EXHIBIT 10.7


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                            KMC FUNDING CORPORATION,
                                     ISSUER



                                       AND



                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                     TRUSTEE



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                                    INDENTURE

                            Dated as of March 1, 2001

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     $325,000,000 7.341% Media Internet Gateway Service Notes, Series 2001-1




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                                    INDENTURE

     This  INDENTURE  ("INDENTURE"),  dated as of March 1, 2001,  is between KMC
FUNDING CORPORATION,  a Delaware  corporation (herein called the "ISSUER"),  and
WELLS  FARGO  BANK  MINNESOTA,   NATIONAL   ASSOCIATION,   a  national   banking
association, as trustee (herein called the "TRUSTEE").

                             RECITALS OF THE ISSUER

     The Issuer has duly  authorized the issuance of  $325,000,000  in aggregate
principal  amount of its 7.341% Media Internet  Gateway  Service  Notes,  Series
2001-1 (the "NOTES") of  substantially  the tenor  hereinafter set forth, and to
provide  therefor the Issuer has duly  authorized  the execution and delivery of
this Indenture.

     The Notes shall be secured by a first  priority lien on the  Collateral (as
defined in Appendix I to this Indenture).

     All things  necessary  to make the Notes,  when  executed by the Issuer and
authenticated and delivered hereunder,  the valid obligations of the Issuer, and
to make this Indenture a valid  agreement of the Issuer,  in accordance with its
terms, have been done.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in  consideration  of the premises and the purchase of the Notes by
the Holders thereof,  it is mutually  covenanted and agreed,  for the benefit of
all Noteholders, as follows:

                                 GRANTING CLAUSE

     The Issuer  hereby  Grants to the Trustee,  for the benefit and security of
the  Noteholders and the Trustee as their  interests  appear herein,  all of the
Issuer's right,  title and interest in and to the Collateral.  The Grants of the
Collateral  effected by this  Indenture  shall include all rights,  powers,  and
options  (but none of the  obligations)  of the  Issuer  with  respect  thereto,
including the immediate and continuing right to claim for, collect, receive, and
give  receipts for all moneys  payable under and in respect of the Contracts and
all  chattel  paper  related  thereto,  to give and  receive  notices  and other
communications,  to recover on the Equipment pursuant thereto,  to make waivers,
amendments  or other  agreements,  to exercise all rights and options,  to bring
judicial  proceedings  in the name of the Issuer or  otherwise,  to  terminate a
Contract  pursuant to the terms thereof,  enforce all rights and remedies of the
Issuer  with  respect  to  the  duties,  covenants,  obligations,   indemnities,
representations  and warranties of the  respective  parties under the Contracts,
and  generally to do and receive  anything that the Issuer is or may be entitled
to do or receive  thereunder  or with respect  thereto.  Such Grants are made in
trust to secure (i) the payment of all  amounts  due on the Notes in  accordance
with  their  terms,  equally  and  ratably  without  prejudice,   priority,   or
distinction between any Note and any other Note by reason of differences in time
of issuance or otherwise, except as otherwise may be provided in this Indenture,
(ii) the  payment  of all other sums  payable  under  this  Indenture  and (iii)
compliance by the Issuer with this Indenture and the Notes.



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     The Trustee  acknowledges  such  Grants,  accepts the trusts  hereunder  in
accordance with the provisions  hereof,  and agrees to perform the duties herein
required  to the best of its ability  and to the end that the  interests  of the
Noteholders may be adequately and effectively protected as hereinafter provided.




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                                   ARTICLE I

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

     SECTION 1.01   DEFINITIONS.

     For  purposes  of this  Indenture,  capitalized  terms used  herein but not
otherwise  defined shall have the respective  meanings assigned to such terms in
Appendix I hereto,  subject to the  following  rules of usage  unless  otherwise
required by the context or unless otherwise defined herein:

     (a) Except as otherwise expressly provided,  any definitions defined herein
shall be  equally  applicable  to the  singular  and  plural  forms of the terms
defined.

     (b) Except as otherwise expressly provided,  references herein to articles,
sections,  paragraphs,  clauses, annexes, appendices,  schedules or exhibits are
references to articles,  sections,  paragraphs,  clauses,  annexes,  appendices,
schedules or exhibits in or to such document.

     (c) The headings,  subheadings and table of contents used herein are solely
for   convenience  of  reference  and  shall  in  no  way  affect  the  meaning,
construction or effect of any provision hereof.

     (d) References to any Person shall include such Person,  its successors and
permitted assigns and transferees.

     (e) Except as otherwise  expressly  provided,  reference  to any  agreement
means such agreement as amended,  supplemented,  restated or otherwise  modified
from time to time in accordance with the applicable provisions thereof.

     (f) Except as otherwise expressly  provided,  references to any law include
any amendment or  modification  to such law and any rules or regulations  issued
thereunder or any law enacted in substitution or replacement therefor.

     (g)  References  to  "including"  means  including,  without  limiting  the
generality of any description preceding such term.

     SECTION 1.02   COMPLIANCE CERTIFICATES.

     Upon any  application  or request by the Issuer to the  Trustee to take any
action under any  provision of this  Indenture,  other than any request that (i)
the Trustee  authenticate the Notes specified in such request,  (ii) the Trustee
invest moneys in the Accounts,  pursuant to the written directions  specified in
such  request,  or (iii) the  Trustee  pay moneys due and  payable to the Issuer
hereunder to the Issuer's  beneficial owner or other assignee  specified in such
request,  the  Trustee  may  require  the Issuer to  furnish  to the  Trustee an
Officer's  Certificate stating that all conditions  precedent,  if any, provided
for in this Indenture  relating to the proposed  action have been complied with,


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except that in the case of any such requested  action as to which other evidence
of satisfaction of the conditions precedent thereto is specifically  required by
any provision of this Indenture, no additional certificate need be furnished.

     SECTION 1.03   FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

     In any case where  several  matters  are  required to be  certified  by, or
covered by an opinion of, any specified  Person,  it is not  necessary  that all
such  matters  be  certified  by, or covered by the  opinion  of,  only one such
Person,  or that they be so certified or covered by only one  document,  but one
such Person may certify or give an opinion  with respect to some matters and one
or more other such Persons as to other matters,  and any such Person may certify
or give an opinion as to such matters in one or several documents.

     Any Officer's Certificate delivered to the Trustee may be based, insofar as
it  relates  to  legal   matters,   upon  a   certificate   or  opinion  of,  or
representations  by,  counsel,  unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which his  certificate  or opinion is based are
erroneous.  Any such Officer's Certificate or opinion and any Opinion of Counsel
may be based,  insofar as it relates to factual  matters,  upon a certificate or
opinion of, or representations  by, an Authorized Officer or Authorized Officers
of the Issuer as to such  factual  matters  unless  such  Authorized  Officer or
counsel of the Issuer knows,  or in the exercise of reasonable care should know,
that the certificate or opinion or representations  with respect to such matters
are  erroneous.  Any Opinion of Counsel  may be based on the written  opinion of
other counsel,  in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion.

     Where  any  Person  is  required  to  make,  give  or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.

     Wherever  in  this  Indenture,   in  connection  with  any  application  or
certificate  or report to the  Trustee,  it is  provided  that the Issuer  shall
deliver any document as a condition of the granting of such  application,  or as
evidence of compliance  with any term hereof,  it is intended that the truth and
accuracy,  at the time of the granting of such  application  or at the effective
date of such  certificate  or  report  (as the case may be),  of the  facts  and
opinions  stated in such document shall in such case be conditions  precedent to
the right of the Issuer to have such  application  granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's  right to rely upon the truth and accuracy of any statement
or opinion  contained  in any such  document as provided in Section  7.0l(a)(ii)
hereof.

     SECTION 1.04   ACTS OF NOTEHOLDERS, ETC.

     (a) Any request, demand, authorization,  direction, notice, consent, waiver
or other action  provided by this  Indenture to be given or taken by Noteholders
may be embodied in and  evidenced by one or more  instruments  of  substantially
similar tenor signed by such  Noteholders  in person or by agents duly appointed
in writing;  and, except as herein  otherwise  expressly  provided,  such action
shall become  effective when such instrument or instruments are delivered to the


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Trustee,  with a copy (or if  expressly  required an original) to the Issuer and
the Service  Provider.  Such instrument or instruments  (and the action embodied
therein and evidenced  thereby) are herein sometimes referred to as the "ACT" of
the Noteholders  signing such  instrument or instruments.  Proof of execution of
any  such  instrument  or of a  writing  appointing  any  such  agent  shall  be
sufficient  for any  purpose of this  Indenture  and  (subject  to Section  7.01
hereof) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section 1.04.

     (b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate  of a notary  public  or  other  officer  authorized  by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a  signer  acting  in a  capacity  other  than  his  individual  capacity,  such
certificate  or  affidavit  shall  also  constitute   sufficient  proof  of  his
authority. The fact and date of the execution of any such instrument or writing,
or the  authority of the Person  executing  the same,  may also be proved in any
other manner which the Trustee deems sufficient.

     (c) Any request, demand, authorization,  direction, notice, consent, waiver
or other Act of the holder of any Note shall  bind  every  future  Holder of the
same Note and the Holder of every Note issued upon the  registration of transfer
thereof or in exchange  therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.

     (d) By  accepting  the  Notes  issued  pursuant  to  this  Indenture,  each
Noteholder   irrevocably   appoints   the  Trustee   hereunder  as  the  special
attorney-in-fact  for such  Noteholder  vested with full power on behalf of such
Noteholder to effect and enforce the rights of such  Noteholder  pursuant hereto
and the provisions hereof for the benefit of such Noteholder.

     SECTION 1.05   NOTICES.

     Any request, demand, authorization, direction, notice, consent, waiver, Act
of Noteholders,  or other document provided or permitted by this Indenture to be
made upon,  given or furnished to, or filed with, the Trustee,  the Issuer,  the
Originator,  the  Servicer/Service  Provider,  the Rating  Agencies,  the Backup
Service Provider or the Service Purchasers shall be sufficient for every purpose
hereunder  if in writing  and  telexed,  telecopied  (with the  original  of the
telexed or telecopied material sent to the recipient by overnight courier on the
day of the telex or telecopy),  mailed,  first-class  postage  prepaid,  or hand
delivered.  Unless  otherwise  specifically  provided  herein,  no such request,
demand, authorization, direction, notice, consent, waiver, Act of Noteholders or
other  document  shall be  effective  until  received and any  provision  hereof
requiring  the  making,  giving,  furnishing,  or filing of the same on any date
shall be  interpreted  as  requiring  the same to be sent or  delivered  in such
fashion  that it will be  received  on such  date.  Any  such  request,  demand,
authorization,  direction, notice, consent, waiver, Act of Noteholders, or other
document shall be sent or delivered to the following addresses:

          (i) if to the Trustee, at the Corporate Trust Office, Wells Fargo Bank
     Minnesota,  National  Association,  Corporate  Trust  Services Asset Backed
     Administration,   MAC  N9311-161,   Sixth  Street  and  Marquette   Avenue,
     Minneapolis,  Minnesota, 55479 (Number for telecopy: (612) 667-3539; Number


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     for  telephonic  confirmation:  (612)  667-8058)  or at any  other  address
     previously  furnished  in  writing  to  the  Issuer,  the  Originator,  the
     Servicer/Service Provider, the Backup Service Provider, the Rating Agencies
     and the Service Purchasers;

          (ii) if to the Issuer, KMC Funding Corporation,  Attention: Attention:
     General  Counsel,  at 1545 Route 206,  Suite 300,  Bedminster,  New Jersey,
     07921  (Number  for  telecopy:   (908)  470-8776;   Number  for  telephonic
     confirmation:  (908) 470-2100) or at any other address previously furnished
     in writing to the Trustee, the Originator,  the Servicer/Service  Provider,
     the Backup Service Provider, the Rating Agencies and the Service Purchasers
     by the Issuer;

          (iii) if to the Originator,  KMC Telecom VI, Inc., Attention:  General
     Counsel,  at 1545  Route 206,  Suite 300,  Bedminster,  New  Jersey,  07921
     (Number for telecopy:  (908) 470-8776;  Number for telephonic confirmation:
     (908) 470-2100) or at any other address previously  furnished in writing to
     the Trustee, the Issuer, the Servicer/Service  Provider, the Backup Service
     Provider, the Rating Agencies and the Service Purchasers by the Originator;

          (iv)  if to the  Servicer/Service  Provider,  KMC  Telecom  VI,  Inc.,
     Attention:  General Counsel, at 1545 Route 206, Suite 300, Bedminster,  New
     Jersey, 07921 (Number for telecopy:  (908) 470-8776;  Number for telephonic
     confirmation:  (908) 470-2100) or at any other address previously furnished
     in writing to the Trustee,  the Issuer, the Originator,  the Backup Service
     Provider,   the  Rating   Agencies  and  the  Service   Purchasers  by  the
     Servicer/Service Provider;

          (v) if to the Backup  Service  Provider,  Lucent  Technologies,  Inc.,
     Attention:  Contract Management,  at 800 North Point Parkway,  Room 915457,
     Alpharetta, Georgia, 30005 (Number for telecopy: (678) 297-6553; Number for
     telephonic confirmation: (770) 750-2125) or at any other address previously
     furnished  in writing to the  Trustee,  the  Issuer,  the  Originator,  the
     Servicer/Service  Provider,  the Rating Agencies and the Service Purchasers
     by the Backup Service Provider; or

          (vi)  if to the  Service  Purchasers,  then  to  Qwest  Communications
     Corporation  and  to  Qwest   Communications   International,   Inc.,  1801
     California  Street,  Denver,  Colorado  80202 (Number for  telecopy:  (303)
     992-1742  Number for  telephonic  confirmation:  (800)  899-7780) or at any
     other address previously  furnished in writing to the Trustee,  the Issuer,
     the Originator,  the Servicer/Service Provider, the Rating Agencies and the
     Backup Service Provider;

          (vii) if to Moody's at 99 Church  Street,  New York,  New York  10007,
     Attention:  ABS Monitoring Department (Number for telecopy: (212) 553-3856,
     Number  for  telephonic  confirmation:  (212)  553-0300),  or at any  other
     address or telecopy number previously  furnished in writing to the Trustee,
     the Issuer,  the  Originator,  the  Servicer/Service  Provider,  the Backup
     Service Provider, S&P and the Service Purchasers, by Moody's; or



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          (viii) if to S&P, Standard and Poor's Ratings Services,  a division of
     The  McGraw-Hill  Companies,  Inc.,  55 Water,  New York,  New York  10041,
     Attention: Asset-Backed Surveillance Department (Number for telecopy: (212)
     438-2664,  Number for telephonic  confirmation:  (212) 438-2000), or at any
     other  address or telecopy  number  previously  furnished in writing to the
     Trustee,  the Issuer, the Originator,  the Servicer/Service  Provider,  the
     Backup Service Provider, Moody's and the Service Purchasers by S&P.

     SECTION 1.06   NOTICE TO NOTEHOLDERS; WAIVER.

     (a) Where this  Indenture  provides for notice to Noteholders of any event,
or the  mailing of any report to  Noteholders,  such  notice or report  shall be
sufficiently  given (unless  otherwise herein expressly  provided) if in writing
and mailed, first class postage prepaid, or sent by private courier or confirmed
telecopy  (with a copy of the  telecopied  material  sent  to the  recipient  by
overnight  courier on the day of the  telecopy) to each  Noteholder  affected by
such event or to whom such report is required to be mailed, at such Noteholder's
address as it appears in the Note Register,  not later than the latest date, and
not earlier than the earliest date,  prescribed for the giving of such notice or
the mailing of such report.  In any case where a notice or report to Noteholders
is mailed,  neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed,  to any particular  Noteholder  shall affect the
sufficiency  of such notice or report with respect to other  Noteholders.  Where
this Indenture  provides for notice in any manner,  such notice may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition  precedent to the  validity of any action taken in reliance  upon
such waiver.

     (b) In case by reason of the  suspension  of  regular  mail  service  or by
reason of any other  cause it shall be  impracticable  to mail or send notice to
Noteholders,  in accordance  with Section  1.06(a)  hereof,  of any event or any
report to  Noteholders  when such notice or report is  required to be  delivered
pursuant to any provision of this Indenture,  then such notification or delivery
as shall be made with the approval of the Trustee shall  constitute a sufficient
notification for every purpose hereunder.

     SECTION 1.07   RESERVED.

     SECTION 1.08   SUCCESSORS AND ASSIGNS.

     All covenants and agreements in this Indenture by the Issuer or the Trustee
shall bind its respective successors and permitted assigns, whether so expressed
or not.

     SECTION 1.09   SEVERABILITY CLAUSE.

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

     SECTION 1.10   BENEFITS OF INDENTURE.



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     Nothing in this Indenture or in the Notes,  express or implied,  shall give
to any Person, other than the parties hereto and their successors hereunder, any
separate  trustee or  co-trustee  appointed  under  Section  7.11 hereof and the
Holders of Notes, any benefit or any legal or equitable  right,  remedy or claim
under this Indenture.

     SECTION 1.11   GOVERNING LAW.

     THIS  INDENTURE  AND THE NOTES  SHALL BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH,  THE LAWS OF THE  STATE OF NEW  YORK,  WITHOUT  REGARD  TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.

     SECTION 1.12   LEGAL HOLIDAYS.

     In any case where any Payment Date or the Stated Maturity Date or any other
date on which  principal of or interest on any Note is proposed to be paid shall
not be a  Business  Day,  then  (notwithstanding  any  other  provision  of this
Indenture  or of the Notes) such  payment  shall be made on the next  succeeding
Business Day, and no interest shall accrue for the intervening period.

     SECTION 1.13   EXECUTION IN COUNTERPARTS.

     This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original,  but all such counterparts  shall
together constitute but one and the same instrument.

     SECTION 1.14   INSPECTION.

     The Issuer  agrees that, on  reasonable  prior  notice,  it will permit the
representatives  of the Trustee or any  Noteholder,  during the Issuer's  normal
business  hours,  to examine all of the books of account,  records,  reports and
other papers of the Issuer,  to make copies thereof and extracts  therefrom,  to
cause such books to be audited by independent accountants selected by the Issuer
and reasonably acceptable to the Trustee or such Noteholder, as the case may be,
and to discuss its affairs,  finances and accounts with its officers,  employees
and  independent  accountants  with an Authorized  Officer of the Issuer present
(and by this provision the Issuer hereby  authorizes its  accountants to discuss
with such  representatives  such affairs,  finances and  accounts),  all at such
reasonable times and as often as may be reasonably  requested for the purpose of
reviewing or evaluating the financial  condition or affairs of the Issuer or the
performance of and compliance with the covenants and  undertakings of the Issuer
in this Indenture,  the Transfer and Servicing Agreement,  the other Transaction
Documents  or any of the other  documents  referred  to herein or  therein.  Any
expense  incident to the  exercise by the Trustee or any  Noteholder  during the
continuance  of any Default or Event of Default of any right under this  Section
1.14 shall be borne by the  Issuer,  but any  expense  due to the  exercise of a
right by any  such  Person  prior to the  occurrence  of a  Default  or Event of
Default shall be borne by such Person.

     SECTION 1.15   SURVIVAL OF REPRESENTATIONS AND WARRANTIES.



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     The  representations,  warranties and  certifications of the Issuer made in
this Indenture or in any  certificate  or other writing  delivered by the Issuer
pursuant  hereto  shall  survive the  authentication  and  delivery of the Notes
hereunder, but unless explicitly provided to the contrary, they are made only as
of the Closing Date.

     SECTION 1.16   RESERVED.

     SECTION 1.17   RESERVED.

     SECTION 1.18   STATEMENTS REQUIRED IN OFFICER'S CERTIFICATE.

     Each Officer's  Certificate  with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

          (i) a statement  that the Person  making such  certification  has read
     such covenant or condition;

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

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

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

     SECTION 1.19   WHEN NOTES ARE DISREGARDED.

     In determining  whether the Noteholders of the required principal amount of
Notes have concurred in any direction,  waiver or consent hereunder, Notes owned
by the  Issuer or any other  obligor  on the  Notes or by any  Affiliate  of the
Issuer or such obligor related thereto shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Responsible Officer of the
Trustee  actually  knows are so owned  shall be so  disregarded.  Notes so owned
which have been  pledged in good faith shall not be  disregarded  if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with  respect to such Notes and that the pledgee is not the Issuer or any
other obligor upon the Notes or any Affiliate of the Issuer or such obligor.

     SECTION 1.20   RULES BY TRUSTEE.

     The  Trustee  may make  reasonable  rules for  action by or at a meeting of
Noteholders.

     SECTION 1.21   NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.



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     This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Issuer or an Affiliate of the Issuer. Any such indenture,  loan
or debt agreement may not be used to interpret this Indenture.

     SECTION 1.22   RESERVED.

     SECTION 1.23   INDEPENDENCE OF COVENANTS.

     All covenants and agreements in this Indenture  shall be given  independent
effect so that if any particular  action or condition is not permitted by any of
such  covenants,  the fact that it would be  permitted  by an  exception  to, or
otherwise be within the  limitations  of,  another  covenant shall not avoid the
occurrence  of a  Default  or an Event of  Default  if such  action  is taken or
condition exists.

     SECTION 1.24   CONSENT TO JURISDICTION.

     Each of the Issuer and the Trustee  irrevocably submits to the jurisdiction
of any New York State or Federal  court  sitting in the Borough of  Manhattan in
the City of New York  over any  suit,  action or  proceeding  arising  out of or
relating  to this  Indenture  or any Note.  Each of the Issuer  and the  Trustee
irrevocably waives, to the fullest extent permitted by laws, any objection which
it may have to the  laying of the venue of any such suit,  action or  proceeding
brought in such a court and any claim that any such suit,  action or  proceeding
brought in such a court has been brought in any inconvenient  forum. Each of the
Issuer and the Trustee  agrees that final  judgment in any such suit,  action or
proceeding  brought in such a court shall be  conclusive  and  binding  upon the
Issuer or the Trustee,  as the case may be, and may be enforced in the courts of
New York (or any other  courts to the  jurisdiction  of which the  Issuer or the
Trustee, as the case may be, is subject) by a suit upon such judgment,  provided
that  service of  process  is  effected  upon the  Issuer as  permitted  by law;
PROVIDED,  HOWEVER,  that  neither  the Issuer nor the Trustee  waives,  and the
foregoing  provisions  of this  sentence  shall not  constitute  or be deemed to
constitute a waiver of, (i) any right to appeal any such  judgment,  to seek any
stay or otherwise to seek reconsideration or review of any such judgment or (ii)
any stay of  execution  or levy  pending an appeal  from,  or a suit,  action or
proceeding for reconsideration or review of, any such judgment.

     SECTION 1.25   NO BANKRUPTCY PETITION.

     Notwithstanding any provision contained herein, each of the Noteholders and
the  Trustee  covenants  and agrees that prior to the date which is one year and
one day after the payment in full of all Notes issued by the Issuer, it will not
institute against, or join any other Person in instituting  against,  the Issuer
any  bankruptcy,  reorganization,   receivership,   arrangement,  insolvency  or
liquidation proceedings, or other similar proceedings under any federal or state
bankruptcy or similar law. The Issuer represents,  warrants,  and covenants that
it and has obtained, and will in the future obtain, a no-petition agreement from
each and  every  Person  that  enters  into any  agreement  of any kind with the
Issuer. This Section 1.25 shall survive the termination of this Indenture.

     SECTION 1.26   INDEBTEDNESS TREATMENT.



                                       10
<PAGE>

     This Indenture and the Notes have been  structured  with the intention that
the Notes will qualify under applicable tax law as indebtedness. The Issuer, the
Trustee and each  Noteholder  agrees to treat the Notes for purposes of federal,
state and local  income or  franchise  taxes  (and any other tax  imposed  on or
measured  by  income)  as  indebtedness  and to cause any  Person  acquiring  an
interest in a Note by, through or under it to acknowledge  the  characterization
of the Notes as indebtedness and to agree to treat the Notes as indebtedness for
such tax purposes.

     SECTION 1.27   CONSENT TO DISTRIBUTION OF SERVICER REPORTS.

     By  accepting  the  Notes  pursuant  to  this  Indenture,  each  Noteholder
irrevocably agrees to receive  distribution of the Monthly Servicer Reports from
(i) the Trustee as provided  in Section  3.09 herein or (ii) from the  Servicer,
pursuant to Section 8.6 of the Transfer and  Servicing  Agreement,  or any other
successor to the Servicer pursuant to the Transaction  Documents  (including the
Trustee, acting pursuant to Section 5.04 hereof).


                                       11
<PAGE>

                                   ARTICLE II

                                    THE NOTES

     SECTION 2.01   GENERAL PROVISIONS.

     (a) The  Notes  issuable  hereunder  shall be issued  as  registered  Notes
without coupons.  The Notes shall be known and entitled  generally as the "Media
Internet  Gateway Service Notes,  Series  2001-1".  The Notes shall have further
particular  designation as the Issuer may adopt,  and each Note issued hereunder
shall bear upon the face  thereof the  designation  so  adopted.  The Trustee is
hereby  authorized  and  directed  upon  the  written  order  of the  Issuer  to
authenticate  and deliver Notes to be issued  hereunder  entitled  "7.341% Media
Internet Gateway Service Notes, Series 2001-1". The form of each Note and of the
Trustee's  certificate of authentication shall be in substantially the forms set
forth in Exhibit A, with such appropriate insertions, omissions,  substitutions,
and other  variations  as are  required  or  permitted  by this  Indenture.  The
aggregate  principal  amount of Notes which may be  authenticated  and delivered
under this Indenture is limited to $325,000,000  except for Notes  authenticated
and delivered upon  registration of, transfer of, or in exchange for, or in lieu
of, other Notes pursuant to Section 2.04, 2.05, or 9.04 herein.  The Notes shall
be  issuable  only in  registered  form  and only in  denominations  of at least
$250,000 and integral  multiples of $1,000 thereof;  PROVIDED that the foregoing
shall not  restrict or prevent the  transfer  or  issuance  in  accordance  with
Section 2.04 or 2.05 herein of any Note having a remaining outstanding principal
amount of less than $250,000.

     (b) The amount of  principal  due and payable on the Notes on each  Payment
Date,  commencing with the related  Initial Payment Date,  shall be equal to the
Monthly Principal.  Except as otherwise provided in Section 6.03 hereof, no part
of the  principal  of any Note shall be paid prior to the Payment  Date on which
such  principal  is due in  accordance  with the  preceding  provisions  of this
Section 2.01(b).

     (c)  Interest  and  principal on the Notes shall be payable on each Payment
Date  commencing  with the related Initial Payment Date to Noteholders of record
on the Record Date.  Interest on the Notes is required to be paid to Noteholders
in an amount  equal to the  Monthly  Interest.  Interest  on the Notes  shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.

     (d) All  payments  made  with  respect  to any  Note  shall be made in U.S.
Dollars by wire  transfer,  and shall be applied  first to the interest then due
and payable on such Notes  (including any Overdue  Interest and interest payable
pursuant to Section 3.03(c) hereof) and then to the principal thereof (including
any Overdue Principal).

     (e) All Notes issued under this Indenture shall be in all respects  equally
and ratably  entitled to the  benefits  hereof and thereof  without  preference,
priority or distinction on account of the actual time or times of authentication
and delivery, all in accordance with the terms and provisions of this Indenture.
Payments of principal and interest on the Notes shall be made pro rata among all
outstanding Notes, without preference or priority of any kind.



                                       12
<PAGE>

     SECTION 2.02   BOOK-ENTRY NOTES; DEFINITIVE NOTES.

     (a) Form of Notes. Initially,  the Notes shall be issued in the form of one
or more Book-Entry  Note(s):  (i) Rule 144A Book-Entry  Notes: the Notes sold in
reliance on Rule 144A under the  Securities Act shall be issued in the form of a
Rule 144A  Book-Entry  Note; (ii)  Regulation S Temporary  Book-Entry  Note: the
Notes sold to non-U.S.  person in reliance on  Regulation  S shall  initially be
issued in the form of a Regulation S Temporary Book-Entry Note; and (iii) Public
Book-Entry Notes: after the expiration of the 40-day restricted period specified
in Regulation S, each beneficial interest in a Regulation S Temporary Book-Entry
Note shall be exchangeable for a Public  Book-Entry Note.  Following the initial
issuance of the Notes,  any  interest in a  Book-Entry  Note  transferred  to an
Institutional  Accredited  Investor that is not a QIB, or exchanged  pursuant to
Section 2.02(d) hereof,  shall be evidenced by a Definitive  Note. The Notes (i)
shall  represent,  and shall be denominated in an aggregate amount equal to, the
aggregate  principal amount of all Notes to be issued  hereunder,  (ii) shall be
substantially in the form of the Note specified pursuant to Section 2.01 hereof,
with such changes  therein as may be necessary to reflect that each such Note is
a global  security,  and (iii)  shall  each bear a legend  substantially  to the
effect  included  in the form of the face of the Notes as set forth in Exhibit A
hereto.

     (b) The Book-Entry  Note(s) shall be delivered as one or more Notes held by
the Book-Entry Custodian, or, if appointed to hold such Notes as provided below,
the  Depository  and shall be  registered  in the name of the  Depository or its
nominee.

     (c) Notwithstanding any other provisions of this Section 2.02 or of Section
2.04  hereof,  unless  and until a  Book-Entry  Note is  exchanged  in whole for
Definitive  Notes, a Book-Entry  Note may be transferred,  in whole,  but not in
part, and in the manner provided in this Section 2.02, only by the Depository to
a  nominee  of  such  Depository  or by a  nominee  of such  Depository  to such
Depository or another  nominee of such  Depository or by such  Depository or any
such nominee to a successor  Depository selected or approved by the Issuer or to
a nominee of such  successor  Depository  or in the manner  specified in Section
2.02(d) hereof.

     (d) If (i) the Issuer at any time notifies the Trustee that the  Depository
is unwilling or unable to continue as Depository  of the Notes,  and a successor
Depository  is not  appointed or approved by the Issuer within 90 days after the
Issuer receives such notice or becomes aware of such condition,  as the case may
be or (ii) the Issuer at its option  elects to terminate the  book-entry  system
through the Depository, the Issuer shall promptly execute, and the Trustee, upon
receipt of an Officer's Certificate evidencing such determination by the Issuer,
will promptly  authenticate  and make available for delivery,  Definitive  Notes
without  coupons,  in  authorized  denominations  and in an aggregate  principal
amount  equal to the  principal  amount  of the  Book-Entry  Note or Notes  then
outstanding in exchange for such  Book-Entry Note or Notes and this Section 2.02
shall no longer be applicable to the Notes.  Upon the exchange of the Book-Entry
Notes for such Definitive  Notes without coupons,  in authorized  denominations,
such Book-Entry  Notes shall be canceled by the Trustee.  Such Definitive  Notes
issued in exchange of the  Book-Entry  Notes  pursuant to this  Section  2.02(d)
shall be registered in such names and in such  authorized  denominations  as the
Depository, pursuant to instructions from its direct or indirect participants or
otherwise,  shall instruct the Trustee. The Trustee may conclusively rely on any
such  instructions  furnished by the  Depository and shall not be liable for any
delay in  delivery  of such  instructions.  The  Trustee  shall  make such Notes


                                       13
<PAGE>

available  for  delivery  to the  Persons  in  whose  names  such  Notes  are so
registered.

     (e) As  long  as the  Notes  outstanding  are  represented  by one or  more
Book-Entry Notes:

          (i) the Note  Registrar  and the Trustee may deal with the  Depository
     for all purposes (including the payment of principal of and interest on the
     Notes) as the authorized representative of the Note Owners;

          (ii) the rights of Note Owners  shall be  exercised  only  through the
     Depository and shall be limited to those  established by law and agreements
     between such Note Owners and the Depository and/or the Direct  Participants
     and Indirect  Participants.  Unless and until  Definitive Notes are issued,
     the Depository will make book-entry transfers among the Direct Participants
     and Indirect Participants and receive and transmit payments of principal of
     and  interest  on the  Notes  to  such  Direct  Participants  and  Indirect
     Participants; and

          (iii) whenever this Indenture  requires or permits actions to be taken
     based upon  instructions  or  directions  of the  Majority of Holders,  the
     Depository  shall be deemed to represent such percentage only to the extent
     that it has received  instructions  to such effect from Note Owners  and/or
     Direct  Participants  and  Indirect  Participants  owning or  representing,
     respectively,  such required  percentage of the beneficial  interest in the
     Notes and has delivered such instruction to the Trustee.

     (f) If Notes  are to be  issued in global  form  other  than as  Book-Entry
Notes,  the provisions  governing  such Notes shall be specified  pursuant to an
Officer's  Certificate  with respect  thereto and by an  indenture  supplemental
hereto.

     (g) Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes have been issued to Note
Owners,  the  Trustee  shall give all such  notices  and  communications  to the
Depository.

     (h) The Trustee is hereby initially  appointed as the Book-Entry  Custodian
and hereby  agrees to act as such in accordance  with the agreement  that it has
with the Depository authorizing it to act as such. The Book-Entry Custodian may,
and,  if it is no longer  qualified  to act as such,  the  Book-Entry  Custodian
shall,   appoint,  by  written  instrument  delivered  to  the  Issuer  and  the
Depository,  any other transfer agent (including the Depository or any successor
Depository)  to  act  as  Book-Entry  Custodian  under  such  conditions  as the
predecessor  Book-Entry Custodian and the Depository or any successor Depository
may prescribe,  PROVIDED that the predecessor  Book-Entry Custodian shall not be
relieved  of any  of its  duties  or  responsibilities  by  reason  of any  such
appointment of other than the  Depository.  If the Trustee resigns or is removed
in accordance with the terms hereof,  the successor Trustee or, if it so elects,
the  Depository  shall  immediately  succeed  to  its  predecessor's  duties  as
Book-Entry Custodian.  The Issuer shall have the right to inspect, and to obtain
copies of, any Notes held as Book-Entry Notes by the Book-Entry Custodian.



                                       14
<PAGE>

     (i) The provisions of this Section  2.02(i) shall apply to all transfers of
Definitive  Notes,  if any,  issued in respect  of  ownership  interests  in the
Book-Entry Notes.

          (a) No transfer of any Note or interest  therein  shall be made unless
     that transfer is made pursuant to an effective registration statement under
     the  Securities  Act, and effective  registration  or  qualification  under
     applicable state securities laws, or is made in a transaction that does not
     require such registration or qualification. If a transfer of any Definitive
     Note is to be made without  registration  under the  Securities  Act (other
     than in connection with the initial  issuance thereof or a transfer thereof
     by the Depository or one of its Affiliates),  then the Note Registrar shall
     refuse to register such transfer unless it receives (and upon receipt,  may
     conclusively  rely upon)  either:  (i) a certificate  from such  Noteholder
     substantially  in the form  attached  as  Exhibit  B hereto  or such  other
     certification  reasonably  acceptable to the Trustee and a certificate from
     such Noteholder's prospective transferee substantially in the form attached
     as Exhibit B hereto or such other  certification  reasonably  acceptable to
     the Trustee;  or (ii) an Opinion of Counsel  satisfactory to the Trustee to
     the effect that such  transfer may be made without  registration  under the
     Securities  Act (which  Opinion  of Counsel  shall not be an expense of the
     Issuer or any Affiliate  thereof that is a trust or of the Depository,  the
     Service  Provider,   any  Successor  Service  Provider,  the  Trustee,  the
     Book-Entry  Custodian or the Note Registrar in their respective  capacities
     as  such),  together  with the  written  certification(s)  as to the  facts
     surrounding  such  transfer  from the  Noteholder  desiring  to effect such
     transfer  and/or such  Noteholder's  prospective  transferee  on which such
     Opinion of Counsel is based.

          (b) If such a transfer of any interest in a  Book-Entry  Note is to be
     made without  registration under the Securities Act, the transferor will be
     deemed to have made each of the representations and warranties set forth on
     Exhibit B hereto in respect of such  interest as if it was  evidenced  by a
     Definitive  Note and the transferee will be deemed to have made each of the
     representations  and  warranties  set forth in  either  Exhibit B hereto in
     respect of such interest as if it was evidenced by a Definitive  Note. None
     of the Depository,  the Issuer,  the Trustee,  Book-Entry  Custodian or the
     Note  Registrar  is  obligated  to  register or qualify any Notes under the
     Securities  Act or any  other  securities  law or to take  any  action  not
     otherwise  required under this Indenture to permit the transfer of any Note
     or interest therein without  registration or qualification.  Any Noteholder
     or Note Owner  desiring  to effect such a transfer  shall,  and does hereby
     agree to,  indemnify the Depository,  the Issuer,  the Trustee and the Note
     Registrar  against any liability  that may result if the transfer is not so
     exempt or is not made in accordance with such federal and state laws.

     SECTION 2.03   EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

     (a) The Notes  shall be  executed  manually or by  facsimile  signature  on
behalf of the Issuer by an Authorized Officer of the Issuer.



                                       15
<PAGE>

     (b) Any Note bearing the signature of an individual  who was at the time of
execution  thereof a proper  authorized  signatory  of the Issuer shall bind the
Issuer,  notwithstanding  that such  individual  did not hold such office at the
date of such Note.

     (c) No Note shall be  entitled to any benefit  under this  Indenture  or be
valid  or  obligatory  for any  purpose  unless  there  appears  on such  Note a
certificate  of  authentication  substantially  in the form provided for herein,
executed by the Trustee by manual signature,  and such certificate upon any Note
shall be conclusive  evidence,  and the only  evidence,  that such Note has been
duly authenticated and delivered hereunder. Each Note shall be dated the date of
its authentication.

     (d) The Notes may from time to time be executed by the Issuer and delivered
to the Trustee for authentication together with an Issuer Request to the Trustee
directing the  authentication  and delivery of such Notes and thereupon the same
shall be  authenticated  and  delivered by the Trustee in  accordance  with such
Issuer Request.

     All Notes and the interest  thereon  shall be recourse  obligations  of the
Issuer only. No Person other than the Issuer shall be liable for any  obligation
of the Issuer  under this  Indenture  or any Note or any losses  incurred by any
Noteholder.

     SECTION 2.04   REGISTRATION, TRANSFER AND EXCHANGE.

     (a) The  Issuer  shall  cause to be kept at the  Corporate  Trust  Office a
register (the "NOTE REGISTER") in which, subject to such reasonable  regulations
as the Trustee may prescribe,  the Issuer shall provide for the  registration of
Notes  and of  transfers  of  Notes.  The  Trustee  is  hereby  appointed  "NOTE
REGISTRAR" for the purpose of registering Notes and transfers of Notes as herein
provided.

     (b)  Upon  surrender  for  registration  of  transfer  of any  Note  at the
Corporate  Trust  Office,  the Issuer shall execute and the Trustee upon request
shall  authenticate  and deliver,  in the name of the  designated  transferee or
transferees,  one or more new Notes,  of any authorized  denominations  and of a
like aggregate original principal amount.

     (c) All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid  obligations  of the Issuer,  evidencing  the same debt,  and
entitled to the same benefits  under this  Indenture,  as the Notes  surrendered
upon such  registration  of transfer or  exchange.  (d) Every Note  presented or
surrendered  for  registration of transfer or for exchange shall (if so required
by the Issuer or the Trustee) be duly  endorsed,  or be accompanied by a written
instrument of transfer in form  satisfactory  to the Issuer and the Trustee duly
executed, by the Holder thereof or his attorney duly authorized in writing.

     (e) No service  charge  shall be made for any  registration  of transfer or
exchange of Notes but the Issuer or the  Trustee  may  require  payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection  with any  registration  of transfer  or exchange of Notes,  but this
provision  shall not apply to any  exchange  pursuant to Section 9.04 hereof not
involving any transfer.



                                       16
<PAGE>

     (f) If Definitive  Notes are issued or exchanged under Section 2.02 hereof,
such Notes shall not be registered by the Trustee unless each Prospective  Owner
of a beneficial  interest in Notes acquiring such beneficial  interest  provides
the Service Provider, the Issuer, the Trustee and any Successor Service Provider
with a  representation  that the statements in either  subsections (1) or (2) of
Section 2.10 hereof is an accurate  representation as to all sources of funds to
be used to pay the purchase price of the Notes.

     (g) No transfer of a Note shall be deemed effective unless the registration
and prospectus delivery  requirements of Section 5 of the Securities Act and any
applicable  state  securities laws are complied with, or such transfer is exempt
from the registration and prospectus delivery  requirements under the Securities
Act  and  such  laws.  In  the  event  that a  transfer  is to be  made  without
registration or qualification,  such Noteholder's  prospective  transferee shall
deliver to the Trustee a purchaser letter substantially in the form of Exhibit B
hereto (the  "PURCHASER  LETTER").  The Trustee is not under any  obligation  to
register  the Notes  under the Act or any  other  securities  law or to bear any
expense  with  respect  to such  registration  by any other  Person  or  monitor
compliance  of any  transfer  with  the  securities  laws of the  United  States
regulations  promulgated  in  connection  thereto or ERISA  unless the Notes are
issued or exchanged in definitive form under Section 2.02 hereof.

     SECTION 2.05   MUTILATED, DESTROYED, LOST AND STOLEN NOTES.

     (a) If any mutilated Note is  surrendered to the Trustee,  the Issuer shall
execute and the Trustee shall  authenticate  and deliver in exchange  therefor a
replacement  Note of like tenor and  principal  amount and  bearing a number not
contemporaneously outstanding.

     (b) If there shall be  delivered to the Issuer and the Trustee (i) evidence
to their  satisfaction  of the  destruction,  loss or theft of any Note and (ii)
such  security or  indemnity as may be required by them to save each of them and
any agent of either of them  harmless,  then, in the absence of actual notice to
the  Issuer  or the  Trustee  that such  Note has been  acquired  by a bona fide
purchaser,  the Issuer  shall  execute and upon its  request  the Trustee  shall
authenticate and deliver, in lieu of any such destroyed,  lost or stolen Note, a
replacement  Note of like tenor and  principal  amount and  bearing a number not
contemporaneously outstanding.

     (c) In case the  final  installment  of  principal  on any such  mutilated,
destroyed,  lost or  stolen  Note has  become or will at the next  Payment  Date
become due and payable,  the Issuer in its discretion may,  instead of issuing a
replacement Note, pay such Note.

     (d) Upon the  issuance  of any  replacement  Note under this  Section,  the
Issuer or the Trustee may require the payment of a sum  sufficient  to cover any
tax or other governmental charge that may be imposed as a result of the issuance
of such replacement Note.

     (e) Every  replacement  Note issued pursuant to this Section in lieu of any
destroyed,   lost  or  stolen  Note  shall  constitute  an  original  additional
contractual  obligation  of the Issuer,  whether or not the  destroyed,  lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately  with any and all
other Notes duly issued hereunder.



                                       17
<PAGE>

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

     SECTION 2.06   PAYMENT OF INTEREST AND PRINCIPAL; RIGHTS PRESERVED.

     (a) Any  installment  of interest or principal  payable on any Note that is
paid or duly provided for by the Issuer on the applicable  Payment Date shall be
paid to the  Person  in whose  name  such  Note was  registered  at the close of
business  on the  Record  Date  for  such  Payment  Date  by  wire  transfer  of
immediately  available  funds to the  account and number  specified  in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.

     (b) All  reductions in the principal  amount of a Note effected by payments
of  installments of principal made on any Payment Date shall be binding upon all
Holders of such Note and of any Note  issued upon the  registration  of transfer
thereof or in exchange therefor or in lieu thereof,  whether or not such payment
is noted on such Note.  All  payments  on the Notes  shall be paid  without  any
requirement of presentment but each Holder of any Note shall be deemed to agree,
by its  acceptance  of the same, to surrender  such Note at the Corporate  Trust
Office for the payment of the final installment of principal on such Note.

     SECTION 2.07   PERSONS DEEMED OWNERS.

     Prior  to due  presentment  of a Note for  registration  or  transfer,  the
Issuer,  the  Trustee  and any agent of the Issuer or the  Trustee may treat the
Noteholder  as the owner of such Note for the  purpose of  receiving  payment of
principal  of and interest on such Note and for all other  purposes  whatsoever,
whether or not such Note be overdue, and neither the Issuer, the Trustee nor any
agent of the Issuer or the Trustee shall be affected by notice to the contrary.

     SECTION 2.08   CANCELLATION.

     All Notes  surrendered  for  registration  of transfer or exchange or final
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly cancelled by it. The Issuer may at any time
deliver to the Trustee for cancellation any Notes previously  authenticated  and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Trustee.  No Notes
shall be  authenticated  in lieu of or in exchange  for any Notes  cancelled  as
provided in this Section,  except as expressly permitted by this Indenture.  All
cancelled  Notes held by the Trustee may be disposed of in the normal  course of
its business or as directed by an Issuer Order.

     SECTION 2.09   NOTEHOLDER LISTS; COMMUNICATIONS TO NOTEHOLDERS.

     (a) The  Trustee  shall  preserve  in as  current  a form as is  reasonably
practicable  the most recent list  available to it of the names and addresses of
Noteholders.  If the  Trustee  is not the Note  Registrar,  the  Issuer or other
obligor, if any, shall furnish to the Trustee at least three Business Days prior
to each  Record  Date and at such  other  times as the  Trustee  may  request in


                                       18
<PAGE>

writing a list in such form and as of such date as the  Trustee  may  reasonably
require of the names and addresses of Noteholders.

     (b) If any Noteholder  (herein  referred to as an  "APPLICANT")  applies in
writing to the Trustee,  and such application  states that the applicant desires
to communicate  with other  Noteholders  with respect to their rights under this
Indenture or under the Notes, then the Trustee shall, within three Business Days
after the receipt of such application,  afford such  applicant(s)  access to the
information  preserved  at the time by the Trustee in  accordance  with  Section
2.09(a) hereof.

     (c) Every  Noteholder,  by receiving and holding the same,  agrees with the
Issuer and the Trustee  that neither the Issuer nor the Trustee nor any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the  Noteholders in accordance with
Section 2.09(b) hereof, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 2.09(b) hereof.

     SECTION 2.10   ERISA DEEMED REPRESENTATIONS.

     Each  prospective  initial  Noteholder  acquiring  Notes,  each prospective
transferee  acquiring  the  Notes,  and each  prospective  owner (or  transferee
thereof) of a beneficial interest in Notes (each a "PROSPECTIVE  OWNER") will be
deemed to have  represented  by such  purchase to the Issuer,  the Trustee,  the
Servicer and any  Successor  Service  Provider  that either (1) it is not a plan
within the meaning of Section 3(3) of ERISA or Section 4975 of the Code ("PLAN")
and is not  directly  or  indirectly  acquiring  the  Notes  on  behalf  of,  as
investment  manager of, as named fiduciary of, as trustee of, or with the assets
of a Plan; or (2) the acquisition and holding of the Notes will not give rise to
a prohibited  transaction  under Section  406(a) of ERISA or Section 4975 of the
Code for which a statutory or administrative exemption is unavailable.


                                       19
<PAGE>

                                  ARTICLE III

                   ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
                       AND APPLICATION OF MONEYS; REPORTS

     SECTION 3.01   ACCOUNTS; INVESTMENTS BY TRUSTEE.

     (a) On or before the Closing Date, the Trustee shall  establish in the name
of the Trustee for the benefit of the  Noteholders as provided in this Indenture
and in the Transfer and Servicing  Agreement,  the following  Accounts,  each of
which accounts shall be established and maintained at the Corporate Trust Office
as an Eligible Deposit Account:

          (i) Revenue Account;

          (ii) Reserve Account; and

          (iii) Property Tax Escrow Account.

Subject to the further  provisions of this Section  3.01(a),  the Trustee shall,
upon receipt or upon transfer from another account,  as the case may be, deposit
into such Accounts all amounts received by it which are required to be deposited
therein  in  accordance  with  the  written  direction  of the  Servicer  or any
Successor  Servicer,  as the case may be, and the provisions of this  Indenture.
All such  amounts and all  investments  made with such  amounts,  including  all
income and other  gain from such  investments,  shall be held by the  Trustee in
such Accounts  (which,  except as to the Property Tax Escrow  Account,  shall be
held as part of the Collateral) as herein provided, subject to withdrawal by the
Trustee in  accordance  with,  and for the  purposes  specified  in the  written
direction of the Servicer  pursuant to the provisions of, this  Indenture.  With
respect to each  Account,  the Issuer and the Trustee  agree that any amounts or
other property that are held in such Account (including any investment  earnings
therein)  shall be held  solely  in the name of the  Trustee,  on  behalf of the
Noteholders.  Each such Account  shall be subject to the  exclusive  custody and
control of the Trustee, and the Trustee shall have sole signature authority with
respect thereto.

     (b) RESERVED.

     (c) The Trustee  shall have no right of set-off with respect to any Account
or any investment  therein,  or any other Collateral,  including  collections or
proceeds with respect thereto  regardless of when or how held by the Trustee and
whether or not commingled.

     (d) So long as no Default or Event of Default  shall have  occurred  and be
continuing,  the amounts in the Accounts shall be invested and reinvested by the
Trustee  pursuant  to a  Servicer  Order  in one or more  Eligible  Investments.
Subject to the  restrictions on the maturity of investments set forth in Section
3.01(f)  hereof,  each such Servicer Order may authorize the Trustee to make the
specific Eligible  Investments set forth therein,  to make Eligible  Investments
from time to time consistent with the general instructions set forth therein, or
to make  specific  Eligible  Investments  pursuant to  instructions  received in
writing or by telegraph or facsimile  transmission  from the employees or agents


                                       20
<PAGE>

of the  Servicer  identified  therein,  in each  case in  such  amounts  as such
Servicer Order shall specify.

The Issuer agrees to report as income for  financial  reporting and tax purposes
(to the extent reportable) all investment earnings on amounts in the Accounts.

     (e) In the event that  either (i) the  Servicer  shall have  failed to give
investment directions to the Trustee by 12:00 P.M. New York time on any Business
Day on which there may be uninvested  cash or (ii) a Default or Event of Default
shall  have  occurred  and be  continuing,  then the  Trustee  shall  invest and
reinvest the funds then in the Accounts to the fullest extent practicable in one
or more Eligible  Investments as specified in paragraph (e) of the definition of
Eligible  Investments in Appendix I to this Indenture.  All investments  made by
the Trustee shall mature no later than the maturity  date therefor  permitted by
Section 3.01(f) hereof.

     (f) No investment of any amount held in (i) the Revenue  Account,  (ii) the
Property Tax Escrow Account to the extent  representing the Minimum Property Tax
Escrow  Amount or (iii) the  Reserve  Account  to the  extent  representing  the
Minimum  Reserve  Amount  shall  mature  later  than  the   Determination   Date
immediately  preceding the Payment Date which is scheduled to occur  immediately
following the date of investment; PROVIDED that no investment of any amount held
in (x) the  Property  Tax Escrow in excess of the  Minimum  Property  Tax Escrow
Amount or (y) the Reserve  Account in excess of the Minimum Reserve Amount shall
mature  later than the  earlier  to occur of (l) the date which  occurs 180 days
after  the  date  of  investment  and  (2) the  Determination  Date  immediately
preceding  the  Stated  Maturity  Date.  All  income  or  other  gains  from the
investment  of moneys that are required to be deposited in any Account  shall be
deposited by the Trustee in such Account immediately upon receipt.

     (g)  Any  investment  of any  funds  in an  Account,  and  any  sale of any
investment  held in an  Account,  shall be made  under the  following  terms and
conditions:

          (i) each such investment  shall be made in the name of the Trustee (in
     its capacity as such) for the benefit of the  Noteholders or in the name of
     a nominee of the Trustee;

          (ii) the investment  earnings of any  investment  shall be credited to
     the Account for which such investment was made;

          (iii) any certificate or other  instrument  evidencing such investment
     shall be  delivered  directly  to the  Trustee or its agent and the Trustee
     shall  have sole  possession  of such  instrument,  and all  income on such
     investment; and

          (iv) the  proceeds of any sale of an  investment  shall be remitted by
     the purchaser thereof directly to the Trustee for deposit in the Account in
     which such investment was held.

     (h) The  Trustee  shall  not in any way be held  liable  by  reason  of any
insufficiency  in any  Account,  resulting  from losses on  investments  made in
accordance with the provisions of this Section 3.01 (but the institution serving
as Trustee  shall at all times remain  liable for its own debt  obligations,  if


                                       21
<PAGE>

any, constituting part of such investments). The Trustee shall not be liable for
any investment losses or any liquidation prior to its maturity or any investment
made by it in  accordance  with this  Section  3.01 on the grounds that it could
have made a more favorable investment.

     SECTION 3.02   RESERVED.

     SECTION 3.03   COLLECTION OF MONEYS.

     (a) Except as otherwise  expressly  provided herein, the Trustee may demand
payment or delivery  of, and shall  receive and  collect,  directly  and without
intervention or assistance of any fiscal agent or other intermediary,  all money
and other  property  payable to or  receivable  by the Trustee  pursuant to this
Indenture.  The Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or  performance  under any agreement
or instrument that is part of the  Collateral,  the Trustee may take such action
as may be  appropriate  to enforce such payment or  performance,  including  the
institution  and  prosecution of appropriate  proceedings.  Notwithstanding  the
foregoing,  the  Trustee  shall  not be  obligated  to  act as  Servicer/Service
Provider.  Any such action  shall be without  prejudice  to any right to claim a
Default  or Event of  Default  under  this  Indenture  and any right to  proceed
thereafter  as  provided in Article VI hereof.  If at any time the Issuer  shall
receive any payment on or in respect of any Contract or Equipment, it shall hold
such payment in trust for the benefit of the Trustee and the Noteholders,  shall
segregate such payment from the other property of the Issuer, and shall,  within
two Business  Days of receipt,  deliver such  payment in  immediately  available
funds to the Trustee.

     (b) If at any time the Trustee  shall  receive any payment on or in respect
of any  Contract  or  Equipment,  it shall,  not  later  than the  Business  Day
following receipt thereof by it, deposit such payment into the Revenue Account.

     (c) To the extent permitted by law, Overdue Interest and Overdue  Principal
shall bear interest from the date due until the date paid, at the Overdue Rate.

     SECTION 3.04   REVENUE ACCOUNT.

     (a) The Trustee shall promptly upon receipt (but in no event later than the
next Business Day following receipt thereof), deposit the following amounts into
the Revenue Account:

          (i) each  Contract  payment  received by the  Trustee,  including  all
     Contract  payments  deposited with the Trustee by the Servicer or Issuer on
     the Closing Date (if any);

          (ii) any proceeds  received by the Trustee  pursuant to any  Insurance
     Policy  covering  Equipment  or any other  amounts  received by the Trustee
     relating to a Contract or Equipment;



                                       22
<PAGE>

          (iii) any amounts  received by the  Trustee  pursuant to Section  3.03
     hereof and not required  under the terms of this  Indenture to be deposited
     in any other Account;

          (iv) any amount  transferred  from the Reserve  Account in  accordance
     with Sections 3.04(c), 3.04(d), 3.07(b) or 3.07(c) hereof; and

          (v) any other amount  required to be deposited in the Revenue  Account
     pursuant to this Indenture or any other Transaction Document.

     (b) Unless the Notes have been declared due and payable pursuant to Section
6.03 hereof and moneys  collected by the Trustee are being applied in accordance
with Section 6.07 hereof, the Trustee shall by 3:00 P.M., New York City time, on
each  Payment  Date,  beginning  on the  Initial  Payment  Date,  in the amounts
required,  and in the order of priority  from  amounts on deposit in the Revenue
Account set forth below in accordance with the Monthly Servicer Report:

          (i) disburse all  Available  Funds to the extent of an amount equal to
     the sum of the Minimum  Payment and any Note  Reserve Draw for such Payment
     Date:

               (A) to pay to the Trustee, the Trustee Fee;

               (B) to pay to the Noteholders,  first interest on any (x) Overdue
          Interest on the Notes and (y) Overdue  Principal on the Notes,  as set
          forth in Section  3.03(c) hereof and then any Overdue  Interest on the
          Notes;

               (C) to pay to the Noteholders, Monthly Interest on the Notes;

               (D) to pay to the Noteholders, Overdue Principal on the Notes, if
          any;

               (E) to pay to the  Noteholders,  Monthly  Principal  on the Notes
          until  such time as the Note  Principal  Balance  has been  reduced to
          zero; and

               (F) to deposit in the Reserve  Account,  the Note Reserve Deposit
          Amount.

          (ii) thereafter, disburse all remaining Available Funds:

               (A) to pay to the Trustee,  the Trustee  Payments (other than the
          Trustee Fee);

               (B) to pay to the Backup  Service  Provider,  the Backup  Service
          Provider Fee;

               (C) to pay to the Servicer/Service Provider, the Senior Servicing
          Fee;



                                       23
<PAGE>

               (D) to pay the Location Adjustment Costs;

               (E) to pay amounts due for  insurance  premiums  under the Backup
          Servicing Agreement;

               (F) to pay amounts due under the Carrier  Hotel  Agreements,  the
          Maintenance  Agreement  and the  Installation  Agreement  (other  than
          Location Adjustment Costs);

               (G) to deposit in the Property Tax Escrow Account an amount equal
          to one-twelfth  of the sum of all property  taxes  estimated to be due
          with  respect to the  Equipment  and the  Contracts in the related tax
          year;

               (H) to pay  amounts  due under  the  Services  Agreement  and the
          Management and Tax Allocation Agreement;

               (I) to pay to the Reserve Account,  the Servicing Reserve Deposit
          Amount;

               (J) to pay to the  Servicer/Service  Provider,  the  Subordinated
          Servicing Fee; and

               (K) to pay to the Issuer or its designee all remaining  Available
          Funds.

Any Advance  Payment  shall be retained in the Revenue  Account  (subject to the
provisions of Section  3.01(d)  hereof) for  distribution on the related Payment
Date.  If at any time any  amount  or  portion  thereof  previously  distributed
pursuant to this Section 3.04(b) shall have been recovered,  or shall be subject
to recovery, in any proceeding with respect to the Issuer or otherwise, then for
purposes of determining  future  distributions  pursuant to this Section 3.04(b)
such amount or portion  thereof  shall be deemed not to have been  previously so
distributed.  The Trustee shall make the  disbursements  in accordance  with the
Monthly  Servicer  Report on each Payment Date to the extent of Available  Funds
for such Payment  Date;  PROVIDED,  HOWEVER,  that any Advance  Payment shall be
retained by the Trustee for distribution on the related Payment Date.

     (c) If on any Payment Date,  the Available  Funds on deposit in the Revenue
Account are less than the sum necessary to make the payments  required  pursuant
to Section  3.04(b)(i)  hereof,  clauses (A) through (E) each as applicable (the
sum of such payments, the "PRIORITY PAYMENTS"),  then the Trustee shall withdraw
the Note  Reserve Draw (as defined in Section  3.07(c)  hereof) from the Reserve
Account, to the extent that such funds are on deposit in the Reserve Account and
after  taking into  account the  Priority  Payments due on such Payment Date and
deposit such Note Reserve Draw into the Revenue Account.

     (d)  If  on  any  Payment  Date,  the  Available   Funds   remaining  after
distribution  of all amounts  payable  pursuant to Section  3.04(b)(i)  for such
Payment Date are less than the sum  necessary to make the payments then required
pursuant to Section  3.04(b)(ii) clauses (A) through (H) hereof (the sum of such
payments,  the  "SERVICING  Payments"),  then the  Trustee  shall  withdraw  the


                                       24
<PAGE>

Servicing  Reserve Draw (as defined in Section  3.07(b) hereof) from the Reserve
Account, to the extent that such funds are on deposit in the Reserve Account and
after  taking into account the  Servicing  Payments due on such Payment Date and
deposit such Servicing Reserve Draw into the Revenue Account.

     SECTION 3.05   RESERVED.

     SECTION 3.06   PROPERTY TAX ESCROW ACCOUNT.

     On each  Payment  Date,  the Trustee  shall  deposit  into the Property Tax
Escrow  Account the amount  specified  in Section  3.04(b)(ii)(G)  hereof.  Upon
receipt of an Officer's  Certificate  from the Servicer setting forth the amount
of property  taxes due with respect to the Equipment on the next due date (or if
not available,  the Servicer's  good faith  estimate  thereof),  and the date on
which such taxes are next due, the Trustee  shall  release to the Servicer  from
the Property Tax Escrow  Account  amounts  necessary to pay such property  taxes
when due.  The  Servicer  shall  provide to the Trustee on an annual  basis,  as
promptly as feasible  after the end of the Issuer's  fiscal year, a  certificate
issued by their  auditors  reflecting  the property  taxes actually due and paid
during such fiscal  year.  The  property  taxes  estimated to be due in the next
succeeding  tax  year,  on which  the  monthly  deposits  described  in  Section
3.04(b)(ii)(G) hereof are based, shall be recalculated by the Issuer (subject to
approval by the Trustee),  if necessary,  based upon the property taxes actually
due and paid the previous  year, as reflected in the  certificate  issued by the
Issuer's auditors with respect thereto.  Any funds remaining in the Property Tax
Escrow  Account  shall  be  released  to the  Issuer  or its  designee  upon the
termination of this Indenture.

     SECTION 3.07   RESERVE ACCOUNT.

     (a) On the Closing  Date,  the Issuer shall  deposit  with the Trustee,  on
behalf of the Noteholders,  for deposit in the Reserve Account,  an amount equal
to the Original Reserve Account Balance.  On each Payment Date the Trustee shall
deposit into the Reserve  Account all amounts  required to be deposited into the
Reserve  Account and actually  received by the Trustee.  The  obligation  of the
Trustee to deposit amounts into the Reserve Account in accordance with the terms
of this  Indenture  shall be  limited to the  deposit of amounts in the  Reserve
Account  pursuant to Sections  3.04(b)(i)(F)  and 3  .04(b)(ii)(I)  hereof.  The
Trustee shall be entitled to rely exclusively  upon the information  provided by
the Servicer in the Monthly  Servicer Report to determine the amount or adequacy
of funds on deposit in the  Reserve  Account,  or the amount of any  withdrawals
from the Reserve Account.  The Issuer agrees to treat the assets in such Account
(and all Reserve  Account  Earnings)  (the  "RESERVE  ACCOUNT  PROPERTY") as its
assets (and earnings) for federal, state and local tax purposes and not to sell,
transfer or otherwise dispose of its interest therein.

     (b) On each Payment Date,  the Trustee  shall,  on the basis of the Monthly
Servicer  Report,   deposit  in  the  Reserve   Account,   pursuant  to  Section
3.04(b)(ii)(I)  hereof, an amount equal to the Servicing Reserve Deposit Amount.
If on any Payment Date, the Available Funds remaining after  distribution of all
amounts  payable  pursuant to Section  3.04(b)(i)  for such Payment Date are not
sufficient to pay the Servicing  Payments,  the Trustee shall  withdraw from the
Reserve  Account (the  "SERVICING  RESERVE DRAW") the lesser of (1) the positive


                                       25
<PAGE>

excess of the Servicing Payments (excluding those attributable to expenses other
than taxes payable under the Management and Tax Allocation  Agreement)  over the
Available Funds remaining after  distribution of all amounts payable pursuant to
Section  3.04(b)(i)  for such Payment Date in  accordance  with Section  3.04(d)
hereof (based solely on information provided in the Monthly Servicer Report) and
(2) the  positive  excess of the amount in the Reserve  Account over the Minimum
Reserve  Amount for such Payment Date as set forth on Schedule I hereto  deposit
such Servicing Reserve Draw into the Revenue Account.

     (c) On each Payment Date,  the Trustee  shall,  on the basis of the Monthly
Servicer  Report,   deposit  in  the  Reserve   Account,   pursuant  to  Section
3.04(b)(i)(F)  hereof, an amount equal to the Note Reserve Deposit Amount. If on
any Payment Date, the Available Funds are less than the Priority  Payments,  the
Trustee shall  withdraw from the Reserve  Account (the "NOTE RESERVE  DRAW") the
excess of the Priority  Payments  over the Available  Funds in  accordance  with
Section  3.04(c)  hereof and  deposit  such Note  Reserve  Draw into the Revenue
Account.

     (d) Upon the  installation  of no less  than a total of  591,500  ports and
delivery to the Trustee of an Officer's  Certificate to such effect,  the Issuer
shall be entitled upon request to receive a draw from the Reserve  Account as of
the following  Payment Date equal to $910,000.  Upon the installation of no less
than a total of  676,104  ports and  delivery  to the  Trustee  of an  Officer's
Certificate to such effect, the Issuer shall be entitled upon request to receive
an additional  draw from the Reserve  Account as of the  following  Payment Date
equal to $910,000. In addition, on each Payment Date, if, after giving effect to
all  withdrawals  therefrom on such Payment Date, the Reserve Account Balance is
greater  than the  amount  indicated  opposite  each  such  Payment  Date on the
schedule attached hereto as Schedule I, then the Trustee,  at the instruction of
the Service Provider,  shall release and pay the amount (such amount, a "RESERVE
ACCOUNT  WITHDRAWAL")  of the  excess  to the  Issuer or its  designee.  Amounts
properly  paid to the Issuer or its  designee,  pursuant  to this  Section  3.07
hereof from the Reserve  Account,  shall be deemed  released from the Collateral
and the Issuer or its designee shall not in any event  thereafter be required to
refund any such amounts so paid.

     (e) Upon  termination  of this  Indenture  and payment of all principal and
interest on the Notes and all other amounts due to the Noteholders,  any amounts
on deposit in the Reserve Account shall be paid to the Issuer or its designee.

     SECTION 3.08   RESERVED.

     SECTION 3.09   REPORTS; NOTICES OF CERTAIN PAYMENTS.

     (a) On or before each Payment  Date,  the Trustee shall mail to the Issuer,
DTC, the Rating Agencies and each Note Owner, to the extent that such Note Owner
has provided evidence satisfactory to the Trustee,  evidencing such Note Owner's
ownership  interest in the Notes and its mailing  address,  the Monthly Servicer
Report furnished to the Trustee by the Servicer on the Determination  Date prior
to such  Payment  Date (or if such  report  has not  been  received,  a  written
statement to such effect).

     (b) The Trustee may make available to the Note Owners, the Service Provider
and the  Rating  Agencies,  via the  Trustee's  Internet  Website,  the  Monthly


                                       26
<PAGE>

Servicer's Report and, with the consent or at the direction of the Issuer,  such
other  information  regarding  the Notes and/or the Contracts as the Trustee may
have in its  possession,  but only with the use of a  password  provided  by the
Trustee or its agent to such Person upon receipt by the Trustee from such Person
of a certification in the form of Exhibit C hereto; PROVIDED,  HOWEVER, that the
Trustee  or its  agent  shall  provide  such  password  to the  parties  to this
Indenture, the Rating Agencies and each Note Owner, to the extent that such Note
Owner has provided  evidence  satisfactory to the Trustee,  evidencing such Note
Owner's  ownership  interest  in the  Notes  and its  mailing  address,  without
requiring  such  certification.  The  Trustee  will  make no  representation  or
warranties as to the accuracy or  completeness of such documents and will assume
no responsibility therefor.

     (c)  The  Trustee's   Internet  Website  shall  be  initially   located  at
"www.ABSNet.net"  or at such other  address as shall be specified by the Trustee
from time to time in writing to the Note Owners.  In connection  with  providing
access to the Trustee's Internet Website,  the Trustee may require  registration
and the  acceptance  of a  disclaimer.  The Trustee  shall not be liable for the
dissemination of information in accordance with this Indenture.

     (d) The Trustee shall deliver to the Servicer, and within two Business Days
after the request of the  Issuer,  deliver to the  Issuer,  a written  statement
setting  forth the  amounts on  deposit in each  Account,  and  identifying  the
investments included therein.

     SECTION 3.10   TRUSTEE MAY RELY ON CERTAIN INFORMATION FROM  ORIGINATOR AND
SERVICER.

     Pursuant  to Section  8.6 of the  Transfer  and  Servicing  Agreement,  the
Originator  and the Servicer are required to furnish to the Trustee from time to
time certain information and make various calculations which are relevant to the
performance  of the  Trustee's  duties in this Article III. The Trustee shall be
entitled  to rely  conclusively  in  good  faith  on any  such  information  and
calculations in the performance of its duties hereunder,  (i) unless and until a
Responsible Officer of the Trustee has actual knowledge that such information or
calculations  is or are  incorrect,  or (ii) unless there is a manifest error in
any such  information;  PROVIDED that the Trustee shall verify the  mathematical
accuracy of the Monthly Principal,  the Overdue Principal, the Monthly Interest,
the Overdue  Interest and the Interest as described in Section 3.03(c) hereof to
be paid on each Payment Date.


                                       27
<PAGE>

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES; OF ISSUER

     SECTION 4.01   REPRESENTATIONS AND WARRANTIES OF THE ISSUER.

     The  Issuer  hereby   represents  and  warrants  to  the  Trustee  and  the
Noteholders as set forth below.  The Trustee shall rely on such  representations
and  warranties  in accepting  the Service  Purchasers  Contracts  and the other
Collateral  in trust and  authenticating  the Notes.  Such  representations  and
warranties  are made as of the  Closing  Date or such  other  date  specifically
referenced therein.

     (a)  The  Issuer  owns  the  Collateral  free  and  clear  of all  security
interests,  liens and encumbrances whatsoever,  except for the security interest
granted to the Trustee pursuant to this Indenture;

     (b) Except as to the Trustee,  each party to the Transaction  Documents has
all  necessary  power,  authority  and legal  right to execute  and  deliver and
perform its obligations under each Transaction  Document to which it is a party,
and each such  Transaction  Document  has been  duly  authorized,  executed  and
delivered,  by each  party  thereto,  and each  constitutes  a legal,  valid and
binding instrument and obligation of such party,  enforceable in accordance with
its terms;

     (c) With respect to each party thereto other than the Trustee,  neither (A)
the execution and delivery of the Transaction Documents,  including the issuance
of the Note,  nor (B) the  consummation  of the  transactions  herein or therein
contemplated  nor  the  fulfillment  of,  or  compliance  with,  the  terms  and
provisions hereof, of any other Transaction  Document,  including the Note, will
(i) conflict  with,  result in any breach of any of the terms and provisions of,
or constitute  (with or without notice or lapse of time) a default under (a) its
certificate  of  incorporation  or bylaws,  or its  certificate  of formation or
limited  liability  company  operating  agreement,  as  applicable,  or (b)  any
indenture,  loan  agreement,  mortgage,  deed of trust,  or other  agreement  or
instrument  to which it is a party or by which it is bound,  (ii)  result in the
creation or imposition of any adverse claim upon any of its properties  pursuant
to the terms of any such indenture, loan agreement,  mortgage, deed of trust, or
other agreement or instrument,  other than the Transaction  Documents,  or (iii)
violate any law or any order, rule, or regulation  applicable to it of any court
or of any state or foreign  regulatory  body,  administrative  agency,  or other
governmental   instrumentality  having  jurisdiction  over  it  or  any  of  its
properties;

     (d) Each of the Issuer, the Originator and the Servicer/Service Provider is
a corporation  duly organized,  and validly  existing and in good standing under
the laws of its state of  incorporation,  with its chief  executive  office  and
principal  place of business  located at the  address set forth in Section  1.05
hereof;

     (e) Each of the Backup  Service  Provider and the Service  Purchasers  is a
corporation duly organized,  and validly existing and in good standing under the


                                       28
<PAGE>

laws of its incorporation with its chief executive office and principal place of
business located at the address set forth in Section 1.05 hereof;

     (f) Each  transfer  of assets to the Issuer  pursuant to the  Transfer  and
Servicing  Agreement  constituted a valid transfer and sale of such assets.  The
purchase  price  paid by the  Issuer to the  Originator  as  "Seller"  under the
Transfer and  Servicing  Agreement  equals the "fair market value" of the assets
transferred thereunder;

     (g) The Trustee (on behalf of the  Noteholders)  will have, upon the giving
of value and the  filing of  Financing  Statements  against  the  Issuer and the
Originator in the Filing  Locations,  a duly perfected  first priority  security
interest in all of the  Collateral,  and the Issuer has delivered to the Trustee
the executed original  counterpart of the Service Purchasers Consent and the MGS
Agreement identified as "SECURED PARTY'S ORIGINAL";

     (h)  the  copies  of  the  Service  Purchasers  Contracts  and  each  other
Transaction  Document  delivered by the Issuer to the Trustee on or prior to the
Closing Date, are true and correct copies of such documents, each of which is in
full force and effect and has not been  amended,  modified or  terminated in any
respect (except by written agreement delivered to the Trustee);

     (i) there is no payment under the MGS  Agreement or the Service  Purchasers
Consent that is now past due  pursuant to the terms of the MGS  Agreement or the
Service Purchasers Consent,  nor have there been any payments made in advance on
account of any payment  due under the MGS  Agreement  or the Service  Purchasers
Consent,  and to the best of the  Issuer's  knowledge,  neither  of the  Service
Purchasers nor the Originator is in default under any of its  obligations  under
the MGS Agreement or the Service Purchasers Consent;

     (j) the Service  Purchasers have not notified the Service Provider,  Lucent
or Nortel,  directly or  indirectly,  that (a) the Service  Provider,  Lucent or
Nortel, as the case may be, is in default under any of its obligations under any
Contract to which it is a party, or (b) any item of Equipment is not functioning
properly or (c) the Service Purchasers intend not to pay any amount which is due
or which will become due,  or will not  satisfy  any  obligation  required to be
performed by it, under the MGS Agreement or the Service Purchasers Consent;

     (k) there are no  setoffs,  counterclaims,  or  defenses on the part of the
Service  Purchasers to pay any of the Service  Purchasers  Payment Agreement due
under the MGS Agreement or the Service Purchasers Consent;

     (l) the Minimum  Payments plus all amounts required to be deposited as Note
Reserve  Deposit  Amounts shall be sufficient to pay the Priority  Payments,  as
such amounts shall come due;

     (m) there is no litigation or governmental proceeding pending or threatened
by the  Originator  or  against  either  the  Originator  or the  Issuer  or any
Collateral  which  litigation or governmental  proceeding  could have a material
adverse  effect upon the  Collateral  or the Issuer or the  Issuer's  ability to
perform its obligations hereunder;



                                       29
<PAGE>

     (n)  simultaneously  with the  closing,  the  Issuer,  as  assignee  of the
Servicer/Service  Provider,  is  obligated  to and  shall  pay  to  the  Service
Purchasers the entire remaining purchase price of the Equipment; and

     (o) to  perfect  the  security  interests  of the  Trustee  in all items of
Collateral  as to which a security  interest  can be  perfected by the filing of
Uniform  Commercial Code Financing  Statements or assignments,  the Issuer shall
cause (1) within  two  Business  Days  after the  Closing  Date,  UCC  Financing
Statements  to be  delivered  for  filing  in all  jurisdictions  (x)  where the
Equipment is located and (y) where all other  Collateral is deemed to be located
and (2) within thirty (30) Business Days after the Closing Date, UCC assignments
to be delivered  for filing in all  jurisdictions  where UCC- 1 file numbers are
not available on the Closing Date.

     All  representations  and  warranties set forth in this Section 4.01 to the
effect that any agreement is a legal, valid and binding  instrument  enforceable
in accordance with its terms are subject,  as to the enforceability of remedies,
to limitations imposed by bankruptcy, insolvency, reorganization,  moratorium or
other similar laws relating to or affecting the enforcement of creditors' rights
generally.



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<PAGE>

                                   ARTICLE V

              SERVICER TERMINATION EVENTS; BACKUP SERVICE PROVIDER;
                           SUBSTITUTE SERVICE PROVIDER

     SECTION 5.01   SERVICER TERMINATION EVENTS.

     If a Servicer Termination Event shall have occurred and be continuing under
Section 10.1 of the Transfer and Servicing  Agreement,  the Trustee shall,  upon
the  written  request of the  Majority of Holders,  give  written  notice to the
Servicer  and to  the  Issuer  of the  termination  of  all  of the  rights  and
obligations of the Servicer as Service  Provider and Servicer under the Transfer
and Servicing  Agreement (but none of the Originator's  obligations  thereunder,
which  shall  survive  any such  termination).  In the  event  that the  Service
Purchasers  do not exercise  their  option,  pursuant to the Service  Purchasers
Consent, to act as Successor Service Provider,  the Trustee shall deliver to the
Backup Service Provider the Backup Servicing Notice.

     SECTION 5.02    SUBSTITUTE SERVICE PROVIDER.

                  In the event that the Backup Service Provider, for any reason,
does not act as Successor Service Provider,  as provided in the Backup Servicing
Agreement,  the Trustee  shall,  at the  direction  of the  Majority of Holders,
appoint a Successor  Service  Provider in accordance with Section 10.2(a) of the
Transfer and Servicing Agreement.

     SECTION 5.03    NOTIFICATION TO NOTEHOLDERS AND RATING AGENCIES.

     Upon any termination of the Service  Provider or appointment of a Successor
Service  Provider,  the Trustee  shall give prompt  notice of such  termination,
resignation,  discharge, removal or appointment, together with the conditions of
default, if applicable, to the Rating Agencies and each Noteholder in the manner
provided herein.

     SECTION 5.04    TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

     (a) On and after the time KMC VI is removed as Servicer pursuant to Section
5.01(a)  hereof or resigns as Servicer  pursuant to Section 8.4 of the  Transfer
and  Servicing  Agreement  and if in each case Lucent is  appointed as Successor
Service  Provider  pursuant  to the Backup  Servicing  Agreement  and so acts as
Successor  Service  Provider,  the Trustee  shall,  unless  prevented  by law as
evidenced by an Opinion of Counsel,  automatically and without further action be
the successor  Servicer pursuant to the Transfer and Servicing  Agreement and as
further set forth in Section  5.04(b)  hereof.  If the Trustee  cannot  serve as
successor Servicer as provided in this Section 5.04(a),  the Majority of Holders
shall appoint another successor Servicer.

     (b) The Trustee in its capacity as successor Servicer shall be bound by all
the  provisions  of the Transfer and  Servicing  Agreement  (as modified by this
Section  5.04) and be the  successor to the Servicer in its capacity as Servicer
under the Transfer and Servicing Agreement and agrees to perform the obligations
of the Servicer for the transactions set forth or provided for therein and shall
be subject to all the responsibilities,  duties and liabilities relating thereto


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<PAGE>

placed on the Servicer by the terms and provisions  thereof;  PROVIDED  however,
that the Trustee in its capacity as successor Servicer (1) shall not be required
to provide the services  provided by Lucent as Backup Service Provider under the
Backup Servicing Agreement and shall not be liable for any of the obligations of
Lucent in its capacity as Backup  Service  Provider  under the Backup  Servicing
Agreement or under the Lucent  Consent,  (2) shall not be liable for any acts or
omissions of the outgoing Servicer or for any breach by the outgoing Servicer of
any of its  representations  and warranties  contained  herein or in any related
document or agreement. With the prior written consent of the Majority of Holders
(which  consent shall not be  unreasonably  withheld),  the Trustee as successor
Servicer may subcontract  with another firm to act as subservicer so long as the
successor  Servicer remains fully responsible and accountable for performance of
all  obligations  of the  successor  Servicer  on and after the time the Trustee
becomes the successor Servicer pursuant to Section 5.04(a) hereof; provided that
it is understood  that Lucent in its capacity of Backup  Service  Provider shall
not be considered a subservicer.

     (c) Upon becoming the successor Servicer pursuant to Section 5.04(a) hereof
(1) the Trustee shall be entitled to the Senior Servicing Fee for its activities
as Servicer and (2) the Trustee in its capacity as successor  Servicer  shall be
afforded the protections set forth in Sections 7.01(a) and (c) and 7.03 hereof.

     (d) The Servicer, the Issuer, the Trustee and such successor Servicer shall
take such action,  consistent with this Indenture and the Transfer and Servicing
Agreement,  as shall be  necessary  to  effectuate  any such  succession  of the
Trustee to be successor Servicer pursuant to this Section 5.04.

     (e) In the event Lucent has been removed or has resigned as Backup  Service
Provider pursuant to the terms of the Backup Servicing Agreement or does not act
as  Successor  Service  Provider  as  required  under  the  terms of the  Backup
Servicing  Agreement,  the  terms  hereof or  otherwise,  the  Trustee  shall be
entitled to resign,  solely as successor  Servicer pursuant to this Section 5.04
and the Transfer  and  Servicing  Agreement  (or shall not be required to become
successor  Servicer),  by delivery of a notice of resignation to the Noteholders
and shall have no further  obligations to the Noteholders as successor  Servicer
immediately  upon  delivery  of such  notice  other than to  cooperate  with the
transfer of servicing  to any  successor  Servicer  appointed by the Majority of
Holders.

     (f) Upon any such  succession  by the Trustee as  successor  Servicer,  the
Trustee  shall be deemed to have made (on and as of the  effective  date of such
succession) the following representations and warranties:

          (i) it has  been  duly  organized  and is  validly  existing  in  good
     standing as a national banking association, with power and authority to own
     its  properties,  enter into the Transfer and Servicing  Agreement,  and to
     conduct  its  business  as such  properties  are  presently  owned and such
     business is presently being conducted;

          (ii)  it is  duly  licensed  or  qualified  to  do  business  in  each
     jurisdiction  in which (a) the  ownership  or lease of its  property or the
     conduct of its business  requires such licensing or  qualification  and (b)
     the failure to be so licensed or qualified  would be  reasonably  likely to
     have a Material Adverse Effect;



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<PAGE>

          (iii) it has (a) all  necessary  power,  authority  and legal right to
     execute and deliver,  and perform its obligations  under,  each Transaction
     Document to which it is a party and (b) duly  authorized such execution and
     delivery and the performance of such obligations by all necessary corporate
     action;

          (iv) the consummation of the transactions contemplated by the Transfer
     and Servicing Agreement, and the fulfillment of the terms thereof, will not
     (a) conflict with,  result in any breach of any of the terms and provisions
     of, or constitute (with or without notice or lapse of time) a default under
     its organizational  documents or any agreement or instrument to which it is
     a party or by which it is bound,  (b) result in the creation or  imposition
     of any Adverse  Claim upon any of its  properties  pursuant to the terms of
     any such agreement or instrument, or (c) violate any law or any order, rule
     or  regulation  applicable  to it of any court or of any  state or  foreign
     regulatory   body,    administrative    agency,   or   other   governmental
     instrumentality having jurisdiction over it or any of its properties;

          (v) the Transfer and  Servicing  Agreement  has been duly  authorized,
     executed and delivered by the Trustee and  constitutes  a legal,  valid and
     binding instrument and obligation of the Trustee, enforceable in accordance
     with its terms is  enforceable  against  the  Trustee  in its  capacity  as
     successor Servicer;

          (vi) there is no action,  suit,  proceeding or  investigation  pending
     before any court,  regulatory body,  arbitrator,  administrative agency, or
     other  tribunal  ot  governmental   instrumentality   which,  if  adversely
     determined,  would be reasonably  likely to have a Material Adverse Effect;
     and

          (vii) no  authorization  or approval or other action by, and no notice
     to or  filing  with,  any  governmental  authority  or  regulatory  body is
     required for the due execution,  delivery and performance by such successor
     Servicer of any Transaction Document to which it is a party.

     (g)  Notwithstanding  any provision of the Transfer and Servicing Agreement
or contrary  provision in this Indenture,  such successor  Servicer shall not be
obligated to perform the  obligations  of the Servicer  under  Sections  6.1(f),
7.2(b)  et  seq.,  7.3 and  8.2(a)  of the  Transfer  and  Servicing  Agreement;
PROVIDED,  further,  that (1) its obligations  under Section 8.6 of the Transfer
and Servicing  Agreement  shall be subject to timely  receipt,  from the Service
Purchasers or Lucent,  of relevant  information  regarding the Service Purchaser
Payments; (2) any indemnification by such successor Servicer, under Section 11.1
of the Transfer and Servicing  Agreement or  otherwise,  shall be limited to any
loss,  expense,  claim or damage which may arise out of the gross  negligence or
willful misconduct of such successor Servicer in performing its duties under the
Transfer and  Servicing  Agreement;  (3) such  successor  Servicer  shall not be
liable to perform any obligation of any party under the MGS  Agreement;  (4) any
expense  of the  Trustee,  in its  capacity  as such or as  successor  Servicer,
incurred in enforcing any of the Contracts or in performing any of its duties as
successor  Servicer  (including the reasonable  fees and expenses of any agents,
subcontractors,  attorneys  and  consultants  retained by it from time to time),
shall constitute "Trustee Payments" under this Indenture; and (5) the Trustee as
successor Servicer may consult with any consultants described above with respect


                                       33
<PAGE>

to  technical  matters  and the  advice  of which  consultant  shall be full and
complete  authorization and protection in respect of any action taken,  suffered
or omitted by it in good faith and in reliance thereon.

     (h) In the event  that  Lucent in its role as  Successor  Service  Provider
elects  not to assume  any  Carrier  Hotel  Agreement  and with  respect  to the
obligations  set  forth  in  Section  8.02(b)  of  the  Transfer  and  Servicing
Agreement,  the  obligations  of the  Trustee as  successor  Servicer  under the
Carrier Hotel Agreements and under Section 8.02(b) of the Transfer and Servicing
Agreement  shall be limited to (1)  continuing  to make all  scheduled  payments
owing  thereunder  (solely  from monies  available  under this  Indenture),  (2)
notifying  each Note Owner of any breach of any of the terms and  provisions of,
or any default  thereunder  of which the Trustee has knowledge and (3) receiving
and responding to all notifications and communications  delivered to the Trustee
as successor  Servicer,  PROVIDED that the Trustee as successor  Servicer  shall
have no obligation to respond to or act on any  notifications or  communications
that require the Trustee as successor Servicer to exercise  independent judgment
in  material  matters  and the  successor  Servicer  shall have  discharged  its
obligations  hereunder by transmitting  such  notifications or communications to
the Note Owners.



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<PAGE>

                                   ARTICLE VI

                           EVENTS OF DEFAULT; REMEDIES

     SECTION 6.01    EVENTS OF DEFAULT.

     "EVENT OF DEFAULT,"  wherever  used herein,  means any one of the following
(whatever the reason for such Event of Default and whether it shall be voluntary
or  involuntary  or be effected by operation of law or pursuant to any judgment,
decree  or  order  of  any  court  or  any  order,  rule  or  regulation  of any
administrative or governmental body):

     (a) failure by the Issuer to pay any principal of, or interest on, any Note
when due;

     (b) default by the Issuer under any of its other  covenants  or  agreements
set  forth in this  Indenture  or any Note  Purchase  Agreement  (which  default
remains  uncured  for a period of 15 days after  notice  thereof is given to the
Issuer);

     (c) default by the Servicer/Service  Provider under any of its covenants or
agreements  set forth in the Transfer and Servicing  Agreement  which default is
not remedied during the applicable grace period, if any;

     (d) default by the Backup  Service  Provider  (after  receipt by the Backup
Service  Provider of a Backup  Servicing  Notice)  under any of its covenants or
agreements  set forth in the Backup  Servicing  Agreement,  which default is not
remedied during the applicable grace period, if any;

     (e) any  representation  or  warranty  (i) made by the  Issuer  under  this
Indenture  or any Note  Purchase  Agreement  or (ii) made by the  Originator  as
Servicer/Service Provider under the Transfer and Servicing Agreement,  proves to
be incorrect or misleading when made;

     (f)  any  representation  or  warranty  (i)  made  by any  Servicer/Service
Provider other than the Originator under the Transfer and Servicing Agreement or
(ii) made by the Backup Service Provider under the Backup  Servicing  Agreement,
proves  to be  incorrect  or  misleading  when  made,  and the  fact  that  such
representation or warranty was incorrect or misleading in any material respects;

     (g) the  Issuer,  the  Servicer/Service  Provider  or the  Backup  Servicer
Provider  (after  receipt by the Backup Service  Provider of a Backup  Servicing
Notice)  shall  become  insolvent  or  bankrupt  or shall  admit in writing  its
inability to pay any of its debts as they mature or make an  assignment  for the
benefit of creditors,  or a receiver or trustee shall have been  appointed  with
respect to it or to any of its estate;

     (h)  bankruptcy,  reorganization,  arrangement,  insolvency or  liquidation
proceedings or other  proceedings for relief under Title 11 of the United States
Code or any federal or state  bankruptcy or insolvency law or similar law now or


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<PAGE>

hereafter in force for the relief of debtors  shall be  instituted by or against
the Issuer, the Servicer/Service  Provider or the Backup Service Provider (after
receipt by the Backup  Service  Provider of a Backup  Servicing  Notice) and, if
instituted  against it,  shall be  consented  to by it or shall not be dismissed
within  sixty (60) days of such  institution  or it shall take any action in the
furtherance of the institution of any such proceeding; or

     (i) the  Trustee  fails to  possess  a first  priority  perfected  security
interest in the Collateral.

     SECTION  6.02    REMEDY  IN  EVENT  OF  DEFAULT IN PAYMENT  OR  PERFORMANCE
BY SERVICE PURCHASERS UNDER THE SERVICE PURCHASERS CONTRACTS.

     In the  event  of a  default  in  payment  by the  Service  Purchasers,  or
performance of the Service Purchasers' obligations, under the Service Purchasers
Contracts, which default is not remedied during the applicable grace period, the
Trustee,  at the unanimous,  written direction of the Noteholders shall exercise
any one or more of the remedies set forth in Section 4 of the Service Purchasers
Consent, which are restated below:

          (i)  bring  an  action  at law  or in  equity  to  compel  payment  or
     performance,  or recover damages for breach thereof, together with interest
     at a rate of 12% per annum on any past due amounts;

          (ii)  demand  immediate  payment  of all past due  amounts  under  the
     Service  Purchasers  Contracts,  together  with  the  present  value of all
     remaining Minimum Payments, discounted monthly at 5% per annum;

          (iii) A.  terminate  the  rights of the  Service Purchasers  under the
                    Service Purchasers Contracts; or

                B.  the  Trustee,  at the  unanimous  written  direction  of the
                    Noteholders,  may  appoint a  Successor  Service  Purchaser,
                    which Successor Service Purchaser (1) shall be acceptable to
                    all  Noteholders  and provided  that it is not  otherwise in
                    default  of its  obligations  pursuant  to  the  Transaction
                    Documents,  the Service Provider,  and (2) shall be a Person
                    whose  regular  business  involves  the purchase of services
                    similar to the MGS Services;  PROVIDED  that such  Successor
                    Service  Purchaser shall accept such  appointment in writing
                    and shall enter into one or more agreements containing terms
                    and conditions that are acceptable to the Successor  Service
                    Purchaser,  the Service  Provider or any  Successor  Service
                    Provider,  as the case may be, the  Issuer,  the Trustee and
                    all Noteholders,  and that are substantially  similar to the
                    Service    Purchasers    Contracts,     including    similar
                    representations   and   warranties   and  an  absolute   and
                    unconditional  payment  obligation not less than the Service
                    Purchasers   Payment   Agreement   (including   the  Minimum
                    Payments).  Pending any  appointment of a Successor  Service


                                       36
<PAGE>

                    Purchaser by the Trustee, at the unanimous written direction
                    of the  Noteholders,  the acceptance of such  appointment by
                    the  Successor  Service  Purchaser  and the execution of the
                    agreement   described   above,  the  Trustee  shall  act  in
                    accordance  with the  provisions of this Section 6.02.  Upon
                    the  appointment  of  and  acceptance  of  appointment  by a
                    Successor  Service  Purchaser,  the Trustee  shall  promptly
                    notify the Rating  Agencies in writing as to the legal name,
                    chief  executive  office and principal  place of business of
                    such  Successor  Service   Purchaser.   Appointment  of  and
                    acceptance of appointment by a Successor  Service  Purchaser
                    pursuant to this Section  6.02(iii)(B)  shall not constitute
                    an Event of Default pursuant to Section 6.01 hereof and upon
                    the payment in full of all Priority  Payment  amounts  owing
                    and unpaid,  shall terminate any Event of Default previously
                    arising pursuant to Section 6.01 hereof; and shall not cause
                    an acceleration of maturity  pursuant to Section 6.03 hereof
                    and shall terminate any acceleration of maturity  previously
                    arising  pursuant to Section 6.03 hereof.  The Trustee shall
                    continue,  subsequent to such  appointment and acceptance of
                    appointment, to invest, collect and apply moneys as provided
                    in Article III hereof;

          (iv) take possession of any or all Equipment and hold,  sell, lease or
     transfer same,  applying the net proceeds of re-lease or any disposition to
     the  unpaid  obligations  of  the  Service  Purchasers  under  the  Service
     Purchasers Contracts; and

          (v) exercise any other remedy available at law or in equity.

     SECTION 6.03    ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

     (a) If an Event of Default occurs and is continuing, of which a Responsible
Officer of the Trustee has received  written notice  (PROVIDED that such written
notice need not have been received by the Trustee in  connection  with a payment
default as  described in Section  6.01(a) or in  connection  with an  insolvency
described in Section 6.01(g) or 6.01(h) hereof), then and in every such case the
Trustee,  at the direction of the Majority of Holders,  shall declare the unpaid
principal amount of all the Notes to be due and payable immediately, by a notice
in writing to the Issuer,  and upon any such  declaration  such principal amount
shall become  immediately  due and payable  together with all accrued and unpaid
interest thereon,  without presentment,  demand,  protest or other notice of any
kind, all of which are hereby waived by the Issuer.

     (b) At any time after such a declaration of acceleration  has been made and
before a judgment  or decree for  payment of the money due has been  obtained by
the Trustee as hereinafter in this Article provided, the Majority of Holders, by
written  notice to the  Issuer  and the  Trustee,  may  rescind  and annul  such
declaration and its consequences if:



                                       37
<PAGE>

          (i) the Issuer has paid or deposited with the Trustee a sum sufficient
     to pay:

               (A) all sums paid or advanced, together with interest thereon, by
          the  Trustee  hereunder  and the  reasonable  compensation,  expenses,
          disbursements,  and advances,  if any, of the Trustee,  its agents and
          counsel;

               (B) all  principal  of any Notes which have become due  otherwise
          than by such  declaration of  acceleration,  and interest thereon from
          the date when the same first became due at the  applicable  Note Rate;
          and

               (C) all  interest  which has become due with respect to the Notes
          (including any interest on Overdue  Interest and Overdue  Principal at
          the Overdue Rate);

          (ii)  all  Events  of  Default,  other  than  the  non-payment  of the
     aggregate Note Principal that has become due solely by such  declaration of
     acceleration, have been cured or waived as provided in Section 6.14 hereof;
     and

          (iii) the rescission would not conflict with any judgment or decree of
     a court of competent jurisdiction.

No such  rescission  shall affect any subsequent  Event of Default or impair any
right consequent thereon.

     SECTION 6.04    OTHER REMEDIES.

     (a) If an Event of Default  occurs and is continuing of which a Responsible
Officer of the Trustee has received  written notice  (PROVIDED that such written
notice need not have been received by the Trustee in  connection  with a payment
default as  described in Section  6.01(a) or in  connection  with an  insolvency
described in Section 6.01(g) or 6.01(h)  hereof),  the Trustee shall give notice
to each  Noteholder as set forth in Section 7.02 hereof.  The Trustee shall then
take such action, if any, as may be directed by the Majority of Holders.

     (b) Following any  acceleration of the Notes, the Trustee shall have all of
the rights,  powers and remedies with respect to the Collateral as are available
to secured parties under the Uniform  Commercial Code or other applicable law or
as are otherwise available to it under applicable law to protect and enforce the
rights and remedies of the Trustee and the  Noteholders  hereunder and under the
other  Transaction  Documents,  including the right to foreclose on the Issuer's
ownership  of the  Equipment  and the right to apply all  moneys in the  Revenue
Account and the Reserve Account for payment of amounts due under the Notes.

     SECTION 6.05    TRUSTEE MAY FILE PROOFS OF CLAIM.

     (a) In case of the pendency of any receivership,  insolvency,  liquidation,
bankruptcy,  reorganization,  arrangement,  adjustment,  composition,  or  other
judicial  proceeding  relative  to  the  Issuer,  the  Originator,  the  Service
Provider,  the Backup Service  Provider,  the Service  Purchasers,  or any other


                                       38
<PAGE>

obligor upon the Notes or the other  obligations  secured  hereby or relating to
the  property  of the  Originator,  the  Service  Provider,  the Backup  Service
Provider,  the Service  Purchasers or of such other obligor or their  creditors,
the Trustee  (irrespective  of whether the  principal on the Notes shall then be
due and  payable  as  therein  expressed  or by  declaration  or  otherwise  and
irrespective  of whether the  Trustee  shall have made any demand on the Issuer,
the Originator,  the Service Provider,  the Backup Service Provider, the Service
Purchasers or any other obligor for the payment of Overdue  Principal or Overdue
Interest or any such other  obligation)  shall be  entitled  and  empowered,  by
intervention in such proceeding or otherwise:

          (i) to file and prove a claim for the whole  amount of  principal  and
     interest owing and unpaid in respect of the Notes and any other  obligation
     secured  hereby  and to file  such  other  papers  or  documents  as may be
     necessary  or  advisable  in  order  to  have  the  claims  of the  Trustee
     (including   any  claim   for  the   reasonable   compensation,   expenses,
     disbursements  and advances of the Trustee,  its agents and counsel) and of
     the Noteholders allowed in such judicial proceeding;

          (ii) to collect and receive  any moneys or other  property  payable or
     deliverable on any such claims and to distribute the same;

          (iii) unless prohibited by applicable law and regulations,  to vote on
     behalf of the  Noteholders in any election of a trustee,  a standby trustee
     or Person performing similar functions in any such proceedings; and

          (iv) to file such proofs of claim and other papers or documents as may
     be necessary or advisable in order to have the claims of the Trustee or the
     Noteholders  allowed  in  any  proceedings  relative  to  the  Issuer,  its
     creditors and its property;

and any custodian,  receiver,  assignee, trustee, liquidator,  sequestrator,  or
other similar official in any such judicial  proceeding is hereby  authorized by
each  Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Noteholders
to pay to the  Trustee  any  amount  due  it for  the  reasonable  compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.06 hereof.

     (b) Nothing  herein  contained  shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any  Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any holder  thereof or to authorize the Trustee to vote in respect
of the claim of any  Noteholder in any such  proceeding,  except as aforesaid to
vote for the election of a trustee in bankruptcy or similar Person.

     SECTION 6.06   TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.

     All rights of action and claims  under this  Indenture  or the Notes may be
prosecuted  and  enforced by the Trustee  without the  possession  of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation,  expenses, disbursements and advances of


                                       39
<PAGE>

the Trustee,  its agents and counsel,  be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.

     SECTION 6.07   APPLICATION OF MONEY COLLECTED.

     Following  the  occurrence of (x) an Event of Default and (y) a declaration
of acceleration pursuant to Section 6.03 hereof, any money,  securities or other
property  collected by the Trustee  pursuant to this Article VI, and any moneys,
securities or other property that may then be held or thereafter received by the
Trustee,  shall be applied,  to the extent  permitted  by law, in the  following
order,  at the  date  or  dates  fixed  by  the  Trustee  and,  in  case  of the
distribution of the entire amount due on account of principal or interest,  upon
presentation of the Notes and surrender thereof:

     FIRST, to pay to the Trustee,  the Trustee Payments  (including the Trustee
     Fee);

     SECOND, to pay to the Backup Service Provider,  the Backup Service Provider
     Fee;

     THIRD, to pay to the Servicer/Service Provider, the Senior Servicing Fee;

     FOURTH, if no Noteholder Subordination Consent Notice has been delivered in
     writing to the Trustee,  to pay to the  Noteholders,  first interest on any
     (x) Overdue  Interest on the Notes and (y) Overdue  Principal on the Notes,
     as set forth in Section 3.03(c) hereof and then any Overdue Interest on the
     Notes;

     FIFTH, if no Noteholder  Subordination Consent Notice has been delivered in
     writing to the Trustee, to pay to the Noteholders,  Monthly Interest on the
     Notes;

     SIXTH, if no Noteholder  Subordination Consent Notice has been delivered in
     writing to the Trustee, to pay to the Noteholders,  all remaining principal
     on the Notes;

     SEVENTH, to pay the Location Adjustment Costs;

     EIGHTH,  to pay  amounts  due  for  insurance  premiums  under  the  Backup
     Servicing Agreement;

     NINTH,  to  pay  amounts  due  under  the  Carrier  Hotel  Agreements,  the
     Maintenance  Agreement  and the  Installation  Agreement  (other  than  the
     Location Adjustment Costs);

     TENTH,  to pay for property taxes on the Equipment then due and to transfer
     to the  Property  Tax Escrow  Account an estimated  monthly  allotment  for
     future property taxes, as described in Section 3.04(b)(ii)(G) hereof;

     ELEVENTH,  if a Noteholder  Subordination Consent Notice has been delivered
     in writing to the Trustee, to pay to the Noteholders, first interest on any
     (x) Overdue  Interest on the Notes and (y) Overdue  Principal on the Notes,
     as set forth in Section 3.03(c) hereof and then any Overdue Interest on the
     Notes;



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<PAGE>

     TWELFTH, if a Noteholder Subordination Consent Notice has been delivered in
     writing to the Trustee, to pay to the Noteholders,  Monthly Interest on the
     Notes;

     THIRTEENTH, if a Noteholder Subordination Consent Notice has been delivered
     in  writing  to the  Trustee,  to pay to  the  Noteholders,  all  remaining
     principal on the Notes;

     FOURTEENTH,  to pay  amounts  due  under  the  Services  Agreement  and the
     Management and Tax Allocation Agreement;

     FIFTEENTH,  to pay  to  the  Servicer/Service  Provider,  the  Subordinated
     Servicing Fee; and

     SIXTEENTH, to pay any excess to the Issuer or its designee.

     SECTION 6.08    LIMITATION ON SUITS.

     The  Holder  of any  Note  shall  not  have  any  right  to  institute  any
proceeding,  judicial or otherwise, with respect to this Indenture or the Notes,
or for the  appointment  of a  receiver  or  trustee,  or for any  other  remedy
hereunder, unless:

          (i) such Noteholder has previously given written notice to the Trustee
     of a continuing Event of Default;

          (ii) the  Noteholders  evidencing  not less than 25% of the  aggregate
     Note  Balance  then  outstanding  shall  have made  written  request to the
     Trustee to institute proceedings in respect of such Event of Default in its
     own name as Trustee hereunder;

          (iii) such  Noteholder  or  Noteholders  have  offered to the  Trustee
     adequate  indemnity  against  the costs,  expenses  and  liabilities  to be
     incurred in compliance with such request;

          (iv) the Trustee for 30 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (v) so long  as any of the  Notes  remain  outstanding,  no  direction
     inconsistent with such written request has been given to the Trustee during
     such 30-day period by the Majority of Holders;

it being  understood and intended that no one or more Noteholder  shall have any
right in any manner  whatever by virtue of, or by availing of, any  provision of
this  Indenture  to  affect,  disturb,  or  prejudice  the  rights  of any other
Noteholder,  or to obtain or to seek to obtain  priority or preference  over any
other  Noteholder  or to enforce any right under this  Indenture,  except in the
manner herein  provided.  It is further  understood and intended that so long as
any portion of the Notes remains  outstanding,  the Servicer  shall not have any
right to institute any proceeding,  judicial or otherwise,  with respect to this
Indenture  (other than for the enforcement of Sections  3.04(b) and 4.04 hereof)
or for the  appointment  of a  receiver  or  trustee,  or for any  other  remedy
hereunder.



                                       41
<PAGE>

     SECTION 6.09    UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PAYMENT.

     Notwithstanding  any other  provision  in this  Indenture,  other  than the
provisions  hereof  establishing  priorities of payment,  the Holder of any Note
shall  have the  absolute  and  unconditional  right to  receive  payment of the
principal of and interest on such Note as such  principal  and interest  becomes
due on the Payment Dates for such payments,  including the Stated Maturity Date,
and to institute suit for the  enforcement of any such payment,  and such rights
shall not be impaired without the consent of such Noteholder.

     SECTION 6.10    RESTORATION OF RIGHTS AND REMEDIES.

     If the Trustee or any  Noteholder  has instituted any proceeding to enforce
any  right  or  remedy  under  this  Indenture  and  such  proceeding  has  been
discontinued or abandoned for any reason,  or has been  determined  adversely to
the Trustee or to such Noteholder,  then and in every such case,  subject to any
determination  in such proceeding,  the Issuer,  the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders  shall
continue as though no such proceeding had been instituted.

     SECTION 6.11    RIGHTS AND REMEDIES CUMULATIVE.

     Except as otherwise  provided with respect to the replacement or payment of
mutilated,  destroyed, lost, or stolen Notes in Section 2.05(f) hereof, no right
or remedy herein conferred upon or reserved to the Trustee or to the Noteholders
is intended to be  exclusive  of any other right or remedy,  and every right and
remedy shall,  to the extent  permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or  otherwise.  The  assertion or employment of any right or remedy
hereunder,  or  otherwise,   shall  not  prevent  the  concurrent  assertion  or
employment of any other appropriate right or remedy.

     SECTION 6.12    DELAY OR OMISSION NOT WAIVER.

     No  delay  or  omission  of the  Trustee  or of any  Holder  of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or  constitute  a waiver of any such Event of Default or an
acquiescence therein.  Every right and remedy given by this Article or by law to
the Trustee or to the  Noteholders  may be exercised  from time to time,  and as
often as may be deemed expedient,  by the Trustee or by the Noteholders,  as the
case may be.

     SECTION 6.13    CONTROL BY NOTEHOLDERS.

     Except as may otherwise be provided in this  Indenture,  until such time as
the  conditions  specified in Section 11.01 hereof have been  satisfied in full,
the  Majority  of Holders  shall  have the right to direct the time,  method and
place of conducting any  proceeding  for any remedy  available to the Trustee or
exercising  any trust or power  conferred  on the Trustee.  Notwithstanding  the
foregoing:



                                       42
<PAGE>

          (i) no such  direction  shall be in  conflict  with any rule of law or
     with this Indenture;

          (ii) the Trustee  shall not be  required to follow any such  direction
     which the  Trustee  believes  may be unduly  prejudicial  to the  rights of
     another  Noteholder  not  joining in such  direction  or which the  Trustee
     believes might result in any personal  liability on the part of the Trustee
     for which the Trustee is not  indemnified to its  reasonable  satisfaction;
     and

          (iii) the  Trustee  may take any  other  action  deemed  proper by the
     Trustee which is not  inconsistent  with any such direction;  PROVIDED that
     the Trustee shall give notice of any such action to each Noteholder.

     SECTION 6.14    WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.

     (a)  Subject  to the  provisions  of  Sections  6.09 and 9.01  hereof,  the
Majority  of  Holders  may,  by one or more  instruments  in  writing,  waive an
existing Default or Event of Default  hereunder and its  consequences,  except a
continuing Event of Default:

          (i) in respect of the payment of the  principal  of or interest on any
     outstanding Note (which may only be waived by the Holder of such Note), or

          (ii) in respect of a covenant or provision  hereof which under Article
     IX cannot be modified or amended  without the consent of the Holder of each
     outstanding  Note  affected (in which case,  the waiver must be executed by
     the Holders of all outstanding Notes affected).

     (b) A copy  of each  waiver  pursuant  to this  Section  6.14(a)  shall  be
furnished  by the Issuer to the  Trustee.  Upon any such  waiver,  such Event of
Default  shall cease to exist and shall be deemed to have been cured,  for every
purpose of this Indenture;  but no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereon.

     SECTION 6.15    WAIVER OF STAY OR EXTENSION LAWS.

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

     SECTION 6.16    SALE OF COLLATERAL.

     (a) The power to effect any sale of any portion of the Collateral  pursuant
to Sections  6.02 or 6.04 hereof shall not be exhausted by any one or more sales
as to any  portion  of the  Collateral  remaining  unsold,  but  shall  continue
unimpaired  until the  entire  Collateral  shall  have been sold or all  amounts
payable on the Notes  shall have been paid.  The  Trustee may from time to time,


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<PAGE>

upon directions in accordance with Section 6.13 hereof, postpone any public sale
by public announcement made at the time and place of such sale.

     (b) To the extent permitted by applicable law, the Trustee shall not in any
private sale sell the  Collateral,  or any portion  thereof,  unless  either (i)
until such time as the conditions specified in Section 11.01(a) hereof have been
satisfied in full,  the Majority of Holders  consent to or direct the Trustee to
make such sale; or (ii) the proceeds of such sale would be not less than the sum
of all amounts  due to the Trustee  hereunder  and the entire  unpaid  principal
amount of all Notes then  outstanding  and interest due or to become due thereon
in accordance  with Section 6.07 hereof on the Payment Date next  succeeding the
date of such sale.

     (c) In connection with a sale of all or any portion of the Collateral:

          (i)  any  one or  more  Noteholders  or the  Trustee  may  bid for and
     purchase the property  offered for sale, and upon compliance with the terms
     of sale may hold, retain, and possess and dispose of such property, without
     further  accountability,  and any  Noteholder  may, in paying the  purchase
     money therefor, deliver in lieu of cash any outstanding Notes or claims for
     interest thereon for credit in the amount that shall,  upon distribution of
     the net proceeds of such sale, be payable thereon,  and such Notes, in case
     the amounts so payable  thereon  shall be less than the amount due thereon,
     shall be returned to the Noteholders after being  appropriately  stamped to
     show such partial payment;

          (ii) the Trustee shall execute and deliver an  appropriate  instrument
     of conveyance transferring its interest in any portion of the Collateral in
     connection with a sale thereof;

          (iii)  the  Trustee  is  hereby  irrevocably  appointed  the agent and
     attorney-in-fact  of the Issuer to transfer  and convey its interest in any
     portion of the  Collateral in connection  with a sale thereof,  and to take
     all action necessary to effect such sale; and

          (iv) no  purchaser  or  transferee  at such a sale  shall  be bound to
     ascertain the Trustee's  authority,  inquire into the  satisfaction  of any
     conditions precedent or see to the application of any moneys.

     (d) The  method,  manner,  time,  place and terms of any sale of all or any
portion of the Collateral shall be commercially reasonable.

     (e) The  provisions of this Section 6.16 shall not be construed to restrict
the ability of the Trustee to exercise any rights and powers  against the Issuer
or the Collateral that are vested in the Trustee by this  Indenture,  including,
without  limitation,  the power of the Trustee to proceed against the collateral
subject to the lien of this Indenture and to institute judicial  proceedings for
the collection of any deficiency remaining thereafter.

     SECTION 6.17    UNDERTAKING FOR COSTS.

     In any suit for the enforcement of any right or remedy under this Indenture
or in any suit  against  the  Trustee  for any action  taken or omitted by it as
Trustee,  a court may in its discretion require the filing by any party litigant


                                       44
<PAGE>

in the suit of an undertaking to pay the costs of the suit, and the court may in
its discretion assess reasonable costs,  including  reasonable  attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses  made by the party  litigant.  This Section 6.17
does not apply to a suit by the  Trustee,  a suit by a  Noteholder  pursuant  to
Sections  6.08  and  6.09  hereof,  or a suit  by any  Noteholder  or  group  of
Noteholders of more than 10% in principal amount of all Notes then outstanding.

     SECTION 6.18    RIGHT OF TRUSTEE UPON A DEFAULT UNDER ANY CONTRACT.

     If any of the Originator,  the Servicer/Service Provider, Lucent, Nortel or
the Service Purchasers  default(s) in any of its respective  obligations under a
Contract to which it is a party,  the Trustee,  at the direction of the Majority
of Holders,  shall provide written  consent so that the Issuer may perform,  any
such   obligation   as  permitted   under  the  relevant   Contract  or  related
acknowledgment and consent agreement.



                                       45
<PAGE>

                                   ARTICLE VII

                                   THE TRUSTEE

     SECTION 7.01    CERTAIN DUTIES AND RESPONSIBILITIES.

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

          (i) the  Trustee  undertakes  to perform  only those  duties  that are
     specifically  set forth in this Indenture and no others and no covenants or
     duties shall be implied herein in connection with the Trustee; and

          (ii)  in the  absence  of bad  faith  on its  part,  the  Trustee  may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein,  upon certificates,  statements,  opinions,
     reports  or  documents  furnished  to the  Trustee  and  conforming  to the
     requirements of this  Indenture.  The Trustee,  however,  shall examine the
     same to determine  whether or not they conform to the  requirements of this
     Indenture.

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

     (c) No  provision  of this  Indenture  shall be  construed  to relieve  the
Trustee from liability for its own negligent  action,  its own negligent failure
to act, or its own willful misconduct, EXCEPT that:

          (i) this  subsection  shall not be  construed  to limit the  effect of
     subsection (a) of this Section 7.01;

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

          (iii) the Trustee shall not be liable with respect to any action taken
     or  omitted  to be  taken  by it in  good  faith  in  accordance  with  the
     directions received by it pursuant to Section 6.13 or 6.14 hereof; and

          (iv) no  provision  of this  Indenture  shall  require  the Trustee to
     expend or risk its own funds or  otherwise  incur  any  personal  financial
     liability  in the  performance  of any of its duties  hereunder,  or in the
     exercise  of any of its  rights  or  powers,  if it shall  have  reasonable
     grounds for believing that repayment of such funds or indemnity  reasonably
     satisfactory to it against such risk or liability is not assured to it.

     (d) Notwithstanding any provision to the contrary in any of the Transaction
Documents,  the Trustee  shall have the  obligation  to assume or succeed to the


                                       46
<PAGE>

obligations of the Servicer or the Service Provider,  to the extent, but only to
the extent, provided in Section 5.04 hereof.

     (e) Whether or not therein  expressly so provided,  every provision of this
Indenture  relating to the conduct or  affecting  the  liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

     SECTION 7.02    NOTICE OF DEFAULTS OR EVENTS OF DEFAULT.

     Within two  Business  Days after a  Responsible  Officer  receives  written
notice or is  otherwise  notified of the  occurrence  of any Default or Event of
Default hereunder or Servicer Termination Event under the Transfer and Servicing
Agreement,   the  Trustee  shall  transmit  by  certified  mail  return  receipt
requested,  hand delivery or overnight  courier,  to all  Noteholders,  as their
names and addresses appear in the Note Register, the Issuer, the Originator, the
Service Provider,  the Backup Service Provider,  the Service  Purchasers and the
Rating Agencies notice of such Default, Event of Default or Servicer Termination
Event hereunder known to the Trustee,  unless such Default,  Event of Default or
Servicer Termination Event shall have been cured or waived.

     SECTION 7.03    CERTAIN RIGHTS OF TRUSTEE.

     Subject to the provisions of Section 7.01 hereof:

          (i) the Trustee may rely conclusively and shall be protected in acting
     or  refraining  from acting upon any  resolution,  certificate,  statement,
     instrument,  opinion, report, notice, request,  direction,  consent, order,
     note, debenture,  other evidence of indebtedness or other paper or document
     believed by it to be genuine and to have been  signed or  presented  by the
     proper party or parties;

          (ii) any request or direction of the Issuer  mentioned herein shall be
     sufficiently  evidenced by an Issuer Request or Issuer Order and any action
     of the Issuer may be sufficiently evidenced by an Issuer Order;

          (iii)  whenever in the  administration  of this  Indenture the Trustee
     shall deem it  desirable  that a matter be proved or  established  prior to
     taking,  suffering or omitting any action  hereunder,  the Trustee  (unless
     other evidence be herein  specifically  prescribed)  may, in the absence of
     bad faith on its part, rely upon an Officer's Certificate;

          (iv) the Trustee may consult with counsel as to legal  matters and the
     advice or opinion of any such counsel selected by the Trustee with due care
     shall be full and complete  authorization  and protection in respect of any
     action  taken,  suffered  or omitted by it  hereunder  in good faith and in
     reliance thereon;

          (v) the Trustee  shall be under no  obligation  to exercise any of the
     rights or powers vested in it by this Indenture at the request or direction
     of  any  of  the  Noteholders  pursuant  to  this  Indenture,  unless  such
     Noteholders  shall  have  offered  to the  Trustee  security  or  indemnity
     reasonably  satisfactory to it against the costs,  expenses and liabilities
     which might be incurred by it in compliance with such request or direction;



                                       47
<PAGE>

          (vi)  prior to the  occurrence  of an Event of  Default  and after the
     curing or waiving of all Events of Default,  the Trustee shall not be bound
     to  make  any  investigation  into  the  facts  or  matters  stated  in any
     resolution,  certificate,  statement,  instrument, opinion, report, notice,
     request,  direction,  consent,  order, note,  debenture,  other evidence of
     indebtedness,  or other  paper or  document,  other  than to  examine  such
     documents to determine  whether they conform as to form to the requirements
     of this Indenture,  unless requested in writing to do so by the Majority of
     Holders;  PROVIDED  that,  if the payment  within a reasonable  time to the
     Trustee of the costs,  expenses or liabilities  likely to be incurred by it
     in the making of such investigation is, in the opinion of the Trustee,  not
     reasonably  assured to the  Trustee by the  security  afforded to it by the
     terms of this  Indenture,  the  Trustee may  require  indemnity  reasonably
     satisfactory  to it against such expenses or  liabilities as a condition to
     proceeding; the reasonable expenses of every such examination shall be paid
     by the Issuer or, if paid by the Trustee or any predecessor trustee,  shall
     be promptly repaid by the Issuer upon demand; and

          (vii) the Trustee may execute any of the trusts or powers hereunder or
     perform  any duties  hereunder  either  directly  or by or through  agents,
     custodians,  nominees or attorneys and the Trustee shall not be responsible
     for any  misconduct  or  negligence  on the part of any  agent,  custodian,
     nominee or attorney appointed with due care by it hereunder.

     SECTION 7.04    TRUSTEE'S DISCLAIMER.

     The Trustee makes no  representation as to the validity or adequacy of this
Indenture  (except  as  against  itself),  the  Notes or any  other  Transaction
Document and it shall not be  responsible  for any  statement in the Notes other
than its  certificate of  authentication  or in any document used in the sale of
the Notes. The Trustee shall have no  responsibility  for, or duty, or liability
in connection with performance by the Servicer,  and shall have no obligation to
monitor the  performance  of the Servicer.  The Trustee shall not be accountable
for the use or application by the Issuer of the Notes or the proceeds thereof.

     SECTION 7.05    MONEY HELD IN TRUST.

     Money and  investments  held by the Trustee or other  paying agent shall be
held in trust in one or more Eligible  Deposit  Accounts as required  hereunder.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with Issuer.

     SECTION 7.06    COMPENSATION, REIMBURSEMENT, ETC.

     The  Trustee  shall be  entitled  to the  Trustee  Fee (which  shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express  trust) for all  services  rendered by the Trustee in the  exercise  and
performance  of any of the powers  and  duties  hereunder  of the  Trustee.  The
Trustee  shall also be reimbursed  for all  reasonable  out-of-pocket  expenses,
disbursements  and advances  incurred or made by the Trustee in accordance  with
any of the provisions of this Indenture  (including the reasonable  compensation
and the  expenses  and  disbursements  of its  counsel  and of all  persons  not
regularly  in its  employ).  Simultaneously  with the  delivery  of a demand for
payment under this Section 7.06, the Trustee shall submit a detailed  summary of


                                       48
<PAGE>

such  claimed  payments  and such  documentation  as the Issuer  may  reasonably
request with respect to such amounts.

     The Trustee Fee and expenses shall be paid from Available  Funds on deposit
in the Revenue  Account in  accordance  with the  priority  set forth in Section
3.04(b)(i) and (ii) or Section 6.07 hereof, as applicable.

     SECTION 7.07    ELIGIBILITY; DISQUALIFICATION.

     The Trustee hereunder (a) shall at all times be a corporation organized and
doing business under the laws of the United States of America, any state thereof
or the District of Columbia,  authorized  under such laws to exercise  corporate
trust  powers;  (b)  shall  have a  combined  capital  and  surplus  of at least
$500,000,000  or be a wholly owned  subsidiary of a bank holding  company having
such a capital and surplus;  (c) shall be subject to  supervision or examination
by federal or state  authority;  (d) at the time of appointment,  shall have (1)
commercial  paper or other  short-term debt obligations (or, if the Trustee does
not have outstanding  commercial paper or other short-term  obligations and is a
subsidiary of a holding  company,  which holding  company shall have  commercial
paper  or  other  short  term  obligations)  having  either  of the two  highest
short-term credit ratings available from the Rating Agencies and (2) a long-term
debt  rating of at least  "A2" by Moody's  and "A" by S&P;  and (e) shall not be
affiliated (as such term is defined in Rule 405 under the  Securities  Act) with
the Issuer or with any Person  involved in the  organization or operation of the
Issuer.  If such corporation  publishes  reports of condition at least annually,
pursuant  to  law  or to the  requirements  of  such  supervising  or  examining
authority,  then for the purposes of this Section 7.07, the combined capital and
surplus  of such  corporation  shall be deemed to be its  combined  capital  and
surplus as set forth in its most recent report of condition so published.  If at
any  time  the  Trustee  shall  cease  to be  eligible  in  accordance  with the
provisions of this Section 7.07, it shall give notice of such  ineligibility  to
the Service Provider, the Issuer and the Service Purchasers, and shall resign in
the manner and with the effect hereinafter specified in Section 7.08 hereof.

     SECTION 7.08    RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

     (a) No  resignation  or  removal of the  Trustee  and no  appointment  of a
successor  Trustee  pursuant to this Article  shall become  effective  until the
acceptance of appointment by a successor Trustee, reasonably satisfactory to the
Majority of Holders, under Section 7.09 hereof.

     (b) Subject to Section 7.08(a)  hereof,  the Trustee may resign at any time
by  giving  written  notice  thereof  to the  Issuer  and by  mailing  notice of
resignation by first-class mail, postage prepaid, to the Rating Agencies and the
Noteholders at their addresses appearing on the Note Register.

     (c) The  Trustee  may be  removed at any time by  written  notice  from the
Majority of Holders  delivered to the Trustee and the Issuer.  The Issuer,  with
the consent of the Majority of Holders, may remove the Trustee if:

          (i) the Trustee fails to comply with Section 7.07 hereof;

          (ii) the Trustee is adjudged bankrupt or insolvent;


                                       49
<PAGE>

          (iii) a receiver or other public  officer  takes charge of the Trustee
     or its property; or

          (iv) the Trustee becomes incapable of acting.

     (d) If the Trustee shall resign, be removed, or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause,  the Issuer,
with the  consent of the  Majority  of Holders  by an act of the  Issuer,  shall
promptly appoint a successor Trustee.

     (e) If no successor  Trustee  shall have been so appointed by the Issuer as
hereinabove provided and accepted appointment in the manner hereinafter provided
within 30 days after any such resignation or removal, existence of incapability,
or occurrence of such vacancy,  the Trustee or any  Noteholder  may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

     (f) The Issuer  shall give notice of each  resignation  and each removal of
the  Trustee and each  appointment  of a  successor  Trustee by mailing  written
notice of such event by first-class mail,  postage prepaid,  to all Noteholders,
as their  names and  addresses  appear in the Note  Register  and to the  Rating
Agencies.  Each notice shall include the name of the  successor  Trustee and the
address of its Corporate Trust Office.

     SECTION 7.09    ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

     (a) Every successor Trustee appointed hereunder shall execute,  acknowledge
and deliver to the Issuer and to the retiring  Trustee an  instrument  accepting
such  appointment,  and  thereupon  the  resignation  or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring  Trustee;  PROVIDED  that on request of the Issuer or
the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights,  powers  and  trusts of the  retiring  Trustee  and shall  duly  assign,
transfer  and deliver to such  successor  Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Issuer  shall  execute  any and all  instruments  for more  fully and  certainly
vesting in and conferring to such successor Trustee all such rights,  powers and
trusts.

     (b) No successor Trustee shall accept its appointment unless at the time of
such  acceptance  such  successor  Trustee shall be qualified and eligible under
this Article and no reduction in the then current ratings,  if any, on the Notes
has occurred as a result of such appointment.

     SECTION 7.10   MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

     Any Person into which the Trustee may be merged or  converted or with which
it may be consolidated,  or any Person resulting from any merger,  conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially  all the corporate trust business of the Trustee,  shall be
the successor of the Trustee hereunder;  PROVIDED such Person shall be otherwise


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qualified and eligible  under this  Article,  without the execution or filing of
any paper or any further act on the part of any of the parties  hereto.  In case
any Notes shall have been authenticated,  but not delivered, by the Trustee then
in  office,  any  successor  by merger,  conversion,  or  consolidation  to such
authenticating  Trustee may adopt such  authentication  and deliver the Notes so
authenticated  with the same  effect as if such  successor  Trustee  had  itself
authenticated such Notes.

     SECTION 7.11    CO-TRUSTEES AND SEPARATE TRUSTEES.

     (a) At any time or times, for the purpose of meeting the legal requirements
of any  jurisdiction  in which any of the Collateral may at the time be located,
the Issuer and the Trustee  shall have power to appoint,  and,  upon the written
request of the Trustee or the  Majority of  Holders,  the Issuer  shall for such
purpose join with the Trustee in the execution, delivery, and performance of all
instruments  and  agreements  necessary or proper to appoint one or more Persons
approved by the Trustee either to act as  co-trustee,  jointly with the Trustee,
of all or any part of such Collateral, or to act as separate trustee of any such
property,  in either case with such powers as may be provided in the  instrument
of appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property,  title,  right or power deemed necessary or desirable,  subject to
the other  provisions  of this Section 7.11. If the Issuer does not join in such
appointment  within  fifteen days after the receipt by it of a request so to do,
or in case an Event of Default has occurred and is continuing, the Trustee alone
shall have power to make such appointment.

     (b) Should  any  written  instrument  from the  Issuer be  required  by any
co-trustee or separate  trustee so appointed  for more fully  confirming to such
co-trustee or separate  trustee such property,  title,  right, or power, any and
all such instruments shall, on request, be executed,  acknowledged and delivered
by the Issuer.

     (c) Every  co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:

          (i) The Notes shall be  authenticated  and  delivered  and all rights,
     powers,  duties,  and  obligations  hereunder  in respect of the custody of
     securities,  cash and other  personal  property  held by, or required to be
     deposited or pledged with, the Trustee hereunder, shall be exercised solely
     by the Trustee.

          (ii) The rights,  powers,  duties, and obligations hereby conferred or
     imposed  upon the  Trustee  in  respect  of any  property  covered  by such
     appointment  shall be conferred or imposed upon and  exercised or performed
     by the Trustee or by the Trustee and such  co-trustee  or separate  trustee
     jointly, as shall be provided in the instrument  appointing such co-trustee
     or  separate  trustee,  except  to the  extent  that,  under any law of any
     jurisdiction  in which any particular  act is to be performed,  the Trustee
     shall be  incompetent  or  unqualified  to perform such act, in which event
     such  rights,  powers,  duties  and  obligations  shall  be  exercised  and
     performed by such co-trustee or separate trustee.

          (iii) The Trustee at any time, by an instrument in writing executed by
     it, with the  concurrence of the Issuer  evidenced by an Issuer Order,  may
     accept the  resignation  of or remove any  co-trustee  or separate  trustee
     appointed  under this  Section  7.11,  and, in case an Event of Default has


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<PAGE>

     occurred  and is  continuing,  the  Trustee  shall have power to accept the
     resignation of, or remove,  any such co-trustee or separate trustee without
     the concurrence of the Issuer. Upon the written request of the Trustee, the
     Issuer  shall  join  with  the  Trustee  in  the  execution,  delivery  and
     performance  of all  instruments  and  agreements  necessary  or  proper to
     effectuate  such  resignation or removal.  A successor to any co-trustee or
     separate  trustee so  resigned or removed  may be  appointed  in the manner
     provided in this Section 7.11.

          (iv) No co-trustee or separate  trustee  hereunder shall be personally
     liable by reason of any act or  omission  of the  Trustee or any other such
     trustee  hereunder and the Trustee shall not be personally liable by reason
     of any act or omission of any  co-trustee  or other such  separate  trustee
     hereunder selected and supervised by the Trustee with due care or appointed
     in  accordance  with  directions  to the Trustee  pursuant to Section  6.13
     hereof.

          (v) Any Act of Noteholders delivered to the Trustee shall be deemed to
     have been delivered to each such co-trustee and separate trustee.

     SECTION 7.12    TRUSTEE TO HOLD SERVICE PURCHASERS CONTRACTS.

     On or prior to the Closing Date,  the Issuer shall cause the  Originator or
DKB North America  Leasing,  on behalf of the Issuer,  to deliver to the Trustee
(or its designee) the sole  original,  executed  counterpart  of each of the MGS
Agreement  and the Service  Purchasers  Consent,  in each case  marked  "Secured
Party's  Original" and each other document that is part of the Contract File. On
or before the Closing Date the Trustee shall deliver a certification that it has
taken  possession of the Contract File  (together  with any exceptions as may be
set forth  therein).  The Trustee (or its  designee)  shall hold such  documents
until such time as such Service Purchasers  Contracts are released from the lien
of this Indenture pursuant to the provisions hereof.

     SECTION 7.13    FINANCING STATEMENTS.

     The Trustee shall execute such UCC Financing  Statements  and  continuation
statements as shall have been prepared by the Servicer and as shall be necessary
and shall  furnish the Servicer  with such  limited  powers of attorney or other
documents  necessary  or  appropriate  to enable the  Servicer  to  fulfill  its
obligations under the Transfer and Servicing Agreement.

     SECTION 7.14    APPOINTMENT OF A SUCCESSOR SERVICE PROVIDER.

     The Trustee at the direction of the Majority of Holders,  shall (i) appoint
a Successor  Service Provider  reasonably  acceptable to the Majority of Holders
and whose regular business includes the servicing of a similar type of Contracts
and the financing of equipment similar to the Equipment, as the Service Provider
under the  Transfer  and  Servicing  Agreement,  to assume all of the rights and
obligations of the Service Provider thereunder,  including,  without limitation,
the Service Provider's right thereunder to receive the Senior Servicing Fee (but
not the  obligations  of the Originator  contained  therein) or, (ii) if no such
institution  is so  appointed,  petition a court of  competent  jurisdiction  to
appoint an institution  meeting such criteria as the  Servicer/Service  Provider
thereunder.  Pending  appointment  of a  Successor  Service  Provider  under the
Transfer and Servicing Agreement,  the Servicer/Service  Provider shall continue
to act in such capacity. In connection with such appointment and assumption, the


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<PAGE>

Trustee, at the direction of the Majority of Holders, shall use its best efforts
to cause such  Successor  Service  Provider to enter into a servicing  agreement
containing  terms,  and conditions that are acceptable to the Successor  Service
Provider,  the  Issuer,  the Trustee  and the  Majority of Holders,  and that is
substantially similar to the Transfer and Servicing Agreement, including similar
representations,  warranties  and duties.  The Trustee,  at the direction of the
Majority  of  Holders,  shall make  arrangements  for the  compensation  of such
Successor  Service  Provider  out of  payments  on  Contracts  and  the  related
Contracts as the Issuer, the Trustee, the Majority of Holders and such Successor
Service Provider shall agree; PROVIDED, HOWEVER, that no such compensation shall
be in excess of that provided in this Indenture.  The Servicer/Service  Provider
shall in no way be  responsible  or liable  for any  action or  inaction  of any
Successor Service Provider.



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<PAGE>

                                  ARTICLE VIII

                                    COVENANTS

     SECTION 8.01   PAYMENT OF PRINCIPAL AND INTEREST AND OTHER AMOUNTS.

     The Issuer will duly and  punctually  pay the  principal of and interest on
the Notes in accordance with the terms of the Notes and this Indenture,  and pay
promptly to the Trustee for deposit in the Revenue  Account any monies due or to
become due under the  Service  Purchasers  Consent  or under any other  Contract
constituting  part of the Collateral that it receives from any Person other than
the Trustee. An installment of interest or principal shall be considered paid on
the date it is due if the Trustee  holds on that date money  designated  for and
sufficient to pay the installment.

     SECTION 8.02   MAINTENANCE OF OFFICE OR AGENCY; CHIEF EXECUTIVE OFFICE.

     (a) The Issuer will maintain in the State of New Jersey an office or agency
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served.

     (b) The chief executive  office of the Issuer,  and the office at which the
Issuer maintains its records with respect to the Contracts,  the Equipment,  and
the transactions  contemplated hereby, is located at 1545 Route 206, Bedminster,
New  Jersey.  The Issuer will not change the  location  of such  office  without
giving the Trustee at least 30 days' prior written notice thereof.

     SECTION 8.03   MONEY FOR PAYMENTS TO NOTEHOLDERS TO BE HELD IN TRUST.

     (a) All  payments of amounts due and payable with respect to any Notes that
are to be made from  amounts  withdrawn  from the  Revenue  Account  pursuant to
Section 3.04(b) or 6.07 hereof,  or the Reserve Account pursuant to Section 3.07
hereof,  shall be made on behalf of the Issuer by the Trustee, and no amounts so
withdrawn  from the Revenue  Account or Reserve  Account  for  payments of Notes
shall be paid over to the Issuer under any  circumstances  except as provided in
this Section 8.03.

     (b) In making payments hereunder, the Trustee will:

          (i) allocate all sums received for payment to the  Noteholders on each
     Payment Date in accordance with the terms of this Indenture;

          (ii)  hold all sums held by it for the  payment  of  amounts  due with
     respect  to the  Notes in trust for the  benefit  of the  Persons  entitled
     thereto until such sums shall be paid to such Persons or otherwise disposed
     of as herein provided and pay such sums to such Persons as herein provided;
     and



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<PAGE>

          (iii) comply with all  requirements  of the  Internal  Revenue Code of
     1986,  as  amended  (or  any  successor  statutes),   and  all  regulations
     thereunder, with respect to the withholding from any payments made by it on
     any Notes of any  applicable  withholding  taxes  imposed  thereon and with
     respect to any applicable reporting  requirements in connection  therewith,
     in each case,  consistent with the treatment of the Notes as  indebtedness.
     The consent of Noteholders shall not be required for any such withholding.

     (c) Except as required by applicable  law, any money held by the Trustee in
trust for the payment of any amount due with  respect to any Note and  remaining
unclaimed  for two years  after such  amount  has become due and  payable to the
Noteholder  shall be  discharged  from such  trust and,  subject  to  applicable
escheat  laws,  paid to the  Issuer  upon  request;  and such  Noteholder  shall
thereafter,  as an  unsecured  general  creditor,  look only to the  Issuer  for
payment  thereof,  and all  liability  of the Trustee with respect to such trust
money shall thereupon cease.

     SECTION 8.04    ISSUER EXISTENCE; ETC.

     (a) The Issuer will do or cause to be done all things necessary to preserve
and keep in full force and effect its  existence as a Delaware  corporation  and
the rights,  licenses and franchises of the Issuer, and will obtain and preserve
its  qualification to do business in each jurisdiction in which the Equipment is
located.

     (b) The  Issuer  shall at all times  observe  and  comply  in all  material
respects with (i) its by-laws and articles of  incorporation as in effect on the
date hereof,  (ii) all laws,  regulations and court orders  applicable to it and
(iii)  all  requisite  and  appropriate  formalities  in the  management  of its
business and affairs and the conduct of the  transactions  contemplated  hereby,
and by the Contracts.

     (c) The Issuer shall be operated so as not to be substantively consolidated
for bankruptcy or insolvency purposes with the Originator or KMC.

     (d) Except as  provided in the  Management  and Tax  Allocation  Agreement,
neither the Originator nor KMC shall be involved in the day-to-day management of
the Issuer.  Neither the Originator nor KMC shall act as agent for the Issuer in
any  capacity;  provided  that the  Originator  may act as the  Servicer/Service
Provider  under the Transfer and  Servicing  Agreement  and except to the extent
that KMC  provides  services to the Issuer  pursuant to the  Management  and Tax
Allocation  Agreement.  The Issuer shall conduct its business  solely in its own
name so as to not  mislead  others as to the  identity  of the party  with which
those  others are  concerned,  and  particularly  will avoid the  appearance  of
conducting  business on behalf of the Originator or KMC any of their  Affiliates
or that the assets of the  Issuer  are  available  to pay the  creditors  of the
Originator  or  KMC  or  any  of its  other  Affiliates.  Without  limiting  the
generality of the foregoing,  all oral and written  communications  on behalf of
the Issuer, including,  without limitation,  letters, invoices, purchase orders,
contracts,  statements and loan applications, will be made solely in the name of
the Issuer.

     (e) The Issuer shall, at all times: (i) maintain (A) its assets  separately
from the assets of the Originator,  KMC and other Persons (including through the
maintenance  of a  separate  bank  account  or through  the  maintenance  of the
Accounts,  as the case may be), (B)  financial  books and records  separate from


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<PAGE>

those of any other Person and (C) minutes of its meetings and other proceedings;
(ii)  continuously  maintain the resolutions,  agreements and other  instruments
underlying  the  transactions  contemplated  hereby  and  by  the  Transfer  and
Servicing Agreement,  as official records of the Issuer; (iii) act solely in its
name to maintain an arm's length  relationship  with the  Originator and KMC and
their  Affiliates;  (iv) pay all of its operating  expenses and liabilities from
its own funds; (v) maintain an office and telephone number separate from that of
the  Originator  and KMC and their other  Affiliates  (such office may be at the
same address as one or more of the foregoing,  provided that such companies have
entered into a written agreement specifying a reasonable  allocation of expenses
with respect to overhead and other shared costs with respect to such premises or
lease agreement),  (vi) characterize the Originator and KMC as separate entities
in any report,  tax return,  financial  statement,  other accounting or business
transaction;  and (vii)  have at all times at least one  director  seated on the
Board of Directors that is an Independent Director. No resignation or removal of
an  Independent  Director  shall  be  effective  until a  successor  Independent
Director has been selected to replace such Independent Director.

     (f) The Issuer will be a party to the consolidated tax returns of KMC.

     (g) The Issuer shall not amend its by-laws or certificate of  incorporation
without the prior consent of the Majority of Holders.

     (h) Within 10 Business Days of the first  anniversary  of the Closing Date,
the Issuer  shall cause to be  delivered  to the  Trustee and the Trustee  shall
deliver to each Noteholder of record an opinion of counsel to the Issuer opining
that under the Uniform Commercial Code in effect at such time, the Trustee holds
a perfected  security  interest in the  Collateral,  prior to any other interest
therein  (based solely on the results of UCC lien  searches  covering the period
from  four  years  prior to the  Closing  Date  through  the  first  anniversary
thereof),  which  opinion  shall be dated  within 10 Business  Days of the first
anniversary of the Closing Date.

     SECTION 8.05    PROTECTION OF COLLATERAL; FURTHER ASSURANCES.

     (a) The Issuer shall from time to time execute and deliver all  supplements
and  amendments  hereto  and all such  UCC  Financing  Statements,  continuation
statements,  instruments of further assurance,  and other instruments,  and will
take such other action as may be necessary or advisable to:

          (i) Grant more effectively all or any portion of the Collateral;

          (ii) maintain or preserve the lien of this Indenture or carry out more
     effectively the purposes hereof;

          (iii)  publish  notice of; or protect  the  validity  of, any Grant or
     assignment  made or to be made by this  Indenture  and perfect the security
     interest  contemplated  hereby in favor of the Trustee in the Contracts and
     any security interest in the related Equipment;

          (iv) cause its  accounting  records to be  clearly  and  unambiguously
     marked to show that the Equipment, the Service Purchasers Contracts and the


                                       56
<PAGE>

     other  Collateral  have been  pledged by the Issuer to the  Trustee for the
     benefit of the Noteholders.

          (v) enforce its rights under any of the Contracts; or

          (vi)  preserve and defend the Issuer's  and the  Trustee's  respective
     rights to the  Contracts  (including  the right to receive all payments due
     under the Service Purchasers Contracts subsequent to the Closing Date), the
     Equipment,  the other property  included in the Collateral and preserve and
     defend the rights of the Trustee and the  Noteholders  in such  Collateral,
     against the claims of all Persons and parties, except for the rights of the
     Service Purchasers under the Service Purchasers  Contracts and the security
     interest of the Trustee created hereunder.

The Issuer,  upon the Issuer's  failure to do so, hereby  designates the Trustee
its  agent  and   attorney-in-fact  to  execute  any  UCC  financing  statement,
continuation statement or other document or instrument required pursuant to this
Section 8.05 or otherwise  in order to maintain the  perfection  and priority of
the Trustee's security interest in the Collateral;  PROVIDED, HOWEVER, that such
designation  shall not be deemed to create a duty in the  Trustee to monitor the
compliance of the Issuer with the foregoing covenants, and PROVIDED FURTHER that
the duty of the  Trustee to execute  any  instrument  required  pursuant to this
Section 8.05 shall arise only if a Responsible Officer of the Trustee has actual
knowledge  of any  failure of the Issuer to comply with the  provisions  of this
Section 8.05.

     (b) The Issuer shall, promptly upon receipt of notice with respect thereto,
pay or cause to be paid all charges,  taxes and  assessments  levied or assessed
against  the  Issuer,  if the  failure  to pay such  taxes  could  result in the
imposition of any lien against the Collateral or any payments made or to be made
by the Service Purchasers in respect thereof, other than liens for taxes not yet
due.

     (c) In the event of loss or damage to any material portion of the Equipment
of which it has actual knowledge, promptly to send written notice thereof to the
Trustee,  and to  cause  the  affected  Equipment  promptly  to be  repaired  or
replaced.

     SECTION 8.06    COMPLIANCE CERTIFICATES.

     The Issuer shall deliver to the Trustee and the Rating Agencies,  within 90
days after the end of each fiscal year, an Officer's  Certificate of the Issuer,
stating,  in addition to the statements  required by Section 1.18 hereof,  as to
each signer thereof, that:

          (i) a review of the  activities  of the Issuer during such year and of
     performance  under  this  Indenture  has been  made  under  such  officers'
     supervision;

          (ii) to the best of such  officers'  knowledge,  based on such review,
     (a) the Issuer has fulfilled all of its  obligations  under this  Indenture
     throughout  such  year  and  (b)  the  Servicer  has  fulfilled  all of the
     Servicer/Service  Provider's  obligations  under the Transfer and Servicing
     Agreement; and



                                       57
<PAGE>

          (iii)  whether the officer  knows of any  Defaults by the Issuer under
     this Indenture  throughout such year or, if there has been a Default in the
     fulfillment of any such  obligation,  specifying each such Default known to
     him and the nature and status  thereof  and the nature of the action  taken
     with respect thereto.

     SECTION 8.07    PERFORMANCE OF OBLIGATIONS.

     (a) The Issuer shall punctually  perform and observe all of its obligations
and  agreements  contained  in its by-laws and articles of  incorporation,  this
Indenture,  the Notes,  any Note  Purchase  Agreement  and any other  applicable
Transaction Documents.

     (b) The Issuer  shall  clearly  mark its books and records to reflect  each
assignment and transfer of a Contract and the security interest in the Equipment
subject thereto from the Originator.

     (c) If the Issuer  shall  have  actual  knowledge  of the  occurrence  of a
default by the Originator,  the Servicer/Service  Provider or the Backup Service
Provider  under  any  Transaction  Document,  which  default  would  in any  way
adversely  affect  the  Service  Purchasers  Payments,   including  the  Minimum
Payments,  the Issuer  shall  promptly  notify the  Trustee  thereof,  and shall
specify in such  notice the action,  if any,  the Issuer is taking in respect of
such  default.  Unless  consented  to by the  Trustee,  at the  direction of the
Majority  of Holders,  the Issuer may not waive any  default  under or amend any
Transaction Documents.

     (d) The  Issuer  shall  update  any  information  required  to be  provided
pursuant to Rule  144A(d)(4) of the Securities  Act to subsequent  purchasers of
the  Notes  so that it does  not  become  false or  misleading  in any  material
respect.

     (e) In the event  that the  Service  Purchasers  default  in payment of any
amounts due under the Service Purchasers Contracts, the Issuer shall use it best
efforts to promptly  collect for and on behalf of the Trustee  such amounts from
the Service  Purchasers  and to cooperate  fully with the Trustee in  connection
with the collection of such amounts.

     SECTION 8.08    NEGATIVE COVENANTS.

     The Issuer shall not:

          (i) sell,  transfer,  exchange or otherwise  dispose of any portion of
     the Collateral  except as expressly  permitted by this Indenture;  PROVIDED
     THAT nothing  contained herein shall prohibit the transfer by the Issuer of
     amounts payable to the Issuer pursuant to Section 3.04(b) hereof;

          (ii) claim any credit on, or make any  deduction  from,  the principal
     of, or interest  on, any of the Notes by reason of the payment of any taxes
     levied or assessed upon any portion of the Collateral;

          (iii)  seek  dissolution  or  liquidation  in  whole  or  in  part  or
     reorganization  of its business or affairs or terminate  its existence as a
     Delaware corporation;



                                       58
<PAGE>

          (iv) (A) permit the validity or effectiveness of this Indenture or any
     Grant  hereby to be  impaired,  or permit the lien of this  Indenture to be
     amended,  hypothecated,  subordinated,  terminated or discharged, or permit
     any Person to be released  from any  covenants  or  obligations  under this
     Indenture,  except as may be  expressly  permitted  hereby,  (B) permit any
     lien,  charge,  security  interest,  mortgage  or other  encumbrance  to be
     created on or to extend to or otherwise arise upon or burden the Collateral
     or any part thereof or any interest  therein or the proceeds  thereof other
     than the lien of this  Indenture and the rights of the Service  Purchasers,
     or (C) permit the lien of this  Indenture  not to  constitute a valid first
     priority  perfected security interest in the Contracts and a valid security
     interest in the Equipment;

          (v) engage in any business or activity in violation of the  provisions
     contained in its by-laws or certificate of incorporation;

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

          (vii) merge or consolidate with any other Person unless (i) the entity
     surviving such merger or consolidation is a Person organized under the laws
     of the  United  States  or any  jurisdiction  thereof,  (ii) the  surviving
     entity,  if not the Issuer,  shall  execute and deliver to the Servicer and
     the Trustee,  in form and substance  satisfactory  to each of them,  (x) an
     instrument  expressly  assuming  all  of  the  obligations  of  the  Issuer
     hereunder,  and (y) an opinion of counsel to the effect that such Person is
     a Person of the type described in the preceding clause (i), has effectively
     assumed  the  obligations  of the  Issuer  hereunder,  that all  conditions
     precedent  provided for in this Indenture relating to such transaction have
     been  complied  with,  that in the opinion of such  counsel,  all Financing
     Statements and  continuation  statements  and amendments  thereto have been
     executed  and filed that are  necessary  fully to preserve  and protect the
     interest of the Trustee in the Collateral, and reciting the details of such
     filings,  or stating that no such action shall be necessary to preserve and
     protect  such  interest,  (iii) the Issuer  shall  deliver to the Trustee a
     letter from each Rating  Agency to the effect  that such  transaction  will
     not, in and of itself,  result in a Ratings Effect,  (iv) immediately after
     giving  effect  to  such  transaction,   no  event  of  default  under  any
     Transaction Document, and no event which, after notice or lapse of time, or
     both,  would  become  an event  of  default,  shall  have  occurred  and be
     continuing,  (v) the Issuer and any  surviving  entity,  if not the Issuer,
     maintains all of its material assets within the United States at all times,
     and (vi) the Issuer does not make any material change in its business;

          (viii)  without the prior written  consent of the Majority of Holders,
     amend,  modify or issue any  consent  or waiver of, or  release  from,  any


                                       59
<PAGE>

     provision of the MGS Agreement  that would in any way adversely  affect the
     Service Purchasers Payment  Agreement,  including the Minimum Payments,  or
     any other Transaction  Documents that would in any way adversely affect the
     Service Purchasers Payment  Agreement,  including the Minimum Payments,  or
     extend the time of any payment thereunder, or rescind, cancel or accept the
     surrender  of the MGS  Agreement,  or any  other  Contract  or any  portion
     thereof if such action would have or could have an adverse  effect upon the
     Service Purchasers Payment Agreement, including the Minimum Payments;

          (ix) issue any other securities (other than the Notes) unless it shall
     have  received  from the Rating  Agencies a written  confirmation  that the
     issuance  of such  securities  will not  result  in a Ratings  Effect  with
     respect to the Notes; or

          (x) without  the  unanimous  affirmative  vote of 100% of its Board of
     Directors, including the Independent Director, take any action to institute
     proceedings  to have the Issuer  adjudicated  as bankrupt or insolvent,  or
     consent to the institution of bankruptcy or insolvency  proceedings against
     it,  or seek or  consent  to the  entry  of any  order  for  relief  or the
     appointment of a receiver, trustee, or other similar official for it or for
     any  substantial  part of its property,  or seek  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 make any general assignment for the
     benefit of creditors; or to take any corporate action in furtherance of any
     of the actions set forth above.

     SECTION 8.09    INFORMATION AS TO THE ISSUER.

     (a) For so long as any of the Notes  are  outstanding  and are  "restricted
securities" within the meaning of Rule  144(a)(3)(iii)  under the Securities Act
and the Issuer is not subject to Section 13 or 15(d) of the  Exchange  Act,  the
Issuer shall:  (1) provide or cause to be provided to any Holder of Notes or any
prospective  subsequent  purchaser thereof designated by such a Holder, upon the
request of such Holder or  prospective  subsequent  purchaser,  the  information
required to be provided to such Holder or  prospective  subsequent  purchaser by
Rule  144A(d)(4)  under the Securities  Act, and (2) update such  information or
cause  such  information  to be  updated  so that it does  not  become  false or
misleading in any material respect.

     (b) The Issuer shall file with the Trustee and the Rating Agencies:

          (i) immediately  upon becoming aware of the existence of any condition
     or event  which  constitutes  a Default or an Event of  Default,  a written
     notice  describing  its nature and period of existence  and what action the
     Issuer is taking or proposes to take with respect thereto;

          (ii) promptly upon the Issuer's becoming aware of:

               (A)  any  proposed  or  pending   investigation   of  it  by  any
          governmental authority or agency, or

               (B) any pending or proposed  court or  administrative  proceeding



                                       60
<PAGE>

          which involves or may involve the possibility,  individually or in the
          aggregate,  of  materially  and adversely  affecting  the  properties,
          business, profits or condition (financial or otherwise) of the Issuer,
          a  written  notice  specifying  the  nature of such  investigation  or
          proceeding  and what  action the Issuer is taking or  proposes to take
          with respect thereto and evaluating its merits;

               (iii) with reasonable promptness,  any other data and information
          which may be reasonably requested from time to time; and

               (iv)  within 15 days  after  KMC's  filing  with the  Commission,
          copies of KMC's annual reports and of KMC's information, documents and
          other  reports (or copies of such  portions of any of the foregoing as
          the Commission may by rules and  regulations  prescribe)  which KMC is
          required to file with the  commission  pursuant to Section 13 or 15(d)
          of the Exchange Act.

     SECTION 8.10    INDEMNIFICATION.

     The Issuer agrees to indemnify  and hold harmless the Trustee  (which shall
include its directors, officers, employees and agents) and each Noteholder (each
an  "INDEMNIFIED  PARTY")  against  any and all  liabilities,  losses,  damages,
penalties,  costs and expenses  (including  the fees and expenses of counsel and
the costs of  defense  and legal fees and  expenses)  which may be  incurred  or
suffered by such  Indemnified  Party  without  negligence,  bad faith or willful
misconduct  on its part as a  result  of  claims,  actions,  suits or  judgments
asserted or imposed against it and arising out of the transactions  contemplated
hereby, or by any other Transaction  Documents,  including,  without limitation,
any claims resulting from any use, operation,  maintenance,  repair,  storage or
transportation  of any  item  of  Equipment,  whether  or  not  in the  Issuer's
possession or under its control,  and any tort claims and any fines or penalties
arising from any  violation of the laws or  regulations  of the United States or
any state or local government or governmental  authority;  PROVIDED that, except
to the extent  otherwise  provided in Section 6.07 hereof,  all amounts  payable
pursuant to this Section  8.10 shall be fully  subordinated  to amounts  payable
under the Notes to the extent that any amounts  otherwise  due and payable under
the terms of this  Indenture  have not been fully paid.  The  provisions of this
Section 8.10 shall survive the termination of this Indenture.

     SECTION 8.11    CONTRACT FILE TO TRUSTEE.

     On or prior to the Closing Date, the Issuer shall cause the Originator,  on
behalf of the Issuer,  shall deliver to the Trustee the original  counterpart of
each Contract that constitutes "chattel paper" or an "instrument," as such terms
are defined in the UCC.

     SECTION 8.12    PAYMENT ADVICES.

     Each  payment by the  Issuer,  the  Service  Provider,  the Backup  Service
Provider  or the  Service  Purchasers  to  the  Trustee  pursuant  to any of the
provisions of the  Transaction  Documents shall be accompanied by written advice
containing  sufficient  information  to identify the section of the  Transaction
Documents  pursuant to which such  payment is made,  and the proper  application
pursuant to the provisions of the applicable Transaction Document of the amounts
being paid.


                                       61
<PAGE>

                                   ARTICLE IX

                                   AMENDMENTS

     SECTION 9.01    AMENDMENT.

     The  Transaction  Documents may be amended from time to time by the parties
thereto,  without the consent of any of the Noteholders,  to cure any ambiguity,
to correct or supplement any provision  therein which may be  inconsistent  with
any other  provision  therein or to make any other  provisions  with  respect to
matters or questions arising under such Transaction  Document which shall not be
materially  inconsistent  with  the  provisions  of such  Transaction  Document,
PROVIDED  THAT  such  action  shall not  adversely  affect  in any  respect  the
interests of any Noteholder.

     The  Transaction  Documents  may also be  amended  from time to time by the
parties  hereto  with the  consent of the  Majority  of Holders  (and with prior
written  notice to each Rating  Agency) for the purpose of adding any provisions
to or  changing  in any  manner or  eliminating  any of the  provisions  of this
Indenture  or the Notes or of  modifying in any manner the rights of the Holders
of Notes;  PROVIDED,  HOWEVER,  that no amendment to this Indenture or any other
Transaction  Document may (i) cause a reduction in the then current ratings,  if
any,  of the  Notes,  (ii)  increase  or reduce in any  manner the amount of, or
accelerate  or delay the timing of  collections  of payments on the Contracts or
distributions  that are  required to be made on the Notes or  otherwise  for the
benefit of the Noteholders,  (iii) reduce the aforesaid  percentage of the Notes
which is required to consent to any such amendment or waiver,  (iv) decrease the
Note Rate or change the Stated  Maturity Date, (v) release any of the Collateral
from the lien thereof (except as otherwise  permitted  herein) or modify Section
3.04,  6.07,  6.09,  6.14 or 9.01  hereof or (vi) waive any  remedy  thereunder,
without the consent of each affected Noteholder. The Issuer shall furnish to the
Rating  Agencies  copies  of all  amendments  to  this  Indenture  or any  other
Transaction Document.

     It shall not be  necessary  for the consent of the  Noteholders  under this
Section 9.01 to approve the particular  form of any proposed  amendment,  but it
shall be sufficient if such consent approves the substance thereof.

     SECTION 9.02    EXECUTION OF AMENDMENTS.

     In executing any amendment to this Indenture, the Notes pursuant to Section
9.01 of this Indenture,  the Trustee shall be entitled to receive,  and (subject
to  Section  7.01  hereof)  shall  be fully  protected  in  relying  upon (i) an
Officer's  Certificate  stating that all conditions  precedent for entering into
such  amendment  or as set  forth in this  Indenture  have  been met and (ii) an
Opinion  of  Counsel  stating  that  the  execution  of such  amendment  to this
Indenture or the Notes is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to,  execute any amendment to this  Indenture or
the Notes which  affects the Trustee's  own rights,  duties or immunities  under
this  Indenture  or  otherwise,  PROVIDED  that a copy of any  amendment to this
Indenture shall promptly be provided to all Note Owners.



                                       62
<PAGE>

     SECTION 9.03    EFFECT OF AMENDMENTS.

     Upon the  execution of any  amendment to this  Indenture or the Notes under
this  Article,  this  Indenture  or the Notes shall be  modified  in  accordance
therewith,  and such amendment  shall form a part of this Indenture or the Notes
for all  purposes,  and every  Noteholder  of Notes  theretofore  or  thereafter
authenticated and delivered hereunder shall be bound thereby.

     SECTION 9.04    REFERENCE IN NOTES TO AMENDMENTS.

     Notes  authenticated  and delivered after the execution of any amendment to
this  Indenture  pursuant  to this  Article  may,  and shall if  required by the
Trustee,  bear a  notation  in form  approved  by the  Trustee  as to any matter
provided for in such amendment.  If the Issuer shall so determine,  new Notes so
modified  as to conform,  in the  opinion of the Trustee and the Issuer,  to any
such amendment may be prepared and executed by the Issuer and  authenticated and
delivered by the Trustee in exchange for outstanding Notes.

     SECTION 9.05    RESERVED.

     SECTION 9.06    REVOCATION AND EFFECT OF CONSENTS.

     Subject to this Indenture, each amendment,  waiver or instrument evidencing
other action  shall become  effective  in  accordance  with its terms.  Until an
amendment,  waiver or other  action  becomes  effective,  a  consent  to it by a
Noteholder  is a continuing  consent by the  Noteholder  even if notation of the
consent is not made on any Note.

     The Issuer may,  but shall not be  obligated  to, fix a record date for the
purpose of determining the  Noteholders  entitled to consent to any amendment or
waiver.  If a record date is fixed,  then those Persons who were  Noteholders at
such record date (or their duly  designated  proxies),  and only those  Persons,
shall be  entitled  to  consent  to such  amendment  or waiver or to revoke  any
consent previously given, whether or not such Persons continue to be Noteholders
after such record  date.  No such consent  shall be valid or effective  for more
than 90 days after such record date.



                                       63
<PAGE>

                                   ARTICLE X

                                   [RESERVED]



                                       64
<PAGE>

                                   ARTICLE XI

                           SATISFACTION AND DISCHARGE

     SECTION 11.01   SATISFACTION AND DISCHARGE OF INDENTURE.


     (a) This  Indenture  shall cease to be of further  effect (except as to any
surviving rights herein expressly  provided for), and the Trustee,  on demand of
and  at  the  expense  of the  Issuer,  shall  execute  proper  instruments  and
certifications acknowledging satisfaction and discharge of this Indenture, when:

          (i) either:

               (A) all Notes theretofore authenticated and delivered (other than
          (x) Notes which have been  destroyed,  lost,  or stolen and which have
          been replaced or paid as provided in Section 2.05 hereof and (y) Notes
          for whose payment  money has  theretofore  been  deposited in trust or
          segregated and held in trust by the Trustee and  thereafter  repaid to
          the Issuer or  discharged  from such  trust,  as  provided  in Section
          8.03(c)  hereof)  have  been  irrevocably  paid and  delivered  to the
          Trustee for cancellation; or

               (B) the final  installments  of  principal  on all such Notes not
          theretofore delivered to the Trustee for cancellation:

                    (1) have become due and payable, or

                    (2) will  become due and  payable at their  Stated  Maturity
               Date within one year,

         and the Issuer has deposited or caused to be deposited with the Trustee
         as trust funds in trust for the purpose an amount sufficient to pay and
         discharge  the  entire  indebtedness  on  such  Notes  not  theretofore
         delivered to the Trustee for  cancellation,  for principal and interest
         to the date of such deposit (in the case of Notes which have become due
         and payable) or to the Stated Maturity Date thereof;

          (ii) the Issuer  has paid or caused to be paid all other sums  payable
     hereunder by the Issuer for the benefit of the Noteholders; and

          (iii) the Issuer has delivered to the Trustee an Officer's Certificate
     of the Issuer stating that all  conditions  precedent  herein  provided for
     relating to the  satisfaction  and  discharge of this  Indenture  have been
     complied with.

At such time, the Trustee shall deliver to the Issuer or, upon Issuer Order, its
assignee,  all cash,  securities  and other  property  held by it as part of the
Collateral  other than funds  deposited  with the  Trustee  pursuant  to Section
11.01(a)(i)(B)  hereof the payment and  discharge of the Notes and a certificate
from a Responsible  Officer  certifying the  satisfaction  and discharge of this
Indenture.



                                       65
<PAGE>

     (b) Notwithstanding  the satisfaction and discharge of this Indenture,  the
obligations  of the Issuer under  Sections  7.06 and 8.10 hereof,  and, if money
shall have been  deposited with the Trustee  pursuant to Section  11.01(a)(i)(B)
hereof,  the  obligations of the Trustee under Section 11.02 and Section 8.03(c)
hereof shall survive.

     SECTION 11.02   APPLICATION OF TRUST MONEY.

     Subject to the provisions of Section  8.03(c)  hereof,  all money deposited
with the Trustee  pursuant to  Sections  11.01 and 8.03 hereof  shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture,  to the payment to the Persons  entitled thereto of the principal and
interest for whose payment such money has been deposited with the Trustee.

     SECTION 11.03   REINSTATEMENT.

     If the  Trustee  is unable to apply any money in  accordance  with  Section
11.01  hereof by reason  of any  legal  proceeding  or by reason of any order or
judgment  of any  court or  governmental  authority  enjoining,  restraining  or
otherwise  prohibiting such  application,  the Issuer's  obligations  under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred  pursuant  to Section  11.01  hereof  until such time as the Trustee is
permitted to apply all such money in accordance with Section 11.01 hereof.



                                       66
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Indenture to be
duly executed, all as of the day and year first above written.

                              KMC FUNDING CORPORATION


                              By:/S/ CONSTANCE LOOSEMORE
                                 -----------------------------------------------
                              Name: Constance Loosemore
                              Title:   Vice President


                              WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
                              as Trustee


                              By: /S/ JOE NARDI
                                  ----------------------------------------------
                              Name: Joe Nardi
                              Title:  Assistant Vice President


<PAGE>

                                   APPENDIX I

     The following definition of terms used in the Indenture, unless the context
otherwise requires, shall have the following meanings and such meanings shall be
equally applicable to both the singular and plural forms of such terms:

     ACCOUNT: means the Revenue Account, the Reserve Account or the Property Tax
Escrow Account.


     ACT: means,  with respect to any Noteholder,  as defined in Section 1.04(a)
of the Indenture.


     ADVANCE  PAYMENT:  means,  as to any Payment Date,  any Service  Purchasers
Payment deposited into the Revenue Account and pertaining to a Collection Period
subsequent to the related Collection Period.

     AFFILIATE:  means,  of any  specified  Person,  any other  Person (i) which
directly or  indirectly  controls,  or whose  directors or officers  directly or
indirectly  control,  or is controlled by, or is under common control with, such
specified Person,  (ii) which  beneficially owns or holds, or whose directors or
officers  beneficially own or hold, 10% or more of any class of the voting stock
(or,  in the case of an  entity  that is not a  corporation,  10% of the  equity
interest)  of such  specified  Person,  or (iii) 10% or more of the voting stock
(or,  in the case of an  entity  that is not a  corporation,  10% of the  equity
interest) of which is owned or held by such specified Person. The term "control"
as used in the preceding sentence means the possession,  directly or indirectly,
of the power to direct or cause the direction of the  management and policies of
a Person,  whether through the ownership of voting securities,  by contract,  or
otherwise.

     AUTHORIZED  OFFICER:  means, with respect to any matter,  any officer of or
other Person representing the Issuer, the Originator, the Servicer Provider, the
Backup Service Provider, the Trustee, or any Noteholder, as the case may be, who
is authorized to act for that Person.

     AVAILABLE FUNDS:  means,  with respect to each Payment Date, all amounts on
deposit and available for distribution in accordance with Section 3.04(b) of the
Indenture in the Revenue Account on the  Determination  Date, net of any Advance
Payment.

     BACKUP SERVICE PROVIDER: means, initially,  Lucent, and thereafter,  either
Lucent or the then-acting  successor Backup Service Provider,  if any, appointed
pursuant to the Backup Servicing Agreement.

     BACKUP SERVICE PROVIDER FEE: means an amount equal to (i) $25,000 per month
from January 1, 2001 to the date on which the Backup Service Provider receives a
Backup Servicing Notice or the Backup Servicing  Agreement expires or terminates
and (ii) to the extent that the Backup Service Provider does not receive amounts
payable as a Senior  Servicing Fee,  $7,800,000 per annum (such amount inclusive
of amounts  otherwise  payable to Lucent pursuant to the Maintenance  Agreement)
(the Servicing Fee) payable  monthly in advance from and after the date on which
the Backup Service  Provider  receives a Backup Servicing Notice to the date the
Backup Servicing Agreement expires or is terminated;  PROVIDED, that the amounts


<PAGE>

in clause  (ii) are in place of,  and not in  addition  to,  amounts  that would
otherwise be payable to the Backup Service  Provider,  if it were a party to the
Transfer  and  Servicing  Agreement,  for  performing  the  obligations  of  the
Servicer/Service Provider thereunder.

     BACKUP SERVICING AGREEMENT: means the Amended and Restated Backup Servicing
Agreement, effective as of November 1, 2001, between the Backup Service Provider
and the Service  Provider,  pursuant to which the Backup Service Provider agrees
to provide MGS Services in the event that the Service  Provider  fails to do so,
as the same may be amended,  restated,  supplemented and otherwise modified from
time to time.

     BACKUP SERVICING  NOTICE:  means the notice delivered to the Backup Service
Provider  pursuant to Section 7 of the Backup Servicing  Agreement,  as the same
may be amended, restated, supplemented and otherwise modified from time to time.

     BOOK-ENTRY CUSTODIAN:  means, the Person appointed pursuant to the terms of
the  Indenture to act in  accordance  with a certain  Letter of  Representations
Agreement  that such Person has with DTC, in which DTC  delegates  its duties to
maintain  the  Book-Entry  Notes to such  Person and  authorizes  such Person to
perform such duties.

     BOOK-ENTRY NOTES: means, collectively,  the Rule 144A Book-Entry Notes, the
Regulation S Temporary Book-Entry Notes and the Public Book-Entry Notes.

     BUSINESS  DAY:  means any day other than a  Saturday,  a Sunday or a day on
which  banking  institutions  in New  York  City  or in the  city in  which  the
Corporate Trust Office is located are authorized or obligated by law, regulation
or executive order to remain closed.

     CARRIER HOTEL: means any of the  (approximately) 38 Equipment  locations as
described in the Carrier Hotel  Agreements  (selected in  coordination  with the
Service Purchasers) to service major metropolitan areas of 23 states.

     CARRIER  HOTEL  AGREEMENTS:   means,   collectively,   the  Master  License
Agreement,  dated October 31, 2000, by and between ISG and the  Originator;  the
Master License Agreement, dated November 3, 2000, by and between Switch and Data
Facilities Company LLC and the Originator; the COLO.COM Terms and Conditions for
Delivery  of  Service,  revised as of  February  22,  2000,  as  modified by the
Addendum to the COLO.COM  Terms and  Conditions  for Delivery of Service,  dated
October 31, 2000, by and between  COLO.COM and the  Originator;  the  Colocation
Agreement, dated December 5, 2000, by and between the Originator and Verio Inc.;
the  License  Agreement,  dated as of  December  4,  2000,  by and  between  the
Originator and Coloteks, LLC; the Master License Agreement,  dated as of January
18, 2001, by and between the  Originator and Hosttech  Communications,  LLC; the
Master  Agreement  for  Colocation  Space,  dated as of January 21, 2001, by and
between the Originator and R.E. Stafford,  Inc., d.b.a. Colo Solutions Inc.; the
Agreement  for Terminal  Facility  Collocation  Space,  dated as of February 12,
2001, by and between the Originator and McLeod USA Telecommunications  Services,
Inc.; the  Colocation  License  Agreement,  dated as of February 1, 2001, by and
between the Originator and Dominion  Telecom,  Inc.; the  Collocation  Equipment
Area Agreement,  dated November 20, 2000, by and between the Originator and Time
Warner Telecom  General  Partnership;  and such other  agreements  substantially
similar in substance to be entered into by the  Originator  from time to time in

<PAGE>

order to install the Equipment and  facilitate  performance  of the MGS Services
under the MGS Agreement, with respect to each such agreement, as the same may be
amended, restated, supplemented and otherwise modified from time to time.

     CARRIER HOTEL CONSENT:  means an  Acknowledgment  and Consent under which a
Licensor has consented to assignment of the related  Carrier Hotel  Agreement by
the Originator to the Issuer and the Trustee.

     CARRIER  HOTEL FEE:  means any amount due and payable  with  respect to any
Carrier Hotel pursuant to the related Carrier Hotel Agreement.

     CLEARSTREAM:   means  Clearstream   Banking,   societe  anonyme,   formerly
Cedelbank, societe anonyme.

     CLEC:  means any small provider engaged in the provision of local telephone
exchange service or exchange access.

     CLOSING DATE: means March 30, 2001.

     CODE: means the Internal Revenue Code of 1986, as amended.

     COLLATERAL: means (a) the rights of the Issuer in and to the Contracts; (b)
all monies due or to become due under the  Contracts  and  payable to the Issuer
under the Contracts, including the Minimum Payment; (c) all right (including its
right to convey title  thereto),  title and interest of the Issuer in and to the
Equipment  and any repairs,  replacements  and  substitutions  thereof;  (d) all
amounts on deposit, and other property, from time to time in the Reserve Account
and the  Revenue  Account;  (e) all  right,  title  and  interest  in and to all
accounts,  chattel paper,  documents,  general intangibles,  inventory and other
property of the Issuer now or hereafter acquired;  and (f) all income,  payments
and proceeds of the foregoing.

     COLLECTION  PERIOD:  means,  with respect to each Payment Date,  the period
from the  earlier  of (i) the  twelfth  day of the  calendar  month  immediately
preceding the month in which such Payment Date occurs and (ii) the last Business
Day of the  immediately  preceding  Collection  Period,  to  and  including  the
eleventh  day of such  current  calendar  month;  PROVIDED,  however,  that with
respect to each Payment Date  occurring  less than four  Business Days after the
eleventh day of such current calendar month, the Collection  Period shall end on
the date which  occurs  four  Business  Days  prior to such  Payment  Date;  and
PROVIDED,  further,  that the first  Collection  Period  shall  commence  on the
Closing Date.

     COMMISSION: means the Securities and Exchange Commission.

     CONTRACT:   means  each  of  the  MGS  Agreement,  the  Equipment  Purchase
Agreement,  the Transfer and Servicing  Agreement,  the Services Agreement,  the
Services  Agreement  Consent,  the  Backup  Servicing  Agreement,   the  Service
Purchasers Consent,  the Maintenance  Agreement,  the Maintenance  Consent,  the
Installation  Agreement,  the  Installation  Consent,  the Lucent  Consent,  the
Management and Tax Allocation  Agreement,  the Carrier Hotel  Agreements and the
Carrier Hotel Consents.


<PAGE>

     CONTRACT FILE: means the following documents:

          (i) The executed  original  counterpart of the Contracts (that, in the
     case of the MGS Agreement and the Service Purchasers  Consent,  constitutes
     "chattel paper" or an "instrument" for purposes of Section  9-l05(1)(b) and
     9-305 of the UCC);

          (ii)  Documents  evidencing  or related to any  insurance  policy with
     respect to the Equipment;

          (iii) A copy of each delivery and acceptance certificate and a copy of
     each original invoice for the Equipment;

          (iv) An acknowledgment  copy of each Financing Statement naming QCI as
     debtor,  the  Originator as secured party and DKB North America  Leasing as
     assignee,  together with the intervening assignments thereof assigning such
     Financing Statements to the Trustee, filed with respect to the Equipment in
     each Filing Location with evidence of proper recording;

          (v) An  acknowledgment  copy of each  Financing  Statement  naming the
     Originator  as debtor,  the Issuer as secured  party and DKB North  America
     Leasing as assignee,  together  with the  intervening  assignments  thereof
     assigning such Financing  Statements to the Trustee,  filed with respect to
     the Collateral in each Filing Location with evidence of proper recording;

          (vi) An  acknowledgment  copy of each Financing  Statement  naming the
     Issuer as debtor  and the DKB  North  America  Leasing  as  secured  party,
     together with the assignments  thereof assigning such Financing  Statements
     to the  Trustee,  filed  with  respect  to the  Collateral  in each  Filing
     Location with evidence of proper recording;

          (vii) An acknowledgment copy of each Financing Statement naming Issuer
     as debtor  and the  Trustee  as secured  party,  filed with  respect to the
     Collateral in each Filing Location with evidence of proper recording; and

          (viii) A copy of any  related  agreement  with the  vendor,  dealer or
     manufacturer  of the  Equipment  or with any Person  from whom the  Service
     Purchasers  acquired the Contract and rights in the related  Equipment  (if
     applicable).

     CORPORATE TRUST OFFICE:  means the principal  corporate trust office of the
Trustee,  located on the Closing Date at Sixth Street and Marquette Avenue,  MAC
9N311-161, Minneapolis, Minnesota 55479, or at such other address as the Trustee
may designate from time to time by notice to the Noteholders.

     DEFAULT:  means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.

     DEFINITIVE NOTE: means any Note evidencing an interest in a Book-Entry Note
in registered and definitive form.


<PAGE>

     DEPOSITORY:  means DTC until a successor  Depository shall have become such
pursuant  to  the   applicable   provisions  of  the  Indenture  and  thereafter
"Depository"  shall  mean  or  include  each  Person  who is  then a  Depository
thereunder.  For purposes of the Indenture,  unless otherwise specified pursuant
to Section 2.02 thereof,  any  successor  Depository  shall,  at the time of its
designation and at all times while it serves as Depository, be a clearing agency
registered  under  the  Exchange  Act,  and  any  other  applicable  statute  or
regulation.

     DETERMINATION DATE: means, as to any Payment Date, the last Business Day of
the related Collection Period.

     DIRECT  PARTICIPANT:  means a  securities  broker and dealer,  bank,  trust
company,  clearing  corporation,  financial institution or other Person for whom
from time to time the  Depository  effects  book-entry  transfers and pledges of
securities deposited with the Depository.

     DKB NORTH AMERICA  LEASING:  means Dresdner  Kleinwort Benson North America
Leasing, Inc., its successors and assigns.

     DTC: means The Depository Trust Company or any successors thereto.

     ELIGIBLE  BANK:  means any depository  institution  (including the Trustee)
incorporated under the laws of the United States of America or any State thereof
and subject to supervision and examination by federal and/or state  authorities,
so long as at the time of such  investment or contractual  commitment  providing
for such  investment,  such  depository  institution or trust company has a long
term  unsecured  debt rating of at least "A" by S&P, and "A2" by Moody's,  and a
short term unsecured  debt rating in the highest  available  rating  category of
each of the Rating Agencies.

     ELIGIBLE DEPOSIT ACCOUNT: means any one or more of the following accounts:

          (i) a segregated account with an Eligible Bank; or

          (ii) a segregated trust account with the corporate trust department of
     a depositary  institution  organized under the laws of the United States of
     America or any one of the states  thereof or the  District of Columbia  (or
     any domestic  branch of a foreign  bank) subject to  regulations  regarding
     fiduciary funds on deposit,  having  corporate trust powers and acting as a
     trustee  for funds  deposited  in such  account  acceptable  to the  Rating
     Agencies.

     ELIGIBLE INVESTMENTS: means, at any time, any and all of the following:

          (a) direct obligations of, and obligations fully guaranteed for timely
     payment by, the United  States of America,  the Federal Home Loan  Mortgage
     Corporation,  the Federal National Mortgage  Association,  the Federal Home
     Loan Banks or any agency or instrumentality of the United States of America
     which has a short term  unsecured  debt rating of at least "A-l" by S&P and
     "P-1" by Moody's,  at the time of such  investment the obligations of which
     are backed by the full faith and credit of the United States of America;


<PAGE>

          (b) securities  bearing  interest or sold at a discount  issued by any
     corporation  incorporated under the laws of the United States of America or
     any  State  thereof  which  has a long term  unsecured  debt  rating in the
     highest  available  rating  category of both of the Rating  Agencies at the
     time of such investment;

          (c) commercial paper having an original maturity of less than 270 days
     and issued by an  institution  having a short term unsecured debt rating in
     the highest available rating category of both of the Rating Agencies at the
     time of such investment;

          (d) a  guaranteed  investment  contract  or bank  investment  contract
     approved  in  writing  by both of the  Rating  Agencies  and  issued  by an
     insurance  company  or other  entity  having a long term debt  rating of at
     least "BBB+" by S&P and "Baal" by Moody's; and

          (e) any mutual fund,  money  market  fund,  common trust fund or other
     pooled investment  vehicle,  the assets of which are limited to instruments
     that would otherwise  constitute Eligible  Investments,  including any such
     fund that is managed by the Trustee or any  Affiliate of the Trustee or for
     which the Trustee or any of its Affiliates  acts as an adviser,  as long as
     such fund is rated in the  highest  rating  category  by both of the Rating
     Agencies.

     EQUIPMENT:  means the  multi-service,  Internet protocol platform parts and
software as described in the Equipment Purchase Agreement and the Implementation
Schedule.

     EQUIPMENT PURCHASE AGREEMENT: means the Equipment Purchase Agreement, dated
as of June 30,  2000,  between QCC as seller and the  Originator  as  purchaser,
pursuant to which the Equipment was sold by QCC to the  Originator,  as the same
may be amended, restated, supplemented or otherwise modified from time to time.

     ERISA:  means the  Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     EUROCLEAR:  means Euroclear Bank S.A./N.V.,  formerly Morgan Guaranty Trust
Company of New York, Brussels Office, as operator of the Euroclear System.

     EVENT  OF  DEFAULT:  has the  meaning  set  forth  in  Section  6.01 of the
Indenture.

     EXCHANGE ACT: means the Securities Exchange Act of 1934, as amended.

     FILING LOCATIONS:  means each  jurisdiction  where the Equipment is located
and where the Originator and the Issuer are organized,  respectively,  and where
their respective chief executive offices are located.

     FINANCING STATEMENTS: means any UCC financing statements filed with respect
to the Collateral in appropriate form for filing.

     GAAP:  means  generally  accepted  accounting  principles  set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such

<PAGE>

other  entity as may be  approved  by a  significant  segment of the  accounting
profession,  which  are  applicable  to  the  circumstances  as of the  date  of
determination.

     GRANT: means to grant, bargain, sell, convey, assign,  transfer,  mortgage,
pledge,  create and perfect a security interest in and right of set-off against,
deposit, set over and confirm.

     HOLDER OR NOTEHOLDER:  means,  at any time, any Person in whose name a Note
is registered in the Note Register.

     ICP:  means  a   telecommunications   carrier  that  provides  packaged  or
integrated  services  from among a broad range of  categories,  including  local
exchange  services,  long distance  services,  enhanced data services,  cable TV
services, and other communications services.

     IMPLEMENTATION SCHEDULE: means the schedule attached as Appendix III of the
MGS  Agreement as the same may be amended from time to time in  accordance  with
the terms and conditions of the Service Purchasers Consent.

     INDENTURE: means the Indenture between the Issuer and the Trustee, dated as
of March 1, 2001, and as from time to time amended,  restated,  supplemented and
otherwise modified pursuant to the applicable provisions thereof.

     INDEPENDENT:  means,  when used with respect to any specified  Person,  any
such Person who (i) is in fact independent of each of the Issuer,  the Servicer,
the Backup Service  Provider and the Trustee,  and any and all their  respective
Affiliates,  (ii) does not have any direct financial interest in or any material
indirect  financial  interest in any of the  Issuer,  the  Servicer,  the Backup
Service  Provider and the Trustee,  or any of their  respective  Affiliates  and
(iii) is not connected with any of the Issuer, the Servicer,  the Backup Service
Provider and the Trustee, or any of their respective Affiliates,  as an officer,
employee,  promoter,   underwriter,   custodian,  partner,  director  or  Person
performing similar functions.

     INDEPENDENT  DIRECTOR:  means any Person  which is not a member,  director,
officer,  employee,  creditor,  supplier  or  agent  of any  entity  which  is a
beneficial owner,  directly or indirectly,  of any of the outstanding  equity or
debt obligations of the Issuer, or an Affiliate of the Issuer;  PROVIDED than an
Independent  Director may serve in similar  capacities for other special purpose
entities formed by KMC or its Affiliates.

     INDIRECT  PARTICIPANT:   means  a  bank,  broker,  dealer,  trust  company,
financial  institution  or other  Person  that  clears  through or  maintains  a
custodial relationship with a Direct Participant, either directly or indirectly.

     INITIAL  PAYMENT  DATE:  means the  initial  Payment  Date  pursuant to the
Transaction  Documents,  which is  contemplated to be, when used with respect to
interest on the Notes,  April 15, 2001,  and when used with respect to principal
on the Notes, May 15, 2001.

     INITIAL  SUBORDINATED  SERVICING  FEE:  has the  meaning  set  forth in the
Transfer and Servicing Agreement.


<PAGE>

     INSTALLATION  AGREEMENT:  means the Master Services Agreement,  dated as of
November  1, 2000,  between  Nortel and the  Originator,  pursuant  to which the
Originator  agrees to  purchase,  and Nortel  agrees to furnish,  services  with
respect  to the  staging  and  installation  of  Equipment,  as the  same may be
amended, restated, supplemented and otherwise modified from time to time.

     INSTALLATION CONSENT: means the Acknowledgment and Consent Agreement, dated
as of November 15, 2000 among Nortel,  the Originator,  the Issuer and DKB North
America  Leasing,  as  the  same  may be  amended,  restated,  supplemented  and
otherwise modified from time to time.

     INSTITUTIONAL  ACCREDITED  INVESTOR:  means  an  "accredited  investor"  as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

     INSURANCE  POLICY:  means,  with  respect  to an  item  of  Equipment,  any
insurance  policy  required to be  maintained  by the Service  Purchasers or the
Issuer  pursuant to the related  Contract  that  covers  physical  damage to the
Equipment.

     INSURANCE PROCEEDS:  means proceeds paid (i) by any insurer pursuant to any
Insurance Policy covering any Equipment or (ii) if the Service Purchasers or the
Issuer, as the case may be, have self-insured with respect to any Equipment,  by
the Service Purchasers or the Issuer, as the case may be, in either case, net of
reasonable costs of collecting such proceeds not otherwise reimbursed.

     INSURED EXPENSES: means expenses covered by any Insurance Policy.

     ISSUER:  means  KMC  Funding  Corporation,  a  Delaware  corporation,   its
successors and assigns.

     ISSUER ORDER or ISSUER REQUEST:  means a written order or request delivered
to the Trustee and signed in the name of the Issuer by an Authorized Officer.

     KMC:  means  KMC  Telecom  Holdings,  Inc.,  a  Delaware  corporation,  its
successors and assigns.

     LICENSE  HOLDERS:  means KMC Telecom of Virginia,  Inc., a Virginia  public
service company, KMC Telecom Inc., a Delaware corporation, KMC Telecom II, Inc.,
a Delaware  corporation,  KMC Telecom  III,  Inc., a Delaware  corporation,  KMC
Telecom IV, Inc.,  a Delaware  corporation,  KMC Telecom IV of Virginia,  Inc. a
Virginia public service  company,  KMC Telecom V, Inc., a Delaware  corporation,
KMC Telecom V of Virginia,  Inc., a Virginia  public  service  company,  and KMC
Telecom  VI  of  Virginia,  Inc.,  a  Virginia  public  service  company,  their
respective successors and assigns.

     LICENSOR: means the other party to a Carrier Hotel Agreement,  which grants
to the Originator,  or an Affiliate thereof, the possession and use of a Carrier
Hotel, for purposes of locating a portion of the Equipment thereat.


<PAGE>

     LOCATION ADJUSTMENT COSTS: the location  adjustment,  maintenance and trunk
provisioning  costs described in paragraphs 2, 3 and 4 of Appendix A to Schedule
1 to the MGS Agreement.

     LUCENT:  means  Lucent  Technologies,  Inc.,  a Delaware  corporation,  its
successors and assigns.

     LUCENT CONSENT:  means the Amended and Restated  Acknowledgment and Consent
Agreement to the Backup Servicing Agreement, dated as of November 1, 2000, among
Lucent, the Originator,  the Issuer, and DKB North America Leasing,  as the same
may be amended, restated, supplemented and otherwise modified from time to time.

     MAINTENANCE  AGREEMENT:  means the Master Services  Agreement,  dated as of
November  1, 2000,  between  Lucent and the  Originator,  pursuant  to which the
Originator  agrees to  purchase,  and Lucent  agrees to furnish,  services  with
respect to maintenance of the Equipment,  as the same may be amended,  restated,
supplemented and otherwise modified from time to time.

     MAINTENANCE CONSENT:  means the Acknowledgment and Consent Agreement to the
Master Services  Agreement,  dated as of November 15, 2000, by and among Lucent,
the  Originator,  the  Issuer  and DKB North  America  Leasing,  the same may be
amended, restated, supplemented and otherwise modified from time to time.

     MAJORITY OF HOLDERS:  means Holders of more than 50% of the aggregate  Note
Balance of the Notes then outstanding.

     MANAGEMENT  AND TAX  ALLOCATION  AGREEMENT:  means the  Management  and Tax
Allocation  Agreement,  dated as of November 1, 2000,  among KMC, the Originator
and the Issuer, as the same may be amended, restated, supplemented and otherwise
modified from time to time.

     MATERIAL ADVERSE EFFECT:  means, relative to any Person with respect to any
event and  circumstance,  a material  adverse  effect on either (a) the  assets,
operations,  business  or  financial  conditions  of such  Person or (b)(i)  the
ability of any such  Person to perform  its  obligations  under the  Transaction
Documents to which it is a party, or (ii) the validity or  enforceability of any
material  provision of any one or more of the Transaction  Documents to which it
is a party.

     MAXIMUM NOTE RESERVE AMOUNT: means for each Payment Date an amount equal to
the positive aggregate excess of (i) the sum of the amounts scheduled to be paid
as Priority  Payments,  on each subsequent Payment Date over (ii) the sum of the
Minimum Payments scheduled to be paid through the Stated Maturity Date.

     MGS AGREEMENT:  means the Media Gateway Services Agreement III, dated as of
June 30, 2000, between the Service Purchasers and the Originator,  including the
Implementation  Schedule,  as modified by (i)  Amendment  No. 1 to Media Gateway
Services  Agreement  III,  dated as of August  31,  2000,  between  the  Service
Purchasers and the  Originator,  (ii) Amendment No. 2 to Media Gateway  Services
Agreement III, dated as of November 1, 2000, between the Service Purchasers and

<PAGE>

Originator, and as the same may be further amended,  restated,  supplemented and
otherwise modified from time to time.

     MGS SERVICES: means services to be provided to the Service Purchasers under
the MGS Agreement.

     MINIMUM PAYMENT:  means an amount,  payable by the Service  Purchasers each
month, pursuant to Section 2(g) of the Service Purchasers Consent,  which equals
not less than (i)  $1,901,542.50  on December  1, 2000;  (ii)  $5,704,627.50  on
January 1, 2001; (iii) $3,803,085.00 on February 1, 2001; (iv) $5,704,627.50 per
month  (payable on the first day of each  month),  commencing  March 1, 2001 and
ending April 1, 2001; (v)  $7,606,170.00  per month (payable on the first day of
each  month),   commencing  May  1,  2001  and  ending  January  1,  2005;  (vi)
$5,704,627.50  per month  (payable on the first day of each  month),  commencing
February  1, 2005 and ending on March 1,  2005;  (vii)  $3,803,085.00  per month
(payable on the first day of the month)  commencing April 1, 2005 and ending May
1, 2005;  and (viii)  $1,901,542.50  per month (payable on the first day of each
month), commencing June 1, 2005 and ending on July 1, 2005.

     MINIMUM RESERVE AMOUNT: means, with respect to any Payment Date, the amount
indicated opposite such Payment Date on Schedule I of the Indenture.

     MINIMUM PROPERTY TAX ESCROW AMOUNT: means an amount equal to the product of
(i)  two  and  (ii)  the  amount  specified  in  Section  3.04(b)(ii)(G)  of the
Indenture.

     MONTHLY  INTEREST:  means, with respect to any Payment Date, the product of
(i) one-twelfth  (or, with respect to the Initial Payment Date, a fraction,  the
numerator  of which is equal to the  number  of days  from  April 2, 2001 to but
excluding the Initial  Payment Date,  and the  denominator of which is 30), (ii)
the Note  Rate  and  (iii)  the  Note  Balance  outstanding  on the  immediately
preceding  Payment Date (or, in the case of the Initial  Payment Date,  April 2,
2001),  after  giving  effect  to  all  principal  payments  on  the  Notes  (if
applicable) on such Payment Date. The Monthly  Interest shall be calculated on a
360-day year with 30 days per month for each  related  interest  accrual  period
from the immediately  preceding Payment Date to but excluding such Payment Date,
except for the Initial  Payment Date, for which interest shall accrue from April
2, 2001 to but excluding such Initial Payment Date.

     MONTHLY  PRINCIPAL:  means, with respect to any Payment Date, the amount of
Monthly  Principal  set forth on Schedule II to the  Indenture  for such Payment
Date.

     MONTHLY  SERVICER  REPORT:  means the report  attached  as Exhibit E to the
Transfer and Servicing Agreement.

     MOODY'S: means Moody's Investors Service, Inc. and any successor.

     NORTEL: means Nortel Networks, Inc., a Delaware corporation, its successors
and assigns.


<PAGE>

     NOTE  BALANCE:  means,  as of the  Closing  Date,  the  Original  Principal
Balance,  and thereafter shall equal the Original  Principal  Balance reduced by
all principal payments on the Notes.

     NOTEHOLDER OR HOLDER:  means,  at any time, any Person in whose name a Note
is  registered  in the Note  Register.  All  references  herein to  "Holders" or
"Noteholders"  shall  reflect the rights of Note  Owners as they may  indirectly
exercise such rights through the  Depository  and the  Depository  Participants,
except as otherwise specified herein.

     NOTEHOLDER  SUBORDINATION  CONSENT NOTICE: means the written consent of the
Majority of Holders to  subordination  of their payment  priorities  pursuant to
Section 6.07 of the  Indenture  from clauses  FOURTH  through  SIXTH  thereof to
clauses ELEVENTH through THIRTEENTH thereof.

     NOTE OWNER:  means,  with respect to any Definitive Note, any Person who is
the owner of such Definitive Note and with respect to any Book-Entry  Notes, any
Person  who is the  owner of such  Book-Entry  Note,  as  reflected  on the Note
Register  or books of DTC,  or on the books of a Person  maintaining  an account
with DTC (as a Direct  Participant or an Indirect  Participant,  in each case in
accordance with the rules of DTC).

     NOTE  PURCHASE  AGREEMENT:  means any  agreement  between the  Issuer,  the
Originator  and  the  purchaser(s)  specified  therein  and  any  other  parties
specified  therein,  relating  to the  purchase  of  Notes,  as the  same may be
amended, restated, supplemented and otherwise modified from time to time.

     NOTE RATE:  means seven and  thirty-four  hundredths  percent  (7.341%) per
annum based upon a 360-day year with 30 days per month.

     NOTE REGISTER: has the meaning set forth in Section 2.04 of the Indenture.

     NOTE REGISTRAR: has the meaning set forth Section 2.04 of the Indenture.

     NOTE RESERVE DEPOSIT AMOUNT: means, on any Payment Date, an amount equal to
the lesser of (a) the positive  excess of (i) Available Funds in an amount equal
to the Minimum Payment over (ii) the Priority  Payments  payable on such Payment
Date;  and (b) the positive  excess of (i) the Maximum Note Reserve  Amount over
(ii) the Reserve Account Balance.

     NOTE RESERVE DRAW:  means, with respect to any Payment Date, the amount, if
any,  withdrawn  by the  Trustee  from the  Reserve  Account  for payment of the
Priority Payments pursuant to Section 3.04(c) of the Indenture.

     NOTES:  means any Notes  described in Article II of, and authorized by, and
authenticated and delivered under, the Indenture.

     OFFICER'S  CERTIFICATE:  means a  certificate  delivered to the Trustee and
signed by Chairman, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the relevant entity.


<PAGE>

     OPINION OF COUNSEL: means a written opinion of counsel (which counsel shall
be Independent of each of the Issuer, the Servicer,  the Backup Service Provider
and the Trustee) reasonably  acceptable to the Majority of Holders and delivered
to the Trustee.

     ORIGINAL PRINCIPAL BALANCE: means $325,000,000.

     ORIGINAL RESERVE ACCOUNT BALANCE: means $15,448,994.

     ORIGINATOR:  means KMC  Telecom  VI,  Inc.,  a  Delaware  corporation,  its
successors and assigns.

     ORIGINATOR  ORDER or ORIGINATOR  REQUEST:  means a written order or request
delivered  to the  Trustee  and  signed  in the  name  of the  Originator  by an
Authorized Officer.

     OUTSTANDING OR  OUTSTANDING:  means,  when used with reference to the Notes
and  as of any  particular  date,  any  Note  theretofore  and  thereupon  being
authenticated and delivered except:

          (i) any Note canceled by the Trustee at or before said date;

          (ii) any Note,  or portion  thereof,  for payment at maturity of which
     monies  equal  to the  principal  amount,  with  interest  to the  date  of
     maturity,  shall  have  theretofore  been  irrevocably  deposited  with the
     Trustee (whether upon or prior to maturity of such Note);

          (iii) any Note in lieu of or in  substitution  for which  another Note
     shall have been authenticated and delivered; and

          (iv) any Note  owned by the  Issuer  or any  Affiliate  of the  Issuer
     (except  that,  in  determining  whether the Trustee  shall be protected in
     relying upon any request, demand, authorization, direction, notice, consent
     or waiver of Noteholders under the Indenture,  only Notes which the Trustee
     knows to be so owned shall be disregarded).

     OVERDUE  INTEREST:  means, for any Payment Date, the excess, if any, of (i)
the aggregate  amount of Monthly  Interest  payable on all prior Payment  Dates,
over (ii) the aggregate  amount of interest  actually paid to the Noteholders on
all prior Payment Dates.

     OVERDUE PRINCIPAL:  means, for any Payment Date, the excess, if any, of (i)
the aggregate  amount of Monthly  Principal  payable on all prior Payment Dates,
over (ii) the aggregate amount of principal  actually paid to the Noteholders on
all prior Payment Dates.

     OVERDUE RATE: means the sum of the Note Rate and one percent (1%) per annum
based upon a 360-day year with 30 days per month.

     PARTICIPANT:   means,   collectively,   Direct  Participants  and  Indirect
Participants.

     PAYMENT DATE: means the fifteenth day of each month (or if such date is not
a Business Day, the  immediately  succeeding  Business  Day),  commencing on the
Initial Payment Date.


<PAGE>

     PERSON:  means any  individual,  corporation,  limited  liability  company,
partnership,  joint venture, association,  joint stock company, trust (including
any  beneficiary  thereof),  unincorporated  organization  or  government or any
agency or political subdivision thereof.

     PLACEMENT  AGENT:  means  Dresdner  Kleinwort  Benson North  America LLC, a
Delaware limited liability company,  d/b/a Dresdner Kleinwort  Wasserstein,  its
successors and assigns.

     PLAN: means a "plan" within the meaning of Section 3(3) of ERISA or Section
4975(e)(l) of the Code.

     PREDECESSOR  NOTES:  means,  with  respect to any  particular  Note,  every
previous Note  evidencing all or a portion of the same debt as that evidenced by
such  particular  Note;  and,  for the  purpose  of this  definition,  any  Note
authenticated  and  delivered  under  Section 2.05 of the Indenture in lieu of a
lost,  destroyed or stolen Note (or a mutilated Note surrendered to the Trustee)
shall be deemed to evidence the same debt as the lost,  destroyed or stolen Note
(or a mutilated Note surrendered to the Trustee).

     PRIORITY  PAYMENTS:  has the  meaning  set forth in Section  3.04(c) of the
Indenture.

     PROPERTY TAX ESCROW ACCOUNT: means the account specified in Section 3.06 of
the Indenture.

     PROSPECTIVE  OWNER:  has the  meaning  set  forth  in  Section  2.10 of the
Indenture.

     PUBLIC BOOK-ENTRY NOTES: means the permanent Book-Entry Notes corresponding
to the Regulation S Temporary Book-Entry Notes.

     PURCHASER:  means the Person in whose name a Note is registered in the Note
Register on the initial purchase date.

     QCC: means Qwest Communications  Corporation,  a Delaware corporation,  its
successors and assigns.

     QCI: means Qwest Communications International Inc., a Delaware corporation,
its successors and assigns.

     QIB: means a "qualified  institutional buyer" as defined in Rule l44A under
the Securities Act.

     RATING  AGENCIES:  means,  when used in the singular,  either of, and, when
used in the plural, both of Moody's and S&P.

     RATING AGENCY  CONDITION:  means, with respect to any action proposed to be
taken, that each Rating Agency shall have notified the Issuer,  the Servicer and
the Trustee in writing that such action will not result in a Ratings Effect.


<PAGE>

     RATINGS EFFECT: means a reduction or withdrawal of a rating on the Notes by
a Rating Agency.

     RECORD DATE:  means,  with respect to any Payment Date,  the  Determination
Date immediately preceding such Payment Date.

     RECOVERIES:  means,  with respect to any Contract,  any cash sale proceeds,
vendor  recourse,  payments  under  personal  and other  guaranties,  litigation
judgments and the present value of re-lease rents.

     REGULATION S: means Regulation S under the Securities Act.

     REGULATION S TEMPORARY  BOOK-ENTRY NOTE: means the Book-Entry Notes without
coupons initially representing the Notes sold in reliance on Regulation S.

     RELATED  PERSON:  means any Person (whether or not  incorporated)  which is
under common control with the Issuer within the meaning of Section 414(b) or (c)
of the Code, or of Section 4001(b) of ERISA.

     REPORTABLE  EVENT:  means any of the events set forth in Section 4043(b) of
ERISA  or  the  regulations  thereunder,  a  withdrawal  from a  "Pension  Plan"
described in Section 4063 of ERISA,  or a cessation of  operations  described in
Section 4062(3) of ERISA.

     RESERVE ACCOUNT: means the account or accounts by that name established and
maintained  by and in the name of the Trustee  pursuant  to Section  3.01 of the
Indenture.

     RESERVE ACCOUNT BALANCE:  means, with respect to any date of determination,
an amount equal to the Original Reserve Account Balance,  plus (a) the amount of
all previous Note Reserve Deposit  Amounts,  plus (b) the amount of all previous
Servicing  Reserve Deposit Amounts,  plus (c) the amount of all previous Reserve
Account Earnings, minus (d) the amount of all previous Note Reserve Draws, minus
(e) the amount of all previous Servicing Reserve Draws, and minus (f) the amount
of all previous Reserve Account Withdrawals.

     RESERVE ACCOUNT EARNINGS:  means the actual investment earnings realized on
property from time to time in the Reserve Account.

     RESERVE ACCOUNT PROPERTY:  means the property  described in Section 3.07(a)
of the Indenture.

     RESERVE ACCOUNT WITHDRAWAL: has the meaning set forth in Section 3.07(d) of
the Indenture.

     RESPONSIBLE  OFFICER:  means,  with respect to the Trustee,  any President,
Senior Vice President, Vice President,  Assistant Vice President,  Trust Officer
or Assistant Secretary with direct  responsibility for the administration of the
Trustee's  obligations  and duties  under the  Indenture  and with  respect to a
particular  matter,  any officer to whom such matter is referred because of such
other officer's knowledge or familiarity with the particular subject.


<PAGE>

     REVENUE ACCOUNT: means the account or accounts by that name established and
maintained by the Trustee pursuant to Section 3.01 of the Indenture.

     REVENUE ACCOUNT EARNINGS:  means the actual investment earnings realized on
property from time to time in the Revenue Account.

     RULE 144A: means Rule 144A under the Securities Act.

     RULE 144A BOOK-ENTRY  NOTE:  means the Book-Entry Notes in fully registered
form without coupons representing the Notes sold in reliance on Rule l44A.

     S&P:  means  Standard  &  Poor's  Ratings  Services,   a  division  of  The
McGraw-Hill Companies, Inc. and any successor.

     SECURITIES ACT: means the Securities Act of 1933 as amended.

     SENIOR SERVICING FEE: means, with respect to the Servicer/Servicer Provider
or any  Affiliate  thereof,  an amount  equal to  $300,000  per  annum,  payable
monthly,  and with respect to any  Successor  Service  Provider  (including  the
Backup Service  Provider to the extent that the Backup Service Provider does not
receive amounts payable as a Backup Service Provider Fee), an amount  determined
by the Majority of Holders,  PROVIDED, that in no event shall such amount exceed
$7,800,000 per annum, payable monthly.

     SERVICE PROVIDER: means the Servicer.

     SERVICE  PURCHASERS:  means  both of QCC and QCI,  jointly  and  severally,
unless the context shall clearly refer to one or either of such entities.

     SERVICE PURCHASERS CONSENT: means the Acknowledgment and Consent Agreement,
dated as of March 1, 2000, by and among the Service Purchasers,  the Originator,
the Issuer,  the Trustee and DKB North America Leasing (as "Lender"  thereunder)
with regard,  among other things,  to the assignment by the Originator of all of
its rights,  title and interest in and to the  Contracts,  the Equipment and the
income,  payments and proceeds  therefrom,  the further assignment and pledge by
the Issuer,  as security for the Notes,  to the Trustee,  for the benefit of the
Noteholders,  and the consent by the Service Purchasers thereto; all as the same
may be amended, restated, supplemented and otherwise modified from time to time.

     SERVICE PURCHASERS CONTRACTS:  means,  collectively,  the MGS Agreement and
the Service Purchasers Consent.

     SERVICE PURCHASERS  PAYMENT  AGREEMENT:  means a sum equal to not less than
(i)  the  Minimum  Payment  and  (ii)  the  Location   Adjustment  Costs,  which
obligations shall in each instance be absolute and  unconditional  under any and
all circumstances.

     SERVICE PURCHASERS PAYMENTS: means, collectively,  all payments made by the
Service Purchasers under the Service Purchasers Contracts, including the Minimum
Payments.


<PAGE>

     SERVICER:  means  initially,  the Originator  (subject to the  Originator's
delegation  of certain  duties to the License  Holders  pursuant to the Services
Agreement),  and  thereafter,  either  the Issuer  who hires the  Originator  to
perform  duties  or the  then-acting  Successor  Service  Provider(s),  if  any,
appointed pursuant to the terms of the Transfer and Servicing  Agreement,  their
respective successors and assigns.

     SERVICER ORDER:  means a written order or request  delivered to the Trustee
and signed in the name of the Service Provider by an Authorized Officer.

     SERVICER  TERMINATION EVENT: means a Servicer  Termination Event as defined
in Section 10.01 of the Transfer and Servicing Agreement.

     SERVICES AGREEMENT:  means the Services Agreement, dated as of November 15,
2000, among the Originator and the License Holders,  as the same may be amended,
restated, supplemented and otherwise modified from time to time.

     SERVICES AGREEMENT CONSENT: means the Acknowledgment and Consent Agreement,
dated as of November 15, 2000,  among the License  Holders and DKB North America
Leasing (as Financing Party), as the same may be amended, restated, supplemented
and otherwise modified from time to time.

     SERVICING  PAYMENTS:  has the meaning  set forth in Section  3.04(d) of the
Indenture.

     SERVICING  RESERVE  DEPOSIT  AMOUNT:  means, on any Payment Date, an amount
equal to the lesser of (a) the positive  excess of (i) Available Funds remaining
after  distribution of all amounts payable pursuant to Section 3.04(b)(i) of the
Indenture over (ii) the Servicing Payments payable on such Payment Date; and (b)
the  positive  excess  of (i) the  Minimum  Reserve  Account  Balance  indicated
opposite such Payment Date in Schedule I to the Indenture  over (ii) the Reserve
Account Balance.

     SERVICING  RESERVE  DRAW:  means,  with  respect to any Payment  Date,  the
amount, if any, withdrawn by the Trustee from the Reserve Account for payment of
the Servicing Payments pursuant to Section 3.07(b) of the Indenture.

     STATED MATURITY DATE: means the Payment Date occurring on August 15, 2005.

     SUBORDINATED  SERVICING  FEE: has the meaning set forth in the Transfer and
Servicing Agreement.

     SUCCESSOR  SERVICE  PROVIDER:  means the  Service  Purchasers,  the  Backup
Service Provider or any other successor to the Service Provider  pursuant to the
Transaction Documents.

     SUCCESSOR SERVICE PURCHASER:  means any successor to the Service Purchasers
pursuant to Section 6.02(iii)(B) of the Indenture.

     TRANSACTION DOCUMENTS:  means collectively,  the Indenture, the Notes, each
Note  Purchase  Agreement,   the  Transfer  and  Servicing  Agreement,  the  MGS
Agreement,  the Service  Purchasers  Consent,  the Stock Pledge  Agreement,  the
Management  and Tax  Allocation  Agreement,  the Carrier Hotel  Agreements,  the

<PAGE>

Carrier Hotel Consents, the Services Agreement,  the Services Agreement Consent,
the Backup Servicing Agreement,  the Lucent Consent, the Maintenance  Agreement,
the Maintenance Consent, the Installation  Agreement,  the Installation Consent,
and all other  Contracts,  and each other  document  or  instrument  executed in
connection  therewith or any transaction  contemplated  thereby, and any and all
other  agreements,  documents  and  instruments  executed and delivered by or on
behalf of or in support of the Issuer or the  Originator  to the  Trustee or its
authorized  designees,  as the same may be amended,  restated,  supplemented  or
otherwise modified from time to time.

     TRANSFER AND SERVICING  AGREEMENT:  means the Amended and Restated Transfer
and Servicing Agreement, dated as of November 1, 2000, among the Originator, the
Issuer and the Trustee, and pursuant to which the Originator  transferred to the
Issuer all of the  Originator's  right,  title and interest  with respect to the
Equipment,   the  Contracts   (including  the  income,   payments  and  proceeds
therefrom),  and the Issuer delegated to the Originator, as Service, among other
things, all of the Issuer's  obligations as provider of MGS Services pursuant to
the MGS  Agreement,  as the  same may be  amended,  restated,  supplemented  and
otherwise modified from time to time.

     TRUSTEE:  means the Person named as the "Trustee" in the first paragraph of
the Indenture until a successor Person shall have become the Trustee pursuant to
the applicable provisions of the Indenture,  and thereafter "Trustee" shall mean
such successor Person;  PROVIDED,  that the provisions of Sections 7.06 and 8.10
of the  Indenture,  as  applicable  to any Person at any time serving as Trustee
under the Indenture, shall survive (with respect to any period prior to the date
of such  termination)  the  termination of such Person's status as Trustee under
the Indenture and the succession of any other Person to such status.

     TRUSTEE FEE: means an amount equal to $500 per month.

     TRUSTEE  PAYMENTS:  means an amount  equal to the Trustee Fee and all other
reimbursements and indemnifications to which the Trustee is entitled.

     UNIFORM  COMMERCIAL  CODE or  UCC:  means,  with  respect  to a  particular
jurisdiction,  the Uniform  Commercial  Code,  as in effect from time to time in
such jurisdiction, or any successor statute thereto.

     U.S. DOLLARS: Lawful money of the United States of America.