDEMPTION.

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

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

     (a) the redemption date;

     (b) the redemption price and accrued and unpaid interest;

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

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

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

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

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

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

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

SECTION 3.4.  EFFECT OF NOTICE OF REDEMPTION.

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


                                       25
<PAGE>

SECTION 3.5.  DEPOSIT OF REDEMPTION PRICE.

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

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

SECTION 3.6.  NOTES REDEEMED IN PART.

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

SECTION 3.7.  OPTIONAL REDEMPTION.

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

    YEAR                                     PERCENTAGE

    2000                                     106.4375%
    2001                                     104.2917%
    2002                                     102.1458%
    2003 and thereafter                      100.0000%

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

SECTION 3.8.  MANDATORY REDEMPTION.

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

                                    ARTICLE 4
                                    COVENANTS

SECTION 4.1.  PAYMENT OF NOTES.


                                       26
<PAGE>

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

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

SECTION 4.2.  MAINTENANCE OF OFFICE OR AGENCY.

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

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

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

SECTION 4.3.  PROVISIONS OF REPORTS AND OTHER INFORMATION.

     (a) The Company  and each  Guarantor  will  deliver to the Trustee and each
Holder within 15 calendar days after the filing of the same with the Commission,
copies  of the  annual  reports  and of the  information,  documents  and  other
reports,  if any,  which the Company or such  Guarantor is required to file with
the   Commission   pursuant  to  Section  13  or  15(d)  of  the  Exchange  Act.
Notwithstanding   that  the  Company  may  not  be  subject  to  the   reporting
requirements  of Section 13 or 15(d) of the Exchange  Act, the Company will file
with the  Commission,  to the extent  permitted,  and  provide  the  Trustee and
Holders  with such  annual  reports  and such  other  information  that would be
required to be  contained  in a filing with the  Commission  if the Company were
required to file such  reports  under  Sections 13 and 15(d) of the Exchange Act
PROVIDED,  HOWEVER,  that (i) such  reports may be prepared in  accordance  with
Brazilian  GAAP (with annual U.S. GAAP  reconciliation  in  accordance  with the
Commission's  rules),  (ii) such reports shall include,  without  limitation,  a
balance  sheet,  income  statement  and cash flow  statement  and shall  contain
condensed  consolidating  financial  statements  concerning  the Company and its
Subsidiaries,  and (iii)  such  annual  reports  shall be  furnished  within 105
calendar days following the end of each fiscal year of the Company.  The Company
will include an unaudited  consolidating balance sheet and related statements of
income  and  cash  flows  for  the  Company  and  its  Subsidiaries   separately
identifying  the Company and its  Restricted  Subsidiaries  as one group and the


                                       27
<PAGE>

Company's  Unrestricted  Subsidiaries  as  a  separate  group,  in  all  reports
containing the consolidated  financial  statements  (which in the case of annual
reports will be audited) of the Company and its consolidated  Subsidiaries which
are required to be delivered by the Company to the Holders of Notes  pursuant to
this Section 4.3,  including the Company's  Annual  Reports on Form 20-F and any
interim reports on Form 6-K. If required by the terms thereof,  the Company will
also comply with the provisions of TIA Section 314(a).

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

SECTION 4.4.  COMPLIANCE CERTIFICATE.

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

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

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

SECTION 4.5.  TAXES.

     The Company will pay, and will cause each of its Restricted Subsidiaries to
pay, prior to delinquency,  all material taxes,  assessments,  and  governmental
levies  except  (i)  such as are  contested  in good  faith  and by  appropriate
proceedings,  (ii) such for which reserves or other  appropriate  provision,  if
any, as shall be required to be made in conformity with Brazilian GAAP, has been
made therefor,  or (iii) where the failure to effect such payment is not adverse
in any material respect to the Holders of the Notes.


                                       28
<PAGE>

SECTION 4.6.  STAY, EXTENSION AND USURY LAWS.

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

SECTION 4.7.  LIMITATION ON RESTRICTED PAYMENTS.

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

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

          (II) such Restricted  Payment,  together with the aggregate  amount of
               all other Restricted Payments declared or made by the Company and
               its Restricted  Subsidiaries  after the Amendment  Effective Date
               will not exceed, at the date of determination,  the sum of (A) an
               amount  equal to the  Company's  Consolidated  Cash Flow from the
               first day of the Company's  first full fiscal  quarter  following
               the Amendment  Effective  Date to the end of the  Company's  most
               recently ended full fiscal  quarter for which internal  financial
               statements are available,  taken as a single  accounting  period,
               less the product of 1.5 times the Company's Consolidated Interest
               Expense  from the first day of the  Company's  first full  fiscal
               quarter following the Amendment  Effective Date to the end of the
               Company's  most  recently  ended full  fiscal  quarter  for which
               internal  financial  statements are available,  taken as a single
               accounting period,  plus (B) 100% of the aggregate amount of cash
               and  marketable  securities  contributed  to the  capital  of the
               Company after the Amendment  Effective Date, plus (C) 100% of the
               aggregate  net cash  proceeds  received by the  Company  from the
               issue  or sale  after  the  Amendment  Effective  Date of  Equity
               Interests  of  the  Company  or of  Disqualified  Stock  or  debt
               securities  of the  Company  that have been  converted  into such
               Equity  Interests  (other than Equity  Interests (or Disqualified
               Stock or convertible debt securities) sold to a Subsidiary of the
               Company and other than Disqualified Stock or debt securities that
               have been converted  into  Disqualified  Stock),  plus (D) to the
               extent  that any  Restricted  Investment  that was made after the
               Amendment Effective Date is sold for cash or otherwise liquidated
               or repaid for cash,  the lesser of (1) the cash return of capital
               with  respect  to such  Restricted  Investment  (less the cost of
               disposition,   if  any)  and  (2)  the  initial  amount  of  such
               Restricted Investment,  plus (E) the aggregate amount of any cash
               dividends or distributions  on any Restricted  Investment and any
               repayment in cash of loans  constituting  Restricted  Investments
               and the amount of any  guarantee  that  constituted  a Restricted
               Investment and is or has been released.


                                       29
<PAGE>

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

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

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

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

     The  Company  will  not,  and  will  not  permit  any  of  its   Restricted
Subsidiaries to, directly or indirectly,  create or otherwise cause or suffer to
exist or become  effective any  consensual  encumbrance  or  restriction  on the
ability of any Restricted  Subsidiary to (i) (a) pay dividends or make any other
distributions  to the  Company  or any of  its  Restricted  Subsidiaries  on its
Capital  Stock or with  respect to any other  interest or  participation  in, or
measured by, its profits or (b) pay any Indebtedness  owed to the Company or any
of its  Restricted  Subsidiaries,  (ii) make loans or advances to the Company or
any of its  Restricted  Subsidiaries,  (iii)  transfer any of its  properties or
assets to the  Company  or any of its  Restricted  Subsidiaries,  (iv) grant any
Liens or security interests in favor of the Holders of the Notes and the Trustee
or (v) guarantee the Notes and any renewals or refinancings thereof,  except for
such  encumbrances or  restrictions  existing under or by reason of (A) Existing
Indebtedness,  (B) Applicable Law, (C) any instrument governing  Indebtedness or
Capital  Stock of a Person  acquired  by the  Company  or any of its  Restricted
Subsidiaries as in effect at the time of such acquisition  (except to the extent
such  Indebtedness  was incurred in connection with or in  contemplation of such
acquisition),  which encumbrance or restriction is not applicable to any Person,
or the  properties  or assets  of any  Person,  other  than the  Person,  or the
property  or assets of the Person,  so  acquired,  PROVIDED  that in the case of


                                       30
<PAGE>

Indebtedness,  such Indebtedness was permitted by the terms of this Indenture to
be incurred, (D) by reason of (x) customary non-assignment provisions in leases,
licenses,  sales  agreements  or other  contracts  entered  into in the ordinary
course of  business  and  consistent  with past  practices  or (y)  restrictions
imposed  pursuant to a binding  agreement for the sale or  disposition of all or
substantially   all  of  the  Equity  Interests  or  assets  of  any  Restricted
Subsidiary,  provided such restrictions  apply solely to the Equity Interests or
assets being sold, (E) Indebtedness of the Company or any Restricted  Subsidiary
represented by Capital Lease Obligations,  mortgage financings or other purchase
money obligations or obligations under other financing  transactions relating to
capital  expenditures,  incurred pursuant to clause (ix) of Section 4.9(b),  (F)
restrictions  imposed by Permitted  Liens on the transfer of the assets that are
subject  to such  Liens,  (G)  Permitted  Refinancing  Debt,  PROVIDED  that the
restrictions  contained in the agreements  governing such Permitted  Refinancing
Debt are no more restrictive, as a whole, than those contained in the agreements
governing the Indebtedness being refinanced or (H) provisions in agreements with
other persons who own Equity Interests in a Restricted Subsidiary which have the
effect of requiring that  transactions  described in clauses (ii) or (iii) above
be  effected  on  terms  no more  favorable  to the  Company  or its  Restricted
Subsidiaries  than a PRO RATA basis in accordance with Equity Interests owned in
such Restricted Subsidiary.

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

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

     (b) The foregoing provisions will not apply to:

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

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

          (iii) Existing Indebtedness;

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

          (v)  the incurrence of intercompany  Indebtedness between or among the
               Company and any of its Restricted Subsidiaries; provided that (A)
               if  the  Company  is  an  obligor  on  such  Indebtedness,   such
               Indebtedness  is expressly  subordinate to the payment in full of
               all  Obligations  with respect to the Notes,  (B) if a Restricted
               Subsidiary is an obligor on such  Indebtedness,  such  Restricted
               Subsidiary must be a Guarantor and (C) any subsequent issuance or


                                       31
<PAGE>

               transfer   of  Equity   Interests   that   results  in  any  such
               Indebtedness  being held by a Person  other than the Company or a
               Restricted  Subsidiary  of the  Company,  or any  sale  or  other
               transfer of any such  Indebtedness to a Person that is not either
               the Company or a Restricted  Subsidiary  of the Company,  will be
               deemed to constitute an  incurrence of such  Indebtedness  by the
               Company  or  such  Restricted  Subsidiary,  as the  case  may be,
               subject to the limitations set forth in Section 4.9(a);

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

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

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

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

SECTION 4.10.  LIMITATION ON ASSET SALES.

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

     (b) The Company shall apply, or cause such Restricted  Subsidiary to apply,
the Net Proceeds of such Asset Sale and any Insurance  Proceeds or  Condemnation
Proceeds,  as the case may be, resulting from a Loss Event,  within 270 calendar


                                       32
<PAGE>

days of  consummation  of such Asset Sale or the  collection  of such  Insurance
Proceeds  or  Condemnation  Proceeds,  as the  case  may be,  for the  following
purposes, individually or in combination:

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

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

     (c) Each  notice of an Asset Sale Offer shall be mailed by first class mail
to the record  Holders  as shown on the  register  of  Holders  not less than 30
calendar  days nor more than 60 calendar  days before the Net Proceeds  Purchase
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in this Indenture.  Upon receiving  notice of the Asset Sale Offer,  Holders may
elect  to  tender  their  Notes in whole  or in part in  integral  multiples  of
US$1,000  principal  amount in exchange for cash. To the extent Holders properly
tender  Notes in an  amount  exceeding  the  Excess  Proceeds  Amount,  Notes of
tendering  Holders  will be  purchased  on a PRO RATA  basis  (based on  amounts
tendered).  An Asset Sale Offer  shall  remain  open for a period of 20 Business
Days and until the close of business on the Net Proceeds  Purchase  Date or such
longer  period as may be  required  by law.  Each  notice of an Asset Sale Offer
shall contain all instructions and materials necessary to enable such Holders to
tender  Notes  pursuant  to the Asset  Sale Offer and shall  identify  the Notes
(including CUSIP number) and shall state the following terms: (i) that the Asset
Sale  Offer is being  made  pursuant  to this  Section  4.10 and that all  Notes
tendered will be accepted for payment; PROVIDED,  HOWEVER, that if the aggregate
principal  amount of Notes tendered in an Asset Sale Offer plus accrued interest
at the  expiration of such offer exceeds the aggregate  amount of the Asset Sale
Offer,  the Company  shall  select the Notes to be purchased on a PRO RATA basis
(with such adjustments as may be deemed  appropriate by the Company so that only
Notes in  denominations  of US$1,000 or multiples  thereof shall be  purchased);
(ii) the Net Proceeds Offer Price and the Net Proceeds Purchase Date; (iii) that
any Note not tendered will continue to accrue  interest;  (iv) that,  unless the
Company  defaults in making  payment  therefor,  any Note  accepted  for payment
pursuant to the Asset Sale Offer shall  cease to accrue  interest  after the Net


                                       33
<PAGE>

Proceeds  Purchase  Date;  (v) that  Holders  electing to have a Note  purchased
pursuant to an Asset Sale Offer will be required to surrender the Note, with the
form  entitled  "Option of Holder to Elect  Purchase" on the reverse of the Note
completed,  to the Paying Agent at the address  specified in the notice prior to
the close of  business  on the  third  Business  Day  prior to the Net  Proceeds
Purchase Date;  (vi) that Holders will be entitled to withdraw their election if
the Paying Agent  receives,  not later than five  Business Days prior to the Net
Proceeds  Purchase  Date, a facsimile  transmission  or letter setting forth the
name of the Holder,  the principal  amount of the Notes the Holder delivered for
purchase and a statement  that such Holder is  withdrawing  his election to have
such Note  purchased;  and (vii) that Holders whose Notes are purchased  only in
part will be issued new Notes in a  principal  amount  equal to the  unpurchased
portion of the Notes surrendered; PROVIDED that each Note purchased and each new
Note issued shall be in an original  principal amount of US$1,000 or an integral
multiple thereof.

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

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

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

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

SECTION 4.11.  LIMITATION ON TRANSACTIONS WITH AFFILIATES.


                                       34
<PAGE>

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

SECTION 4.12.  LIMITATION ON LIENS.

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

SECTION 4.13.  GUARANTORS.

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

     (b) The  Company  will  not  permit  any  Restricted  Subsidiary  that is a
Guarantor  to issue or sell any  Capital  Stock  other than to the  Company or a
Restricted  Subsidiary,  (i) if such issuance or sale could adversely  affect or
impair the  legality  or  enforceability  of, or the  ability of the  Trustee to
realize upon, the Guarantee  granted by such  Restricted  Subsidiary  hereunder;


                                       35
<PAGE>

(ii) if such issuance or sale would result in any Person or Persons  (other than
the  Company or a  Restricted  Subsidiary),  directly or  indirectly,  owning or
controlling  15% or more of the Capital Stock of any Restricted  Subsidiary that
is a  Guarantor;  PROVIDED,  HOWEVER,  that  any sale of 100% of the  shares  of
Capital  Stock of any  Restricted  Subsidiary  that is a  Guarantor  effected in
accordance with Section 4.10 or Section 5.1 shall be permitted; and (iii) unless
such  Restricted  Subsidiary  receives  the Fair Market  Value for such  Capital
Stock.

SECTION 4.14.  OFFER TO REPURCHASE UPON CHANGE OF CONTROL.

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

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

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


                                       36
<PAGE>

principal amount of US$1,000 or an integral multiple  thereof.  Any Notes not so
accepted will be as promptly as  practicable  mailed or delivered by the Trustee
to the Holders  thereof.  The Company will publicly  announce the results of the
Change of Control  Offer on or as  promptly as  practicable  after the Change of
Control Payment Date. For purposes of this Section 4.14, the Trustee will act as
the Paying Agent.

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

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

SECTION 4.15.  CORPORATE EXISTENCE.

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

SECTION 4.16.  LIMITATION ON ASSET SWAPS.

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

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

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

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

SECTION 4.17.  LIMITATION ON SALE LEASEBACK TRANSACTIONS.

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


                                       37
<PAGE>

SECTION 4.18.  MAINTENANCE OF BUSINESS, PROPERTIES AND INSURANCE.

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

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

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

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

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

SECTION 4.19.  IMPAIRMENT OF SECURITY INTEREST.

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

SECTION 4.20.  PAYMENT OF ADDITIONAL AMOUNTS.

     All  payments  by the Company in respect of the Notes or any  Guarantor  in
respect  of its  Guarantee  of the  Notes  shall be made  free and  clear of and
without  withholding  or  deduction  for or on account of any  present or future
taxes,  duties,  assessments or other  governmental  charges of whatever nature,
including penalties, interest and any other liabilities related thereto, imposed
or  levied  by or on  behalf  of  Brazil  or any  relevant  jurisdiction  or any
political  subdivision  or  authority  thereof  or therein  having  power to tax
("Taxes").  In the event that the Company or any Guarantor,  as the case may be,


                                       38
<PAGE>

is required to make any  withholding or deduction for or on account of any Taxes
from any payment made under or with respect to the Notes,  or its Guarantee,  as
the case may be, the Company or any Guarantor, as the case may be, will pay such
additional  amounts  ("Additional  Amounts") as may be necessary so that the net
amount  received  by each  Holder  (including  Additional  Amounts)  after  such
withholding  or deduction will not be less than the amount the Holder would have
received  had such  Taxes  not been  withheld  or  deducted;  PROVIDED,  that no
Additional  Amounts will be payable to a Holder (an "Excluded  Holder") (i) with
which the Company or any  Guarantor,  as the case may be, does not deal at arm's
length at the time of making such  payment,  (ii) which is subject to such Taxes
by reason of its being  connected  with Brazil or any political  subdivision  or
authority thereof otherwise than by the mere holding of the Notes or the receipt
of payments  thereunder,  (iii) which presents any Note for payment of principal
more than 60  calendar  days  after  the later of (x) the date on which  payment
first became due and (y) if the full amount payable has not been received by the
Trustee on or prior to such due date, the date on which, the full amount payable
having  been so  received,  notice to that  effect  shall have been given to the
Holders by the  Company,  except to the extent  that the Holder  would have been
entitled to such  Additional  Amounts on presenting such Note for payment on the
last day of the applicable  60-day period,  (iv) which failed to duly and timely
comply with a timely request of the Company to provide information, documents or
other evidence concerning the Holder's  nationality,  residence,  entitlement to
treaty benefits, identity or connection with Brazil or any political subdivision
or authority  thereof,  if and to the extent that due and timely compliance with
such request would have reduced or eliminated  any Taxes as to which  Additional
Amounts  would have  otherwise  been  payable to such Holder but for this clause
(iv), (v) on account of any estate, inheritance,  gift, sale, transfer, personal
property or other similar Tax, (vi) which is a fiduciary, a partnership,  or not
the  beneficial  owner of any  payment on a Note,  if and to the extent that any
beneficiary or settlor of such fiduciary,  any partner in such  partnership,  or
the  beneficial  owner of such  payment (as the case may be) would not have been
entitled to receive  Additional  Amounts  with  respect to such  payment if such
beneficiary,  settlor,  partner or beneficial  owner had been the Holder of such
Note or (vii) any combination of the foregoing numbered clauses of this proviso.

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

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

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


                                       39
<PAGE>

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


                                    ARTICLE 5
                                   SUCCESSORS

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

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

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

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

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

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

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

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

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

     (i)  the entity or Person formed by or surviving any such  consolidation or
          merger (if other than such Guarantor) or the entity or Person to which
          such  sale,   assignment,   transfer,   lease,   conveyance  or  other


                                       40
<PAGE>

          disposition  shall have been made assumes all the  obligations of such
          Guarantor under the Guarantee, in form satisfactory to the Trustee;

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

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

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

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

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

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

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

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

SECTION 5.2.  SUCCESSOR COMPANY SUBSTITUTED.

     Upon any  consolidation  or merger or any transfer of all or  substantially
all of the assets of the  Company  and its  Restricted  Subsidiaries  taken as a
whole in accordance with Section 5.1, the successor  corporation  formed by such
consolidation  or into which the Company or the Restricted  Subsidiary is merged
or to which such transfer is made, will succeed to, and be substituted  for, and
may exercise every right and power of the Company or the  Restricted  Subsidiary
under this Indenture with the same effect as if such successor  corporation  had
been named as the Company or the Restricted  Subsidiary  herein; and thereafter,
if the Company or the Restricted Subsidiary is dissolved following a transfer of
all or  substantially  all of its assets in accordance with this Indenture,  the
Company or the  Restricted  Subsidiary  will be discharged and released from all
obligations and covenants under this Indenture,  the Security  Documents and the


                                       41
<PAGE>

Notes.  The Trustee  will enter into a  supplemental  indenture  to evidence the
succession  and  substitution  of such  successor  Person and such discharge and
release of the Company or the Restricted Subsidiary.


                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

SECTION 6.1.  EVENTS OF DEFAULT.

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

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

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

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

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

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

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

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

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

     (i) a court of competent  jurisdiction  enters an order or decree under any
Bankruptcy Law that:  (i) is for relief  against the Company or any  Significant
Subsidiary of the Company in an involuntary case or proceeding,  (ii) appoints a


                                       42
<PAGE>

Custodian of the Company or any Significant Subsidiary of the Company or for all
or  substantially  all  of  its  respective  properties,  or  (iii)  orders  the
liquidation of the Company or any Significant  Subsidiary of the Company, or any
similar  relief is granted under any foreign laws, and in each case the order or
decree remains unstayed and in effect for 60 calendar days;

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

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

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

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

SECTION 6.2.  ACCELERATION.

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

SECTION 6.3.  OTHER REMEDIES.

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


                                       43
<PAGE>

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

SECTION 6.4.  WAIVER OF PAST DEFAULTS.

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

SECTION 6.5.  CONTROL BY MAJORITY.

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

SECTION 6.6.  LIMITATION ON SUITS.

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

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

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

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

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

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

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


                                       44
<PAGE>

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

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

SECTION 6.8.  COLLECTION SUIT BY TRUSTEE.

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

SECTION 6.9.  TRUSTEE MAY FILE PROOFS OF CLAIM.

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

SECTION 6.10.  PRIORITIES.

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

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

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

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

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


                                       45
<PAGE>

SECTION 6.11.  UNDERTAKING FOR COSTS.

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


                                    ARTICLE 7
                                     TRUSTEE

SECTION 7.1.  DUTIES OF TRUSTEE.

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

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

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

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

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

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

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

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

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

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


                                       46
<PAGE>

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

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

SECTION 7.2.  RIGHTS OF TRUSTEE.

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

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

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

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

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

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

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

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

SECTION 7.3.  INDIVIDUAL RIGHTS OF TRUSTEE.

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


                                       47
<PAGE>

SECTION 7.4.  TRUSTEE'S DISCLAIMER.

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

SECTION 7.5.  NOTICE OF DEFAULTS.

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

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

     Within 60  calendar  days  after  each July 31  beginning  with the July 31
following  the  Amendment  Effective  Date,  and  for so long  as  Notes  remain
outstanding,  the Trustee  will mail to the Holders of the Notes a brief  report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event  described  in TIA Section  313(a) has occurred  within the twelve  months
preceding the reporting date, no report need be  transmitted).  The Trustee also
will comply with TIA Section  313(b)(2).  The Trustee will also transmit by mail
all reports as required by TIA Section 313(c).

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

SECTION 7.7.  COMPENSATION AND INDEMNITY.

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

     The  Company  will  indemnify  the  Trustee  against  any and  all  losses,
liabilities or expenses  incurred by it arising out of or in connection with the
acceptance or administration  of its duties under this Indenture,  including the
costs and expenses of enforcing  this Indenture  against the Company  (including
this Section 7.7) and defending  itself against any claim  (whether  asserted by
the Company or any Holder or any other Person) or liability in  connection  with
the exercise or performance of any of its powers or duties hereunder,  except to
the extent any such loss,  liability or expense may be attributable to its gross
negligence  or bad faith.  The Trustee will  promptly  notify the Company of any
claim for which it may seek indemnity. The Company will defend the claim and the
Trustee will cooperate in the defense. The Trustee may have separate counsel and
the Company will pay the reasonable fees and expenses of such counsel;  PROVIDED


                                       48
<PAGE>

that the  Company  will not be  required  to pay such  fees and  expenses  if it
assumes the  Trustee's  defense with counsel  acceptable  to and approved by the
Trustee (such approval not to be unreasonably withheld) and there is no conflict
of interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any  settlement  made without its written  consent,
which consent will not be unreasonably  withheld. The Company need not reimburse
the Trustee for any expense or  indemnity  against any  liability or loss of the
Trustee to the extent such  expense,  liability or loss is  attributable  to the
gross negligence, bad faith or willful misconduct of the Trustee.

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

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

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

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

SECTION 7.8.  REPLACEMENT OF TRUSTEE.

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

     The  Trustee  may resign in writing  upon 60  calendar  days  notice and be
discharged from the trust hereby created by so notifying the Company in writing.
The Holders of a majority in principal amount of the then outstanding  Notes may
remove the  Trustee by so  notifying  the Trustee and the Company in writing and
may appoint a successor trustee with the consent of the Company. The Company may
remove the Trustee if:

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

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

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

     (d) the Trustee becomes incapable of acting.

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

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

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


                                       49
<PAGE>

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

SECTION 7.9.  SUCCESSOR TRUSTEE BY MERGER, ETC.

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

SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION.

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

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

SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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


                                    ARTICLE 8
                            DEFEASANCE AND DISCHARGE

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

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


                                       50
<PAGE>

SECTION 8.2.  LEGAL DEFEASANCE.

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

SECTION 8.3.  COVENANT DEFEASANCE.

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

SECTION 8.4.  CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

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

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


                                       51
<PAGE>

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

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

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

SECTION 8.5.  DISCHARGE.

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


                                       52
<PAGE>

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

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

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

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

SECTION 8.7.  REPAYMENT TO COMPANY.

     Any money  deposited with the Trustee or any Paying Agent,  or then held by
the Company or any of its  Subsidiaries or Affiliates,  in trust for the payment
of the principal of, or premium,  if any, or interest on, any Note and remaining
unclaimed for one year after such  principal,  premium,  if any, or interest has
become due and  payable  will be paid to the  Company on its request or (if then
held by the Company or any of its subsidiaries or Affiliates) will be discharged
from such trust;  and the Holder of such Note will  thereafter,  as an unsecured
general  creditor,  look  only  to the  Company  for  payment  thereof,  and all
liability  of the Trustee or such Paying Agent with respect to such trust money,
and all  liability of the Company or any of its  Subsidiaries  or  Affiliates as
trustee thereof,  will thereupon cease;  PROVIDED,  HOWEVER, that the Trustee or
such Paying Agent,  before being required to make any such repayment,  shall, at
the pre-paid expense of the Company, cause to be published once, in The New York
Times and The Wall Street  Journal  (national  edition),  notice that such money
remains  unclaimed and that, after a date specified  therein,  which will not be
less than 30 calendar days from the date of such  notification  or  publication,
any  unclaimed  balance  of such  money  then  remaining  will be  repaid to the
Company.

SECTION 8.8.  REINSTATEMENT.

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


                                       53

<PAGE>

                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.1.  WITHOUT CONSENT OF HOLDERS OF NOTES.

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

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

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

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

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

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

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

SECTION 9.2.  WITH CONSENT OF HOLDERS OF NOTES.

     Except as provided in Section 9.1 and in this Section 9.2, this  Indenture,
the  Notes,  the  Security  Documents  or  the  Guarantees  may  be  amended  or
supplemented by the Company, each Guarantor, and the Trustee with the consent of
the  Holders  of at least a  majority  in  principal  amount of the  Notes  then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for,  Notes),  and,  subject to
Sections  6.4 and 6.7 and the  second to last  paragraph  of  Section  6.1,  any
existing Default,  Event of Default (other than a Default or Event of Default in
the payment of principal of, premium,  if any, or interest on, the Notes, except
a payment  default  resulting from an  acceleration  that has been rescinded) or
non-compliance  with any provision of this  Indenture,  the Notes,  the Security
Documents or the  Guarantees  may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding  Notes (including  consents
obtained in connection  with a purchase of, or a tender offer or exchange  offer
for, the Notes).

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

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


                                       54
<PAGE>

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

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

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

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

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

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

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

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

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

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

SECTION 9.3.  COMPLIANCE WITH TRUST INDENTURE ACT.

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

SECTION 9.4.  REVOCATION AND EFFECT OF CONSENTS.

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

     The Company may,  but will not be  obligated  to, fix a record date for the
purpose of  determining  the  Holders  entitled  to  consent  to any  amendment,
supplement or waiver. If a record date is fixed, then  notwithstanding  the last
sentence of the immediately preceding paragraph,  those Persons who were Holders
at such record date (or their duly designated proxies),  and only those Persons,
will be  entitled to consent to such  amendment  or waiver or revoke any consent


                                       55
<PAGE>

previously given,  whether or not such Persons continue to be Holders after such
record date.  No consent  will be valid or  effective  for more than 90 calendar
days after such record date  except to the extent that the  requisite  number of
consents to the amendment,  supplement or waiver have been obtained  within such
90-day period or as set forth in the next paragraph of this Section 9.4.

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

SECTION 9.5.  NOTATION ON OR EXCHANGE OF NOTES.

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

SECTION 9.6.  TRUSTEE TO SIGN AMENDMENTS, ETC.

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

SECTION 9.7.  PAYMENTS FOR CONSENT.

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


                                   ARTICLE 10
                             COLLATERAL AND SECURITY

SECTION 10.1.  SECURITY DOCUMENTS.

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

     The Company shall, and shall cause each of its Restricted  Subsidiaries to,
do or cause to be done all such acts and things as may be  necessary  or proper,
or as may be required by the provisions of the Security Documents, to assure and


                                       56
<PAGE>

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

SECTION 10.2.  OPINIONS.

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

SECTION 10.3.  RELEASE OF COLLATERAL.

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

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

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

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

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

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

SECTION 10.4.  CERTIFICATES OF THE COMPANY.

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


                                       57
<PAGE>

made by an Officer of the Company except in cases where TIA ss. 314(d)  requires
that such certificate or opinion be made by an independent  engineer,  appraiser
or other expert within the meaning of TIA ss. 314(d).

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

     The  Trustee  may,  in its sole  discretion  and without the consent of the
Holders,  on behalf of the  Holders,  take all  actions  it deems  necessary  or
appropriate  in order to (a) enforce any of the terms of the Security  Documents
and (b)  collect  and  receive  any and all  amounts  payable  in respect of the
Obligations of the Company and the Guarantors hereunder.  The Trustee shall have
the power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any  impairment  of the  Collateral by any acts that may be
unlawful or in violation of the Security  Documents or this Indenture,  and such
suits and  proceedings  as the Trustee may deem expedient to preserve or protect
its  interests  and the  interests of the Holders in the  Collateral  (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental  enactment,  rule or
order that may be  unconstitutional  or otherwise invalid if the enforcement of,
or  compliance  with,  such  enactment,  rule or order would impair the security
interest  hereunder  or be  prejudicial  to the  interests of the Holders or the
Trustee).

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

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


                                   ARTICLE 11
                               GUARANTEE OF NOTES

SECTION 11.1.  GUARANTEE.

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


                                       58
<PAGE>

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

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

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

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

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


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<PAGE>

SECTION 11.2.  GUARANTEE UNCONDITIONAL, ETC.

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

SECTION 11.3.  LIMITATION OF GUARANTOR'S LIABILITY.

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

SECTION 11.4.  CONTRIBUTION.

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


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<PAGE>

SECTION 11.5.  RELEASE.

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

SECTION 11.6.  ADDITIONAL GUARANTORS.

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

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

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

SECTION 11.8.  SUCCESSORS AND ASSIGNS.

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

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

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


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<PAGE>

                                   ARTICLE 12
                                  MISCELLANEOUS

SECTION 12.1.  TRUST INDENTURE ACT CONTROLS.

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

SECTION 12.2.  NOTICES.

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

     If to the Company or a Guarantor:

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

              With a copy to:

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

     If to the Trustee:

              The Bank of New York
              101 Barclay Street, Floor 21 West
              New York, NY 10286
              Phone No.:  (212) 815-5080
              Telecopier No.:  (212) 815-5915
              Attention: Loretta A. Lundberg

              With a copy to:

              Battle Fowler LLP
              75 East 55th Street
              New York, New York 10022
              Phone No.: (212) 856-7000
              Telecopier No.: (212) 339-9150
              Attention: Douglas L. Furth, Esq. and Benjamin Dean, Esq.


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<PAGE>

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

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

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

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

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

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

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

SECTION 12.4.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

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

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

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

SECTION 12.5.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

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

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

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


                                       63
<PAGE>

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

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

SECTION 12.6.  RULES BY TRUSTEE AND AGENTS.

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

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

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

SECTION 12.8.  GOVERNING LAW.

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

SECTION 12.9.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

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

SECTION 12.10.  SUCCESSORS.

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

SECTION 12.11.  SEVERABILITY.

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

SECTION 12.12.  ORIGINALS.

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


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<PAGE>

SECTION 12.13.  TABLE OF CONTENTS, HEADINGS, ETC.

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

SECTION 12.14.  COUNTERPARTS.

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

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

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

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


                                       65
<PAGE>

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

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

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

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

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

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

            (iv)   The  obligations  contained in subsections  (a), (b) (ii) and
         (b)  (iii)  of  this  Section  12.16  shall  constitute   separate  and
         independent  obligations  from the other  Indenture  obligations of the
         Company,  shall give rise to separate and independent  causes of action
         against  the  Company,  shall  apply  irrespective  of  any  waiver  or
         extension  granted by any Holder of a Note or the  Trustee or either of
         them from  time to time and shall  continue  in full  force and  effect


                                       66
<PAGE>

         notwithstanding  any  judgment  or order or the  filing of any proof of
         claim in the  winding-up of the Company for a liquidated sum in respect
         of amounts due hereunder  (other than under subsection (b) (iii) above)
         or under any such judgment or order.  Any such  deficiency as aforesaid
         shall be deemed to  constitute  a loss  suffered  by the Holders of the
         Note or the  Trustee,  as the case may be, and no proof or  evidence of
         any actual loss shall be required by the Company or the  liquidator  or
         otherwise or any of them.  In the case of  subsection  (b) (iii) above,
         the amount of such deficiency  shall not be deemed to be reduced by any
         variation  in rates of exchange  occurring  between the said final date
         and the date of any liquidating distribution.

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

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


                                       67
<PAGE>

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

                          ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME BRASILIA SERVICOS DE TELECOMUNICACOES LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME GOIANIA SERVICOS DE TELECOMUNICACOES LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME BELEM SERVICOS DE TELECOMUNICACOES LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME PROGRAMADORA LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME SISTEMAS LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME SERVICOS DE TELECOMUNICACOES LTDA.


                          By:_________________________________________
                             Name:
                             Title:

                          TV FILME OPERACOES LTDA.


                                       68
<PAGE>


                          By:_________________________________________
                             Name:
                             Title:

                          THE BANK OF NEW YORK, as trustee


                          By:_________________________________________
                             Name:
                             Title:


WITNESSES:


Name:


Name:


                                       69
<PAGE>

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

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


Notary Public


[NOTARIAL SEAL]



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

     On this ___ day of ___________, 2000, before me, a notary public within and
for said county,  personally appeared  ________________,  to me personally known
who being duly sworn, did say that he was the Chief Executive  Officer of ITSA -
Intercontinental  Telecomunicacoes  Ltda.,  one of the persons  described in and
which executed the foregoing instrument,  and acknowledges said instrument to be
the free act and deed of said corporation.


Notary Public


[NOTARIAL SEAL]



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

     On this ___ day of  _____________,  2000, before me, a notary public within
and for said county,  personally  appeared  ________________,  to me  personally
known who being duly sworn,  did say that he was the Chief Executive  Officer of
TV  Filme  Brasilia  Servicos  de  Telecomunicacoes  Ltda.,  one of the  persons
described in and which executed the foregoing instrument,  and acknowledges said
instrument to be the free act and deed of said corporation.


Notary Public

[NOTARIAL SEAL]


                                       70
<PAGE>

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

     On this ___ day of ___________, 2000, before me, a notary public within and
for said county,  personally  appeared________________  , to me personally known
who being  duly  sworn,  did say that he was the Chief  Executive  Officer of TV
Goiania Servicos de Telecomunicacoes  Ltda., one of the persons described in and
which executed the foregoing instrument,  and acknowledges said instrument to be
the free act and deed of said corporation.


Notary Public


[NOTARIAL SEAL]




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

     On this ___ day of  _____________,  2000, before me, a notary public within
and for said  county,  personally  appeared________________  , to me  personally
known who being duly sworn,  did say that he was the Chief Executive  Officer of
TV Filme Belem Servicos de Telecomunicacoes  Ltda., one of the persons described
in and which executed the foregoing instrument, and acknowledges said instrument
to be the free act and deed of said corporation.


Notary Public


[NOTARIAL SEAL]




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

     On this ___ day of ______________,  2000, before me, a notary public within
and for said county,  personally  appeared  _________________,  to me personally
known who being duly sworn,  did say that he was the Chief Executive  Officer of
TV Filme Campina Grande Servicos de  Telecomunicacoes  Ltda., one of the persons
described in and which executed the foregoing instrument,  and acknowledges said
instrument to be the free act and deed of said corporation.


Notary Public

[NOTARIAL SEAL]


                                       71
<PAGE>

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


     On this ___ day of ______________,  2000, before me, a notary public within
and for said county, personally appeared ____________________,  to me personally
known who being duly sworn,  did say that he was the Chief Executive  Officer of
TV Filme Programadora  Ltda., one of the persons described in and which executed
the foregoing  instrument,  and acknowledges  said instrument to be the free act
and deed of said corporation.


Notary Public


[NOTARIAL SEAL]



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

     On this ___ day of  _____________,  2000, before me, a notary public within
and for said county,  personally  appeared  _________________,  to me personally
known who being duly sworn,  did say that he was the Chief Executive  Officer of
TV Filme Sistemas Ltda., one of the persons  described in and which executed the
foregoing  instrument,  and acknowledges  said instrument to be the free act and
deed of said corporation.


Notary Public


[NOTARIAL SEAL]



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

     On this ___ day of  ________________,  2000,  before  me,  a notary  public
within and for said county,  personally appeared  ______________________,  to me
personally  known who being duly sworn,  did say that he was the Chief Executive
Officer of TV Filme  Servicos  de  Telecomunicacoes  Ltda.,  one of the  persons
described in and which executed the foregoing instrument,  and acknowledges said
instrument to be the free act and deed of said corporation.


Notary Public


[NOTARIAL SEAL]


                                       72
<PAGE>

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

         On this ___ day of , 2000,  before me, a notary  public  within and for
said county,  personally appeared , to me personally known who being duly sworn,
did say that he was the Chief Executive Officer of TV Filme Operacoes Ltda., one
of the persons  described in and which  executed the foregoing  instrument,  and
acknowledges said instrument to be the free act and deed of said corporation.


Notary Public


[NOTARIAL SEAL]


                                       73
<PAGE>
                                                                         ANNEX I


                              EXISTING INDEBTEDNESS















                                    Annex-1

<PAGE>


                                                                        ANNEX II

                                   GUARANTORS



TV Filme Brasilia Servicos de Telecomunicacoes Ltda.

 TV Filme Goiania Servicos de Telecomunicacoes Ltda.

TV Filme Belem Servicos de Telecomunicacoes Ltda.

TV Filme Campina Grande Servicos de Telecomunicacoes Ltda.

TV Filme Programadora Ltda.

TV Filme Sistemas Ltda.

TV Filme Servicos de Telecomunicacoes Ltda.

TV Filme Operacoes Ltda.




                                    Annex-2
<PAGE>


                                                                       EXHIBIT A


                                 (Face of Note)

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

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


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

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

                                      A-1

<PAGE>


                  ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.

                        12% Senior Secured Notes due 2004

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


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

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

Record Dates: June 1 and December 1.

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

                                    Dated: __________, 2000

                                    ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.


                                    By:_________________________________________
                                       Name:
                                       Title:


-------------------
*   CUSIP NO. for the Global Note.

**  CUSIP NO. for the Certificated Notes.


                                      A-2

<PAGE>


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

THE BANK OF NEW YORK,
  as Trustee


By:________________________________
         Authorized Signatory

Dated:_____________________________


                                      A-3

<PAGE>

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

     On this  _____ day of  ______________,  2000,  before  me, a notary  public
within and for said  country,  personally  appeared  ___________________,  to me
personally   known  who  being  duly   sworn,   did  say  that  he  was  the  of
ITSA-Intercontinental  Telecomunicacoes  Ltda., one of the persons  described in
and which executed the foregoing instrument, and acknowledges said instrument to
be the free act and deed of said corporation.




Notary Public


[NOTARIAL SEAL]






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

     On this _____ day of  ________________,  2000,  before me, a notary  public
within  and  for  said  country,  personally  appeared_________________  , to me
personally  known who being duly  sworn,  did say that he was the of The Bank of
New York,  one of the persons  described  in and which  executed  the  foregoing
instrument, and acknowledges said instrument to be the free act and deed of said
corporation.




Notary Public


[NOTARIAL SEAL]


                                      A-4

<PAGE>


                                 (Back of Note)

                        12% Senior Secured Notes due 2004

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

     1. INTEREST.

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

     2. METHOD OF PAYMENT.

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

     3. PAYING AGENT AND REGISTRAR.

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


                                      A-5

<PAGE>

     4. INDENTURE.

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

     5. OPTIONAL REDEMPTION.

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

           Year                                 Percentage
           ----                                 ----------
           2000                                 106.4375%
           2001                                 104.2917%
           2002                                 102.1458%
           2003 and thereafter                  100.0000%

     6. MANDATORY REDEMPTION.

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

     7. REPURCHASE AT OPTION OF HOLDER.

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

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

     8. DENOMINATIONS, TRANSFER, EXCHANGE.

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


                                      A-6
<PAGE>


     9. PERSONS DEEMED OWNERS.

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

     10. UNCLAIMED MONEY.

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

     11. DEFEASANCE PRIOR TO REDEMPTION OR MATURITY.

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

     12. AMENDMENT, SUPPLEMENT AND WAIVER.

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

     13. DEFAULTS AND REMEDIES.

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

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

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

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

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

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

     (f) the Company defaults under any mortgage,  indenture or instrument under
which  there may be issued or by which  there may be  secured or  evidenced  any
Indebtedness  for  money  borrowed  of the  Company  or  any  of its  Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted  Subsidiaries),  whether such Indebtedness or Guarantee now exists or


                                      A-7

<PAGE>

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

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

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

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

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

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

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

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


                                       A-8
<PAGE>

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

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

     14. INDIVIDUAL RIGHTS OF TRUSTEE.

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

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

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

     16. AUTHENTICATION.

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

     17. ABBREVIATIONS.

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


                                       A-9
<PAGE>

     18. CUSIP NUMBERS.

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

     19. GOVERNING LAW.

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

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

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



                                       A-10
<PAGE>

                                                   Assignment Form

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


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

     ___________________________________________________________________________


     ___________________________________________________________________________


     ___________________________________________________________________________


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

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

________________________________________________________________________________


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

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

                     Signature Guarantee*:______________________________________



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


                                       A-11
<PAGE>


Option of Holder to Elect Purchase

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

         | __ | Section 4.10                | __ | Section 4.14

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


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

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

                     Social Security or Tax Identification No.:_________________

                     Signature Guarantee**:_____________________________________








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



                                       A-12
<PAGE>


                   SCHEDULE OF EXCHANGES OF CERTIFICATED NOTE(1)

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


<TABLE>
<S>                 <C>                          <C>                           <C>
Date of Exchange     Amount of decrease in        Amount of increase in         Principal Amount
                      Principal Amount of          Principal Amount of             Global Note
                       this Global Note             this Global Note             following such
                                                                                  (or increase)
</TABLE>




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


<PAGE>

                                                                       EXHIBIT B


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


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

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

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


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

                     Your Signature:____________________________________________

                     Social Security or Tax Identification No.:_________________

                     Signature Guarantee*:______________________________________




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


                                       B-1
<PAGE>

                                                                      SCHEDULE I


                               SECURITY DOCUMENTS









                                      S-1


<PAGE>

                                                                       EXHIBIT B












                            RESTRUCTURING AGREEMENT

                          dated as of January 24, 2000

                                      among

                                 TV FILME, INC.

                                       and

                        EACH OF THE SPECIFIED HOLDERS OF

                          12-7/8% SENIOR NOTES DUE 2004













<PAGE>



                                TABLE OF CONTENTS
                                                                            Page

SECTION 1             DEFINITIONS..............................................1

SECTION 2             AGREEMENT TO RESTRUCTURE.................................3

     Section 2.1      Restructuring............................................3

     Section 2.2      Financing Agreement......................................4

     Section 2.3      Implementation of Restructuring..........................5

     Section 2.4      Conditions...............................................5

SECTION 3             PLAN SOLICITATION AND CONFIRMATION.......................5

     Section 3.1      Solicitation and Confirmation............................5

     Section 3.2      Acceptance of Plan.......................................6

SECTION 4             RESTRICTIONS UPON TRANSFERS..............................6

     Section 4.1      Restrictions.............................................6

     Section 4.2      Permitted Transfers......................................6

SECTION 5             AGREEMENTS AND REPRESENTATIONS...........................7

     Section 5.1      Negative Covenants of the Company........................7

     Section 5.2      Forbearance..............................................7

     Section 5.3      Employee Benefits........................................7

     Section 5.4      Management Stock.........................................7

     Section 5.5      Specified Holders' Representations.......................7

     Section 5.6      Company's Representations................................8

SECTION 6             MISCELLANEOUS............................................9

     Section 6.1      No Waiver; Modifications in Writing......................9

     Section 6.2      Notices..................................................9

     Section 6.3      No Solicitation..........................................9

     Section 6.4      Further Assurances.......................................9

     Section 6.5      Amendments..............................................10

     Section 6.6      Appointment to Creditors' Committee.....................10

     Section 6.7      Specific Performance....................................10

     Section 6.8      Prior Negotiations......................................10

     Section 6.9      No Third-Party Beneficiaries............................10

     Section 6.10     Consideration...........................................10

     Section 6.11     Term....................................................10


                                      -i-

<PAGE>
                               TABLE OF CONTENTS
                                  (continued)
                                                                            Page

     Section 6.12     Execution in Counterparts...............................10

     Section 6.13     Assignment..............................................10

     Section 6.14     Governing Law; Jurisdiction.............................10

     Section 6.15     Headings................................................11

EXHIBIT A  SCHEDULE OF SPECIFIED HOLDERS......................................13

EXHIBIT B  PLAN OF REORGANIZATION.............................................14

EXHIBIT C  DISCLOSURE STATEMENT...............................................15

EXHIBIT D  LIST OF PERSONS RECEIVING 15% OF NEW EQUITY INTERESTS..............16

EXHIBIT E  EMPLOYMENT AGREEMENTS..............................................17

EXHIBIT F  NEW INDENTURE......................................................18





















                                      -ii-


<PAGE>

                             RESTRUCTURING AGREEMENT

         Restructuring  Agreement (the "AGREEMENT") dated as of January 24, 2000
among TV Filme, Inc., a Delaware corporation (the "COMPANY"), and each holder of
12-7/8%  Senior Notes due 2004 ("OLD  NOTES") of the Company that is a signatory
hereto (each, a "SPECIFIED HOLDER" and, collectively, the "SPECIFIED HOLDERS").

         The Specified Holders own or have proxies to vote the principal amounts
of Old Notes set forth on EXHIBIT A and collectively own or have proxies to vote
65.77% of the aggregate principal amount of Old Notes outstanding.  As described
herein,  the  Specified  Holders  consent  to and  will  support  the  Company's
solicitation (the  "SOLICITATION") of votes for acceptance of the Company's plan
of  reorganization  substantially  in the form attached hereto as EXHIBIT B (the
"PLAN") under chapter 11 of title 11 of the United States Code (the  "BANKRUPTCY
CODE") from the Company's securityholders.

         In  consideration  of the mutual  covenants  contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Specified Holder agrees as follows:

                                    SECTION 1
                                   DEFINITIONS

         Unless otherwise defined in this Agreement, all capitalized terms shall
have the meanings set forth in the Plan annexed as EXHIBIT B hereto.

         "AFFILIATE" of any specified  Person means any other Person directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control  with  such  specified  Person.  For the  purposes  of this  definition,
"control"  when used with  respect to any  Person  means the power to direct the
management and policies of such Person, directly or indirectly,  whether through
the  ownership of voting  securities,  by contract or  otherwise;  and the terms
"controlling" and "controlled" having meanings correlative to the foregoing.

         "ANATEL"  means  Agencia  Nacional de  Telecomunicacoes,  the Brazilian
government agency which regulates  telecommunication  services in Brazil and has
jurisdiction over the multi-channel  distribution  systems licenses held by ITSA
and the Subsidiaries.

         "BANKRUPTCY  COURT" means the United States  Bankruptcy  Court,  or the
District  Court,  for the District of Delaware in which a chapter 11  bankruptcy
case will be commenced by the Company to seek confirmation of the Plan.

         "CENTRAL BANK" means the Central Bank of Brazil.

         "CENTRAL  BANK FEE" means the fee, if any,  imposed by the Central Bank
in  connection  with the  Central  Bank's  approval  of the  debt  restructuring
contemplated by this Agreement.

         "COMMON  STOCK"  means the  currently  outstanding  Common Stock of the
Company.


<PAGE>


         "DISCLOSURE STATEMENT" means the Disclosure Statement  substantially in
the form  attached  hereto as  EXHIBIT C to be  distributed  by the  Company  in
connection with the Solicitation.

         "HOLDERS" means holders of Old Notes including, without limitation, the
Specified Holders.

         "INDEBTEDNESS"  means without duplication (a) any liability  (including
obligations  to pay  principal,  interest and  premium,  as  applicable)  of the
Company or any of its  Subsidiaries  for borrowed  money or evidenced by a bond,
note,  debenture or similar  instrument  (including a purchase money obligation)
given in connection with the acquisition of any businesses, properties or assets
of any kind (other than a trade  payable or a current  liability  arising in the
ordinary course of business) to the extent it would appear as a liability upon a
balance sheet of the Company prepared on a consolidated basis in accordance with
United States generally accepted accounting principles; (b) any liability of the
Company or any of its Subsidiaries under any reimbursement  obligation  relating
to a letter of credit;  and (c) any liability of others described in clauses (a)
or (b)  above  that  the  Company  or any of its  Subsidiaries  has  guaranteed,
directly or indirectly (to the extent of such  guarantee),  or that is otherwise
the Company's or any of its Subsidiaries'  legal liability;  PROVIDED,  HOWEVER,
that clauses (a) through (c) shall not limit the  indebtedness  and transactions
authorized in Article 4 of the New Indenture.

         "INDENTURE" means the Indenture, dated as of December 20, 1996, between
the Company and IBJ Schroeder Bank and Trust Company, as indenture trustee.

         "INDENTURE  TRUSTEE"  means  The Bank of New York as  successor  to IBJ
Schroeder Bank and Trust  Company,  (later known as IBJ Whitehall Bank and Trust
Company),  in its  capacity as indenture  trustee  under the  Indenture,  or any
successor  indenture  trustee  appointed  in  accordance  with the  terms of the
Indenture.

         "NEW EQUITY INTERESTS" means the stock of the Reorganized Company to be
issued in the manner set forth in section 2.1 of this Agreement.

         "NEW INDENTURE"  means an indenture  relating to the New Secured Notes,
in the form annexed hereto as EXHIBIT F.

         "NEW NOTE AMOUNT"  means an amount equal to the sum of $35 million plus
an amount equal to the amount of the Central Bank Fee.

         "NEW SECURED NOTES" means the new secured note or notes to be issued by
ITSA to the  Reorganized  Company  in the New Note  Amount,  which  will then be
assigned to the holders of the Old Notes pursuant to the Plan and be governed by
the terms of the New Indenture.

         "PERSON" means an individual,  corporation,  limited liability company,
partnership,  trust, incorporated or unincorporated association,  joint venture,
joint stock company,  government (or an agency or political subdivision thereof)
or other entity of any kind.


                                       2
<PAGE>


         "REORGANIZED  COMPANY"  means  a  newly-formed  Cayman  Islands  entity
initially to be named "Successor TV Filme Company" which, in accordance with the
Plan,  will acquire the assets of the Company on the Effective  Date and will be
the successor in interest to the Company pursuant to a  reorganization  in which
the newly-formed corporation survives (the "REORGANIZATION").

         "SUBSIDIARY"  means,  with respect to any Person,  (i) a  corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more  Subsidiaries  of such  Person or by such  Person and one or more
Subsidiaries  thereof or (ii) any other  Person  (other than a  corporation)  in
which such Person,  one or more  Subsidiaries  thereof or such Person and one or
more Subsidiaries thereof,  directly or indirectly, at the date of determination
thereof, has at least majority ownership interest.

         "TERMINATION  EVENT" means failure to obtain  confirmation  of the Plan
within 120 days of the filing date of the Company's chapter 11 petition.

         "VOTING DEADLINE" means the voting deadline specified in the Disclosure
Statement  prior to which  ballots  with respect to the Plan will be accepted by
the Company,  as such voting  deadline may be extended by the Company,  with the
reasonable consent of the Specified Holders.

                                   SECTION 2
                            AGREEMENT TO RESTRUCTURE

         Section 2.1.  RESTRUCTURING.  Each Specified Holder and the Company
has,  after good faith  negotiations  in which it was  represented  by  counsel,
agreed to the restructuring of the outstanding Old Notes and Common Stock of the
Company pursuant to the Plan, as follows:

         (a) Holders of Old Notes will collectively receive upon consummation of
the Plan in exchange for the Old Notes: (i) $25 million (U.S.) in cash, (ii) New
Secured  Notes in the New Note  Amount  and (iii) 80% of the fully  diluted  New
Equity Interests in the Reorganized Company.

         (b)  Current  equity  shareholders  of the  Company  will  collectively
receive  in  exchange  for all  outstanding  Common  Stock of the  Company  upon
consummation  of the Plan 5% of the fully  diluted New Equity  Interests  in the
Reorganized  Company. All outstanding options or warrants of the Company will be
canceled upon consummation of the Plan.

         (c) Current management of the Company and its Subsidiaries,  identified
in EXHIBIT D hereto,  or an entity or entities  controlled by them, will receive
15% of the fully  diluted New Equity  Interests in the  Reorganized  Company and
will  receive  employment  contracts to be executed  contemporaneously  with the
Reorganization, substantially in the form annexed hereto as EXHIBIT E.

         (d)  The  terms  and  provisions  of the New  Secured  Notes  shall  be
substantially as set forth in the New Indenture annexed hereto as EXHIBIT F.


                                       3
<PAGE>


         (e) The initial  Board of Directors of the  Reorganized  Company  shall
consist of seven (7) directors,  as follows;  Hermano Albuquerque,  as Chairman,
Carlos  Albuquerque,  one director  appointed by Hermano and Carlos  Albuquerque
prior to the  hearing  on  confirmation  of the  Plan,  and  four (4)  directors
appointed  by the  Specified  Holders  prior to  confirmation  of the Plan.  The
initial term of the directors shall be for a one year period after the Effective
Date of the Plan.  The  Specified  Holders agree that during the one year period
following the  Effective  Date (a) neither they nor their  affiliates  will take
action to call or permit the Company or the Reorganized Debtor to call a meeting
of  shareholders  for the purpose of  changing,  or to take any other  action to
change,  the initial  composition of the Board of Directors as agreed to herein;
and  (b)  should  the  Specified  Holders  sell  the  equity  securities  in the
Reorganized  Company  received  in  connection  with  the  Reorganization,   the
Specified  Holders  will use  their  best  efforts  to cause  any  purchaser  or
purchasers of such equity  securities to agree to the  restrictions set forth in
subsection (a) hereof.

         Section 2.2. FINANCING AGREEMENT.  The Specified Holders have agreed to
underwrite and ensure the  availability  of a $10 million (U.S.) secured line of
credit (the "Exit  Financing") to the Reorganized  Company on the Effective Date
of the Plan. The terms of the Exit Financing shall be as follows:

         o    Maturity: twelve months from the Effective Date of the Plan.

         o    Interest: 15% annual interest rate, payable monthly, in cash.

         o    Fees:

              (i)    $400,000 (U.S.) upfront underwriting fee, to be paid on the
                     Effective  Date of the  Plan  PRO  RATA,  to the  Specified
                     Holders, as underwriters;

              (ii)   $100,000  (U.S.) upfront  administration  fee to be paid on
                     the  Effective  Date  of  the  Plan  to  Resurgence   Asset
                     Management LLC, as administrator of the Exit Financing; and

              (iii)  $300,000  (U.S.)  facility  fee to be paid  only  upon  the
                     initial draw down on the Exit  Financing,  payable on a PRO
                     RATA  basis  to the  lenders  who  participate  in the Exit
                     Financing.

         o    Each  draw  down on  the Exit  Financing  will  require  the prior
              approval of the  board of directors of the Reorganized Company.

         o    Security:  The  Exit  Financing  will be  secured  on a PARI PASSU
              basis with the New Secured  Notes.

         o    Participation:  Each  holder of  in excess  of $1  million  in Old
              Notes may  participate  on a PRO RATA  basis in the Exit Financing
              if such  party (i)  commits to do  so in writing at least five (5)
              business days prior to  the Confirmation Hearing and (ii) actually
              participates on  a PRO RATA basis in the Exit Financing.


                                      4
<PAGE>


         o    Documentation:    The  loan,   security  and  other  documentation
              relating to the Exit  Financing  will  be negotiated and finalized
              by the parties  on or prior to the hearing on  confirmation of the
              Plan.

         Section  2.3.  IMPLEMENTATION  OF  RESTRUCTURING.    The  restructuring
shall be implemented  under the Plan to be confirmed by the Bankruptcy Court. To
implement  the Plan,  the Company shall form the  Reorganized  Company and, upon
confirmation of the Plan, engage in the Reorganization. Upon the Reorganization,
the  Reorganized  Company will  contribute as equity to its  subsidiary,  ITSA -
Intercontinental  Telecomunicacoes Ltda. ("ITSA"), a portion of the indebtedness
under an  existing  intercompany  note (the "ITSA  Note") owed to the Company by
ITSA which  portion is equal to: $105 million less an amount equal to the amount
of the Central Bank Fee. The terms of the remaining  amount due on the ITSA Note
(which  amount shall equal $35 million plus an amount equal to the amount of the
Central  Bank Fee) will be amended  and  restated,  and shall be assigned by the
Reorganized  Company to the holders of the Old Notes.  In  addition,  New Equity
Interests will be issued by the Reorganized Company, as set forth in section 2.1
above.

         Section 2.4. CONDITIONS.  Effectiveness of the restructuring under this
Agreement and the Plan shall be subject to the following conditions:

         (a) Confirmation of the Plan by order of the Bankruptcy Court;

         (b) Approval by ANATEL of the relevant transactions contemplated by the
Plan, in form and substance reasonably satisfactory to the Specified Holders and
the Company;

         (c)  Approval  by  the  Central  Bank  of  the  relevant   transactions
contemplated by the Plan, in form and substance  reasonably  satisfactory to the
Specified Holders and the Company; and

         (d) Such other  conditions to the  occurrence of the Effective Date (as
defined in the Plan) as may be set forth in the Plan.

                                   SECTION 3
                       PLAN SOLICITATION AND CONFIRMATION

         Section 3.1    SOLICITATION AND CONFIRMATION.    No later than five (5)
business days  subsequent to all parties hereto  executing this  Agreement,  the
Company will file a voluntary  case under Chapter 11 of the  Bankruptcy  Code in
the  Bankruptcy  Court and will seek approval of the adequacy of the  Disclosure
Statement as expeditiously as possible under the Bankruptcy Code and the Federal
Rules of Bankruptcy  Procedure (the "BANKRUPTCY  RULES") and as permitted by the
Bankruptcy  Court's  schedule.  Upon approval of the adequacy of the  Disclosure
Statement,  the Company will solicit acceptances of the Plan from holders of the
Company's  Common  Stock  and Old Notes as  expeditiously  as  practical  and as
possible under the Bankruptcy Code and the Bankruptcy Rules, and as permitted by
the Bankruptcy Court's schedule.

         Section 3.2 ACCEPTANCE OF PLAN. Each of the Specified Holders covenants
and agrees that such Specified Holder will take and cause each of its Affiliates
and Persons whose funds are managed by such Specified  Holder to take or refrain
from taking, as the case may be, directly or indirectly,  the following actions:


                                       5
<PAGE>


(i) vote for  acceptance  of the Plan with  respect  to all Old Notes  currently
owned,   controlled  or  hereafter   acquired  by  such  Specified  Holder  and,
accordingly,  tender to the Company an executed and properly-completed ballot in
favor of  acceptance  of the Plan by the Voting  Deadline;  (ii) not withdraw or
otherwise revoke the ballot referred to in clause (i) above;  (iii) not vote for
or otherwise  consent to or  participate  in any action or agreement  that would
impede, interfere with, delay, postpone or attempt to discourage consummation of
the Plan, including, but not limited to, any vote for or recommendation in favor
of any  alternative  plan of  reorganization  or liquidation not proposed by the
Company under the Bankruptcy  Code; and (iv) use its reasonable  best efforts to
have the adequacy of the Disclosure Statement approved and the Plan confirmed by
the Bankruptcy  Court as expeditiously as possible under the Bankruptcy Code and
the Bankruptcy Rules, and as permitted by the Bankruptcy Court's schedule.

                                   SECTION 4
                           RESTRICTIONS UPON TRANSFERS

         Section 4.1    RESTRICTIONS.    No Specified Holder shall sell, assign,
transfer, pledge, hypothecate, make gifts of or in any manner whatsoever dispose
of or encumber (any such sale, assignment, transfer, pledge, hypothecation, gift
or  disposition  being  hereinafter  referred to as a "TRANSFER")  any Old Notes
(including  the Old Notes set forth  opposite  such  Specified  Holders' name on
EXHIBIT A) or any  interest  therein,  except  pursuant to a permitted  Transfer
specified in Section  4.2. Any  purported  Transfer by any  Specified  Holder in
violation  of this  Agreement  shall be null and void and of no force and effect
and the  purported  transferee  shall  have no rights or  privileges  in or with
respect to the Company.

         Section  4.2  PERMITTED  TRANSFERS.  Notwithstanding  anything  to  the
contrary  contained in Section  4.1, a Specified  Holder may Transfer any or all
Old Notes solely  pursuant to a permitted  Transfer as follows:  (a) Transfer of
Old Notes to any Person if the proposed transferee agrees in a writing delivered
to the Company to become a party to this Agreement and pursuant to which writing
such proposed  transferee (i) shall be bound by the terms and conditions of this
Agreement in the same manner and to the same extent as the Specified  Holder who
proposes  to  Transfer  such  Old  Notes  (including,  without  limitation,  the
obligations  set forth in Section  3), and (ii) shall be entitled to the benefit
of the provisions of this Agreement in the same manner and to the same extent as
the Specified Holder who proposes to Transfer such Old Notes; and (b) a Transfer
of Old Notes in connection  with the exchange of such Old Notes as  contemplated
by the Plan upon the Reorganization.

                                   SECTION 5
                         AGREEMENTS AND REPRESENTATIONS

         Section  5.1  NEGATIVE  COVENANTS  OF THE  COMPANY.  Absent the written
approval of the Specified Holders, the Company hereby covenants and agrees that,
until the earlier to occur of the  Reorganization  or a Termination  Event,  the
Company will not and will not permit any of its Subsidiaries to:

         (a) LIMITATION ON RESTRICTED PAYMENTS.  Declare or pay any dividend on,
or purchase,  redeem or retire for value,  or make any payment on the account of


                                       6
<PAGE>


the purchase,  redemption or other  acquisition  or retirement for value of, any
Common  Stock of the  Company,  except  as  permitted  in  Article  4 of the New
Indenture.

         (b) LIMITATION ON INDEBTEDNESS.  Create,  incur or assume,  directly or
indirectly, any Indebtedness.

         (c) LIMITATION ON MERGERS AND ASSET SALES.  Merge or  consolidate  with
any Person or acquire all or any substantial part of the properties or assets of
any Person or sell, assign,  lease,  transfer,  exchange or otherwise dispose of
any material  property,  except (i) for sales of goods and services  made in the
ordinary  course  of  business,  (ii)  sale of excess  inventory  in the  manner
conducted by the Company or its Subsidiaries in the past and (iii)  transactions
authorized by Articles 4 or 5 of the New Indenture.

         Section 5.2 FORBEARANCE.  Until the date of a Termination  Event,  each
Specified  Holder  hereby  agrees  to  forebear  (and  agrees  not to  give  any
instructions to the Indenture Trustee under the Indenture inconsistent with such
forbearance)  from the  exercise of any rights or remedies it may have under the
Old  Notes or the  Indenture  (the  "EXISTING  AGREEMENTS"),  applicable  law or
otherwise,  with  respect to any  default  in  existence  or  arising  under the
Existing  Agreements;  PROVIDED,  HOWEVER,  that during such period, the Company
shall  have  continued  to  comply  with its  obligations  under  the  terms and
conditions of this Agreement.

         Section  5.3  EMPLOYEE  BENEFITS.  The Company  has  reviewed  with the
Specified  Holders the  importance of retaining the services of key employees of
the Company and its Subsidiaries and, with the approval of the Specified Holders
and the recommendation of their financial advisor,  has agreed to (i) enter into
the employment  agreements  with  management  substantially  in the form annexed
hereto as EXHIBIT E which  agreements are to become effective upon the Effective
Date, and (ii) continue to honor existing  employment  arrangements  between the
Company and its management and/or its Subsidiaries' management.

         Section 5.4 MANAGEMENT  STOCK. Upon the Effective Date of the Plan, the
Specified  Holders  agree that an aggregate of 15% of the fully  diluted  Common
Stock of the Reorganized Debtor shall be issued to the key management  employees
identified in EXHIBIT D, or an entity or entities controlled by them, in partial
consideration of the services to be rendered to the Reorganized Company.

         Section 5.5 SPECIFIED  HOLDERS'  REPRESENTATIONS  Each of the Specified
Holders represents and warrants to the Company that:

         (a) AUTHORITY.  Such Specified  Holder has full legal right,  power and
authority to enter into this  Agreement and to perform such  Specified  Holder's
obligations  hereunder without the need for the consent of any other Person; and
that the  execution,  delivery and  performance of this Agreement have been duly
authorized by all necessary corporate, partnership or LLC action on its part.

         (b)  OWNERSHIP.  Such  Specified  Holder is the sole  beneficial  owner
and/or the  investment  advisor or manager for the  beneficial  owner,  with the
power to vote and  dispose  of on behalf of such  beneficial  owner,  or has the
proxy to vote under the Plan or otherwise the principal  amount of Old Notes set


                                       7
<PAGE>


forth opposite the name of such Specified  Holder on EXHIBIT A.  Notwithstanding
the amounts set forth on EXHIBIT A, each Specified  Holder agrees that the terms
of this  Agreement  shall  also  apply to any Old  Notes  such  Holder  acquires
subsequent to the date hereof.

         (c) ENFORCEABILITY.  This Agreement has been duly authorized,  executed
and delivered and  constitutes the legal,  valid and binding  obligation of such
Specified  Holder  enforceable  against such Specified Holder in accordance with
the terms hereof.

         (d)  COMPLIANCE.  The  execution,  delivery  and  performance  of  this
Agreement  by such  Specified  Holder does not,  in any  material  respect,  (i)
violate any  provision  of  applicable  law,  rule,  regulation  or ordinance or
require  any  government  approval  (other  than the  consents to be obtained as
contemplated by the Plan),  (ii) violate any judgment,  order, writ or decree of
any court or other tribunal  applicable to such Specified Holder,  (iii) violate
or  result  in a  default  under any of the  provisions  of the  Certificate  of
Incorporation or the By-Laws (or other constitutive documents) of such Specified
Holder or (iv)  violate or otherwise  constitute a default  (with or without the
giving of notice or the lapse of time or both) under any  material  agreement to
which such Specified Holder is a party. Such Specified Holder is a sophisticated
institutional  investor with respect to its ownership of the Old Notes and is an
"accredited  investor"  as  defined  in Rule  501(a) of  Regulation  D under the
Securities Act of 1933.

         (e) The Specified Holders have reviewed and had an adequate opportunity
to review and  comment on the terms of the  Disclosure  Statement,  the Plan and
this  Agreement  (and all exhibits to such  documents)  and have  consulted with
financial advisors and counsel in connection therewith.

         Section  5.6  COMPANY'S  REPRESENTATIONS.  The Company  represents  and
warrants to each of the Specified Holders that:

         (a) ORGANIZATION.  The Company is a corporation validly existing and in
good  standing  under the laws of the State of  Delaware  and has all  requisite
corporate power and corporate authority to own, lease and operate its properties
and assets as now owned, leased and operated.

         (b)  AUTHORITY.  The  Company  has the  full  legal  right,  power  and
authority to enter into this Agreement and to perform its obligations  hereunder
without the need for the  consent of any other  person,  except for ANATEL,  the
Central Bank and the Bankruptcy Court approvals contemplated by this Agreement.

         (c) ENFORCEABILITY.  This Agreement has been duly authorized,  executed
and delivered and  constitutes  the legal,  valid and binding  obligation of the
Company enforceable against the Company in accordance with the terms hereof.

         (d)  COMPLIANCE.  The  execution,  delivery  and  performance  of  this
Agreement  by the Company  does not, in any  material  respect,  (1) violate any
provision of  applicable  law,  rule,  regulation  or ordinance  (other than the
consents to be obtained as contemplated by the Plan), (ii) violate any judgment,
order, writ or decree of any court or other tribunal  applicable to the Company,
(iii)  violate  or  result  in a  default  under  any of the  provisions  of the
Certificate  of  Incorporation  or the By-Laws of the Company or (iv) violate or


                                       8
<PAGE>

otherwise  constitute  a default  (with or  without  the giving of notice of the
lapse of time or both) under any  material  agreement  to which the Company is a
party.

                                    SECTION 6
                                  MISCELLANEOUS

         Section 6.1 NO WAIVER; MODIFICATIONS IN WRITING. No failure or delay on
the part of the Company or any Specified  Holder in exercising any right,  power
or remedy  hereunder shall operate as a waiver thereof,  nor shall any single or
partial  exercise  of any such  right,  power or remedy  hereunder  operate as a
waiver  thereof,  nor shall any single or partial  exercise  of any such  right,
power or remedy preclude any other or further  exercise  thereof or the exercise
of any other  right,  power or  remedy.  The  remedies  provided  for herein are
cumulative  and are not  exclusive of any remedies  that may be available to any
party at law or in equity or otherwise.

         Section 6.2  NOTICES.  All  notices,  demands and other  communications
provided for hereunder  shall be in writing,  and, if to the Specified  Holders,
shall be given by  registered  or  certified  mail,  return  receipt  requested,
telecopy,  courier  service or personal  delivery,  addressed to each  Specified
Holder as shown on the  execution  pages hereof or to such other address as such
person may designate to the Company in writing and, if to the Company,  shall be
given by similar  means to the Company at: SCS,  Quadra  07-Bl.  A Ed  Executive
Tower, Sala 601,  Brasilia,  DF Brazil, and shall be deemed given when received.
Copies of all such  notices  shall be provided  to:  Counsel  for the  Specified
Holders,  Jones, Day, Reavis & Pogue,  LLP, 599 Lexington Avenue,  New York, New
York 10022,  Attention:  Marc S.  Kirschner,  Esq.; and counsel for the Company,
Kelley Drye & Warren LLP, 101 Park Avenue, New York, New York 10178,  Attention:
Mark I. Bane, Esq.

         Section 6.3 NO  SOLICITATION.  This  Agreement  is not and shall not be
deemed to be a  solicitation  of consents to the Plan.  The  acceptances  of the
Specified  Holders will not be solicited until the Bankruptcy  Court has entered
an order approving the Disclosure  Statement and the Specified Holders have been
sent the court-approved Disclosure Statement and related ballot.

          Section 6.4 FURTHER ASSURANCES.  The Company and each Specified Holder
hereby further covenants and agrees to use its best efforts to, and to cause the
Indenture  Trustee  to,  negotiate  in good  faith and  complete  the  documents
necessary  to  implement  this  Agreement  and  the  Plan,  and  all  agreements
contemplated thereby.

         Section 6.5 AMENDMENTS.  This Agreement may not be modified, amended or
supplemented with respect to any party except in writing signed by such party.

         Section 6.6 APPOINTMENT TO CREDITORS' COMMITTEE.  The Specified Holders
agree to support the  appointment  of an official  committee of creditors by the
United  States  Trustee  in  the  Company's  bankruptcy  case  (the  "CREDITORS'
COMMITTEE").  Each Specified Holder will use its best efforts to be appointed to
the Creditors'  Committee.  Service on the  Creditors'  Committee by a Specified
Holder  shall not affect the  continuing  validity  and  enforceability  of this
Agreement as to such Specified Holder.

         Section 6.7 SPECIFIC  PERFORMANCE.  It is understood and agreed by each
of the parties  hereto that money damages  would not be a sufficient  remedy for
any breach of this Agreement by any party and each non-breaching  party shall be


                                       9
<PAGE>


entitled to specific  performance and injunctive or other equitable  relief as a
remedy of any such breach.

         Section 6.8 PRIOR  NEGOTIATIONS.  This  Agreement  supersedes all prior
negotiations with respect to the subject matter hereof.

         Section  6.9    NO THIRD-PARTY  BENEFICIARIES.  Unless expressly stated
herein, this Agreement shall be solely for the benefit of the Parties hereto and
no other person or entity shall be a third-party beneficiary hereof.

         Section 6.10  CONSIDERATION.  It is hereby  acknowledged by the parties
hereto that no consideration  shall be due or paid to the Specified  Holders for
their  agreement  to vote to accept  the Plan in  accordance  with the terms and
conditions  of this  Agreement  other than the  Company's  agreement  to use its
reasonable  best efforts to obtain  approval of the Disclosure  Statement and to
take all steps  necessary and  desirable to confirm the Plan in accordance  with
the terms and conditions of this Agreement.

         Section 6.11 TERM.  This Agreement shall terminate upon the earliest to
occur of (a) the Termination Event and (b) the Effective Date of the Plan.

         Section 6.12 EXECUTION IN COUNTERPARTS.  This Agreement may be executed
in two or more counterparts,  each of which shall constitute an original and all
of which together shall  constitute one and the same  Agreement.  Delivery of an
executed  counterpart of a signature page by telecopier  shall be effective as a
delivery of a manually executed counterpart hereof.

         Section  6.13  ASSIGNMENT. This Agreement  shall  be  binding  upon the
Company and each Specified Holder,  and their successors and permitted  assigns.
The Selected  Holders shall not assign their rights under this Agreement  except
to a permitted  transferee of the Old Notes in accordance with Section 4 hereof.
Any assignment in violation of this provision shall be null and void.

         Section 6.14  GOVERNING  LAW;  JURISDICTION.  This  Agreement  shall be
governed  under  the laws of the State of New York,  and  without  regard to the
conflicts of law principles thereof. Each of the parties hereto agrees to submit
to the  exclusive  jurisdiction  of  the  Bankruptcy  Court  in  any  action  or
proceeding arising out of or relating to this Agreement.

         Section 6.15 HEADINGS.  The Section headings and Table of Contents used
or contained in this  Agreement are for  convenience or reference only and shall
not affect the construction of this Agreement.



                                       10
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective  officers hereunto duly authorized,  as of the date
first above written.

                                    TV FILME, INC.


                                    By:__________________________________
                                       Name:
                                       Title:


















                                       11
<PAGE>



                                    SPECIFIED HOLDER
                                    Resurgence Asset Management LLC
                                    (for itself and its Affiliates)


                                    By:__________________________________
                                       Name:
                                       Title:
                                       Address: 10 New King Street
                                                White Plains, NY


                                    SPECIFIED HOLDER
                                    Romulus Holdings
                                    (for itself and its Affiliates and Holders
                                    for whom it has Power to Vote


                                    By:__________________________________
                                      Name:
                                      Title:
                                      Address:


                                    SPECIFIED HOLDER


                                    By:__________________________________
                                       Name:
                                       Title:
                                       Address:


                                    SPECIFIED HOLDER


                                    By:__________________________________
                                       Name:
                                       Title:
                                       Address:


                                    SPECIFIED HOLDER


                                    By:__________________________________
                                       Name:
                                       Title:
                                       Address:







                                       12
<PAGE>


                                    EXHIBIT A

                          SCHEDULE OF SPECIFIED HOLDERS


                                                   PRINCIPAL AMOUNT OF OLD NOTES
SPECIFIED HOLDER                                   CURRENTLY OWNED OR CONTROLLED

Resurgence Asset Management LLC                                 $59,516,000
 (and Affiliates)

Romulus Holdings                                                $32,564,000
 (and Affiliates and Holders for
 whom Romulus has Power to Vote)
                                                              ---------------

                                          Total                 $92,080,000












                                       13
<PAGE>


                                    EXHIBIT B

                             PLAN OF REORGANIZATION





















                                       14
<PAGE>




                                    EXHIBIT C

                              DISCLOSURE STATEMENT





















                                       15
<PAGE>

                                    EXHIBIT D

    LIST OF PERSONS RECEIVING, IN THE AGGREGATE, 15% OF NEW EQUITY INTERESTS

Veronica Albuquerque
Dilton Caldas
Ari Lisboa
Geraldo Mello
Carlos Souza
Robespierre Sa
Hermano Albuquerque
Carlos Albuquerque














                                       16
<PAGE>


                                    EXHIBIT E

                              EMPLOYMENT AGREEMENTS




















                                       17
<PAGE>

                                    EXHIBIT F

                                  NEW INDENTURE





















                                       18