EXECUTION COPY



                                  $200,000,000


                                CREDIT AGREEMENT

                           Dated as of August 12, 1999

                                      Among

                               ICG EQUIPMENT, INC.
                               ICG NETAHEAD, INC.

                                  as Borrowers

                                       and

                               ICG SERVICES, INC.

                                    as Parent

                THE INITIAL LENDERS AND THE INITIAL ISSUING BANK

                   as Initial Lenders and Initial Issuing Bank

                                       and

                              ROYAL BANK OF CANADA

                  as Administrative Agent and Collateral Agent

                                       and

                       MORGAN STANLEY SENIOR FUNDING, INC.

                      as Sole Book-Runner and Lead Arranger

                                       and

                              BANK OF AMERICA, N.A.
                                       and
                                BARCLAYS BANK PLC

                           as Co-Documentation Agents




<PAGE>

                       T A B L E  O F  C O N T E N T S


Section                                                                     Page

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

1.01.  Certain Defined Terms...................................................1
1.02.  Computation of Time Periods; Other Definitional Provisions.............28
1.03.  Accounting Terms.......................................................28

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

2.01.  The Advances and the Letters of Credit.................................29
2.02.  Making the Advances....................................................30
2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit.....32
2.04.  Repayment of Advances..................................................33
2.05.  Termination or Reduction of the Commitments............................35
2.06.  Prepayments............................................................36
2.07.  Interest...............................................................38
2.08.  Fees...................................................................38
2.09.  Conversion of Advances.................................................39
2.10.  Increased Costs, Etc...................................................40
2.11.  Payments and Computations..............................................41
2.12.  Taxes..................................................................43
2.13.  Sharing of Payments, Etc...............................................45
2.14.  Use of Proceeds........................................................45
2.15.  Defaulting Lenders.....................................................46

                                   ARTICLE III

                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

3.01.  Conditions Precedent to Initial Extension of Credit....................48
3.02.  Conditions Precedent to Each Borrowing and Issuance and Renewal........54
3.03.  Determinations Under Section 3.01......................................55

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

4.01.  Representations and Warranties of the Borrower.........................55


<PAGE>


Section                                                                     Page

                                    ARTICLE V

                          COVENANTS OF THE LOAN PARTIES

5.01.  Affirmative Covenants..................................................61
5.02.  Negative Covenants.....................................................66
5.03.  Reporting Requirements.................................................72
5.04.  Financial Covenants....................................................76

                                   ARTICLE VI

                                EVENTS OF DEFAULT

6.01.  Events of Default......................................................79
6.02.  Actions in Respect of the Letters of Credit upon Default...............85

                                   ARTICLE VII

                                 PARENT GUARANTY

7.01.  Guaranty...............................................................86
7.02.  Guaranty Absolute......................................................86
7.03.  Waiver.................................................................87
7.04.  Subrogation............................................................87

                                  ARTICLE VIII

                                   THE AGENTS

8.01.  Authorization and Action...............................................88
8.02.  Agents' Reliance, Etc..................................................88
8.03.  Agents and Affiliates..................................................88
8.04.  Lender Party Credit Decision...........................................89
8.05.  Indemnification........................................................89
8.06.  Successor Agents.......................................................90

                                   ARTICLE IX

                                  MISCELLANEOUS

9.01.  Amendments, Etc........................................................91
9.02.  Notices, Etc...........................................................91
9.03.  No Waiver; Remedies....................................................92

                                       ii
<PAGE>

Section                                                                     Page

9.04.  Costs and Expenses.....................................................92
9.05.  Right of Set-off.......................................................93
9.06.  Binding Effect.........................................................94
9.07.  Assignments and Participations.........................................94
9.08.  Execution in Counterparts..............................................97
9.09.  No Liability of the Issuing Bank.......................................97
9.10.  Confidentiality........................................................98
9.11.  Release of Collateral..................................................98
9.12.  Jurisdiction, Etc......................................................98
9.13.  Governing Law..........................................................98
9.14.  Waiver of Jury Trial...................................................99

SCHEDULES

Schedule I        -      Commitments and Applicable Lending Offices
Schedule II       -      Subsidiary Guarantors
Schedule 4.01(a)  -      Equity Investors
Schedule 4.01(b)  -      Subsidiaries
Schedule 4.01(d)  -      Authorizations, Approvals, Actions, Notices and Filings
Schedule 4,01(q)  -      Tax Matters
Schedule 4.01(s)  -      Existing Debt
Schedule 4.01(t)  -      Liens
Schedule 4.01(u)  -      Owned Real Property
Schedule 4.01(v)  -      Leased Real Property
Schedule 4.01(w)  -      Investments
Schedule 4.01(x)  -      Intellectual Property
Schedule 4.01(y)  -      Material Contracts

EXHIBITS

Exhibit A-1       -      Form of Tranche A Term Note
Exhibit A-2       -      Form of Tranche B Term Note
Exhibit A-3       -      Form of Working Capital Note
Exhibit B         -      Form of Notice of Borrowing
Exhibit C         -      Form of Assignment and Acceptance
Exhibit D         -      Form of Security Agreement
Exhibit E         -      Form of Subsidiary Guaranty
Exhibit F         -      Form of Solvency Certificate
Exhibit G         -      Form of Opinion of Counsel to the Loan Parties
Exhibit H         -      Form of Opinion of Local Counsel
Exhibit I         -      Form of Borrowing Base Certificate

                                      iii
<PAGE>

                                                                  EXECUTION COPY


                                CREDIT AGREEMENT


     CREDIT AGREEMENT dated as of August 12, 1999, among ICG Equipment,  Inc., a
Colorado  corporation  ("ICG  Equipment"),   ICG  NetAhead,   Inc.,  a  Delaware
corporation ("ICG NetAhead" and, together with ICG Equipment,  the "Borrowers"),
ICG Services,  Inc., a Delaware corporation (the "Parent"), the banks, financial
institutions  and other  institutional  lenders  listed on the  signature  pages
hereof as the Initial Lenders (the "Initial Lenders") and the bank listed on the
signature pages hereof as the Initial  Issuing Bank (the "Initial  Issuing Bank"
and, together with the Initial Lenders,  the "Initial Lender  Parties"),  Morgan
Stanley Senior Funding,  Inc. ("Morgan  Stanley"),  as sole book-runner and lead
arranger  (the  "Lead  Arranger"),  Royal Bank of Canada,  as  collateral  agent
(together with any successor collateral agent appointed pursuant to Article VII,
the "Collateral Agent") and as administrative agent (together with any successor
administrative  agent  appointed  pursuant to Article VII,  the  "Administrative
Agent") for the Lender  Parties (as  hereinafter  defined)) and Bank of America,
N.A. and Barclays Bank Plc, as  co-documentation  agents (the  "Co-Documentation
Agents" and,  together  with the Lead  Arranger and the  Collateral  Agent,  the
"Agents").


PRELIMINARY STATEMENTS:

     (1)  Each  Borrower  has  requested  that the  Lenders  make  Advances  (as
hereinafter  defined)  to such  Borrower on the terms and  conditions  set forth
herein.

     (2) The Lenders are willing to make Advances to each Borrower, on the terms
and subject to the conditions set forth herein.

     (3) Each Borrower wishes to enter into the transactions contemplated hereby
for  significant  commercial  purposes  associated  with its ongoing  operations
(including,   without   limitation,   the  Internet  Service  Business  and  the
Telecommunications Business) (each, as hereinafter defined).

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants and agreements  contained  herein,  the parties hereto hereby agree as
follows:


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION  1.01.  Certain  Defined  Terms.  As used in  this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "Administrative  Agent" has the  meaning  specified  in the recital of
     parties to this Agreement.


<PAGE>

          "Administrative   Agent's   Account"   means   the   account   of  the
     Administrative  Agent as the Administrative  Agent shall specify in writing
     to the Lender Parties.

          "Advance" means a Tranche A Term Advance,  a Tranche B Term Advance, a
     Working Capital Advance or a Letter of Credit Advance.

          "Affiliate" means, as to any Person,  any other Person that,  directly
     or indirectly,  controls,  is controlled by or is under common control with
     such Person or is a director  or officer of such  Person.  For  purposes of
     this  definition,  the term "control"  (including the terms  "controlling",
     "controlled  by" and "under  common  control  with") of a Person  means the
     possession,  direct  or  indirect,  of the power to vote 10% or more of the
     Voting  Interests of such Person or to direct or cause the direction of the
     management  and policies of such Person,  whether  through the ownership of
     Voting Interests, by contract or otherwise.

          "Agents"  has the meaning  specified in the recital of parties to this
     Agreement.

          "Agreement  Value"  means,  for each Hedge  Agreement,  on any date of
     determination,  an amount determined by the Administrative  Agent equal to:
     (a) in the case of a Hedge  Agreement  documented  pursuant  to the  Master
     Agreement  (Multicurrency-Cross Border) published by the International Swap
     and Derivatives Association,  Inc. (the "Master Agreement"), the amount, if
     any, that would be payable by any Loan Party or any of its  Subsidiaries to
     its  counterparty to such Hedge  Agreement,  as if (i) such Hedge Agreement
     was being  terminated early on such date of  determination,  (ii) such Loan
     Party  or  Subsidiary  was  the  sole  "Affected  Party",   and  (iii)  the
     Administrative  Agent was the sole party  determining  such payment  amount
     (with the Administrative  Agent making such  determination  pursuant to the
     provisions of the form of Master Agreement);  or (b) in the case of a Hedge
     Agreement  traded on an exchange,  the  mark-to-market  value of such Hedge
     Agreement, which will be the unrealized loss on such Hedge Agreement to the
     Loan  Party or  Subsidiary  of a Loan Party  party to such Hedge  Agreement
     determined by the  Administrative  Agent based on the  settlement  price of
     such Hedge  Agreement  on such date of  determination,  or (c) in all other
     cases, the mark-to-market value of such Hedge Agreement,  which will be the
     unrealized  loss on such Hedge Agreement to the Loan Party or Subsidiary of
     a Loan Party party to such Hedge Agreement determined by the Administrative
     Agent as the amount,  if any, by which (i) the present  value of the future
     cash flows to be paid by such Loan  Party or  Subsidiary  exceeds  (ii) the
     present value of the future cash flows to be received by such Loan Party or
     Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not
     otherwise defined in this definition shall have the respective meanings set
     forth in the above described Master Agreement.

          "Applicable  Lending Office" means, with respect to each Lender Party,
     such  Lender  Party's  Domestic  Lending  Office in the case of a Base Rate
     Advance and such Lender Party's  Eurodollar Lending Office in the case of a
     Eurodollar Rate Advance.

          "Applicable  Margin" means, at any time, (a) in respect of the Tranche
     A Term  Facility and the Working  Capital  Facility,  (i) for the first six
     calendar  months  following  the  Effective  Date,  3.125%  in the  case of
     Eurodollar Rate Advances, and 2.125% in the case of Base Rate Advances, and
     (ii) thereafter, a

                                       2
<PAGE>

     percentage  per annum  determined  by reference  to the ICG Total  Leverage
     Ratio as set forth below and (b) in respect of the Tranche B Term Facility,
     3.500% in the case of Eurodollar  Rate Advances,  and 2.500% in the case of
     Base Rate Advances.

ICG Total Leverage Ratio      Base Rate Advances      Eurodollar Rate Advances

         > 10:1                     2.125%                     3.125%

  < 10:1, and > 7.5:1               1.750%                     2.750%
  -

  < 7.5:1, and > 5.0:1              1.500%                     2.500%
  -            -

        < 5.0:1                     1.250%                     2.250%

     The  Applicable  Margin for each Base Rate Advance  shall be  determined by
     reference to the ICG Total  Leverage  Ratio in effect from time to time and
     the Applicable  Margin for each Eurodollar Rate Advance shall be determined
     by  reference  to the ratio in  effect  on the  first day of each  Interest
     Period  for  such  Advance;  provided,  however,  that  no  change  in  the
     Applicable  Margin shall be effective  until three  Business Days after the
     date on which the  Administrative  Agent receives the financial  statements
     required to be  delivered  pursuant to Section  5.03(b) or (c), as the case
     may be, and a certificate of the Chief  Financial  Officer of each Borrower
     demonstrating the ICG Total Leverage Ratio.

          "Appropriate  Borrower"  means (a) with respect to any Borrowing,  the
     Borrower  named in the Notice of Borrowing  pursuant to Section  2.02(a)(i)
     for such  Advance;  and (b) with  respect  to any  Letter  of  Credit,  the
     Borrower  named in the Notice of Issuance  pursuant to Section  2.03(a) for
     such Letter of Credit.

          "Appropriate  Borrower's  Account"  means  (a)  with  respect  to  ICG
     Equipment,  the account of ICG Equipment as ICG Equipment  shall specify in
     writing to the  Administrative  Agent and (b) with respect to ICG NetAhead,
     the account of ICG NetAhead as ICG NetAhead shall specify in writing to the
     Administrative Agent.

          "Appropriate  Lender" means,  at any time,  with respect to (a) any of
     the Tranche A Term  Facility,  Tranche B Term Facility and Working  Capital
     Facility,  a Lender that has a Commitment  with respect to such Facility at
     such time, and (b) the Letter of Credit Facility,  (i) the Issuing Bank and
     (ii) if the  other  Working  Capital  Lenders  have  made  Letter of Credit
     Advances  pursuant to Section  2.03(c) that are  outstanding  at such time,
     each such other Working Capital Lender.

          "Approved Fund" means,  with respect to any Lender that is a fund that
     invests in bank  loans,  any other  fund that  invests in bank loans and is
     advised or managed by the same  investment  advisor as such Lender or by an
     Affiliate of such investment advisor.

                                       3
<PAGE>

          "Assignment and Acceptance" means an assignment and acceptance entered
     into by a Lender  Party  and an  Eligible  Assignee,  and  accepted  by the
     Administrative  Agent, in accordance with Section 9.07 and in substantially
     the form of Exhibit C hereto.

          "Available  Amount" of any Letter of Credit  means,  at any time,  the
     maximum  amount  available  to be drawn under such Letter of Credit at such
     time (assuming compliance at such time with all conditions to drawing).

          "Base Rate" means a fluctuating interest rate per annum in effect from
     time to time,  which  rate  per  annum  shall at all  times be equal to the
     higher of:

               (a) the rate of  interest  announced  publicly  by Royal  Bank of
          Canada in New York, New York,  from time to time, as its base or prime
          rate; and

               (b) 2 of 1% per annum above the Federal Funds Rate.

          "Base Rate Advance"  means an Advance that bears  interest as provided
     in Section 2.07(a)(i).

          "Borrowers"  has the  meaning  specified  in the recital of parties to
     this Agreement.

          "Borrowing"  means  a  Tranche  A Term  Borrowing,  a  Tranche  B Term
     Borrowing or a Working Capital Borrowing.

          "Borrowing Base Certificate"  means a certificate in substantially the
     form of Exhibit I hereto,  duly certified by the Chief Financial Officer of
     a Borrower.

          "Borrowing Base Deficiency" means, at any time, the failure of (a) the
     sum of the Loan Values of the Eligible  Collateral at such time to equal or
     exceed  the (b)  sum of the  aggregate  principal  amount  of the  Advances
     outstanding  at such time plus the  aggregate  Available  Amount  under all
     Letters of Credit outstanding at such time.

          "Business Day" means a day of the year on which banks are not required
     or  authorized  by law to close in New York  City  and,  if the  applicable
     Business Day relates to any Eurodollar Rate Advances, on which dealings are
     carried on in the London interbank market.

          "Capital  Expenditures"  means, for any Person for any period, the sum
     of,  without  duplication,  (a) all cash  expenditures  made,  directly  or
     indirectly,  by such Person or any of its  Subsidiaries  during such period
     for equipment,  fixed assets, real property,  improvements or other assets,
     or for  replacements  or  substitutions  therefor or additions  thereto and
     other  tangible and intangible  assets that may be capitalized  under GAAP,
     that  have been or  should  be,  in  accordance  with  GAAP,  reflected  as
     additions to property,  plant or equipment on a Consolidated  balance sheet
     of such  Person or have a useful  life of more than one year plus,  without
     duplication,  (b) the  aggregate  principal  amount of all Debt  (including
     Obligations  under  Capitalized  Leases)  assumed or incurred in connection
     with any such expenditures.  For purposes of this definition,  the purchase


                                       4
<PAGE>

     price of equipment  that is purchased  simultaneously  with the trade-in of
     existing  equipment or with insurance proceeds shall be included in Capital
     Expenditures  only to the extent of the gross amount of such purchase price
     less the credit  granted by the seller of such  equipment for the equipment
     being  traded in at such time or the amount of such  proceeds,  as the case
     may be.

          "Capitalized  Leases" means all leases that have been or should be, in
     accordance with GAAP, recorded as capitalized leases.

          "Cash  Collateral  Account" has the meaning s pecified in the Security
     Agreement.

          "Cash Equivalents" means any of the following,  to the extent owned by
     each Borrower or any of its respective  Subsidiaries  free and clear of all
     Liens other than Liens created under the Collateral  Documents and having a
     maturity  of not  greater  than 365 days  from the date of the  acquisition
     thereof: (a) readily marketable direct obligations of the Government of the
     United  States or any  agency or  instrumentality  thereof  or  obligations
     unconditionally  guaranteed by the full faith and credit of the  Government
     of the  United  States,  (b)  insured  certificates  of  deposit of or time
     deposits with any commercial bank that is a Lender Party or a member of the
     Federal Reserve System,  issues (or the parent of which issues)  commercial
     paper rated as described in clause (c) below,  is organized  under the laws
     of the United  States or any State  thereof  and has  combined  capital and
     surplus  of at least $1  billion or (c)  commercial  paper in an  aggregate
     amount of no more than  $25,000,000  per  issuer  outstanding  at any time,
     issued  by any  corporation  organized  under  the laws of any State of the
     United States and rated at least "Prime-1" (or the then  equivalent  grade)
     by Moody's Investors Service,  Inc. or "A-1" (or the then equivalent grade)
     by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.

          "CERCLA" means the Comprehensive Environmental Response,  Compensation
     and Liability Act of 1980, as amended from time to time.

          "CERCLIS" means the Comprehensive Environmental Response, Compensation
     and  Liability  Information  System  maintained  by the U.S.  Environmental
     Protection Agency.

          "Change of Control" means the occurrence of any of the following:  (a)
     any Person or two or more  Persons  acting in concert  shall have  acquired
     beneficial  ownership  (within the meaning of Rule 13d-3 of the  Securities
     and  Exchange  Commission  under  the  Securities  Exchange  Act of  1934),
     directly or  indirectly,  of Voting  Interests of ICG (or other  securities
     convertible  into such Voting  Interests)  representing  35% or more of the
     combined voting power of all Voting Interests of ICG; or (b) (i) any Person
     or two or more Persons  acting in concert  shall have  acquired  beneficial
     ownership  (within the meaning of Rule 13d-3 of the Securities and Exchange
     Commission  under  the  Securities  Exchange  Act  of  1934),  directly  or
     indirectly,  of Voting  Interests of ICG (or other  securities  convertible
     into such Voting Interests) representing 20% or more of the combined voting
     power of all Voting Interests of ICG and (ii) during any period of up to 24
     consecutive months,  commencing before or after the date of this Agreement,
     individuals  who at the beginning of such 24-month period were directors of
     ICG shall  cease for any reason to  constitute  a majority  of the board of
     directors of ICG, or (c) ICG shall cease to own directly or indirectly 100%
     of the Equity Interests of the Parent; or (d) the Parent shall cease to own
     directly or indirectly 100% of the Equity Interests of the Borrowers.


                                       5
<PAGE>

          "Co-Documentation  Agents" has the meaning specified in the recital of
     parties to this Agreement.

          "Collateral"  means all  "Collateral"  referred  to in the  Collateral
     Documents  and all other  property  that is or is intended to be subject to
     any Lien in favor of the  Collateral  Agent for the  benefit of the Secured
     Parties.

          "Collateral Agent" has the meaning specified in the recital of parties
     to this Agreement.

          "Collateral Documents" means Mortgages, the Security Agreement and any
     other  agreement  that creates or purports to create a Lien in favor of the
     Collateral Agent for the benefit of the Secured Parties.

          "Commitment"  means a  Tranche  A Term  Commitment,  a  Tranche B Term
     Commitment, a Working Capital Commitment or a Letter of Credit Commitment.

          "Commitment Letter" means the commitment letter,  dated June 25, 1999,
     between the Parent and Morgan Stanley.

          "Confidential  Information"  means  information  that any  Loan  Party
     furnishes to any Agent or any Lender  Party on a  confidential  basis,  but
     does  not  include  any  such  information  that  is or  becomes  generally
     available to the public other than as a result of a breach by such Agent or
     any  Lender  Party  of its  obligations  hereunder  or that  is or  becomes
     available  to such Agent or such Lender  Party from a source other than the
     Loan  Parties  that is not,  to the  best of such  Agent's  or such  Lender
     Party's knowledge,  acting in violation of a confidentiality agreement with
     a Loan Party.

          "Consolidated"  refers to the  consolidation of accounts in accordance
     with GAAP.

          "Contingent  Obligation"  means,  with  respect  to  any  Person,  any
     Obligation  or  arrangement  of such  Person to  guarantee  or  intended to
     guarantee  any  Debt,  Capitalized  Leases,   dividends  or  other  payment
     Obligations  ("primary  obligations")  of any other  Person  (the  "primary
     obligor") in any manner, whether directly or indirectly, including, without
     limitation,  (a) the direct or indirect guarantee,  endorsement (other than
     for collection or deposit in the ordinary  course of business),  co-making,
     discounting  with  recourse  or sale with  recourse  by such  Person of the
     Obligation of a primary obligor,  (b) the Obligation to make take-or-pay or
     similar  payments,  if required,  regardless of nonperformance by any other
     party or parties to an  agreement  or (c) any  Obligation  of such  Person,
     whether or not contingent,  (i) to purchase any such primary  obligation or
     any property  constituting  direct or indirect security  therefor,  (ii) to
     advance or supply funds (A) for the purchase or payment of any such primary
     obligation  or (B) to  maintain  working  capital or equity  capital of the
     primary  obligor or  otherwise to maintain the net worth or solvency of the
     primary obligor, (iii) to purchase property, assets, securities or services
     primarily  for the  purpose  of  assuring  the  owner of any  such  primary
     obligation  of the ability of the primary  obligor to make  payment of such
     primary  obligation or (iv) otherwise to assure or hold harmless the holder
     of such primary obligation  against loss in respect thereof.  The amount of

                                       6
<PAGE>

     any  Contingent  Obligation  shall be deemed  to be an amount  equal to the
     stated or determinable amount of the primary obligation in respect of which
     such Contingent Obligation is made (or, if less, the maximum amount of such
     primary  obligation  for which such  Person may be liable  pursuant  to the
     terms of the instrument  evidencing such Contingent  Obligation) or, if not
     stated or determinable,  the maximum  reasonably  anticipated  liability in
     respect thereof  (assuming such Person is required to perform  thereunder),
     as determined by such Person in good faith.

          "CFC"  means any Person  that is a  "controlled  foreign  corporation"
     pursuant to Section 957 of the Internal Revenue Code.

          "Conversion",  "Convert" and "Converted" each refer to a conversion of
     Advances of one Type into  Advances  of the other Type  pursuant to Section
     2.09 or 2.10.

          "Current  Assets" of any Person  means all assets of such  Person that
     would,  in  accordance  with GAAP,  be  classified  as current  assets of a
     company  conducting  a  business  the  same as or  similar  to that of such
     Person,  after deducting  adequate reserves in each case in which a reserve
     is proper in accordance with GAAP.

          "Current  Liabilities" of any Person means (a) all Debt of such Person
     that by its terms is payable on demand or matures within one year after the
     date of determination  (excluding any Debt renewable or extendible,  at the
     option  of such  Person,  to a date  more  than one year  from such date or
     arising under a revolving  credit or similar  agreement  that obligates the
     lender or  lenders to extend  credit  during a period of more than one year
     from such date),  (b) all amounts of Funded Debt of such Person required to
     be paid or prepaid  within one year after such date and (c) all other items
     (including  taxes accrued as estimated)  that in accordance with GAAP would
     be classified as current liabilities of such Person.

          "Debt"  of any  Person  at any date of  determination  means,  without
     duplication,  (a) all  indebtedness of such Person for borrowed money,  (b)
     all  Obligations of such Person for the deferred and unpaid  purchase price
     of property or services  which is due more than 6 months  after the date of
     placing such property in service or taking delivery of title thereto or the
     completion of such services, (other than trade payables and accrued current
     liabilities incurred in the ordinary course of such Person's business), (c)
     all  Obligations of such Person  evidenced by notes,  bonds,  debentures or
     other similar  instruments,  (d) all  Obligations of such Person created or
     arising under any conditional sale or other title retention  agreement with
     respect to property  acquired by such  Person  (even  though the rights and
     remedies  of the  seller or lender  under  such  agreement  in the event of
     default  are limited to  repossession  or sale of such  property),  (e) all
     Obligations  of such Person as lessee  under  Capitalized  Leases,  (f) all
     Obligations  of such Person under  acceptance,  letter of credit or similar
     facilities,  (g) for the purposes of Sections 5.02(b) and 6.01(e) only, all
     monetary Obligations of such Person to purchase, redeem, retire, defease or
     otherwise  make any  payment in respect  of any  Equity  Interests  in such
     Person or any other  Person or any  warrants,  rights or options to acquire
     such  capital  stock (in each case,  pursuant  to the terms of such  Equity
     Interests or capital stock) if the failure to pay such monetary obligations
     allows the holders of such Equity  Interests  or capital  stock to exercise
     remedies or additional  right against such Person,  valued,  in the case of
     Redeemable  Preferred  Interests,  at  the  greater  of  its  voluntary  or
     involuntary  liquidation preference plus accrued and unpaid dividends,  (h)


                                       7
<PAGE>

     all  Obligations of such Person in respect of Hedge  Agreements,  valued at
     the Agreement Value thereof, (i) all Contingent  Obligations of such Person
     and (j) all  indebtedness  and other  payment  Obligations  referred  to in
     clauses (a) through  (i) above of another  Person  secured by (or for which
     the holder of such Debt has an existing right,  contingent or otherwise, to
     be  secured  by)  any  Lien on  property  (including,  without  limitation,
     accounts and contract rights) owned by such Person, even though such Person
     has not assumed or become  liable for the payment of such  indebtedness  or
     other payment Obligations.

          "Debt for  Borrowed  Money" of any  Person  means all items  that,  in
     accordance with GAAP, would be classified as indebtedness on a Consolidated
     balance sheet of such Person.

          "Default"  means  any  Event  of  Default  or  any  event  that  would
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

          "Defaulted  Advance"  means,  with  respect to any Lender Party at any
     time,  the portion of any Advance  required to be made by such Lender Party
     to the Appropriate Borrower pursuant to Section 2.01 or 2.02 at or prior to
     such  time  that  has  not  been  made  by  such  Lender  Party  or by  the
     Administrative  Agent for the  account of such  Lender  Party  pursuant  to
     Section 2.02(e) as of such time. In the event that a portion of a Defaulted
     Advance  shall be deemed made  pursuant to Section  2.15(a),  the remaining
     portion of such Defaulted  Advance shall be considered a Defaulted  Advance
     originally required to be made pursuant to Section 2.01 on the same date as
     the Defaulted Advance so deemed made in part.

          "Defaulted  Amount"  means,  with  respect to any Lender  Party at any
     time,  any amount  required to be paid by such Lender Party to any Agent or
     any other  Lender Party  hereunder  or under any other Loan  Document at or
     prior to such  time that has not been so paid as of such  time,  including,
     without limitation,  any amount required to be paid by such Lender Party to
     (a) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a
     Letter of Credit Advance made by such Issuing Bank, (b) the  Administrative
     Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for
     the amount of any Advance made by the Administrative  Agent for the account
     of such Lender Party,  (c) any other Lender Party  pursuant to Section 2.13
     to purchase any  participation in Advances owing to such other Lender Party
     and (d) any Agent or the Issuing Bank pursuant to Section 8.05 to reimburse
     such Agent or the Issuing Bank for such Lender Party's ratable share of any
     amount  required  to be paid by the  Lender  Parties  to such  Agent or the
     Issuing  Bank  as  provided  therein.  In the  event  that a  portion  of a
     Defaulted  Amount  shall be deemed paid  pursuant to Section  2.15(b),  the
     remaining  portion of such Defaulted Amount shall be considered a Defaulted
     Amount  originally  required to be paid  hereunder  or under any other Loan
     Document on the same date as the Defaulted Amount so deemed paid in part.

          "Default  Termination  Notice"  has the meaning  specified  in Section
     2.01(d).

          "Defaulting Lender" means, at any time, any Lender Party that, at such
     time, (a) owes a Defaulted  Advance or a Defaulted Amount or (b) shall take
     any  action  or be  the  subject  of any  action  or  proceeding  of a type
     described in Section 6.01(f).

                                       8
<PAGE>

          "Domestic Lending Office" means, with respect to any Lender Party, the
     office of such Lender Party  specified  as its  "Domestic  Lending  Office"
     opposite its name on Schedule I hereto or in the  Assignment and Acceptance
     pursuant  to which it  became a Lender  Party,  as the case may be, or such
     other  office of such Lender  Party as such  Lender  Party may from time to
     time specify to each Borrower and the Administrative Agent.

          "EBITDA" means, with respect to any Person for any period,  the sum of
     the following,  determined on a Consolidated basis without duplication,  in
     accordance  with GAAP:  (a) net income (or net loss) of such Person and its
     Subsidiaries  for such  period plus (b) the sum of the  following  (in each
     case,  to the extent  deducted  in  determining  net income) (i) income and
     franchise tax expenses of such Person and its  Subsidiaries,  (ii) interest
     expense  of  such  Person  and  its   Subsidiaries,   (iii)   amortization,
     depreciation  and  other  non-cash  charges  and  (iv)  any   non-recurring
     extraordinary  losses,  less (c)  interest  income of such  Person  and its
     Subsidiaries and any non-recurring extraordinary gains.

          "Effective  Date"  means the first  date on which the  conditions  set
     forth in Article III shall have satisfied.

          "Eligible Assignee" means any commercial bank or financial institution
     (including,  without  limitation,  any fund that regularly invests in loans
     similar to the  Advances) as approved by the  Administrative  Agent and (so
     long as no Event of Default has occurred and is  continuing  at the time of
     such  assignment) by each Borrower (such  approvals not to be  unreasonably
     withheld); provided, however, that neither any Loan Party nor any Affiliate
     of  a  Loan  Party  shall  qualify  as  an  Eligible  Assignee  under  this
     definition.

          "Eligible  Collateral" means,  collectively,  all property,  plant and
     equipment of the Borrowers and their respective  Subsidiaries pledged under
     the Collateral  Documents and in which the Collateral Agent has a perfected
     security  interest that (i) is not subject to any Lien that is prior to the
     security  interests created under the Loan Documents and (ii) is related to
     the Internet Service Business or the Telecommunications Business.

          "Environmental  Action" means any action, suit, demand, demand letter,
     claim,  notice of  non-compliance  or  violation,  notice of  liability  or
     potential liability,  investigation,  proceeding,  consent order or consent
     agreement  relating in any way to any Environmental  Law, any Environmental
     Permit or Hazardous  Material or arising  from alleged  injury or threat to
     health, safety or the environment,  including,  without limitation,  (a) by
     any governmental or regulatory authority for enforcement, cleanup, removal,
     response,  remedial or other actions or damages and (b) by any governmental
     or  regulatory   authority  or  third  party  for  damages,   contribution,
     indemnification, cost recovery, compensation or injunctive relief.

          "Environmental  Law"  means  any  Federal,  state,  local  or  foreign
     statute,  law, ordinance,  rule,  regulation,  code, order, writ, judgment,
     injunction, decree or judicial or agency interpretation, policy or guidance
     relating to pollution or protection of the environment,  health,  safety or
     natural resources,  including,  without  limitation,  those relating to the
     use, handling,  transportation,  treatment,  storage,  disposal, release or
     discharge of Hazardous Materials.

                                       9
<PAGE>

          "Environmental  Permit"  means any  permit,  approval,  identification
     number,  license or other  authorization  required under any  Environmental
     Law.

          "Equipment"  means all  Equipment  referred to in Section  1(a) of the
     Security Agreement.

          "Equity  Interests"  means,  with  respect  to any  Person,  shares of
     capital stock of (or other  ownership or profit  interests in) such Person,
     warrants,  options or other  rights for the  purchase or other  acquisition
     from  such  Person of shares of  capital  stock of (or other  ownership  or
     profit   interests  in)  such  Person,   securities   convertible  into  or
     exchangeable  for shares of capital stock of (or other  ownership or profit
     interests  in) such Person or warrants,  rights or options for the purchase
     or other  acquisition  from  such  Person  of such  shares  (or such  other
     interests),  and  other  ownership  or  profit  interests  in  such  Person
     (including,  without  limitation,  partnership,  member or trust  interests
     therein),  whether  voting or  nonvoting,  and whether or not such  shares,
     warrants,  options,  rights or other  interests are authorized or otherwise
     existing on any date of determination.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
     amended  from time to time,  and the  regulations  promulgated  and rulings
     issued thereunder.

          "ERISA  Affiliate"  means any Person that for  purposes of Title IV of
     ERISA is a member  of the  controlled  group  of any Loan  Party,  or under
     common  control  with any Loan Party,  within the meaning of Section 414 of
     the Internal Revenue Code.

          "ERISA  Event" means  (a)(i) the  occurrence  of a  reportable  event,
     within  the  meaning  of Section  4043 of ERISA,  with  respect to any Plan
     unless the 30-day  notice  requirement  with respect to such event has been
     waived by the PBGC or (ii) the  requirements  of  Section  4043(b) of ERISA
     apply  with  respect  to a  contributing  sponsor,  as  defined  in Section
     4001(a)(13) of ERISA,  of a Plan, and an event  described in paragraph (9),
     (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
     to occur with respect to such Plan within the  following  30 days;  (b) the
     application  for a minimum  funding  waiver with respect to a Plan; (c) the
     provision  by the  administrator  of any  Plan of a  notice  of  intent  to
     terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
     such notice with respect to a plan amendment referred to in Section 4041(e)
     of ERISA);  (d) the cessation of operations at a facility of any Loan Party
     or any ERISA Affiliate in the circumstances described in Section 4062(e) of
     ERISA;  (e) the withdrawal by any Loan Party or any ERISA  Affiliate from a
     Multiple  Employer  Plan during a plan year for which it was a  substantial
     employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
     imposition of a lien under Section 302(f) of ERISA shall have been met with
     respect to any Plan;  (g) the adoption of an amendment to a Plan  requiring
     the provision of security to such Plan pursuant to Section 307 of ERISA; or
     (h) the institution by the PBGC of proceedings to terminate a Plan pursuant
     to  Section  4042 of ERISA,  or the  occurrence  of any event or  condition
     described  in  Section  4042 of  ERISA  that  constitutes  grounds  for the
     termination of, or the appointment of a trustee to administer, such Plan.

          "Eurocurrency  Liabilities" has the meaning  specified in Regulation D
     of the Board of Governors of the Federal Reserve System,  as in effect from
     time to time.

                                       10
<PAGE>

          "Eurodollar  Lending Office" means,  with respect to any Lender Party,
     the  office of such  Lender  Party  specified  as its  "Eurodollar  Lending
     Office"  opposite  its name on Schedule I hereto or in the  Assignment  and
     Acceptance  pursuant  to which it  became a Lender  Party  (or,  if no such
     office is specified,  its Domestic Lending Office), or such other office of
     such  Lender  Party as such Lender  Party may from time to time  specify to
     each Borrower and the Administrative Agent.

          "Eurodollar  Rate" means,  for any Interest  Period for all Eurodollar
     Rate Advances  comprising part of the same Borrowing,  an interest rate per
     annum equal to the rate per annum  obtained  by  dividing  (a) the rate per
     annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
     on  Telerate  Page 3750 (or any  successor  page) as the  London  interbank
     offered rate for deposits in U.S.  Dollars at 11:00 A.M.  (London time) two
     Business  Days  before the first day of such  Interest  Period for a period
     equal to such Interest  Period  (provided that, if for any reason such rate
     is not available,  the term "Eurodollar  Rate" shall mean, for any Interest
     Period  for all  Eurodollar  Rate  Advances  comprising  part  of the  same
     Borrowing,  the rate per  annum  (rounded  upwards,  if  necessary,  to the
     nearest  1/100 of 1%)  appearing on Reuters  Screen LIBO Page as the London
     interbank offered rate for deposits in U.S. Dollars at approximately  11:00
     A.M.  (London  time)  two  Business  Days  prior to the  first  day of such
     Interest  Period for a term comparable to such Interest  Period;  provided,
     however,  if more than one rate is specified  on Reuters  Screen LIBO Page,
     the applicable  rate shall be the arithmetic mean of all such rates) by (b)
     a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for
     such Interest Period.

          "Eurodollar  Rate  Advance"  means an Advance  that bears  interest as
     provided in Section 2.07(a)(ii).

          "Eurodollar  Rate Reserve  Percentage" for any Interest Period for all
     Eurodollar  Rate Advances  comprising  part of the same Borrowing means the
     reserve  percentage  applicable  two Business  Days before the first day of
     such  Interest  Period  under  regulations  issued from time to time by the
     Board of Governors of the Federal  Reserve  System (or any  successor)  for
     determining the maximum reserve requirement (including, without limitation,
     any emergency,  supplemental or other marginal  reserve  requirement) for a
     member bank of the Federal  Reserve System in New York City with respect to
     liabilities or assets consisting of or including  Eurocurrency  Liabilities
     (or with  respect  to any  other  category  of  liabilities  that  includes
     deposits  by  reference  to which  the  interest  rate on  Eurodollar  Rate
     Advances is determined) having a term equal to such Interest Period.

          "Events of Default" has the meaning specified in Section 6.01.

          "Excess Amount" has the meaning specified in Section 6.01(q).

          "Excess Cash Flow" means, for any period,

               (a) the sum of:


                                       11
<PAGE>

                    (i)  Consolidated  net income (or loss) of the Borrowers and
               their Subsidiaries for such period plus

                    (ii) the aggregate  amount of all non-cash  charges deducted
               in arriving at such Consolidated net income (or loss) plus

                    (iii) if there was a net  increase in  Consolidated  Current
               Liabilities  of the Borrower and their  Subsidiaries  during such
               period, the amount of such net increase plus

                    (iv) if there was a net  decrease  in  Consolidated  Current
               Assets (excluding cash and Cash Equivalents) of the Borrowers and
               their  Subsidiaries  during such  period,  the amount of such net
               decrease less

               (b) the sum of:

                    (i) the aggregate amount of all non-cash credits included in
               arriving at such Consolidated net income (or loss) plus

                    (ii) if there was a net  decrease  in  Consolidated  Current
               Liabilities of the Borrowers and their  Subsidiaries  during such
               period, the amount of such net decrease plus

                    (iii) if there was a net  increase in  Consolidated  Current
               Assets (excluding cash and Cash Equivalents) of the Borrowers and
               their  Subsidiaries  during such  period,  the amount of such net
               increase plus

                    (iv) the  aggregate  amount of Capital  Expenditures  of the
               Borrowers and their respective  Subsidiaries  paid in cash during
               such period to the extent permitted by this Agreement plus

                    (v)  the  aggregate   amount  of  all  regularly   scheduled
               principal payments of Funded Debt made by the Borrowers and their
               respective Subsidiaries during such period plus

                    (vi) cash  dividend  payments made to the Parent by any Loan
               Party to the extent such cash is applied by the Parent to pay any
               amount in  respect of Debt of the  Parent  permitted  by the Loan
               Documents plus

                    (vii)  the  aggregate   principal  amount  of  all  optional
               prepayments of Term Advances made during such period  pursuant to
               Section 2.06(a) plus.

                    (viii)  solely to the extent  not  deducted  in  determining
               Consolidated  net  income  (or loss) of the  Borrowers  and their
               Subsidiaries for such period and without duplication of the items
               contained in clauses (i) through (vii)  immediately  above,  cash

                                       12
<PAGE>

               tax payments to governmental  authorities or made pursuant to the
               Tax Sharing Agreement.

               "Excluded  Receivables" means (i) accounts receivable  reflecting
          amounts due for reciprocal  compensation  for traffic to the internet,
          and (ii)  accounts  receivable  which  are more than 120 days past the
          original invoice date.

               "Existing   Debt"   means   Debt  of  each  Loan  Party  and  its
          Subsidiaries  outstanding  immediately  before  giving  effect  to the
          consummation of the Transaction.

               "Extraordinary  Receipt" means any cash received by or paid to or
          for the account of any Person not in the ordinary  course of business,
          including,  without limitation, tax refunds (excluding amounts applied
          to pay  taxes  within  18 months of  receipt  thereof),  pension  plan
          reversions,  proceeds of insurance (including, without limitation, any
          key man life insurance but excluding proceeds of business interruption
          insurance to the extent such proceeds constitute compensation for lost
          earnings),   condemnation  awards  (and  payments  in  lieu  thereof),
          indemnity  payments  and any  purchase  price  adjustment  received in
          connection with any purchase  agreement;  provided,  however,  that an
          Extraordinary  Receipt shall not include cash  receipts  received from
          proceeds  of  insurance,  condemnation  awards  (or  payments  in lieu
          thereof)  or  indemnity  payments  to the extent  that such  proceeds,
          awards or  payments  (A) in  respect  of loss or damage to  equipment,
          fixed  assets or real  property  are  applied  (or in respect of which
          expenditures  were  previously  incurred)  to  replace  or repair  the
          equipment,  fixed  assets or real  property  in  respect of which such
          proceeds  were  received  in  accordance  with  the  terms of the Loan
          Documents, so long as such application is made within six months after
          the  occurrence  of such  damage  or loss or (B) are  received  by any
          Person in respect of any third  party  claim  against  such Person and
          applied to pay (or to reimburse  such Person for its prior payment of)
          such claim and the costs and  expenses  of such  Person  with  respect
          thereto.

               "Facility" means the Tranche A Facility,  the Tranche B Facility,
          the Working Capital Facility or the Letter of Credit Facility

               "FCC"  means  the  Federal   Communications   Commission  or  any
          successor  commission or agency of the United States of America having
          jurisdiction over each Borrower or any System.

               "Federal  Funds  Rate"  means,  for  any  period,  a  fluctuating
          interest  rate per annum  equal for each day during such period to the
          weighted average of the rates on overnight Federal funds  transactions
          with members of the Federal  Reserve System  arranged by Federal funds
          brokers,  as published for such day (or, if such day is not a Business
          Day, for the next preceding  Business Day) by the Federal Reserve Bank
          of New York,  or, if such rate is not so published for any day that is
          a Business  Day, the average of the  quotations  for such day for such
          transactions  received by the Administrative  Agent from three Federal
          funds brokers of recognized standing selected by it.

               "Fee Letter" means the fee letter dated June 25, 1999 between the
          Parent, the Borrowers and Morgan Stanley, as amended.

                                       13
<PAGE>

               "Fiscal  Year"  means a  fiscal  year of  each  Borrower  and its
          Consolidated Subsidiaries ending on December 31 in any calendar year.

               "Fixed   Charge   Coverage   Ratio"   means,   at  any   date  of
          determination,  the  ratio  of  (a)  EBITDA  of  the  Parent  and  its
          Subsidiaries  to (b) the Fixed  Charges,  in each  case,  of or by the
          Parent and its Subsidiaries during the two consecutive fiscal quarters
          most recently ended for which financial  statements are required to be
          delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as
          the case may be.

               "Fixed  Charges"  means,  with  respect  to the  Parent  and  its
          Subsidiaries, for any period, the sum of the following determined on a
          consolidated basis, without duplication,  in accordance with GAAP: (a)
          scheduled  principal  payments  to be  made  during  such  period  and
          Interest Expense during such period,  in respect of Debt of the Parent
          and its Subsidiaries,  (b) Capital Expenditures made by the Parent and
          its  Subsidiaries  during such period,  (c) cash taxes  payable by the
          Parent and its Subsidiaries  during such Period and (d) cash dividends
          paid by the Parent and its Subsidiaries during such period.

               "Funded  Debt"  of  any  Person  means  Debt  in  respect  of the
          Advances,  in the case of each  Borrower,  and all other  Debt of such
          Person that by its terms  matures more than one year after the date of
          determination  or  matures  within  one  year  from  such  date but is
          renewable or extendible,  at the option of such Person, to a date more
          than one year after such date or arises  under a  revolving  credit or
          similar  agreement  that  obligates  the  lender or  lenders to extend
          credit  during  a  period  of more  than one  year  after  such  date,
          including,  without  limitation,  all  amounts of Funded  Debt of such
          Person  required to be paid or prepaid  within one year after the date
          of determination.

               "GAAP" has the meaning specified in Section 1.03.

               "Grantors" has the meaning specified in the Security Agreement.

               "Gross  PP & E"  means,  collectively,  all  property,  plant and
          equipment of the Borrowers and their respective  Subsidiaries  that is
          related to the  Internet  Service  Business or the  Telecommunications
          Business.

               "ICG 161" means ICG 161 L.P., a Delaware limited partnership.

               "ICG  Corporate  Headquarters"  means ICG Corporate  Headquarters
          L.L.C., a Colorado limited liability company.

               "Guaranties"   means  the  Parent  Guaranty  and  the  Subsidiary
          Guaranty.

               "Guarantors" means the Parent and the Subsidiary Guarantors.

               "Hazardous  Materials" means (a) petroleum or petroleum products,
          by-products   or   breakdown    products,    radioactive    materials,
          asbestos-containing materials, polychlorinated biphenyls and radon gas
          and (b) any  other  chemicals,  materials  or  substances  designated,

                                       14
<PAGE>

          classified  or  regulated  as  hazardous or toxic or as a pollutant or
          contaminant under any Environmental Law.

               "Hedge  Agreements"  means  interest  rate  swap,  cap or  collar
          agreements,  interest rate future or option  contracts,  currency swap
          agreements,  currency  future or option  contracts  and other  hedging
          agreements.

               "Hedge  Bank" means any Lender  Party or an Affiliate of a Lender
          Party in its capacity as a party to a Secured Hedge Agreement.

               "ICG" means ICG Communications, Inc, a Delaware corporation.

               "ICG  Equipment"  has the  meaning  specified  in the  recital of
          parties this Agreement.

               "ICG  NetAhead"  has the  meaning  specified  in the  recital  of
          parties this Agreement.

               "ICG Total Leverage Ratio" means,  at any date of  determination,
          the ratio of (A) Total Debt of ICG and its  Subsidiaries as of the end
          of the most recently  completed  fiscal  quarter to (B) the product of
          (i) two times (ii) EBITDA of ICG and its  Subsidiaries for such fiscal
          quarter and the immediately preceding fiscal quarter.

               "Indemnified Party" has the meaning specified in Section 9.04(b).

               "Initial  Extension of Credit"  means the earlier to occur of the
          initial  Borrowing  and the  initial  issuance  of a Letter  of Credit
          hereunder.

               "Initial  Issuing Bank",  "Initial  Lender  Parties" and "Initial
          Lenders"  each has the meaning  specified in the recital of parties to
          this Agreement.

               "Insufficiency"  means,  with respect to any Plan, the amount, if
          any,  of its  unfunded  benefit  liabilities,  as  defined  in Section
          4001(a)(18) of ERISA.

               "Interest  Coverage Ratio" means, at any time of determination in
          respect  of any  Person,  the  ratio  of (a)  EBITDA  to (b)  Interest
          Expense, in each case, of or by such Person during the two consecutive
          fiscal quarters most recently ended for which financial statements are
          required to be  delivered  to the Lender  Parties  pursuant to Section
          5.03(b) or (c), as the case may be.

               "Interest  Expense"  means,  for any  period  in  respect  of any
          Person,  total accrued  interest less  accreted  interest  (including,
          without limitation,  cash interest expense attributable to Capitalized
          Leases) determined on a Consolidated basis, without  duplication,  for
          such Person and its Subsidiaries in accordance with GAAP.

               "Interest   Period"  means,  for  each  Eurodollar  Rate  Advance
          comprising  part of the same Borrowing,  the period  commencing on the
          date of such  Eurodollar Rate Advance or the date of the Conversion of
          any Base Rate Advance into such Eurodollar Rate Advance, and ending on
          the  last  day of the  period  selected  by the  Appropriate  Borrower
          pursuant to the  provisions  below and,  thereafter,  each  subsequent
          period  commencing  on  the  last  day of  the  immediately  preceding
          Interest  Period and ending on the last day of the period  selected by
          such Borrower  pursuant to the provisions  below. The duration of each
          such Interest  Period shall be one, two, three or six months or, until

                                       15
<PAGE>

          the  Syndication  Date,  7-days,  as such  Borrower  may,  upon notice
          received by the  Administrative  Agent not later than 11:00 A.M.  (New
          York City  time) on the third  Business  Day prior to the first day of
          such Interest Period, select; provided, however, that:

                    (a) the  Appropriate  Borrower  may not select any  Interest
               Period  with  respect  to any  Eurodollar  Rate  Advance  under a
               Facility that ends after any principal repayment installment date
               for such Facility unless,  after giving effect to such selection,
               the  aggregate  principal  amount  of Base Rate  Advances  and of
               Eurodollar Rate Advances  having Interest  Periods that end on or
               prior  to such  principal  repayment  installment  date  for such
               Facility  shall be at  least  equal  to the  aggregate  principal
               amount of  Advances  under such  Facility  due and  payable on or
               prior to such date;

                    (b)  whenever  the last  day of any  Interest  Period  would
               otherwise  occur on a day other than a Business Day, the last day
               of such  Interest  Period  shall be extended to occur on the next
               succeeding  Business  Day,  provided,   however,  that,  if  such
               extension  would  cause the last day of such  Interest  Period to
               occur in the next following  calendar month, the last day of such
               Interest Period shall occur on the next preceding Business Day;

                    (c) whenever the first day of any Interest  Period occurs on
               a day  of  an  initial  calendar  month  for  which  there  is no
               numerically corresponding day in the calendar month that succeeds
               such initial  calendar month by the number of months equal to the
               number of months in such Interest  Period,  such Interest  Period
               shall end on the last  Business Day of such  succeeding  calendar
               month;

                    (d)  neither of the  Borrowers  may select a 7-day  Interest
               Period on or after the Syndication Date; and

                    (e) subject to clause (a) above, if the Appropriate Borrower
               has failed to notify the Administrative Agent with respect to the
               duration of any Interest  Period,  the duration of such  Interest
               Period shall be one month.

          "Internal  Revenue  Code" means the Internal  Revenue Code of 1986, as
     amended  from time to time,  and the  regulations  promulgated  and rulings
     issued thereunder.

          "Internet Service Business" has the meaning specified in the Indenture
     dated as of February 12, 1998 between the Parent and Norwest Bank Colorado,
     National Association,  as Trustee relating to the 10% Senior Discount Notes
     issued by the Parent due 2008.

          "Inventory"  means all  Inventory  referred to in Section  1(b) of the
     Security Agreement.

          "Investment"  in any Person  means any loan or advance to such Person,
     any purchase or other  acquisition  of any Equity  Interests or Debt or the
     assets  comprising a division or business unit or a substantial part or all

                                       16
<PAGE>

     of the business of such Person, any capital  contribution to such Person or
     any other direct or indirect investment in such Person, including,  without
     limitation,  any  acquisition by way of a merger or  consolidation  and any
     arrangement  pursuant  to  which  the  investor  incurs  Debt of the  types
     referred to in clause (i) or (j) of the  definition of "Debt" in respect of
     such Person.

          "Issuing  Bank"  means  the  Initial  Issuing  Bank  and any  Eligible
     Assignee  to which  the  Letter  of Credit  Commitment  hereunder  has been
     assigned  pursuant to Section 9.07 so long as each such  Eligible  Assignee
     expressly  agrees to perform  in  accordance  with  their  terms all of the
     obligations  that  by the  terms  of  this  Agreement  are  required  to be
     performed by it as the Issuing Bank and notifies the  Administrative  Agent
     of its  Applicable  Lending  Office  and the amount of its Letter of Credit
     Commitment (which information shall be recorded by the Administrative Agent
     in the  Register),  for so long as the  Initial  Issuing  Bank or  Eligible
     Assignee, as the case may be, shall have a Letter of Credit Commitment.

          "L/C  Cash  Collateral  Account"  has  the  meaning  specified  in the
     Borrowers Security Agreement.

          "L/C  Related   Documents"  has  the  meaning   specified  in  Section
     2.04(d)(ii)(A).

          "Lead Arranger" has the meaning specified in the recital of parties to
     this Agreement.

          "Lender Party" means any Lender or the Issuing Bank.

          "Lenders"  means the Initial Lenders and each Person that shall become
     a Lender  hereunder  pursuant to Section  9.07 for so long as such  Initial
     Lender or Person, as the case may be, shall be a party to this Agreement.

          "Letter of Credit  Advance"  means an advance made by the Issuing Bank
     or any Working Capital Lender pursuant to Section 2.03(c).

          "Letter of Credit  Agreement"  has the  meaning  specified  in Section
     2.03(a).

          "Letter of Credit Commitment" means, with respect to the Issuing Bank,
     at any time,  the amount set forth  opposite  the  Issuing  Bank's  name on
     Schedule I hereto under the caption  "Letter of Credit  Commitment"  or, if
     the Issuing Bank has entered into an Assignment and  Acceptance,  set forth
     for the Issuing Bank in the Register maintained by the Administrative Agent
     pursuant  to  Section  9.07(d)  as the  Issuing  Bank's  "Letter  of Credit
     Commitment",  as such  amount  may be  reduced  at or  prior  to such  time
     pursuant to Section 2.05.

          "Letter of Credit  Facility"  means,  at any time,  an amount equal to
     $25,000,000,  as such  amount  may be  reduced  at or  prior  to such  time
     pursuant to Section 2.05.

          "Letters of Credit" has the meaning specified in Section 2.01(d).

                                       17
<PAGE>

          "Lien"  means  any  lien,   security   interest  or  other  charge  or
     encumbrance  of any kind,  or any other type of  preferential  arrangement,
     including,  without  limitation,  the lien or retained  security title of a
     conditional  vendor and any easement,  right of way or other encumbrance on
     title to real property.

          "Loan  Documents"  means (a) for  purposes of this  Agreement  and the
     Notes and any amendment,  supplement or modification hereof or thereof, (i)
     this Agreement,  (ii) the Notes, (iii) the Guaranties,  (iv) the Collateral
     Documents, (v) the Fee Letter, and (vi) each Letter of Credit Agreement and
     (b) for purposes of the Guaranties and the Collateral Documents and for all
     other purposes other than for purposes of this Agreement and the Notes, (i)
     this Agreement,  (ii) the Notes, (iii) the Guaranties,  (iv) the Collateral
     Documents,  (v) the Fee Letter,  (vi) each Letter of Credit Agreement,  and
     (vii) each Secured Hedge Agreement.

          "Loan  Parties"  means the  Borrowers and the  Guarantors  (including,
     without limitation, the Parent).

          "Loan Value" means 70% of the gross book value of any item of Eligible
     Collateral.

          "Margin Stock" has the meaning specified in Regulation U.

          "Material  Adverse  Change" means any material  adverse  change in the
     business,  condition  (financial or  otherwise),  operations,  performance,
     properties  or  prospects  of the  Parent and its  Subsidiaries  taken as a
     whole.

          "Material  Adverse Effect" means a material  adverse effect on (a) the
     business,  condition  (financial or  otherwise),  operations,  performance,
     properties  or  prospects  of the  Parent and its  Subsidiaries  taken as a
     whole,  (b) the rights and  remedies of any Agent or any Lender Party under
     any  Transaction  Document  or (c) the ability of any Loan Party to perform
     its Obligations under any Transaction Document to which it is or is to be a
     party.

          "Material  Contract"  means (i) each  agreement  described as a Master
     Lease  Agreement,  and each  agreement in the nature of a master lease,  to
     which ICG  Equipment is a party as lessor,  (ii) any other  material  lease
     agreement to which ICG  Equipment is a party as lessor and (iii) each other
     contract to which  either  Borrower or any of its  Subsidiaries  is a party
     involving  aggregate   consideration  payable  to  or  by  such  Person  of
     $5,000,000  or more in any  year or  otherwise  material  to the  business,
     condition (financial or otherwise), operations,  performance, properties or
     prospects of such Person.

          "Morgan  Stanley" has the meaning  specified in the recital of parties
     to this Agreement.

          "Mortgages" has the meaning specified in Section 3.01(a)(v).

          "Mortgage   Policies"   has   the   meaning   specified   in   Section
     3.01(a)(v)(B).

          "Multiemployer Plan" means a multiemployer plan, as defined in Section
     4001(a)(3)  of ERISA,  to which any Loan  Party or any ERISA  Affiliate  is
     making or accruing an obligation to make  contributions,  or has within any

                                       18
<PAGE>

     of the  preceding  five plan years made or  accrued an  obligation  to make
     contributions.

          "Multiple  Employer Plan" means a single  employer plan, as defined in
     Section  4001(a)(15) of ERISA,  that (a) is maintained for employees of any
     Loan Party or any ERISA  Affiliate  and at least one Person  other than the
     Loan  Parties  and the ERISA  Affiliates  or (b) was so  maintained  and in
     respect of which any Loan Party or any ERISA Affiliate could have liability
     under Section 4064 or 4069 of ERISA in the event such plan has been or were
     to be terminated.

          "Net Cash Proceeds" means, with respect to any sale,  lease,  transfer
     or other  disposition  of any asset  other than in the  ordinary  course of
     business,  or any  Extraordinary  Receipt received by or paid to or for the
     account of any Person,  the aggregate  amount of cash received from time to
     time (whether as initial consideration or through payment or disposition of
     deferred  consideration)  by or on behalf of such Person in connection with
     such transaction after deducting  therefrom only (without  duplication) (a)
     brokerage commissions,  underwriting or placement agent fees and discounts,
     legal fees,  accountant's  and consultant's  fees,  finder's fees and other
     similar fees and commissions, (b) provision for the amount of taxes payable
     in connection  with or as a result of such  transaction,  (c) the amount of
     any  Debt  secured  by a Lien on  such  asset  that,  by the  terms  of the
     agreement or instrument  governing such Debt, is required to be repaid upon
     such disposition,  in each case to the extent, but only to the extent, that
     the amounts so deducted are, at the time of receipt of such cash,  actually
     paid to a Person that is not an  Affiliate of such Person or any Loan Party
     or any  Affiliate of any Loan Party and are properly  attributable  to such
     transaction or to the asset that is the subject  thereof and (d) such other
     reserves as are required by GAAP;  provided,  however,  that in the case of
     taxes that are deductible  under clause (b) above but for the fact that, at
     the time of receipt of such cash, such taxes have not been actually paid or
     are not then  payable,  such Loan  Party or such  Subsidiary  may deduct an
     amount (the "Reserved  Amount") equal to the amount  reserved in accordance
     with GAAP for such Loan Party's or such Subsidiary's reasonable estimate of
     such taxes,  other than taxes for which such Loan Party or such  Subsidiary
     is indemnified, provided further, however, that, at the time such taxes are
     paid, an amount equal to the amount,  if any, by which the Reserved  Amount
     for such  taxes  exceeds  the  amount of such  taxes  actually  paid  shall
     constitute  "Net Cash  Proceeds"  of the type for  which  such  taxes  were
     reserved  for all  purposes  hereunder;  provided  further  that  "Net Cash
     Proceeds  " shall not  include  any  proceeds  that are  reinvested  in the
     Internet  Service  Business  or  the  Telecommunications  Business  of  the
     Borrowers and their respective Subsidiaries so long as such reinvestment is
     made within 270 days after the receipt of such proceeds.

          "Note" means a Tranche A Term Note, a Tranche B Term Note or a Working
     Capital Note.

          "Notice of Borrowing" has the meaning specified in Section 2.02(a).

          "Notice of Issuance" has the meaning specified in Section 2.03(a).

          "Notice of Renewal" has the meaning specified in Section 2.01 (d).



                                       19
<PAGE>

          "Notice of Termination" has the meaning specified in Section 2.01(d).

          "NPL" means the National Priorities List under CERCLA.

          "Obligation"   means,  with  respect  to  any  Person,   any  payment,
     performance  or other  obligation  of such  Person of any kind,  including,
     without limitation,  any liability of such Person on any claim,  whether or
     not the right of any  creditor  to  payment  in  respect  of such  claim is
     reduced to judgment, liquidated,  unliquidated, fixed, contingent, matured,
     disputed,  undisputed,  legal, equitable, secured or unsecured, and whether
     or not such  claim is  discharged,  stayed  or  otherwise  affected  by any
     proceeding referred to in Section 6.01(f).  Without limiting the generality
     of the  foregoing,  the  Obligations  of any  Loan  Party  under  the  Loan
     Documents include (a) the obligation to pay principal,  interest, Letter of
     Credit  commissions,   charges,   expenses,   fees,   attorneys'  fees  and
     disbursements,  indemnities  and other  amounts  payable by such Loan Party
     under  any Loan  Document  and (b) the  obligation  of such  Loan  Party to
     reimburse  any amount in respect  of any of the  foregoing  that any Lender
     Party, in its reasonable discretion,  may elect to pay or advance on behalf
     of such Loan Party.

          "Open Year" has the meaning specified in Section 4.01(q)(ii).

          "Other Taxes" has the meaning specified in Section 2.12(b).

          "Parent"  has the  meaning  set forth in the  recital  of the  parties
     hereto.

          "Parent Guaranty" means the guaranty contained in Article VII hereof.

          "Parent Total Leverage Ratio" means, at any date of determination, the
     ratio of (A) Total Debt of the Parent and its Subsidiaries as of the end of
     the most recently  completed  fiscal  quarter to (B) the product of (i) two
     times  (ii)  EBITDA of the  Parent  and its  Subsidiaries  for such  fiscal
     quarter and the immediately preceding fiscal quarter.

          "PBGC"  means  the  Pension  Benefit  Guaranty   Corporation  (or  any
     successor).

          "Permitted  Liens"  means  such  of  the  following  as  to  which  no
     enforcement,  collection,  execution,  levy or foreclosure proceeding shall
     have been commenced: (i) Liens for taxes, assessments, governmental charges
     or claims  that are being  contested  in good  faith by  appropriate  legal
     proceedings  promptly  instituted and diligently  conducted and for which a
     reserve or other  appropriate  provision,  if any,  as shall be required in
     conformity  with GAAP shall have been made;  (ii)  statutory and common law
     Liens  of  landlords  and  carriers,  warehousemen,  mechanics,  attorneys,
     suppliers,  materialmen,  repairmen or other  similar  Liens arising in the
     ordinary  course of business,  unexercised  rights of set off, in each case
     with  respect to  amounts  not yet  delinquent  or that are bonded or being
     contested  in  good  faith  by  appropriate  legal   proceedings   promptly
     instituted  and  diligently  conducted  and for  which a  reserve  or other
     appropriate provision, if any, as shall be required in conformity with GAAP
     shall have been made; (iii) Liens incurred or deposits made in the ordinary
     course of business in connection with workers'  compensation,  unemployment
     insurance  and other  types of social  security;  (iv)  Liens  incurred  or
     deposits made to secure the performance of tenders, bids, leases, licenses,
     statutory  or  regulatory   obligations,   bankers'  acceptances,   surety,

                                       20
<PAGE>

     indemnity,  performance  and appeal bonds,  trade or government  contracts,
     performance and  return-of-money  bonds and other  obligations of a similar
     nature  incurred  in  the  ordinary   course  of  business   (exclusive  of
     obligations for the payment of borrowed  money);  (v) easements  (including
     reciprocal easement  agreements),  rights-of-way,  municipal,  building and
     zoning  ordinances  and similar  charges,  utility  agreements,  covenants,
     reservations,  restrictions,  encroachments,  charges, encumbrances,  title
     defects or other  irregularities that do not materially  interfere with the
     ordinary  course of business of any Loan Party or any of its  Subsidiaries;
     (vi) leases,  subleases,  licenses and rights-of-use  granted to others and
     rights of purchase  pursuant to  installment  sales that do not  materially
     interfere with the ordinary  course of business of any Loan Party or any of
     its  Subsidiaries;  (vii) any interest or title of a lessor in the property
     subject to any Capitalized  Lease or operating lease;  (viii) Liens arising
     from filing Uniform Commercial Code financing  statements  regarding leases
     or  installment  sales;  (ix) Liens on property of, or on shares of capital
     stock or Debt,  any Person  existing  at the time such Person  becomes,  or
     becomes a part of, any  Subsidiary  of any Loan Party;  provided  that such
     Liens do not extend to or cover any property or assets of any Loan Party or
     any  Subsidiary  of any Loan  Party of other  than the  property  or assets
     acquired;  (x) Liens in favor of any Loan  Party or any  Subsidiary  of any
     Loan Party;  (xi) Liens arising from the  rendering of a final  judgment or
     order against any Loan Party or any  Subsidiary of any Loan Party that does
     not give rise to an Event of Default;  (xii) Liens  securing  reimbursement
     obligations  with respect to letters of credit that encumber  documents and
     other  property  relating to such  letters of credit and the  products  and
     proceeds thereof;  (xiii) Liens in favor of customs and revenue authorities
     arising  as a  matter  of  law to  secure  payment  of  customs  duties  in
     connection  with the  importation of goods;  and (xiv) Liens arising out of
     conditional  sale,  installment  sales,  title  retention,  consignment  or
     similar  arrangements  for the sale of goods entered into by any Loan Party
     or any of its Subsidiaries in the ordinary course of business.

          "Person" means an individual,  partnership,  corporation  (including a
     business trust),  limited liability  company,  joint stock company,  trust,
     unincorporated association,  joint venture or other entity, or a government
     or any political subdivision or agency thereof.

          "Plan" means a Single Employer Plan or a Multiple Employer Plan.

          "Pledged Debt" has the meaning specified in the Security Agreement.

          "Pre-Commitment Information" means all information (including, without
     limitation, any confidential information) that any Loan Party has furnished
     to any Agent or Lender  Party at or prior to the date of, or in  connection
     with, the Commitment Letter.

          "Preferred  Interests"  means,  with  respect  to any  Person,  Equity
     Interests  issued by such  Person  that are  entitled  to a  preference  or
     priority  over any other  Equity  Interests  issued by such Person upon any
     distribution of such Person's  property and assets,  whether by dividend or
     upon liquidation.

          "Prepayment Amount" has the meaning specified in Section 5.03(a).

          "Prepayment Date" has the meaning specified in Section 5.03(a).



                                       21
<PAGE>

          "Prepayment Notice" has the meaning specified in Section 5.03(a).

          "Pro Rata  Share" of any amount  means,  with  respect to any  Working
     Capital Lender at any time, the product of such amount times a fraction the
     numerator  of  which  is  the  amount  of  such  Lender's  Working  Capital
     Commitment at such time (or, if the Commitments  shall have been terminated
     pursuant to Section 2.05 or 6.01, such Lender's Working Capital  Commitment
     as in effect  immediately prior to such termination) and the denominator of
     which is the Working Capital  Facility at such time (or, if the Commitments
     shall have been  terminated  pursuant to Section 2.05 or 6.01,  the Working
     Capital Facility as in effect immediately prior to such termination).

          "PUC"  means  any  state  governmental  authority  having  utility  or
     telecommunications authority over any Borrower or any System.

          "Receivables" means all Receivables referred to in Section 1(c) of the
     Security Agreement.

          "Redeemable"  means, with respect to any Equity Interest,  any Debt or
     any other right or Obligation,  any such Equity  Interest,  Debt,  right or
     Obligation  that (a) the  issuer  has  undertaken  to  redeem at a fixed or
     determinable  date or dates,  whether  by  operation  of a sinking  fund or
     otherwise,  or upon the  occurrence  of a condition  not solely  within the
     control of the issuer or (b) is redeemable at the option of the holder.

          "Reduction Amount" has the meaning specified in Section 2.06 (b)(iv).

          "Register" has the meaning specified in Section 9.07(d).

          "Regulation  U" means  Regulation  U of the Board of  Governors of the
     Federal Reserve System, as in effect from time to time.

          "Related Documents" means the Tax Sharing Agreement.

          "Required  Lenders"  means,  at any time,  Lenders  owed or holding at
     least a majority  in  interest  of the sum of (a) the  aggregate  principal
     amount  of the  Advances  outstanding  at  such  time,  (b)  the  aggregate
     Available Amount of all Letters of Credit outstanding at such time, (c) the
     aggregate  Unused  Tranche  A Term  Commitments  at such  time  and (d) the
     aggregate  Unused  Working  Capital  Commitments  at such  time;  provided,
     however,  that if any  Lender  shall be a  Defaulting  Lender at such time,
     there shall be excluded from the  determination of Required Lenders at such
     time (A) the  aggregate  principal  amount  of the  Advances  owing to such
     Lender (in its capacity as a Lender) and outstanding at such time, (B) such
     Lender's Pro Rata Share of the aggregate Available Amount of all Letters of
     Credit  outstanding at such time, (C) the Unused Tranche A Term  Commitment
     of such Lender at such time and (D) the Unused Working  Capital  Commitment
     of such Lender at such time. For purposes of this definition, the aggregate
     principal amount of the Letter of Credit Advances owing to the Issuing Bank
     and the Available Amount of each Letter of Credit shall be considered to be
     owed to the  Working  Capital  Lenders  ratably  in  accordance  with their
     respective Working Capital Commitments.

                                       22
<PAGE>

          "Responsible  Officer"  means any  officer of any Loan Party or any of
     its Subsidiaries.

          "Restricted  Subsidiary"  has the meaning  specified in the  Indenture
     dated as of February 12, 1998 between the Parent and Norwest Bank Colorado,
     National  Association  as  Trustee,  in respect of the 10% Senior  Discount
     Notes due 2008.

          "Revenue" means, for any period,  Consolidated revenues of ICG and its
     Subsidiaries  for such  period as  determined  on a  Consolidated  basis in
     accordance with GAAP.

          "Secured  Hedge  Agreement  " means any Hedge  Agreement  required  or
     permitted  under Article V that is entered into by a Borrower and any Hedge
     Bank.

          "Secured  Obligations"  has the meaning  specified in Section 2 of the
     Security Agreement.

          "Secured  Parties" means the Agents,  the Lender Parties and the Hedge
     Banks.

          "Security Agreement" has the meaning specified in Section 3.01(a)(ii).

          "Senior  Secured  Debt"  means,  at any  date of  determination,  with
     respect to the Parent and its Subsidiaries,  all Debt of the Parent and its
     Subsidiaries  that is either  secured by a Lien on any assets of the Parent
     and/or any of its Subsidiaries or is not Subordinated Debt.

          "Senior Secured Debt Ratio" means, at any date of  determination,  the
     ratio  of (a)  Senior  Secured  Debt  as of the  end of the  most  recently
     completed fiscal quarter to (b) the product of (i) two times (ii) EBITDA of
     the Parent and its Subsidiaries for such fiscal quarter and the immediately
     preceding fiscal quarter.

          "Senior  Secured Debt Service"  means,  with respect to the Parent and
     its  Subsidiaries,  for any period,  the sum of (a) the aggregate amount of
     all principal of, interest  accrued on, and premium,  if any, on any Senior
     Secured  Debt  that is due  and  payable  during  such  period  and (b) the
     aggregate amount of all fees, costs,  expenses,  indemnification  payments,
     insurance policy premiums and other amounts, in each case, that are due and
     payable with respect to such Debt during such period.

          "Senior  Secured Debt Service  Coverage  Ratio" means,  at any date of
     determination,  the ratio of (a) EBITDA of the Parent and its  Subsidiaries
     for the two most  recently  ended  fiscal  quarters of the Parent for which
     financial  statements  are required to be  delivered to the Lender  Parties
     pursuant  to  Section  5.03(b)  or (c),  as the case may be, to (b)  Senior
     Secured Debt Service for such two fiscal quarters.

          "Single  Employer  Plan" means a single  employer  plan, as defined in
     Section  4001(a)(15) of ERISA,  that (a) is maintained for employees of any
     Loan Party or any ERISA Affiliate and no Person other than the Loan Parties
     and the ERISA  Affiliates or (b) was so maintained  and in respect of which
     any Loan Party or any ERISA  Affiliate  could have liability  under Section
     4069 of ERISA in the event such plan has been or were to be terminated.

                                       23
<PAGE>

          "Solvent"  and  "Solvency"  mean,  with  respect  to any  Person  on a
     particular  date,  that on such date (a) the fair value of the  property of
     such Person is greater  than the total  amount of  liabilities,  including,
     without limitation, contingent liabilities, of such Person, (b) the present
     fair salable value of the assets of such Person is not less than the amount
     that will be required to pay the  probable  liability of such Person on its
     debts as they become absolute and matured,  (c) such Person does not intend
     to, and does not believe that it will,  incur debts or  liabilities  beyond
     such Person's  ability to pay such debts and liabilities as they mature and
     (d) such Person is not engaged in  business  or a  transaction,  and is not
     about to engage in  business  or a  transaction,  for which  such  Person's
     property would  constitute an  unreasonably  small  capital.  The amount of
     contingent liabilities at any time shall be computed as the amount that, in
     the  light  of all the  facts  and  circumstances  existing  at such  time,
     represents  the amount that can  reasonably be expected to become an actual
     or matured liability.

          "Standby Letter of Credit" means any Letter of Credit issued under the
     Letter of Credit Facility, other than a Trade Letter of Credit.

          "Subordinated  Debt"  means  any  Debt  of  any  Loan  Party  that  is
     subordinated to the Obligations of such Loan Party under the Loan Documents
     on, and that otherwise contains,  terms and conditions  satisfactory to the
     Required Lenders.

          "Subordinated  Debt Documents"  means all  agreements,  indentures and
     instruments  pursuant to which Subordinated Debt is issued, in each case as
     amended, to the extent permitted under the Loan Documents.

          "Subsidiary" of any Person means any  corporation,  partnership  joint
     venture,  limited  liability company trust or estate of which (or in which)
     more  than 50% of (a) the  issued  and  outstanding  capital  stock  having
     ordinary voting power to elect a majority of the Board of Directors of such
     corporation (irrespective of whether at the time capital stock of any other
     class or classes of such corporation  shall or might have voting power upon
     the  occurrence  of any  contingency),  (b) the  interest in the capital or
     profits of such partnership,  joint venture or limited liability company or
     (c) the beneficial interest in such trust or estate is at the time directly
     or indirectly owned or controlled by such Person, by such Person and one or
     more of its other  Subsidiaries  or by one or more of such  Person's  other
     Subsidiaries;  provided, however, that, solely for the purposes of Sections
     5.01(j) and 5.02(d),  (e), (g), (j) and (l), "Subsidiary" shall not include
     ICG 161 and ICG Corporate Headquarters.

          "Subsidiary Guarantors" means the Subsidiaries of the Borrowers listed
     on Schedule II hereto and each other  Subsidiary  of each  Borrower  (other
     than ICG 161 and ICG  Corporate  Headquarters)  that shall be  required  to
     execute and deliver a guaranty pursuant to Section 5.01(j).

          "Subsidiary   Guaranty"   has  the   meaning   specified   in  Section
     3.01(a)(iii).

          "Syndication  Date"  means  the  earlier  to occur of (a) the 30th day
     following  the Effective  Date and (b) the date upon which the  Syndication
     Agent  has  determined  in its sole  discretion  (and has so  notified  the
     Borrowers)  that  the  primary  syndication  of  the  Facilities  has  been
     completed.

                                       24
<PAGE>

          "System"  means  each  data  communications,   telecommunications   or
     information  system  (including,   without  limitation,  any  voice,  video
     transmission,  data or Internet  services),  and any related,  ancillary or
     complementary  services,   owned  by  the  Borrowers  or  their  respective
     Subsidiaries and all replacements, enhancements or additions thereto.

          "Syndication Period" has the meaning specified in Section 2.02(b).

          "Tax Sharing  Agreement" means the Tax Sharing  Agreement between ICG,
     the Parent and each of the Borrowers dated as of August 9, 1999.

          "Taxes" has the meaning specified in Section 2.12(a).

          "Telecommunications   Business"  has  the  meaning  specified  in  the
     Indenture dated as of February 12, 1998 between the Parent and Norwest Bank
     Colorado,  National  Association,  as Trustee, in respect of the 10% Senior
     Discount Notes due 2008.

          "Term  Advance"  means a  Tranche A Term  Advance  or a Tranche B Term
     Advance.

          "Term  Borrowing" means a Tranche A Term Borrowing or a Tranche B Term
     Borrowing.

          "Term  Commitment"  means a Tranche A Term  Commitment  or a Tranche B
     Term Commitment.

          "Term  Facility"  means the  Tranche A Term  Facility or the Tranche B
     Term Facility.

          "Term  Lender"  means a  Tranche A Term  Lender or the  Tranche B Term
     Lender.

          "Term Note" means a Tranche A Term Note or the Tranche B Term Note.

          "Total Debt" means, at any date of determination,  with respect to any
     Person  and its  Subsidiaries,  the sum of the  following  determined  on a
     Consolidated basis, without  duplication,  in accordance with GAAP: (a) all
     liabilities,  obligations and indebtedness  for borrowed money,  including,
     but not limited to, obligations  evidenced by bonds,  debentures,  notes or
     other  similar  instruments,  (b) all  obligations  to pay the deferred and
     unpaid  purchase  price of property  or  services  which is due more than 6
     months after placing such  property in service or taking  delivery or title
     thereto or the  completion  of such  services,  (exclusive of rent for real
     property  for which the  associated  lease would not be  capitalized  under
     GAAP), including, but not limited to, all obligations under non-competition
     agreements,  excluding  trade  payables  and  accrued  current  liabilities
     arising in the ordinary course of business,  (c) all obligations as lessees
     under capital leases (other than the interest component  thereof),  (d) all
     guaranty obligations, (e) all obligations,  liabilities and indebtedness of
     any other  Person  secured  by a Lien on any asset of such  Person  and its
     Subsidiaries, (f) all obligations, contingent or otherwise, relative to the
     face  amount  of  letters  of  credit   (excluding   those  that  are  cash
     collateralized),  whether or not drawn and banker's  acceptances issued for
     the  account  of any of  such  Person  and  its  Subsidiaries,  and (g) all

                                       25
<PAGE>

     Obligations  of such Person in respect of Hedge  Agreements,  valued at the
     Agreement Value thereof.

          "Trade  Letter of Credit"  means any  Letter of Credit  that is issued
     under the  Letter of Credit  Facility  for the  benefit  of a  supplier  of
     Inventory to either  Borrower or any of its  Subsidiaries to effect payment
     for such Inventory.

          "Tranche A Term  Advance"  means an advance made by any Tranche A Term
     Lender pursuant to Section 2.01(a).

          "Tranche  A  Term   Borrowing"   means  a  borrowing   consisting   of
     simultaneous Tranche A Advances pursuant to Section 2.02(b).

          "Tranche A Term Commitment"  means, with respect to any Tranche A Term
     Lender at any time,  the amount set forth  opposite  such  Lender's name on
     Schedule I hereto under the caption "Tranche A Term Commitment" or, if such
     Lender  has  entered  into  one or more  Assignment  and  Acceptances,  the
     aggregate  amount set forth for such Lender in the Register  maintained  by
     the  Administrative  Agent  pursuant  to Section  9.07(d) as such  Lender's
     "Tranche A Term  Commitment",  as such amount may be reduced at or prior to
     such time pursuant to Section 2.05.

          "Tranche A Term Facility"  means, at any time, the aggregate amount of
     the Tranche A Term Lenders' Tranche A Term Commitments at such time.

          "Tranche A Term  Lender"  means any  Lender  that has a Tranche A Term
     Commitment.

          "Tranche A Term Note" means a promissory note of each Borrower payable
     to the order of any Tranche A Term  Lender,  in  substantially  the form of
     Exhibit A-1 hereto,  evidencing the  indebtedness  of such Borrower to such
     Lender  resulting  from  each  Tranche  A  Advance  made  by  such  Lender,
     evidencing the  indebtedness of such Borrower to such Lender resulting from
     each such Tranche A Term Advance made by such Lender, as amended.

          "Tranche A Termination  Date" means,  for the Tranche A Term Facility,
     the  earlier of (a) June 30, 2005 and (b) the  termination  in whole of the
     Tranche A Term Commitments pursuant to Section 2.05 or 6.01.

          "Tranche B Term  Advance"  means an advance made by any Tranche B Term
     Lender pursuant to Section 2.01(b).

          "Tranche  B  Term   Borrowing"   means  a  borrowing   consisting   of
     simultaneous Tranche B Advances pursuant to Section 2.02(b).

          "Tranche B Term Commitment"  means, with respect to any Tranche B Term
     Lender,  the amount set forth  opposite  such  Lender's  name on Schedule I
     hereto under the caption "Tranche B Term Commitment" or, if such Lender has
     entered into one or more Assignment and  Acceptances,  the aggregate amount
     set forth for such Lender in the Register  maintained by the Administrative
     Agent  pursuant  to  Section  9.07(d)  as  such  Lender's  "Tranche  B Term

                                       26
<PAGE>

     Commitment",  as such  amount  may be  reduced  at or  prior  to such  time
     pursuant to Section 2.05.

          "Tranche B Term Facility"  means, at any time, the aggregate amount of
     the Tranche B Term Lenders' Tranche B Term Commitments at such time.

          "Tranche B Term  Lender"  means any  Lender  that has a Tranche B Term
     Commitment.

          "Tranche B Term Note" means a promissory note of each Borrower payable
     to the order of any Tranche B Term  Lender,  in  substantially  the form of
     Exhibit A-2 hereto,  evidencing the  indebtedness  of such Borrower to such
     Lender  resulting  from  each  Tranche  B  Advance  made  by  such  Lender,
     evidencing the  indebtedness of such Borrower to such Lender resulting from
     each such Tranche B Term Advance made by such Lender, as amended.

          "Tranche B Termination  Date" means,  for the Tranche B Term Facility,
     the earlier of (a) March 31, 2006, and (b) the  termination in whole of the
     Tranche B Term Commitments pursuant to Section 2.05 or 6.01.

          "Transaction  Documents" means,  collectively,  the Loan Documents and
     the Related Documents.

          "Type" refers to the distinction  between Advances bearing interest at
     the Base Rate and Advances bearing interest at the Eurodollar Rate.

          "Unused Tranche A Term Commitment"  means, with respect to any Tranche
     A Term Lender at any time, (a) such Lender=s  Tranche A Term  Commitment at
     such time minus (b) the  aggregate  principal  amount of all Tranche A Term
     Advances made by such Lender and outstanding at such time.

          "Unused Working Capital Commitment" means, with respect to any Working
     Capital Lender at any time, (a) such Lender's Working Capital Commitment at
     such time minus (b) the sum of (i) the  aggregate  principal  amount of all
     Working  Capital  Advances  and  (without  duplication)  Letter  of  Credit
     Advances made by such Lender (in its capacity as a Lender) and  outstanding
     at such time plus (ii) such  Lender's  Pro Rata Share of (A) the  aggregate
     Available Amount of all Letters of Credit  outstanding at such time and (B)
     the aggregate principal amount of all Letter of Credit Advances made by the
     Issuing Bank pursuant to Section 2.03(c) and outstanding at such time.

          "Voting   Interests"  means  shares  of  capital  stock  issued  by  a
     corporation,  or  equivalent  Equity  Interests  in any other  Person,  the
     holders of which are ordinarily, in the absence of contingencies,  entitled
     to vote for the  election  of  directors  (or  persons  performing  similar
     functions) of such Person,  even if the right so to vote has been suspended
     by the happening of such a contingency.

                                       27
<PAGE>

          "Welfare  Plan" means a welfare  plan,  as defined in Section  3(1) of
     ERISA,  that is maintained for employees of any Loan Party or in respect of
     which any Loan Party could have liability.

          "Withdrawal Liability" has the meaning specified in Part I of Subtitle
     E of Title IV of ERISA.

          "Working  Capital  Advance"  has  the  meaning  specified  in  Section
     2.01(c).

          "Working   Capital   Borrowing"   means  a  borrowing   consisting  of
     simultaneous  Working Capital Advances of the same Type made by the Working
     Capital Lenders.

          "Working  Capital  Commitment"  means,  with  respect  to any  Working
     Capital  Lender at any time,  the amount set forth  opposite  such Lender's
     name on Schedule I hereto under the caption  "Working  Capital  Commitment"
     or, if such Lender has entered into one or more Assignment and Acceptances,
     set forth for such Lender in the Register  maintained by the Administrative
     Agent  pursuant  to  Section  9.07(d)  as such  Lender's  "Working  Capital
     Commitment",  as such  amount  may be  reduced  at or  prior  to such  time
     pursuant to Section 2.05.

          "Working Capital Facility" means, at any time, the aggregate amount of
     the Working Capital Lenders' Working Capital Commitments at such time.

          "Working  Capital  Termination  Date" means,  for the Working  Capital
     Facility  and the Letter of Credit  Facility,  the  earlier of (a) June 30,
     2005 and (b) the  termination in whole of the Working  Capital  Commitments
     and the Letter of Credit Commitments pursuant to Section 2.05 or 6.01.

          "Working  Capital  Lender" means any Lender that has a Working Capital
     Commitment.

          "Working  Capital  Note"  means a  promissory  note  of each  Borrower
     payable to the order of any Working Capital Lender,  in  substantially  the
     form of Exhibit A-3 hereto,  evidencing the aggregate  indebtedness of such
     Borrower to such Lender  resulting  from the Working  Capital  Advances and
     Letter of Credit Advances, as amended.

     SECTION 1.02. Computation of Time Periods;  Other Definitional  Provisions.
In this Agreement and the other Loan Documents in the  computation of periods of
time from a specified  date to a later  specified  date,  the word "from"  means
"from  and  including"  and  the  words  "to"  and  "until"  each  mean  "to but
excluding".  References  in the Loan  Documents to any agreement or contract "as
amended" shall mean and be a reference to such agreement or contract as amended,
amended and restated,  supplemented  or otherwise  modified from time to time in
accordance with its terms.

     SECTION 1.03.  Accounting  Terms.  All  accounting  terms not  specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial statements referred to in Section 4.01(g) ("GAAP").

                                       28
<PAGE>


                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

     SECTION  2.01.  The Advances  and the Letters of Credit.  (a) The Tranche A
Term Advances.  Each Tranche A Term Lender  severally  agrees,  on the terms and
conditions  hereinafter set forth, to make advances (a "Tranche A Term Advance")
to the  Appropriate  Borrower  on the  Effective  Date  and,  from  time to time
thereafter,  on any Business Day during the period from the Effective Date until
August 10, 2000 in an amount for each such  Advance not to exceed such  Lender's
Unused  Tranche A Term  Commitment at such time.  Each Tranche A Term  Borrowing
shall be in an  aggregate  amount  of  $5,000,000  or an  integral  multiple  of
$1,000,000  in excess  thereof and shall consist of Tranche A Term Advances made
simultaneously  by the Tranche A Term Lenders ratably according to their Tranche
A Term  Commitments.  Amounts  borrowed under this Section 2.01(a) and repaid or
prepaid may not be reborrowed.

     (b) The  Tranche B Term  Advances.  Each  Tranche B Term  Lender  severally
agrees,  on the terms and  conditions  hereinafter  set forth,  to make a single
advance (a "Tranche B Term  Advance") to the Borrowers on the Effective  Date in
an amount not to exceed such  Lender's  Tranche B Term  Commitment at such time.
The  Tranche B Term  Borrowing  shall  consist of Tranche B Term  Advances  made
simultaneously  by the Tranche B Term Lenders ratably according to their Tranche
B Term  Commitments.  Amounts  borrowed under this Section 2.01(b) and repaid or
prepaid may not be reborrowed.

     (c) The Working Capital  Advances.  Each Working  Capital Lender  severally
agrees,  on the terms and  conditions  hereinafter  set forth,  to make advances
(each a "Working Capital Advance") to the Appropriate Borrower from time to time
on any Business Day during the period from the Effective  Date until the Working
Capital  Termination  Date in an amount for each such Advance not to exceed such
Lender's  Unused Working  Capital  Commitment at such time. Each Working Capital
Borrowing shall be in an aggregate amount of $1,000,000 or an integral  multiple
of $500,000 in excess  thereof  (other  than a Borrowing  the  proceeds of which
shall be used  solely to repay or prepay  in full  outstanding  Letter of Credit
Advances) and shall consist of Working Capital Advances made  simultaneously  by
the  Working  Capital  Lenders  ratably   according  to  their  Working  Capital
Commitments.  Within the limits of each Working Capital  Lender's Unused Working
Capital  Commitment in effect from time to time,  each Borrower may borrow under
this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(c).

     (d) The  Letters of  Credit.  The  Issuing  Bank  agrees,  on the terms and
conditions  hereinafter  set forth,  to issue (or cause its Affiliate  that is a
commercial  bank to issue on its  behalf)  letters of credit  (the  "Letters  of
Credit") for the account of the  Appropriate  Borrower  from time to time on any
Business Day during the period from the Effective  Date until 60 days before the
Working Capital  Termination  Date in an aggregate  Available Amount (i) for all
Letters  of Credit  not to exceed  at any time the  lesser of (x) the  Letter of
Credit  Facility  at such  time and (y) the  Issuing  Bank's  Letter  of  Credit
Commitment at such time and (ii) for each such Letter of Credit not to exceed an
amount equal to the Unused Working  Capital  Commitments of the Working  Capital
Lenders  at such  time.  No Letter  of  Credit  shall  have an  expiration  date
(including all rights of the Appropriate  Borrower or the beneficiary to require



                                       29
<PAGE>

renewal)  later  than  the  earlier  of  60  days  before  the  Working  Capital
Termination  Date and (A) in the case of a Standby  Letter of  Credit,  one year
after the date of issuance thereof,  but may by its terms be renewable  annually
upon  notice  (a  "Notice  of  Renewal")  given  to the  Issuing  Bank  and  the
Administrative  Agent on or prior to any date for notice of renewal set forth in
such Letter of Credit but in any event at least three Business Days prior to the
date  of the  proposed  renewal  of such  Standby  Letter  of  Credit  and  upon
fulfillment  of the  applicable  conditions  set forth in Article III unless the
Issuing  Bank  has  notified  the  Appropriate  Borrower  (with  a  copy  to the
Administrative  Agent)  on or prior to the date for  notice of  termination  set
forth in such Letter of Credit but in any event at least 30 Business  Days prior
to the date of  automatic  renewal of its  election  not to renew  such  Standby
Letter of  Credit (a  "Notice  of  Termination")  and (B) in the case of a Trade
Letter of Credit, 60 days after the date of issuance thereof;  provided that the
terms of each Standby Letter of Credit that is automatically  renewable annually
shall (x) require the Issuing Bank to give the beneficiary named in such Standby
Letter  of  Credit  notice  of  any  Notice  of  Termination,  (y)  permit  such
beneficiary,  upon receipt of such notice,  to draw under such Standby Letter of
Credit prior to the date such Standby Letter of Credit otherwise would have been
automatically  renewed  and (z) not permit the  expiration  date  (after  giving
effect  to any  renewal)  of such  Standby  Letter  of Credit in any event to be
extended  to a date later than 60 days before the  Working  Capital  Termination
Date. If either a Notice of Renewal is not given by the Appropriate  Borrower or
a Notice of Termination is given by the Issuing Bank pursuant to the immediately
preceding  sentence,  such Standby  Letter of Credit shall expire on the date on
which it otherwise would have been  automatically  renewed;  provided,  however,
that even in the absence of receipt of a Notice of Renewal the Issuing  Bank may
in its discretion, unless instructed to the contrary by the Administrative Agent
or the  Appropriate  Borrower,  deem that a Notice of  Renewal  had been  timely
delivered  and in such case, a Notice of Renewal shall be deemed to have been so
delivered for all purposes under this  Agreement.  Each Standby Letter of Credit
shall  contain a  provision  authorizing  the  Issuing  Bank to  deliver  to the
beneficiary  of such  Letter of  Credit,  upon the  occurrence  and  during  the
continuance of an Event of Default,  a notice (a "Default  Termination  Notice")
terminating  such Letter of Credit and giving such  beneficiary  15 days to draw
such Letter of Credit.  Within the limits of the Letter of Credit Facility,  and
subject to the limits referred to above,  each Borrower may request the issuance
of Letters  of Credit  under this  Section  2.01(d),  repay any Letter of Credit
Advances  resulting  from drawings  thereunder  pursuant to Section  2.03(c) and
request the issuance of additional Letters of Credit under this Section 2.01(d).

     SECTION  2.02.  Making the  Advances.  (a) Except as otherwise  provided in
Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the date
of the proposed  Borrowing in the case of a Borrowing  consisting  of Eurodollar
Rate  Advances,  or the first  Business  Day  prior to the date of the  proposed
Borrowing in the case of a Borrowing consisting of Base Rate Advances, by either
Borrower  to the  Administrative  Agent,  which  shall give to each  Appropriate
Lender  prompt  notice  thereof by telex or  telecopier.  Each such  notice of a
Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately
in  writing,  or telex or  telecopier,  in  substantially  the form of Exhibit B
hereto, specifying therein the requested (i) name of such Borrower, (ii) date of
such  Borrowing,  (ii) Facility under which such Borrowing is to be made,  (iii)
Type of  Advances  comprising  such  Borrowing,  (iv)  aggregate  amount of such
Borrowing  and (v) in the case of a  Borrowing  consisting  of  Eurodollar  Rate
Advances, initial Interest Period for each such Advance. Each Appropriate Lender
shall,  before  11:00 A.M.  (New York City time) on the date of such  Borrowing,
make  available  for  the  account  of  its  Applicable  Lending  Office  to the
Administrative  Agent at the Administrative  Agent's Account, in same day funds,
such  Lender's  ratable  portion  of  such  Borrowing  in  accordance  with  the
respective  Commitments  under the  applicable  Facility  of such Lender and the


                                       30
<PAGE>

other  Appropriate  Lenders.  After the  Administrative  Agent's receipt of such
funds and upon  fulfillment  of the  applicable  conditions set forth in Article
III, the Administrative  Agent will make such funds available to the Appropriate
Borrower by  crediting  the  Appropriate  Borrower's  Account in same day funds;
provided,  however,  that,  in the case of any Working  Capital  Borrowing,  the
Administrative  Agent  shall  first make a portion  of such  funds  equal to the
aggregate  principal amount of any Letter of Credit Advances made by the Issuing
Bank and by any other Working Capital Lender and outstanding on the date of such
Working Capital Borrowing, plus interest accrued and unpaid thereon to and as of
such date, available to such Issuing Bank and such other Working Capital Lenders
for repayment of such Letter of Credit Advances.

     (b)  Anything  in  subsection  (a) above to the  contrary  notwithstanding,
neither  Borrower  may  select  Eurodollar  Rate  Advances  (i) for any  initial
Borrowing  hereunder  and  during  the  period  from the  Effective  Date to the
Syndication Date (the  "Syndication  Period"),  provided,  however,  that either
Borrower may select  Eurodollar  Rate  Advances  for such  initial  Borrowing or
during the Syndication  Period, so long as such Borrower  indemnifies the Agents
and each Lender  Party in  accordance  with  Section  9.04(c)  and as  otherwise
provided  under the Loan  Documents,  (ii) for any  Borrowing  if the  aggregate
amount of such  Borrowing is less than  $1,000,000 or (iii) if the obligation of
the Appropriate Lenders to make Eurodollar Rate Advances shall then be suspended
pursuant to Section 2.09 or 2.10.

     (c) The Tranche A Advances may not be  outstanding as part of more than ten
separate Borrowings,  the Tranche B Term Advances may not be outstanding as part
of more than five separate Borrowing and the Working Capital Advances may not be
outstanding as part of more than ten separate Borrowings.

     (d) Each  Notice of  Borrowing  shall be  irrevocable  and  binding  on the
Appropriate  Borrower.  In the case of any Borrowing  that the related Notice of
Borrowing  specifies  is  to be  comprised  of  Eurodollar  Rate  Advances,  the
Borrowers  shall  indemnify each  Appropriate  Lender against any loss,  cost or
expense  incurred  by such  Lender as a result of any  failure  to fulfill on or
before the date  specified in such Notice of Borrowing  for such  Borrowing  the
applicable  conditions set forth in Article III, including,  without limitation,
any loss (including loss of anticipated  profits),  cost or expense  incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such  Lender  to fund  the  Advance  to be made by such  Lender  as part of such
Borrowing  when such Advance,  as a result of such failure,  is not made on such
date.

     (e) Unless the  Administrative  Agent  shall have  received  notice from an
Appropriate  Lender prior to the date of any  Borrowing  under a Facility  under
which such Lender has a Commitment  that such Lender will not make  available to
the  Administrative  Agent such Lender's ratable portion of such Borrowing,  the
Administrative Agent may assume that such Lender has made such portion available
to the  Administrative  Agent on the date of such  Borrowing in accordance  with
subsection  (a) of this  Section  2.02  and the  Administrative  Agent  may,  in
reliance upon such  assumption,  make available to the  Appropriate  Borrower on
such date a  corresponding  amount.  If and to the extent that such Lender shall
not have so made such ratable  portion  available to the  Administrative  Agent,
such  Lender  and  such  Borrower  severally  agree  to  repay  or  pay  to  the
Administrative  Agent forthwith on demand such  corresponding  amount and to pay
interest  thereon,  for each day from the date such amount is made  available to
such Borrower until the date such amount is repaid or paid to the Administrative


                                       31
<PAGE>

Agent, at (i) in the case of such Borrower, the interest rate applicable at such
time under Section 2.07 to Advances  comprising  such  Borrowing and (ii) in the
case of such  Lender,  the Federal  Funds Rate.  If such Lender shall pay to the
Administrative  Agent  such  corresponding  amount,  such  amount so paid  shall
constitute such Lender's Advance as part of such Borrowing for all purposes.

     (f) The  failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its  obligation,  if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be  responsible  for the  failure of any other  Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     SECTION 2.03.  Issuance of and Drawings and Reimbursement  Under Letters of
Credit.  (a) Request for  Issuance.  Each Letter of Credit  shall be issued upon
notice,  given not  later  than  11:00  A.M.  (New York City  time) on the fifth
Business  Day  prior to the date of the  proposed  issuance  of such  Letter  of
Credit,   by  a  Borrower  to  the  Issuing  Bank,   which  shall  give  to  the
Administrative  Agent and each Working  Capital  Lender prompt notice thereof by
telex or  telecopier.  Each  such  notice of  issuance  of a Letter of Credit (a
"Notice of Issuance") shall be by telephone,  confirmed  immediately in writing,
or  telex  or  telecopier,  specifying  therein  the  requested  (A) name of the
Borrower,  (B) date of such  issuance  (which  shall  be a  Business  Day),  (C)
Available Amount of such Letter of Credit, (D) expiration date of such Letter of
Credit, (E) name and address of the beneficiary of such Letter of Credit and (F)
form of such Letter of Credit,  and shall be accompanied by such application and
agreement for letter of credit as such Issuing Bank may specify to such Borrower
for use in connection with such requested  Letter of Credit (a "Letter of Credit
Agreement"). If (x) the requested form of such Letter of Credit is acceptable to
the Issuing Bank in its sole  discretion  and (y) it has not received  notice of
objection to issuance  from  Lenders  holding at least a majority of the Working
Capital  Commitments,  the Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article III, make such Letter of Credit available to the
Appropriate  Borrower at its office  referred to in Section 9.02 or as otherwise
agreed with such Borrower in connection with such issuance.  In the event and to
the extent that the provisions of any Letter of Credit  Agreement shall conflict
with this Agreement, the provisions of this Agreement shall govern.

     (b) Letter of Credit  Reports.  The Issuing  Bank shall  furnish (A) to the
Administrative  Agent on the first  Business  Day of each week a written  report
summarizing  issuance and  expiration  dates of Letters of Credit  issued by the
Issuing  Bank during the previous  week and drawings  during such week under all
Letters of Credit issued by the Issuing Bank, (B) to each Working Capital Lender
on the first  Business Day of each month a written report  summarizing  issuance
and expiration  dates of Letters of Credit issued by the Issuing Bank during the
preceding  month and  drawings  during  such month  under all  Letters of Credit
issued by the Issuing Bank and (C) to the Administrative  Agent and each Working
Capital  Lender on the first  Business  Day of each  calendar  quarter a written
report  setting forth the average daily  aggregate  Available  Amount during the
preceding calendar quarter of all Letters of Credit issued by the Issuing Bank.

     (c) Drawing and  Reimbursement.  The payment by the Issuing Bank of a draft
drawn  under any Letter of Credit  shall  constitute  for all  purposes  of this
Agreement the making by such Issuing Bank of a Letter of Credit  Advance,  which
shall be a Base Rate Advance,  in the amount of such draft.  Upon written demand
by the Issuing  Bank,  with a copy of such demand to the  Administrative  Agent,
each  Working  Capital  Lender shall  purchase  from the Issuing  Bank,  and the


                                       32
<PAGE>

Issuing Bank shall sell and assign to each such  Working  Capital  Lender,  such
Lender's Pro Rata Share of such  outstanding  Letter of Credit Advance as of the
date of such  purchase,  by making  available for the account of its  Applicable
Lending Office to the Administrative  Agent for the account of the Issuing Bank,
by deposit to the Administrative  Agent's Account,  in same day funds, an amount
equal to the  portion  of the  outstanding  principal  amount of such  Letter of
Credit Advance to be purchased by such Lender.  Promptly after receipt  thereof,
the  Administrative  Agent shall  transfer such funds to the Issuing Bank.  Each
Borrower  hereby agrees to each such sale and  assignment.  Each Working Capital
Lender agrees to purchase its Pro Rata Share of an outstanding  Letter of Credit
Advance on (i) the Business Day on which demand  therefor is made by the Issuing
Bank,  provided  that  notice of such  demand is given not later than 11:00 A.M.
(New York City time) on such Business  Day, or (ii) the first  Business Day next
succeeding  such demand if notice of such demand is given after such time.  Upon
any such  assignment  by the  Issuing  Bank to any Working  Capital  Lender of a
portion of a Letter of Credit Advance,  the Issuing Bank represents and warrants
to such other Lender that the Issuing Bank is the legal and beneficial  owner of
such interest  being  assigned by it, free and clear of any liens,  but makes no
other  representation or warranty and assumes no responsibility  with respect to
such Letter of Credit  Advance,  the Loan Documents or any Loan Party. If and to
the extent that any Working  Capital Lender shall not have so made the amount of
such  Letter of Credit  Advance  available  to the  Administrative  Agent,  such
Working  Capital  Lender  and  the  Borrowers  severally  agree  to  pay  to the
Administrative  Agent  forthwith on demand such amount  together  with  interest
thereon, for each day from the date of demand by the Issuing Bank until the date
such amount is paid to the  Administrative  Agent, at the Federal Funds Rate for
its account or the account of the Issuing  Bank, as  applicable.  If such Lender
shall pay to the Administrative Agent such amount for the account of the Issuing
Bank on any  Business  Day,  such amount so paid in respect of  principal  shall
constitute a Letter of Credit  Advance made by such Lender on such  Business Day
for purposes of this  Agreement,  and the  outstanding  principal  amount of the
Letter of Credit  Advance  made by the  Issuing  Bank  shall be  reduced by such
amount on such Business Day.

     (d) Failure to Make Letter of Credit Advances. The failure of any Lender to
make the  Letter of Credit  Advance  to be made by it on the date  specified  in
Section  2.03(c) shall not relieve any other Lender of its obligation  hereunder
to make its  Letter of  Credit  Advance  on such  date,  but no Lender  shall be
responsible  for the  failure  of any other  Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.

     SECTION 2.04.  Repayment of Advances.  (a) Tranche A Term Advances.  On the
last Business Day of each calendar quarter  specified below, the Borrowers shall
jointly and severally repay to the Administrative  Agent for the ratable account
of the Tranche A Term Lenders an aggregate  outstanding  principal amount of the
Tranche A Term  Advances  (which  amounts  shall be  reduced  as a result of the
application  of  prepayments  in  accordance  with the  priorities  set forth in
Section 2.06) in twelve  consecutive  installments,  each such installment being
payable on each such  quarterly  date  during  each year  indicated  below (such
installments to aggregate for such year to the percentage set opposite such year
of the outstanding Tranche A Term Advances outstanding on September 27, 2002 and
to be in equal principal amounts for each such quarterly date for such year):

                                       33
<PAGE>

                    Calendar Quarter                             Percentage

From and including the third quarter of 2002 to and                  25%
including the second quarter of 2003

From and including the third quarter of 2003 to and                  35%
including the second quarter of 2004

From and including the third quarter of 2004 to and                  40%
including the second quarter of 2005

provided,  however,  that the final principal installment shall be repaid on the
Tranche A  Termination  Date and in any event shall be in an amount equal to the
aggregate  principal  amount of the Tranche A Term Advances  outstanding on such
date.

     (b)  Tranche  B Term  Advances.  On the last day of each  calendar  quarter
specified  below,  the  Borrowers  shall  jointly  and  severally  repay  to the
Administrative  Agent for the ratable  account of the Tranche B Term Lenders the
aggregate  outstanding  principal  amount of the Tranche B Term Advances  (which
amounts  shall be  reduced  as a result of the  application  of  prepayments  in
accordance  with  the  order  of  priority  set  forth  in  Section  2.06) in 27
consecutive  installments,  each such  installment  being  payable  on each such
quarterly date during each year indicated below (such  installments to aggregate
for such year to the  percentage  set  opposite  such year of the Tranche B Term
Advances  outstanding on the Effective Date and to be in equal principal amounts
for each such quarterly date for such year):


                    Calendar Quarter                             Percentage

From and including the third quarter of 1999 to and                  1%
including the second quarter of 2005

From and including the third quarter of 2005 to and                  94%
including the first quarter of 2006

provided,  however,  that the final principal installment shall be repaid on the
Tranche B  Termination  Date and in any event shall be in an amount equal to the
aggregate  principal  amount of the Tranche B Term Advances  outstanding on such
date.

     (c) Working  Capital  Advances.  The Borrowers  shall jointly and severally
repay to the Administrative Agent for the ratable account of the Working Capital
Lenders on the Working Capital  Termination Date the aggregate  principal amount
of the Working Capital Advances then outstanding.

     (d)  Letter  of  Credit  Advances.  (i) The  Borrowers  shall  jointly  and
severally repay to the Administrative  Agent for the account of the Issuing Bank
on the Working Capital Termination Date the outstanding principal amount of each
Letter of Credit Advance made by, and not reimbursed to, the Issuing Bank.


                                       34
<PAGE>

     (ii) The Obligations of the Borrowers  under this Agreement,  any Letter of
Credit Agreement and any other agreement or instrument relating to any Letter of
Credit shall be  unconditional  and  irrevocable,  and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances,  including,  without
limitation,  the  following  circumstances  (it being  understood  that any such
payment by the  Borrowers  is without  prejudice  to, and does not  constitute a
waiver of, any rights the  Borrowers  might have or might acquire as a result of
the  payment  by the  Issuing  Bank of any  draft  or the  reimbursement  by the
Borrowers thereof):

                  (A)  any  lack  of  validity  or  enforceability  of any  Loan
         Document,  any Letter of Credit Agreement,  any Letter of Credit or any
         other  agreement or instrument  relating  thereto (all of the foregoing
         being, collectively, the "L/C Related Documents");

                  (B) any change in the time,  manner or place of payment of, or
         in any other term of, all or any of the  Obligations of any Borrower in
         respect of any L/C Related Document or any other amendment or waiver of
         or any  consent  to  departure  from  all or  any  of the  L/C  Related
         Documents;

                  (C) the  existence  of any  claim,  set-off,  defense or other
         right that any Borrower may have at any time against any beneficiary or
         any transferee of a Letter of Credit (or any Persons for which any such
         beneficiary or any such transferee may be acting),  the Issuing Bank or
         any  other  Person,   whether  in  connection  with  the   transactions
         contemplated by the L/C Related Documents or any unrelated transaction;

                  (D) any  statement  or any other  document  presented  under a
         Letter  of  Credit  proving  to  be  forged,  fraudulent,   invalid  or
         insufficient  in any respect or any  statement  therein being untrue or
         inaccurate in any respect;

                  (E)  payment  by the  Issuing  Bank  under a Letter  of Credit
         against  presentation of a draft or certificate  that does not strictly
         comply with the terms of such Letter of Credit;

                  (F) any exchange,  release or non-perfection of any Collateral
         or other  collateral,  or any  release  or  amendment  or  waiver of or
         consent to departure  from the Guaranties or any other  guarantee,  for
         all or any of the  Obligations  of any  Borrower  in respect of the L/C
         Related Documents; or

                  (G) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing, including, without limitation, any
         other circumstance that might otherwise  constitute a defense available
         to, or a discharge of, any Loan Party or a guarantor.

     SECTION 2.05.  Termination or Reduction of the  Commitments.  (a) Optional.
The  Borrowers   may,   upon  at  least  five  Business   Days'  notice  to  the
Administrative  Agent  terminate in whole or reduce in part the Unused Tranche A
Term Commitments and the Unused Working Capital Commitments;  provided, however,
that each  partial  reduction  of the  Commitments  (i) shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and
(ii) shall be made ratably  among the  Appropriate  Lenders in  accordance  with


                                       35
<PAGE>

their Commitments with respect to such Facility. For the avoidance of doubt, the
termination  or reduction  of the Unused  Tranche A  Commitments  and the Unused
Working Capital  Commitments  pursuant to the preceding sentence shall be deemed
to be a  termination  or  reduction,  as  applicable,  in  the  amount  of  such
termination  or  reduction  of the  Tranche A Term  Commitments  or the  Working
Capital Commitment, as the case may be.

     (b)  Mandatory.  The  Facilities  shall be  automatically  and  permanently
reduced on each date a  prepayment  thereof is required  to be made  pursuant to
Section  2.06(b)(i) or (ii) in an amount equal to the amount of such prepayment,
provided that such reduction of the  Facilities  shall be made ratably among the
Appropriate Lenders in accordance with their relevant  Commitments in accordance
with the priorities pursuant to Section 2.06(b).

     SECTION 2.06.  Prepayments.  (a) Optional.  Subject to Section 5.03(a)(ii),
the Borrowers  may, upon at least one Business  Day's notice in the case of Base
Rate Advances and three  Business  Days' notice in the case of  Eurodollar  Rate
Advances, in each case to the Administrative Agent stating the proposed date and
aggregate  principal  amount of the prepayment,  and if such notice is given the
Borrowers  shall,  jointly  and  severally  prepay  the  outstanding   aggregate
principal amount of the Advances  comprising part of the same Borrowing in whole
or  ratably  in  part,  together  with  accrued  interest  to the  date  of such
prepayment on the aggregate principal amount prepaid;  provided,  however,  that
(x)  each  partial  prepayment  shall be in an  aggregate  principal  amount  of
$5,000,000 or an integral  multiple of $1,000,000 in excess thereof;  and (y) if
any  prepayment  of a  Eurodollar  Rate Advance is made on a date other than the
last day of an Interest  Period for such Advance,  the Borrowers  shall also pay
any amounts owing pursuant to Section  9.04(c).  Each such  prepayment  shall be
applied ratably first to the Term Facilities and to the installments thereof pro
rata and second to the Working  Capital  Facility as set forth in clause (b)(iv)
below.

     (b)  Mandatory.  (i)  Commencing  with the Fiscal Year ending  December 31,
2002,  the  Borrowers  shall,  on the 90th day  following the end of such Fiscal
Year, jointly and severally prepay an aggregate principal amount of the Advances
comprising part of the same Borrowings and, thereafter, deposit an amount in the
L/C Cash Collateral  Account,  in an amount equal to 50% of the amount of Excess
Cash Flow for such Fiscal Year.  Each such  prepayment  shall be applied ratably
first to the Term Facilities and to the installments thereof pro rata and second
to the Working Capital Facility as set forth in clause (iv) below.

     (ii) The Borrowers  shall,  on the date of receipt of the Net Cash Proceeds
by any Borrower or any of their Subsidiaries from (A) the sale, lease,  transfer
or other  disposition  of any assets of any Borrower or any of its  Subsidiaries
(other than any sale, lease, transfer or other disposition of assets pursuant to
clause (i), (ii), or (iv) of Section 5.02(e)) and (B) any Extraordinary  Receipt
received  by or paid to or for  the  account  of any  Borrower  or any of  their
Subsidiaries  and not  otherwise  included  in clause  (A)  above,  jointly  and
severally prepay an aggregate  principal amount of the Advances  comprising part
of the same  Borrowings  and,  thereafter,  deposit  an  amount  in the L/C Cash
Collateral  Account, in an amount equal to the amount of such Net Cash Proceeds.
Each such  prepayment  shall be applied ratably first to the Term Facilities and
to the installments  thereof pro rata and second to the Working Capital Facility
as set forth in clause (iv) below.

     (iii) The Borrowers  shall, on each Business Day, jointly and severally pay
to the  Administrative  Agent for deposit in the L/C Cash Collateral  Account an


                                       36
<PAGE>

amount  sufficient  to cause the  aggregate  amount on  deposit  in the L/C Cash
Collateral  Account to equal the amount by which the aggregate  Available Amount
of all Letters of Credit then outstanding  exceeds the Letter of Credit Facility
on such Business Day.

     (iv)  Prepayments of the Working  Capital  Facility made pursuant to clause
(i) and (ii) above shall be first  applied to prepay  Letter of Credit  Advances
then outstanding  until such Advances are paid in full, second applied to prepay
Working Capital Advances then outstanding comprising part of the same Borrowings
until  such  Advances  are  paid in full  and  third  deposited  in the L/C Cash
Collateral  Account to cash  collateralize  100% of the Available  Amount of the
Letters of Credit  then  outstanding;  and,  in the case of  prepayments  of the
Working  Capital  Facility  required  pursuant to clause (i) or (ii) above,  the
amount  remaining  (if any) after the  prepayment  in full of the Advances  then
outstanding  and the 100%  cash  collateralization  of the  aggregate  Available
Amount  of  Letters  of  Credit  then  outstanding  (the sum of such  prepayment
amounts, cash  collateralization  amounts and remaining amount being referred to
herein as the  "Reduction  Amount")  may be  retained by the  Borrowers  and the
Working  Capital  Facility shall be permanently  reduced as set forth in Section
2.05(b). Upon the drawing of any Letter of Credit for which funds are on deposit
in the L/C Cash Collateral Account, such funds shall be applied to reimburse the
Issuing Bank.

     (v) All  prepayments  under this subsection (b) shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.
If any payment of Eurodollar Rate Advances  otherwise  required to be made under
this  Section  2.06(b)  would  be made on a day  other  than the last day of the
applicable Interest Period therefor, the Borrowers may direct the Administrative
Agent to (and if so  directed,  the  Administrative  Agent  shall)  deposit such
payment  in the Cash  Collateral  Account  until the last day of the  applicable
Interest Period at which time the Administrative Agent shall apply the amount of
such payment to the prepayment of such Advances;  provided,  however,  that such
Advances  shall continue to bear interest as set forth in Section 2.07 until the
last day of the applicable Interest Period therefor.

     (c) Term B Opt-Out. The Administrative Agent shall promptly forward to each
Term B  Lender  each  Prepayment  Notice  received  by it  pursuant  to  Section
5.03(a)(ii).   With  respect  to  any  prepayment  of  the  Term  Advances,  the
Administrative  Agent  shall  ratably  pay the  Tranche A Term  Lenders  and the
Tranche B Term Lenders;  provided,  however,  that any Tranche B Term Lender, at
its option, to the extent that any Tranche A Term Advances are then outstanding,
may  elect  not to  accept  such  prepayment  (such  Lender  being a  "Declining
Lender"),  in which event the provisions of the next sentence  shall apply.  Any
Tranche  B Term  Lender  may  elect  not to  accept  its  ratable  share  of the
prepayment  referred to in any Prepayment Notice by giving written notice to the
Administrative  Agent not later  than  11:00  A.M.  (New York City  time) on the
fourth Business Day immediately  preceding the scheduled Prepayment Date. On the
Prepayment  Date,  an amount  equal to that  portion  of the  Prepayment  Amount
available  to  prepay  Tranche  B Term  Lenders  (less any  amounts  that  would
otherwise be payable to Declining  Lenders) shall be applied to prepay Tranche B
Term Advances owing to Tranche B Term Lenders other than  Declining  Lenders and
any amounts  that would  otherwise  have been  applied to prepay  Tranche B Term
Advances owing to Declining  Lenders shall instead be applied  ratably to prepay
the remaining  Tranche A Term Advances as provided in Sections  2.06(a) and (b);
provided,  further that on  prepayment  in full of Term  Advances  owing to Term
Lenders other than Declining  Lenders,  the remainder of any  Prepayment  Amount
shall be applied  ratably to prepay  Tranche B Term Advances  owing to Declining
Lenders.

                                       37
<PAGE>

     SECTION 2.07. Interest. (a) Scheduled Interest. The Borrowers shall jointly
and severally pay interest on the unpaid  principal amount of each Advance owing
to each Lender from the date of such Advance until such  principal  amount shall
be paid in full, at the following rates per annum:

          (i) Base Rate Advances.  During such periods as such Advance is a Base
     Rate  Advance,  a rate per  annum  equal at all times to the sum of (A) the
     Base Rate in effect  from  time to time plus (B) the  Applicable  Margin in
     effect from time to time,  payable in arrears  quarterly on the last day of
     each  quarter  during such  periods and on the date such Base Rate  Advance
     shall be Converted or paid in full.

          (ii) Eurodollar Rate Advances.  During such periods as such Advance is
     a Eurodollar Rate Advance,  a rate per annum equal at all times during each
     Interest  Period for such Advance to the sum of (A) the Eurodollar Rate for
     such  Interest  Period for such Advance plus (B) the  Applicable  Margin in
     effect  from  time to  time,  payable  in  arrears  on the last day of such
     Interest  Period and, if such  Interest  Period has a duration of more than
     three months,  on each day that occurs  during such  Interest  Period every
     three  months  from the first day of such  Interest  Period and on the date
     such Eurodollar Rate Advance shall be Converted or paid in full.

     (b) Default  Interest.  Upon the occurrence and during the continuance of a
payment or  bankruptcy  Default or any Event of  Default,  each  Borrower  shall
jointly and  severally pay interest on (i) the unpaid  principal  amount of each
Advance  owing to each  Lender,  payable in arrears on the dates  referred to in
clause (a)(i) or (a)(ii)  above and on demand,  at a rate per annum equal at all
times to 2% per  annum  above  the rate per  annum  required  to be paid on such
Advance  pursuant  to clause  (a)(i) or  (a)(ii)  above and (ii) to the  fullest
extent permitted by law, the amount of any interest, fee or other amount payable
under the Loan  Documents  that is not paid when due,  from the date such amount
shall be due until such amount shall be paid in full,  payable in arrears on the
date such amount shall be paid in full and on demand,  at a rate per annum equal
at all times to 2% per annum above the rate per annum  required  to be paid,  in
the case of interest,  on the Type of Advance on which such interest has accrued
pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on Base Rate
Advances pursuant to clause (a)(i) above.

     (c) Notice of Interest Period and Interest Rate.  Promptly after receipt of
a Notice of  Borrowing  pursuant  to  Section  2.02(a),  a notice of  Conversion
pursuant to Section 2.09 or a notice of selection of an Interest Period pursuant
to the terms of the definition of "Interest Period",  the  Administrative  Agent
shall give notice to the Appropriate Borrower and each Appropriate Lender of the
applicable  Interest  Period and the applicable  interest rate determined by the
Administrative Agent for purposes of clause (a)(i) or (a)(ii) above.

     SECTION 2.08.  Fees.  (a) Commitment  Fee. The Borrowers  shall jointly and
severally  pay to the  Administrative  Agent for the  account  of the  Lenders a
commitment  fee, from the Effective  Date in the case of each Initial Lender and
from the effective date  specified in the Assignment and Acceptance  pursuant to
which it became a Lender in the case of each  other  Lender,  payable in arrears
quarterly on the last  Business Day of each calendar  quarter,  on the available
but Unused Tranche A Term  Commitment  (until August 10, 2000) and the available
but Unused Working Capital  Commitment  (until the Working  Capital  Termination
Date)  at the  rate  expressed  as  percentage  set  forth  below  opposite  the


                                       38
<PAGE>

percentage  per annum on the average  daily unused  portion of each  Appropriate
Lender's  aggregate  available  Tranche A Term  Commitments  and Working Capital
Commitments during such quarter:


      Percentage of Unused Commitments          Commitment Fee

                    >75%                            1.375%

                >50% and <75%                       1.250%

                >25% and <50%                       1.125%

                    <25%                            0.625%

provided,  however,  that any  commitment fee accrued with respect to any of the
Commitments  of a  Defaulting  Lender  during the period  prior to the time such
Lender  became a Defaulting  Lender and unpaid at such time shall not be payable
by the  Borrowers so long as such Lender shall be a Defaulting  Lender except to
the extent that such commitment fee shall otherwise have been due and payable by
the  Borrowers  prior to such  time;  and  provided  further,  however,  that no
commitment fee shall accrue on any of the Commitments of a Defaulting  Lender so
long as such Lender shall be a Defaulting Lender.

     (b)  Letter of Credit  Fees,  Etc.  (i) The  Borrowers  shall  jointly  and
severally  pay to the  Administrative  Agent  for the  account  of each  Working
Capital Lender a commission,  payable in arrears  quarterly on the last Business
Day of each calendar quarter,  and on the earliest to occur of the full drawing,
expiration,  termination  or  cancellation  of any  Letter of Credit  and on the
Working Capital Termination Date, on such Lender's Pro Rata Share of the average
daily aggregate  Available Amount during such quarter of (A) all Standby Letters
of Credit outstanding from time to time at a rate equal to the Applicable Margin
in effect from day to day for Eurodollar Rate Advances under the Working Capital
Facility and (B) all Trade Letters of Credit then outstanding at a rate equal to
the  Applicable  Margin in effect from day to day for  Eurodollar  Rate Advances
under the Working Capital Facility.

     (ii) The Borrowers shall jointly and severally pay to the Issuing Bank, for
its own account,  such commissions,  issuance fees, fronting fees, transfer fees
and other fees and charges in connection with the issuance or  administration of
each Letter of Credit as the Borrowers and the Issuing Bank shall agree.

     (c) Agents'  Fees.  The  Borrowers  shall jointly and severally pay to each
Agent for its own account  such fees as may from time to time be agreed  between
the Borrower and such Agent.

     SECTION  2.09.  Conversion  of  Advances.  (a)  Optional.  The  Appropriate
Borrower may on any Business Day, upon notice given to the Administrative  Agent
not later than 11:00 A.M.  (New York City time) on the third  Business Day prior
to the date of the proposed  Conversion and subject to the provisions of Section
2.07 and Section  2.10,  Convert all or any portion of the  Advances of one Type
comprising  the same  Borrowing  into  Advances  of the  other  Type;  provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an  Interest  Period  for such  Eurodollar
Rate  Advances,  any  Conversion  of Base Rate  Advances  into  Eurodollar  Rate
Advances  shall be in an amount not less than the minimum  amount  specified  in
Section  2.02(c),  no Conversion  of any Advances  shall result in more separate


                                       39
<PAGE>

Borrowings  than permitted under Section 2.02(c) and each Conversion of Advances
comprising  part of the same Borrowing  under any Facility shall be made ratably
among the Appropriate  Lenders in accordance with their  Commitments  under such
Facility.  Each  such  notice  of  Conversion  shall,  within  the  restrictions
specified above,  specify (i) the date of such Conversion,  (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances,  the
duration  of the  initial  Interest  Period for such  Advances.  Each  notice of
Conversion shall be irrevocable and binding on such Borrower.

     (b)  Mandatory.  (i) On the date on which the  aggregate  unpaid  principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.

     (ii) If the  Appropriate  Borrower shall fail to select the duration of any
Interest  Period  for any  Eurodollar  Rate  Advances  in  accordance  with  the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative  Agent will forthwith so notify such Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically,  on the
last day of the then existing Interest Period therefor, Convert into a one month
Eurodollar Rate Advance.

     (iii) Upon the  occurrence and during the  continuance of any Default,  (x)
each  Eurodollar  Rate Advance will  automatically,  on the last day of the then
existing Interest Period therefor,  Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into,  Eurodollar Rate
Advances shall be suspended.

     SECTION  2.10.  Increased  Costs,  Etc.  (a)  If,  due to  either  (i)  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other  governmental  authority (whether or not having the force of law),
there shall be any  increase in the cost to any Lender Party of agreeing to make
or of making,  funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or  participating  in Letters of Credit or of
agreeing  to  make  or of  making  or  maintaining  Letter  of  Credit  Advances
(excluding,  for  purposes  of this  Section  2.10,  any  such  increased  costs
resulting  from (x) Taxes or Other Taxes (as to which Section 2.12 shall govern)
and (y) changes in the basis of taxation of overall net income or overall  gross
income by the United  States or by the foreign  jurisdiction  or state under the
laws of which such  Lender  Party is  organized  or has its  Applicable  Lending
Office or any political subdivision thereof), then the Borrowers shall from time
to time,  upon  demand by such  Lender  Party (with a copy of such demand to the
Administrative Agent), jointly and severally pay to the Administrative Agent for
the account of such Lender Party  additional  amounts  sufficient  to compensate
such Lender Party for such  increased  cost;  provided,  however,  that a Lender
Party  claiming  additional  amounts  under this Section  2.10(a)  agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different  Applicable  Lending Office if the making
of such a  designation  would  avoid the need for, or reduce the amount of, such
increased  cost that may  thereafter  accrue  and would not,  in the  reasonable
judgment of such  Lender  Party,  be  otherwise  disadvantageous  to such Lender
Party. A certificate as to the amount of such increased cost, and the details of
the computation thereof,  submitted to the Borrowers by such Lender Party, shall
be conclusive and binding for all purposes, absent manifest error.

     (b) If,  due to either (i) the  introduction  of or any change in or in the
interpretation  of any  law or  regulation  or  (ii)  the  compliance  with  any

                                       40
<PAGE>

guideline  or request  from any  central  bank or other  governmental  authority
(whether  or not having the force of law),  there  shall be any  increase in the
amount of capital  required or expected to be  maintained by any Lender Party or
any corporation  controlling  such Lender Party as a result of or based upon the
existence of such Lender  Party's  commitment to lend or to issue or participate
in  Letters  of  Credit  hereunder  and  other  commitments  of such type or the
issuance or maintenance of or participation in the Letters of Credit (or similar
contingent  obligations),  then,  upon  demand  by  such  Lender  Party  or such
corporation  (with a copy of  such  demand  to the  Administrative  Agent),  the
Borrowers  shall jointly and severally pay to the  Administrative  Agent for the
account of such  Lender  Party,  from time to time as  specified  by such Lender
Party,  additional  amounts  sufficient to  compensate  such Lender Party in the
light of such  circumstances,  to the extent that such Lender  Party  reasonably
determines  such  increase in capital to be allocable  to the  existence of such
Lender  Party's  commitment  to lend or to issue or  participate  in  Letters of
Credit  hereunder or to the issuance or maintenance of or  participation  in any
Letters of Credit.  A  certificate  as to such  amounts,  and the details of the
computation  thereof,  submitted to the  Borrowers by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.

     (c) If, with respect to any  Eurodollar  Rate Advances  under any Facility,
Lenders owed at least 50% of the then aggregate  unpaid principal amount thereof
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such  Advances  will not  adequately  reflect  the cost to such  Lenders  of
making,  funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrowers and the
Appropriate Lenders,  whereupon (i) each such Eurodollar Rate Advance under such
Facility  will  automatically,  on the last day of the  then  existing  Interest
Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate  Lenders  to make,  or to Convert  Advances  into,  Eurodollar  Rate
Advances  shall be  suspended  until the  Administrative  Agent shall notify the
Borrowers that such Lenders have determined that the circumstances  causing such
suspension no longer exist.

     (d)  Notwithstanding  any  other  provision  of  this  Agreement,   if  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation  shall make it unlawful,  or any central  bank or other  governmental
authority  shall  assert that it is unlawful,  for any Lender or its  Eurodollar
Lending  Office to perform its  obligations  hereunder to make  Eurodollar  Rate
Advances or to continue to fund or maintain  Eurodollar Rate Advances hereunder,
then,  on notice  thereof and demand  therefor  by such Lender to the  Borrowers
through the  Administrative  Agent,  (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically,  upon such
demand,  Convert  into a Base  Rate  Advance  and  (ii)  the  obligation  of the
Appropriate  Lenders  to make,  or to Convert  Advances  into,  Eurodollar  Rate
Advances  shall be  suspended  until the  Administrative  Agent shall notify the
Borrowers that such Lender has determined  that the  circumstances  causing such
suspension  no longer exist;  provided,  however,  that,  before making any such
demand,  such  Lender  agrees to use  reasonable  efforts  (consistent  with its
internal policy and legal and regulatory  restrictions) to designate a different
Eurodollar  Lending Office if the making of such a designation  would allow such
Lender or its Eurodollar  Lending Office to continue to perform its  obligations
to make Eurodollar  Rate Advances or to continue to fund or maintain  Eurodollar
Rate  Advances  and would not, in the  judgment  of such  Lender,  be  otherwise
disadvantageous to such Lender.

     SECTION 2.11. Payments and Computations.  (a) The Borrowers shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off (except as otherwise  provided in Section 2.15), not later than 11:00
A.M.  (New  York  City  time)  on the  day  when  due  in  U.S.  dollars  to the


                                       41
<PAGE>

Administrative  Agent at the  Administrative  Agent's Account in same day funds,
with payments being received by the  Administrative  Agent after such time being
deemed  to  have  been  received  on  the  next  succeeding  Business  Day.  The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by any such Borrower is in respect of  principal,  interest,
commitment  fees or any other  Obligation  then payable  hereunder and under the
Notes to more than one Lender Party,  to such Lender  Parties for the account of
their  respective  Applicable  Lending  Offices  ratably in accordance  with the
amounts of such respective  Obligations  then payable to such Lender Parties and
(ii) if such payment by any such Borrower is in respect of any  Obligation  then
payable  hereunder to one Lender Party,  to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording  of the  information  contained  therein in the  Register  pursuant to
Section  9.07(d),  from and  after the  effective  date of such  Assignment  and
Acceptance, the Administrative Agent shall make all payments hereunder and under
the Notes in  respect of the  interest  assigned  thereby  to the  Lender  Party
assignee  thereunder,  and the parties to such  Assignment and Acceptance  shall
make all  appropriate  adjustments  in such  payments for periods  prior to such
effective date directly between themselves.

     (b) The  Borrowers  hereby  authorize  each  Lender  Party  and each of its
Affiliates,  if and to the extent  payment owed to such Lender Party is not made
when due  hereunder  or,  in the case of a  Lender,  under the Note held by such
Lender,  to charge from time to time,  to the fullest  extent  permitted by law,
against any or all of the  Borrower's  accounts  with such Lender  Party or such
Affiliate any amount so due.

     (c) All  computations  of interest  based on the Base Rate shall be made by
the Administrative  Agent on the basis of a year of 365 or 366 days, as the case
may be, and all  computations  of interest based on the  Eurodollar  Rate or the
Federal Funds Rate and of fees and Letter of Credit commissions shall be made by
the  Administrative  Agent on the basis of a year of 360 days,  in each case for
the actual number of days  (including  the first day but excluding the last day)
occurring  in the  period  for which  such  interest,  fees or  commissions  are
payable. Each determination by the Administrative Agent of an interest rate, fee
or commission hereunder shall be conclusive and binding for all purposes, absent
manifest error.

     (d) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in the  computation  of payment of interest or  commitment  fee, as the
case may be; provided,  however,  that, if such extension would cause payment of
interest on or  principal  of  Eurodollar  Rate  Advances to be made in the next
following  calendar  month,  such  payment  shall be made on the next  preceding
Business Day.

     (e) Unless the  Administrative  Agent shall have  received  notice from the
Borrowers  prior to the date on which any  payment  is due to any  Lender  Party
hereunder  that  any such  Borrower  will not make  such  payment  in full,  the
Administrative  Agent may assume that any such Borrower has made such payment in
full to the Administrative  Agent on such date and the Administrative Agent may,
in reliance upon such  assumption,  cause to be  distributed to each such Lender
Party on such due date an amount equal to the amount then due such Lender Party.
If and to the extent any such  Borrower  shall not have so made such  payment in
full to the  Administrative  Agent,  each such  Lender  Party shall repay to the


                                       42
<PAGE>

Administrative  Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon,  for each day from the date such amount is
distributed  to such Lender  Party until the date such Lender  Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

     (f) If the  Administrative  Agent  receives  funds for  application  to the
Obligations  under the Loan  Documents  under  circumstances  for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute  such funds to each Lender Party ratably in
accordance with such Lender Party=s  proportionate share of the principal amount
of all  outstanding  Advances and the Available  Amount of all Letters of Credit
then outstanding, in repayment or prepayment of such of the outstanding Advances
or other  Obligations  owed to such Lender Party,  and for  application  to such
principal installments, as the Administrative Agent shall direct.

     SECTION 2.12. Taxes. (a) Any and all payments by the Borrowers hereunder or
under the Notes shall be made, in accordance  with Section 2.11,  free and clear
of and  without  deduction  for any and all  present  or future  taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto,  excluding,  (i) in the case of each Lender Party and each Agent, taxes
that are imposed on its  overall net income by the United  States and taxes that
are imposed on its overall net income (and any franchise  taxes) by the state or
foreign jurisdiction under the laws of which such Lender Party or such Agent, as
the case may be, is organized or any political  subdivision thereof and, (ii) in
the case of each Lender Party,  taxes that are imposed on its overall net income
(and any franchise  taxes) by the state or foreign  jurisdiction  of such Lender
Party's Applicable Lending Office or any political subdivision thereof (all such
non-excluded  taxes,  levies,  imposts,  deductions,  charges,  withholdings and
liabilities  in  respect  of  payments   hereunder  or  under  the  Notes  being
hereinafter  referred to as "Taxes").  If the Borrowers shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender  Party or any  Agent,  (i) the sum  payable by the  Borrowers
shall be  increased  as may be  necessary  so that after the  Borrowers  and the
Administrative  Agent have made all required  deductions  (including  deductions
applicable to additional sums payable under this Section 2.12) such Lender Party
or such Agent,  as the case may be, receives an amount equal to the sum it would
have received had no such  deductions  been made,  (ii) the Borrowers shall make
all such  deductions and (iii) the Borrowers  shall pay the full amount deducted
to the  relevant  taxation  authority  or other  authority  in  accordance  with
applicable law.

     (b) In  addition,  the  Borrowers  shall pay any  present or future  stamp,
documentary,  excise,  property or similar  taxes,  charges or levies that arise
from any  payment  made  hereunder  or under  the  Notes or from the  execution,
delivery or registration  of,  performance  under, or otherwise with respect to,
this Agreement,  the Letters of Credit or the Notes (hereinafter  referred to as
"Other Taxes").

     (c) The Borrowers  shall indemnify each Lender Party and each Agent for and
hold them harmless against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any  jurisdiction on amounts payable
under this Section  2.12,  imposed on or paid by such Lender Party or such Agent
(as the case may be) and any liability (including  penalties,  additions to tax,
interest  and  expenses)  arising  therefrom  or  with  respect  thereto.   This
indemnification  shall be made within 30 days from the date such Lender Party or
such Agent (as the case may be) makes written demand  therefor.  Any such demand
shall show in reasonable  detail the amount payable and the calculations used to
determine such amount.

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<PAGE>

     (d) Within 30 days after the date of any  payment of Taxes,  the  Borrowers
shall furnish to the Administrative Agent, at its address referred to in Section
9.02, the original or a certified copy of a receipt evidencing such payment.  In
the case of any  payment  hereunder  or under  the  Notes by or on behalf of the
Borrowers  through an account or branch  outside  the United  States or by or on
behalf of the  Borrowers by a payor that is not a United States  person,  if the
Borrowers determine that no Taxes are payable in respect thereof,  the Borrowers
shall  furnish,  or shall  cause such payor to  furnish,  to the  Administrative
Agent, at such address,  an opinion of counsel  acceptable to the Administrative
Agent  stating  that  such  payment  is  exempt  from  Taxes.  For  purposes  of
subsections  (d) and (e) of this Section  2.12,  the terms  "United  States" and
"United States person" shall have the meanings  specified in Section 7701 of the
Internal Revenue Code.

     (e) Each Lender Party  organized  under the laws of a jurisdiction  outside
the United States  shall,  on or prior to the date of its execution and delivery
of this  Agreement in the case of each  Initial  Lender Party and on the date of
the Assignment and Acceptance pursuant to which it becomes a Lender Party in the
case of each other Lender Party,  and from time to time  thereafter as requested
in writing by the  Borrowers  (but only so long  thereafter as such Lender Party
remains  lawfully able to do so), provide each of the  Administrative  Agent and
the Borrowers with two original  Internal  Revenue  Service forms 1001,  4224 or
form  W-8  (and,  if such  Lender  Party  delivers  a form  W-8,  a  certificate
representing  that such  Lender  Party is not a "bank" for  purposes  of Section
881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the
meaning of Section  871(h)(3)(B) of the Internal  Revenue Code) of the Borrowers
and is not a controlled foreign corporation related to the Borrowers (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate,  or
any  successor  or  other  form  prescribed  by the  Internal  Revenue  Service,
certifying  that such Lender  Party is exempt from or entitled to a reduced rate
of United States  withholding tax on payments  pursuant to this Agreement or the
Notes or, in the case of a Lender Party  providing a form W-8,  certifying  that
such Lender Party is a foreign corporation, partnership, estate or trust. If the
forms  provided by a Lender Party at the time such Lender Party first  becomes a
party to this Agreement  indicate a United States interest  withholding tax rate
in excess of zero,  withholding  tax at such rate shall be  considered  excluded
from Taxes unless and until such Lender Party  provides  the  appropriate  forms
certifying that a lesser rate applies,  whereupon withholding tax at such lesser
rate only shall be considered  excluded from Taxes for periods  governed by such
forms;  provided,  however, that if, at the effective date of the Assignment and
Acceptance  pursuant to which a Lender Party becomes a party to this  Agreement,
the Lender Party assignor was entitled to payments under  subsection (a) of this
Section  2.12 in  respect  of United  States  withholding  tax with  respect  to
interest paid at such date,  then, to such extent,  the term Taxes shall include
(in  addition  to  withholding  taxes that may be imposed in the future or other
amounts  otherwise  includable in Taxes) United States  withholding tax, if any,
applicable  with respect to the Lender Party  assignee on such date. If any form
or document  referred to in this  subsection  (e)  requires  the  disclosure  of
information,  other than  information  necessary  to compute the tax payable and
information  required on the date hereof by Internal  Revenue Service form 1001,
4224 or W-8 (or the related  certificate  described above),  that the applicable
Lender Party reasonably  considers to be  confidential,  such Lender Party shall
give notice  thereof to the  Borrowers  and shall not be obligated to include in
such form or document such confidential information.

     (f) For any  period  with  respect  to which a Lender  Party has  failed to
provide the Borrowers  with the  appropriate  form  described in subsection  (e)
above (other than if such failure is due to a change in law occurring  after the
date on which a form  originally  was  required  to be  provided or if such form


                                       44
<PAGE>

otherwise is not required under  subsection (e) above),  such Lender Party shall
not be entitled to  indemnification  under subsection (a) or (c) of this Section
2.12  with  respect  to Taxes  imposed  by the  United  States by reason of such
failure;  provided,  however, that should a Lender Party become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrowers shall
take such steps as such  Lender  Party shall  reasonably  request to assist such
Lender Party to recover such Taxes.

     (g) Any Lender Party claiming any additional  amounts  payable  pursuant to
this Section 2.12 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory  restrictions) to change the jurisdiction of its
Eurodollar  Lending  Office if the making of such a change  would avoid the need
for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not,  in the  reasonable  judgment  of such  Lender  Party,  be
disadvantageous to such Lender Party.

     SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at
any time any payment (whether  voluntary,  involuntary,  through the exercise of
any right of  set-off,  or  otherwise,  other than as a result of an  assignment
pursuant to Section 9.07) (a) on account of Obligations  due and payable to such
Lender Party hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender  Party at such time to (ii) the  aggregate  amount of the
Obligations due and payable to all Lender Parties  hereunder and under the Notes
at such time) of payments on account of the  Obligations  due and payable to all
Lender  Parties  hereunder  and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations  owing (but not due
and payable) to such Lender Party  hereunder and under the Notes at such time in
excess of its ratable share  (according  to the  proportion of (i) the amount of
such  Obligations  owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations  owing (but not due and payable) to all Lender Parties
hereunder  and under the  Notes at such  time) of  payments  on  account  of the
Obligations  owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall  forthwith  purchase from the other Lender  Parties such
interests or participating interests in the Obligations due and payable or owing
to them,  as the case may be, as shall be  necessary  to cause  such  purchasing
Lender Party to share the excess  payment  ratably with each of them;  provided,
however,  that  if all or any  portion  of such  excess  payment  is  thereafter
recovered  from such  purchasing  Lender  Party,  such  purchase from each other
Lender Party shall be  rescinded  and such other Lender Party shall repay to the
purchasing  Lender Party the purchase price to the extent of such Lender Party's
ratable  share  (according to the  proportion of (i) the purchase  price paid to
such  Lender  Party to (ii) the  aggregate  purchase  price  paid to all  Lender
Parties) of such recovery  together with an amount equal to such Lender  Party's
ratable  share  (according  to the  proportion  of (i) the  amount of such other
Lender Party's required repayment to (ii) the total amount so recovered from the
purchasing  Lender Party) of any interest or other amount paid or payable by the
purchasing  Lender  Party in  respect  of the total  amount so  recovered.  Each
Borrower agrees that any Lender Party so purchasing an interest or participating
interest  from another  Lender  Party  pursuant to this Section 2.13 may, to the
fullest extent permitted by law,  exercise all its rights of payment  (including
the right of set-off) with respect to such interest or  participating  interest,
as the case may be, as fully as if such Lender Party were the direct creditor of
such Borrower in the amount of such interest or participating  interest,  as the
case may be.

     SECTION 2.14.  Use of Proceeds.  The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrowers agree that they shall


                                       45
<PAGE>

use such proceeds and Letters of Credit)  solely for the  following:  (a) in the
case of the Tranche A Term Advances,  (i) to pay transaction costs in connection
with the negotiation, syndication, execution and delivery of the Loan Documents;
(ii) the purchase of certain receivables (other than Excluded  Receivables) from
ICG Telecom  Group,  Inc. and its  Subsidiaries,  subject to a maximum  purchase
price of $50,000,000,  (b) in the case of the Term Advances, to finance the cost
(including, without limitation, with respect to the cost of design, development,
acquisition   construction,   installation,   improvement,   transportation   or
integration),  to acquire  equipment,  inventory,  assets,  services and related
costs in connection  with the Internet  Service  Business or  Telecommunications
Business (including, without limitation,  acquisitions by way of acquisitions of
real property,  leasehold  improvements,  licenses,  rights-of-use,  Capitalized
Leases,  installment  sales and  acquisitions  of the capital stock of an entity
that becomes a Restricted  Subsidiary  to the extent of the fair market value of
the equipment, inventory or assets so acquired (but excluding goodwill)) and (c)
in the case of the Working Capital Facility, for working capital purposes.

     SECTION 2.15.  Defaulting Lenders.  (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting  Lender,  (ii) such Defaulting Lender
shall owe a  Defaulted  Advance  to the  Appropriate  Borrower  and  (iii)  such
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such  Defaulting  Lender,  then such  Borrower
may, so long as no Default  shall occur or be continuing at such time and to the
fullest  extent  permitted by applicable  law, set off and  otherwise  apply the
Obligation  of it to make such payment to or for the account of such  Defaulting
Lender against the obligation of such  Defaulting  Lender to make such Defaulted
Advance.  In the event that, on any date, the Appropriate  Borrower shall so set
off and  otherwise  apply its  obligation  to make any such payment  against the
obligation of such  Defaulting  Lender to make any such Defaulted  Advance on or
prior to such date, the amount so set off and otherwise applied by such Borrower
shall constitute for all purposes of this Agreement and the other Loan Documents
an Advance  by such  Defaulting  Lender  made on the date of such  setoff.  Such
Advance shall be  considered,  for all purposes of this  Agreement,  to comprise
part of the  Borrowing  in  connection  with which such  Defaulted  Advance  was
originally  required  to have been made  pursuant to Section  2.01,  even if the
other Advances  comprising  such Borrowing  shall be Eurodollar Rate Advances on
the date such Advance is deemed to be made pursuant to this  subsection (a). The
Appropriate  Borrower  shall  notify the  Administrative  Agent at any time such
Borrower  exercises  its right of set-off  pursuant to this  subsection  (a) and
shall set forth in such  notice  (A) the name of the  Defaulting  Lender and the
Defaulted  Advance  required  to be made by such  Defaulting  Lender and (B) the
amount  set off and  otherwise  applied in  respect  of such  Defaulted  Advance
pursuant to this subsection (a). Any portion of such payment otherwise  required
to be made by the Appropriate  Borrower to or for the account of such Defaulting
Lender which is paid by such Borrower, after giving effect to the amount set off
and otherwise applied by such Borrower pursuant to this subsection (a), shall be
applied by the  Administrative  Agent as specified in  subsection  (b) or (c) of
this Section 2.15.

     (b) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting  Lender,  (ii) such Defaulting Lender shall owe a Defaulted Amount to
any Agent or any of the other Lender Parties and (iii) the Borrowers  shall make
any payment  hereunder  or under any other Loan  Document to the  Administrative
Agent for the account of such Defaulting Lender,  then the Administrative  Agent
may,  on its  behalf or on  behalf of such  other  Agents or such  other  Lender
Parties and to the fullest  extent  permitted by applicable  law,  apply at such
time the amount so paid by any of such  Borrowers  to or for the account of such
Defaulting  Lender to the  payment of each such  Defaulted  Amount to the extent
required  to pay such  Defaulted  Amount.  In the event that the  Administrative


                                       46
<PAGE>

Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Administrative  Agent shall constitute
for all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative   Agent  shall  be  retained  by  the  Administrative   Agent  or
distributed  by the  Administrative  Agent to such  other  Agents or such  other
Lender  Parties,  ratably in  accordance  with the  respective  portions of such
Defaulted Amounts payable at such time to the  Administrative  Agent, such other
Agents and such other Lender  Parties and, if the amount of such payment made by
the Borrowers shall at such time be  insufficient  to pay all Defaulted  Amounts
owing at such time to the Administrative Agent, such other Agents and such other
Lender Parties, in the following order of priority:

          (i) first,  to the Agents for any Defaulted  Amounts then owing to the
     Agents,  ratably in accordance with such respective  Defaulted Amounts then
     owing to the Agents; and

          (ii) second,  to any other Lender  Parties for any  Defaulted  Amounts
     then owing to such other Lender  Parties,  ratably in accordance  with such
     respective Defaulted Amounts then owing to such other Lender Parties.

Any  portion  of such  amount  paid by the  Borrowers  for the  account  of such
Defaulting  Lender  remaining,  after giving effect to the amount applied by the
Administrative  Agent pursuant to this  subsection  (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.

     (c) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted  Amount and (iii) the  Borrowers,  any Agent or any other  Lender
Party shall be required to pay or distribute  any amount  hereunder or under any
other Loan Document to or for the account of such  Defaulting  Lender,  then the
Borrowers  or such Agent or such other Lender Party shall pay such amount to the
Administrative  Agent to be held by the  Administrative  Agent,  to the  fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest  extent  permitted by applicable  law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this  subsection  (c) shall be  deposited  by the  Administrative  Agent in such
account as the Administrative  Agent shall designate in writing to the Borrowers
and  the  Defaulting   Lender,  in  the  name  and  under  the  control  of  the
Administrative  Agent, but subject to the provisions of this subsection (c). The
terms  applicable to such account,  including the rate of interest  payable with
respect to the credit  balance of such account  from time to time,  shall be the
Administrative  Agent's standard terms applicable to escrow accounts  maintained
with it. Any  interest  credited to such account from time to time shall be held
by the  Administrative  Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance  with the provisions  of, this  subsection
(c).  The  Administrative  Agent  shall,  to the  fullest  extent  permitted  by
applicable  law,  apply  all  funds so held in  escrow  from time to time to the
extent  necessary  to make any Advances  required to be made by such  Defaulting
Lender and to pay any amount  payable by such  Defaulting  Lender  hereunder and
under the other Loan Documents to the  Administrative  Agent or any other Lender
Party, as and when such Advances or amounts are required to be made or paid and,
if the amount so held in escrow  shall at any time be  insufficient  to make and
pay all such  Advances and amounts  required to be made or paid at such time, in
the following order of priority:


                                       47
<PAGE>

          (i) first,  to the Agents for any amounts then due and payable by such
     Defaulting Lender to the Agents hereunder,  ratably in accordance with such
     amounts then due and payable to the Agents;

          (ii) second,  to any other Lender  Parties for any amount then due and
     payable by such Defaulting  Lender to such other Lender Parties  hereunder,
     ratably in accordance with such respective  amounts then due and payable to
     such other Lender Parties; and

          (iii) third, to the Borrowers for any Advance then required to be made
     by such  Defaulting  Lender  pursuant to a  Commitment  of such  Defaulting
     Lender.

In the event that any Lender Party that is a  Defaulting  Lender  shall,  at any
time,  cease to be a  Defaulting  Lender,  any funds held by the  Administrative
Agent in  escrow  at such  time  with  respect  to such  Lender  Party  shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender  Party to the  Obligations  owing to such Lender Party at such time under
this  Agreement  and the other Loan  Documents  ratably in  accordance  with the
respective amounts of such Obligations outstanding at such time.

     (d) The rights and remedies against a Defaulting  Lender under this Section
2.15 are in addition to other rights and remedies  that the  Borrowers  may have
against such  Defaulting  Lender with respect to any Defaulted  Advance and that
any Agent or any Lender  Party may have  against  such  Defaulting  Lender  with
respect to any Defaulted Amount.

     (e) Notwithstanding anything in this Section 2.15 to the contrary, upon any
payment by the  Borrowers  hereunder or under any other Loan  Documents  for the
account of a Defaulting  Lender,  the  Administrative  Agent and the  Defaulting
Lender  shall treat such  payment as having been  applied in the manner in which
the Borrower  intended for purposes of calculating  interest or commitment  fees
owed by the Borrowers.


                                   ARTICLE III

                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

     SECTION  3.01.  Conditions  Precedent to Initial  Extension of Credit.  The
obligation  of each Lender to make an Advance or of the Issuing  Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the  satisfaction  of the following  conditions  precedent  before or
concurrently with the Initial Extension of Credit:



                                       48
<PAGE>

          (a) The Administrative  Agent shall have received on or before the day
     of the  Initial  Extension  of Credit  the  following,  each dated such day
     (unless  otherwise  specified),  in form and substance  satisfactory to the
     Lender Parties (unless  otherwise  specified) and (except for the Notes) in
     sufficient copies for each Lender Party:

               (i) The Notes payable to the Lenders or their registered assigns.

               (ii) A security  agreement in substantially the form of Exhibit D
          hereto  (together  with each other  security  agreement  and  security
          agreement  supplement  delivered pursuant to Section 5.01(j),  in each
          case as amended, the "Security Agreement"), duly executed by each Loan
          Party thereto;

                    (A) certificates representing the Pledged Shares referred to
               therein accompanied by undated stock powers executed in blank and
               instruments evidencing the Pledged Debt indorsed in blank,

                    (B)  acknowledgment  copies  or  stamped  receipt  copies of
               proper financing  statements,  duly filed on or before the day of
               the Initial Extension of Credit under the Uniform Commercial Code
               of all  jurisdictions  that  the  Administrative  Agent  may deem
               necessary  or desirable in order to perfect and protect the first
               priority liens and security  interests created under the Security
               Agreement,  covering  the  Collateral  described  in the Security
               Agreement,

                    (C) completed  requests for information,  dated on or before
               the  date  of  the  Initial  Extension  of  Credit,  listing  the
               financing  statements  referred  to in  clause  (B) above and all
               other effective  financing  statements filed in the jurisdictions
               referred  to in  clause  (B) above  that  name any Loan  Party as
               debtor, together with copies of such other financing statements,

                    (D) evidence of the  completion of all other  recordings and
               filings of or with  respect to the  Security  Agreement  that the
               Administrative  Agent may deem necessary or desirable in order to
               perfect and protect the Liens created thereby,

                    (E) evidence of the  insurance  required by the terms of the
               Security Agreement,

                    (F) copies of the  Assigned  Agreements  referred  to in the
               Security  Agreement,  together with a consent to such assignment,
               in substantially the form of Exhibit B to the Security Agreement,
               duly  executed by each party to such  Assigned  Agreements  other
               than the Loan Parties,

                    (G) the Pledged Account Letters  referred to in the Security
               Agreement, duly executed by each Pledged Account Bank referred to
               in the Security Agreement, and

                                       49
<PAGE>

                    (H) evidence  that all other action that the  Administrative
               Agent may deem  necessary  or  desirable  in order to perfect and
               protect the first priority liens and security  interests  created
               under the Security Agreement have been taken (including,  without
               limitation,  receipt  of  duly  executed  payoff  letters,  UCC-3
               termination  statements and  landlords'  and bailees'  waiver and
               consent agreements).

               (iii) A guaranty  in  substantially  the form of Exhibit E hereto
          (together with each other guaranty and guaranty  supplement  delivered
          pursuant to Section 5.01(j), in each case as amended,  the "Subsidiary
          Guaranty"), duly executed by each Subsidiary Guarantor.

               (iv) A guaranty duly executed by the Parent.

               (v) Deeds of trust, trust deeds,  mortgages,  leasehold mortgages
          and leasehold deeds of trust in form and substance satisfactory to the
          Administrative  Agent and covering the properties  listed on Schedules
          4.01(v) and 4.01(w) hereto  (together  with the  Assignments of Leases
          and Rents  referred  to  therein  and each  other  mortgage  delivered
          pursuant  to  Section   5.01(j),   in  each  case  as   amended,   the
          "Mortgages"),  duly executed by the appropriate  Loan Party,  together
          with:

                    (A) evidence that  counterparts  of the Mortgages  have been
               duly  recorded on or before the day of the Initial  Extension  of
               Credit in all filing or recording offices that the Administrative
               Agent may deem  necessary or desirable in order to create a valid
               first and subsisting  Lien on the property  described  therein in
               favor of the  Collateral  Agent for the  benefit  of the  Secured
               Parties  and that all  filing and  recording  taxes and fees have
               been paid,

                    (B) fully  paid  American  Land Title  Association  Lender's
               Extended   Coverage  title  insurance   policies  (the  "Mortgage
               Policies") in form and substance, with endorsements and in amount
               acceptable to the  Administrative  Agent,  issued,  coinsured and
               reinsured  by title  insurers  acceptable  to the  Administrative
               Agent,  insuring the  Mortgages to be valid first and  subsisting
               Liens on the real property described  therein,  free and clear of
               all  defects  (including,  but not  limited  to,  mechanics'  and
               materialmen's  Liens) and encumbrances,  excepting only Permitted
               Encumbrances,  and providing for such other affirmative insurance
               (including  endorsements  for  future  advances  under  the  Loan
               Documents and for  mechanics' and  materialmen's  Liens) and such
               coinsurance and direct access  reinsurance as the  Administrative
               Agent may deem necessary or desirable,

                    (C) American Land Title  Association form surveys,  dated no
               more than 30 days  before  the day of the  Initial  Extension  of
               Credit,  certified to the Administrative  Agent and the issuer of
               the   Mortgage   Policies  in  a  manner   satisfactory   to  the
               Administrative  Agent  by a land  surveyor  duly  registered  and
               licensed in the States in which the real  property  described  in


                                       50
<PAGE>

               such  surveys is located  and  acceptable  to the  Administrative
               Agent, showing all buildings and other improvements, any off-site
               improvements,  the  location of any  easements,  parking  spaces,
               rights of way,  building  set-back  lines  and other  dimensional
               regulations  and the  absence  of  encroachments,  either by such
               improvements  or on to such property,  and other  defects,  other
               than   encroachments   and  other   defects   acceptable  to  the
               Administrative Agent,

                    (D)  engineering,  soils  and other  reports  as to the real
               properties described in the Mortgages,  in form and substance and
               from professional firms acceptable to the Administrative Agent,

                    (E) the  Assignments  of Leases and Rents referred to in the
               Mortgages, duly executed by the appropriate Loan Party,

                    (F) such consents and  agreements of lessors and other third
               parties,  and such estoppel letters and other  confirmations,  as
               the Administrative Agent may deem necessary or desirable,

                    (G) evidence of the  insurance  required by the terms of the
               Mortgages,

                    (H) evidence  that all other action that the  Administrative
               Agent may deem  necessary  or  desirable in order to create valid
               first  and  subsisting  Liens on the  property  described  in the
               Mortgages has been taken.

               (vi)  Certified  copies  of  the  resolutions  of  the  Board  of
          Directors  of each  Loan  Party  approving  the  Transaction  and each
          Transaction  Document  to which it is or is to be a party,  and of all
          documents evidencing other necessary corporate action and governmental
          and other third party approvals and consents,  if any, with respect to
          the Transaction and each Transaction  Document to which it is or is to
          be a party.

               (vii) To the extent such Secretary of State customarily  provides
          such  certificates,  a copy of a certificate of the Secretary of State
          of the  jurisdiction  of  incorporation  of  each  Loan  Party,  dated
          reasonably  near  the  date  of  the  Initial   Extension  of  Credit,
          certifying  (A) as to a true and  correct  copy of the charter of such
          Loan  Party and each  amendment  thereto  on file in such  Secretary's
          office and (B) that (1) such  amendments  are the only  amendments  to
          such Loan Party's charter on file in such  Secretary's  office and (2)
          such Loan Party has paid all franchise  taxes,  if any, to the date of
          such  certificate and (C) such Loan Party is duly  incorporated and in
          good standing or presently  subsisting  under the laws of the State of
          the jurisdiction of its incorporation.

               (viii) To the extent such Secretary of State customarily provides
          such  certificates,  a copy of a certificate of the Secretary of State
          of each relevant  jurisdiction,  dated reasonably near the date of the
          Initial  Extension  of  Credit,  stating  that each Loan Party is duly
          qualified and in good standing as a foreign  corporation in such State
          and has filed all annual  reports  required to be filed to the date of
          such certificate.


                                       51
<PAGE>

               (ix) A certificate  of each Loan Party,  signed on behalf of such
          Loan Party by its  President or a Vice  President and its Secretary or
          any Assistant  Secretary,  dated the date of the Initial  Extension of
          Credit (the statements made in which  certificate shall be true on and
          as of the date of the Initial  Extension of Credit),  certifying as to
          (A) the  absence of any  amendments  to the charter of such Loan Party
          since the date of the Secretary of State's certificate  referred to in
          Section  3.01(a)(viii),  (B) a true and correct  copy of the bylaws of
          such Loan  Party as in  effect  on the date on which  the  resolutions
          referred to in Section 3.01(a)(vi) were adopted and on the date of the
          Initial  Extension  of  Credit,  (C) the due  incorporation  and  good
          standing  or valid  existence  of such  Loan  Party  as a  corporation
          organized under the laws of the jurisdiction of its incorporation, and
          the absence of any  proceeding  for the  dissolution or liquidation of
          such Loan Party, (D) the truth of the  representations  and warranties
          contained  in the Loan  Documents as though made on and as of the date
          of the  Initial  Extension  of Credit and (E) the absence of any event
          occurring and continuing,  or resulting from the Initial  Extension of
          Credit, that constitutes a Default.

               (x) A certificate  of the Secretary or an Assistant  Secretary of
          each  Loan  Party  certifying  the names  and true  signatures  of the
          officers  of such  Loan  Party  authorized  to sign  each  Transaction
          Document to which it is or is to be a party and the other documents to
          be delivered hereunder and thereunder.

               (xi)  Certified  copies of each of the  Related  Documents,  duly
          executed by the parties thereto and in form and substance satisfactory
          to the Lender Parties,  together with all agreements,  instruments and
          other   documents   delivered   in   connection   therewith   as   the
          Administrative Agent shall request.

               (xii)  Certificates,  in  substantially  the  form of  Exhibit  F
          hereto,  attesting to the Solvency of each Loan Party before and after
          giving effect to the Transaction, from its Chief Financial Officer.

               (xiii)  Evidence  of  insurance  naming the  Collateral  Agent as
          additional  insured and loss payee with such responsible and reputable
          insurance companies or associations,  and in such amounts and covering
          such risks, as is satisfactory to the Lender Parties.

               (xiv)  Certified  copies of all  Material  Contracts of each Loan
          Party and its Subsidiaries as the Administrative Agent shall request.

               (xv) A Notice of Borrowing or Notice of Issuance,  as applicable,
          and a Borrowing Base Certificate  relating to the Initial Extension of
          Credit.

               (xvi) Such financial,  business and other  information  regarding
          each Loan Party and its  Subsidiaries as the Lender Parties shall have
          requested,  including, without limitation,  information as to possible
          contingent   liabilities,   tax   matters,    environmental   matters,
          obligations  under  Plans,  Multiemployer  Plans  and  Welfare  Plans,
          collective   bargaining   agreements  and  other   arrangements   with
          employees,  audited  annual  financial  statements  dated December 31,
          1998,  interim  financial  statements dated the end of the most recent


                                       52
<PAGE>

          fiscal  quarter for which  financial  statements are available (or, in
          the event the Lender  Parties' due diligence  review reveals  material
          changes since such financial statements,  as of a later date within 45
          days  of the  day of the  Initial  Extension  of  Credit),  pro  forma
          financial  statements  as to the  Borrower and  forecasts  prepared by
          management of the Company,  in form and substance  satisfactory to the
          Lender  Parties,  of balance sheets,  income  statements and cash flow
          statements on a quarterly  basis for the first year  following the day
          of the  Initial  Extension  of Credit and on an annual  basis for each
          year thereafter until December 31, 2004.

               (xvii) A favorable  opinion of Thelen Reid & Priest LLP,  counsel
          for the Loan Parties,  in  substantially  the form of Exhibit G hereto
          and  as to  such  other  matters  as  any  Lender  Party  through  the
          Administrative Agent may reasonably request.

               (xviii) Favorable  opinion of Sherman & Howard,  local counsel to
          the Loan Parties in the State of Colorado,  in substantially  the form
          of Exhibit H hereto or in such other forms as any Lender Party through
          the Administrative Agent may reasonably request.

          (b) The Lender Parties shall be satisfied with the corporate and legal
     structure  and   capitalization   of  each  Loan  Party  and  each  of  its
     Subsidiaries  the Equity  Interests in which  Subsidiaries is being pledged
     pursuant to the Loan  Documents,  including the terms and conditions of the
     charter,  bylaws and each class of Equity  Interest  in each Loan Party and
     each such  Subsidiary and of each agreement or instrument  relating to such
     structure or capitalization.

          (c)  Before  giving  effect to the  transactions  contemplated  by the
     Transaction Documents, there shall have occurred no Material Adverse Change
     since December 31, 1998.

          (d) There shall exist no action,  suit,  investigation,  litigation or
     proceeding  affecting any Loan Party or any of its Subsidiaries  pending or
     threatened  before any court,  governmental  agency or arbitrator  that (i)
     could be  reasonably  likely  to have a  Material  Adverse  Effect  or (ii)
     purports  to  affect  the  legality,  validity  or  enforceability  of  any
     Transaction  Document or the consummation of the transactions  contemplated
     thereby.

          (e) All governmental and third party consents and approvals  necessary
     in  connection  with the  Transaction  Documents  shall have been  obtained
     (without the  imposition of any  conditions  that are not acceptable to the
     Lender Parties) and shall remain in effect;  all applicable waiting periods
     in  connection  with  the  transactions  contemplated  by  the  Transaction
     Documents  shall  have  expired  without  any  action  being  taken  by any
     competent  authority,  and no law or regulation  shall be applicable in the
     judgment of the Lender Parties,  in each case that  restrains,  prevents or
     imposes materially adverse conditions upon the Transaction or the rights of
     the Loan  Parties or their  Subsidiaries  freely to transfer  or  otherwise
     dispose of, or to create any Lien on, any properties now owned or hereafter
     acquired by any of them.

          (f)  The  Lender   Parties  shall  have   completed  a  due  diligence
     investigation  of the  Parent  and its  Subsidiaries  in  scope,  and  with
     results, satisfactory to the Lender Parties, and shall have been given such


                                       53
<PAGE>

     access  to  the  management,  records,  books  of  account,  contracts  and
     properties of the Parent and its  Subsidiaries and shall have received such
     financial,  business and other information  regarding each of the foregoing
     persons  as they  shall  have  requested,  including,  without  limitation,
     information as to possible contingent liabilities,  tax matters, collective
     bargaining  agreements  and  other  arrangements  with  employees,   annual
     financial  statements dated December 31, 1998, interim financial statements
     dated  the end of the  most  recent  fiscal  quarter  for  which  financial
     statements  are  available  (or, in the event the  Lenders'  due  diligence
     review reveals  material changes since such financial  statements,  as of a
     later date within 45 days of the Effective  Date),  pro forma  consolidated
     financial  statements as the Borrowers,  the Parent and their Subsidiaries,
     and forecasts  prepared by management of the Borrowers and the Parent, in a
     form  satisfactory  to the Lender  Parties,  of  balance  sheets and income
     statements,  and  nothing  shall have come to the  attention  of the Lender
     Parties during the course of such due diligence  investigation to lead them
     to believe that any  information  provided to the Lender Parties was or has
     become misleading, incorrect or incomplete in any material respect.

          (g) The  Borrower  shall have paid all accrued  fees of the Agents and
     the Lender  Parties and all accrued  expenses of the Agents  (including the
     accrued fees and expenses of counsel to the Administrative Agent.

          (h) The Related Documents shall be in full force and effect.

     SECTION  3.02.  Conditions  Precedent  to Each  Borrowing  and Issuance and
Renewal.  The  obligation of each  Appropriate  Lender to make an Advance (other
than a Letter of Credit  Advance  made by the Issuing  Bank  Lender  pursuant to
Section  2.03(c)  on the  occasion  of each  Borrowing  (including  the  initial
Borrowing),  and the  obligation of the Issuing Bank to issue a Letter of Credit
(including the initial  issuance) or renew a Letter of Credit,  shall be subject
to the  further  conditions  precedent  that on the  date of such  Borrowing  or
issuance  or  renewal  (a)  the  following  statements  shall  be  true  and the
acceptance  by the Borrower of the proceeds of such  Borrowing or of such Letter
of  Credit  or  the  renewal  of  such  Letter  of  Credit  shall  constitute  a
representation and warranty by the Borrower that both on the date of such notice
and on the date of such  Borrowing  or issuance or renewal such  statements  are
true):

          (i) the representations and warranties contained in each Loan Document
     are correct on and as of such date,  before and after giving effect to such
     Borrowing  or issuance or renewal and to the  application  of the  proceeds
     therefrom,  as  though  made on and as of such  date,  other  than any such
     representations  or warranties  that,  by their terms,  refer to a specific
     date other than the date of such Borrowing or issuance or renewal, in which
     case as of such specific date;

          (ii) no Default has occurred and is  continuing,  or would result from
     such  Borrowing  or  issuance  or  renewal or from the  application  of the
     proceeds therefrom; and

          (iii) for each Advance or issuance or renewal of any Letter of Credit,
     the sum of the Loan Values of the Eligible Collateral exceeds the aggregate
     principal amount of the Advances plus the aggregate Available Amount of all
     Letters of Credit to be outstanding  after giving effect to such Advance or
     issuance or renewal, respectively;

                                       54
<PAGE>

and (b) the  Administrative  Agent  shall have  received  (i) a  Borrowing  Base
Certificate  signed by a duly  authorized  officer of the  Appropriate  Borrower
dated the date of such  Borrowing  or issuance  or renewal;  and (ii) such other
approvals,   opinions  or  documents  as  any  Appropriate  Lender  through  the
Administrative Agent may reasonably request.

     SECTION  3.03.   Determinations   Under  Section  3.01.   For  purposes  of
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or  satisfactory to the Lender Parties unless an
officer  of  the   Administrative   Agent   responsible  for  the   transactions
contemplated  by the Loan Documents  shall have received notice from such Lender
Party prior to the Initial  Extension of Credit specifying its objection thereto
and, if the Initial  Extension of Credit  consists of a  Borrowing,  such Lender
Party  shall not have made  available  to the  Administrative  Agent such Lender
Party's ratable portion of such Borrowing.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     SECTION 4.01.  Representations  and Warranties of the Borrower.  The Parent
and each Borrower represents and warrants as follows:

          (a) Each Loan Party and each of its  Subsidiaries (i) is a corporation
     duly organized, validly existing and in good standing under the laws of the
     jurisdiction  of its  incorporation,  (ii)  is duly  qualified  and in good
     standing as a foreign  corporation in each other  jurisdiction  in which it
     owns or leases property or in which the conduct of its business requires it
     to so qualify or be licensed  except  where the failure to so qualify or be
     licensed could not be reasonably  likely to have a Material  Adverse Effect
     and (iii) has all  requisite  corporate  power  and  authority  (including,
     without limitation, all governmental licenses, permits and other approvals)
     to own or lease and operate its  properties and to carry on its business as
     now  conducted  and as proposed  to be  conducted.  All of the  outstanding
     Equity  Interests in each Borrower has been validly  issued,  is fully paid
     and  non-assessable and is owned by the Parent free and clear of all Liens,
     except those created under the Collateral Documents.

          (b) Set forth on Schedule  4.01(b)  hereto is a complete  and accurate
     list of all Subsidiaries of each Loan Party,  showing as of the date hereof
     (as to each such  Subsidiary) the  jurisdiction of its  incorporation,  the
     number of shares of each class of its Equity Interests authorized,  and the
     number  outstanding,  on the date  hereof and the  percentage  of each such
     class of its Equity  Interests  owned (directly or indirectly) by such Loan
     Party  and  the  number  of  shares  covered  by all  outstanding  options,
     warrants,  rights of conversion or purchase and similar  rights at the date
     hereof.  All of the  outstanding  Equity  Interests  in each  Loan  Party's
     Subsidiaries has been validly issued, are fully paid and non-assessable and
     are owned by such Loan  Party or one or more of its  Subsidiaries  free and
     clear of all Liens, except those created under the Collateral Documents.

                                       55
<PAGE>

          (c) The execution, delivery and performance by each Loan Party of each
     Transaction  Document  to  which  it  is  or is  to  be a  party,  and  the
     consummation  of the  Transaction,  are within such Loan Party's  corporate
     powers, have been duly authorized by all necessary corporate action, and do
     not (i) contravene  such Loan Party's  charter or bylaws,  (ii) violate any
     law, rule, regulation (including,  without limitation,  Regulation X of the
     Board of Governors of the Federal Reserve System),  order, writ,  judgment,
     injunction,  decree,  determination or award, (iii) conflict with or result
     in the breach of, or constitute a default or require any payment to be made
     under, any contract,  loan agreement,  indenture,  mortgage, deed of trust,
     lease or other  instrument  binding on or affecting any Loan Party,  any of
     its  Subsidiaries  or any of their  properties in such a manner as would be
     reasonably  likely to have a Material Adverse Effect or (iv) except for the
     Liens created under the Loan  Documents,  result in or require the creation
     or imposition of any Lien upon or with respect to any of the  properties of
     any Loan  Party  or any of its  Subsidiaries.  No Loan  Party or any of its
     Subsidiaries  is in violation  of any such law,  rule,  regulation,  order,
     writ, judgment,  injunction, decree, determination or award or in breach of
     any such contract,  loan  agreement,  indenture,  mortgage,  deed of trust,
     lease or other  instrument,  the  violation  or  breach  of which  could be
     reasonably likely to have a Material Adverse Effect.

          (d) No  authorization or approval or other action by, and no notice to
     or filing with, any governmental  authority or regulatory body or any other
     third party is required for (i) the due execution,  delivery,  recordation,
     filing or  performance  by any Loan Party of any  Transaction  Document  to
     which  it  is or  is  to  be a  party,  or  for  the  consummation  of  the
     Transaction,  (ii) the grant by any Loan  Party of the Liens  granted by it
     pursuant to the Collateral  Documents,  (iii) the perfection or maintenance
     of the Liens created under the  Collateral  Documents  (including the first
     priority  nature  thereof) or (iv) the  exercise by any Agent or any Lender
     Party of its rights under the Loan  Documents or the remedies in respect of
     the  Collateral  pursuant  to the  Collateral  Documents,  except  for  the
     authorizations,  approvals, actions, notices and filings referred to herein
     or listed on Schedule 4.01(d) hereto, all of which have been duly obtained,
     taken,  given or made and are in full  force  and  effect.  All  applicable
     waiting periods in connection with the Transaction have expired without any
     action having been taken by any competent authority restraining, preventing
     or imposing  materially  adverse  conditions  upon the  Transaction  or the
     rights of the Loan  Parties or their  Subsidiaries  freely to  transfer  or
     otherwise dispose of, or to create any Lien on, any properties now owned or
     hereafter acquired by any of them.

          (e) This Agreement has been, and each other Transaction  Document when
     delivered  hereunder  will have been,  duly  executed and delivered by each
     Loan Party party  thereto.  This  Agreement is, and each other  Transaction
     Document when  delivered  hereunder  will be, the legal,  valid and binding
     obligation of each Loan Party party thereto,  enforceable against such Loan
     Party in accordance with its terms.

          (f) There is no action, suit, investigation,  litigation or proceeding
     affecting  any  Loan  Party  or  any  of its  Subsidiaries,  including  any
     Environmental Action, pending or threatened before any court,  governmental
     agency or arbitrator that (i) could be reasonably likely to have a Material
     Adverse  Effect  or (ii)  purports  to affect  the  legality,  validity  or
     enforceability  of any  Transaction  Document  or the  consummation  of the
     Transaction.


                                       56
<PAGE>

          (g) The  Consolidated and  consolidating  balance sheets of the Parent
     and its Subsidiaries as at December 31, 1998, and the related  Consolidated
     and consolidating  statements of income and Consolidated  statement of cash
     flows of the Parent and its  Subsidiaries  for the fiscal  year then ended,
     accompanied by an unqualified opinion of KPMG Peat Marwick LLP, independent
     public  accountants,  and  the  Consolidated  and  consolidating  unaudited
     balance sheets of the Parent and its  Subsidiaries as at June 30, 1999, and
     the related unaudited  Consolidated and consolidating  statements of income
     and Consolidated statement of cash flows of the Parent and its Subsidiaries
     for the six  months  then  ended,  duly  certified  by the Chief  Financial
     Officer of the Parent,  copies of which have been  furnished to each Lender
     Party,  in each case fairly present,  subject,  in the case of said balance
     sheet as at June 30, 1999, and said statements of income and cash flows for
     the six months then ended, to year-end audit adjustments,  the Consolidated
     and consolidating financial condition of the Parent and its Subsidiaries as
     at such dates and the Consolidated and consolidating  results of operations
     of the Parent and its Subsidiaries for the periods ended on such dates, all
     in accordance with generally  accepted  accounting  principles applied on a
     consistent  basis,  and since December 31, 1998, there has been no Material
     Adverse Change.

          (h) The  Consolidated  and  consolidating  forecasted  balance sheets,
     statements  of income  and  statements  of cash flows of the Parent and its
     Subsidiaries   delivered  to  the  Lender   Parties   pursuant  to  Section
     3.01(a)(xvi)  or 5.03  were  prepared  in good  faith  on the  basis of the
     assumptions  stated therein,  which  assumptions  were fair in light of the
     conditions  existing  at the  time  of  delivery  of  such  forecasts,  and
     represented,  at the time of delivery,  the Parent's  best  estimate of its
     future financial performance.

          (i) Neither the Pre-Commitment  Information nor any other information,
     exhibit or report  furnished by or on behalf of any Loan Party to any Agent
     or any Lender Party in connection  with the  negotiation and syndication of
     the Loan Documents or pursuant to the terms of the Loan Documents contained
     any untrue statement of a material fact or omitted to state a material fact
     necessary to make the statements made therein not misleading.

          (j) The Borrower is not engaged in the  business of  extending  credit
     for the purpose of purchasing or carrying Margin Stock,  and no proceeds of
     any Advance or drawings under any Letter of Credit will be used to purchase
     or carry any Margin Stock or to extend  credit to others for the purpose of
     purchasing or carrying any Margin Stock.

          (k)  Neither  any  Loan  Party  nor  any  of  its  Subsidiaries  is an
     "investment  company",  or an  "affiliated  person"  of, or  "promoter"  or
     "principal  underwriter"  for, an "investment  company",  as such terms are
     defined in the Investment Company Act of 1940, as amended. Neither any Loan
     Party nor any of its Subsidiaries is a "holding company",  or a "subsidiary
     company" of a "holding  company",  or an "affiliate" of a "holding company"
     or of a  "subsidiary  company"  of a "holding  company",  as such terms are
     defined in the Public  Utility  Holding  Company  Act of 1935,  as amended.
     Neither  the making of any  Advances,  nor the  issuance  of any Letters of
     Credit,  nor the  application  of the proceeds or repayment  thereof by the
     Borrower,  nor the consummation of the other  transactions  contemplated by
     the  Transaction  Documents,  will violate any provision of any such Act or
     any rule,  regulation or order of the  Securities  and Exchange  Commission
     thereunder.


                                       57
<PAGE>

          (l) Neither any Loan Party nor any of its  Subsidiaries  is a party to
     any indenture,  loan or credit agreement or any lease or other agreement or
     instrument  or subject to any charter or corporate  restriction  that could
     reasonably be expected to have a Material Adverse Effect.

          (m) All filings and other  actions  necessary  or desirable to perfect
     and  protect the  security  interest in the  Collateral  created  under the
     Collateral Documents have been duly made or taken and are in full force and
     effect,  and the  Collateral  Documents  create in favor of the  Collateral
     Agent for the benefit of the  Secured  Parties a valid and,  together  with
     such filings and other actions,  perfected first priority security interest
     in the Collateral, securing the payment of the Secured Obligations, and all
     filings and other  actions  necessary  or  desirable to perfect and protect
     such security interest have been duly taken. The Loan Parties are the legal
     and beneficial  owners of the Collateral free and clear of any Lien, except
     for the liens and security  interests  created or permitted  under the Loan
     Documents.

          (n)  Each  Loan  Party  is,   individually   and  together   with  its
     Subsidiaries, Solvent.

          (o) (i) No ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan.

          (ii)  Schedule B  (Actuarial  Information)  to the most recent  annual
     report  (Form 5500  Series) for each Plan,  copies of which have been filed
     with the Internal  Revenue Service and furnished to the Lender Parties,  is
     complete and accurate and fairly  presents the funding status of such Plan,
     and since the date of such  Schedule B there has been no  material  adverse
     change in such funding status.

          (iii)  Neither any Loan Party nor any ERISA  Affiliate has incurred or
     is  reasonably   expected  to  incur  any   Withdrawal   Liability  to  any
     Multiemployer Plan.

          (iv) Neither any Loan Party nor any ERISA  Affiliate has been notified
     by the sponsor of a Multiemployer  Plan that such  Multiemployer Plan is in
     reorganization  or has been  terminated,  within the meaning of Title IV of
     ERISA,  and no such  Multiemployer  Plan is  reasonably  expected  to be in
     reorganization  or to be  terminated,  within  the  meaning  of Title IV of
     ERISA.

          (p) (i) The  operations  and properties of each Loan Party and each of
     its  Subsidiaries  comply  in all  material  respects  with all  applicable
     Environmental Laws and Environmental  Permits, all past non-compliance with
     such Environmental Laws and Environmental Permits has been resolved without
     ongoing  obligations  or costs,  and no  circumstances  exist that could be
     reasonably likely to (A) form the basis of an Environmental  Action against
     any Loan Party or any of its  Subsidiaries or any of their  properties that
     could have a Material  Adverse  Effect or (B) cause any such property to be
     subject to any restrictions on ownership, occupancy, use or transferability
     under any Environmental Law.

          (ii) None of the properties currently or formerly owned or operated by
     any Loan Party or any of its Subsidiaries is listed or proposed for listing
     on the NPL or on the CERCLIS or any analogous foreign,  state or local list


                                       58
<PAGE>

     or is adjacent to any such  property;  there are no and never have been any
     underground  or  aboveground  storage  tanks or any  surface  impoundments,
     septic tanks, pits, sumps or lagoons in which Hazardous Materials are being
     or have been treated, stored or disposed on any property currently owned or
     operated  by any Loan Party or any of its  Subsidiaries  or, to the best of
     its knowledge, on any property formerly owned or operated by any Loan Party
     or any of its  Subsidiaries;  there is no asbestos  or  asbestos-containing
     material on any property  currently  owned or operated by any Loan Party or
     any of its  Subsidiaries;  and Hazardous  Materials have not been released,
     discharged  or disposed of on any property  currently or formerly  owned or
     operated by any Loan Party or any of its Subsidiaries.

          (iii)  Neither  any  Loan  Party  nor  any  of  its   Subsidiaries  is
     undertaking,  and has not completed,  either  individually or together with
     other potentially  responsible  parties, any investigation or assessment or
     remedial or response action  relating to any actual or threatened  release,
     discharge  or  disposal of  Hazardous  Materials  at any site,  location or
     operation,  either voluntarily or pursuant to the order of any governmental
     or regulatory  authority or the requirements of any Environmental  Law; and
     all Hazardous Materials generated,  used, treated, handled or stored at, or
     transported  to or  from,  any  property  currently  or  formerly  owned or
     operated by any Loan Party or any of its Subsidiaries have been disposed of
     in a manner not reasonably  expected to result in material liability to any
     Loan Party or any of its Subsidiaries.

          (q) (i) Neither any Loan Party nor any of its Subsidiaries is party to
     any tax sharing agreement other than the Tax Sharing Agreement.

          (ii) Except as  disclosed  on Schedule  4.01(q),  (i) all tax returns,
     statements,  reports  and forms  (including  estimated  tax or  information
     returns)  (collectively,  the "Tax Returns")  required to be filed with any
     taxing  authority  by,  or with  respect  to,  each  Loan  Party  and their
     Subsidiaries have been timely filed in accordance with all applicable laws;
     (ii)  each  Loan  Party  and their  Subsidiaries  has  timely  paid or made
     adequate  provision  for  payment  of all  taxes  that are shown as due and
     payable  on Tax  Returns  that  have  been so filed  or that are  otherwise
     required to be paid (including without  limitation,  assessments,  interest
     and penalties) and, as of the time of filing,  each Tax Return was accurate
     and complete and correctly reflected the facts regarding income,  business,
     assets, operations,  activities and the status of each Loan Party and their
     Subsidiaries  (other than taxes which are being contested in good faith and
     for which  adequate  reserves  are  reflected on the  financial  statements
     delivered  hereunder) and (iii) each Loan Party and its  Subsidiaries  have
     made  adequate  provision  for all taxes payable by such Loan Party and its
     Subsidiaries  for  which  no Tax  Return  has yet been  filed or which  are
     otherwise due.

          (iii) Set forth on Part I of Schedule 4.01(q) hereto is a complete and
     accurate  list,  as of the date  hereof,  of each taxable year of each Loan
     Party and each of its  Subsidiaries and Affiliates for which Federal income
     tax returns have been filed and for which the  expiration of the applicable
     statute of  limitations  for  assessment or collection  has not occurred by
     reason of extension or otherwise (an "Open Year").

          (iv)  The  aggregate  unpaid  amount,   as  of  the  date  hereof,  of
     adjustments to the Federal income tax liability of each Loan Party and each
     of its Subsidiaries and Affiliates proposed by the Internal Revenue Service
     with respect to Open Years does not exceed  $10,000,000.  Set forth on Part
     II of Schedule 4.01(q) hereto is a complete and accurate description, as of


                                       59
<PAGE>

     the date  hereof,  of each  such item  that  separately,  for all such Open
     Years, together with applicable interest and penalties, exceeds $1,000,000.
     No issues have been raised by the  Internal  Revenue  Service in respect of
     Open Years that, in the  aggregate,  could be  reasonably  likely to have a
     Material Adverse Effect.

          (v) The aggregate unpaid amount, as of the date hereof, of adjustments
     to the state,  local and foreign tax  liability  of each Loan Party and its
     Subsidiaries and Affiliates proposed by all state, local and foreign taxing
     authorities  (other than amounts arising from adjustments to Federal income
     tax  returns)  does not exceed  $10,000,000.  No issues have been raised by
     such taxing authorities that, in the aggregate,  could be reasonably likely
     to have a Material Adverse Effect.

          (r) Neither the business nor the  properties  of any Loan Party or any
     of its Subsidiaries are affected by any fire, explosion,  accident, strike,
     lockout or other labor dispute, drought, storm, hail, earthquake,  embargo,
     act of God or of the public enemy or other casualty (whether or not covered
     by insurance)  that could be reasonably  likely to have a Material  Adverse
     Effect.

          (s) Set forth on Schedule  4.01(s)  hereto is a complete  and accurate
     list of all  Existing  Debt,  showing as of the date hereof the obligor and
     the principal amount outstanding thereunder.

          (t) Set forth on Schedule  4.01(t)  hereto is a complete  and accurate
     list of all Liens on the property or assets of any Loan Party or any of its
     Subsidiaries,  showing as of the date hereof the  lienholder  thereof,  the
     principal  amount of the  obligations  secured  thereby and the property or
     assets of such Loan Party or such Subsidiary subject thereto.

          (u) Set forth on Schedule  4.01(u)  hereto is a complete  and accurate
     list  of  all  real  property  owned  by  any  Loan  Party  or  any  of its
     Subsidiaries,  showing as of the date hereof the street address,  county or
     other  relevant  jurisdiction,  state,  record owner and book and estimated
     fair value thereof. Each Loan Party or such Subsidiary has good, marketable
     and insurable fee simple title to such real property, free and clear of all
     Liens, other than Liens created or permitted by the Loan Documents.

          (v) Set forth on Schedule  4.01(v)  hereto is a complete  and accurate
     list of all leases of real  property  under  which any Loan Party or any of
     its  Subsidiaries  is the lessee,  showing as of the date hereof the street
     address,  county or other relevant  jurisdiction,  state,  lessor,  lessee,
     expiration  date and annual  rental  cost  thereof.  Each such lease is the
     legal, valid and binding  obligation of the lessor thereof,  enforceable in
     accordance with its terms.

          (w) Set forth on Schedule  4.01(w)  hereto is a complete  and accurate
     list of all Investments  held by any Loan Party or any of its  Subsidiaries
     on the date  hereof,  showing as of the date hereof the amount,  obligor or
     issuer and maturity, if any, thereof.

          (x) Set forth on Schedule  4.01(x)  hereto is a complete  and accurate
     list of all patents, trademarks, trade names, service marks and copyrights,


                                       60
<PAGE>

     and all applications  therefor and licenses thereof,  of each Loan Party or
     any of its Subsidiaries,  showing as of the date hereof the jurisdiction in
     which registered, the registration number, the date of registration and the
     expiration date.

          (y) Set forth on Schedule  4.01(y)  hereto is a complete  and accurate
     list of all  Material  Contracts  of each Loan Party and its  Subsidiaries,
     showing as of the date hereof the parties, subject matter and term thereof.
     Each  such  Material  Contract  has  been  duly  authorized,  executed  and
     delivered  by all  parties  thereto,  has not  been  amended  or  otherwise
     modified,  is in full force and effect and is binding upon and  enforceable
     against all parties thereto in accordance with its terms,  and there exists
     no default under any Material Contract by any party thereto.

          (z) Each  Borrower has (i)  initiated a review and  assessment  of all
     areas  within its and each of its  Subsidiaries'  business  and  operations
     (including  those affected by suppliers,  vendors and customers) that could
     be adversely  affected by the risk that computer  applications used by such
     Borrower or any of its Subsidiaries  (or suppliers,  vendors and customers)
     may be unable to recognize and perform  properly  date-sensitive  functions
     involving  certain dates prior to and any date after December 31, 1999 (the
     "Year 2000  Problem"),  (ii)  developed a plan and timetable for addressing
     the Year 2000 Problem on a timely basis and (iii) to date, implemented that
     plan in  accordance  with  such  timetable.  Based on the  foregoing,  each
     Borrower  believes that all computer  applications  (including those of its
     suppliers,  vendors and  customers)  that are material to its or any of its
     Subsidiaries'  business and operations are reasonably  expected on a timely
     basis to be able to perform properly date-sensitive functions for all dates
     before and after  January 1, 2000  ("Year 2000  Compliant"),  except to the
     extent that a failure to do so could not  reasonably  be expected to have a
     Material Adverse Effect.


                                    ARTICLE V

                          COVENANTS OF THE LOAN PARTIES

     SECTION 5.01.  Affirmative  Covenants.  So long as any Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, each Loan Party will:

          (a)  Compliance  with  Laws,  Etc.  Comply,  and  cause  each  of  its
     Subsidiaries to comply, in all material respects, with all applicable laws,
     rules,   regulations  and  orders,  such  compliance  to  include,  without
     limitation,  compliance with ERISA and the Racketeer Influenced and Corrupt
     Organizations Chapter of the Organized Crime Control Act of 1970.

          (b) Payment of Taxes,  Etc. Pay and  discharge,  and cause each of its
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes,  assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that,  if unpaid,  might
     by law become a Lien upon its property; provided, however, that neither the
     Loan  Parties  nor any of their  Subsidiaries  shall be  required to pay or
     discharge any such tax, assessment, charge or claim that is being contested
     in  good  faith  and by  proper  proceedings  and as to  which  appropriate
     reserves are being maintained.

                                       61
<PAGE>

          (c) Compliance with Environmental  Laws. Comply, and cause each of its
     Subsidiaries  and all lessees and other Persons  operating or occupying its
     properties  to  comply,  in all  material  respects,  with  all  applicable
     Environmental  Laws and Environmental  Permits;  obtain and renew and cause
     each of its  Subsidiaries  to obtain  and renew all  Environmental  Permits
     necessary for its operations and properties; and conduct, and cause each of
     its  Subsidiaries  to  conduct,  any  investigation,  study,  sampling  and
     testing,  and  undertake  any  cleanup,  removal,  remedial or other action
     necessary to remove and clean up all  Hazardous  Materials  from any of its
     properties,  in accordance with the requirements of all Environmental Laws;
     provided,  however,  that  neither  the  Loan  Parties  nor  any  of  their
     Subsidiaries  shall be required to  undertake  any such  cleanup,  removal,
     remedial  or other  action to the extent  that its  obligation  to do so is
     being  contested in good faith and by proper  proceedings  and  appropriate
     reserves are being maintained with respect to such circumstances.

          (d)  Maintenance  of  Insurance.  Maintain,  and  cause  each  of  its
     Subsidiaries  to  maintain,   insurance  with   responsible  and  reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar  properties  in the same general  areas in which such Loan Party or
     such Subsidiary operates.

          (e) Preservation of Corporate  Existence,  Etc. Preserve and maintain,
     and cause each of its Subsidiaries to preserve and maintain, its existence,
     legal  structure,  rights  (charter  and  statutory),   permits,  licenses,
     approvals,  privileges and franchises (including,  without limitation,  any
     permits, licenses, approvals, privileges and franchises issued to such Loan
     Party by the FCC or any PUC); provided, however, that each Borrower and its
     Subsidiaries  may consummate any merger or  consolidation  permitted  under
     Section 5.02(d) and provided further that neither any Loan Party nor any of
     its Subsidiaries shall be required to preserve any right, permit,  license,
     approval,  privilege  or  franchise  if the Board of Directors of such Loan
     Party or such Subsidiary shall determine that the  preservation  thereof is
     no longer  desirable  in the conduct of the  business of such Loan Party or
     such  Subsidiary,  as the case may be,  and  that the loss  thereof  is not
     disadvantageous in any material respect to such Loan Party, such Subsidiary
     or the Lender Parties.

          (f) Visitation  Rights.  At any reasonable time and from time to time,
     permit  any of the Agents or any of the  Lender  Parties,  or any agents or
     representatives  thereof,  to examine and make copies of and abstracts from
     the records and books of account of, and visit the properties of, such Loan
     Party and any of its Subsidiaries, and to discuss the affairs, finances and
     accounts of such Loan Party and any of its  Subsidiaries  with any of their
     officers  or  directors  and  with  their   independent   certified  public
     accountants.

          (g)  Keeping of Books.  Keep,  and cause each of its  Subsidiaries  to
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial  transactions and the assets and business of
     such Loan  Party and each such  Subsidiary  in  accordance  with  generally
     accepted accounting principles in effect from time to time.

                                       62
<PAGE>

          (h) Maintenance of Properties,  Etc. Maintain and preserve,  and cause
     each of its  Subsidiaries  to maintain and preserve,  all of its properties
     that are used or useful in the  conduct  of its  business  in good  working
     order and condition, ordinary wear and tear excepted.

          (i)  Transactions  with  Affiliates.  Conduct,  and cause  each of its
     Subsidiaries to conduct,  all  transactions  otherwise  permitted under the
     Loan  Documents  with any of their  Affiliates  on terms  that are fair and
     reasonable and no less favorable to such Loan Party or such Subsidiary than
     it would obtain in a comparable arm's-length  transaction with a Person not
     an Affiliate.

          (j) Covenant to Guarantee Obligations and Give Security.  Upon (x) the
     request of the  Collateral  Agent  following the  occurrence and during the
     continuance  of a Default,  (y) the  formation  or  acquisition  of any new
     direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of
     any property by any Loan Party,  and such property,  in the judgment of the
     Collateral  Agent,  shall not  already  be  subject  to a  perfected  first
     priority security interest in favor of the Collateral Agent for the benefit
     of the Secured  Parties,  then each Loan Party  shall,  in each case at the
     such Loan Party's expense:

               (i)  in  connection  with  the  formation  or  acquisition  of  a
          Subsidiary, within 10 days after such formation or acquisition,  cause
          each such  Subsidiary,  and cause each direct and  indirect  parent of
          such  Subsidiary  (if it has not already done so), to duly execute and
          deliver to the Collateral Agent a guaranty or guaranty supplement,  in
          form and substance satisfactory to the Collateral Agent,  guaranteeing
          the other Loan Parties' obligations under the Loan Documents,

               (ii) within 10 days after such request, formation or acquisition,
          furnish to the Collateral Agent a description of the real and personal
          properties of the Loan Parties and their  respective  Subsidiaries  in
          detail satisfactory to the Collateral Agent,

               (iii)   within  15  days  after  such   request,   formation   or
          acquisition,  duly execute and deliver, and cause each such Subsidiary
          (other than ICG 161 and ICG  Corporate  Headquarters)  and each direct
          and indirect parent of such Subsidiary (if it has not already done so)
          to duly  execute  and  deliver,  to the  Collateral  Agent  mortgages,
          pledges,   assignments,   security  agreement  supplements  and  other
          security  agreements,  as  specified  by and  in  form  and  substance
          satisfactory  to the  Collateral  Agent,  securing  payment of all the
          Obligations  of the  applicable  Loan Party,  such  Subsidiary or such
          parent,  as the case may be, under the Loan Documents and constituting
          Liens on all such properties,

               (iv) within 30 days after such request, formation or acquisition,
          take, and cause such Subsidiary  (other than ICG 161 and ICG Corporate
          Headquarters)  or such  parent to take,  whatever  action  (including,
          without limitation,  the recording of mortgages, the filing of Uniform
          Commercial  Code financing  statements,  the giving of notices and the
          endorsement  of  notices  on  title  documents)  may be  necessary  or
          advisable  in the  opinion  of the  Collateral  Agent  to  vest in the
          Collateral  Agent (or in any  representative  of the Collateral  Agent
          designated  by it)  valid  and  subsisting  Liens  on  the  properties
          purported  to be  subject  to  the  mortgages,  pledges,  assignments,


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          security  agreement  supplements  and  security  agreements  delivered
          pursuant  to this  Section  5.01(j),  enforceable  against  all  third
          parties in accordance with their terms,

               (v) within 70 days after such request,  formation or acquisition,
          deliver to the  Collateral  Agent,  upon the request of the Collateral
          Agent in its sole  discretion,  a signed copy of a favorable  opinion,
          addressed to the Collateral  Agent and the other Secured  Parties,  of
          counsel for the Loan Parties  reasonably  acceptable to the Collateral
          Agent as to the matters contained in clauses (i), (iii) and (iv) above
          (subject to customary  limitations),  as to such guaranties,  guaranty
          supplements,   mortgages,  pledges,  assignments,  security  agreement
          supplements  and security  agreements  being legal,  valid and binding
          obligations of each Loan Party thereto  enforceable in accordance with
          their terms,  as to the matters  contained in clause (iv) above, as to
          such  recordings,  filings,  notices,  endorsements  and other actions
          being  sufficient to create valid perfected Liens on such  properties,
          and as to such other matters as the  Collateral  Agent may  reasonably
          request,

               (vi) as promptly as practicable after such request,  formation or
          acquisition,  deliver, upon the request of the Collateral Agent in its
          sole  discretion,  to the Collateral Agent with respect to each parcel
          of real  property  owned or held by the entity  that is the subject of
          such request,  formation or  acquisition  title  reports,  surveys and
          engineering,  soils and other reports,  and  environmental  assessment
          reports,  each  in  scope,  form  and  substance  satisfactory  to the
          Collateral Agent, provided,  however, that to the extent that any Loan
          Party or any of its Subsidiaries  shall have otherwise received any of
          the  foregoing  items with respect to such real  property,  such items
          shall,  promptly  after  the  receipt  thereof,  be  delivered  to the
          Collateral Agent,

               (vii)  upon  the  occurrence  and  during  the  continuance  of a
          Default,  promptly  cause to be deposited  any and all cash  dividends
          paid  or  payable  to it or any of its  Subsidiaries  from  any of its
          Subsidiaries from time to time into the Cash Collateral  Account,  and
          with  respect to all other  dividends  paid or payable to it or any of
          its Subsidiaries from time to time,  promptly execute and deliver,  or
          cause such Subsidiary to promptly execute and deliver, as the case may
          be, any and all further  instruments and take or cause such Subsidiary
          to take,  as the case may be, all such other action as the  Collateral
          Agent may deem  necessary or desirable in order to obtain and maintain
          from and after the time such  dividend is paid or payable a perfected,
          first priority lien on and security interest in such dividends, and

               (viii) at any time and from time to time,  promptly  execute  and
          deliver any and all further  instruments  and  documents  and take all
          such  other  action  as the  Collateral  Agent may deem  necessary  or
          desirable in obtaining  the full  benefits  of, or in  perfecting  and
          preserving  the  Liens  of,  such  guaranties,   mortgages,   pledges,
          assignments,  security agreement  supplements,  intellectual  property
          security agreement supplements and security agreements.

          (k) Further Assurances. (i) Promptly upon request by any Agent, or any
     Lender Party through the Administrative  Agent,  correct, and cause each of


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     its Subsidiaries promptly to correct, any material defect or error that may
     be  discovered in any Loan  Document or in the  execution,  acknowledgment,
     filing or recordation thereof, and

          (ii) Promptly  upon request by any Agent,  or any Lender Party through
     the  Administrative  Agent,  do,  execute,  acknowledge,  deliver,  record,
     re-record, file, re-file, register and re-register any and all such further
     acts, deeds,  conveyances,  pledge agreements,  mortgages,  deeds of trust,
     trust deeds,  assignments,  financing statements and continuations thereof,
     termination  statements,  notices of assignment,  transfers,  certificates,
     assurances and other  instruments as any Agent, or any Lender Party through
     the Administrative Agent, may reasonably require from time to time in order
     to (A) carry out more  effectively the purposes of the Loan Documents,  (B)
     to the fullest extent permitted by applicable law, subject any Loan Party's
     or  any of  its  Subsidiaries'  (other  than  ICG  161  and  ICG  Corporate
     Headquarters)  properties,  assets, rights or interests to the Liens now or
     hereafter  intended to be covered by any of the Collateral  Documents,  (C)
     perfect and maintain the validity, effectiveness and priority of any of the
     Collateral Documents and any of the Liens intended to be created thereunder
     and (D) assure,  convey,  grant, assign,  transfer,  preserve,  protect and
     confirm more effectively unto the Secured Parties the rights granted or now
     or hereafter  intended to be granted to the Secured  Parties under any Loan
     Document or under any other instrument executed in connection with any Loan
     Document to which any Loan Party or any of its  Subsidiaries is or is to be
     a party, and cause each of its Subsidiaries to do so.

          (l) Performance of Related Documents.  Perform and observe,  and cause
     each of its  Subsidiaries  to  perform  and  observe,  all of the terms and
     provisions  of each  Related  Document to be  performed  or observed by it,
     maintain each such Related Document in full force and effect,  enforce such
     Related Document in accordance with its terms, take all such action to such
     end as may be from time to time requested by the Administrative  Agent and,
     upon request of the Administrative  Agent, make to each other party to each
     such Related Document such demands and requests for information and reports
     or for action as any Loan Party or any of its  Subsidiaries  is entitled to
     make under such Related Document.

          (m)  Compliance  with  Terms  of  Leaseholds.  Make all  payments  and
     otherwise perform all obligations in respect of all leases of real property
     to which such Loan Party or any of its  Subsidiaries is a party,  keep such
     leases in full force and  effect  and not allow such  leases to lapse or be
     terminated or any rights to renew such leases to be forfeited or cancelled,
     notify the Administrative Agent of any default by any party with respect to
     such leases and cooperate with the Administrative  Agent in all respects to
     cure any such default,  and cause each of its Subsidiaries to do so, except
     where the failure to do so either  individually or in the aggregate,  could
     not be reasonably likely to have a Material Adverse Effect.

          (n) Interest Rate Hedging.  If the three month Eurodollar Rate exceeds
     9% per annum for 15 consecutive  Business Days at any time,  enter into and
     maintain  at all times  thereafter,  interest  rate Hedge  Agreements  with
     Persons  acceptable to the  Administrative  Agent and the Required Lenders,
     covering a notional  amount of not less than 50% of the  Commitments  under
     all of the Facilities at such time.

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<PAGE>

          (o)  Performance  of Material  Contracts.  Perform and observe all the
     terms and provisions of each Material  Contract to be performed or observed
     by it,  maintain  each such  Material  Contract  in full force and  effect,
     enforce each such Material  Contract in accordance with its terms, take all
     such action to such end as may be from time to time reasonably requested by
     the  Administrative  Agent and, upon request of the  Administrative  Agent,
     make to each other party to each such  Material  Contract  such demands and
     requests for information and reports or for action as any Loan Party or any
     of its Subsidiaries is entitled to make under such Material  Contract,  and
     cause each of its  Subsidiaries  to do so, except,  in any case,  where the
     failure to do so, either  individually  or in the  aggregate,  could not be
     reasonably likely to have a Material Adverse Effect.

          (p) Lease  Arrangements.  Insure that ICG  Equipment  is lessor  under
     master  leases and other lease  arrangements  in respect of which the lease
     payments,  together  with the  residual  value of the  property,  plant and
     equipment  subject  thereto,  are  sufficient  to pay all  amounts  due and
     payable  during  the term of this  Agreement  in respect of all Debt of the
     Parent and its Subsidiaries.

     SECTION  5.02.  Negative  Covenants.  So long as any  Advance  or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, no Loan Party shall, at any time:

          (a) Liens,  Etc. Create,  incur,  assume or suffer to exist, or permit
     any of its  Subsidiaries to create,  incur,  assume or suffer to exist, any
     Lien  on or  with  respect  to  any  of its  properties  of  any  character
     (including,  without  limitation,  accounts) whether now owned or hereafter
     acquired,  or sign or  file  or  suffer  to  exist,  or  permit  any of its
     Subsidiaries  to sign or  file  or  suffer  to  exist,  under  the  Uniform
     Commercial Code of any jurisdiction,  a financing  statement that names any
     Loan  Party or any of its  Subsidiaries  as  debtor,  or sign or  suffer to
     exist, or permit any of its  Subsidiaries  to sign or suffer to exist,  any
     security  agreement  authorizing any secured party  thereunder to file such
     financing  statement,  or  assign,  or permit  any of its  Subsidiaries  to
     assign, any accounts or other right to receive income, except:

               (i) Liens created under the Loan Documents;

               (ii) Permitted Liens;

               (iii)  Liens  existing  on the date  hereof  or  required  on the
          Effective  Date to be  provided  in the  future  and,  in  each  case,
          described on Schedule 4.01(u) hereto;

               (iv) purchase money Liens upon or in property acquired or held by
          any  Borrower or any of its  Subsidiaries  in the  ordinary  course of
          business to secure the  purchase  price of such  property or to secure
          Debt incurred  solely for the purpose of financing the  acquisition of
          any such  property to be subject to such Liens,  or Liens  existing on
          any such  property  at the time of  acquisition  (other  than any such
          Liens created in  contemplation of such acquisition that do not secure
          the purchase price), or extensions, renewals or replacements of any of
          the foregoing for the same or a lesser amount; provided, however, that


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          no such Lien  shall  extend to or cover any  property  other  than the
          property being acquired, and no such extension, renewal or replacement
          shall extend to or cover any property not  theretofore  subject to the
          Lien being extended,  renewed or replaced;  and provided  further that
          the aggregate  principal amount of the Debt secured by Liens permitted
          by this  clause  (iv)  shall not exceed  the  amount  permitted  under
          Section 5.02(b)(iii)(B) at any time outstanding;

               (v) Liens arising in connection  with  Capitalized  Leases of any
          Borrower  or  any  of  its   Subsidiaries   permitted   under  Section
          5.02(b)(iii)(C);  provided  that no such Lien shall extend to or cover
          any  Collateral  or  assets  other  than the  assets  subject  to such
          Capitalized Leases;

               (vi)  Liens on  property  of a Person  existing  at the time such
          Person is  merged  into or  consolidated  with  such  Borrower  or any
          Subsidiary of the Borrower or becomes a Subsidiary  of such  Borrower;
          provided  that such Liens were not  created in  contemplation  of such
          merger,  consolidation  or investment  and do not extend to any assets
          other than those of the Person merged into or  consolidated  with such
          Borrower  or such  Subsidiary  or  acquired  by such  Borrower or such
          Subsidiary; and

               (vii)  Liens in  connection  with Debt  permitted  under  Section
          5.02(b)(iii)(E);  provided  that no such Lien shall extend to or cover
          any Collateral other than cash and Cash Equivalents in an amount equal
          to the amount of such Debt.

          (b) Debt. Create,  incur,  assume or suffer to exist, or permit any of
     its  Subsidiaries to create,  incur,  assume or suffer to exist,  any Debt,
     except:

               (i) in the case of any Borrower,

                    (A) Debt in respect of Hedge  Agreements  designed  to hedge
               against  fluctuations in interest rates or foreign exchange rates
               incurred in the ordinary  course of business and consistent  with
               prudent business practice.

                    (B) Debt owed to a wholly owned Subsidiary of such Borrower,
               which Debt (x) shall,  in the case of Debt owed to a Loan  Party,
               constitute  Pledged Debt, (y) shall be on terms acceptable to the
               Required  Lenders and (z) shall be evidenced by promissory  notes
               in form and substance  satisfactory  to the Required  Lenders and
               such  promissory  notes shall, in the case of Debt owed to a Loan
               Party,  be pledged as security for the  Obligations of the holder
               thereof under the Loan  Documents to which such holder is a party
               and delivered to the  Collateral  Agent  pursuant to the terms of
               the Security Agreement.

               (ii) in the case of any Subsidiary of any Borrower,  Debt owed to
          such  Borrower  or to a  wholly  owned  Subsidiary  of such  Borrower,
          provided that, in each case,  such Debt (x) shall, in the case of Debt
          owed to a Loan Party,  constitute  Pledged Debt, (y) shall be on terms
          acceptable  to the  Required  Lenders  and (z) shall be  evidenced  by
          promissory  notes in form and substance  satisfactory  to the Required
          Lenders and such promissory notes shall, in the case of Debt owed to a


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<PAGE>

          Loan Party,  be pledged as security for the  Obligations of the holder
          thereof  under the Loan  Documents to which such holder is a party and
          delivered  to  the  Collateral  Agent  pursuant  to the  terms  of the
          Security Agreement; and

               (iii) in the case of the Parent and its Subsidiaries,

                    (A) Debt under the Loan Documents,

                    (B) Debt secured by Liens  permitted by Section  5.02(a)(iv)
               not to exceed in the aggregate $25,000,000 during any consecutive
               12-month period,

                    (C)  Capitalized  Leases  of  any  Borrower  or  any  of its
               Subsidiaries  not to exceed in the aggregate  $385,000,000 at any
               time  outstanding  (taking  into account any  reductions  in such
               Capitalized Leases).

                    (D) the Existing Debt, and

                    (E) Debt in respect  of  letters  of credit in an  aggregate
               principal   amount  at  any  time   outstanding   not  to  exceed
               $10,000,000; and

                    (F) other  unsecured Debt in an aggregate  principal  amount
               not to exceed $350,000,000 at any one time outstanding.

          (c)  Change  in  Nature  of  Business.  Make,  or  permit  any  of its
     Subsidiaries  to make, any material change in the nature of its business as
     carried on at the date hereof.

          (d) Mergers,  Etc. Merge into or consolidate with any Person or permit
     any Person to merge into it, or permit any of its Subsidiaries to do any of
     the  foregoing,  except that any Subsidiary of each Borrower may merge into
     or consolidate with any other  Subsidiary of each Borrower,  provided that,
     in the case of any such merger or consolidation,  the Person formed by such
     merger  or  consolidation  shall  be a  wholly  owned  Subsidiary  of  each
     Borrower,  provided  further  that,  in the  case  of any  such  merger  or
     consolidation to which a Subsidiary Guarantor is a party, the Person formed
     by such merger or  consolidation  shall become a Subsidiary  Guarantor  and
     provided,  however,  that in each case,  immediately  after  giving  effect
     thereto, no event shall occur and be continuing that constitutes a Default.

          (e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose
     of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
     dispose  of, any assets,  or grant any option or other  right to  purchase,
     lease or otherwise  acquire any assets  other than  Inventory to be sold or
     leased in the ordinary course of its business, except:

               (i) sales or leases of Inventory  in the  ordinary  course of its
          business;

               (ii) sales of assets for cash and Cash  Equivalents  and for fair
          value in an aggregate  amount not to exceed  $15,000,000 in any Fiscal
          Year;


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<PAGE>

               (iii) the sale of any asset by each  Borrower  or any  Subsidiary
          (other than a bulk sale of Inventory and a sale of  receivables  other
          than delinquent  accounts for collection purposes only) so long as (A)
          the purchase  price paid to each Borrower or such  Subsidiary for such
          asset shall be no less than the fair market value of such asset at the
          time of such sale, (B) the purchase price for such asset shall be paid
          to  each  Borrower  or such  Subsidiary  solely  in  cash  and (C) the
          aggregate  purchase  price  paid  to  each  Borrower  and  all  of its
          Subsidiaries for such asset and all other assets sold by each Borrower
          and its  Subsidiaries  during the same  Fiscal  Year  pursuant to this
          clause (iii) shall not exceed $25,000,000; and

               (iv) sales of all of the outstanding  capital stock of, or assets
          of,  each  of  ICG   Satellite   Services,   Inc.,   ICG  Fiber  Optic
          Technologies, Inc. and each of their respective Subsidiaries.

     provided  that in the case of sales of  assets  pursuant  to  clause  (iii)
     above, each Borrower shall, on the date of receipt by any Loan Party or any
     of its  Subsidiaries  of the Net Cash Proceeds  from such sale,  prepay the
     Advances pursuant to, and in the amount and order of priority set forth in,
     Section 2.06(b)(ii), as specified therein.

          (f)  Investments in Other Persons.  Make or hold, or permit any of its
     Subsidiaries to make or hold, any Investment in any Person, except:

               (i)  Investments  by the  Parent  and its  Subsidiaries  in their
          Subsidiaries outstanding on the date hereof and additional investments
          in wholly owned  Subsidiaries  of a Borrower now existing or organized
          hereafter,  provided that any such  Subsidiary has become a Subsidiary
          Guarantor to the extent required by Section 5.01(j).

               (ii) loans and advances to  employees  in the ordinary  course of
          the  business  of each  Borrower  and its  Subsidiaries  as  presently
          conducted in an aggregate principal amount not to exceed $1,000,000 at
          any time outstanding;

               (iii) Investments by each Borrower in Hedge Agreements  permitted
          under Section 5.02(b)(i)(A);

               (iv)  Investments  existing on the date hereof and  described  on
          Schedule 4.01(x) hereto;

               (v) Investments  consisting of intercompany  Debt permitted under
          Section 5.02(b);

               (vi)  Investments  consisting of the purchase by the Borrowers of
          certain receivables (other than Excluded Receivables) from ICG Telecom
          Group,   Inc.  and  its   Subsidiaries  on  market  terms   reasonably
          satisfactory to the Required Lenders; and

               (vii) other  Investments in an aggregate  amount  invested not to
          exceed  $50,000,000 and Investments  made solely with Equity Interests


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          of the Borrowers and their Subsidiaries  provided that with respect to
          Investments made under this clause (vii),  (1) immediately  before and
          after giving  effect  thereto,  no Default  shall have occurred and be
          continuing or would result therefrom; and (2) immediately after giving
          effect to the  acquisition  of a company or business  pursuant to this
          clause (vii),  the Parent and its  Subsidiaries  shall be in pro forma
          compliance  with the covenants  contained in Section 5.04,  calculated
          based on the  financial  statements  most  recently  delivered  to the
          Lender Parties pursuant to Section 5.03 and as though such acquisition
          had occurred at the beginning of the appropriate  measurement  periods
          for the  financial  covenants,  as evidenced by a  certificate  of the
          Chief Financial  Officer of the Parent delivered to the Lender Parties
          demonstrating such compliance.

          (g)  Restricted  Payments.  Declare  or pay any  dividends,  purchase,
     redeem,  retire,  defease or otherwise  acquire for value any of its Equity
     Interests  other  than  of a  wholly  owned  Subsidiary  now  or  hereafter
     outstanding,  return any capital to its  stockholders,  partners or members
     (or the  equivalent  Persons  thereof) as such,  make any  distribution  of
     assets,  Equity  Interests,  obligations or securities to its stockholders,
     partners or members (or the equivalent  Persons  thereof) as such or permit
     any of its  Subsidiaries  to do any of the foregoing,  or permit any of its
     Subsidiaries to purchase,  redeem, retire, defease or otherwise acquire for
     value any Equity  Interests in each Borrower or to issue or sell any Equity
     Interests  therein,  except that, so long as no Default shall have occurred
     and be continuing at the time of any action described in clause (i) or (ii)
     below or would result therefrom:

               (i) each Borrower may declare and pay dividends and distributions
          payable only in stock of each Borrower,

               (ii) the  Borrowers  may  declare and pay cash  dividends  to the
          Parent to the extent, and only to the extent,  necessary to enable the
          Parent  to pay (a)  cash  interest  on the  Existing  Debt  listed  on
          Schedule  4.01(s),  and (b) cash  interest on other Debt of the Parent
          permitted pursuant to Section 5.02(b) (iii)(B) and (F), and

               (iii) any  Subsidiary  of each  Borrower  may (A) declare and pay
          cash dividends to each Borrower, (B) declare and pay cash dividends to
          any  other  Loan  Party  of which it is a  Subsidiary  and (C)  accept
          capital  contributions  from its Parent to the extent  permitted under
          Section 5.01(f)(i).

          (h) Amendments of Constitutive Documents.  Amend, or permit any of its
     Subsidiaries to amend,  its certificate of incorporation or bylaws or other
     constitutive  documents  other  than  any such  amendment  that  could  not
     reasonably be expected to have a Material Adverse Effect.

          (i)  Accounting  Changes.  Make  or  permit,  or  permit  any  of  its
     Subsidiaries  to make or permit,  any change in (i) accounting  policies or
     reporting practices,  except as required or permitted by generally accepted
     accounting principles, or (ii) Fiscal Year.

          (j) Prepayments,  Etc., of Debt. Prepay, redeem, purchase,  defease or
     otherwise satisfy prior to the scheduled maturity thereof in any manner, or


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     make any  payment in  violation  of any  subordination  terms of, any Debt,
     except (i) the  prepayment of the Advances in accordance  with the terms of
     this  Agreement  and (ii)  regularly  scheduled or required  repayments  or
     redemptions of Existing Debt, or amend,  modify or change in any manner any
     term  or  condition  of any  Existing  Debt  or  Subordinated  Debt if such
     amendment,  modification or change is reasonably  likely to have an adverse
     impact on (a) the business, condition (financial or otherwise), operations,
     performance,  properties  or prospects  of the Parent and its  Subsidiaries
     taken as a whole,  (b) the rights and  remedies  of any Agent or any Lender
     Party under any  Transaction  Document or (c) the ability of any Loan Party
     to perform its Obligations under any Transaction Document to which it is or
     is to be a  party,  or  permit  any  of its  Subsidiaries  to do any of the
     foregoing other than to prepay any Debt payable to any Borrower.

          (k)  Amendment,  Etc., of Related  Documents.  Cancel or terminate any
     Related  Document or consent to or accept any  cancellation  or termination
     thereof, amend, modify or change in any manner any term or condition of any
     Related Document or give any consent, waiver or approval thereunder,  waive
     any  default  under or any breach of any term or  condition  of any Related
     Document,  agree in any  manner to any  other  amendment,  modification  or
     change of any term or condition  of any Related  Document or take any other
     action in connection with any Related  Document that would impair the value
     of the interest or rights of any Loan Party thereunder or that would impair
     the rights or interests of any Agent or any Lender Party,  or permit any of
     its Subsidiaries to do any of the foregoing.

          (l) Negative  Pledge.  Enter into or suffer to exist, or permit any of
     its   Subsidiaries  to  enter  into  or  suffer  to  exist,  any  agreement
     prohibiting or conditioning the creation or assumption of any Lien upon any
     of its  property or assets  except (i) in favor of the  Secured  Parties or
     (ii) in connection  with (A) any Existing Debt, (B) any purchase money Debt
     permitted  by  Section  5.02(b)(iii)(B)  solely  to  the  extent  that  the
     agreement  or  instrument  governing  such  Debt  prohibits  a Lien  on the
     property acquired with the proceeds of such Debt, (C) any Capitalized Lease
     permitted  by  Section  5.02(b)(iii)(C)  solely  to the  extent  that  such
     Capitalized Lease prohibits a Lien on the property subject thereto, (D) any
     Debt  outstanding on the date any Subsidiary of any Borrower becomes such a
     Subsidiary  (so long as such  agreement  was not  entered  into  solely  in
     contemplation  of such  Subsidiary  becoming a Subsidiary of such Borrower)
     and (E) any governmental license, permit or other approval.

          (m)  Partnerships,  Etc.  Become a general  partner in any  general or
     limited  partnership  or joint venture,  or permit any of its  Subsidiaries
     (other than a wholly owned special purpose  Subsidiary of a Borrower formed
     specifically for the purpose) to do so.

          (n)   Speculative   Transactions.   Engage,   or  permit  any  of  its
     Subsidiaries to engage, in any transaction  involving  commodity options or
     futures contracts or any similar speculative transactions.

          (o)  Formation  of  Subsidiaries.  Organize  or invest,  or permit any
     Subsidiary to organize or invest, in any new Subsidiary unless it becomes a
     Subsidiary Guarantor.

          (p)  Payment   Restrictions   Affecting   Subsidiaries.   Directly  or
     indirectly,   enter  into  or  suffer  to  exist,  or  permit  any  of  its


                                       71
<PAGE>

     Subsidiaries to enter into or suffer to exist, any agreement or arrangement
     limiting the ability of any of its Subsidiaries to declare or pay dividends
     or other  distributions  in  respect of its  Equity  Interests  or repay or
     prepay any Debt owed to, make loans or advances to, or  otherwise  transfer
     assets to or invest in, the  Borrower  or any  Subsidiary  of any  Borrower
     (whether through a covenant restricting  dividends,  loans, asset transfers
     or  investments,  a financial  covenant or otherwise),  except (i) the Loan
     Documents and (ii) any agreement or instrument evidencing Existing Debt.

          (q) Amendment,  Etc., of Material  Contracts.  Cancel or terminate any
     Material  Contract or consent to or accept any  cancellation or termination
     thereof,  amend or  otherwise  modify  any  Material  Contract  or give any
     consent,  waiver or approval thereunder,  waive any default under or breach
     of any  Material  Contract,  agree in any  manner to any  other  amendment,
     modification or change of any term or condition of any Material Contract or
     take any other action in connection  with any Material  Contract that would
     impair the value of the interest or rights of any Loan Party  thereunder or
     that would impair the interest or rights of any Agent or any Lender  Party,
     or permit any of its Subsidiaries to do any of the foregoing,  in each case
     except  in the  ordinary  course of  business  in a manner  that  would not
     reasonably be expected to have a Material Adverse Effect.

          (r) Capital  Expenditures.  Make, or permit any of its Subsidiaries to
     make, any Capital  Expenditures  that would cause the aggregate of all such
     Capital  Expenditures made by the Parent and its Subsidiaries in any period
     set forth in Section  6.01(q) to exceed 80% of the amount allowed  pursuant
     to Section 6.01(q) for such period:

     SECTION 5.03. Reporting  Requirements.  So long as any Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder,  each applicable Loan Party will furnish to the Agents and
the Lender Parties:

          (a) Default and Prepayment Notices. (i) As soon as possible and in any
     event  within two days after the  occurrence  of each Default or any event,
     development  or  occurrence  reasonably  likely to have a Material  Adverse
     Effect  continuing on the date of such statement,  a statement of the chief
     financial officer of the Borrower setting forth details of such Default and
     the action that the  Borrower  has taken and  proposes to take with respect
     thereto,  and (ii) as soon as possible  and in any event no later than 1:00
     P.M.  (New  York  City  time) at  least  seven  Business  Days  before  any
     prepayment  of Term  Advances  is to be made by the  Borrowers  pursuant to
     Section  2.06 (the  "Prepayment  Date"),  written  notice of the  principal
     amount of such  prepayment  (the  "Prepayment  Amount") and the  applicable
     Prepayment Date. Each such notice (a "Prepayment Notice") shall be by telex
     or telecopier or otherwise as provided in Section 9.02.

          (b) Annual  Financials.  As soon as available  and in any event within
     106 days after the end of each  Fiscal  Year,  a copy of the  annual  audit
     report for such year for the Parent and its Subsidiaries, including therein
     Consolidated  and  consolidating  balance  sheets  of the  Parent  and  its
     Subsidiaries  as of the  end of  such  Fiscal  Year  and  Consolidated  and
     consolidating  statements  of income and a  Consolidated  statement of cash
     flows of the Parent and its Subsidiaries for such Fiscal Year, in each case
     accompanied by an opinion  acceptable to the Required  Lenders of KPMG Peat


                                       72
<PAGE>

     Marwick or other  independent  public  accountants  of recognized  standing
     acceptable to the Required Lenders,  together with (i) a certificate of the
     Chief Financial Officer to the Lender Parties stating that in the course of
     the regular audit of the business of the Parent and its Subsidiaries, which
     audit was conducted by such  accounting  firm in accordance  with generally
     accepted auditing standards, such accounting firm has not indicated to such
     Chief Financial  Officer that it had obtained  knowledge that a Default has
     occurred and is continuing,  or if, in the opinion of such accounting firm,
     a Default has  occurred  and is  continuing,  a statement  as to the nature
     thereof,  (ii) a schedule in form satisfactory to the Administrative  Agent
     of the computations used by the Chief Financial Officer in determining,  as
     of the end of such Fiscal Year,  compliance with the covenants contained in
     Section 5.04,  provided that in the event of any change in GAAP used in the
     preparation of such financial statements, the Parent shall also provide, if
     necessary  for  the  determination  of  compliance  with  Section  5.04,  a
     statement of  reconciliation  conforming such financial  statements to GAAP
     and  (iii) a  certificate  of the Chief  Financial  Officer  of the  Parent
     stating that no Default has occurred and is continuing or, if a default has
     occurred and is  continuing,  a statement as to the nature  thereof and the
     action that the Parent has taken and proposes to take with respect thereto.

          (c) Quarterly Financials. As soon as available and in any event within
     50 days after the end of each of the first  three  quarters  of each Fiscal
     Year,  Consolidated and consolidating  balance sheets of the Parent and its
     Subsidiaries  as  of  the  end  of  such  quarter  and   Consolidated   and
     consolidating  statements  of income and a  Consolidated  statement of cash
     flows of the Parent and its Subsidiaries  for the period  commencing at the
     end of the previous  fiscal  quarter and ending with the end of such fiscal
     quarter (except for the Consolidated  statement of cash flows,  which shall
     be on a year to date basis) and Consolidated and  consolidating  statements
     of income and a Consolidated  statement of cash flows of the Parent and its
     Subsidiaries  for the period  commencing at the end of the previous  Fiscal
     Year and ending with the end of such quarter, setting forth in each case in
     comparative form the corresponding  figures for the  corresponding  date or
     period of the  preceding  Fiscal Year,  all in  reasonable  detail and duly
     certified  (subject  to normal  year-end  audit  adjustments)  by the Chief
     Financial  Officer of the Parent as having been prepared in accordance with
     GAAP,  together  with (i) a  certificate  of said  officer  stating that no
     Default has occurred and is continuing or, if a Default has occurred and is
     continuing,  a statement as to the nature  thereof and such action that the
     Parent  has taken and  proposes  to take with  respect  thereto  and (ii) a
     schedule  in  form  satisfactory  to  the   Administrative   Agent  of  the
     computations  used  by  the  Parent  in  determining  compliance  with  the
     covenants  contained  in Section  5.04,  provided  that in the event of any
     change in GAAP used in the  preparation of such financial  statements,  the
     Parent shall also provide, if necessary for the determination of compliance
     with Section 5.04, a statement of reconciliation  conforming such financial
     statements to GAAP.

          (d) Annual  Forecasts.  As soon as available and in any event no later
     than January 31 of each Fiscal Year,  forecasts  prepared by  management of
     the Parent,  in form satisfactory to the  Administrative  Agent, of balance
     sheets, income statements and cash flow statements on a quarterly basis for
     such  Fiscal Year and on an annual  basis for each  Fiscal Year  thereafter
     until the Tranche B Termination Date.

          (e) Litigation. Promptly after the commencement thereof, notice of all
     actions, suits, investigations, litigation and proceedings before any court


                                       73
<PAGE>

     or  governmental   department,   commission,   board,  bureau,   agency  or
     instrumentality,  domestic or foreign,  affecting  any Loan Party or any of
     its Subsidiaries of the type described in Section 4.01(f).

          (f) Securities Reports.  Promptly after the sending or filing thereof,
     copies of all proxy statements,  financial  statements and reports that any
     Loan Party or any of its Subsidiaries sends to its stockholders, and copies
     of  all  regular,  periodic  and  special  reports,  and  all  registration
     statements,  that any Loan Party or any of its Subsidiaries  files with the
     Securities and Exchange  Commission or any governmental  authority that may
     be substituted therefor, or with any national securities exchange.

          (g) Creditor Reports. Promptly after the furnishing thereof, copies of
     any statement or report  furnished to any holder of Debt  securities of any
     Loan  Party  or of any of its  Subsidiaries  pursuant  to the  terms of any
     indenture,  loan or credit or similar agreement and not otherwise  required
     to be furnished to the Lender Parties  pursuant to any other clause of this
     Section 5.03.

          (h) Agreement  Notices.  Promptly upon receipt thereof,  copies of all
     notices,  requests and other documents received by any Loan Party or any of
     its  Subsidiaries  under or pursuant  to any  Related  Document or Material
     Contract  or  instrument,  indenture,  loan or credit or similar  agreement
     regarding  or related to any breach or default by any party  thereto or any
     other event that could materially  impair the value of the interests or the
     rights of any Loan Party or otherwise  have a Material  Adverse  Effect and
     copies of any  amendment,  modification  or waiver of any  provision of any
     Related  Document or Material  Contract or instrument,  indenture,  loan or
     credit or  similar  agreement  and,  from time to time upon  request by the
     Administrative  Agent,  such information and reports  regarding the Related
     Documents, the Material Contracts and such instruments, indentures and loan
     and  credit  and  similar  agreements  as  the  Administrative   Agent  may
     reasonably request.

          (i) ERISA. (i) ERISA Events and ERISA Reports. (A) Promptly and in any
     event within 10 days after any Loan Party or any ERISA  Affiliate  knows or
     has reason to know that any ERISA Event has  occurred,  a statement  of the
     Chief Financial Officer of the Borrower describing such ERISA Event and the
     action,  if any, that such Loan Party or such ERISA Affiliate has taken and
     proposes  to take with  respect  thereto  and (B) on the date any  records,
     documents or other  information  must be furnished to the PBGC with respect
     to any Plan  pursuant  to Section  4010 of ERISA,  a copy of such  records,
     documents and information.

          (ii) Plan Terminations.  Promptly and in any event within two Business
     Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies
     of each notice from the PBGC stating its intention to terminate any Plan or
     to have a trustee appointed to administer any Plan.

          (iii) Plan Annual  Reports.  Promptly  and in any event within 30 days
     after the filing thereof with the Internal Revenue Service,  copies of each
     Schedule B (Actuarial  Information) to the annual report (Form 5500 Series)
     with respect to each Plan.

          (iv) Multiemployer Plan Notices. Promptly and in any event within five
     Business  Days  after  receipt  thereof  by any  Loan  Party  or any  ERISA


                                       74
<PAGE>

     Affiliate from the sponsor of a Multiemployer  Plan,  copies of each notice
     concerning  (A)  the  imposition  of  Withdrawal   Liability  by  any  such
     Multiemployer  Plan,  (B) the  reorganization  or  termination,  within the
     meaning  of Title IV of ERISA,  of any such  Multiemployer  Plan or (C) the
     amount of liability incurred,  or that may be incurred,  by such Loan Party
     or any ERISA Affiliate in connection with any event described in clause (A)
     or (B).

          (j)  Environmental   Conditions.   Promptly  after  the  assertion  or
     occurrence  thereof,  notice of any Environmental  Action against or of any
     noncompliance  by any  Loan  Party  or any of  its  Subsidiaries  with  any
     Environmental  Law or  Environmental  Permit that could (i)  reasonably  be
     expected  to have a  Material  Adverse  Effect or (ii)  cause any  property
     described in the Mortgages to be subject to any  restrictions on ownership,
     occupancy, use or transferability under any Environmental Law.

          (k) Real  Property.  As soon as  available  and in any event within 60
     days after the end of each Fiscal  Year, a report  supplementing  Schedules
     4.01(w) and 4.01(x) hereto,  including an  identification  of all owned and
     leased  real  property   disposed  of  by  each  Borrower  or  any  of  its
     Subsidiaries during such Fiscal Year, a list and description (including the
     street address, county or other relevant jurisdiction, state, record owner,
     book value thereof and, in the case of leases of property,  lessor, lessee,
     expiration  date and  annual  rental  cost  thereof)  of all real  property
     acquired or leased during such Fiscal Year and a description  of such other
     changes in the  information  included in such Schedules as may be necessary
     for such Schedules to be accurate and complete.

          (l)  Insurance.  As soon as available  and in any event within 30 days
     after the end of each  Fiscal  Year,  a report  summarizing  the  insurance
     coverage  (specifying  type,  amount and  carrier)  in effect for each Loan
     Party and its  Subsidiaries  and containing such additional  information as
     any Agent,  or any Lender  Party  through  the  Administrative  Agent,  may
     reasonably specify.

          (m) Borrowing Base Certificate.  As soon as available and in any event
     within 10 days after the end of each month, a Borrowing  Base  Certificate,
     as at the end of the  previous  month,  certified  by the  Chief  Financial
     Officer of each Borrower.

          (n) Year 2000 Compliance.  Promptly after each Borrower's discovery or
     determination  thereof,  notice (in  reasonable  detail)  that any computer
     application (including those of its suppliers,  vendors and customers) that
     is material to its or any of its Subsidiaries' business and operations will
     not be Year 2000 Compliant (as defined in Section  4.01(z)),  except to the
     extent  that  such  failure  could not  reasonably  be  expected  to have a
     Material Adverse Effect.

          (o) Revenue Agent Reports. Within 10 days after receipt, copies of all
     Revenue Agent Report (Internal  Revenue Service Form 886), or other written
     proposals of the  Internal  Revenue  Service,  that  propose,  determine or
     otherwise  set  forth  positive  adjustments  to  the  federal  income  tax
     liability of the affiliated group (within the meaning of Section 1504(a)(1)
     of the Internal Revenue Code) of which the Borrower is a member aggregating
     $3,000,000 or more.

                                       75
<PAGE>

          (p) Tax  Certificates.  Promptly,  and in any event within thirty (30)
     Business Days after the due date (with  extensions,  if properly  obtained)
     for filing the final  federal  income tax return in respect of each taxable
     year, a certificate  (a "Tax  Certificate")  signed by the President or the
     Chief Financial Officer of the Parent,  stating that there has been paid to
     the Internal Revenue Service or other applicable taxing authority, the full
     amount that the affiliated group that includes the Parent and the Borrowers
     is required to pay in respect of federal  income tax for such year and that
     the Parent and the  Borrowers  have  received any amounts  payable to them,
     that the Parent and the Borrowers have not paid amounts in respect of taxes
     (federal,  state, local or foreign) in excess of the amounts,  if any, they
     are  required  to pay under the Tax  Sharing  Agreement  in respect of such
     taxable year and have received  amounts,  if any, due to them under the Tax
     Sharing Agreement for such year.

          (q) Other Information. Such other information respecting the business,
     condition (financial or otherwise), operations,  performance, properties or
     prospects of any Loan Party or any of its Subsidiaries as any Agent, or any
     Lender  Party  through  the  Administrative  Agent,  may from  time to time
     reasonably request.

     SECTION  5.04.  Financial  Covenants.  So long as any  Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, the Parent will:

          (a) Senior Secured Debt Service Coverage Ratio. Maintain at the end of
     each fiscal quarter of the Borrowers a Senior Secured Debt Service Coverage
     Ratio of not less than the amount set forth below for such period:


<TABLE>
<CAPTION>
                       1999        2000        2001       2002        2003         2004        2005

<S>                   <C>         <C>         <C>        <C>         <C>          <C>         <C>
1st Quarter            N/A        2.50:1      2.75:1     2.75:1      3.00:1       3.00:1      3.00:1

2nd Quarter            N/A        2.50:1      2.75:1     2.75:1      3.00:1       3.00:1      3.00:1

3rd Quarter           2.50:1      2.50:1      2.75:1     2.75:1      3.00:1       3.00:1      3.00:1

4th Quarter           2.50:1      2.50:1      2.75:1     2.75:1      3.00:1       3.00:1      3.00:1
</TABLE>

          (b) Minimum EBITDA:  Maintain  quarterly  EBITDA of the Parent and its
     Subsidiaries as at the end of each fiscal quarter of the Parent of not less
     than the amount set forth below:
<TABLE>
<CAPTION>
                        1999            2000           2001            2002           2003            2004            2005

<S>                   <C>             <C>            <C>            <C>            <C>             <C>              <C>
1st Quarter                   N/A     $36,036,000    $68,412,000     $97,000,000   $129,977,000    $144,000,000     $147,000,000

2nd Quarter                   N/A     $42,214,000    $77,199,000    $103,000,000   $135,000,000    $144,000,000     $147,000,000

3rd Quarter           $23,204,000     $48,506,000    $85,471,000    $109,000,000   $140,000,000    $145,328,000     $150,000,000

4th Quarter           $29,136,000     $54,249,000    $94,183,000    $117,641,000   $144,000,000    $147,000,000     $153,738,000
</TABLE>

          (c)  Maximum  Senior  Secured  Leverage.  Maintain  at the end of each
     fiscal  quarter of the Parent a Senior  Secured  Debt Ratio of not  greater
     than the ratio set forth below for such fiscal quarter:

                                       76
<PAGE>

            Fiscal Quarter Ending                           Ratio
            ---------------------                           -----
       September 30, 1999                                   2.75:1
       December 31, 1999                                    2.75:1
       March 31, 2000                                       2.75:1
       June 30, 2000                                        2.75:1
       September 30, 2000                                   2:50:1
       December 31, 2000                                    2:25:1
       March 31, 2001                                       2:25:1
       June 30, 2001                                        2:25:1
       September 30, 2001                                   2:25:1
       December 31, 2001                                    2:25:1
       March 31, 2002                                       2:25:1
       June 30, 2002                                        2:25:1
       September 30, 2002                                   2:25:1
       December 31, 2002                                    2:25:1
       March 31, 2003                                       2:25:1
       June 30, 2003                                        2:25:1
       September 30, 2003                                   2:25:1
       December 31, 2003                                    2:25:1
       March 31, 2004                                       2:25:1
       June 30, 2004                                        2:25:1
       September 30, 2004                                   2:25:1
       December 31, 2004                                    2:25:1
       March 31, 2005                                       2:25:1
       June 30, 2005                                        2:25:1
       September 30, 2005                                   2:25:1
       December 31, 2005                                    2:25:1

          (d) Maximum Total Leverage. Maintain at the end of each fiscal quarter
     of the Parent a Parent Total  Leverage  Ratio of not greater than the ratio
     set forth below for such fiscal quarter:


           Fiscal Quarter Ending In                          Ratio
           ------------------------                          -----
        September 30, 1999                                   8.75:1
        December 31, 1999                                    7.75:1
        March 31, 2000                                       7.75:1
        June 30, 2000                                        7.25:1
        September 30, 2000                                   7.00:1
        December 31, 2000                                    7.00:1
        March 31, 2001                                       7.00:1
        June 30, 2001                                        6.50:1
        September 30, 2001                                   6.25:1
        December 31, 2001                                    6.00:1
        March 31, 2002                                       5.50:1


                                       77
<PAGE>

           Fiscal Quarter Ending In                          Ratio
           ------------------------                          -----
        June 30, 2002                                        5.50:1
        September 30, 2002                                   5.50:1
        December 31, 2002                                    5.50:1
        March 31, 2003                                       5.00:1
        June 30, 2003                                        5.00:1
        September 30, 2003                                   5.00:1
        December 31, 2003                                    5.00:1
        March 31, 2004                                       5.00:1
        June 30, 2004                                        5.00:1
        September 30, 2004                                   5.00:1
        December 31, 2004                                    5.00:1
        March 31, 2005                                       5.00:1
        June 30, 2005                                        5.00:1
        September 30, 2005                                   5.00:1
        December 31, 2005                                    5.00:1

          (e)  Minimum  Interest  Coverage.  Maintain  at the end of each fiscal
     quarter  of the  Parent a ratio of (i)  EBITDA of the  Parent  for the most
     recently ended six month period to (ii) Interest  Expense of the Parent for
     the most recently ended six month period of not less than 3.75:1.

          (f) Minimum Fixed Charge Coverage.  Maintain at the end of each fiscal
     quarter  of the  Parent a ratio of (i)  EBITDA of the  Parent  for the most
     recently ended six month period to (ii) Fixed Charges for the most recently
     ended six month  period of not less than the ratio set forth below for such
     fiscal quarter:


            Fiscal Quarter Ending In                          Ratio
            ------------------------                          -----
         June 30, 2002                                        0.50:1
         September 30, 2002                                   0.50:1
         December 31, 2002                                    0.50:1
         March 31, 2003                                       0.75:1
         June 30, 2003                                        0.75:1
         September 30, 2003                                   0.75:1
         December 31, 2003                                    0.75:1
         March 31, 2004                                       1.10:1
         June 30, 2004                                        1.10:1
         September 30, 2004                                   1.10:1
         December 31, 2004                                    1.10:1
         March 31, 2005                                       1.10:1
         June 30, 2005                                        1.10:1
         September 30, 2005                                   1.10:1
         December 31, 2005                                    1.10:1

                                       78
<PAGE>

                                   ARTICLE VI

                                EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

          (a) (i) any  Borrower  shall fail to pay any  principal of any Advance
     when the same shall become due and payable or (ii) any Borrower  shall fail
     to pay any  interest on any  Advance,  or any Loan Party shall fail to make
     any other payment under any Loan  Document,  in each case under this clause
     (ii) within five days after the same becomes due and payable; or

          (b) any  representation  or warranty made by any Loan Party (or any of
     its officers)  under or in connection with any Loan Document shall prove to
     have been incorrect in any material respect when made or confirmed; or

          (c) any Loan Party shall fail to perform or observe any term, covenant
     or agreement contained in Section 2.14, 5.01(e), (f), (i), (j), (o) or (n),
     5.02, 5.03(a)(i), or 5.04; or

          (d) any Loan Party  shall fail to perform or observe  any other  term,
     covenant  or  agreement  contained  in any Loan  Document on its part to be
     performed or observed if such failure shall remain  unremedied  for 30 days
     after the earlier of the date on which (i) a  Responsible  Officer  becomes
     aware of such failure or (ii) written  notice thereof shall have been given
     to the Borrower by any Agent or any Lender Party; or

          (e) any Loan  Party or any of its  Subsidiaries  shall fail to pay any
     principal of, premium or interest on or any other amount payable in respect
     of any Debt of such Loan Party or such Subsidiary (as the case may be) that
     is  outstanding  in a  principal  amount  (or,  in the  case  of any  Hedge
     Agreement,  an Agreement Value) of at least $10,000,000 either individually
     or in the aggregate (but excluding Debt  outstanding  hereunder),  when the
     same  becomes due and  payable  (whether by  scheduled  maturity,  required
     prepayment,  acceleration,  demand or  otherwise),  and such failure  shall
     continue  after the  applicable  grace  period,  if any,  specified  in the
     agreement  or  instrument  relating to such Debt;  or any other event shall
     occur or condition  shall exist under any agreement or instrument  relating
     to any such Debt and shall continue after the applicable  grace period,  if
     any, specified in such agreement or instrument, if the effect of such event
     or  condition  is to  accelerate,  or to permit  the  acceleration  of, the
     maturity  of such Debt or  otherwise  to cause,  or to  permit  the  holder
     thereof to cause,  such Debt to mature;  or any such Debt shall be declared
     to be due and payable or required to be prepaid or redeemed  (other than by
     a regularly  scheduled  required  prepayment or  redemption),  purchased or
     defeased,  or an offer to prepay,  redeem,  purchase  or defease  such Debt
     shall be  required  to be made,  in each case prior to the stated  maturity
     thereof; or

          (f) any Loan Party or any of its Subsidiaries  shall generally not pay
     its debts as such debts become due, or shall admit in writing its inability
     to pay its debts  generally,  or shall  make a general  assignment  for the
     benefit of creditors;  or any proceeding  shall be instituted by or against
     any Loan  Party  or any of its  Subsidiaries  seeking  to  adjudicate  it a


                                       79
<PAGE>

     bankrupt or insolvent, or seeking liquidation,  winding up, reorganization,
     arrangement,  adjustment,  protection,  relief, or composition of it or its
     debts under any law relating to bankruptcy, insolvency or reorganization or
     relief of  debtors,  or  seeking  the  entry of an order for  relief or the
     appointment of a receiver,  trustee or other similar official for it or for
     any  substantial  part  of its  property  and,  in  the  case  of any  such
     proceeding  instituted  against it (but not instituted by it) that is being
     diligently  contested  by it in good faith,  either such  proceeding  shall
     remain  undismissed  or  unstayed  for a  period  of 60  days or any of the
     actions sought in such proceeding (including, without limitation, the entry
     of an order for relief against, or the appointment of a receiver,  trustee,
     custodian or other similar  official for, it or any substantial part of its
     property) shall occur; or any Loan Party or any of its  Subsidiaries  shall
     take any  corporate  action to authorize any of the actions set forth above
     in this subsection (f); or

          (g) any judgments or orders,  either individually or in the aggregate,
     for the payment of money in excess of  $10,000,000  (determined  net of any
     applicable  insurance proceeds) shall be rendered against any Loan Party or
     any of its Subsidiaries and either (i) enforcement  proceedings  shall have
     been  commenced by any creditor  upon such  judgment or order or (ii) there
     shall  be any  period  of 25  consecutive  days  during  which  a  stay  of
     enforcement  of such  judgment or order,  by reason of a pending  appeal or
     otherwise, shall not be in effect; or

          (h) any  non-monetary  judgment or order shall be rendered against any
     Loan Party or any of its  Subsidiaries  that could be reasonably  likely to
     have a  Material  Adverse  Effect,  and  there  shall be any  period  of 10
     consecutive  days during which a stay of  enforcement  of such  judgment or
     order, by reason of a pending appeal or otherwise,  shall not be in effect;
     or

          (i) any provision of any Loan Document after delivery thereof pursuant
     to  Section  3.01 or  5.01(j)  shall for any  reason  cease to be valid and
     binding on or  enforceable  against any Loan Party party to it, or any such
     Loan Party shall so state in writing; or

          (j) any  Collateral  Document or financing  statement  after  delivery
     thereof  pursuant to Section  3.01 or 5.01(j)  shall for any reason  (other
     than pursuant to the terms  thereof)  cease to create a valid and perfected
     first priority lien on and security interest in the Collateral purported to
     be covered thereby; or

          (k) a Change of Control shall occur; or

          (l) any ERISA Event shall have occurred with respect to a Plan and the
     sum  (determined  as of the date of  occurrence of such ERISA Event) of the
     Insufficiency of such Plan and the Insufficiency of any and all other Plans
     with respect to which an ERISA Event shall have occurred and then exist (or
     the liability of the Loan Parties and the ERISA Affiliates  related to such
     ERISA Event) exceeds $500,000; or

          (m) any Loan Party or any ERISA  Affiliate shall have been notified by
     the  sponsor  of a  Multiemployer  Plan  that  it has  incurred  Withdrawal
     Liability to such  Multiemployer  Plan in an amount that,  when  aggregated
     with all other amounts  required to be paid to  Multiemployer  Plans by the
     Loan Parties and the ERISA Affiliates as Withdrawal  Liability  (determined


                                       80
<PAGE>

     as of the date of such notification), exceeds $500,000 or requires payments
     exceeding $100,000 per annum; or

          (n) any Loan Party or any ERISA  Affiliate shall have been notified by
     the  sponsor of a  Multiemployer  Plan that such  Multiemployer  Plan is in
     reorganization  or is being  terminated,  within the meaning of Title IV of
     ERISA, and as a result of such  reorganization or termination the aggregate
     annual  contributions  of the Loan Parties and the ERISA  Affiliates to all
     Multiemployer  Plans that are then in  reorganization  or being  terminated
     have  been  or will be  increased  over  the  amounts  contributed  to such
     Multiemployer  Plans  for  the  plan  years  of  such  Multiemployer  Plans
     immediately  preceding  the  plan  year in  which  such  reorganization  or
     termination occurs by an amount exceeding $500,000; or

          (o) any Borrowing Base Deficiency shall occur; or

          (p) ICG shall fail to maintain the following financial covenants:

               (i) Minimum Revenue.  At the end of each fiscal quarter set forth
          below,  maintain  quarterly  Revenue  of not less than the  amount set
          forth below for such fiscal quarter:


            Fiscal Quarter Ending                          Revenue
            ---------------------                          -------
       September 30, 1999                                $110,000,000
       December 31, 1999                                 $135,000,000
       March 31, 2000                                    $135,000,000
       June 30, 2000                                     $180,000,000
       September 30, 2000                                $225,000,000
       December 31, 2000                                 $265,000,000
       March 31, 2001                                    $290,000,000
       June 30, 2001                                     $330,000,000
       September 30, 2001                                $365,000,000
       December 31, 2001                                 $420,000,000
       March 31, 2002                                    $468,000,000
       June 30, 2002                                     $502,500,000
       September 30, 2002                                $542,000,000
       December 31, 2002                                 $587,500,000
       March 31, 2003                                    $615,000,000
       June 30, 2003                                     $675,000,000
       September 30, 2003                                $710,000,000
       December 31, 2003                                 $750,000,000
       March 31, 2004                                    $825,000,000
       June 30, 2004                                     $835,000,000
       September 30, 2004                                $840,000,000
       December 31, 2004                                 $850,000,000
       March 31, 2005                                    $850,000,000
       June 30, 2005                                     $850,000,000


                                       81
<PAGE>

            Fiscal Quarter Ending                          Revenue
            ---------------------                          -------
       September 30, 2005                                $865,000,000
       December 31, 2005                                 $885,500,000

               (ii) Minimum EBITDA.  At the end of each fiscal quarter set forth
          below, maintain EBITDA of ICG for such fiscal quarter of not less than
          the amount set forth below (or, in the case of (A) the fiscal quarters
          ending on or before March 31, 2000,  EBITDA of ICG for the period from
          April 1,  1999  through  the end of such  fiscal  quarter  and (B) the
          fiscal  quarter  ended  June  30,  2000,  EBITDA  of ICG for the  most
          recently ended twelve-month period):

           Fiscal Quarter Ending                            EBITDA
           ---------------------                            ------
       September 30, 1999                                 $22,615,000
       December 31, 1999                                  $52,527,000
       March 31, 2000                                     $45,435,000
       June 30, 2000                                      $56,958,000
       September 30, 2000                                 $53,743,000
       December 31, 2000                                  $71,500,000
       March 31, 2001                                     $85,679,000
       June 30, 2001                                     $105,843,000
       September 30, 2001                                $121,372,000
       December 31, 2001                                 $149,757,000
       March 31, 2002                                    $190,000,000
       June 30, 2002                                     $204,000,000
       September 30, 2002                                $220,000,000
       December 31, 2002                                 $238,553,000
       March 31, 2003                                    $275,000,000
       June 30, 2003                                     $301,675,000
       September 30, 2003                                $316,000,000
       December 31, 2003                                 $334,085,000
       March 31, 2004                                    $378,992,000
       June 30, 2004                                     $385,491,000
       September 30, 2004                                $390,036,000
       December 31, 2004                                 $395,000,000
       March 31, 2005                                    $395,000,000
       June 30, 2005                                     $395,000,000
       September 30, 2005                                $400,000,000
       December 31, 2005                                 $406,004,000

               (iii) Maximum Total  Leverage.  At the end of each fiscal quarter
          set forth below,  maintain an ICG Total  Leverage Ratio of not greater
          than the ratio set forth below for such fiscal quarter:


                                       82
<PAGE>

                        Fiscal Quarter Ending               Ratio
                        ---------------------               -----
                    June 30, 2001                           8.50:1
                    September 30, 2001                      7.50:1
                    December 31, 2001                       6.50:1
                    March 31, 2002                          5.00:1
                    June 30, 2002                           5.00:1
                    September 30, 2002                      5.00:1
                    December 31, 2002                       5.00:1
                    March 31, 2003 and thereafter           4.00:1

               (iv) Maximum  Total  Debt/Gross PP & E. At the end of each fiscal
          quarter set forth below, maintain a ratio of (i) Total Debt of ICG and
          its  Subsidiaries  on such  date to (ii) the gross  book  value of the
          Gross PP & E on such  date of not  greater  than the  ratio  set forth
          below for such fiscal quarter:


                         Fiscal Quarter Ending                Ratio
                         ---------------------                -----
                    September 30, 1999                        1.50:1
                    December 31, 1999                         1.45:1
                    March 31, 2000                            1.40:1
                    June 30, 2000                             1.35:1
                    September 30, 2000                        1.30:1
                    December 31, 2000                         1:25:1
                    March 31, 2001                            1:25:1
                    June 30, 2001                             1.20:1
                    September 30, 2001                        1.15:1
                    December 31, 2001                         1.10:1
                    March 31, 2002 and thereafter             1.00:1

               (v) Minimum Interest Coverage. Maintain at the end of each fiscal
          quarter  set  forth  below a ratio of (i)  EBITDA  of ICG for the most
          recently  ended six month period to (ii)  Interest  Expense of ICG for
          the most  recently  ended six month  period of not less than the ratio
          set forth below for such fiscal  quarter  (or,  (A) in the case of the
          fiscal quarter ending  December 31, 1999, a ratio of (i) EBITDA of ICG
          for the most recently ended nine month period to (ii) Interest Expense
          of ICG for the most  recently  ended nine month  period and (B) in the
          case of the fiscal quarters ending March 31, 2000 and June 30, 2000, a
          ratio of (i) EBITDA of ICG for the most  recently  ended  twelve month
          period to (ii)  Interest  Expense of ICG for the most  recently  ended
          twelve month period):


                         Fiscal Quarter Ending                  Ratio
                         ---------------------                  -----
                     September 30, 1999                         1.75:1
                     December 31, 1999                          1.75:1
                     March 31, 2000                             1.75:1
                     June 30, 2000                              1.75:1


                                       83
<PAGE>

                         Fiscal Quarter Ending                  Ratio
                         ---------------------                  -----
                     September 30, 2000                         2.25:1
                     December 31, 2000                          2:25:1
                     March 31, 2001                             2:25:1
                     June 30, 2001                              2.25:1
                     September 30, 2001                         2.25:1
                     December 31, 2001                          2.25:1
                     March 31, 2002 and thereafter              2.50:1; or

               (q) ICG shall make,  or permit any of its  Subsidiaries  to make,
          any Capital  Expenditures  that would cause the  aggregate of all such
          Capital  Expenditures  made by ICG and its  Subsidiaries in any period
          set forth below to exceed the amount set forth below for such period:


                          Fiscal Quarter Ending          Amount
                          ---------------------          ------
                      September 30, 1999               $173,000,000
                      December 31, 1999                 229,000,000
                      March 31, 2000                    207,000,000
                      June 30, 2000                     202,000,000
                      September 30, 2000                195,000,000
                      December 31, 2000                 190,000,000
                      March 31, 2001                    237,000,000
                      June 30, 2001                     229,000,000
                      September 30, 2001                222,000,000
                      December 31, 2001                 213,000,000
                      March 31, 2002                    228,280,000
                      June 30, 2002                     228,280,000
                      September 30, 2002                210,720,000
                      December 31, 2002                 210,720,000
                      March 31, 2003                    216,060,000
                      June 30, 2003                     216,060,000
                      September 30, 2003                199,440,000
                      December 31, 2003                 199,440,000
                      March 31, 2004                    199,680,000
                      June 30, 2004                     199,680,000
                      September 30, 2004                184,320,000
                      December 31, 2004                 184,320,000
                      March 31, 2005                    205,670,000
                      June 30, 2005                     205,670,000
                      September 30, 2005                189,850,000
                      December 31, 2005                 189,850,000

provided, however, that if, at the end of any such period (a "Base Quarter") set
forth above, the amount specified above for such Base Quarter exceeds the amount


                                       84
<PAGE>

of  Capital  Expenditures  made by ICG and its  Subsidiaries  during  such  Base
Quarter  (the amount of such  excess  being the  "Excess  Amount"),  ICG and its
Subsidiaries shall be entitled to make additional Capital Expenditures in either
of the two succeeding periods set forth above in an amount in the aggregate over
such succeeding periods equal to the Excess Amount;

then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Required  Lenders,  by notice to the Borrowers,
declare the  Commitments  of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by the Issuing Bank
or a Working Capital Lender pursuant to Section 2.03(c)) and of the Issuing Bank
to issue Letters of Credit to be terminated,  whereupon the same shall forthwith
terminate,  and (ii)  shall at the  request,  or may  with the  consent,  of the
Required  Lenders,  (A) by notice  to the  Borrowers,  declare  the  Notes,  all
interest  thereon and all other  amounts  payable  under this  Agreement and the
other Loan Documents to be forthwith due and payable,  whereupon the Notes,  all
such  interest  and all such  amounts  shall  become  and be  forthwith  due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby  expressly  waived by the  Borrowers,  (B) by notice to each
party  required  under the terms of any  agreement in support of which a Standby
Letter of Credit is issued, request that all Obligations under such agreement be
declared to be due and payable and (C) by notice to the Issuing Bank, direct the
Issuing Bank to deliver a Default  Termination Notice to the beneficiary of each
Standby  Letter of Credit  issued by it, and the Issuing Bank shall deliver such
Default Termination Notices;  provided,  however, that in the event of an actual
or deemed entry of an order for relief with respect to the  Borrowers  under the
Federal  Bankruptcy  Code,  (x) the  Commitments  of each  Lender  Party and the
obligation  of each Lender Party to make  Advances  (other than Letter of Credit
Advances by the Issuing  Bank or a Working  Capital  Lender  pursuant to Section
2.03(c)) and of the Issuing Bank to issue Letters of Credit shall  automatically
be  terminated  and (y) the Notes,  all such interest and all such amounts shall
automatically  become  and be due  and  payable,  without  presentment,  demand,
protest or any notice of any kind, all of which are hereby  expressly  waived by
the Borrowers.

     SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.  If
any Event of Default shall have occurred and be continuing,  the  Administrative
Agent may,  or shall at the request of the  Required  Lenders,  irrespective  of
whether it is taking any of the actions  described in Section 6.01 or otherwise,
make demand upon the Borrowers to, and forthwith  upon such demand the Borrowers
will,  pay to the  Collateral  Agent on behalf of the Lender Parties in same day
funds at the Collateral Agent's office designated in such demand, for deposit in
the L/C Cash  Collateral  Account,  an amount equal to the  aggregate  Available
Amount  of  all  Letters  of  Credit  then  outstanding.  If  at  any  time  the
Administrative  Agent or the Collateral  Agent determines that any funds held in
the L/C Cash Collateral  Account are subject to any right or claim of any Person
other than the Agents  and the Lender  Parties or that the total  amount of such
funds is less than the aggregate  Available Amount of all Letters of Credit, the
Borrowers  will,  forthwith  upon  demand  by the  Administrative  Agent  or the
Collateral  Agent,  pay to the  Collateral  Agent,  as  additional  funds  to be
deposited and held in the L/C Cash  Collateral  Account,  an amount equal to the
excess of (a) such  aggregate  Available  Amount  over (b) the  total  amount of
funds,  if  any,  then  held  in  the  L/C  Cash  Collateral  Account  that  the
Administrative  Agent or the Collateral Agent, as the case may be, determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds are on deposit in the L/C Cash Collateral  Account,  such
funds shall be applied to reimburse the Issuing Bank or Working Capital Lenders,
as applicable, to the extent permitted by applicable law.

                                       85
<PAGE>

                                   ARTICLE VII

                                 PARENT GUARANTY

     SECTION 7.01. Guaranty.  The Parent hereby  unconditionally and irrevocably
guarantees  the  punctual  payment  when due,  whether  at stated  maturity,  by
acceleration  or otherwise,  of all  Obligations of each other Loan Party now or
hereafter  existing under the Loan Documents,  whether for principal,  interest,
fees,   expenses  or  otherwise   (such   Obligations   being  the   "Guaranteed
Obligations"),  and  agrees to pay any and all  expenses  (including  reasonable
counsel fees and expenses)  incurred by the  Administrative  Agent or the Lender
Parties in  enforcing  any rights  under this  Guaranty.  Without  limiting  the
generality of the foregoing,  the Parent0s liability shall extend to all amounts
that  constitute  part of the Guaranteed  Obligations  and would be owed by each
such Loan Party to the Agent or any Lender  Party under the Loan  Documents  but
for the fact that they are  unenforceable  or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving any Loan Party.

     SECTION 7.02. Guaranty Absolute.  The Parent guarantees that the Guaranteed
Obligations  will be paid  strictly  in  accordance  with the  terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any  jurisdiction  affecting any of such terms or the rights of the Agents or
the Lenders  with  respect  thereto.  The  Obligations  of the Parent under this
Guaranty are independent of the Guaranteed  Obligations or any other Obligations
of any Loan Party under the Loan Documents, and a separate action or actions may
be  brought  and  prosecuted  against  the  Parent  to  enforce  this  Guaranty,
irrespective  of whether  any action is brought  against any other Loan Party or
whether  any  other  Loan  Party is joined in any such  action or  actions.  The
liability of the Parent under this Guaranty shall be  irrevocable,  absolute and
unconditional  irrespective  of, and the Parent  hereby  irrevocably  waives any
defenses it may now or  hereinafter  have in any way  relating to, any or all of
the following:

          (a) any lack of validity or enforceability of any Loan Document or any
     agreement or instrument relating thereto;

          (b) any change in the time,  manner or place of payment  of, or in any
     other  term  of,  all or any of the  Guaranteed  Obligations  or any  other
     Obligations of any other Loan Party under the Loan Documents,  or any other
     amendment or waiver of or any consent to departure  from any Loan Document,
     including,  without limitation,  any increase in the Guaranteed Obligations
     resulting  from the  extension  of  additional  credit to the  Borrower  or
     otherwise;

          (c) any taking, exchange, release or non-perfection of any collateral,
     or any taking,  release or  amendment  or waiver of or consent to departure
     from any other guaranty, for all or any of the Guaranteed Obligations;

          (d) any manner of application of collateral,  or proceeds thereof,  to
     all or any of the  Guaranteed  Obligations,  or any manner of sale or other
     disposition of any collateral for all or any of the Guaranteed  Obligations
     or any other  Obligations  of any other Loan Party under the Loan Documents
     or any other assets of any Loan Party or any of their Subsidiaries;

          (e)  any  change,   restructuring  or  termination  of  the  corporate
     structure or existence of any Loan Party or any of their Subsidiaries; or


                                       86
<PAGE>

          (f) any other circumstance (including, without limitation, any statute
     of  limitations) or any existence of or reliance on any  representation  by
     the  Administrative   Agent  or  any  Lender  Party  that  might  otherwise
     constitute a defense  available to, or a discharge  of, the  Borrower,  any
     Subsidiary Guarantor or any other guarantor or surety.

     This Guaranty shall continue to be effective or be reinstated,  as the case
may be,  if at any time any  payment  of any of the  Guaranteed  Obligations  is
rescinded  or must  otherwise  be  returned by the  Administrative  Agent or any
Lender Party upon the insolvency, bankruptcy or reorganization of any Loan Party
or any of their  Subsidiaries  or otherwise,  all as though such payment had not
been made.

     SECTION  7.03.  Waiver.  The Parent hereby  waives  promptness,  diligence,
notice of acceptance  and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Administrative  Agent
or any Lender Party protect,  secure, perfect or insure any Lien or any property
subject  thereto or exhaust any right or take any action  against any Loan Party
or any other  Person or any  collateral.  The Parent  acknowledges  that it will
receive   direct  and  indirect   benefits  from  the   financing   arrangements
contemplated by the Loan Documents and that the waiver set forth in this Section
7.03 is knowingly made in contemplation of such benefits

     SECTION 7.04. Subrogation.  The Parent will not exercise any rights that it
may now or hereafter acquire against the Borrower,  any Subsidiary  Guarantor or
any other  guarantor  that arise from the  existence,  payment,  performance  or
enforcement of the Parent0s  Obligations  under this Agreement or any other Loan
Document,   including,   without   limitation,   any   right   of   subrogation,
reimbursement,  exoneration,  contribution or  indemnification  and any right to
participate  in any claim or remedy of the  Administrative  Agent or any  Lender
Party against the Borrower,  any Subsidiary  Guarantor or any other guarantor or
any collateral,  whether or not such claim,  remedy or right arises in equity or
under contract, statute or common law, including,  without limitation, the right
to take or receive  from the  Borrower,  any  Subsidiary  Guarantor or any other
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts payable under this
Guaranty  shall  have been paid in full in cash and the  Commitments  shall have
expired or terminated. If any amount shall be paid to the Parent in violation of
the preceding sentence at any time prior to the later of (i) the payment in full
in cash of the Guaranteed  Obligations  and all other amounts payable under this
Guaranty,  and (ii) the later of the Tranche A Termination  Date,  the Tranche B
Termination Date and the Working Capital  Termination Date, such amount shall be
held in trust for the benefit of the Administrative Agent and the Lender Parties
and shall  forthwith  be paid to the  Administrative  Agent to be  credited  and
applied to the Guaranteed  Obligations  and all other amounts payable under this
Guaranty, whether matured or unmatured, in accordance with the terms of the Loan
Documents,  or to be held as collateral for any Guaranteed  Obligations or other
amounts payable under this Guaranty  thereafter arising. If (i) the Parent shall
make payment to the Administrative  Agent or any Lender Party of all or any part
of the Guaranteed  Obligations,  (ii) all of the Guaranteed  Obligations and all
other  amounts  payable  under this  Guaranty  shall be paid in full in cash and
(iii) each of the Tranche A Termination Date, the Tranche B Termination Date and
the Working Capital  Termination  Date shall have occurred,  the  Administrative
Agent and the Lender Parties will, at the Parent0s request and expense,  execute
and deliver to the Parent  appropriate  documents,  without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
the Parent of an  interest in the  Guaranteed  Obligations  resulting  from such
payment by the Parent.

                                       87
<PAGE>

                                  ARTICLE VIII

                                   THE AGENTS

     SECTION  8.01.   Authorization  and  Action.  Each  Lender  Party  (in  its
capacities as a Lender, Issuing Bank (if applicable) and on behalf of itself and
its Affiliates as potential  Hedge Banks) hereby  appoints and  authorizes  each
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Loan Documents as are delegated to
such  Agent by the terms  hereof  and  thereof,  together  with such  powers and
discretion as are reasonably incidental thereto. As to any matters not expressly
provided for by the Loan Documents (including,  without limitation,  enforcement
or  collection  of the  Notes),  no Agent  shall be  required  to  exercise  any
discretion  or take any action,  but shall be required to act or to refrain from
acting (and shall be fully  protected  in so acting or  refraining  from acting)
upon the instructions of the Required Lenders,  and such  instructions  shall be
binding  upon all Lender  Parties and all holders of Notes;  provided,  however,
that no Agent shall be required  to take any action that  exposes  such Agent to
personal liability or that is contrary to this Agreement or applicable law. Each
Agent agrees to give to each Lender Party prompt  notice of each notice given to
it by any Borrower pursuant to the terms of this Agreement.

     SECTION 8.02.  Agents'  Reliance,  Etc.  Neither any Agent nor any of their
respective  directors,  officers,  agents or  employees  shall be liable for any
action  taken or omitted to be taken by it or them under or in  connection  with
the Loan  Documents,  except  for its or their own gross  negligence  or willful
misconduct.  Without limitation of the generality of the foregoing,  each Agent:
(a) may treat the payee of any Note as the holder thereof until,  in the case of
the  Administrative  Agent,  the  Administrative  Agent  receives and accepts an
Assignment and  Acceptance  entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any
other Agent, such Agent has received notice from the  Administrative  Agent that
it has received and accepted such  Assignment  and  Acceptance,  in each case as
provided in Section 9.07; (b) may consult with legal counsel  (including counsel
for any Loan Party),  independent  public accountants and other experts selected
by it and shall not be liable  for any  action  taken or  omitted to be taken in
good faith by it in accordance  with the advice of such counsel,  accountants or
experts;  (c) makes no warranty or  representation to any Lender Party and shall
not be  responsible  to any  Lender  Party  for any  statements,  warranties  or
representations (whether written or oral) made in or in connection with the Loan
Documents;  (d) shall not have any duty to  ascertain  or to  inquire  as to the
performance  or observance  of any of the terms,  covenants or conditions of any
Loan  Document  on the  part  of any  Loan  Party  or to  inspect  the  property
(including  the  books  and  records)  of  any  Loan  Party;  (e)  shall  not be
responsible  to any  Lender  Party for the due  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value  of, or the  perfection  or
priority of any lien or security  interest  created or  purported  to be created
under or in  connection  with,  any Loan  Document  or any other  instrument  or
document furnished  pursuant thereto;  and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent,  certificate
or other  instrument  or writing  (which may be by telegram,  telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 8.03. Agents and Affiliates.  With respect to its Commitments,  the
Advances  made by it and the Notes  issued to it, each Agent shall have the same
rights and powers  under the Loan  Documents  as any other  Lender Party and may


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exercise the same as though it were not an Agent; and the term "Lender Party" or
"Lender Parties" shall, unless otherwise expressly indicated, include each Agent
in its individual capacity.  Each Agent and its respective affiliates may accept
deposits  from,  lend money to,  act as  trustee  under  indentures  of,  accept
investment banking engagements from and generally engage in any kind of business
with,  any  Loan  Party,  any of its  Subsidiaries  and any  Person  that may do
business with or own securities of any Loan Party or any such Subsidiary, all as
if such Agent was not an Agent and without  any duty to account  therefor to the
Lender Parties.

     SECTION 8.04. Lender Party Credit Decision.  Each Lender Party acknowledges
that it has,  independently  and  without  reliance  upon any Agent or any other
Lender Party and based on the financial  statements  referred to in Section 4.01
and such other documents and information as it has deemed appropriate,  made its
own credit analysis and decision to enter into this Agreement. Each Lender Party
also  acknowledges  that it will,  independently  and without  reliance upon any
Agent or any other Lender Party and based on such  documents and  information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.

     SECTION 8.05.  Indemnification.  (a) Each Lender Party severally  agrees to
indemnify  each Agent (to the extent not promptly  reimbursed  by the  Borrower)
from and against  such Lender  Party's  ratable  share  (determined  as provided
below) of any and all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever that may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of the Loan  Documents or any action
taken or omitted by such Agent under the Loan Documents; provided, however, that
no  Lender  Party  shall  be  liable  for  any  portion  of  such   liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or  disbursements  resulting  from such  Agent's  gross  negligence  or
willful  misconduct as found in a final,  non-appealable  judgment by a court of
competent jurisdiction.  Without limitation of the foregoing,  each Lender Party
agrees to reimburse each Agent promptly upon demand for its ratable share of any
costs and expenses (including, without limitation, fees and expenses of counsel)
payable by the  Borrowers  under  Section 9.04, to the extent that such Agent is
not promptly reimbursed for such costs and expenses by the Borrowers.

     (b) Each Lender Party  severally  agrees to indemnify  the Issuing Bank (to
the extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share (determined as provided below) of any and all liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements  of any kind or nature  whatsoever that may be imposed
on, incurred by, or asserted  against the Issuing Bank in any way relating to or
arising out of the Loan  Documents or any action taken or omitted by the Issuing
Bank under the Loan Documents;  provided, however, that no Lender Party shall be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Issuing  Bank's gross  negligence  or willful  misconduct as found in a
final,  non-appealable  judgment by a court of competent  jurisdiction.  Without
limitation of the  foregoing,  each Lender Party agrees to reimburse the Issuing
Bank  promptly  upon  demand  for its  ratable  share of any costs and  expenses
(including,  without  limitation,  fees and expenses of counsel)  payable by the
Borrowers  under  Section  9.04,  to the  extent  that the  Issuing  Bank is not
promptly reimbursed for such costs and expenses by the Borrowers.

     (c) For  purposes of this  Section  8.05,  the Lender  Parties'  respective
ratable shares of any amount shall be determined,  at any time, according to the


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sum of (i) the aggregate  principal  amount of the Advances  outstanding at such
time and owing to the respective Lender Parties,  (ii) their respective Pro Rata
Shares of the aggregate Available Amount of all Letters of Credit outstanding at
such  time,  (iii)  the  aggregate  unused  portions  of their  respective  Term
Commitments  at such  time and (iv)  their  respective  Unused  Working  Capital
Commitments at such time; provided that the aggregate principal amount of Letter
of Credit  Advances  owing to the Issuing Bank shall be considered to be owed to
the Working Capital Lenders ratably in accordance with their respective  Working
Capital  Commitments.  The failure of any Lender Party to reimburse any Agent or
the Issuing Bank, as the case may be, promptly upon demand for its ratable share
of any amount  required  to be paid by the  Lender  Parties to such Agent or the
Issuing Bank, as the case may be, as provided herein shall not relieve any other
Lender Party of its obligation  hereunder to reimburse such Agent or the Issuing
Bank,  as the case may be, for its ratable  share of such amount,  but no Lender
Party  shall  be  responsible  for the  failure  of any  other  Lender  Party to
reimburse  such Agent or the  Issuing  Bank,  as the case may be, for such other
Lender Party's ratable share of such amount.  Without  prejudice to the survival
of any  other  agreement  of any  Lender  Party  hereunder,  the  agreement  and
obligations  of each Lender Party  contained in this Section 8.05 shall  survive
the  payment  in full of  principal,  interest  and all  other  amounts  payable
hereunder and under the other Loan Documents.

     SECTION 8.06.  Successor Agents. Any Agent may resign at any time by giving
written  notice  thereof  to the Lender  Parties  and the  Borrowers  and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal,  the Required  Lenders shall have the right to appoint a
successor Agent, subject, so long as no Default has occurred and continuing,  to
the consent of the Borrowers,  such consent not to be unreasonably  withheld. If
no successor  Agent shall have been so appointed  by the Required  Lenders,  and
shall have accepted such appointment,  within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Agent,  then the retiring Agent may, on behalf of the Lender Parties,  appoint a
successor Agent, subject, so long as no Default has occurred and continuing,  to
the consent of the  Borrowers,  such  consent not to be  unreasonably  withheld,
which shall be a commercial  bank organized  under the laws of the United States
or of any State  thereof  and having a combined  capital and surplus of at least
$250,000,000.  Upon the acceptance of any  appointment  as Agent  hereunder by a
successor  Agent and,  in the case of a  successor  Collateral  Agent,  upon the
execution and filing or recording of such  financing  statements,  or amendments
thereto,  and such  amendments or supplements  to any mortgages,  and such other
instruments  or notices,  as may be necessary or  desirable,  or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents,  such successor Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring  Agent,  and the retiring  Agent shall be  discharged
from its  duties and  obligations  under the Loan  Documents.  If within 45 days
after written  notice is given of the retiring  Agent's  resignation  or removal
under this Section 8.06 no successor  Agent shall have been  appointed and shall
have accepted such  appointment,  then on such 45th day (i) the retiring Agent's
resignation  or removal shall become  effective,  (ii) the retiring  Agent shall
thereupon be discharged from its duties and obligations under the Loan Documents
and (iii) the  Required  Lenders  shall  thereafter  perform  all  duties of the
retiring Agent under the Loan Documents until such time, if any, as the Required
Lenders appoint a successor Agent as provided above.  After any retiring Agent's
resignation  or removal  hereunder  as Agent  shall have become  effective,  the
provisions  of this  Article  VII shall  inure to its  benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.


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                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.01.  Amendments,  Etc. No amendment or waiver of any provision of
this  Agreement  or the Notes or any other  Loan  Document,  nor  consent to any
departure by any Loan Party  therefrom,  shall in any event be effective  unless
the same  shall be in  writing  and signed  (or,  in the case of the  Collateral
Documents,  consented  to) by the  Required  Lenders,  and then  such  waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given;  provided,  however,  that (a) no amendment,  waiver or
consent  shall,  unless in writing and signed by all of the Lenders  (other than
any Lender  Party that is, at such time,  a  Defaulting  Lender),  do any of the
following at any time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial  Extension of Credit,  Section 3.02,  (ii) change
the  number  of  Lenders  or the  percentage  of (x)  the  Commitments,  (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of  outstanding  Letters of Credit that, in each case,  shall be required
for the  Lenders or any of them to take any action  hereunder,  (iii)  reduce or
limit the obligations of any Guarantor under Section 1 of the Guaranty issued by
it or release such Guarantor or otherwise limit such Guarantor's  liability with
respect to the  Obligations  owing to the Agents and the Lender  Parties  (other
than, in the case of any Subsidiary Guarantor, to the extent permitted under the
Subsidiary Guaranty), (iv) release any material portion of the Collateral in any
transaction  or  series  of  related   transactions   or  permit  the  creation,
incurrence,  assumption or existence of any Lien on any material  portion of the
Collateral in any  transaction or series of related  transactions  to secure any
Obligations  other than Obligations  owing to the Secured Parties under the Loan
Documents,  (v) amend  Section  2.13 or this  Section  9.01,  (vi)  increase the
Commitments  of the Lenders,  (vii) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable  hereunder,  (viii) postpone any date
scheduled for any payment of principal of, or interest on, the Notes pursuant to
Section  2.04 or 2.07 or any date  fixed for  payment  of fees or other  amounts
payable  hereunder,  or (ix) limit the  liability of any Loan Party under any of
the Loan  Documents and (b) no  amendment,  waiver or consent  shall,  unless in
writing  and signed by the  Required  Lenders  and each  Lender  (other than any
Lender that is, at such time, a Defaulting  Lender) that has a Commitment  under
the Term  Facilities  or Working  Capital  Facility  if such  Lender is directly
affected by such amendment,  waiver or consent,  (i) increase the Commitments of
such  Lender,  (ii) reduce the  principal  of, or interest on, the Notes held by
such Lender or any fees or other amounts payable hereunder to such Lender, (iii)
postpone  any date fixed for any payment of  principal  of, or interest  on, the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender,  (iv) change the order of  application  of any  prepayment  set forth in
Section 2.06 in any manner that materially affects such Lender; provided further
that no amendment,  waiver or consent shall, unless in writing and signed by the
Issuing Bank, as the case may be, in addition to the Lenders  required  above to
take such  action,  affect the rights or  obligations  of the Issuing Bank under
this Agreement; and provided further that no amendment, waiver or consent shall,
unless in writing and signed by an Agent in  addition  to the  Lenders  required
above to take such action,  affect the rights or duties of such Agent under this
Agreement or the other Loan Documents.

     SECTION 9.02. Notices,  Etc. All notices and other communications  provided
for hereunder shall be in writing (including telecopy  communication) and mailed
(by certified  mail),  telecopied or delivered by hand; if to ICG Equipment,  at
its address at 161 Inverness Drive West, Englewood, CO 80112,  facsimile:  (303)
414-8883,  Attention:  Reggie Vegliante,  with a copy to H. Don Teaque,  General
Counsel;  if to ICG  NetAhead,  at its  address  at 161  Inverness  Drive  West,
Englewood, CO 80112,  facsimile:  (303) 414-8883,  Attention:  Reggie Vegliante,


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with a copy to H. Don Teague,  General Counsel;  if to any Initial Lender Party,
at its Domestic Lending Office specified opposite its name on Schedule I hereto;
if to any other Lender Party,  at its Domestic  Lending Office  specified in the
Assignment and Acceptance  pursuant to which it became a Lender Party; if to the
Administrative Agent or the Collateral Agent, at its address at 1 Liberty Plaza,
New York, New York 10006 Attention:  Kevin Cornwell; and if to the Lead Arranger
at its  address at 1585  Broadway,  New York,  New York 10036,  Attention:  Lucy
Galbraith;  or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties.  All such notices and other
communications  shall, when mailed (by certified mail),  telecopied or delivered
shall be  effective  when  received  by the party  being  notified.  Delivery by
telecopier  of an  executed  counterpart  of  any  amendment  or  waiver  of any
provision of this Agreement or the Notes or of any Exhibit hereto to be executed
and delivered  hereunder shall be effective as delivery of an original  executed
counterpart thereof.

     SECTION  9.03.  No Waiver;  Remedies.  No failure on the part of any Lender
Party or any Agent to exercise, and no delay in exercising,  any right hereunder
or under any Note  shall  operate as a waiver  thereof;  nor shall any single or
partial  exercise  of any such  right  preclude  any other or  further  exercise
thereof or the exercise of any other right.  The  remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

     SECTION  9.04.  Costs and  Expenses.  (a) Subject to the  provisions of the
Commitment  Letter,  the Borrowers  agree jointly and severally to pay on demand
(i) all costs and expenses of the Administrative  Agent and the Collateral Agent
in  connection  with  the  preparation,   execution,  delivery,  administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication,   appraisal,  audit,  insurance,  consultant,  search,  filing  and
recording fees and expenses and (B) the reasonable  fees and expenses of counsel
for such Agents with respect thereto, with respect to advising such Agents as to
their rights and responsibilities, or the perfection, protection or preservation
of rights or interests,  under the Loan Documents,  with respect to negotiations
with any Loan  Party or with  other  creditors  of any Loan  Party or any of its
Subsidiaries  arising out of any Default or any events or circumstances that may
give rise to a Default and with  respect to  presenting  claims in or  otherwise
participating  in or  monitoring  any  bankruptcy,  insolvency  or other similar
proceeding  involving  creditors' rights generally and any proceeding  ancillary
thereto) and (ii) all costs and expenses of such Agents and each Lender Party in
connection with the  enforcement of the Loan  Documents,  whether in any action,
suit or litigation,  or any bankruptcy,  insolvency or other similar  proceeding
affecting  creditors'  rights  generally  (including,  without  limitation,  the
reasonable  fees and  expenses of counsel for the  Administrative  Agent and the
Collateral Agent and each Lender Party with respect thereto).

     (b) The Borrowers agree to indemnify, defend and save and hold harmless the
Administrative  Agent and the  Collateral  Agent,  each Lender Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors  (each,  an  "Indemnified  Party") from and  against,  and shall pay on
demand,  any  and  all  claims,  damages,   losses,   liabilities  and  expenses
(including,  without  limitation,  reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection  with or by reason of  (including,  without
limitation,  in connection with any  investigation,  litigation or proceeding or
preparation of a defense in connection therewith) (i) the Facilities, the actual


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or proposed use of the  proceeds of the  Advances or the Letters of Credit,  the
Transaction  Documents or any of the transactions  contemplated thereby, or (ii)
the actual or alleged  presence of  Hazardous  Materials  on any property of any
Loan Party or any of its  Subsidiaries or any  Environmental  Action relating in
any way to any Loan Party or any of its Subsidiaries,  except to the extent such
claim, damage,  loss,  liability or expense is found in a final,  non-appealable
judgment  by a court  of  competent  jurisdiction  to have  resulted  from  such
Indemnified  Party's gross negligence or willful  misconduct.  In the case of an
investigation,  litigation  or other  proceeding  to which the indemnity in this
Section 9.04(b) applies,  such indemnity shall be effective  whether or not such
investigation,  litigation  or  proceeding  is  brought by any Loan  Party,  its
directors, shareholders or creditors or an Indemnified Party, whether or not any
Indemnified  Party  is  otherwise  a  party  thereto  and  whether  or  not  the
Transaction  is  consummated.  Each Borrower also agrees not to assert any claim
against any Agent, any Lender Party or any of their Affiliates,  or any of their
respective officers, directors, employees, agents and advisors, on any theory of
liability, for special, indirect,  consequential or punitive damages arising out
of or otherwise  relating to the  Facilities,  the actual or proposed use of the
proceeds of the Advances or the Letters of Credit, the Transaction  Documents or
any of the transactions contemplated by the Transaction Documents.

     (c) If any payment of principal of, or Conversion of, any  Eurodollar  Rate
Advance is made by any  Borrower to or for the  account of a Lender  Party other
than on the last day of the Interest  Period for such Advance,  as a result of a
payment  or  Conversion  pursuant  to  Section  2.06,   2.09(b)(i)  or  2.10(d),
acceleration  of the  maturity of the Notes  pursuant to Section 6.01 or for any
other  reason,  or by an Eligible  Assignee to a Lender  Party other than on the
last day of the Interest  Period for such Advance upon an  assignment  of rights
and obligations  under this Agreement  pursuant to Section 9.07 as a result of a
demand by the Borrowers pursuant to Section 9.07(a), or if the Borrowers fail to
make any payment or  prepayment  of an Advance for which a notice of  prepayment
has been given or that is  otherwise  required to be made,  whether  pursuant to
Section 2.04,  2.06 or 6.01 or otherwise,  the Borrowers  shall,  upon demand by
such  Lender  Party (with a copy of such  demand to the  Administrative  Agent),
jointly and  severally pay to the  Administrative  Agent for the account of such
Lender  Party any amounts  required  to  compensate  such  Lender  Party for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion or such failure to pay or prepay, as the case may be,
including, without limitation, any loss (including loss of anticipated profits),
cost or  expense  incurred  by  reason of the  liquidation  or  reemployment  of
deposits or other funds  acquired by any Lender  Party to fund or maintain  such
Advance.

     (d) If any Loan Party  fails to pay when due any costs,  expenses  or other
amounts payable by it under any Loan Document,  including,  without  limitation,
fees and expenses of counsel and indemnities,  such amount may be paid on behalf
of such Loan Party by the Administrative  Agent or any Lender Party, in its sole
discretion.

     (e) Without  prejudice to the  survival of any other  agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of each Borrower contained in Sections 2.10 and 2.12 and this Section 9.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.

     SECTION  9.05.  Right of Set-off.  Upon (a) the  occurrence  and during the
continuance  of any Event of Default  and (b) the  making of the  request or the
granting  of  the  consent   specified  by  Section   6.01  to   authorize   the


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Administrative  Agent to  declare  the Notes  due and  payable  pursuant  to the
provisions of Section  6.01,  each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent  permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness at any time owing by such Agent,  such Lender Party
or such  Affiliate to or for the credit or the account of each Borrower  against
any and all of the Obligations of such Borrower now or hereafter  existing under
the Loan  Documents,  irrespective  of whether  such Agent or such Lender  Party
shall  have  made any  demand  under  this  Agreement  or such Note or Notes and
although such  Obligations  may be  unmatured.  Each Agent and each Lender Party
agrees promptly to notify each Borrower after any such set-off and  application;
provided,  however,  that the failure to give such  notice  shall not affect the
validity  of such  set-off  and  application.  The rights of each Agent and each
Lender Party and their respective  Affiliates under this Section are in addition
to other rights and remedies  (including,  without  limitation,  other rights of
set-off) that such Agent, such Lender Party and their respective  Affiliates may
have.

     SECTION 9.06. Binding Effect. This Agreement shall become effective when it
shall have been  executed by the Borrower and each Agent and the  Administrative
Agent shall have been  notified by each  Initial  Lender Party that such Initial
Lender Party has executed it and  thereafter  shall be binding upon and inure to
the  benefit  of each  Borrower,  each  Agent  and each  Lender  Party and their
respective successors and assigns,  except that the Borrowers shall not have the
right to assign their rights  hereunder or any interest herein without the prior
written consent of the Lender Parties.

     SECTION 9.07.  Assignments and Participations.  (a) Each Lender may and, so
long as no Default  shall have  occurred and be  continuing,  if demanded by the
Borrowers  (following a demand by such Lender  pursuant to Section 2.10 or 2.12)
upon at least five Business  Days' notice to such Lender and the  Administrative
Agent,  will assign to one or more  Eligible  Assignees  all or a portion of its
rights and obligations under this Agreement (including,  without limitation, all
or a portion of its Commitment or Commitments,  the Advances owing to it and the
Note or Notes  held by it);  provided,  however,  that (i) each such  assignment
shall  be of a  uniform,  and  not a  varying,  percentage  of  all  rights  and
obligations  under and in respect of one or more Facilities,  (ii) except in the
case of an assignment to a Person that,  immediately  prior to such  assignment,
was a Lender, an Affiliate of any Lender or an Approved Fund of any Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, the
aggregate  amount of the  Commitments  being assigned to such Eligible  Assignee
pursuant to such  assignment  (determined  as of the date of the  Assignment and
Acceptance  with  respect  to such  assignment)  shall in no event be less  than
$3,000,000  (or such lesser  amount as shall be  approved by the  Administrative
Agent and, so long as no Default  shall have  occurred and be  continuing at the
time of effectiveness of such assignment,  the Borrower) under each Facility for
which a Commitment is being assigned,  (iii) each such assignment shall be to an
Eligible Assignee, (iv) each such assignment made as a result of a demand by the
Borrower  pursuant to this  Section  9.07(a)  shall be arranged by the  Borrower
after  consultation  with  the  Administrative  Agent  and  shall be  either  an
assignment of all of the rights and  obligations  of the assigning  Lender under
this Agreement or an assignment of a portion of such rights and obligations made
concurrently  with  another  such  assignment  or other  such  assignments  that
together cover all of the rights and  obligations of the assigning  Lender under
this Agreement,  (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrower pursuant to this Section 9.07(a) unless and
until such  Lender  shall have  received  one or more  payments  from either the
Borrower or one or more Eligible Assignees in an aggregate amount at least equal
to the  aggregate  outstanding  principal  amount of the Advances  owing to such


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Lender,  together with accrued  interest  thereon to the date of payment of such
principal  amount  and all other  amounts  payable  to such  Lender  under  this
Agreement,  (vi) no such assignments  shall be permitted  without the consent of
the Administrative  Agent until the Administrative Agent shall have notified the
Lender Parties that syndication of the Commitments  hereunder has been completed
and (vii) the parties to each such  assignment  shall execute and deliver to the
Administrative  Agent,  for its  acceptance  and recording in the  Register,  an
Assignment  and  Acceptance,  together  with any Note or Notes  subject  to such
assignment and a processing and  recordation fee of $3,000;  provided,  however,
that (A) such processing and recordation fee shall be $1,500 for any Person that
immediately  prior to such  assignment was a Lender;  (B) there shall be no such
processing and  recordation  fee for any Person that  immediately  prior to such
assignment  was an Affiliate  of such  assigning  Lender;  and (C) for each such
assignment made as a result of a demand by the Borrower pursuant to this Section
9.07(a),  the  Borrower  shall pay to the  Administrative  Agent the  applicable
processing and recordation fee.

     (b) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder  shall  be a  party  hereto  and,  to  the  extent  that  rights  and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and obligations of a Lender or Issuing Bank, as the
case may be,  hereunder and (ii) the Lender or Issuing Bank assignor  thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Sections 2.10, 2.12 and 9.04 to the extent any claim thereunder
relates to an event arising prior to such  assignment)  and be released from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance  covering all of the  remaining  portion of an assigning  Lender's or
Issuing  Bank's  rights and  obligations  under this  Agreement,  such Lender or
Issuing Bank shall cease to be a party hereto).

     (c) By executing and delivering an Assignment and  Acceptance,  each Lender
Party assignor thereunder and each assignee thereunder confirm to and agree with
each other and the other parties  thereto and hereto as follows:  (i) other than
as provided in such Assignment and Acceptance, such assigning Lender Party makes
no representation or warranty and assumes no responsibility  with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the  execution,  legality,  validity,  enforceability,  genuineness,
sufficiency  or value of, or the  perfection or priority of any lien or security
interest  created or purported to be created  under or in connection  with,  any
Loan Document or any other instrument or document  furnished  pursuant  thereto;
(ii) such assigning Lender Party makes no representation or warranty and assumes
no responsibility  with respect to the financial  condition of any Loan Party or
the performance or observance by any Loan Party of any of its obligations  under
any Loan  Document  or any  other  instrument  or  document  furnished  pursuant
thereto;  (iii)  such  assignee  confirms  that it has  received  a copy of this
Agreement,  together  with  copies of the  financial  statements  referred to in
Section  4.01  and  such  other  documents  and  information  as it  has  deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance upon any Agent,  such assigning  Lender Party or any other Lender Party
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  decisions in taking or not taking action
under  this  Agreement;  (v)  such  assignee  confirms  that  it is an  Eligible
Assignee;  (vi) such assignee  appoints and  authorizes  each Agent to take such
action as agent on its behalf and to exercise such powers and  discretion  under
the Loan  Documents  as are  delegated  to such  Agent by the terms  hereof  and
thereof,  together with such powers and discretion as are reasonably  incidental


                                       95
<PAGE>

thereto;  and (vii) such assignee agrees that it will perform in accordance with
their  terms  all of the  obligations  that by the terms of this  Agreement  are
required to be performed by it as a Lender or Issuing Bank, as the case may be.

     (d) The  Administrative  Agent,  acting for this purpose (but only for this
purpose) as the agent of the Borrower, shall maintain at its address referred to
in  Section  9.02 a copy of each  Assignment  and  Acceptance  delivered  to and
accepted by it and a register for the  recordation of the names and addresses of
the Lender  Parties and the  Commitment  under each  Facility of, and  principal
amount of the Advances owing under each Facility to, each Lender Party from time
to time (the  "Register").  The entries in the Register  shall be conclusive and
binding for all purposes,  absent manifest error,  and the Borrower,  the Agents
and the Lender  Parties  shall treat each  Person  whose name is recorded in the
Register as a Lender Party  hereunder  for all purposes of this  Agreement.  The
Register  shall be available for  inspection by the Borrower or any Agent or any
Lender Party at any reasonable time and from time to time upon reasonable  prior
notice.

     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning Lender Party and an assignee,  together with any Note or Notes subject
to such  assignment,  the  Administrative  Agent shall,  if such  Assignment and
Acceptance  has been  completed  and is in  substantially  the form of Exhibit C
hereto,  (i) accept such Assignment and Acceptance,  (ii) record the information
contained  therein in the Register and (iii) give prompt  notice  thereof to the
Borrowers  and each  other  Agent.  In the case of any  assignment  by a Lender,
within five Business Days after its receipt of such notice,  the  Borrowers,  at
its own  expense,  shall  execute  and  deliver to the  Administrative  Agent in
exchange  for the  surrendered  Note or  Notes a new  Note to the  order of such
Eligible Assignee in an amount equal to the Commitment  assumed by it under each
Facility pursuant to such Assignment and Acceptance and, if any assigning Lender
has retained a Commitment hereunder under such Facility, a new Note to the order
of such  assigning  Lender in an amount equal to the  Commitment  retained by it
hereunder.  Such new Note or Notes  shall be in an  aggregate  principal  amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be  dated  the  effective  date of such  Assignment  and  Acceptance  and  shall
otherwise be in substantially the form of Exhibit A-1, A-2 or A-3 hereto, as the
case may be.

     (f) The Issuing Bank may assign to Eligible  Assignee all of its rights and
obligations  under the undrawn portion of its Letter of Credit Commitment at any
time; provided,  however,  that (i) each such assignment shall be to an Eligible
Assignee and (ii) the parties to each such assignment  shall execute and deliver
to the  Administrative  Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance,  together with a processing and recordation fee of
$3,000;  provided,  however,  that such  processing and recordation fee shall be
$1,500 for any Person that immediately prior to such assignment was a Lender.

     (g) Each Lender Party may sell participations to one or more Persons (other
than any Loan Party or any of its  Affiliates)  in or to all or a portion of its
rights and obligations under this Agreement (including,  without limitation, all
or a portion of its Commitments,  the Advances owing to it and the Note or Notes
(if  any)  held  by  it);  provided,  however,  that  (i)  such  Lender  Party's
obligations   under  this  Agreement   (including,   without   limitation,   its
Commitments) shall remain unchanged,  (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii)  such  Lender  Party  shall  remain  the  holder  of any such Note for all
purposes of this Agreement,  (iv) the Borrowers, the Agents and the other Lender


                                       96
<PAGE>

Parties  shall  continue to deal solely and  directly  with such Lender Party in
connection with such Lender Party's rights and obligations  under this Agreement
and (v) no  participant  under any such  participation  shall  have any right to
approve any  amendment or waiver of any provision of any Loan  Document,  or any
consent to any departure by any Loan Party therefrom,  except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts  payable  hereunder,  in each case to the
extent subject to such participation, postpone any date fixed for any payment of
principal  of, or interest  on, the Notes or any fees or other  amounts  payable
hereunder, in each case to the extent subject to such participation,  or release
all or substantially all of the Collateral.

     (h)  Any  Lender  Party  may,  in   connection   with  any   assignment  or
participation or proposed  assignment or participation  pursuant to this Section
9.07,   disclose  to  the  assignee  or  participant  or  proposed  assignee  or
participant any information  relating to the Borrowers  furnished to such Lender
Party by or on behalf of the Borrowers;  provided,  however,  that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve  the  confidentiality  of any  Confidential  Information
received by it from such Lender Party.

     (i)  Notwithstanding  any other provision set forth in this Agreement,  any
Lender Party may at any time create a security interest in all or any portion of
its rights under this Agreement  (including,  without  limitation,  the Advances
owing to it and the Note or Notes  held by it) in favor of any  Federal  Reserve
Bank in  accordance  with  Regulation A of the Board of Governors of the Federal
Reserve System.

     SECTION 9.08. Execution in Counterparts.  This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.

     SECTION 9.09. No Liability of the Issuing  Bank.  The Borrowers  assume all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit  with  respect to its use of such  Letter of Credit.  Neither the Issuing
Bank nor any of its officers or directors  shall be liable or  responsible  for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any  beneficiary  or  transferee  in  connection  therewith;  (b) the  validity,
sufficiency or genuineness of documents,  or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid,  insufficient,
fraudulent or forged;  (c) payment by the Issuing Bank against  presentation  of
documents  that do not comply  with the terms of a Letter of  Credit,  including
failure of any  documents  to bear any  reference  or adequate  reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrowers shall have
a claim  against the Issuing  Bank,  and the Issuing Bank shall be liable to the
Borrowers, to the extent of any direct, but not consequential,  damages suffered
by the Borrowers that the Borrowers  prove were caused by (i) the Issuing Bank's
willful misconduct or gross negligence as determined in a final,  non-appealable
judgment by a court of competent  jurisdiction in determining  whether documents
presented  under any  Letter of Credit  comply  with the terms of the  Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter  of  Credit  after the  presentation  to it of a draft  and  certificates
strictly  complying  with the terms and  conditions of the Letter of Credit.  In


                                       97
<PAGE>

furtherance and not in limitation of the foregoing,  the Issuing Bank may accept
documents that appear on their face to be in order,  without  responsibility for
further investigation, regardless of any notice or information to the contrary.

     SECTION 9.10. Confidentiality. Neither any Agent nor any Lender Party shall
disclose any  Confidential  Information to any Person without the consent of the
Borrower,  other than (a) to such Agent's or such Lender Party's  Affiliates and
their  officers,  directors,  employees,  agents and  advisors  and to actual or
prospective Eligible Assignees and participants, and then only on a confidential
basis, (b) as required by any law, rule or regulation or judicial  process,  (c)
as requested or required by any state,  Federal or foreign authority or examiner
regulating  such Lender Party and (d) to any rating  agency when required by it,
provided that, prior to any such disclosure,  such rating agency shall undertake
to preserve the confidentiality of any Confidential  Information relating to the
Loan Parties received by it from such Lender Party.

     SECTION 9.11.  Release of  Collateral.  Upon the sale,  lease,  transfer or
other  disposition  of any  item of  Collateral  of any Loan  Party  (including,
without limitation, as a result of the sale, in accordance with the terms of the
Loan Documents,  of the Loan Party that owns such Collateral) in accordance with
the terms of the Loan  Documents,  the Collateral  Agent will, at the Borrowers'
expense,  execute  and  deliver to such Loan Party such  documents  as such Loan
Party may reasonably  request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Collateral Documents
in accordance with the terms of the Loan Documents.

     SECTION  9.12.  Jurisdiction,  Etc. (a) Each of the parties  hereto  hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction  of any New York State court or Federal  court of the
United States of America  sitting in New York City, and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement  or any of the other  Loan  Documents  to which it is a party,  or for
recognition  or  enforcement  of any  judgment,  and each of the parties  hereto
hereby irrevocably and unconditionally  agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such Federal court. Each of
the  Loan  Parties  hereby  agrees  that  service  of all  process  in any  such
proceeding in any such court may be made by registered  mail or certified  mail,
return receipt requested,  to such Loan Party at its address provided in Section
9.02. Each of the parties hereto agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other  jurisdictions by
suit on the  judgment or in any other  manner  provided by law.  Nothing in this
Agreement  shall affect any right that any party may otherwise have to bring any
action  or  proceeding  relating  to this  Agreement  or any of the  other  Loan
Documents in the courts of any jurisdiction.

     (b) Each of the parties hereto irrevocably and  unconditionally  waives, to
the fullest  extent it may legally and  effectively do so, any objection that it
may now or  hereafter  have to the  laying  of  venue  of any  suit,  action  or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party in any New York State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an  inconvenient  forum to the maintenance of such action or
proceeding in any such court.

     SECTION 9.13. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.

                                       98
<PAGE>

     SECTION 9.14. Waiver of Jury Trial.  Each of the Borrowers,  the Agents and
the Lender Parties  irrevocably waives all right to trial by jury in any action,
proceeding  or  counterclaim  (whether  based on  contract,  tort or  otherwise)
arising out of or  relating  to any of the Loan  Documents,  the  Advances,  the
Letters  of  Credit  or the  actions  of any  Agent or any  Lender  Party in the
negotiation, administration, performance or enforcement thereof.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                      ICG EQUIPMENT, INC.


                                      By  /s/ H. Don Teague
                                         ---------------------
                                          Title:


                                      ICG NETAHEAD, INC.


                                      By  /s/ H. Don Teague
                                         ---------------------
                                          Title:




<PAGE>


                                      ICG SERVICES, INC.


                                      By  /s/ H. Don Teague
                                         ---------------------
                                          Title:



<PAGE>



                                      MORGAN STANLEY SENIOR FUNDING, INC.,
                                         as Sole Book-Runner and Lead Arranger


                                      By  /s/ Lucy H. Galbraith
                                         ------------------------
                                          Title:  Principal




<PAGE>


                                      ROYAL BANK OF CANADA,
                                         as Administrative Agent and Collateral
                                         Agent


                                      By  /s/ Stephanie Babich
                                         ------------------------
                                          Title:  Senior Manager


<PAGE>



                                      BANK OF AMERICA, N.A.,
                                         as Co-Documentation Agent


                                      By  /s/ Julie Schell
                                         ---------------------
                                          Title:  Vice President


<PAGE>



                                      BARCLAYS BANK PLC
                                         as Co-Documentation Agent


                                      By  /s/ Daniele Iacovone
                                        ------------------------
                                          Title:  Associate Director


<PAGE>


                                      Initial Lenders

                                      MORGAN STANLEY SENIOR FUNDING, INC.


                                      By  /s/ Lucy H. Galbraith
                                         ------------------------
                                          Title:  Principal



<PAGE>



                                      BANK OF AMERICA, N.A.


                                      By /s/ Julie Schell
                                         ------------------------
                                          Title:  Vice President


<PAGE>

                                      PARIBAS, LOS ANGELES AGENCY


                                      By  /s/ Darlynn Ernst Kitcher
                                         --------------------------
                                          Title:  Vice President

                                      By  /s/ Thomas G. Brandt
                                         --------------------------
                                          Title:  Director


<PAGE>

                                      FINOVA CAPITAL CORPORATION


                                      By  /s/ Andrew J. Pluta
                                         --------------------------
                                          Title:  Vice President


<PAGE>



                                      FIRST UNION NATIONAL BANK


                                      By  /s/ Mark L. Cook
                                         ------------------------------
                                          Title:  Senior Vice President


<PAGE>




                                      GENERAL ELECTRIC CAPITAL CORPORATION


                                      By  /s/ Thomas P. Waters
                                         ------------------------------
                                          Title:  Senior Vice President


<PAGE>



                                      IBM CREDIT


                                      By  /s/ Philip N. Morse
                                         ---------------------------------------
                                          Title:  Director, Commercial Financing
                                                  Americas

<PAGE>



                                      ROYAL BANK OF CANADA


                                      By  /s/ Stephanie Babich
                                         ------------------------
                                          Title:  Senior Manager


<PAGE>



                                      STEIN ROE FLOATING RATE LIMITED LIABILITY
                                      COMPANY


                                      By  /s/ Brian W. Good
                                         --------------------------
                                          Title:  Vice President


<PAGE>



                                      PILGRIM PRIME RATE TRUST
                                      By:   Pilgrim Investments, Inc., as its
                                            investment manager


                                      By  /s/ Michel Prince, CFA
                                         ---------------------------
                                          Title:  Vice President