Document:

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                                 EXECUTION COPY

                                                                    EXHIBIT 10.9

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                                Dated 30 May 2000

                            NTI COMMUNICATIONS CORP.
                                    as Parent

                              NTL (UK) GROUP, INC.
                             as Intermediate Parent

                           NTL COMMUNICATIONS LIMITED
                                   as Borrower

                     MORGAN STANLEY DEAN WITTER BANK LIMITED
                             AND CHASE MANHATTAN PLC
                      as Arrangers and Joint Book Managers

                                       and

                      CHASE MANHATTAN INTERNATIONAL LIMITED
                          as Agent and Security Trustee

                                       and

                                     OTHERS

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

                                 L1,300,000,000
                                CREDIT AGREEMENT

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

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                                  WHITE & CASE
                                 7-11 Moorgate
                                London EC2R 6HH

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THIS AGREEMENT is made on 30 May 2000

BETWEEN:

(1)     NTL COMMUNICATIONS CORP., a company incorporated in Delaware (the
        "PARENT");

(2)     NTL (UK) GROUP, INC., a company incorporated in Delaware (the
        "INTERMEDIATE PARENT");

(3)     NTL COMMUNICATIONS LIMITED, a company incorporated in England and Wales
        with company number 3521915 (the "BORROWER");

(4)     MORGAN STANLEY DEAN WITTER BANK LIMITED AND CHASE MANHATTAN PLC as
        arrangers and joint book managers of the Facility (the "ARRANGERS");

(5)     CHASE MANHATTAN INTERNATIONAL LIMITED as agent for the Banks (the
        "AGENT");

(6)     CHASE MANHATTAN INTERNATIONAL LIMITED as security trustee for the
        Finance Parties (the "SECURITY Trustee"); and

(7)     THE BANKS (as defined below).

IT IS AGREED as follows:

1.      DEFINITIONS AND INTERPRETATION

1.1     DEFINITIONS
        In this Agreement:

        "ACCOUNTANTS' REPORT" means the report prepared by the Target's
        accountants, Arthur Andersen, dated 14 February 2000 and splitting the
        Target's financial statements for its financial years ended 31 March
        1997, 31 March 1998 and 31 March 1999 between the CWC ConsumerCo
        Business and the CWC DataCo Business (as set out in Part A of Appendix 8
        of the CWC Circular).

        "ACQUISITION" means the acquisition by NTL Holdings of the issued share
        capital of CWC Holdings pursuant to the Transaction Agreement.

        "ACQUISITION DATE" means the date on which the Acquisition is completed,
        being a date on or prior to 31 March 2001.

        "ADDITIONAL INCREMENTAL AMOUNT" means the next L500,000,000 of Financial
        Indebtedness incurred pursuant to clause (i) of the definition of
        Permitted Indebtedness after the Incremental Amount.

        "ADVANCE" means an advance (as from time to time consolidated, divided
        or reduced by repayment in accordance with the terms hereof) made or to
        be made by the Banks under the Facility.

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        "ASSET ADJUSTMENT PAYMENTS" means:

        (a)     a payment made by a member of the Target Group to a company
                carrying on the CWC DataCo Business, in respect of a transfer of
                assets from that company carrying on the CWC DataCo Business to
                such a member of the Target Group; or

        (b)     a payment made by a company carrying on the CWC DataCo Business
                to a member of the Target Group, in respect of a transfer of
                assets from such a member of the Target Group to that company
                carrying on the CWC DataCo Business,

        in each case in accordance with the terms of the Transaction Agreement
        and where either Cable & Wireless is obliged to reimburse NTL Holdings
        in respect of a payment made by a member of the Target Group under
        paragraph (a) or NTL Holdings is obliged to reimburse Cable & Wireless
        in respect of a payment received by a member of the Target Group
        pursuant to paragraph (b).

        "ASSET PASSTHROUGH" means a series of transactions, commencing with a
        transaction between the Parent and a member of the Covenant Group, which
        may be followed by one or more similar transactions between various
        members of the Covenant Group and culminating with a similar transaction
        between a member of the Covenant Group and a Final Asset Transferee, the
        purpose of which is to enable the Parent to indirectly transfer assets
        to that Final Asset Transferee by way of transfers of those assets to
        and from (and, if necessary, between) one or more members of the
        Covenant Group in such a matter as to be neutral to the Covenant Group
        taken as a whole, PROVIDED THAT:

        (a)     the consideration payable (if any) by the first member of the
                Covenant Group to acquire such assets to the Parent comprises
                either (i) cash funded or to be funded directly or indirectly by
                a payment from the Final Asset Transferee in connection with
                that series of transactions or (ii) Subordinated Funding;

        (b)     if the Intermediate Parent (having acquired such assets from the
                Parent) transfers them on to another member of the Covenant
                Group, the consideration payable by such a member of the
                Covenant Group comprises either (i) cash funded or to be funded
                directly or indirectly by a payment from the Final Asset
                Transferee in connection with that series of transactions or
                (ii) Parent Funding;

        (c)     the consideration payable by the Final Asset Transferee is equal
                to the consideration received or receivable by the Parent;

        (d)     the consideration payable by each member of the Covenant Group
                participating in such a series of transactions is equal in
                value;

        (e)     all of the transactions comprising such a series of transactions
                (from and including the transfer of the assets by the Parent to
                and including the acquisition of those assets by the Final Asset
                Transferor) are completed within two Business Days; and

        (f)     upon completion of all of the transactions comprising such a
                series of transactions, no person (other than another member of
                the Covenant Group) has any recourse to any member of the
                Covenant Group in relation to such a series

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                of transactions (other than in respect of (i) the Subordinated
                Funding mentioned in paragraph (a) above) and (ii) covenants as
                to title provided in favour of the Final Asset Transferee on the
                same terms as such covenants were provided in favour of the
                Initial Asset Transferor in respect of the relevant assets.

        "ASSIGNED DEBT" means any loan made by the Parent to the Intermediate
        Parent or by the Intermediate Parent to the Borrower where the lender's
        rights in respect of any such loan have been assigned to the Security
        Trustee pursuant to the Inter-Company Loan Assignment.

        "AUTHORISED SIGNATORY" means, in relation to an Obligor, any person who
        is duly authorised (in such manner as may be reasonably acceptable to
        the Agent) and in respect of whom the Agent has received a certificate
        signed by a director or another Authorised Signatory of such Obligor
        setting out the name and signature of such person and confirming such
        person's authority to act.

        "AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save
        as otherwise provided herein, its Commitment at such time LESS the
        aggregate amount which it has advanced hereunder at such time (but not
        including any amount added to the Advances pursuant to Clause 4.3
        (Limitations on Cash Interest)), PROVIDED THAT such amount shall not be
        less than zero.

        "AVAILABLE EXCESS CASH FLOW" means, at any time, the aggregate Excess
        Cash Flow generated in respect of each financial year of the Borrower,
        commencing with the financial year ended 31 December 2003, less the
        amount of such Excess Cash Flow (in respect of each such financial year)
        which:

        (a)     is required to be used (in respect to such financial year) to
                prepay the Senior Bank Loan in accordance with clause 10.1 of
                the Senior Bank Credit Agreement or the Loan in accordance with
                Clause 9.1 (Mandatory Prepayment from Excess Cash Flow) of this
                Agreement; and

        (b)     has, on or after 1 January 2003, already been used to fund a
                Permitted Payment.

        "AVAILABLE FACILITY" means, at any time, the aggregate amount of the
        Available Commitments adjusted, in the case of any proposed drawdown, so
        as to take into account any reduction in the Available Commitment of a
        Bank pursuant to the terms hereof.

        "AVERAGE REVENUE CONTRIBUTIONS" means, in respect of any asset at any
        time:

                                 A + B
                                 -----
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        where:

        A =                the revenue generated by, or attributable (whether
                           in whole or in part) to, such asset during the
                           immediately preceding financial year of the Borrower,
                           expressed as a percentage of the aggregate of the
                           consolidated revenue of the UK Group and, prior to
                           the Pushdown Date, the consolidated revenue of the
                           Target Group for such a financial year; and

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        B =                the revenue generated by, or attributable (whether
                           in whole or in part) to, such asset during the
                           financial year of the Borrower preceding that
                           referred to in A above, expressed as a percentage of
                           the aggregate of the consolidated revenue of the UK
                           Group and, prior to the Pushdown Date, the
                           consolidated revenue of the Target Group for such
                           financial year.

        "BANK" means any financial institution:

        (a)     named in Schedule 1 (The Banks); or

        (b)     which has become a party hereto as a Bank in accordance with
                Clause 30.4 (Assignments by Banks) or Clause 30.5 (Transfers by
                Banks),

        and which has not ceased to be a party hereto in accordance with the
        terms hereof.

        "BUDGET" means a budget delivered by the Borrower to the Agent pursuant
        to Clause 16.5 (Budgets).

        "BUSINESS DAY" means a day (other than a Saturday or Sunday) which is
        not a public holiday and on which banks are open for general business in
        both London and New York.

        "BUSINESS PLAN" means the financial model including profit and loss
        accounts, balance sheets and cashflow projections, in the agreed form,
        relating to the UK Group (for these purposes assuming that the Pushdown
        has been completed) as set out in annex 16 to the Information
        Memorandum.

        "C&W (UK) HOLDINGS" means Cable & Wireless (UK) Holdings plc, a company
        incorporated in England and Wales (company number 3888319), being (on
        and after the Scheme Effective Date) a wholly owned subsidiary of Cable
        & Wireless.

        "CABLE & WIRELESS" means Cable & Wireless plc, a company incorporated in
        England and Wales (company number 238525).

        "CABLE BUSINESS" means (i) any person directly or indirectly operating,
        or owning a license to operate, a cable and/or television and/or
        telephone and/or telecommunications system or service principally within
        the United Kingdom and/or in Ireland and (ii) any Cable Related
        Business.

        "CABLE RELATED BUSINESS" means a person which directly, or indirectly,
        owns or provides a service or product used in a Cable Business,
        including, without limitation, any television programming, production
        and/or licensing business or any programming guide or telephone
        directory business or content or software related thereto.

        "CAPITAL EXPENDITURE" means expenditure on the acquisition or
        improvement of an asset which would be treated as a capital asset in
        accordance with generally accepted accounting principles in the United
        Kingdom.

        "CAPITAL EVENT PROCEEDS" means the net cash proceeds received by any
        member of the Group from the issuance or sale of Financial Indebtedness
        or equity interests to persons which are not members of the Group other
        than:

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        (a)     Financial Indebtedness under the Senior Bank Credit Agreement
                (other than the Incremental Amount);

        (b)     Financial Indebtedness constituting the Additional Incremental
                Amount;

        (c)     Financial Indebtedness incurred or equity proceeds raised by the
                Group's Australian companies to the extent that the net cash
                proceeds thereof do not exceed L250,000,000;

        (d)     Financial Indebtedness used for the Group's working capital,
                capital expenditure and other general corporate purposes, in
                each case incurred in the ordinary course of business to the
                extent that the aggregate principal amount of such Financial
                Indebtedness does not exceed L50,000,000 at any one time
                outstanding;

        (e)     Financial Indebtedness incurred for working capital purposes
                pursuant to commitments existing on the Execution Date;

        (f)     Non-Recourse Bank Indebtedness incurred by a Non-Recourse
                Subsidiary;

        (g)     Net cash proceeds received from the issuance of equity interests
                (including, without limitation, warrants and options) to
                officers, directors and employees pursuant to stock option or
                other incentive plans, to the extent that the aggregate amount
                of such net cash proceeds received after the Execution Date does
                not exceed L50,000,000;

        (h)     amounts equal to Debt Adjustment Payments from time to time
                invested as contemplated in Clause 19.15 (Debt Adjustment
                Payments); and

        (i)     any net cash proceeds received on conversion and/or cancellation
                and reissue of securities.

        "CAPITAL EVENT PROCEEDS AMOUNT" means at any time of the receipt by the
         Group of Capital Event Proceeds (x) the aggregate amount of Capital
         Event Proceeds (including the Capital Event Proceeds then being
         received) received after the Execution Date multiplied by the
         applicable Required Percentage less (y) the amount of such Capital
         Event Proceeds which have been applied in accordance with Clause 9.6
         (Application of Proceeds), provided (i) any product of such calculation
         which is negative shall be treated as zero and (ii) the Capital Event
         Proceeds Amount for any Capital Event Proceeds received during a Remedy
         Restriction Period shall be an amount equal to 100% of such Capital
         Event Proceeds.

        For the avoidance of doubt, the net cash proceeds of the Incremental
        Amount shall constitute Capital Event Proceeds.

        "CAXTON" means Caxton Holdings Limited, a company incorporated in
        England and Wales (company number 3840888), being (prior to the First
        Caxton Sale) a wholly owned subsidiary of the Target and, together with
        its subsidiaries, comprising the CWC DataCo Business.

        "CHARGED ACCOUNT" means an account, bearing interest at a commercially
        reasonable rate in relation to the given circumstances, in the name of
        any member of the NTL

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        Holding Group over which security has been granted in favour of the
        Finance Parties (or the Security Trustee on their behalf) on terms
        acceptable to the Agent (or if the Senior Bank Credit Agreement is in
        effect, in favour of the banks under the Senior Bank Credit Facility (or
        a security trustee on their behalf)), into which members of the UK Group
        make deposits for the purpose of making Permitted Payments in accordance
        with paragraph (e) of the definition thereof.

        "CODE" means the City Code on Takeovers and Mergers.

        "COMMITMENT" means, in relation to a Bank at any time and save as
        otherwise provided herein, the amount set opposite its name under the
        heading "COMMITMENT" in Schedule 1 (The Banks). The Commitments of
        Morgan Stanley Dean Witter Bank Limited and Morgan Stanley Senior
        Funding, Inc. shall be determined in accordance with Clause 30.11
        (Morgan Stanley Commitment).

        "COMPLIANCE CERTIFICATE" means a certificate substantially in the form
        set out in Schedule 6 (Form of Compliance Certificate).

        "CONFIDENTIALITY UNDERTAKING" means a confidentiality undertaking in the
        standard form from time to time of the LMA or in such other form as may
        be agreed between the Borrower and the Agent.

        "COURT" means the High Court of Justice of England and Wales.

        "COURT MEETING" means the meeting of the holders of the shares of Target
        summoned by the Court and directed to consider and vote on whether to
        approve the Scheme pursuant to Section 425.

        "COVENANT GROUP" means the Intermediate Parent, any subsidiary of the
        Intermediate Parent which is a direct or indirect holding company of the
        Borrower, the Borrower and the other members of the UK Group. For the
        avoidance of doubt, the Parent is not a member of the Covenant Group.

        "COVENANT GROUP OBLIGOR" means each member of the Covenant Group which
        is an Obligor.

        "CWC CIRCULAR" means the circular to the Target's shareholders dated 14
        February 2000 (as supplemented by a circular dated 3 March 2000),
        relating to the Scheme and the proposed acquisition of the CWC DataCo
        Business by Cable & Wireless and the CWC ConsumerCo Business by NTL
        Holdings.

        "CWC CONSUMERCO BUSINESS" means the residential cable, business cable,
        indirect residential telephony, residential internet and digital
        television development and services businesses owned and operated by the
        Target and its subsidiaries.

        "CWC DATACO BUSINESS" means the corporate, business, internet protocol
        and wholesale operations carried on by the Target and its subsidiaries
        prior to the First Caxton Sale.

        "CWC HOLDINGS" means Cable & Wireless Communications (Holdings) plc, a
        company incorporated in England and Wales with company number 3922682.

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        "CWC HOLDINGS CAPITAL REDUCTION" means the reduction in the share
        capital of CWC Holdings occurring prior to the Acquisition, such a
        reduction being confirmed by the Court in accordance with section 135 of
        the Companies Act 1985.

        "DEBT ADJUSTMENT PAYMENTS means:

        (a)     in the event that the members of the Target Group are found to
                have had excessive indebtedness as at the Acquisition Date, the
                issue and/or transfer of Cable & Wireless shares to NTL
                Holdings; or

        (b)     in the event that the members of the Target Group are found to
                have had insufficient indebtedness as at the Acquisition Date,
                the payment of a sum equal to such an insufficient amount of
                indebtedness by NTL Holdings to Cable & Wireless.

        "DIAMOND NOTES" means the:

        (a)     13-1/4% senior discount notes due 30 September, 2004, with a
                principal amount at maturity of $285,000,000, issued by Diamond
                Cable Communications plc;

        (b)     11-3/4% senior discount notes due 15 December, 2005, with a
                principal amount at maturity of $531,000,000, issued by Diamond
                Cable Communications plc;

        (c)     10-3/4% senior discount notes due 15 February, 2007, with a
                principal amount at maturity of $421,000,000, issued by Diamond
                Cable Communications plc;

        (d)     10% senior notes due 1 February, 2008, with a principal amount
                at maturity of L135,000,000, issued by Diamond Holdings plc; and

        (e)     9-1/8% senior notes due 1 February, 2008, with a principal
                amount at maturity of $110,000,000, issued by Diamond Holdings
                plc.

        "DISCLOSURE LETTER" means the letter, in the agreed form, dated on or
        about the Execution Date from the Borrower to the Agent (on behalf of
        the Finance Parties) setting out various matters to be excluded from
        certain representations and covenants in this Agreement.

        "DISPUTE" means any dispute referred to in Clause 39 (Jurisdiction).

        "DORMANT SUBSIDIARY" means, at any time, any subsidiary of the Borrower
        which is "dormant" as defined in Section 250(3) of the Companies Act
        1985.

        "EBITDA" has the meaning given to it in Clause 17.2 (Financial
        Definitions).

        "EGM" means the extraordinary general meeting of Target convened to
        consider and vote on the resolutions necessary to implement the Scheme.

        "EMU" means Economic and Monetary Union as contemplated in the Treaty on
        European Union.

        "EMU LEGISLATION" means legislative measures of the European Union for
        the introduction of, changeover to or operation of the euro in one or
        more member states, being in part legislative measures to implement the
        third stage of EMU.

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        "ENCUMBRANCE" means (a) a mortgage, charge, pledge, lien or other
        encumbrance securing any obligation of any person, (b) any arrangement
        under which money or claims to, or the benefit of, a bank or other
        account may be applied, set off or made subject to a combination of
        accounts so as to effect discharge of any sum owed or payable to any
        person or (c) any other type of preferential arrangement (including any
        title transfer and retention arrangement) having a similar effect.

        "ENVIRONMENTAL CLAIM" means any claim, proceeding or investigation by
        any person pursuant to any Environmental Law.

        "ENVIRONMENTAL LAW" means any applicable law in any jurisdiction in
        which any member of the Covenant Group conducts business which relates
        to the pollution or protection of the environment or harm to or the
        protection of human health or the health of animals or plants.

        "ENVIRONMENTAL PERMITS" means any permit, licence, consent, approval and
        other authorisation and the filing of any notification, report or
        assessment required under any Environmental Law for the operation of the
        business of any member of the Covenant Group conducted on or from the
        properties owned or used by the relevant member of the Covenant Group.

        "EVENT OF DEFAULT" means any circumstance described as such in Clause 19
        (Events of Default).

        "EXCESS CAPACITY NETWORK SERVICES" means the provision of network
        services, or agreement to provide network services, by a member of the
        UK Group in favour of one or more of its affiliates where such network
        services are only provided in respect of the capacity available to such
        a member of the UK Group in excess of that network capacity it requires
        to continue to provide current services to its existing and projected
        future customers and to allow it to provide further services to both its
        existing and projected future customers in accordance with the Business
        Plan.

        "EXCESS CASH FLOW" has the meaning given to it in Clause 17.2 (Financial
        Definitions).

        "EXCESS CASH FLOW PAYMENT AMOUNT" means for any financial year an amount
        equal to (x) 50 per cent. of Excess Cash Flow for such financial year
        less (y) the permanent reductions to the advances and loans under the
        Senior Bank Credit Agreement required to be made from such Excess Cash
        Flow for such financial year pursuant to clause 10.1 of the Senior Bank
        Credit Agreement.

        "EXECUTION DATE" means the date of this Agreement.

        "EXISTING PERFORMANCE BONDS" means:

        (a)     performance bonds in an aggregate amount of up to L7,100,000
                issued by Zurich Re at the request of certain members of the
                Target Group;

        (b)     performance bonds in an aggregate amount of up to L1,139,199
                issued by National Westminster Bank Plc at the request of
                certain members of the Target Group; and

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        (c)     performance bonds in an aggregate amount of up to L2,800,000
                issued by National Westminster Bank Plc at the request of
                certain members of the UK Group.

        "FACILITY" means the L1,300,000,000 multiple draw loan facility granted
        to the Borrower in this Agreement.

        "FACILITY OFFICE" means, in relation to the Agent, the office identified
        with its signature below or such other office as it may select by notice
        and, in relation to any Bank, the office notified by it to the Agent in
        writing prior to the date hereof (or, in the case of a Transferee, at
        the end of the Transfer Certificate to which it is a party as
        Transferee) or such other office as it may from time to time select by
        notice to the Agent.

        "FINAL ASSET TRANSFEREE" means the member of the Group, other than a
        member of the Covenant Group, who is the final transferee in respect of
        a transfer from the Parent, through one or more members of the Covenant
        Group.

        "FINAL MATURITY DATE" means 31 March 2006.

        "FINANCE DOCUMENTS" means this Agreement, the fee letters referred to in
        Clause 21.4 (Agency and other Fees), the Security Documents, the
        Security Trust Agreement, any Guarantor Accession Memorandum, the Parent
        Subordination Agreement, the Intermediate Parent Subordination
        Agreement, the Intercreditor Agreement and any other document designated
        as such by the Agent and the Borrower.

        "FINANCE PARTIES" means, at any time, the Agent, the Arrangers, the
        Security Trustee and the Banks at such time.

        "FINANCIAL INDEBTEDNESS" means any indebtedness for or in respect of:

        (a)     Indebtedness for Borrowed Money;

        (b)     any documentary or standby letter of credit facility or
                performance bond facility;

        (c)     any Hedging Agreement (and the amount of the Financial
                Indebtedness in relation thereto shall be calculated by
                reference to the mark-to-market valuation of such transaction at
                the relevant time); and

        (d)     (without double counting) any guarantee or indemnity for any of
                the items referred to in paragraphs (a) to (c) above.

        "FINANCIAL QUARTER" has the meaning given to it in Clause 17.2
        (Financial Definitions).

        "FIRST CAXTON SALE" means the transfer, after the Scheme Effective Date,
        of Caxton by the Target to CWC Holdings, as authorised by the Scheme,
        such a transfer being made at book value (subject to adjustment under
        Schedule 19 of the Transaction Agreement), on terms that the price
        payable by CWC Holdings is left outstanding to the extent that CWC
        Holdings does not assume at least a corresponding amount of indebtedness
        of the Target in consideration for the sale of Caxton.

        "FULL FUNDING DATE" has the meaning given to it in the Intercreditor
        Agreement as in effect on the Execution Date.

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        "FUNDED EXCLUDED SUBSIDIARY" means a UK Group Excluded Subsidiary which:

        (a)     indirectly receives funding from the Parent; and/or

        (b)     by way of dividend or other distribution, loan or payment of
                interest on or the repayment of the principal amount of any
                indebtedness owed by it, makes a payment to the Parent,

        in each case by way of a Funding Passthrough.

        "FUNDING PASSTHROUGH" means a series of transactions between the Parent,
        one or more members of the Covenant Group and a Funded Excluded
        Subsidiary where:

        (a)     in the case of funding being provided by the Parent to the
                Funded Excluded Subsidiary, that funding is:

                (i)     first made available by the Parent to the Intermediate
                        Parent by way of Subordinated Funding;

                (ii)    secondly made available by the Intermediate Parent to
                        the Borrower by way of Parent Funding; and

                (iii)   thirdly (if relevant) made available by one or more
                        transactions between members of the UK Group and finally
                        made available by a member of the UK Group to the Funded
                        Excluded Subsidiary in all such cases by way of either
                        the subscription for new equity capital, the advancing
                        of loans or capital contribution; or

        (b)     in the case of a payment to be made by the Funded Excluded
                Subsidiary to the Parent, that payment is:

                (i)     first made by the Funded Excluded Subsidiary to a member
                        of the UK Group, and thereafter between members of the
                        UK Group (as relevant), by way of dividend or other
                        distribution, loan or payment of interest on or the
                        repayment of the principal amount of any indebtedness
                        owed by such Funded Excluded Subsidiary or relevant UK
                        Group; and

                (ii)    finally made by a member of the UK Group to the Parent
                        by way of dividend or other distribution, loan or the
                        payment of interest on or the repayment of the principal
                        amount of any Subordinated Debt owed to the Parent by
                        the Intermediate Parent.

        "GROUP" means NTL Holdings and its subsidiaries.

        "GROUP STRUCTURE CHARTS" means:

        (a)     the structure chart showing (at least) the UK Group and the NTL
                Holding Group, in the agreed form; and

        (b)     the structure chart showing the Target Group (in a form similar
                to the structure chart referred to in paragraph (a) above).

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        "GUARANTOR" means the Parent, the Intermediate Parent and any other
        person who becomes a guarantor pursuant to Clause 37.

        "GUARANTOR ACCESSION MEMORANDUM" means a memorandum substantially in the
        form set out in Schedule 10.

        "HEDGING AGREEMENT" means an agreement in respect of an interest rate
        swap, currency swap, forward foreign exchange transaction, cap, floor,
        collar or option transaction or any other treasury transaction or any
        combination thereof or any other transaction entered into in connection
        with protection against or benefit from fluctuation in any rate or
        price.

        "HEDGING STRATEGY" means the hedging strategy adopted by the Borrower
        from time to time for the sole purpose of hedging the UK Group's
        then existing interest rate or currency risk exposure in connection with
        its ordinary business acting reasonably and prudently and not for
        speculative or proprietary trading purposes.

        "ICTA" means the Income and Corporation Taxes Act 1988.

        "INCREMENTAL AMOUNT" means the first L500,000,000 of Financial
        Indebtedness incurred pursuant to clause (i) of the definition of
        Permitted Indebtedness.

        "INDEBTEDNESS FOR BORROWED MONEY" means any indebtedness for or in
        respect of:

        (a)     moneys borrowed;

        (b)     any amount raised by acceptance under any acceptance credit
                facility;

        (c)     any amount raised pursuant to any note purchase facility or the
                issue of bonds, notes, debentures, loan stock or any similar
                instrument (for the avoidance of doubt excluding any such
                instrument issued solely by way of consideration for the
                acquisition of assets where such an instrument is not issued for
                the purpose of raising finance);

        (d)     any amount raised pursuant to any issue of shares which are
                expressed to be redeemable in cash (other than (i) shares
                redeemable after 31 March 2007 and (ii) redeemable shares issued
                by way of consideration for the acquisition of assets where such
                shares are not issued for the purpose of raising finance);

        (e)     the amount of any liability in respect of any lease or hire
                purchase contract which would, in accordance with generally
                accepted accounting principles in the relevant jurisdiction, be
                treated as a finance or capital lease;

        (f)     the amount of any liability in respect of any advance or
                deferred purchase agreement if the primary reason for entering
                into such agreement is to raise finance;

        (g)     receivables sold or discounted (other than on a non-recourse
                basis);

        (h)     any agreement or option to re-acquire an asset if the primary
                reason for entering into such agreement or option is to raise
                finance;

                                       11
<PAGE>   13
        (i)     any amount raised under any other transaction (including any
                forward sale or purchase agreement) having the commercial effect
                of a borrowing; and

        (j)     (without double counting) the amount of any liability in respect
                of any guarantee or indemnity for any of the items referred to
                in paragraphs (a) to (i) above.

        "INFORMATION MEMORANDUM" means the document concerning the CWC
        ConsumerCo Business and the UK Group and the Target Group which, at,
        inter alia, the Borrower's request and on its behalf, was prepared in
        relation to the Senior Bank Credit Agreement and distributed by the
        Arrangers to selected banks during May 2000 (as the same may be updated
        on or before the Syndication Date).

        "INTEREST PERIOD" means, save as otherwise provided herein:

        (a)     any of those periods mentioned in Clause 4.5 (Interest Periods);
                and

        (b)     in relation to an Unpaid Sum, any of those periods mentioned in
                Clause 23.1 (Default Interest Periods).

        "INITIAL ADVANCE DATE" means the first date on which Advances are made
        under the Facility.

        "INSTRUCTING GROUP" means:

        (a)     before any Advances have been made, a Bank or Banks whose
                Commitments amount in aggregate to more than sixty-six and two
                thirds per cent. of the Total Commitments; and

        (b)     thereafter, a Bank or Banks to whom in aggregate more than
                sixty-six and two thirds per cent. of the amount of the Loan is
                (or, immediately prior to its repayment, was then) owed.

        "INSURANCE PROCEEDS" means the proceeds of any insurance claim intended
        to compensate for damage to any asset or interruption of business
        received by any member of the UK Group after deducting:

        (a)     any reasonable out of pocket expenses incurred by any member of
                the UK Group in relation to such a claim; and

        (b)     proceeds relating to third party claims, which are applied
                towards meeting such claims.

        "INTELLECTUAL PROPERTY" means all patents, trade marks, service marks,
        designs, copyrights, design rights, moral rights, inventions,
        confidential information, know-how and other intellectual property
        rights and interests, whether registered or unregistered, and the
        benefit of all licences, applications and rights to use such
        intellectual property now or hereafter belonging to any member of the
        Covenant Group.

        "INTERCREDITOR AGREEMENT" means the agreement dated on or about the
        Execution Date between (inter alia) the Banks, the lenders under the
        Senior Bank Credit Agreement, the Agent and the Security Trustee, by
        which the Banks undertake certain obligations in respect of their rights
        under this Agreement.

                                       12
<PAGE>   14
        "INTER-COMPANY LOAN ASSIGNMENT" means the Assignment Agreement among the
        Parent, the Intermediate Parent and the Security Trustee dated on or
        about the Execution Date.

        "INTERMEDIATE SUBORDINATION AGREEMENT" means the subordination agreement
        in the agreed form between the Intermediate Parent (as the lender) and
        the Security Trustee, pursuant to which, whilst sums remain outstanding
        under the Finance Documents, no payment of interest, repayment of
        principal or any other payments of any kind can be made in respect of
        indebtedness owed by the Borrower to the Intermediate Parent, save for
        certain Permitted Payments.

        "INTRA-GROUP SERVICES" means:

        (a)     the provision of services by a member of the UK Group to a
                member of the Group, where such member of the Group requires
                those services to enable it to carry on its business and
                PROVIDED THAT the consideration for the provision thereof is in
                the reasonable opinion of the Borrower no less than the cost
                (save in any immaterial respect) incurred by such a member of
                the UK Group in providing such services;

        (b)     the provisions of services constituted by NTL Group Limited
                employing personnel, acting as agent to buy equipment or other
                assets or trade with residential customers on behalf of other
                members of the Group, where the costs of such employment or
                purchasing and the costs and revenues generated by such trading
                are in the reasonable opinion of the Borrower reimbursed by or
                distributed (save in any immaterial respect) to the relevant
                Group member; and

        (c)     the provision of services constituted by NTL Business Limited
                (formerly named NTL Technologies Limited) acting as agent to
                trade with business customers on behalf of other members of the
                Group, where the costs and revenues of such trading are in the
                reasonable opinion of the Borrower reimbursed by or distributed
                (save in any immaterial respect) to the relevant Group member.

        "IRELAND" means the Republic of Ireland.

        "LIBOR" means, in relation to any amount to be advanced to or owing by
        an Obligor under the Finance Documents on which interest for a given
        period is to accrue:

        (a)     the percentage rate per annum equal to the offered quotation
                which appears on the page of the Telerate Screen which displays
                the British Bankers Association Interest Settlement Rate for
                sterling (being currently "3750") or the currency of any Unpaid
                Sum for such period as of 11.00 a.m. on the Quotation Date for
                such period or, if such page or such service shall cease to be
                available, such other page or such other service for the purpose
                of displaying the British Bankers Association Interest
                Settlement Rate for sterling (or the currency of such Unpaid
                Sum) as the Agent, after consultation with the Banks and the
                Borrower, shall select; or

        (k)     if no quotation for sterling (or the currency of such Unpaid
                Sum) and the relevant period is displayed and the Agent has not
                selected an alternative service on which a quotation is
                displayed, the arithmetic mean (rounded

                                       13
<PAGE>   15
                upwards to five decimal places) of the rates (as notified to the
                Agent) at which each of the Reference Banks was offering to
                prime banks in the London interbank market deposits in sterling
                (or the currency of such Unpaid Sum) for such period as of 11.00
                a.m. on the Quotation Date for such period.

        "LICENCES" means each licence which is material to the conduct of the
        business of any member of the Covenant Group.

        "LMA" means the Loan Market Association.

        "LOAN" means, at any time, the aggregate principal amount of the
        outstanding Advances at such time.

        "MANDATORY COST RATE" means the rate determined in accordance with
        Schedule 7 (Mandatory Costs).

        "MARGIN" means 4.50 per cent. per annum, provided that the Margin shall
        increase by 0.50 per cent. per annum on the three month anniversary of
        the Initial Advance Date and by an additional 0.50 per cent. per annum
        on each subsequent three month anniversary of the Initial Advance Date.

        "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
        business, operations, property or condition (financial or otherwise) of
        a Covenant Group Obligor or the UK Group taken as a whole or if on or
        prior to the Pushdown Date, the UK Group taken as a whole (assuming that
        the Pushdown had occurred on the Execution Date) or (b) the ability of
        any Covenant Group Obligor to perform its material obligations under the
        Finance Documents to which it is a party.

        "MATERIAL COMMERCIAL CONTRACTS" means any commercial agreements entered
        into by any member of the Covenant Group which are reasonably likely to
        be material to the business or prospects of the Covenant Group taken as
        a whole.

        "MEETINGS" means each of the Court Meeting and EGM.

        "NET AVERAGE REVENUE CONTRIBUTIONS" means, at any time:

        (a)     the aggregate of the Average Revenue Contributions of all assets
                disposed of by members of the UK Group under paragraph (f) of
                the definition of Permitted Disposals,

                less

        (b)     the aggregate of the estimated Average Revenue Contributions of
                all assets acquired by members of the UK Group either in
                exchange for, or out of the proceeds of the disposal of, assets
                disposed of under paragraph (f) of the definition of Permitted
                Disposals (such estimated Average Revenue Contributions to be
                reasonably agreed between the Borrower and the Agent on the
                basis of the revenues such acquired assets could have reasonably
                been expected to have generated for the two financial years of
                the Borrower immediately preceding the date of their
                acquisition, had such assets been owned by the relevant member
                of the UK Group throughout those two financial years).

                                       14
<PAGE>   16
        "NEW YORK OFFICE EXPENSES" means, in relation to any financial year of
        NTL Holdings, the expenses (including taxes) so described and specified
        in relation to such financial year in the Business Plan.

        "NON-RECOURSE BANK INDEBTEDNESS" means any Financial Indebtedness
        incurred by a Non-Recourse Subsidiary from financial institutions
        pursuant to a bank credit or loan agreement where the liabilities of
        such Non-Recourse Subsidiary in respect of such Financial Indebtedness
        are not directly or indirectly the subject of a guarantee, indemnity or
        any other form of assurance, undertaking or support from any other
        member of the Group (other than the subsidiaries of such person).

        "NON-RECOURSE SUBSIDIARY" means a person which is a member of the Group
        (other than a member of the Covenant Group, a member of the Target
        Group, the Parent and any direct or indirect parent company of the
        Parent) and whose creditors have no recourse to any other member of the
        Group (other than the subsidiaries of such person) in respect of any
        Financial Indebtedness of that person or any of its subsidiaries (other
        than recourse to any member of the Group which has granted security over
        its shares or other interests in such a Non-Recourse Subsidiary
        beneficially owned by it provided that such recourse is limited to the
        realisation of such security).

        "NOTICE OF DRAWDOWN" means a notice substantially in the form set out in
        Schedule 4 (Notice of Drawdown).

        "NOTICE PERIOD" means the period commencing ten Business Days before the
        proposed date for the making of an Advance and ending 2.00 p.m. three
        Business Days before the proposed date for the making of such Advance
        (or such later time as all of the Banks may agree).

        "NTL CC NOTES" means, to the extent such have been issued in either the
        domestic or international capital markets, the bonds, notes or similar
        public debt instruments issued by the Parent and outstanding on the
        Execution Date.

        "NTL HOLDING GROUP" means NTL Holdings and the Borrower's other holding
        companies.

        "NTL HOLDINGS" means NTL Incorporated (formerly named NTL Holdings
        Incorporated), a company incorporated in Delaware which became the
        holding company of NTL Delaware Inc. with effect from the effective date
        of the CWC Holdings Capital Reduction.

        "NTL DELAWARE INC." means NTL (Delaware) Incorporated (formerly named
        NTL Incorporated), a company incorporated in Delaware.

        "NTL TRIANGLE ACCESSION" means the accession of the members of the NTL
        Triangle Sub-Group as guarantors under the Senior Bank Credit Agreement
        in accordance with Clause 34.5 (NTL Triangle Accession) of the Senior
        Bank Credit Agreement.

        "NTL TRIANGLE SUB-GROUP" means NTL Triangle LLC and its subsidiaries
        from time to time.

                                       15
<PAGE>   17
        "NTLIH" means NTL Investment Holdings Limited, a company incorporated in
        England and Wales with company number 3173552.

        "OBLIGORS" means the Borrower and the Guarantors.

        "OFTEL" means the Director General of Telecommunications and/or any
        other successor or other body or authority having, inter alia, the
        right, function and/or obligation to monitor and enforce compliance with
        the provisions of licences issued pursuant to the Telecommunications Act
        1984.

        "ORIGINAL FINANCIAL STATEMENTS" means:

        (a)     in relation to the Borrower, its audited consolidated financial
                statements for its financial year ended 31 December 1998; and

        (b)     in relation to Intermediate Parent, its audited unconsolidated
                financial statements for the financial year ended 31 December
                1998; and

        (c)     in relation to the Target (and insofar as they relate to the CWC
                ConsumerCo Business), the consolidated financial statements of
                the Target and its subsidiaries, prepared by its auditors, for
                the financial year ended 31 March 1999 (as set out in the
                Accountants Report) and the consolidated financial statements of
                the Target and its subsidiaries, prepared by its management for
                the six month period ended 30 September 1999 (as set out in the
                CWC Circular).

        "OVERDRAFT FACILITY" means any facility provided by a United Kingdom
        clearing bank to a member of the UK Group.

        "PANEL" means the Panel on Takeovers and Mergers.

        "PARENT COVENANT GROUP" means the Parent and each Guarantor.

        "PARENT FUNDING" means:

        (a)     the subscription by the Intermediate Parent for new equity
                capital of the Borrower; and

        (b)     Subordinated Debt incurred by the Borrower from the Intermediate
                Parent.

        "PARENT SUBORDINATION AGREEMENT" means the subordination agreement in
        the agreed form between the Parent (as the lender) and the Security
        Trustee, pursuant to which, whilst sums remain outstanding under the
        Finance Documents, no payment of interest, repayment of principal or any
        other payments of any kind can be made in respect of indebtedness owed
        by the Borrower to the Parent, save for certain Permitted Payments.

        "PARTICIPATING MEMBER STATE" means any member state of the European
        Union which has adopted the euro as its lawful currency at the relevant
        time.

        "PERMITTED ACQUISITIONS" means:

        (a)     the Acquisition or any acquisitions necessary to effect either
                the issues or transfers of shares referred to in paragraphs (a),
                (b), (c), (d), (e) and (f) of the

                                       16
<PAGE>   18
                definition of the Pushdown set forth in the Senior Bank Credit
                Agreement as in effect on the Execution Date;

        (b)     with respect to any member of the UK Group at any time, any
                acquisition of (or of any interests in) (A) companies,
                partnerships, consortia, joint ventures or other arrangements or
                (B) businesses, licences, revenues or assets provided that:

                (i)     the relevant company, partnership, consortium, joint
                        venture or other arrangement or the acquired business,
                        licence, revenues or asset engages in, or, as the case
                        may be, relates to, a Cable Business;

                (ii)    if the total consideration (including, without
                        limitation, assumed debt, deferred consideration and any
                        consideration comprising of the issue of either debt
                        instruments or shares) for such acquisition either (A)
                        exceeds L80,000,000 (or its equivalent in other
                        currencies) or (B) when aggregated with the
                        consideration (determined as aforesaid) arising in
                        respect of all such other acquisitions (save for any
                        acquisitions permitted by paragraphs (a), (c), (d), (e)
                        or (g) of this definition of Permitted Acquisitions)
                        made by members of the UK Group during the then current
                        financial year, exceeds L100,000,000 (or its equivalent
                        in other currencies):

                        (1)   the Borrower has provided the Agent with a pro
                              forma business plan (over a period ending at least
                              one year after the Final Maturity Date), together
                              with the key operating assumptions relating
                              thereto, has provided representations to the
                              Finance Parties (in the form agreed by the Agent
                              (acting reasonably) with respect thereto) in
                              relation to such business plan and has confirmed
                              that no Event of Default or Potential Event of
                              Default has occurred and is continuing or would
                              occur following such acquisition;

                        (2)   the pro forma business plan demonstrates pro forma
                              compliance with the financial covenants set out in
                              Clause 17 (Financial Condition) until the Final
                              Maturity Date; and

                        (3)   the pro forma business plan demonstrates that
                              amounts available for drawdown under the Senior
                              Bank Credit Agreement (following any planned
                              drawdown to finance the contemplated acquisition)
                              and under other financing sources committed to the
                              UK Group are sufficient to meet the UK Group's
                              projected financing needs until the Final Maturity
                              Date (excluding the amount of principal to be
                              repaid in respect to the Senior Bank Credit
                              Agreement and this Agreement on the respective
                              maturity date thereof);

        (c)     the incorporation of a company or the acquisition of the shares
                in a newly incorporated company from its subscribing
                shareholders, where such a company at all times carries on
                business in an administrative capacity, supporting the business
                of the UK Group (as carried on in accordance with

                                       17
<PAGE>   19
                Clause 18.25 (Change of Business) or acts as a holding company
                for a Permitted Acquisition within paragraph (b) above;

        (d)     any acquisition made by a member of the UK Group pursuant to the
                implementation of an Asset Passthrough or a member of the UK
                Group pursuant to a Funding Passthrough;

        (e)     any acquisition by a member of the UK Group pursuant to a
                Permitted Disposal within paragraphs (g) or (h) of the
                definition thereof;

        (f)     any acquisition by any member of the UK Group of the minority
                shareholdings in Northampton Cable Television Limited and/or
                Herts Cable Limited; and

        (g)     any acquisition of assets as referred to in paragraph (a) of the
                definition of Asset Adjustment Payments.

        "PERMITTED DISPOSAL" means any disposal:

        (a)     made in the ordinary and usual course of business;

        (b)     on arm's length commercial terms of an asset by a member of the
                UK Group who is not an Obligor;

        (c)     for cash (if the relevant asset has any value) on arm's length
                commercial terms of any surplus or obsolete assets no longer
                required for the efficient operation of the business of the UK
                Group;

        (d)     of cash, where such a disposal is not otherwise prohibited by
                the Finance Documents;

        (e)     by way of a realisation of a Permitted Investment;

        (f)     on (A) arm's length commercial terms for cash consideration or
                (B) in exchange for similar assets located in either the United
                Kingdom or Ireland which the Agent (acting reasonably)
                determines to be of a comparable or superior quality, provided
                that:

                        (i)     in each case the Net Average Revenue
                                Contributions at no time exceed 15 per cent; and

                        (ii)    the proceeds of any disposal under (A) of this
                                paragraph (f) are applied in accordance with
                                Clause 9.2 (Mandatory Prepayment from Asset
                                Disposals);

        (g)     of an interest in real property by way of a lease or licence
                granted by a member of the UK Group to a member of the UK Group;

        (h)     by a member of the UK Group to another member of the UK Group;

        (i)     (by way of share sale) of any UK Group Excluded Subsidiary or
                any Target Group Excluded Subsidiary (other than Cable &
                Wireless Communications (B) Limited) (or any interest therein);

                                       18
<PAGE>   20
        (j)     necessary to effect the transfers of shares referred to in
                paragraphs (d), (e) and (j) of the definition of the Pushdown;

        (k)     (by way of share sale) of NTL Insurance Limited, for fair market
                value, to any member of the NTL Holding Group;

        (l)     (by way of share sale) of Lanbase Espania SL, for fair market
                value;

        (m)     of any assets as referred to in paragraph (b) of the definition
                of Asset Adjustment Payments; and

        (n)     of any assets pursuant to the implementation of an Asset
                Passthrough or of any funds received pursuant to the
                implementation of a Funding Passthrough.

         For the avoidance of doubt, in no event shall the transfer of the
         shares of the Borrower or any Guarantor to a person which is not a
         Guarantor constitute a Permitted Disposal.

        "PERMITTED ENCUMBRANCE" means:

        (a)     any Encumbrance specified in Schedule 5 (Existing Encumbrances),
                if the principal amount thereby secured is not increased;

        (b)     any Encumbrance over or affecting any asset acquired by a member
                of the UK Group after the date hereof and subject to which such
                asset is acquired, if:

                (i)     such Encumbrance was not created in contemplation of the
                        acquisition of such asset by a member of the UK Group;
                        and

                (ii)    the Financial Indebtedness secured by such Encumbrance
                        at all times falls within paragraph (o) of the
                        definition of Permitted Indebtedness;

        (c)     any Encumbrance over or affecting any asset of any company
                (other than a member of the Target Group) which becomes a member
                of the UK Group after the date hereof, where such Encumbrance is
                created prior to the date on which such company becomes a member
                of the UK Group, if:

                (i)     such Encumbrance was not created in contemplation of the
                        acquisition of such company; and

                (ii)    the Financial Indebtedness secured by such Encumbrance
                        at all times falls within paragraph (l) or (o) of the
                        definition of Permitted Indebtedness;

        (d)     any netting or set-off arrangement entered into by the
                Intermediate Parent or any member of the UK Group in the normal
                course of its banking arrangements for the purpose of netting
                debit and credit balances;

        (e)     any right of set-off or any title transfer or retention of title
                arrangement entered into by the Intermediate Parent or any
                member of the UK Group in the normal course of its trading
                activities on the counterparty's standard or usual terms (where
                such terms reasonably accord with the terms generally adopted in
                the market to which such a trading activity relates);

                                       19
<PAGE>   21
        (f)     any lien arising by operation of law or by a contract having a
                similar effect and in each case arising or entered into in the
                normal course of business, if such lien is discharged within
                thirty days of arising;

        (g)     any Encumbrance created pursuant to, arising under or evidenced
                by the Security Documents;

        (h)     any Encumbrance granted by a member of the UK Group over the
                shares or other interests it holds in, or over the assets
                attributable to, a Project Company;

        (i)     any Encumbrance created by any arrangements referred to in
                paragraph (e) or paragraph (f) of the definition of Indebtedness
                for Borrowed Money;

        (j)     any Encumbrance arising pursuant to an order of attachment, an
                injunction restraining the disposal of assets or any similar
                legal process in each case arising in connection with court
                proceedings being diligently conducted by a member of the
                Covenant Group in good faith;

        (k)     any Encumbrance over cash deposited as security for the
                obligations of a member of the UK Group in respect of a
                performance bond, guarantee, standby letter of credit or similar
                facility entered into by such a member of the UK Group in the
                ordinary course of business;

        (l)     any Encumbrance on assets of the UK Group or the Intermediate
                Parent securing the obligations under the Senior Bank Credit
                Agreement;

        (m)     any Encumbrance securing Permitted Indebtedness falling within
                paragraph (i) of the definition of that term;

        (n)     any Encumbrance constituted by a rent deposit deed entered into
                on arm's length terms and in the ordinary course of business
                securing the obligations of a member of the UK Group in relation
                to property leased to a member of the UK Group; and

        (o)     any Encumbrance securing Permitted Indebtedness falling within
                paragraph (p) of the definition of that term.

        "PERMITTED INDEBTEDNESS" means any Financial Indebtedness:

        (a)     arising under or permitted pursuant to the Finance Documents;

        (b)     of the Intermediate Parent, any other Guarantor (other than the
                Parent) or the Borrower, in respect of the Subordinated Debt and
                provided, in the case of the Intermediate Parent and the
                Borrower, that the indebtedness in respect of it constitutes
                Assigned Debt;

        (c)     of a member of the UK Group, from the Borrower or any other
                member of the UK Group;

        (d)     of members of the UK Group under the Senior Bank Credit
                Agreement which does not exceed L2,500,000,000 at any time
                outstanding less the amount of permanent repayment of amounts
                outstanding thereunder and/or (without

                                       20
<PAGE>   22
                duplication) permanent reductions in the commitments thereunder
                (whether the occurring prior to the Pushdown Date or
                thereafter);

        (e)     of the UK Group arising in relation to the implementation of the
                Hedging Strategy;

        (f)     of the Parent, under the NTL CC Notes;

        (g)     of the Parent, where:

                (i)     such Financial Indebtedness does not have any scheduled
                        repayments or other amortisations prior to, and has a
                        final maturity date no earlier than, the date one year
                        after the Final Maturity Date;

                (ii)    after giving effect thereto, the requirements of
                        subclause 17.1.1 through 17.1.4 would be satisfied on a
                        pro forma basis; and

                (iii)   Capital Event Proceeds of such Financial Indebtedness
                        are applied by the Borrower in cancellation of the Loan
                        in accordance with Clause 9.6 (Application of Proceeds)
                        to the extent required by Clause 9.5 (Mandatory
                        Prepayment from Capital Event Proceeds);

        (h)     of the Covenant Group, arising under Permitted Loans and
                Guarantees;

        (i)     on and after the Pushdown Date, of the UK Group, arising under
                one or more credit facilities which does not exceed
                L1,000,000,000 in the aggregate principal amount at any one time
                outstanding less the amount of permanent repayment of amounts
                outstanding thereunder and/or (without duplication) permanent
                reductions in the commitments thereunder (it being understood
                that the Financial Indebtedness permitted by this clause (i)
                may, but shall not be required to be, incurred under the Senior
                Bank Credit Agreement);

        (j)     of the UK Group, falling within paragraph (e) of the definition
                of Indebtedness for Borrowed Money ("FINANCE LEASE DEBT") which,
                when aggregated with any other Finance Lease Debt incurred in
                reliance on this paragraph (j) by each member of the UK Group
                does not exceed L45,000,000 (or its equivalent);

        (k)     arising in respect of Existing Performance Bonds;

        (l)     of any company which becomes a member of the UK Group after the
                date hereof, where such Financial Indebtedness arose prior to
                the date on which such company becomes a member of the UK Group,
                if:

                (i)     such Financial Indebtedness was not created in
                        contemplation of the acquisition of such company;

                (ii)    the aggregate amount of all Financial Indebtedness
                        falling within this paragraph (l) does not exceed
                        L20,000,000 (or its equivalent); and

                (iii)   such Financial Indebtedness is repaid within three
                        months of such company becoming a member of the UK
                        Group;

                                       21
<PAGE>   23
        (m)     of members of the UK Group under the Secured Ancillary
                Facilities or in relation to any documentary or standby letter
                of credit facility or performance bond facility made available
                by a financial institution on an unsecured basis PROVIDED THAT
                the aggregate indebtedness of all members of the UK Group in
                relation to such facilities and the Secured Ancillary Facilities
                does not exceed L40,000,000 (or its equivalent);

        (n)     of the UK Group in respect of Permitted Overdraft Borrowings,
                provided that the aggregate amount of such Financial
                Indebtedness does not exceed L20,000,000 (or its equivalent);

        (o)     arising in relation to either an Asset Passthrough or a Funding
                Passthrough PROVIDED THAT any such Financial Indebtedness is
                Subordinated Debt if it is owed by a Covenant Group Obligor to a
                member of the Group and Assigned Debt if it is owed by the
                Borrower to the Intermediate Parent or by the Intermediate
                Parent to the Parent; and

        (p)     not falling within paragraphs (a) through (o) above, of any
                member of the UK Group, PROVIDED THAT the aggregate amount of
                such Financial Indebtedness does not exceed L20,000,000 (or its
                equivalent).

        "PERMITTED INVESTMENTS" means:

        (a)     any debt securities which are readily marketable and which are
                rated at least "AA" by Standard & Poor's Corporation or "Aa2" by
                Moody's Investors Service, Inc.;

        (b)     certificates of deposit and deposits with banks and bankers
                acceptances in each case with a bank rated at least A- (or the
                equivalent thereof) by Moody's Investors Service, Inc. or
                Standard & Poor's Corporation; or

        (c)     commercial paper rated at least A-1 (or the equivalent thereof)
                by Moody's Investors Service, Inc. or Standard & Poor's
                Corporation.

        "PERMITTED LOANS AND GUARANTEES" means:

        (a)     trade credit or guaranties or indemnities granted in the
                ordinary course of business on usual and customary terms;

        (b)     loans made by any member of the UK Group to its employees either
                (i) in the ordinary course of its employees' employment or (ii)
                to fund the exercise of share options by its employees;

        (c)     loans permitted pursuant to subclauses (b) and (c) of the
                definition of Permitted Indebtedness;

        (d)     loans made by a member of the UK Group to a member of the
                Covenant Group where the proceeds of such a loan are either
                directly or indirectly used to fund a Permitted Payment;

        (e)     loans made, credit granted and guarantees or indemnities given
                in an aggregate amount not exceeding L200,000 (or its
                equivalent);

                                       22
<PAGE>   24
        (f)     any loan made to a UK Group Excluded Subsidiary made out of
                Available Excess Cash Flow;

        (g)     any guarantee or indemnity given by a member of the UK Group in
                respect of any Permitted Indebtedness, or other obligation not
                restricted by the terms of the Finance Documents, of another
                member of the UK Group;

        (h)     credits granted by any member of the UK Group to a member of the
                Group, where the indebtedness outstanding thereunder relates to
                Intra-Group Services; and

        (i)     loans made to either of the Telecential Partnerships outstanding
                on the Execution Date or made in accordance with Clause 18.16
                (Telecential Partnerships).

        "PERMITTED OVERDRAFT BORROWINGS" means Financial Indebtedness in respect
        of an Overdraft Facility if such Financial Indebtedness:

        (a)     has been incurred solely for short term cash management purposes
                in the ordinary course of business;

        (b)     is fully repaid within three Business Days of it having been
                incurred (from available funds other than Permitted Overdraft
                Borrowings); and

        (c)     is not outstanding at any time between the date on which the
                Pushdown Condition is satisfied and the Pushdown Date.

        "PERMITTED PAYMENT" means a Restricted Payment which is:

        (a)     made after 31 December 2003 and funded from Available Excess
                Cash Flow;

        (b)     made, at any time, to fund the payment of New York Office
                Expenses, the amount of such payments during each financial year
                of the Borrower being no greater than the amount of New York
                Office Expenses so attributed for that financial year in the
                Business Plan;

        (c)     made, at any time, to fund the cash payment obligations of the
                Parent or any other member of the NTL Holding Group in relation
                to:

                (i)     the NTL CC Notes;

                (ii)    any Permitted Refinancings within either paragraph (a)
                        of the definition thereof or any refinancing of this
                        Facility;

                (iii)   subject to the NTL Triangle Accession having been
                        completed, any Permitted Refinancings within paragraph
                        (c) of the definition thereof; or

                (iv)    any bonds, notes or similar public debt instruments
                        issued by any member of the NTL Holding Group after the
                        date hereof, in either the domestic or the international
                        capital markets, to the extent that the proceeds thereof
                        have been invested into the Borrower;

                                       23
<PAGE>   25
                which, in either case, has fallen due or will fall due within
                five Business Days; or

        (d)     made pursuant to an Asset Passthrough and funded solely from
                cash generated by entities outside of the Covenant Group or made
                available pursuant to a Funding Passthrough and funded solely
                from cash generated by entities outside of the Covenant Group;
                or

        (e)     deposited in the Charged Account and:

                (i)     represents the proceeds from a payment of interest on
                        Subordinated Debt, being paid by the Borrower to the
                        Intermediate Parent and then paid by the Intermediate
                        Parent to the Parent and by the Parent to NTL (Delaware)
                        Inc. in accordance with arrangements the Group has with
                        the Inland Revenue; and

                (ii)    is reinvested in the Borrower within ten Business Days
                        of the date of the Restricted Payment, such an
                        investment being by way of Subordinated Funding or
                        Parent Funding;

        (f)     of an amount of up to L2,000,000 made to NTL, Inc. to finance
                payments to be made by NTL, Inc. to Cable & Wireless in relation
                to certain Acquisition overhead costs; or

        (g)     made out the proceeds of an Asset Adjustment Payment referred to
                in paragraph (b) of the definition thereof received by a member
                of the Target Group; or

        (h)     made by either a member of the Target Group or NTL Business
                Limited where the proceeds of such a Restricted Payment are to
                be used by NTL Holdings to make a Debt Adjustment Payment to
                Cable & Wireless in accordance with paragraph (b) of the
                definition thereof,

        and provided in each case that such payment shall only be permitted if
        and to the extent that no Event of Default has occurred (and is
        continuing) or would result from the making of such payment.

        "PERMITTED REFINANCINGS" means any refinancing of:

        (a)     the NTL CC Notes by the Parent;

        (b)     the Diamond Notes, by the Parent; or

        (c)     the Triangle Notes, by the Parent;

        PROVIDED THAT, in each case, the final maturity date of the indebtedness
        incurred in respect of such refinancing is a date no earlier than the
        day falling one year after the Final Maturity Date.

        "PLEDGE AGREEMENT" means the Pledge Agreement in agreed form executed or
        to be executed by the Parent in favour of the Security Trustee relating
        to 100% of the capital stock of the Intermediate Parent.

                                       24
<PAGE>   26
        "POTENTIAL EVENT OF DEFAULT" means any event which would become (with
        the passage of time, the giving of notice, the making of any
        determination hereunder or any combination thereof) an Event of Default.

        "PREPAYMENT ESCROW ACCOUNT" means an account, bearing interest at a
        commercially reasonable rate in relation to the given circumstances,
        held with the Agent (or such other financial institution reasonably
        acceptable to the Agent) in the name of the Borrower, over which the
        Borrower has granted or will grant security in favour of the Security
        Trustee and into which sums are deposited in accordance with Clause 9
        (Mandatory Prepayment).

        "PROJECT COMPANY" means a subsidiary of the Borrower (or a person in
        which a subsidiary of the Borrower has an interest), which has a special
        purpose and whose creditors have no recourse to any other member of the
        Covenant Group in respect of any Financial Indebtedness of that person
        or any of its subsidiaries (other than recourse to any member of the UK
        Group which has granted security over its shares or other interest in
        such a Project Company beneficially owned by it provided that such
        recourse is limited to the realisation of such security).

        "PROPERTIES" means the properties owned or leased by members of the UK
        Group.

        "PUSHDOWN" has the meaning given to it in the Senior Bank Credit
        Agreement as in effect on the Execution Date.

        "PUSHDOWN CONDITION" means that each of the following conditions has
        been satisfied:

        (a)     the Pushdown has been completed in all material respects in
                accordance with the terms of the Senior Bank Credit Agreement as
                in effect on the Execution Date;

        (b)     on the Pushdown Date, and after giving effect to the Pushdown,
                all representations and warranties set forth in this Agreement
                are true in all material respects;

        (c)     on the Pushdown Date and prior to giving effect to the Pushdown,
                the Target Group shall be in compliance with all of the
                covenants set forth in the Senior Bank Credit Agreement as in
                effect on the Execution Date;

        (d)     on the Pushdown Date, and after giving effect to the Pushdown,
                no Event of Default or Potential Event of Default shall be
                continuing; and

        (e)     the Agent shall have received a certificate of the Borrower
                certifying that the conditions set forth in paragraphs (a)
                through (d) above have been satisfied.

        "PUSHDOWN DATE" means the date upon which the Pushdown is completed.

        "QUALIFYING LENDER" means:

        (a)     a Bank which is (on the date a payment of interest falls due
                under a Finance Document) beneficially entitled to and within
                the charge to United Kingdom corporation tax in respect of that
                payment provided that the advance in respect of which the
                payment is made was made by a bank for the purposes of section
                349 of ICTA at the time that the advance was made; or

                                       25
<PAGE>   27
        (b)     a Treaty Lender.

        "QUARTER DATE" has the meaning given to it in Clause 17.2 (Financial
        Definitions).

        "QUOTATION DATE" means, in relation to any period for which an interest
        rate is to be determined under the Finance Documents, the day on which
        quotations would ordinarily be given by prime banks in the London
        Interbank Market for deposits in the currency of the relevant sum for
        delivery on the first day of that period, PROVIDED THAT, if, for any
        such period, quotations would ordinarily be given on more than one date,
        the Quotation Date for that period shall be the last of those dates.

        "REFERENCE BANKS" means:

        (a)     whilst the financial institutions named in Schedule 1 (The
                Banks) are the only Banks hereunder, the principal London
                offices of The Chase Manhattan Bank; and

        (b)     at any other time, the principal London offices of The Chase
                Manhattan Bank, and the principal London offices of two other
                Banks agreed between the Agent and the Borrower on or before the
                Syndication Date,

        or such other bank or banks as may from time to time be agreed between
        the Borrower and the Agent acting on the instructions of an Instructing
        Group.

        "RELEVANT PERIOD" has the meaning given to it in Clause 17.2 (Financial
        Definitions).

        "REMEDY RESTRICTION PERIOD" means any period during which the rights and
        remedies of the Banks which would otherwise arise by reason of an Event
        of Default (whether or not such Event of Default is deemed waived
        pursuant to the Intercreditor Agreement) are restricted, delayed or
        suspended, or the Banks are required to waive (or are deemed to have
        waived) conditions to drawdown hereunder, pursuant to the terms of the
        Intercreditor Agreement as in effect on the Execution Date.

        "REPEATED REPRESENTATIONS" means each of the representations set out in
        Clause 15.2 (Status and Due Authorisation), Clause 15.4 (No Immunity),
        Clause 15.7 (Binding Obligations), Clause 15.9 (No Material Defaults) to
        Clause 15.11 (Audited Financial Statements), Clause 15.16 (Budgets),
        Clause 15.21 (Execution of this Agreement), Clause 15.25 (Intellectual
        Property), Clause 15.26 (Security Interest) and Clause 15.27 (Group
        Structure).

        "REQUIRED PERCENTAGE" means:

        (a)     in the case of the first L700,000,000 of Capital Event Proceeds
                (other than Capital Event Proceeds arising from the Incremental
                Amount) received by the Group after the Execution Date, 50 per
                cent.;

        (b)     in the case of Capital Event Proceeds (other than Capital Events
                Proceeds arising from the Incremental Amount) received by the
                Group after the Execution Date which exceed L700,000,000, 70 per
                cent.; and

        (c)     in the case of Capital Event Proceeds arising from the
                Incremental Amount, 100 per cent.

                                       26
<PAGE>   28
        "RESERVATIONS" means:

        (a)     the principle that equitable remedies are remedies which may be
                granted or refused at the discretion of the court, the
                limitation of enforcement by laws relating to bankruptcy,
                insolvency, liquidation, reorganisation, court schemes,
                moratoria, administration and other laws generally affecting the
                rights of creditors, the time barring of claims under any
                applicable law, the possibility that an undertaking to assume
                liability for or to indemnify against non-payment of any stamp
                duty or other tax may be void, defences of set-off or
                counterclaim and similar principles;

        (b)     anything analogous to any of the matters set out in paragraph
                (a) above under any laws of any applicable jurisdiction; and

        (c)     the reservations in or anything disclosed by any of the legal
                opinions delivered pursuant to Clause 2.4 (Conditions Precedent)
                and Schedule 3 (Conditions Precedent).

        "RESTRICTED GROUP" means any member of the Group other than a member of
        the UK Group.

        "RESTRICTED PAYMENT" means any payment by a member of the Covenant Group
        to a member of the Restricted Group whether by way of dividend or other
        distribution, loan, interest or the payment of interest on or repayment
        of the principal amount of inter-company Indebtedness for Borrowed
        Money.

        "SCHEME" means the scheme of arrangement under Section 425 in relation
        to the Target, as detailed in appendix 12 of the CWC Circular (or with
        such modifications, additions or conditions as may be approved or
        imposed by the Court).

        "SCHEME DOCUMENTS" means the CWC Circular, including the notice of Court
        Meeting and of the EGM set out therein and the resolutions of such Court
        Meeting and EGM.

        "SCHEME EFFECTIVE DATE" the date upon which an office copy of the order
        of the Court sanctioning the Scheme and the cancellation of the Target's
        shares covered by the Scheme was registered by the Registrar of
        Companies being 12 May 2000.

        "SECOND CAXTON SALE" means the transfer of Caxton by CWC Holdings to C&W
        (UK) Holdings in part satisfaction of the CWC Holdings Capital
        Reduction.

        "SECTION 425" means section 425 of the Companies Act 1985.

        "SECURED ANCILLARY FACILITIES" has the meaning given to it in the Senior
        Bank Credit Agreement as in effect on the Execution Date.

        "SECURITY" means the security from time to time constituted by or
        pursuant to the Security Documents and the guarantees provided
        hereunder.

                                       27
<PAGE>   29
        "SECURITY DOCUMENTS" means the Pledge Agreement, the Share Charge, the
        Inter-Company Loan Assignment and any other agreement or document
        pursuant to which any member of the Group creates any security interest
        in favour of the Finance Parties (or the Security Trustee on their
        behalf) for all or any part of the obligations of the Obligors or any of
        them under any of the Finance Documents.

        "SECURITY TRUST AGREEMENT" means the security trust agreement entered
        into or to be entered into in connection herewith between the Parent,
        the Intermediate Parent and the Security Trustee.

        "SENIOR AGENT" means the person from time to time appointed as agent of
        the banks under the Senior Bank Credit Agreement.

        "SENIOR BANK CREDIT AGREEMENT" means the L2,500,000,000 Credit Agreement
        dated on or about the date hereof among the Borrower, NTL Technologies,
        the Parent, Chase Manhattan Plc and Morgan Stanley Dean Witter Bank
        Limited, as arrangers and joint book managers, Chase Manhattan
        International Limited, as agent and security trustee and others.

        "SHARE CHARGE" means the share charge in agreed form executed or to be
        executed by the Intermediate Parent in favour of the Security Trustee
        relating to 65% of the issued share capital of the Borrower.

        "SPECIFIED FINANCIAL INDEBTEDNESS" means any Financial Indebtedness of
        the Parent or any Guarantor (other than arising in respect of any
        letters of credit or performance bonds issued at the request of a member
        of the Group in the ordinary course of its business) arising under (a)
        the NTL CC Notes, (b) any Permitted Refinancing and (c) any Financial
        Indebtedness incurred to refinance the Facility in whole or in part.

        "STATUTORY REQUIREMENTS" means any applicable provision or requirement
        of any Act of Parliament including the Telecommunications Act 1984, the
        Cable and Broadcasting Act 1984 and the Cable and the Broadcasting Act
        1990 or any instrument, rule or order made under any Act of Parliament
        or any regulation or by-law of any local or other competent authority or
        any statutory undertaking or statutory company which has jurisdiction in
        relation to the carrying out, use, occupation, operation of the
        properties or the businesses of any member of the UK Group (or, prior to
        the Pushdown Date, the Target Group) carried out thereon.

        "STEERING COMMITTEE GROUP" means the Arrangers.

        "SUBORDINATED DEBT" means any loan made by the Parent to any Guarantor
        which is a direct subsidiary of the Parent or by any Guarantor to the
        Borrower or any other Guarantor provided that in each case (x) the
        lender of such loan is the direct parent of the borrower of such loan
        and (y) such loan has been subordinated to the Loan on the terms of a
        Subordination Agreement.

        "SUBORDINATED FUNDING" means:

        (a)     the subscription by the Parent for new equity capital of the
                Intermediate Parent; and

                                       28
<PAGE>   30
        (b)       Subordinated Debt.

        "SUBORDINATION AGREEMENT" means each subordination agreement in the
        agreed form executed or to be executed in connection herewith pursuant
        to which the indebtedness identified therein owed by any Guarantor
        (including, without limitation, the Intermediate Parent) or the
        Borrower, as the case may be, is subordinated to the obligations of the
        Obligors under the Finance Documents.

        "SUBSEQUENT PARTICIPANT" means a member state that adopts the euro as
        its lawful currency after 1 January 1999.

        "SYNDICATION DATE" means the earlier of (a) the day specified by the
        Arrangers, after having given five Business Days prior notice to the
        Borrower, as the day on which primary syndication of the Facility is
        completed and (b) the day falling six months after the date hereof.

        "TARGET" means Cable and Wireless Communications plc (company number
        3288998).

        "TARGET GROUP" means CWC Holdings, Target and its direct and indirect
        subsidiaries (other than the Target Group Excluded Subsidiaries (as
        defined in the Senior Bank Credit Agreement)) immediately after the
        Second Caxton Sale, such comprising the CWC ConsumerCo Business and, for
        the purpose of Clause 17.2 (Financial Definitions) and any other
        provisions of this Agreement using the definitions defined in Clause
        17.2 (Financial Definitions), NTL Business Limited.

        "TELECENTIAL PARTNERSHIPS" means:

        (a)     Telecential Communications (Herts) Partnership, a partnership
                between CableTel Limited and CableTel Investments Limited
                (acting through the Telecential Communications Partnership),
                Maza Limited and Herts Cable Limited; and

        (b)     Telecential Communications (Northants) Partnership, a
                partnership between CableTel Limited and CableTel Investments
                Limited (acting through the Telecential Communications
                Partnership), Maza Limited and Northampton Cable Television
                Limited.

        "TOTAL COMMITMENTS" means, at any time, the aggregate of the Banks'
        Commitments.

        "TOTAL NET CASH FINANCE CHARGES" has the meaning given to it in Clause
        17.2 (Financial Definitions).

        "TRANSACTION AGREEMENT" means the restated agreement dated as of 26 July
        1999 between Bell Atlantic Corporation, Cable & Wireless, the Target and
        NTL Delaware Inc. (as amended from time to time before the date of this
        Agreement).

        "TRANSFER CERTIFICATE" means a certificate substantially in the form set
        out in Schedule 2 (Form of Transfer Certificate) or in such other form
        as may be agreed between the Borrower and the Agent signed by a Bank and
        a Transferee under which:

        (a)     such Bank seeks to procure the transfer to such Transferee of
                all or a part of such Bank's rights, benefits and obligations
                under the Finance Documents upon

                                       29
<PAGE>   31
                and subject to the terms and conditions set out in Clause 30.3
                (Assignments and Transfers by Banks); and

        (b)     such Transferee undertakes to perform the obligations it will
                assume as a result of delivery of such certificate to the Agent
                as contemplated in Clause 30.5 (Transfers by Banks).

        "TRANSFER DATE" means, in relation to any Transfer Certificate, the date
        for the making of the transfer as specified in such Transfer
        Certificate.

        "TRANSFEREE" means a person to which a Bank seeks to transfer by
        novation all or part of such Bank's rights, benefits and obligations
        under the Finance Documents.

        "TREATY LENDER" means a Bank which is (on the date a payment falls due
        under a Finance Document) entitled to that payment under a double
        taxation agreement in force with the United Kingdom on that date
        (subject to the completion of any necessary procedural formalities)
        without a deduction or withholding for or on account of tax imposed by
        the United Kingdom from such a payment.

        "TREATY ON EUROPEAN UNION" means the Treaty of Rome of 25 March 1957, as
        amended by the Single European Act 1986 and the Maastricht Treaty (which
        was signed at Maastricht on 7 February 1992 and came into force on 1
        November 1993).

        "TRIANGLE NOTES" means the 11.2% senior discount debentures due 15
        November 2007, with a principal amount at maturity of $517,300,000,
        issued by NTL Triangle LLC (formerly known as Comcast UK Cable Partners
        Limited).

        "UNPAID SUM" means the unpaid balance of any of the sums referred to in
        Clause 23.1 (Default Interest Periods).

        "UK GROUP" means:

        (a)     for the purpose of Clause 17.1 (UK Group Financial Condition),
                Clause 17.2 (Financial Definitions) and any other provision of
                this Agreement using the definitions defined in Clause 17.2
                (Financial Definitions):

                (i)     the Borrower;

                (ii)    Northampton Cable Television Limited and Herts Cable
                        Limited;

                (iii)   Cable & Wireless Communications (South Hertfordshire)
                        Limited;

                (iv)    each of the Borrower's direct and indirect subsidiaries
                        from time to time, excluding the UK Group Excluded
                        Subsidiaries (other than Northampton Cable Television
                        Limited, Herts Cable Limited and Cable & Wireless
                        Communications (South Hertfordshire) Limited; and

                (v)     prior to the Pushdown Date, the Target Group (including
                        NTL Business Limited); and

        (b)     for all other purposes, the Borrower and each of its direct or
                indirect subsidiaries from time to time other than the UK Group
                Excluded Subsidiaries. For information purposes only, the
                members of the UK Group on the Execution

                                       30
<PAGE>   32
                Date (as defined by this paragraph (b)) are listed on Schedule
                14 to the Senior Bank Credit Agreement.

        "UK GROUP EXCLUDED SUBSIDIARY" means:

        (a)     any subsidiary of the Borrower which is a Dormant Subsidiary and
                which (i) has assets (save for loans existing on the Execution
                Date owed to it by other members of the UK Group) with an
                aggregate value of L10,000 or less and (ii) does not hold a
                Licence;

        (b)     X-Tant Limited and its subsidiaries;

        (c)     Northampton Cable Television Limited (until such time as it
                becomes a wholly owned subsidiary of the Borrower);

        (d)     Herts Cable Limited (until such time as it becomes a wholly
                owned subsidiary of the Borrower);

        (e)     any member of the NTL Triangle Sub-Group (until such time as the
                Parent elects for the members of the NTL Triangle Sub-Group to
                become members of the UK Group in accordance with Clause 34.5
                (NTL Triangle Accession) of the Senior Bank Credit Agreement;

        (f)     any Target Group Excluded Subsidiaries which become subsidiaries
                of the Borrower pursuant to the Pushdown;

        (g)     any subsidiary of the Borrower which is a Project Company; and

        (h)     any company (other than a member of the Target Group) which
                becomes a subsidiary of the Borrower after the date hereof
                pursuant to an Asset Passthrough,

        PROVIDED THAT, any of such companies shall become a member of the UK
        Group and cease to be a UK Group Excluded Subsidiary if the Borrower and
        the Agent (acting on the instructions of an Instructing Group, acting
        reasonably) so agree.

1.2     INTERPRETATION

        Any reference in this Agreement to:

        the "AGENT", an "ARRANGER", the "SECURITY TRUSTEE" or any "BANK" shall
        be construed so as to include it and any subsequent successors and
        permitted transferees in accordance with their respective interests;

        an "AFFILIATE" of a specified person means any other person directly or
        indirectly controlling or controlled by or under direct or indirect
        common control with that specified person, where:

        (a)     "CONTROL" (and "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON
                CONTROL WITH") mean the possession, directly or indirectly, of
                the power to direct or cause the direction of the management or
                policies of a person, whether by the ownership of shares, by
                agreement or otherwise; and

                                       31
<PAGE>   33
        (b)     the beneficial ownership of 10 per cent. or more of the issued
                share capital of a person shall be deemed to constitute control
                of that person;

        "AGREED FORM" in relation to any document means a form which is
        initialled by each of the Agent and the Borrower for the purposes of
        identification (as such form may be amended from time to time by
        agreement between such parties) or a document executed on or before the
        Execution Date by (among others) the Parent or the Borrower and the
        Agent or, if not so executed or initialed, a document in form and
        substance reasonably satisfactory to the Agent;

        "ASSETS" includes present and future properties, revenues and rights of
        every description;

        a "COMPANY" includes any body corporate;

        "CONTINUING", in relation to an Event of Default, shall be construed as
        a reference to an Event of Default which has not been waived (any deemed
        waiver pursuant to the Intercreditor Agreement not being a waiver for
        these purposes) in writing or remedied and, in relation to a Potential
        Event of Default, one which has not been remedied within the relevant
        grace period or waived (any deemed waiver pursuant to the Intercreditor
        Agreement not being a waiver for these purposes) in accordance with the
        terms hereof;

        "DISPOSAL" includes any sale, lease, transfer or other disposal;

        the "EQUIVALENT" on any date in one currency (the "FIRST CURRENCY") of
        an amount denominated in another currency (the "SECOND CURRENCY") is a
        reference to the amount of the first currency which could be purchased
        with the amount of the second currency at the spot rate of exchange
        quoted by the Agent at or about 11.00 a.m. on such date for the purchase
        of the first currency with the second currency;

        a "HOLDING COMPANY" of a company or corporation shall be construed as a
        reference to any company or corporation of which the first-mentioned
        company or corporation is a subsidiary;

        "INDEBTEDNESS" shall be construed so as to include any obligation
        (whether incurred as principal or as surety) for the payment or
        repayment of money, whether present or future, actual or contingent;

        a "LAW" shall be construed as any law (including common or customary
        law), statute, constitution, decree, judgment, treaty, regulation,
        directive, bye-law, order or any other legislative measure of any
        government, supranational, local government, statutory or regulatory
        body or court;

        a "MEMBER STATE" shall be construed as a reference to a member state of
        the European Union;

        a "MONTH" is a reference to a period starting on one day in a calendar
        month and ending on the numerically corresponding day in the next
        succeeding calendar month save that:

        (a)     if any such numerically corresponding day is not a Business Day,
                such period shall end on the immediately succeeding Business Day
                to occur in that next succeeding calendar month or, if none, it
                shall end on the immediately preceding Business Day; and

                                       32
<PAGE>   34
        (b)     if there is no numerically corresponding day in that next
                succeeding calendar month, that period shall end on the last
                Business Day in that next succeeding calendar month,

        (and references to "MONTHS" shall be construed accordingly);

        a "PERSON" shall be construed as a reference to any person, firm,
        company, corporation, government, state or agency of a state or any
        association or partnership (whether or not having separate legal
        personality) of two or more of the foregoing;

        "REPAY" (or any derivative form thereof) shall, subject to any contrary
        indication, be construed to include "PREPAY" (or, as the case may be,
        the corresponding derivative form thereof) and vice versa;

        a "SUBSIDIARY" of a company or corporation shall be construed as a
        reference to:

        (a)     any company or corporation:

                (i)     which is controlled, directly or indirectly, by the
                        first-mentioned company or corporation;

                (ii)    more than half the issued share capital of which is
                        beneficially owned, directly or indirectly, by the
                        first-mentioned company or corporation; or

                (iii)   which is a subsidiary of another subsidiary of the
                        first-mentioned company or corporation,

                and, for these purposes, a company or corporation shall be
                treated as being controlled by another if that other company or
                corporation is able to direct its affairs and/or to control the
                composition of its board of directors or equivalent body; and

        (b)     for the purposes of only Clause 16 (Financial Information),
                Clause 17 (Financial Condition) and where the financial
                definitions referred to in Clause 17.2 (Financial Definition)
                are used in this Agreement, any company or corporation which is
                a subsidiary undertaking as defined in Section 258 of the
                Companies Act 1985 or any other legal entity which is accounted
                for as a subsidiary of that first mentioned company or
                corporation;

        a "SUCCESSOR" shall be construed so as to include an assignee or
        successor in title of such party and any person who under the laws of
        its jurisdiction of incorporation or domicile has assumed the rights and
        obligations of such party under this Agreement or to which, under such
        laws, such rights and obligations have been transferred;

        "TAX" shall be construed so as to include any tax, levy, impost, duty or
        other charge of a similar nature (including any penalty or interest
        payable in connection with any failure to pay or any delay in paying any
        of the same);

        "VAT" shall be construed as a reference to value added tax including any
        similar tax which may be imposed in place thereof from time to time;

        a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be
        construed as a reference to any company or corporation which has no
        other members except that other

                                       33
<PAGE>   35
        company or corporation and that other company's or corporation's
        wholly-owned subsidiaries or persons acting on behalf of that other
        company or corporation or its wholly-owned subsidiaries; and

        the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or
        corporation shall be construed so as to include any equivalent or
        analogous proceedings under the law of the jurisdiction in which such
        company or corporation is incorporated or any jurisdiction in which such
        company or corporation carries on business including the seeking of
        liquidation, winding-up, reorganisation, dissolution, administration,
        arrangement, adjustment, protection or relief of debtors.

1.3     CURRENCY SYMBOLS

        1.3.1     "L" and "STERLING" denote lawful currency of the United
                  Kingdom and "$" and "DOLLARS" denote lawful currency of the
                  United States of America.

        1.3.2     "EURO" means the single currency unit of the European Union as
                  constituted by the Treaty on European Union as referred to in
                  EMU Legislation and "EURO UNIT" means the currency unit of the
                  euro as defined in EMU Legislation.

1.4     AGREEMENTS AND STATUTES

        Any reference in a Finance Document to:

        1.4.1     this Agreement or any other agreement or document shall be
                  construed as a reference to this Agreement or, as the case may
                  be, such other agreement or document as the same may have
                  been, or may from time to time be, amended, varied, novated or
                  supplemented; and

        1.4.2     a statute or treaty shall be construed as a reference to such
                  statute or treaty as the same may have been, or may from time
                  to time be, amended or, in the case of a statute, re-enacted.

1.5     HEADINGS

        Clause and Schedule headings are for ease of reference only.

1.6     TIME

        Any reference in this Agreement to a time of day shall, unless a
        contrary indication appears, be a reference to London time.

1.7     THIRD PARTY RIGHTS

        A person who is not a party to this Agreement has no right under the
        Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
        Agreement.

2.      THE FACILITY

2.1     GRANT OF THE FACILITY

        The Banks grant to the Borrower, upon the terms and subject to the
        conditions hereof, a sterling multiple draw loan facility in an
        aggregate amount of L1,300,000,000, as the same may be reduced in
        accordance with the terms hereof.

2.2     PURPOSE

        The Facility is intended to fund loans by the Borrower to other members
        of the UK Group each of which shall utilize the proceeds thereof to
        finance the working capital

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<PAGE>   36
        requirements of the UK Group, provided that in no event shall the
        proceeds of any Advance be used for a purpose other than to finance the
        construction, capital expenditure and working capital needs of a Cable
        Business.

2.3     APPLICATION

        The Borrower shall apply all amounts raised by it hereunder in or
        towards satisfaction of, the purposes specified in Clause 2.2 (Purpose)
        and none of the Finance Parties shall be obliged to concern themselves
        with such application.

2.4     CONDITIONS PRECEDENT

        Save as the Banks may otherwise agree, the Borrower may not deliver any
        Notice of Drawdown unless the Agent has confirmed to the Borrower and
        the Banks that it has received all of the documents and other evidence
        listed in Schedule 3 (Conditions Precedent) and that each is, in form
        and substance, satisfactory to the Agent. The Agent shall notify the
        Borrower and the Banks promptly upon being so satisfied.

2.5     BANKS' OBLIGATIONS SEVERAL

        The obligations of each Bank are several and the failure by a Bank to
        perform its obligations hereunder shall not affect the obligations of an
        Obligor towards any other party hereto nor shall any other party be
        liable for the failure by such Bank to perform its obligations
        hereunder.

2.6     BANKS' RIGHTS SEVERAL

        The rights of each Bank are several and any debt arising hereunder at
        any time from an Obligor to any of the other parties hereto shall be a
        separate and independent debt. Each such party shall be entitled to
        protect and enforce its individual rights arising out of this Agreement
        independently of any other party (so that it shall not be necessary for
        any party hereto to be joined as an additional party in any proceedings
        for this purpose).

3.      UTILISATION OF THE FACILITY

3.1     DRAWDOWN CONDITIONS FOR ADVANCES

        An Advance will be made by the Banks to the Borrower if:

        3.1.1   during the Notice Period, the Agent has received a completed
                Notice of Drawdown from the Borrower;

        3.1.2   the proposed date for the making of such Advance is a Business
                Day falling one month or more before the Final Maturity Date;

        3.1.3   the proposed amount of such Advance is (a) if less than the
                Available Facility an amount or integral multiple of L50,000,000
                or (b) equal to the amount of the Available Facility;

        3.1.4   there would not, immediately after the making of such an
                Advance, be more than five Advances outstanding;

        3.1.5   neither of the events mentioned in sub-clauses 5.1.1 and 5.1.2
                of Clause 5.1 (Market Disruption and Alternative Interest Rates)
                shall have occurred;

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<PAGE>   37
        3.1.6   to the extent that the initial aggregate principal amount of
                Advances made under this Facility would exceed L300,000,000
                after giving effect to the making of such Advance, the Pushdown
                Condition has been satisfied;

        3.1.7   on and as of the proposed date for the making of such Advance
                (i) no Event of Default or Potential Event of Default is
                continuing and (ii) the Repeated Representations are true in all
                material respects;

        3.1.8   the cash on hand of the UK Group at the close of business on the
                Business Day immediately preceding the date the Notice of
                Drawdown for such Advance is delivered to the Agent shall not
                exceed L25,000,000; and

        3.1.9   in the case of Advances made on or after the Pushdown Date, the
                advances which are outstanding under the Senior Bank Credit
                Agreement shall equal at least L2,500,000,000 less any permanent
                reductions to the availability thereunder made after the
                Execution Date.

3.2     EACH BANK'S PARTICIPATION IN ADVANCES

        Each Bank will participate through its Facility Office in each Advance
        made pursuant to this Clause 3 (Utilisation of the Facility) in the
        proportion borne by its Available Commitment to the Available Facility
        immediately prior to the making of that Advance.

3.3     REDUCTION OF AVAILABLE COMMITMENT

        If a Bank's Commitment is reduced in accordance with the terms hereof
        after the Agent has received the Notice of Drawdown for an Advance and
        such reduction was not taken into account in the Available Facility,
        then the amount of that Advance shall be reduced accordingly.

3.4     FORCED DRAWDOWN

        At any time during the continuance of a Remedy Restriction Period, the
        Agent, acting upon the instructions of an Instructing Group, shall have
        the right to require the Borrower to incur an Advance in the amount
        necessary to cause the Full Funding Date to occur (such amount the
        "FORCED DRAWDOWN Amount"). Such right shall be exercised by the giving
        of notice of such drawdown by the Agent to the Banks and the Borrower.

        In such an event, upon notice to each Bank, such Bank shall fund its pro
        rata portion of the Forced Drawdown Amount to the Agent and the Agent,
        on behalf of the Borrower, will transfer the amounts so made available
        to the Borrower's account at the Senior Agent. The Borrower and each of
        the other Obligors acknowledge and agree that the making of an Advance
        by the Banks pursuant to this Clause 3.4 (Forced Drawdown) has been
        irrevocably and unconditionally consented to by the Borrower and the
        Obligors and neither the Borrower nor any other Obligor nor any other
        person shall have the right to revoke, cancel or otherwise limit such
        consent or the right of the Banks to make such Advance hereunder.

                                       36
<PAGE>   38
4.      PAYMENT AND CALCULATION OF INTEREST ON ADVANCES; INTEREST PERIODS

4.1     PAYMENT OF INTEREST

        On the last day of each Interest Period (and, if the Interest Period of
        such Advance exceeds six months, on the expiry of each period of six
        months during such Interest Period) the Borrower shall pay accrued
        interest on the Advance to which such Interest Period relates.

4.2     CALCULATION OF INTEREST

        The rate of interest applicable to an Advance from time to time during
        an Interest Period relating thereto shall be the rate per annum which is
        the lesser of:

        4.2.1   16 per cent. per annum; and

        4.2.2   the sum of:

                (a)     the Margin at such time;

                (b)     the Mandatory Cost Rate; and

                (c)     LIBOR on the Quotation Date therefor.

4.3     LIMITATIONS ON CASH INTEREST.

        Notwithstanding anything to the contrary set forth in this Agreement, to
        the extent that the rate of interest applicable to an Advance on any
        interest payment date for such Advance exceeds the sum of 14 per cent.
        per annum and the increase, if any, in the rate of interest pursuant to
        Clause 4.4 (Default Interest) such excess interest shall be paid by
        adding such excess interest to the principal amount of such Advance
        unless the Borrower shall have given the Agent notice at least three
        Business Days prior to such interest payment date that it shall pay such
        excess amount in cash.

4.4     DEFAULT INTEREST

        The interest rate determined in accordance with Clause 4.2 (Calculation
        of Interest) shall be increased by one per cent. per annum (it being
        understood that the interest rate could by reason of such increase
        exceed 16 per cent. per annum) from the date determined by the Agent
        (acting reasonably) (in writing) as being the date on which an Event of
        Default or Potential Event of Default has occurred or come into
        existence until the date specified by the Agent (in writing) as being
        the date on which it has been demonstrated to its satisfaction (acting
        reasonably) that such Event of Default or Potential Event of Default is
        no longer continuing. The Agent shall promptly notify the other parties
        hereto of any determination that an Event of Default or Potential Event
        of Default has occurred or exists or, as the case may be, that it has
        been demonstrated to its reasonable satisfaction that such is no longer
        continuing.

4.5     INTEREST PERIODS

        The period for which an Advance is outstanding shall be divided into
        successive periods each of which (other than the first, which shall
        begin on the day such Advance is made) shall start on the last day of
        the preceding such period.

4.6     DURATION

                                       37
<PAGE>   39
        The duration of each Interest Period shall, save as otherwise provided
        herein, be one, two, three or six months or such other period as the
        Agent (acting on instructions of all the Banks) may agree in each case
        as the Borrower may by not less than five Business Days' prior notice to
        the Agent select, PROVIDED THAT:

        4.6.1   if the Borrower fails to give such notice of its selection in
                relation to an Interest Period, the duration of that Interest
                Period shall, subject to sub-clauses 4.6.2, 4.6.3 and 4.6.4 be
                one month;

        4.6.2   if there are more than five Advances outstanding any Interest
                Period which begins during or at the same time as anyone or more
                other Interest Periods shall end at the same time as such one of
                those other Interest Periods as the Borrower may, by not less
                than five Business Days' prior notice to the Agent, select or,
                failing such selection, the first such other Interest Period to
                expire;

        4.6.3   any Interest Period which would otherwise end during the month
                preceding, or extend beyond, the Final Maturity Date shall be of
                such duration that it shall end on the Final Maturity Date; and

        4.6.4   prior to the Syndication Date, Interest Periods shall be one
                month or such other period as the Agent and the Borrower may
                agree.

4.7     CONSOLIDATION OF ADVANCES

        If two or more Interest Periods end at the same time, then, on the last
        day of those Interest Periods, the Advances to which they relate shall
        be consolidated into and treated as a single Advance.

4.8     DIVISION OF ADVANCES

        The Borrower may, by not less than five Business Days' prior notice to
        the Agent, direct that any Advance shall, at the beginning of any
        Interest Period relating thereto, be divided into (and thereafter, save
        as otherwise provided herein, treated in all respects as) two or more
        Advances in such amounts (in aggregate, equaling the amount of the
        Advance being so divided) as shall be specified by the Borrower in such
        notice, PROVIDED THAT the Borrower shall not be entitled to make such a
        direction if:

        4.8.1   as a result of so doing, there would be more than five
                outstanding Advances; or

        4.8.2   any Advance thereby coming into existence would be of an amount
                less than L50,000,000.

5.      MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES

5.1     MARKET DISRUPTION

        If, in relation to any Advance:

        5.1.1   LIBOR is to be determined by reference to Reference Banks and at
                or about 11.00 a.m. on the Quotation Date for the relevant
                Interest Period none or only one of the Reference Banks supplies
                a rate for the purpose of determining LIBOR for the relevant
                Interest Period; or

                                       38
<PAGE>   40
        5.1.2   before the close of business in London on the Quotation Date for
                such Advance the Agent has been notified by a Bank or each of a
                group of Banks, to whom in aggregate fifty per cent. or more of
                such Advance would be owed if made that the LIBOR rate does not
                accurately reflect the cost of funding its participation in such
                Advance,

        then the Agent shall notify the Borrower and the Banks of such event
        and, notwithstanding anything to the contrary in this Agreement, Clause
        5.2 (Substitute Interest Period and Interest Rate) shall apply to such
        Advance (if it is a Rollover Advance). If either sub-clause 5.1.1 or
        5.1.2 of Clause 5.1 (Market Disruption and Alternative Interest Rates)
        applies to a proposed Advance (other than a Rollover Advance), such an
        Advance shall not be made.

5.2     SUBSTITUTE INTEREST PERIOD AND INTEREST RATE

        If sub-clause 5.1.1 of Clause 5.1 (Market Disruption and Alternative
        Interest Rates) applies to an Advance, the duration of the relevant
        Interest Period shall be one month or, if less, such that it shall end
        on the Final Maturity Date. If either sub-clause 5.1.1 or 5.1.2 of
        Clause 5.1 (Market Disruption and Alternative Interest Rates) applies to
        an Advance, the rate of interest applicable to each Bank's portion of
        such Advance during the relevant Interest Period shall (subject to any
        agreement reached pursuant to Clause 5.3 (Alternative Rate)) be the rate
        per annum which is the sum of:

        5.2.1   the Margin at such time;

        5.2.2   the Mandatory Cost Rate; and

        5.2.3   the rate per annum notified to the Agent by such Bank before the
                last day of such Interest Period to be that which expresses as a
                percentage rate per annum the cost to such Bank of funding from
                whatever sources it may reasonably select its portion of such
                Advance during such Interest Period.

5.3     ALTERNATIVE RATE

        If either of those events mentioned in sub-clauses 5.1.1 or 5.1.2 of
        Clause 5.1 (Market Disruption and Alternative Interest Rates) occurs in
        relation to an Advance, then if the Agent or the Borrower so requires,
        the Agent and the Borrower shall enter into negotiations with a view to
        agreeing a substitute basis (i) for determining the rates of interest
        from time to time applicable to the Advances and/or (ii) upon which the
        Advances may be maintained (whether in sterling or some other currency)
        thereafter and any such substitute basis that is agreed shall take
        effect in accordance with its terms and be binding on each party hereto,
        PROVIDED THAT the Agent may not agree any such substitute basis without
        the prior consent of each Bank (which is not to be unreasonably
        withheld).

6.      NOTIFICATION

6.1     ADVANCES

        The Agent shall, promptly upon its receipt of a Notice of Drawdown,
        notify each Bank of:

        6.1.1   the proposed amount of the relevant Advance;

                                       39
<PAGE>   41
        6.1.2   the proposed length of the relevant Interest Period; and

        6.1.3   the aggregate principal amount of the relevant Advance allocated
                to such Bank pursuant to Clause 3.2 (Each Bank's Participation
                in Advances).

6.2     INTEREST PERIODS

        Not less than three Business Days before the first day of an Interest
        Period, the Agent shall notify each Bank of the proposed amount of the
        relevant Advance, the proposed length of such Interest Period and the
        aggregate principal amount of the relevant Advance allocated to such
        Bank pursuant to Clause 3.2 (Each Bank's Participation in Advances).

6.3     INTEREST RATE DETERMINATION

        The Agent shall promptly notify the Borrower and the Banks of each
        determination of LIBOR, the Mandatory Cost Rate and the Margin.

6.4     CHANGES TO ADVANCES OR INTEREST RATES

        The Agent shall promptly notify the Borrower and the Banks of any change
        to (a) the proposed length of an Interest Period or (b) any interest
        rate occasioned by the operation of Clause 5 (Market Disruption and
        Alternative Interest Rates).

7.      REPAYMENT AND REDUCTION OF THE FACILITY

7.1     REPAYMENT

        The Borrower shall repay each Advance made to it in full on the Final
        Maturity Date.

8.      CANCELLATION AND PREPAYMENT

8.1     CANCELLATION OF THE FACILITY

        Subject to the provisions of Clause 8.7 (Limitations on Cancellation of
        the Facility), the Borrower may, by giving to the Agent not less than
        five Business Days' prior written notice to that effect, cancel the
        whole or any part (being a minimum amount of L50,000,000 and an integral
        multiple of L10,000,000) of the Available Facility. Any such
        cancellation shall reduce the Available Commitment and Commitment of
        each Bank rateably.

8.2     PREPAYMENT OF THE FACILITY

        Subject to the provisions of Clause 8.7 (Limitations on Cancellation of
        the Facility) and Clause 23.4 (Break Costs), the Borrower may, by giving
        to the Agent not less than five Business Days prior written notice to
        that effect, prepay the whole or any part of an Advance (being a minimum
        amount of L50,000,000 and an integral multiple of L10,000,000).

8.3     NOTICE OF CANCELLATION OR PREPAYMENT

        Any notice of cancellation or prepayment given by the Borrower pursuant
        to this Clause 8 (Cancellation and Prepayment) shall be irrevocable,
        shall specify the date upon which such cancellation or prepayment is to
        be made and the amount of such cancellation or prepayment and, in the
        case of a notice of prepayment, shall oblige the Borrower to make such
        prepayment on such date.

                                       40
<PAGE>   42
8.4     REPAYMENT OF A BANK'S SHARE OF THE LOAN

        If:

        8.4.1   any sum payable to any Bank by an Obligor is required to be
                increased pursuant to Clause 10.1 (Tax Gross-up); or

        8.4.2   any Bank claims indemnification from an Obligor under Clause
                10.2 (Tax Indemnity), the Agent claims indemnification from an
                Obligor under Clause 10.2 (Tax Indemnity) in respect of a
                payment received by it and paid by it to a Bank under the
                Finance Documents or any Bank claims indemnification from the
                Borrower under Clause 12.1 (Increased Costs),

        the Borrower may, whilst such circumstance continues, give the Agent at
        least five Business Days prior written notice (which notice shall be
        irrevocable) of its intention to procure the repayment of such Bank's
        share of the Loan. On the last day of each then current Interest Period,
        or at any other time subject to the provisions of Clause 23.4 (Break
        Costs), the Borrower shall repay such Bank's portion of the Advance to
        which such Interest Period relates.

8.5     NO FURTHER ADVANCES

        A Bank for whose account a repayment is to be made under Clause 8.4
        (Repayment of a Bank's Share of the Loan) shall not be obliged to
        participate in the making of Advances on or after the date upon which
        the Agent receives the Borrower's notice of its intention to procure the
        repayment of such Bank's share of the Loan, and such Bank's Available
        Commitment shall be reduced to zero.

8.6     NO OTHER REPAYMENTS

        The Borrower shall not repay all or any part of the Loan except at the
        times and in the manner expressly provided for in this Agreement and
        shall not be entitled to reborrow any amount repaid.

8.7     LIMITATION ON CANCELLATION OF THE FACILITY

        Notwithstanding anything to the contrary set forth in this Clause 8
        (Cancellation and Prepayment) or Clause 8.2 (Prepayment of the
        Facility), the Borrower may not voluntarily reduce the Available
        Commitment pursuant to Clause 8.1 (Cancellation of the Facility) or
        prepay all or any part of an Advance pursuant to Clause 8.2 (Prepayment
        of the Facility) at any time that the Senior Bank Credit Agreement is in
        effect, without the consent of the Senior Agent under the Senior Bank
        Credit Facility, unless such reduction or prepayment is permitted under
        Clause 19.35 (Working Capital Facility Amendments) of the Senior Bank
        Credit Agreement as in effect on the Execution Date.

9.      MANDATORY PREPAYMENT

9.1     MANDATORY PREPAYMENT FROM EXCESS CASH FLOW

        The Borrower shall ensure that within ten Business Days of delivery of
        the most recent financial statements of the UK Group pursuant to Clause
        16.1 (Annual Statements), commencing with the financial statements
        delivered in respect of the financial year to ending 31 December 2003,
        the Excess Cash Flow Payment Amount for the financial year to which such
        financial statements relate is applied in cancellation of the Available
        Facility and/or repayment of the Loan in accordance with Clause 9.6
        (Application of

                                       41
<PAGE>   43
        Proceeds).

9.2     MANDATORY PREPAYMENT FROM ASSET DISPOSALS

        The Borrower shall ensure that the net cash proceeds of any disposal
        falling within paragraph (f)(A) of the definition of Permitted Disposals
        of any asset by any member of the UK Group are applied in cancellation
        of the Available Facility and/or repayment of the Loan in accordance
        with Clause 9.6 (Application of Proceeds) unless the relevant member of
        the UK Group can show to the satisfaction of the Agent that:

        9.2.1   such disposal was on arms' length terms and the net proceeds are
                to be reinvested in similar or like assets of a comparable or
                superior quality or applied towards the UK Group's Capital
                Expenditure within a period of 365 days from the date of receipt
                of such proceeds by the relevant member of the UK Group; or

        9.2.2   such disposal was on arms' length terms and in the ordinary and
                usual course of business of such member of the UK Group; or

        9.2.3   the net disposal proceeds, when aggregated with the net disposal
                proceeds received by members of the UK Group in respect of
                disposals falling within paragraph (f)(A) of the definition of
                Permitted Disposals made in the immediately preceding twelve
                calendar month period (excluding the proceeds from disposals
                falling within sub-clauses 9.2.1 or 9.2.2 above) does not exceed
                L10,000,000 or its equivalent; or

        9.2.4   the net disposal proceeds are required to be, and are actually,
                applied to the permanent repayments and commitment reductions
                under the Senior Bank Credit Agreement (but only to the extent
                that such net disposal proceeds are actually so applied).

                In the case of sub-clause 9.2.1 only, to the extent that the net
                disposal proceeds therefrom are not deposited in the prepayment
                escrow account established under the Senior Bank Credit
                Agreement, the net disposal proceeds referred to therein will be
                deposited in the Prepayment Escrow Account and the relevant
                member of UK Group shall be entitled, during the 365 day period,
                to withdraw (or, as the case may be, require the Borrower to
                withdraw) sums from such account only to the extent that it is
                able to reasonably demonstrate that such sums will be reinvested
                or applied in accordance with the provisions of sub-clause
                9.2.1. Any amounts not reinvested as specified in sub-clause
                9.2.1 during the 365 day period specified therein shall
                thereafter, be applied in repayment of the Loan in accordance
                with Clause 9.6 (Application of Proceeds), provided that to the
                extent that any amounts are deposited in the Prepayment Escrow
                Account prior to the Pushdown Date, such amounts shall not be so
                applied on such 365th day but shall be retained in the
                Prepayment Escrow Account until the earlier of (x) the later of
                the Pushdown Date and such 365th day (on which later date such
                amounts shall be applied to the permanent repayment of amounts
                outstanding under the Senior Bank Credit Agreement in accordance
                with clause 10.2.1 thereof) and (y) the occurrence of an Event
                of Default (in which event such amounts shall be applied in
                repayment of the Loan in accordance with Clause 9.6 (Application
                of Proceeds)).

                                       42
<PAGE>   44
9.3     MANDATORY PREPAYMENT FROM INSURANCE PROCEEDS

        The Borrower shall ensure that Insurance Proceeds received by any member
        of the UK Group above an aggregate minimum threshold of Insurance
        Proceeds of L10,000,000 (the "MINIMUM THRESHOLD"), are paid to the Agent
        and applied in cancellation of the Available Facility and/or repayment
        of the Loan in accordance with Clause 9.6 (Application of Proceeds)
        unless the Insurance Proceeds received above the Minimum Threshold are:

        9.3.1   promptly upon receipt, deposited in the Prepayment Escrow
                Account in accordance with the provisions of Clause 9.4 (Payment
                of Insurance Proceeds into Prepayment Escrow Account); and

        9.3.2   applied, to the satisfaction of the Agent, towards the
                replacement, reinstatement and/or repair of the assets and/or
                the satisfaction of business interruption losses in respect of
                which the relevant insurance claim was made (or to refinance any
                expenditure incurred in the replacement, reinstatement and/or
                repair of such assets) within a period of 365 days from the date
                of receipt of such Insurance Proceeds by the relevant member of
                the UK Group; or

        9.3.3   are required to be, and are actually, applied to the permanent
                repayment and commitment reductions under the Senior Bank Credit
                Agreement (but only to the extent that such Insurance Proceeds
                are actually so applied).

9.4     PAYMENT OF INSURANCE PROCEEDS INTO PREPAYMENT ESCROW ACCOUNT

        The Borrower shall ensure that to the extent that any Insurance Proceeds
        to be applied in accordance with sub-clause 9.3.2 of Clause 9.3
        (Mandatory Prepayment from Insurance Proceeds) are not deposited in the
        prepayment escrow account established under the Senior Bank Credit
        Agreement such Insurance Proceeds are deposited in the Prepayment Escrow
        Account. The relevant member of the UK Group shall be entitled, during
        the period of 365 days from its receipt of Insurance Proceeds, to
        withdraw sums from the Prepayment Escrow Account only to the extent that
        it is able to reasonably demonstrate that such sums will be applied
        towards the replacement, reinstatement and/or repair of the assets
        and/or the satisfaction of business interruption losses in respect of
        which the relevant insurance claim was made (or to refinance any
        expenditure incurred in the replacement, reinstatement and/or repair of
        such assets). Any sums not so withdrawn during such 365 day period shall
        thereafter be paid to the Agent and applied in cancellation of the
        Available Facility and/or repayment of the Loan in accordance with
        Clause 9.6 (Application of Proceeds), provided that to the extent that
        any amounts are deposited in the Prepayment Escrow Account prior to the
        Pushdown Date, such amounts shall not be so applied on such 365th day
        but shall be retained in the Prepayment Escrow Account until the earlier
        of (x) the later of the Pushdown Date and such 365th day (on which later
        date such amounts shall be applied to the permanent repayment of amounts
        outstanding under the Senior Bank Credit Agreement in accordance with
        clause 10.2.1 thereof) and (y) the occurrence of an Event of Default (in
        which event such amounts shall be applied in repayment of the Loan in
        accordance with Clause 9.6 (Application of Proceeds)).

                                       43
<PAGE>   45
9.5     MANDATORY PREPAYMENT FROM CAPITAL EVENT PROCEEDS

        The Parent shall ensure that upon the receipt of Capital Event Proceeds
        an amount equal to the Capital Event Proceeds Amount as then determined
        is applied in cancellation of the Available Facility and/or repayment of
        the Loan in accordance with Clause 9.6 (Application of Proceeds),
        PROVIDED that there shall be no obligation to apply any such Capital
        Event Proceeds which are otherwise required to be so applied until the
        amount of Capital Event Proceeds which have not been applied by reason
        of this proviso exceed L5,000,000 (in which case the entire amount (and
        not simply the amount in excess of L5,000,000) shall be so applied).

9.6     APPLICATION OF PROCEEDS

        9.6.1   Any amounts required to be applied in cancellation of the
                Available Facility and/or repayment of the Loan pursuant to
                Clause 9.1 (Mandatory Prepayment From Excess Cash Flow) to
                Clause 9.5 (Mandatory Prepayments from Capital Event Proceeds)
                shall be applied as follows:

                (a)     all such amounts required to be applied pursuant to
                        Clause 9.5 (Mandatory Prepayment from Capital Event
                        Proceeds) other than to the extent arising from the
                        Incremental Amount shall be applied (x) first to the
                        repayment of Loan then outstanding and (y) second to the
                        extent any proceeds remain after application pursuant to
                        clause (x), to the reduction of the Available Facility;

                (b)     all such amounts not covered by clause (a) above, shall
                        be applied (x) first, to the reduction of the Available
                        Facility and (y) second, to the extent any proceeds
                        remain after application pursuant to clause (x) (i.e.
                        after the Available Facility has been reduced to zero),
                        to the repayment of Loans then outstanding.

        9.6.2   Any amounts paid to the Agent in accordance with Clause 9.1
                (Mandatory Prepayment from Excess Cash Flow) to Clause 9.5
                (Mandatory Prepayment from Capital Event Proceeds) shall be:

                (a)     retained in the Prepayment Escrow Account pending any
                        withdrawal permitted by any of those Clauses; and

                (b)     if no such right of withdrawal is available, if it has
                        ceased to be available or if the Borrower so instructs
                        the Agent, be retained in the Prepayment Escrow Account
                        for application on one or more prepayment dates until
                        such time as such amounts have been applied in full in
                        repayment of the Loan in accordance with this Clause
                        9.6.

9.7     MANDATORY PREPAYMENT DUE TO CHANGE IN CONTROL

        9.7.1     If after the date hereof:

        (a)     any person, or group of connected persons, (which does not have
                control at the date hereof) acquires control of NTL Holdings;

        (b)     the Parent or any Obligor ceases to be (directly or indirectly)
                a wholly-owned subsidiary of NTL Holdings; or

                                       44
<PAGE>   46
        (c)     the Borrower ceases to be (directly or indirectly) a
                wholly-owned subsidiary of the Parent;

        then the Borrower shall procure the immediate repayment of the Loan in
        full (together with accrued interest thereon and any other sums then
        owed by the Borrower hereunder) and the Available Commitment of each
        Bank shall be immediately cancelled and reduced to zero.

        9.7.2   For the purpose of this Clause 9.7 (Mandatory Prepayment due to
                Change in Control):

                "CONTROL" means:

                (a)     the power (whether by way of ownership of shares, proxy,
                        contract, agency or otherwise) to:

                        (i)     cast, or control the casting of, more than
                                one-half of the maximum number of votes that
                                might be cast at a general meeting of NTL
                                Holdings; or

                        (ii)    appoint or remove all, or the majority, of the
                                directors or other equivalent officers of NTL
                                Holdings; or

                        (iii)   give directions with respect to the operating
                                and financial policies of NTL Holdings which the
                                directors or other equivalent officers of NTL
                                Holdings are obliged to comply with; or

                (b)     the holding of more than one-half of the issued share
                        capital of NTL Holdings (excluding any part of that
                        issued share capital that carries no voting rights or
                        right).

                "GROUP OF CONNECTED PERSONS" means, a group of persons who,
                pursuant to an agreement or understanding (whether formal or
                informal), actively co-operate, through the acquisition by any
                of them, either directly or indirectly, of shares in NTL
                Holdings, to obtain or consolidate control of NTL Holdings.

        9.7.3   This Clause 9.7 (Mandatory Prepayment due to Change in Control)
                will not apply, and the Available Commitments will not be
                cancelled, and the Loan will not become due and payable in the
                event that:

                (a)     France Telecom S.A. or any of its affiliates acquires
                        control of NTL Holdings; or

                (b)     any company acquires control of NTL Holdings as part of
                        a solvent reorganisation of the Group on terms approved
                        by the Agent (acting on the instructions of an
                        Instructing Group).

9.8     MANDATORY PREPAYMENT DUE TO PUSHDOWN DATE

        Notwithstanding any other provision of this Agreement, if the Pushdown
        Date has not occurred on or prior to 30 September 2001, on the first
        Business Day after 30 September 2001, the Borrower shall procure the
        immediate repayment of the Loan in full (together with accrued interest
        thereon and any other sum owed by the Borrower hereunder) and

                                       45
<PAGE>   47
        Available Commitment of each Bank shall immediately be cancelled and
        reduced to zero.

10.     TAXES

10.1    TAX GROSS-UP

        All payments to be made by an Obligor to any Finance Party under the
        Finance Documents shall be made free and clear of and without deduction
        for or on account of tax unless such Obligor is required by law to make
        such a payment subject to the deduction or withholding of tax, in which
        case the sum payable by such Obligor (in respect of which such deduction
        or withholding is required to be made) shall, subject to Clause 10.6
        (Excluded Claims), be increased to the extent necessary to ensure that
        such Finance Party receives a sum net of any deduction or withholding
        equal to the sum which it would have received had no such deduction or
        withholding been made or required to be made.

10.2    TAX INDEMNITY

        Without prejudice to Clause 10.1 (Tax Gross-up), if the Agent or (as a
        result of the introduction of, or change in or in the interpretation,
        administration or application of, any law or regulation or order or
        governmental rule or double taxation agreement or any published practice
        or concession of any relevant taxing authority after the date hereof)
        any Bank (a) is required to make any payment of or on account of tax on
        or in relation to any sum received or receivable under the Finance
        Documents (including any sum deemed for purposes of tax to be received
        or receivable by such Finance Party whether or not actually received or
        receivable) or (b) has any liability in respect of any such payment
        asserted, imposed, levied or assessed against it, the relevant Obligor
        shall, within five Business Days of demand by the Agent, promptly
        indemnify the Agent or Bank which suffers a loss or liability as a
        result against such payment or liability, together with any interest,
        penalties, costs and expenses payable or incurred in connection
        therewith, PROVIDED THAT this Clause 10.2 shall not apply to:

        10.2.1  any tax imposed on and calculated by reference to the net
                income, profits or gains actually received or receivable by the
                Agent or such Bank (but, for the avoidance of doubt, not
                including any sum deemed for purposes of tax to be received or
                receivable by the Agent or such Bank but not actually
                receivable) by the jurisdiction in which the Agent or such Bank
                is incorporated or, if different, the jurisdiction (or
                jurisdictions) in which the Agent or such Bank is treated as
                resident for tax purposes (but excluding any such tax that would
                not have arisen but for such Agent or Bank, as the case may be,
                being treated as a resident in a jurisdiction solely by reason
                of having entered into this Agreement, performed its obligations
                or received any payment hereunder or enforced its rights
                hereunder); or

        10.2.2  any tax imposed on and calculated by reference to the net
                income, profits or gains of the Facility Office of the Agent or
                such Bank actually received or receivable by the Agent or such
                Bank (but, for the avoidance of doubt, not including any sum
                deemed for purposes of tax to be received or receivable by the
                Agent or such Bank but not actually receivable) by the
                jurisdiction in which its Facility Office is located; or

                                       46
<PAGE>   48
        10.2.3  any tax imposed on the Agent, as a result of the failure by a
                Bank to satisfy on the due date of a payment of interest either
                of the conditions set out in sub-clauses 10.3.1 and 10.3.2 of
                Clause 10.3 (Banks' Tax Status Confirmation); or

        10.2.4  for the avoidance of doubt, any tax imposed on a Bank which
                would not have arisen but for the sub-participation of its
                rights and benefits under any of the Finance Documents.

10.3    BANKS' TAX STATUS CONFIRMATION

        Each Bank confirms in favour of the Agent (on the date hereof or, in the
        case of a Bank which becomes a party hereto pursuant to a transfer or
        assignment, on the date on which the relevant transfer or assignment
        becomes effective) that either:

        10.3.1  it is not resident for tax purposes in the United Kingdom and is
                beneficially entitled to its share of the Loan and the interest
                thereon; or

        10.3.2  it is a bank as defined for the purposes of Section 349 of ICTA
                and is beneficially entitled to its share of the Loan and the
                interest thereon,

        and each Bank shall promptly notify the Agent if there is any change in
        its position from that set out above.

10.4    U.S. TAX FORMS

        Each Bank that is not a United States person (as such term is defined in
        Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal
        income tax purposes agrees to deliver to the Borrower and the Agent on
        or prior to the Initial Advance Date, or in the case of a Bank that is
        an assignee or transferee of an interest under this Agreement pursuant
        to Clause 30.3 (Assignment and Transfers by Banks) (unless the
        respective Bank was already a Bank hereunder immediately prior to such
        assignment or transfer), on the date of such assignment or transfer to
        such Bank, (i) two accurate and complete original signed copies of
        Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a
        complete exemption under an income tax treaty) (or successor forms)
        certifying to such Bank's entitlement as of such date to a complete
        exemption from United States withholding tax with respect to payments to
        be made under this Agreement, or (ii) if the Bank is not a "bank" within
        the meaning of Section 881(c)(3)(A) of the Code and cannot deliver
        either Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect
        to a complete exemption under an income tax treaty) pursuant to clause
        (i) above, (x) a certificate substantially in the form of Schedule 8
        (any such certificate, a "NON-BANK CERTIFICATE") and (y) two accurate
        and complete original signed copies of Internal Revenue Service Form
        W-8BEN (with respect to the portfolio interest exemption) (or successor
        form) certifying to such Bank's entitlement to a complete exemption from
        United States withholding tax with respect to payments of interest to be
        made under this Agreement. In addition, each Bank agrees that from time
        to time after the Initial Advance Date, upon the reasonable request of
        the Borrower or when a change in circumstances of the Bank renders the
        previous certification obsolete or inaccurate in any material respect,
        it will deliver to the Borrower and the Agent two new accurate and
        complete original signed copies of Internal Revenue Service W-8ECI or
        Form W-8BEN (with respect to the benefits of any income tax treaty), or
        Form W-8BEN (with respect to the portfolio interest exemption) and a
        Non-Bank Certificate, as

                                       47
<PAGE>   49
        the case may be, and such other forms as may be required in order to
        confirm or establish the entitlement as of such date of such Bank to a
        continued exemption from or (as a result of a change in law, treaty,
        rule, regulations, guideline or order, or in the interpretation thereof)
        reduction in United States withholding tax with respect to payments
        under this Agreement, or it shall notify the Borrower and the Agent of
        its inability to deliver any such Form or Certificate, in which case
        such Bank shall not be required to deliver any such Form or Certificate
        pursuant to this Clause 10.4. Notwithstanding anything to the contrary
        contained in Clause 10.1 (Tax Gross-up), but subject to Clause 10.5
        (Claims by Banks and the Agent) and the immediately succeeding sentence,
        (x) the Borrower shall be entitled, to the extent it is required to do
        so by law, to deduct or withhold income or similar taxes imposed by the
        United States (or any political subdivision or taxing authority thereof
        or therein) from interest, fees or other amounts payable hereunder for
        the account of any Bank which is not a United States person (as such
        term is defined in Section 7701(a)(30) of the Code) for U.S. federal
        income tax purposes to the extent that such Bank has not provided to the
        Borrower U.S. Internal Revenue Service Forms that establish a complete
        exemption from such deduction or withholding and (y) the Borrower shall
        not be obligated pursuant to Clause 10.1 to gross-up payments to be made
        to a Bank in respect of income or similar taxes imposed by the United
        States if (I) such Bank has not provided to the Borrower the Internal
        Revenue Service Forms required to be provided to the Borrower pursuant
        to this Clause 10.4 or (II) in the case of a payment, other than
        interest that is treated as interest for U.S. federal income tax
        purposes, to a Bank described in clause (ii) above, to the extent that
        such Forms do not establish a complete exemption from withholding of
        such taxes. Notwithstanding anything to the contrary contained in the
        preceding sentence or elsewhere in this Clause 10.4 and except as set
        forth in Clause 10.5 (Claims by Banks and the Agent), the Borrower
        agrees to pay any additional amounts and to indemnify each Bank in the
        manner set forth in Clause 10.1 (Tax Gross-up) in respect of any United
        States taxes deducted or withheld by it as described in the immediately
        preceding sentence as a result of any changes that are effective after
        the Initial Advance Date in any applicable law, treaty, governmental
        rule, regulation, guideline or order, or in the interpretation thereof,
        relating to the deducting or withholding of such taxes.

10.5    CLAIMS BY BANKS AND THE AGENT

        A Bank intending to make a claim pursuant to Clause 10.2 (Tax Indemnity)
        shall notify the Agent of the event giving rise to the claim, whereupon
        the Agent shall notify the Borrower thereof. If the Agent intends to
        make a claim pursuant to Clause 10.2 (Tax Indemnity) it shall notify the
        Borrower of the event giving rise to the claim.

10.6    EXCLUDED CLAIMS

        If any Finance Party is not or ceases to be a Qualifying Lender, no
        Obligor shall be liable to pay to that Finance Party under Clause 10.1
        (Tax Gross-Up) any amount in respect of taxes levied or imposed by the
        United Kingdom in excess of the amount it would have been obliged to pay
        if that Finance Party had been or had not ceased to be a Qualifying
        Lender PROVIDED THAT this Clause 10.6 shall not apply (and each Obligor
        shall be obliged to comply with its obligations under Clause 10.1 (Tax
        Gross-Up)) if:

        10.6.1  after the date hereof, there shall have been any introduction
                of, or change in or in the interpretation, administration or
                application of, any law or regulation or order or governmental
                rule or double taxation agreement or any published

                                       48
<PAGE>   50
                practice or concession of any relevant taxing authority and as a
                result thereof such Finance Party ceases to be a Qualifying
                Lender; or

        10.6.2    such Finance Party is not or ceases to be a Qualifying Lender
                  as a result of the actions of any Obligor.

10.7    TREATY LENDERS

        A Treaty Lender and each Obligor which makes a payment to which that
        Treaty Lender is entitled shall co-operate in completing any procedural
        formalities necessary for that Obligor to obtain authorisation to make
        that payment without a deduction or withholding for or on account of tax
        imposed by the United Kingdom. If an Obligor is able to demonstrate that
        a deduction or withholding for or on account of tax imposed by the
        United Kingdom is required to be made by it as a result of a Treaty
        Lender's failure to so co-operate, such an Obligor shall not be liable
        to pay any increased amount under Clause 10.1 (Tax Gross-Up) as a result
        of such a deduction or withholding.

10.8    NOTIFICATION OF STATUS

        Each Bank shall notify the Agent if it is not a Qualifying Lender at the
        time it becomes a Bank hereunder and shall promptly notify the Agent if
        at any time thereafter it ceases to be a Qualifying Lender. The Agent
        shall promptly notify the Borrower of any notices it receives under this
        Clause 10.8 and if it ceases to be a Qualifying Lender.

11.     TAX RECEIPTS

11.1    NOTIFICATION OF REQUIREMENT TO DEDUCT TAX

        If, at any time, an Obligor is required by law to make any deduction or
        withholding from any sum payable by it under the Finance Documents (or
        if thereafter there is any change in the rates at which or the manner in
        which such deductions or withholdings are calculated), such Obligor and
        the Bank to which such sum is payable shall promptly upon becoming aware
        of such a requirement notify the Agent accordingly. If the Agent
        receives such a notification from a Bank it shall promptly notify the
        Borrower and the Obligor who is required to make such a deduction or
        withholding.

11.2    EVIDENCE OF PAYMENT OF TAX

        If an Obligor makes any payment under the Finance Documents in respect
        of which it is required to make any deduction or withholding, it shall
        pay the full amount required to be deducted or withheld to the relevant
        taxation or other authority within the time allowed for such payment
        under applicable law and shall request and, within thirty days of it
        receiving the same, deliver to the Agent for each Bank an original
        receipt (or a certified copy thereof) issued by such authority
        evidencing the payment to such authority of all amounts so required to
        be deducted or withheld in respect of that Bank's share of such payment.

11.3    TAX CREDIT PAYMENT

        If an additional payment is made under Clause 10 (Taxes) by an Obligor
        or the Borrower for the benefit of any Finance Party and such Finance
        Party, in its sole discretion, determines that it has obtained (and has
        derived full use and benefit from) a credit against, a relief or
        remission for, or repayment of, any tax, then, if and to the extent that
        such Finance Party, in its sole opinion, determines that such credit,
        relief, remission or repayment is in respect of or calculated with
        reference to or otherwise relates to the

                                       49
<PAGE>   51
        additional payment made pursuant to Clause 10 (Taxes), such Finance
        Party shall, to the extent that it can do so without prejudice to the
        retention of the amount of such credit, relief, remission or repayment,
        pay to such Obligor or, as the case may be, the Borrower such amount as
        such Finance Party shall, in its sole opinion, determine to be the
        amount which will leave such Finance Party (after such payment) in no
        worse after-tax position than it would have been in had the additional
        payment in question not been required to be made by such Obligor or the
        Borrower.

11.4    TAX CREDIT CLAWBACK

        If any Finance Party makes any payment to an Obligor or the Borrower
        pursuant to Clause 11.3 (Tax Credit Payment) and such Finance Party
        subsequently determines, in its sole opinion, that the credit, relief,
        remission or repayment in respect of which such payment was made was not
        available or has been withdrawn or that it was unable to use such
        credit, relief, remission or repayment in full, such Obligor or the
        Borrower shall reimburse such Finance Party such amount as such Finance
        Party determines, in its sole opinion, is necessary to place it in the
        same after-tax position as it would have been in if such credit, relief,
        remission or repayment had been obtained and fully used and retained by
        such Finance Party.

11.5    TAX AND OTHER AFFAIRS

        Subject to Clause 10.7, no provision of this Agreement shall interfere
        with the right of any Finance Party to arrange its tax or any other
        affairs in whatever manner it thinks fit, oblige any Finance Party to
        claim any credit, relief, remission or repayment in respect of any
        payment under Clause 10 (Taxes) in priority to any other credit, relief,
        remission or repayment available to it nor oblige any Finance Party to
        disclose any information relating to its tax or other affairs or any
        computations in respect thereof.

12.     INCREASED COSTS

12.1    INCREASED COSTS

        If, by reason of the occurrence, in each case after the date hereof, of
        (a) any change in law or in its interpretation or administration and/or
        (b) compliance with any such new law or with any request or requirement
        relating to the maintenance of capital or any other request from or
        requirement of any central bank or other fiscal, monetary or other
        authority (in each case, where a request or requirement that does not
        have the force of law is a request or requirement with which financial
        institutions subject to such request or requirement are generally
        accustomed to comply):

        12.1.1  a Bank or any holding company of such Bank is unable to obtain
                the rate of return on its capital which it would have been able
                to obtain but for such Bank's entering into or assuming or
                maintaining a commitment or performing its obligations under the
                Finance Documents;

        12.1.2  a Bank or any holding company of such Bank incurs a cost as a
                result of such Bank's entering into or assuming or maintaining a
                commitment or performing its obligations under the Finance
                Documents; or

        12.1.3  there is any increase in the cost to a Bank or any holding
                company of such Bank of funding or maintaining such Bank's share
                of the Advances or any Unpaid Sum,

                                       50
<PAGE>   52
        then the Borrower shall, within three Business Days of a demand of the
        Agent, pay to the Agent for the account of that Bank amounts sufficient
        to indemnify that Bank or to enable that Bank to indemnify its holding
        company from and against, as the case may be, (i) such reduction in the
        rate of return of capital, (ii) such cost or (iii) such increased cost.

12.2    INCREASED COSTS CLAIMS

        A Bank intending to make a claim pursuant to Clause 12.1 (Increased
        Costs) shall notify the Agent of the event giving rise to such claim,
        whereupon the Agent shall notify the Borrower thereof.

12.3    EXCLUSIONS

        Notwithstanding the foregoing provisions of this Clause 12 (Increased
        Costs), no Bank shall be entitled to make any claim under this Clause 12
        (Increased Costs) in respect of any reduction in the rate of return on
        capital, cost or increased cost:

        12.3.1  attributable to a deduction or withholding for or on account of
                tax from a payment under a Finance Document required by law to
                be made by an Obligor and compensated for pursuant to the
                provisions of Clause 10.1 (Tax Gross-Up) (or would have been
                compensated for under Clause 10.1 (Tax Gross-Up) but was not so
                compensated solely because of Clause 10.4 (Tax Forms), Clause
                10.6 (Excluded Claims) or Clause 10.7 (Treaty Lenders));

        12.3.2  compensated by Clause 10.2 (Tax Indemnity) (or would have been
                compensated for under Clause 10.2 (Tax Indemnity) but was not so
                compensated solely because of one of the exclusions set out in
                sub-clauses 10.2.1 to 10.2.4 of Clause 10.2 (Tax Indemnity));

        12.3.3  compensated by the Mandatory Cost Rate; or

        12.3.4  attributable to the wilful breach by the relevant Finance Party
                or its affiliates of any law or regulation.

13.     ILLEGALITY

        If, at any time, it is or will become unlawful for a Bank to make, fund
        or allow to remain outstanding all or part of its share of the Advances,
        then that Bank shall, promptly after becoming aware of the same, deliver
        to the Borrower through the Agent a notice to that effect and:

        13.1.1  such Bank shall not thereafter be obliged to participate in the
                making of any Advances and the amount of its Available
                Commitment (if any) shall be immediately reduced to zero; and

        13.1.2  if the Agent on behalf of such Bank so requires, the Borrower
                shall no later than the last day permitted by law repay such
                Bank's share of any outstanding Advances together with accrued
                interest thereon and all other amounts owing to such Bank under
                the Finance Documents.

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<PAGE>   53
14.     MITIGATION

        If, in respect of any Bank, circumstances arise which would or would
        upon the giving of notice result in:

        14.1.1  an increase in any sum payable to it or for its account pursuant
                to Clause 10.1 (Tax Gross-up);

        14.1.2  a claim for indemnification pursuant to Clause 10.2 (Tax
                Indemnity) or Clause 12.1 (Increased Costs); or

        14.1.3  the reduction of its Available Commitment to zero or any
                repayment to be made pursuant to Clause 13 (Illegality),

        then, without in any way limiting, reducing or otherwise qualifying the
        rights of such Bank or the obligations of the Obligors under any of the
        Clauses referred to above, such Bank shall promptly upon becoming aware
        of such circumstances notify the Agent thereof and, in consultation with
        the Agent and the Borrower and to the extent that it can do so lawfully,
        take reasonable steps (including a change of location of its Facility
        Office or the transfer of its rights, benefits and obligations under the
        Finance Documents to another financial institution acceptable to the
        Borrower and willing to participate in the Facility) to mitigate the
        effects of such circumstances, PROVIDED THAT such Bank shall be under no
        obligation to take any such action if, in the opinion of such Bank, to
        do so might have any adverse effect upon its business, operations or
        financial condition (other than any minor costs and expenses of an
        administrative nature).

15.     REPRESENTATIONS

        15.1.1  Each Covenant Group Obligor makes the representations and
                warranties set out in Clause 15.2 (Status and Due Authorisation)
                to Clause 15.29 (The Scheme); provided that insofar as the
                representations and warranties set out in sub-clause 15.15.3 of
                Clause 15.15 (Business Plan and Information Memorandum) and
                Clause 15.27 (Group Structure) relate to the Target Group, the
                Borrower makes such representations and warranties to the best
                of its knowledge and belief and without liability to pay damages
                for breach thereof.

        15.1.2  The Parent makes the representations and warranties set out in
                Clauses 15.2 (Status and Due Authorisation) to Clause 15.8 (No
                Winding-Up), Clause 15.21 (Execution of this Agreement) and
                Clause 15.26 (Security Interest) with respect to itself (as
                applicable).

        Each Obligor acknowledges that the Finance Parties have entered into the
        Finance Documents in reliance on those representations and warranties.

15.2    STATUS AND DUE AUTHORISATION

        It is duly organised under the laws of the jurisdiction in which it is
        established or incorporated with power to enter into each of the Finance
        Documents to which it is a party and to exercise its rights and perform
        its obligations thereunder and all corporate and other action required
        to authorise its execution of each of the Finance Documents to which it
        is a party and its performance of its obligations thereunder has been
        duly taken. No limit on its powers will be exceeded as a result of the
        borrowings, granting of

                                       52
<PAGE>   54
        security or giving of guarantees contemplated by the Finance Documents
        to which it is a party.

15.3    NO DEDUCTIONS OR WITHHOLDING; ENTITY CLASSIFICATION ELECTION

        Under the laws of its jurisdiction in which it is established or
        incorporated in force at the date hereof, it will not be required to
        make any deduction or withholding from any payment it may make under any
        Finance Document to any Bank which is a Qualifying Lender (assuming in
        the case of a Treaty Lender, that it has secured a direction from the UK
        Inland Revenue to pay interest gross and assuming in the case of United
        States taxes that the tax forms required to be provided in Clause 10.4
        (U.S. Tax Forms) have been so provided). The Borrower has filed a valid
        election to be treated as a disregarded entity for U.S. federal income
        tax purposes and such election currently remains in effect.

15.4    NO IMMUNITY

        In any proceedings taken in the jurisdiction in which it is incorporated
        or established in relation to any Finance Document to which it is party,
        it is not entitled to claim for itself or any of its assets immunity
        from suit, execution, attachment or other legal process.

15.5    VALIDITY AND ADMISSIBILITY IN EVIDENCE

        All acts, conditions and things required to be done, fulfilled and
        performed in order:

        15.5.1  to enable it lawfully to enter into, exercise its rights under
                and perform and comply with the obligations expressed to be
                assumed by it in each of the Finance Documents to which it is
                party;

        15.5.2  to ensure that the obligations expressed to be assumed by it in
                each such Finance Document are legal, valid and (subject to the
                Reservations) binding and enforceable; and

        15.5.3  (subject to the Reservations) to make each such Finance Document
                admissible in evidence in England and the United States,

        have been done, fulfilled and performed (other than the registration of
        the Encumbrances created by the Security Documents with the Registrar of
        Companies under Sections 395 and 398 of the Companies Act 1985).

15.6    NO FILING OR STAMP TAXES

        Under the laws of the jurisdiction in which it is incorporated or
        established in force at the date hereof, it is not necessary that any of
        the Finance Documents to which it is a party be filed, recorded or
        enrolled with any court or other authority in such jurisdiction or that
        any stamp, registration or similar tax be paid on or in relation to any
        Finance Document other than the entries in public registries referred to
        in Clause 15.5 (Validity and Admissibility in Evidence) and fixed duties
        on assignments by way of security.

15.7    BINDING OBLIGATIONS

        The obligations expressed to be assumed by it in each Finance Document
        to which it is expressed to be a party are legal and valid obligations
        and (subject to the Reservations) binding on it and enforceable against
        it in accordance with the terms thereof.

                                       53
<PAGE>   55
15.8    NO WINDING-UP

        No Obligor nor member of the UK Group has taken any corporate action nor
        have any other steps been taken or legal proceedings been started and
        served or (to the best of its knowledge and belief) threatened against
        any Obligor or any member of the UK Group for its winding-up,
        dissolution, administration or re-organisation or for the appointment of
        a receiver, administrator, administrative receiver, trustee or similar
        officer of it or of any or all of its assets or revenues (other than for
        the purpose of a solvent reconstruction or amalgamation of such Obligor
        or (as the case may be) such member of the UK Group (where such would
        not cause any breach of this Agreement) or for the purpose of the
        transfer of all or part of the business and assets of any member of the
        UK Group to any other member of the UK Group (PROVIDED THAT such
        transfer is permitted under the terms of this Agreement)) and (save in
        the case of any action, steps or proceedings relating to the appointment
        of an administrator) other than where the relevant action, steps or
        proceedings are frivolous or vexatious or being contested in good faith
        by appropriate legal action and such action, steps or proceedings are
        discontinued (in any such case) within 30 days of commencement.

15.9    NO MATERIAL DEFAULTS

        No member of the Covenant Group is in breach of or in default under any
        agreement to which it is a party (including, without limitation,
        Material Commercial Contracts) or which is binding on it or any of its
        assets and no party has terminated or is entitled to terminate (on the
        basis of any breach of or default thereunder) any such agreement to an
        extent or in a manner which could reasonably be expected to have a
        Material Adverse Effect.

15.10   NO MATERIAL PROCEEDINGS

        No action or administrative proceeding of or before any court,
        arbitrator or agency (including, without limitation, investigative
        proceedings) which could reasonably be expected to have a Material
        Adverse Effect has been started or threatened against any member of the
        Covenant Group or any of their respective assets.

15.11   AUDITED FINANCIAL STATEMENTS

        Its most recent consolidated audited financial statements:

        15.11.1 were prepared in accordance with accounting principles generally
                accepted in its jurisdiction of incorporation and consistently
                applied;

        15.11.2 disclose all material liabilities (contingent or otherwise) and
                all material unrealised or anticipated losses any member of the
                Covenant Group; and

        15.11.3 save as disclosed therein, give a true and fair view of the
                financial condition and operations of the Intermediate Parent
                or, as the case may be, the UK Group during the relevant
                financial year.

15.12   ORIGINAL FINANCIAL STATEMENTS

        Save as disclosed in the Disclosure Letter, the financial statements of
        the Target (referred to in paragraph (c) of the definition of Original
        Financial Statements), to the best of its knowledge and belief:

                                       54
<PAGE>   56
        15.12.1 were prepared in accordance with accounting principles generally
                accepted in England and Wales and consistently applied;

        15.12.2 disclose all material liabilities (contingent or otherwise) and
                all material unrealised or anticipated losses of the Target and
                the CWC ConsumerCo Business; and

        15.12.3 save as disclosed therein, give a true and fair view of the
                financial condition and operations of the Target and the CWC
                ConsumerCo Business during the period to which such financial
                statements relate.

15.13   NO MATERIAL ADVERSE CHANGE

        Since the date as at which its most recent audited financial statements
        (where required by Clause 16.1 (Annual Statements), consolidated, in the
        case of the Borrower) were stated to be prepared, there has been no
        change in its business or financial condition or, in the business or
        financial condition of any member of the UK Group or of the UK Group
        taken as a whole or, in the business or financial condition of any
        member of the Target Group or of the Target Group taken as a whole
        which, in each case, could reasonably be expected to have a Material
        Adverse Effect.

15.14   FULL DISCLOSURE

        It is not aware of any material facts or circumstances that have not
        been disclosed to the Finance Parties originally party hereto and which
        would, in its reasonable opinion, if disclosed, adversely affect the
        decision of a person considering whether or not to provide finance for
        the purposes set out in Clause 2.2 (Purpose) on the terms of the Finance
        Documents.

15.15   BUSINESS PLAN AND INFORMATION MEMORANDUM

        The Borrower:

        15.15.1 does not regard any of the forecasts or projections set out in
                the Business Plan as unreasonable or, to any material extent,
                unattainable;

        15.15.2 considers (having made all reasonable enquiries) the assumptions
                upon which the forecasts and projections contained in the
                Business Plan are based to be fair and reasonable in all
                material respects; and

        15.15.3 confirms that the factual information contained in the
                Information Memorandum and any other written factual information
                supplied by any member of the UK Group or any member of the
                Target Group (in the latter case, supplied after the Acquisition
                Date or, if supplied before the Acquisition Date, supplied with
                the Borrower's knowledge) to the Agent, the Arrangers and the
                Banks in connection herewith is true, complete and accurate in
                all material respects.

15.16   BUDGETS

        It:

        15.16.1 regards (as at the date each Budget is delivered to the Agent)
                as neither unreasonable, nor to any material extent
                unattainable, any of the forecasts or projections set out in the
                latest Budget delivered under Clause 16.5 (Budgets);

                                       55
<PAGE>   57
        15.16.2 believes (having made all reasonable enquiries) the assumptions,
                upon which the forecasts and projections in relation to the CWC
                ConsumerCo Business contained in the latest Budget delivered
                under Clause 16.5 (Budgets) are based, to be fair and
                reasonable; and

        15.16.3 has, to the best of its knowledge and belief (having made all
                reasonable efforts to make due and careful enquiry), made full
                disclosure of all material facts relating to the CWC ConsumerCo
                Business to all the persons responsible for the preparing of the
                latest Budget delivered under Clause 16.5 (Budgets).

15.17   ENVIRONMENTAL COMPLIANCE

        Each member of the Covenant Group has complied in all material respects
        with all Environmental Law and obtained and maintained any Environmental
        Permits breach of which or, as the case may be, failure to obtain or
        maintain which, could reasonably be expected to have a Material Adverse
        Effect.

15.18   ENVIRONMENTAL CLAIMS

        No Environmental Claim has been commenced or (to the best of the
        Borrower's knowledge and belief) is threatened against any member of the
        Covenant Group where such claim would be reasonably likely, if
        determined against such member of the Covenant Group to have a Material
        Adverse Effect.

15.19   NO ENCUMBRANCES

        Save (in each case) for Permitted Encumbrances, no Encumbrance exists
        over all or any of its present or future revenues or assets and, over
        all or any of the present or future revenues or assets of any other
        member of the Covenant Group.

15.20   NO LOANS

        Save (in each case) for Permitted Loans and Guarantees, no member of the
        Covenant Group has made any loans or granted any credit or other
        financial accommodation which is or are outstanding.

15.21   EXECUTION OF THIS AGREEMENT

        Its execution of each Finance Document to which it is a party and the
        performance of its obligations thereunder do not and will not:

        15.21.1 conflict with any agreement, mortgage, bond or other instrument
                or treaty to which it is party or which is binding upon it or
                any of its assets (including, without limitation, the NTL CC
                Notes) in a manner that could reasonably be expected to have a
                Material Adverse Effect;

        15.21.2 conflict with its constitutive documents and rules and
                regulations; or

        15.21.3 conflict with any applicable law.

15.22   OWNERSHIP OF THE PARENT

        The Parent is a wholly-owned subsidiary of NTL Holdings, and no persons
        or group of connected persons (as construed in accordance with Clause
        9.7 (Mandatory Prepayment due to Change in Control)) has control (as
        construed in accordance with Clause 9.7 (Mandatory Prepayment due to
        Change in Control)) of, NTL Holdings.

                                       56
<PAGE>   58
15.23   LICENCES AND CONSENTS

        Each member of the Covenant Group has, at all relevant times, obtained
        all material licences (including, without limitation, the Licences),
        permissions, authorisations and consents (each an "APPROVAL") required
        for the conduct of its business as carried on from time to time, and all
        such approvals are valid and subsisting save in any such case where
        failure to obtain such an approval or the invalidity of such an approval
        or its failure to subsist could not reasonably be expected to have a
        Material Adverse Effect and to the best of its knowledge and belief
        there has been no act or omission on the part of it, any Covenant Group
        member which is likely to give rise to the enforcement, revocation,
        material amendment, suspension, withdrawal or avoidance of any of the
        approvals or any of the material terms or conditions thereof, which
        enforcement, revocation, amendment, withdrawal, suspension or avoidance
        could reasonably be expected to have a Material Adverse Effect.

15.24   GOVERNMENT OR REGULATORY AUTHORITY INQUIRY

        No member of the Covenant Group has to the best of its knowledge and
        belief after due and careful inquiry received any notice or
        communication which has not been disclosed to the Agent on or prior to
        the date hereof from, or is aware of, any inquiry, investigation or
        proceeding on the part of any government, court or regulatory agency or
        authority the effect of which, in any such case, could reasonably be
        expected to have a Material Adverse Effect.

15.25   INTELLECTUAL PROPERTY

        It is not aware of any adverse circumstance relating to the validity,
        subsistence or use of any member of the Covenant Group's Intellectual
        Property which could reasonably be expected to have a Material Adverse
        Effect.

15.26   SECURITY INTEREST

        15.26.1 Subject (in each case) to the Reservations, each Security
                Document creates the security interest which that Security
                Document purports to create or, if that Security Document
                purports to evidence a security interest, accurately evidences a
                security interest which has been validly created and each
                security interest ranks in priority as specified in the Security
                Document creating or evidencing that interest.

        15.26.2 The shares of Intermediate Parent and the Borrower which are
                subject to an Encumbrance under the Security Documents are fully
                paid and not subject to any option to purchase or similar rights
                and the constitutional documents of such persons do not and
                could not restrict or inhibit (whether absolutely, partly, under
                a discretionary power or otherwise) any transfer of such shares
                pursuant to enforcement of the Security Documents.

15.27   GROUP STRUCTURE

        The corporate structure of the UK Group and the NTL Holding Group set
        out in the Group Structure Chart delivered pursuant to Clause 2.4
        (Conditions Precedent) and the corporate structure of the UK Group, the
        Target Group and the NTL Holding Group set out in any Group Structure
        Chart delivered to the Agent pursuant to Clause 18.29 (Revised Group
        Structure) is true, complete and accurate, in each case as at the date
        of its delivery to the Agent.

                                       57
<PAGE>   59
15.28   SCHEME INFORMATION

        The CWC Circular contains all the material terms of the Scheme and the
        information contained in the CWC Circular relating to the Group (other
        than the Target Group) and the Scheme and, to the best of its knowledge
        and belief, the CWC ConsumerCo Business is true, complete and accurate
        in all material respects on its date of despatch. An office copy of the
        order of the court sanctioning the Scheme under Section 425 was filed
        with the Registrar of Companies for registration pursuant to sub-section
        3 of Section 425 on 12 May 2000.

15.29   THE SCHEME

        In relation to the Scheme:

        15.29.1   no step has been taken which has increased (or may in the
                  future increase) the offer price under the Scheme beyond the
                  level specified in the CWC Circular;

        15.29.2   no modification, variation or amendment of a material nature
                  has been made to, and no waiver has been granted in respect
                  of, any of the conditions set out in Appendix 2 to the CWC
                  Circular or in the Transaction Agreement;

        15.29.3   no press release or other publicity, the text of which has not
                  previously been agreed with the Agent, which makes reference
                  to the Facility or to some or all of the Finance Parties has
                  been issued or allowed to be issued; and

        15.29.4   in all material respects relevant in the context of the
                  Scheme, it and each of its affiliates (as relevant) has
                  complied with the Code, the Financial Services Act 1986, the
                  Companies Act 1985 and all other applicable laws and
                  regulations.

15.30   EXISTING GROUP INDEBTEDNESS

        15.30.1   The Intermediate Parent owes no Financial Indebtedness to any
                  other members of the Group, other than the Parent.

        15.30.2   The Borrower owes no Financial Indebtedness to any members of
                  the Group, other than the Intermediate Parent.

15.31   REPETITION OF REPRESENTATIONS

        The Repeated Representations shall (to the extent applicable) be deemed
        to be repeated by the Obligors on each date on which an Advance is or is
        to be made and the representations set out in sub-clause 15.15.3 of
        Clause 15.15 (Business Plan and Information Memorandum) shall be deemed
        to be made on the date that the Information Memorandum is approved by
        the Borrower and (save as otherwise disclosed by the Borrower, in
        writing to the Agent, prior to the Syndication Date) on the Syndication
        Date.

16.     FINANCIAL INFORMATION

16.1    ANNUAL STATEMENTS

        16.1.1    The Borrower shall as soon as the same become available, but
                  in any event within 120 days after the end of each of its
                  financial years, deliver to the Agent in sufficient copies for
                  the Banks the consolidated financial statements of the UK
                  Group for such financial year, audited by an internationally
                  recognised firm of independent auditors licensed to practice
                  in England and Wales.

                                       58
<PAGE>   60
        16.1.2    In respect of any of its financial years which end before the
                  Pushdown Date, the Borrower shall as soon as the same become
                  available, but in any event within 180 days after the end of
                  each of those financial years, procure the delivery to the
                  Agent in sufficient copies for the Banks the consolidated
                  financial statements of the Target Group for such financial
                  year, audited by an internationally recognised firm of
                  independent auditors licensed to practise in England and
                  Wales.

16.2    QUARTERLY STATEMENTS

        16.2.1    The Borrower shall as soon as the same become available, but
                  in any event within 60 days after the end of each Financial
                  Quarter, deliver to the Agent in sufficient copies for the
                  Banks the unaudited consolidated financial statements of the
                  UK Group for such period.

        16.2.2    In respect of any Financial Quarter which ends before the
                  Pushdown Date, the Borrower shall as soon as the same become
                  available, but in any event within 60 days after the end of
                  each of those Financial Quarters, procure the delivery to the
                  Agent in sufficient copies for the Banks the unaudited
                  consolidated financial statements of the Target Group for such
                  period.

16.3    REQUIREMENTS AS TO FINANCIAL STATEMENTS

        The Borrower shall ensure that each set of financial statements
        delivered by it pursuant to this Clause 16 is:

        16.3.1    certified by one of its Authorised Signatories as giving a
                  true and fair view of its financial condition (and in the case
                  of the Borrower, after Pushdown the consolidated financial
                  condition of the UK Group and the consolidated financial
                  condition of the Target Group) as at the end of the period to
                  which those financial statements relate and of the results of
                  its (or, as the case may be, the UK Group's or the Target
                  Group's) operations during such period; and

        16.3.2    accompanied by a comparison to the Business Plan projections
                  (as updated by the relevant Budget) for the financial year or,
                  as the case may be, Financial Quarter to which those financial
                  statements relate.

16.4    COMPLIANCE CERTIFICATES

        The Borrower shall ensure that each set of consolidated financial
        statements delivered by it pursuant to Clause 16.1 (Annual Statements)
        or Clause 16.2 (Quarterly Statements) is accompanied by a Compliance
        Certificate signed by two of its Authorised Signatories.

16.5    BUDGETS

        The Borrower shall, as soon as the same become available, and in any
        event no later than 60 days after the beginning of each of its financial
        years, deliver to the Agent in sufficient copies for the Banks an annual
        budget (in a form agreed with the Agent and, for the purpose of this
        Clause 16.5, assuming that the Pushdown has been completed) prepared by
        reference to each Financial Quarter in respect of such financial year
        including:

                                       59
<PAGE>   61
        16.5.1    forecasts of projected disposals (including timing and amount
                  thereof) on a consolidated basis of the UK Group (including,
                  prior to the Pushdown Date, the Target Group) for such
                  financial year;

        16.5.2    projected annual profit and loss accounts (including projected
                  turnover and operating costs) and projected balance sheets and
                  cash flow statements, together with the main operating
                  assumptions relating thereto, on a quarterly basis, for such
                  financial year on a consolidated basis for the UK Group
                  (including, prior to the Pushdown Date, the Target Group);

        16.5.3    revisions to the projections set out in the Business Plan,
                  together with the main operating assumptions relating thereto,
                  for such financial year until the Final Maturity Date, based
                  on the financial condition and performance and prospects of
                  the UK Group (including, prior to the Pushdown Date, the
                  Target Group) at such time;

        16.5.4    projected Permitted Payments to be made during such financial
                  year and the (in respect of paragraph (c) of the definition of
                  Permitted Payments) related Financial Indebtedness of the
                  relevant member of the NTL Holding Group to which those
                  Permitted Payments will relate;

        16.5.5    projected Capital Expenditure to be incurred on a quarterly
                  basis for such financial year on a consolidated basis for the
                  UK Group (including, prior to the Pushdown Date, the Target
                  Group);

        16.5.6    projected EBIT and EBITDA as at the end of each Financial
                  Quarter in such financial year, for the UK Group and (prior to
                  the Pushdown Date) the Target Group; and

        16.5.7    a qualitative analysis and commentary from the management on
                  its proposed activities for such financial year.

        The Borrower shall provide the Agent with details of any material
        changes in the projections delivered under this Clause 16.5 as soon as
        reasonably practicable after it becomes aware of any such change.

16.6    HEDGING

        The Borrower will promptly notify the Agent upon either it or any member
        of the UK Group and prior to the Pushdown Date any member of the Target
        Group entering into any Hedging Agreement, provided that the Borrower
        shall incur no liability to pay damages for failure to so notify the
        Agent of any member of the Target Group entering into any Hedging
        Agreement.

16.7    ASSET PASSTHROUGHS AND FUNDING PASSTHROUGHS

        The Borrower shall, at least five Business Days prior to effecting
        either an Asset Passthrough or a Funding Passthrough provide the Agent
        with:

        16.7.1    written notice of the proposed Asset Passthrough or Funding
                  Passthrough;

        16.7.2    a summary of the steps to be implemented in connection with
                  the proposed Asset Passthrough or Funding Passthrough;

                                       60
<PAGE>   62
        16.7.3    a certificate from an Authorised Signatory of the Borrower,
                  confirming that the proposed Asset Passthrough or Funding
                  Passthrough will satisfy all of the requirements of the
                  definition thereof; and

        16.7.4    such other information in relation to the proposed Asset
                  Passthrough or Funding Passthrough as the Agent may reasonably
                  request.

16.8    OTHER FINANCIAL INFORMATION

        The Borrower shall procure that each member of the UK Group and the
        Target Group shall from time to time on the request of the Agent,
        furnish the Agent with such information about the business, condition
        (financial or otherwise), operations, performance, properties or
        prospects of the Intermediate Parent, the UK Group (and, prior to the
        Pushdown Date, the Target Group) as the Agent or any Bank (through the
        Agent) may reasonably require, PROVIDED THAT the Borrower shall not be
        under any obligation to supply any information the supply of which would
        be contrary to any confidentiality obligation binding on it and further
        provided that the Borrower shall incur no liability to pay damages for
        failure so to procure any member of the Target Group.

16.9    ACCOUNTING POLICIES

        The Borrower shall ensure that each set of financial statements
        delivered pursuant to this Clause 16 is prepared using accounting
        policies, practices, procedures and reference period consistent with
        those applied in the preparation of the Original Financial Statements
        unless, in relation to any such set of financial statements, the
        Borrower notifies the Agent that there have been one or more changes in
        any such accounting policies, practices, procedures or reference period
        and:

        16.9.1    the auditors of the Borrower provide:

                  (a)   a description of the changes and the adjustments which
                        would be required to be made to those financial
                        statements in order to cause them to use the accounting
                        policies, practices, procedures and reference period
                        upon which the relevant Original Financial Statements
                        were prepared; and

                  (b)   sufficient information, in such detail and format as may
                        be reasonably required by the Agent, to enable the Banks
                        to make an accurate comparison between the financial
                        position indicated by those financial statements and the
                        relevant Original Financial Statements,

                  in which case any reference in this Agreement to those
                  financial statements shall be construed as a reference to
                  those financial statements as adjusted to reflect the basis
                  upon which the relevant Original Financial Statements were
                  prepared; or

        16.9.2    the Borrower also notifies the Agent that it is no longer
                  practicable to test compliance with the financial condition
                  set out in Clause 17.1 (UK Group Financial Condition) against
                  the financial statements received in which case:

                  (a)   the Agent and the Borrower shall enter into negotiations
                        with a view to agreeing alternative financial conditions
                        to replace those contained in

                                       61
<PAGE>   63
                        Clause 17.1 (UK Group Financial Condition) in order to
                        maintain a consistent basis for such financial
                        covenants; and

                  (b)   if, after three months commencing on the date of the
                        notice given to the Agent pursuant to this sub-clause
                        16.9.2, the Agent and the Borrower cannot agree
                        alternative financial conditions which are acceptable to
                        an Instructing Group, the Agent shall refer the matter
                        to such internationally recognised accounting firm as
                        may be agreed between the Borrower and an Instructing
                        Group for determination of the adjustments required to
                        be made to such financial statements or the calculation
                        of such ratios to take account of such change, such
                        determination to be binding on the parties hereto,
                        provided that pending such determination the Borrower
                        shall continue to prepare financial statements and
                        calculate such ratios in accordance with sub-clause
                        16.9.1 above.

16.10   GENERAL INFORMATION

        16.10.1   The Borrower and the Intermediate Parent shall, as soon as
                  reasonably practicable, furnish the Agent with such general
                  information as it or any member of the UK Group is required by
                  law to supply or make available to its (or such member of the
                  UK Group's) (a) shareholders (in their capacity as such) or
                  (b) creditors generally or any class thereof.

        16.10.2   Prior to the Pushdown Date, the Borrower shall, as soon as
                  reasonably practicable, furnish the Agent with such general
                  information as any member of the Target Group is required by
                  law to supply or make available to its (or such member of the
                  Target Group's) (a) shareholders (in their capacity as such)
                  or (b) creditors generally or any class thereof.

16.11   LITIGATION AND GOVERNMENT OR REGULATORY ENQUIRY The Borrower shall
        advise the Agent forthwith of the details of:

        16.11.1   any litigation, arbitration or administrative proceedings
                  pending or threatened against any member of the Covenant Group
                  or the Target Group which could reasonably be expected to
                  result in liability of such member of the Covenant Group or
                  the Target Group in an amount in excess of L5,000,000 (or its
                  equivalent); and

        16.11.2   any notice or communication received by it or, any member of
                  the Covenant Group or the Target Group from, or any actual or
                  potential enquiry, investigation or proceedings commenced by,
                  any government, court or regulatory agency or authority, if
                  such notice, communication, enquiry, investigation or
                  proceedings could reasonably be expected to have a Material
                  Adverse Effect; provided that the Borrower shall incur no
                  liability to pay damages for failure to advise the Agent of
                  such pending or threatened litigation, arbitration or
                  administrative proceedings against the Target Group or notice
                  or communication received by the Target Group.

16.12   ACQUISITION INFORMATION

        The Borrower shall from time to time, on the request of the Agent,
        provide the Agent with any material information in the possession of any
        member of either the NTL

                                       62
<PAGE>   64
        Holding Group, the UK Group or (after the Acquisition Date) the Target
        Group relating to the Acquisition and/or the Scheme as the Agent may
        reasonably request provided that the Borrower (a) shall be under no
        obligation to supply any information the supply of which it can
        demonstrate would be contrary to any confidentiality obligation binding
        on it or on any member of the NTL Holding Group, the UK Group or the
        Target Group and (b) shall have no liability to pay damages for failure
        to provide such information in the possession of any member of the
        Target Group.

17.     FINANCIAL CONDITION

17.1    UK GROUP FINANCIAL CONDITION

        The Borrower shall ensure that the financial condition of the UK Group
        (which shall, for the purposes of this Clause 17.1 be deemed to include
        (a) Northampton Cable Television Limited, Herts Cable Limited and Cable
        & Wireless Communications (South Hertfordshire) Limited and (b) prior to
        the Pushdown Date, the Target Group including NTL Business Limited)
        shall be such that:

        17.1.1    Ratio of UK Group Net Senior Debt to Annualised EBITDA

                  The ratio of the UK Group Net Senior Debt on each of the
                  Quarter Dates specified in column one below to the Annualised
                  EBITDA of the UK Group for the Relevant Period ended on that
                  date shall be no greater than the ratio set out in column two
                  below corresponding to that date.

                COLUMN ONE                                  COLUMN TWO
               QUARTER DATE                       UK GROUP NET CASH SENIOR DEBT:
                                                         ANNUALISED EBITDA
         31 December 2000                                    13.45:1.00
         31 March 2001                                       11.75:1.00
         30 June 2001                                        9.99:1.00
         30 September 2001                                   7.64:1.00
         31 December 2001                                    6.17:1.00
         31 March 2002                                       6.17:1.00
         30 June 2002                                        4.70:1.00
         30 September 2002                                   4.41:1.00
         31 December 2002                                    4.11:1.00
         31 March 2003                                       4.11:1.00
         30 June 2003                                        3.23:1.00
         30 September 2003                                   3.23:1.00
         31 December 2003                                    2.64:1.00
         31 March 2004                                       2.64:1.00
         30 June 2004                                        2.35:1.00
         30 September 2004                                   2.35:1.00
         31 December 2004                                    2.06:1.00
         31 March 2005                                       2.06:1.00
         30 June 2005 and each Quarter Date                  1.76:1.00
         thereafter

                                       63
<PAGE>   65
        17.1.2    UK Group Net Senior Interest Cover Ratio

                  The ratio of the EBITDA of the UK Group for each Relevant
                  Period ended on the Quarter Dates specified in column one
                  below to the UK Group Net Cash Senior Finance Charges for that
                  Relevant Period shall be equal to or greater than the ratio
                  set out in column two below corresponding to that date.

                                                            COLUMN TWO
            COLUMN ONE                               EBITDA: UK GROUP NET CASH
           QUARTER DATE                               SENIOR FINANCE CHARGES
        31 December 2000                                    0.78:1.00
        31 March 2001                                       0.99:1.00
        30 June 2001                                        1.20:1.00
        30 September 2001                                   1.44:1.00
        31 December 2001                                    1.77:1.00
        31 March 2002                                       1.77:1.00
        30 June 2002                                        2.27:1.00
        30 September 2002                                   2.68:1.00
        31 December 2002                                    2.89:1.00
        31 March 2003                                       2.89:1.00
        30 June 2003                                        3.71:1.00
        30 September 2003                                   3.71:1.00
        31 December 2003                                    4.33:1.00
        31 March 2004                                       4.33:1.00
        30 June 2004                                        5.78:1.00
        30 September 2004                                   5.78:1.00
        31 December 2004                                    6.19:1.00
        31 March 2005                                       6.19:1.00
        30 June 2005 and each Quarter Date                  6.19:1.00
        thereafter

        17.1.3    Total Interest Cover Ratio

                  The ratio of the EBITDA of the UK Group for each Relevant
                  Period ended on the Quarter Dates specified in column one
                  below to the Total Net Cash Finance Charges for that Relevant
                  Period shall be equal to or greater than the ratio set out in
                  column two below corresponding to that date.

              COLUMN ONE                                 COLUMN TWO
             QUARTER DATE                      EBITDA: TOTAL NET CASH FINANCE
                                                           CHARGES
        31 December 2002                                  1.07:1.00
        31 March 2003                                     1.07:1.00
        30 June 2003                                      1.24:1.00
        30 September 2003                                 1.24:1.00
        31 December 2003                                  1.36:1.00
        31 March 2004                                     1.36:1.00

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<PAGE>   66
        30 June 2004                                      1.44:1.00
        30 September 2004                                 1.44:1.00
        31 December 2004                                  1.65:1.00
        31 March 2005                                     1.65:1.00
        30 June 2005 and each Quarter Date                1.86:1.00
        thereafter

        17.1.4    Ratio of Total Net Debt to Annualised EBITDA

                  The ratio of the Total Net Debt on each of the Quarter Dates
                  specified in column one below to the Annualised EBITDA of the
                  UK Group for the Relevant Period ended on that date shall be
                  no greater than the ratio set out in column two below
                  corresponding to that date.

                 COLUMN ONE                                 COLUMN TWO
                QUARTER DATE                          TOTAL NET DEBT: EBITDA
         31 December 2002                                    12.04:1.00
         31 March 2003                                       11.75:1.00
         30 June 2003                                        9.40:1.00
         30 September 2003                                   9.40:1.00
         31 December 2003                                    8.81:1.00
         31 March 2004                                       8.81:1.00
         30 June 2004                                        6.46:1.00
         30 September 2004                                   6.46:1.00
         31 December 2004                                    6.17:1.00
         31 March 2005                                       6.17:1.00
         30 June 2005 and each Quarter Date                  5.29:1.00
         thereafter

17.2    FINANCIAL DEFINITIONS

        In this Agreement the following terms have the following meanings. For
        the purpose of the financial definitions set out in this Clause 17.2
        references to the UK Group shall be deemed to include (a) Northampton
        Cable Television Limited, Herts Cable Limited and Cable & Wireless
        Communications (South Hertfordshire) Limited and (b) prior to the
        Pushdown Date, the Target Group.

        "ANNUALISED EBITDA" means with respect to any Quarter Date, the
        consolidated EBITDA of the UK Group, for the Relevant Period ended on
        such Quarter Date, multiplied by two.

        "CASH" means at any time, cash denominated in sterling (or any other
        currency freely convertible to sterling) and credited to an account in
        the name of a member of the Parent Covenant Group or (as applicable) the
        UK Group with an Eligible Deposit Bank and to which such a member of the
        Parent Covenant Group or the UK Group is alone beneficially entitled and
        for so long as:

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        (a)     such cash is repayable on demand and repayment of such cash is
                not contingent on the prior discharge of any other indebtedness
                of any member of the Parent Covenant Group or the UK Group or of
                any other person whatsoever or on the satisfaction of any other
                condition; or

        (b)     such cash has been deposited with an Eligible Deposit Bank as
                security for any performance bond, guarantee, standby letter of
                credit or similar facility the contingent liabilities relating
                to such having been included in the calculation of Parent
                Covenant Group Net Debt or, as the case may be, UK Group Net
                Senior Debt.

        "CURRENT ASSETS" means the aggregate of inventory, trade and other
        receivables of each member of the UK Group including sundry debtors (but
        excluding cash at bank) maturing within twelve months from the date of
        computation.

        "CURRENT LIABILITIES" means the aggregate of all liabilities (including
        trade creditors, accruals and provisions and prepayments) of each member
        of the UK Group falling due within twelve months from the date of
        computation but excluding consolidated aggregate Indebtedness for
        Borrowed Money of the UK Group falling due within such period and any
        interest on such Indebtedness for Borrowed Money due in such period.

        "EBIT" means, in respect of any period, the consolidated net income of
        the UK Group, for such period adding back (only to the extent, in each
        case, deducted in calculating such consolidated net income):

        (a)       any provision on account of taxation;

        (b)       any interest (including capitalised interest), commission,
                  discounts or other fees incurred or payable, received or
                  receivable, by any member of the UK Group in respect of
                  Indebtedness for Borrowed Money;

         (c)      any amounts received or paid pursuant to the interest hedging
                  arrangements entered into in respect of the Senior Bank Credit
                  Agreement; and

         (d)      any items treated as exceptional or extraordinary items and
                  any other similar items agreed between the Borrower and the
                  Agent (acting on the instructions of an Instructing Group).

        "EBITDA" means, in respect of any period, EBIT for such period adding
        back (only to the extent, in each case, deducted in calculating EBIT):

         (a)      any amount attributable to amortisation of intangible assets
                  (including goodwill);

         (b)      depreciation of tangible assets and capitalised costs and
                  expenses; and

         (c)      amortisation, or the writing off, of transaction expenses in
                  relation to the Acquisition,

        and deducting any costs and expenses capitalised during such period
        (other than costs and expenses incurred in constructing or upgrading
        cable networks in the ordinary course of the UK Group's business).

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<PAGE>   68
        "ELIGIBLE DEPOSIT BANK" means any bank or financial institution with a
        short term rating of at least A1 granted by Standard & Poor's
        Corporation or P1 granted by Moody's Investors Services, Inc.

        "EXCESS CASH FLOW" means, for any financial year, Operating Cash Flow
        for that period LESS Net Total Debt Service for that period.

        "FINANCIAL QUARTER" means the period commencing on the day after one
        Quarter Date and ending on the next Quarter Date.

        "NET TOTAL DEBT SERVICE" means, in respect of any financial year, the
        aggregate of:

         (a)      Total Net Cash Finance Charges for the two Relevant Periods in
                  that financial year; and

        (b)       save to the extent such were immediately reborrowed, the
                  aggregate of scheduled and mandatory payments of the
                  principal, capital or nominal amounts of any Indebtedness for
                  Borrowed Money of any member of the Parent Covenant Group
                  which fell due during that financial year (excluding any such
                  payments which relate to subordinated debt (as defined in the
                  Senior Bank Credit Agreement) where such payments cannot be
                  made due to the subordination of such subordinated debt (as
                  defined in the Senior Bank Credit Agreement) remaining in full
                  force and effect).

        "OPERATING CASH FLOW" means, in respect of any financial year, EBITDA of
        the UK Group for that financial year after:

         (a)      adding back:

                  (i)      any decrease in the amount of Working Capital at the
                           end of such a financial year compared against the
                           Working Capital at the start of such financial year;
                           and

                  (ii)     any cash receipt in respect of any exceptional or
                           extraordinary item; and

        (b)       deducting:

                  (i)      any amount of Capital Expenditure actually made by
                           any member of the UK Group;

                  (ii)     any increase in the amount of Working Capital at the
                           end of such financial year compared against the
                           Working Capital at the start of that financial year;

                  (iii)    any amount actually paid or due and payable in
                           respect of taxes on the profits of any member of the
                           UK Group; and

                  (iv)     any cash payment in respect of any exceptional or
                           extraordinary item,

                  and no amount shall be included or excluded more than once.

        "PARENT COVENANT GROUP NET DEBT" means, at any time (without double
        counting), the aggregate principal, capital or nominal amounts
        (including any capitalised interest) of

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<PAGE>   69
         indebtedness of any member of the Parent Covenant Group constituting
         Indebtedness for Borrowed Money together with any other indebtedness of
         any member of the Parent Covenant Group constituting Indebtedness for
         Borrowed Money which is due and payable and has not been paid at such
         time and in respect of which the grace period (if any) specified in the
         documentation relating thereto has expired, but:

                  (a)      excluding Indebtedness for Borrowed Money of any
                           member of the Parent Covenant Group to another member
                           of the Group to the extent permitted under this
                           Agreement; and

                  (b)      deducting the Cash held by members of the Parent
                           Covenant Group at such time.

         "QUARTER DATE" means 31 March, 30 June, 30 September and 31 December in
         each year.

         "RELEVANT PERIOD" means each period of six months ending on a Quarter
         Date.

        "TOTAL NET DEBT" means, at any time, the aggregate of the UK Group Net
        Senior Debt and the Parent Covenant Group Net Debt.

        "TOTAL NET CASH FINANCE CHARGES" means, in respect of each Relevant
        Period, the aggregate amount of the interest (including the interest
        element of leasing and hire purchase payments) commission, fees and
        other periodic finance payments paid or due and payable in cash on the
        Total Net Debt during such a Relevant Period,

        (a)       adding any commission, fees and other finance payments payable
                  by any member of the Parent Covenant Group and the UK Group in
                  cash under any interest rate hedging arrangement;

        (b)       deducting any commission, fees and other finance payments
                  receivable by any member of the Parent Covenant Group and the
                  UK Group under any interest rate hedging instrument permitted
                  by this Agreement; and

         (c)      deducting any interest receivable by any member of the Parent
                  Covenant Group and the UK Group on any deposit or bank
                  account.

         "UK GROUP NET SENIOR DEBT" means, at any time (without double
         counting), the aggregate principal, capital or nominal amounts
         (including any capitalised interest) of indebtedness of any member of
         the UK Group constituting Indebtedness for Borrowed Money together with
         any other indebtedness of any member of the UK Group constituting
         Indebtedness for Borrowed Money which is due and payable and has not
         been paid at such time and in respect of which the grace period (if
         any) specified in the documentation relating thereto has expired but:

         (a)      excluding such Indebtedness for Borrowed Money of any member
                  of the UK Group to another member of the UK Group to the
                  extent permitted under this Agreement;

         (b)      excluding any Indebtedness for Borrowed Money to the extent
                  such is Subordinated UK Group Debt; and

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<PAGE>   70
         (c)      deducting the Cash held by members of the UK Group at such
                  time.

        "UK GROUP NET CASH SENIOR FINANCE CHARGES" means, in respect of each
        Relevant Period, the aggregate amount of the interest (including the
        interest element of leasing and hire purchase payments) commission, fees
        and other periodic finance payments paid or due and payable in cash on
        the UK Group Net Senior Debt during such a Relevant Period,

         (a)      adding any commission, fees and other finance payments payable
                  by any member of the UK Group in cash under any interest rate
                  hedging arrangement;

         (b)      deducting any commission, fees and other finance payments
                  receivable by any member of the UK Group under any interest
                  rate hedging arrangement permitted by this Agreement; and

         (c)      deducting any interest receivable by any member of the UK
                  Group on any deposit or bank account.

         "WORKING CAPITAL" means on any date Current Assets less Current
         Liabilities.

17.3    ACCOUNTING TERMS

        All accounting expressions which are not otherwise defined herein shall
        be construed in accordance with generally accepted accounting principles
        in England.

18.     COVENANTS

18.1    NOTIFICATION OF EVENTS OF DEFAULT

        The Borrower shall promptly inform the Agent of the occurrence of any
        Event of Default or Potential Event of Default and, upon receipt of a
        written request to that effect from the Agent, confirm to the Agent
        that, save as previously notified to the Agent or as notified in such
        confirmation, no Event of Default or Potential Event of Default has
        occurred and is continuing.

18.2    CLAIMS PARI PASSU
        Each Obligor shall ensure that subject to the Reservations:

        18.2.1    at all times the claims of the Finance Parties against such
                  Obligor under the Finance Documents (other than the Security
                  Documents) to which such Obligor is party rank at least pari
                  passu with the claims of all its other unsecured and
                  unsubordinated creditors; and

        18.2.2    at all times the claims of the Finance Parties against such
                  Obligor under the Security Documents to which such Obligor is
                  party rank ahead of the claims of all its other creditors
                  (other than (if and to the extent applicable) creditors with
                  the benefit of Permitted Encumbrances) against the assets the
                  subject of the Encumbrances created by such Security
                  Documents.

18.3    MAINTENANCE AND LEGAL VALIDITY

        Each Obligor shall:

        18.3.1    do all such things as are necessary to maintain its existence
                  as a legal person (other than as part of a solvent
                  reorganisation on terms which have been

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<PAGE>   71
                  approved in writing by the Agent acting on the instructions of
                  an Instructing Group); and

         18.3.2   obtain, comply with the terms of and do all that is necessary
                  to maintain in full force and effect all authorisations,
                  approvals, licences and consents required in or by the laws
                  and regulations of each jurisdiction in which it owns or
                  leases property or in which it conducts its business to enable
                  it lawfully to enter into and perform its obligations under
                  each of the Finance Documents to which it is expressed to be a
                  party or to ensure the legality or validity or (subject to the
                  Reservations) enforceability or admissibility in evidence in
                  each jurisdiction in which it owns or leases property or in
                  which it conducts its business (to the extent applicable) of
                  each such Finance Document.

        The Borrower shall procure that each member of the UK Group shall do all
        such things as are necessary to maintain its existence as a legal
        entity.

18.4    INSURANCE

        Each Covenant Group Obligor shall, and shall procure that each member of
        the UK Group shall, effect and maintain, insurances (or, in the case of
        NTL Insurance Limited (or its successor as the UK Group's captive
        insurance company), insurances and re-insurances) on and in relation to
        its business and assets against such risks as is reasonable for a
        company carrying on a business such as that carried on by such Obligor
        or, as the case may be, such member of the UK Group with either (save in
        respect of NTL Insurance Limited's own insurance) NTL Insurance
        Limited (or its successor as the UK Group's captive insurance company)
        or with a reputable underwriter or insurance company and, in the case of
        NTL Insurance Limited (or its successor as the UK Group's captive
        insurance company), with a reputable underwriter or insurance or
        reinsurance company.

18.5    ENVIRONMENTAL COMPLIANCE

        Each Covenant Group Obligor shall, and shall procure that each member of
        the UK Group shall, comply in all material respects with all
        Environmental Law and obtain and maintain any Environmental Permits,
        breach of which (or failure to obtain or maintain which) could
        reasonably be expected to have a Material Adverse Effect.

18.6    ENVIRONMENTAL CLAIMS

        Each Covenant Group Obligor shall, and shall procure that each member of
        the UK Group shall, inform the Agent in writing as soon as reasonably
        practicable upon becoming aware of the same if any Environmental Claim
        has been commenced or (to the best of such person's knowledge and
        belief) is threatened against it in any case where such claim would be
        reasonably likely, if adversely determined, to have a Material Adverse
        Effect, or of any facts or circumstances which will or are reasonably
        likely to result in any Environmental Claim being commenced or
        threatened against such Obligor or any member of the UK Group in any
        case where such claim would be reasonably likely, if determined against
        such person, to have a Material Adverse Effect.

18.7    MAINTENANCE OF LICENCES AND OTHER AUTHORISATION

        Each Covenant Group Obligor shall, and shall procure that each member
        of the UK Group shall:

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<PAGE>   72
        18.7.1  ensure that it has the right and is duly qualified to conduct
                its business and to the extent that the loss of any contract,
                authorisation, approval, licence, consent, right or franchise
                could reasonably be expected to have a Material Adverse Effect,
                do all things necessary to obtain, preserve, keep valid and
                binding and, where relevant, renew all such contracts,
                authorisations, approvals, licences, consents, rights and
                franchises; and

        18.7.2  ensure that each Licence (or any replacement or renewal thereof)
                is held by a member of the UK Group.

18.8    CONDUCT BUSINESS IN ACCORDANCE WITH LICENCES

        Each Covenant Group Obligor shall, and shall procure that each member of
        the UK Group shall, carry on its business, or cause the same to be
        carried on, in accordance with the terms and conditions of the Licences
        in all material respects and no Covenant Group Obligor shall (and each
        Covenant Group Obligor shall procure that no member of the UK Group
        shall) do, omit to do or suffer to be done, any act whereby any person
        is entitled or empowered to revoke, materially and adversely amend,
        suspend, withdraw or terminate any Licence if such amendment,
        revocation, suspension, withdrawal or termination could reasonably be
        expected to have a Material Adverse Effect.

18.9    STATUTORY REQUIREMENTS

        Each Covenant Group Obligor shall, and shall procure that each member of
        the UK Group shall, comply in all material respects with all Statutory
        Requirements binding upon it or enforceable against it in respect of the
        conduct of its business and the ownership of its properties if and
        insofar as failure to do so could reasonably be expected to have a
        Material Adverse Effect.

18.10   REGULATORY NOTICES AND COMMUNICATIONS

        The Borrower shall notify the Agent within fourteen days upon receipt by
        any Covenant Group Obligor or any member of the UK Group of any notice
        or communication from any government, court or regulatory authority or
        agency (including, without prejudice to the generality of the foregoing,
        the Secretary of State for Trade and Industry, Oftel or the
        Radiocommunications Agency) which may give rise to the revocation,
        termination, material adverse amendment, suspension, withdrawal or
        avoidance of any Licences or any of the terms and conditions thereof if
        such revocation, termination, material adverse amendment, suspension,
        withdrawal or avoidance could reasonably be expected to have a Material
        Adverse Effect.

18.11   COMPLIANCE WITH MATERIAL COMMERCIAL CONTRACTS

        Each Covenant Group Obligor shall, and shall procure that each member
        of the UK Group shall:

        18.11.1   comply in all material respects with its obligations under
                  each Material Commercial Contract to which it is a party and
                  take all action necessary to ensure the continued validity and
                  enforceability of its rights thereunder;

         18.11.2  not amend, vary, novate or supplement any such Material
                  Commercial Contract in any material respect;

         18.11.3  not terminate any such Material Commercial Contract prior to
                  its contractual

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                  termination date,

        if such non-compliance, failure to take action, amendment, variation,
        novation or supplement or termination, as the case may be, could
        reasonably be expected to have a Material Adverse Effect.

18.12   PRESERVATION OF ASSETS

        Each Covenant Group Obligor shall and shall procure that each member of
        the UK Group shall, maintain and preserve all of its assets that are
        necessary and material in the conduct of its business as conducted at
        the date hereof in good working order and condition (ordinary wear and
        tear excepted), repair (with reasonable promptness) any damage to such
        assets and shall maintain in all material respects all books and records
        which are necessary in connection therewith or in connection with the
        conduct of its business.

18.13   SECURITY

        Each Covenant Group Obligor shall, at its own expense, take all such
        action as the Agent may reasonably require for the purpose of perfecting
        or protecting the Finance Parties' rights under and preserving the
        security interests intended to be created or evidenced by any of the
        Finance Documents to which it is a party, and following the making of
        any declaration pursuant to Clause 19.16 (Acceleration and Cancellation)
        or 19.17 (Advances Due on Demand) for facilitating the realisation of
        any such security or any part thereof.

18.14   ACCESS

        Each Covenant Group Obligor shall ensure that any one or more
        representatives, agents and advisers of the Agent and/or any of the
        Banks will be allowed, whilst an Event of Default or Potential Event of
        Default is continuing and with prior notice, to have access to the
        assets, books, records and premises of each Covenant Group Obligor and
        each UK Group member and be permitted to inspect the same during normal
        business hours.

18.15   SUBORDINATED DEBT

        The Parent shall ensure that Subordinated Debt is the only indebtedness
        owed by the Intermediate Parent, the Borrower or any other Guarantor to
        any member of the Group.

18.16   TELECENTIAL PARTNERSHIPS

        The Borrower shall procure that, unless all of the partners of the
        Telecential Partnerships are wholly-owned members of the UK Group and
        are subject to an Encumbrance pursuant to the security documents under
        the Senior Bank Credit Agreement:

        18.16.1   the aggregate of (a) the amount of any loans made by any
                  member of the UK Group to either of the Telecential
                  Partnerships after the Execution Date, (b) the book value of
                  any assets contributed by either CableTel Limited or CableTel
                  Investments Limited to either of the Telecential Partnerships
                  after the Execution Date and (c) any cash contributed by
                  either CableTel Limited or CableTel Investments Limited to
                  either of the Telecential Partnerships after the Execution
                  Date does not exceed L25,000,000; and

        18.16.2   any such loan, asset contribution or cash contribution made by
                  any members of the UK Group within such a L25,000,000
                  threshold is only made to the extent

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                  and in the manner required by the partnership agreements
                  relating to the Telecential Partnerships, together with a
                  loan, asset contribution or cash contribution by the minority
                  partner in the relevant Telecential Partnership (and funded by
                  the minority shareholder in such a minority partner).

18.17   HEDGING

        The Borrower will:

        18.17.1   promptly notify the Agent upon either it or any member of the
                  UK Group or, prior to the Pushdown Date, any member of the
                  Target Group entering into any currency swap or interest swap,
                  cap or collar arrangements or any other derivative instrument
                  or transaction; and

        18.17.2   not enter into and procure that no member of the UK Group and,
                  prior to the Pushdown Date, no member of the Target Group
                  shall enter into any currency swap or interest swap, cap or
                  collar arrangements or any other derivative instrument or
                  transaction other than in accordance with the Hedging
                  Strategy.

18.18   NEGATIVE PLEDGE

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, create or permit to
        subsist any Encumbrance over all or any of its present or future
        undertaking, revenues or assets other than Permitted Encumbrances.

18.19   LOANS AND GUARANTEES

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, (save in the ordinary
        course of business) make any loans, grant any credit or give any
        guarantee or indemnity to or for the benefit of any person or
        voluntarily assume any liability, whether actual or contingent, in
        respect of any obligation of any other person other than Permitted Loans
        and Guarantees.

18.20   DISPOSALS

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, sell, lease, transfer or
        otherwise dispose of, by one or more transactions or series of
        transactions (whether related or not), the whole or any part of its
        revenues or its assets other than any Permitted Disposal.

18.21   FINANCIAL INDEBTEDNESS

        18.21.1   No Covenant Group Obligor shall, and each Covenant Group
                  Obligor shall procure that no member of the UK Group shall,
                  incur or allow to subsist, any Financial Indebtedness or enter
                  into any agreement or arrangement whereby it is entitled to
                  incur, create or allow to subsist any Financial Indebtedness
                  other than Permitted Indebtedness.

        18.21.2   The Parent shall procure that the Intermediate Parent and the
                  Intermediate Parent shall procure that the Borrower shall not
                  incur, or allow to subsist, any Financial Indebtedness between
                  it and any other members of the NTL Holding Group or enter
                  into any agreement or arrangement whereby it is entitled to
                  incur, create or allow to subsist any such Financial
                  Indebtedness other than

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                  Financial Indebtedness owed (a) in the case of the
                  Intermediate Parent, by it to the Parent and (b) in the case
                  of the Borrower, by it to the Intermediate Parent.

        18.21.3   The Parent and Intermediate Parent shall procure that the only
                  Financial Indebtedness outstanding between the Intermediate
                  Parent and the Borrower is Subordinated Debt and Assigned
                  Debt.

        18.21.4   The Intermediate Parent and the Borrower shall procure that
                  the only Financial Indebtedness outstanding between the
                  Intermediate Parent and the Borrower is Subordinated Debt and
                  Assigned Debt.

18.22   RESTRICTED PAYMENTS

        The Intermediate Parent shall not and shall procure that no member of
        the UK Group shall make any Restricted Payment other than Permitted
        Payments.

18.23   ACQUISITIONS AND INVESTMENTS

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, (a) purchase, subscribe
        for or otherwise acquire any shares (or other securities or any interest
        therein) in, or incorporate, any other company or agree to do any of the
        foregoing, or (b) purchase or otherwise acquire any assets (other than
        in the ordinary course of business) or revenues or (without limitation
        to any of the foregoing) acquire any business or interest therein or
        agree to do so, save for (and for agreements relating to):

        18.23.1   any investment or acquisition of assets contemplated in the
                  Business Plan or arising out of expenditure being financed by
                  the Senior Bank Credit Agreement;

        18.23.2   any investment in a Project Company made out of Available
                  Excess Cash Flow;

        18.23.3   Permitted Investments; and

        18.23.4   Permitted Acquisitions.

18.24   MERGERS

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, enter into any merger or
        consolidation with any other person save for, respectively, another
        member of the UK Group (in the case of a member of the UK Group). The
        Parent shall not enter into any merger or consolidation with any other
        person if the validity, perfection or priority of the Security would be
        adversely impaired as a result thereof.

18.25   CHANGE OF BUSINESS

        Save as contemplated in the Business Plan (and PROVIDED THAT nothing in
        this Clause 18.25 shall prevent a member of the Covenant Group from
        making any investment or disposal which is otherwise permitted under
        this Agreement) no Covenant Group Obligor shall, and each Covenant Group
        Obligor shall procure that no member of the UK Group shall, enter into
        any type of business sector which would result in a change in the
        business focus of the UK Group taken as a whole from its business focus
        as at the date hereof.

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18.26   SHARES

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, without the prior written
        consent of an Instructing Group, alter any rights attaching to its
        issued shares if those shares are subject to the Security and such an
        alteration would be reasonably likely to prejudice to value of, or the
        ability of the Security Trustee to realise the security over those
        shares.

18.27   TRANSACTIONS WITH AFFILIATES

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, enter into any transaction
        with an affiliate other than:

        18.27.1   transactions in respect of either Subordinated Funding or
                  Parent Funding;

        18.27.2   transactions between members of the UK Group;

        18.27.3   transactions in the ordinary course of business and either on
                  no worse than arms' length terms or, where there is no
                  available market by which to assess whether such a transaction
                  is on no worse than arms' length terms, on terms such that in
                  the reasonable opinion of the Borrower the transaction is
                  financially fair to the relevant Covenant Group Obligor or, as
                  the case may be, member of the UK Group or, as the case may
                  be, member of the Target Group;

        18.27.4   transactions to effect either an Asset Passthrough or a
                  Funding Passthrough;

        18.27.5   insurance arrangements entered into in the ordinary course of
                  business with NTL Insurance Limited (or its successor as the
                  captive insurance company to the UK Group);

        18.27.6   tax sharing arrangements and agreements to surrender fax
                  losses;

        18.27.7   transactions relating to the provision of Intra-Group
                  Services;

        18.27.8   transactions relating to Excess Capacity Network Services
                  PROVIDED THAT the price payable by any affiliates in relation
                  to such Excess Capacity Network Services is no less than the
                  cost incurred by the relevant obligor, member of the UK Group
                  or, as the case may be, member of the Target Group in
                  providing such Excess Capacity Network Services; and

        18.17.9   transactions constituted by loans or investments in any UK
                  Group Exclude Subsidary, where such are otherwise permitted
                  under this Agreement.

18.28   CHANGE IN FINANCIAL YEAR

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, change the end of its
        financial year, other than as agreed by an Instructing Group, acting
        reasonably or so as to ensure that the financial year of each member of
        the Target Group ends on the same date as the financial year of each
        member of the UK Group; provided that the Borrower shall incur no
        liability to pay damages for failure to so procure with respect to any
        member of the Target Group.

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18.29   REVISED GROUP STRUCTURE

        18.29.1   The Borrower shall, within 30 days of the Execution Date,
                  deliver to the Agent the Group Structure Chart referred to in
                  paragraph (b) of the definition of that term;

        18.29.2   If any Covenant Group Obligor becomes aware of any material
                  inaccuracy in the corporate structure as set out in either the
                  Group Structure Chart delivered to the Agent pursuant to
                  Clause 2.4 (Conditions Precedent) or any Group Structure Chart
                  delivered to the Agent pursuant to this Clause 18.29, it will
                  deliver to the Agent as soon as reasonably practicable
                  thereafter a revised Group Structure Chart which is true,
                  complete and accurate.

18.30   ISSUANCE OF CAPITAL STOCK

        The Parent shall procure that no capital stock of the Borrower or any
        Guarantor (other than the Parent) is held by any person which is not a
        wholly-owned subsidiary of the Parent or a Guarantor which is either
        party to this Agreement on the Execution Date or has become a Guarantor
        pursuant to Clause 37 (Accession of Guarantors) and all the requirements
        set forth on Schedule 11 with respect thereto have been satisfied.

18.31   RESTRICTIONS ON PAYMENTS

        No Covenant Group Obligor shall, and each Covenant Group Obligor shall
        procure that no member of the UK Group shall, enter into any
        restrictions on the ability of any member of the UK Group to pay
        dividends, to make loans to, repay or prepay loans made by, or transfer
        assets to, the Borrower or any other member of the UK Group, except for
        (a) the restrictions set forth in the Senior Bank Credit Agreement as in
        effect on the Execution Date; (b) restrictions entered into in
        connection with the incurrence of Financial Indebtedness incurred
        pursuant to clause (i) or clause (m) of the definition of Permitted
        Indebtedness provided that such restrictions are no more restrictive
        than those set forth in the Senior Bank Credit Agreement as in effect on
        the Execution Date; (c) restrictions imposed by applicable law; and (d)
        customary non assignment provisions in leases entered into in the
        ordinary course of business and consistent with past practice.

18.32   INVESTMENTS IN THE UK GROUP

        The Borrower shall procure that notwithstanding anything to the contrary
        set forth in this Agreement all investments by the Borrower in the UK
        Group will be in the form of loans (except that to the extent that the
        Borrower determines in good faith that it is tax efficient to make such
        investments in the form of equity or capital contribution, and the
        outstanding principal amount of intercompany loans made by the Borrower
        is at no time less than L1,300,000,000 (or, if less, the outstanding
        principal amount of the Loan and the Available Facility) such
        investments may be in the form of equity or capital contributions).

18.33   MAINTENANCE OF CORPORATE SEPARATENESS

        The Parent (x) will, and will procure that each other Guarantor and the
        Borrower satisfies customary corporate formalities, including the
        holding of regular board of directors' and shareholders' meetings or
        action by directors or shareholders without a meeting and the
        maintenance of corporate offices and records; and (y) will not take any
        action, or conduct its affairs in a manner, which could result in the
        corporate existence of any such person being ignored, or in the assets
        and liabilities of any such person being

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        substantively consolidated with those of any other such person in a
        bankruptcy, reorganization or other insolvency proceeding.

19.     EVENTS OF DEFAULT

        Each of Clause 19.1 (Failure to Pay) to Clause 19.16 (Material Adverse
        Change) describes circumstances which constitute an Event of Default for
        the purposes of this Agreement. Clause 19.17 (Acceleration and
        Cancellation) and Clause 19.18 (Advances Due on Demand) deal with the
        rights of the Agent and the Banks after the occurrence of an Event of
        Default.

19.1    FAILURE TO PAY

        Any of the Obligors fails to pay any sum due from it under any of the
        Finance Documents to which it is a party at the time, in the currency
        and in the manner specified therein unless:

        19.1.1    the sum is of a principal amount which was not paid as a
                  result of a technical error or failure in the transmission of
                  funds and that payment is then received by the Agent within
                  one Business Day of the due date;

        19.1.2    the sum is of an amount of interest and that payment is then
                  received by the Agent within three Business Days of the due
                  date; or

        19.1.3    the sum is of an amount other than principal or interest and
                  that payment is then received by the Agent within five
                  Business Days of the due date.

19.2    MISREPRESENTATION

        Any representation or statement made or repeated by any Obligor in any
        of the Finance Documents or in any notice or other document or
        certificate delivered by it pursuant thereto or in connection therewith
        is or proves to have been incorrect or misleading in any material
        respect when made or deemed to be made and the circumstances giving rise
        to such inaccuracy, if capable of remedy or change, are not remedied or
        do not change, such that the relevant representation or statement would
        be correct and not misleading if repeated five Business Days after the
        earlier of (a) it being notified by the Agent to the Group
        Representative in all other cases, as having been made inaccurately and
        (b) the relevant Obligor becoming aware of such inaccuracy.

19.3    SPECIFIC COVENANTS

        Any of the Obligors fails to comply with any of its obligations under
        Clause 16 (Financial Information) or Clause 18 (Covenants). No Event of
        Default under this Clause 19.3 shall occur in relation to:

        19.3.1    Clause 16.1 (Annual Statements) to Clause 16.8 (Other
                  Financial Information), Clause 16.10 (General Information) or
                  Clause 16.12 (Acquisition Information), if the failure to
                  comply with such is remedied within five Business Days of the
                  Agent giving notice thereof to the Group Representative; and

        19.3.2    Clause 18 (Covenants), if the failure to comply with such is
                  capable of remedy and is remedied within five Business Days of
                  the date on which an Obligor became aware of such failure to
                  comply PROVIDED THAT a breach of any of the obligations under
                  Clause 18.2 (Claims Pari Passu), Clause 18.3 (Maintenance

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                  and Legal Validity), Clause 18.8 (Conduct Business in
                  Accordance with Licences), Clause 18.18 (Negative Pledge),
                  Clause 18.19 (Loans and Guarantees), Clause 18.20 (Disposals),
                  Clause 18.22 (Restricted Payments), Clause 18.23 (Acquisitions
                  and Investments), Clause 18.24 (Mergers) and Clause 18.27
                  (Transactions with Affiliates) shall immediately give rise to
                  an Event of Default.

19.4    OTHER OBLIGATIONS

        Any of the Obligors fails duly to perform or comply with any other
        obligation expressed to be assumed by it in any of the Finance Documents
        and such failure is not remedied within thirty days after the Agent has
        given notice thereof to the Borrower.

19.5    FINANCIAL CONDITION

        At any time any of the requirements of Clause 17.1 (UK Group Financial
        Condition) is not satisfied.

19.6    CROSS DEFAULT

        Any:

        19.6.1    Financial Indebtedness of any member of the Covenant Group is
                  not paid when due and payable (after taking account of any
                  applicable grace period) or, if payable on demand (after
                  taking account of any applicable grace period), is not paid on
                  demand;

        19.6.2    Financial Indebtedness of any member of the Covenant Group is
                  declared to be or otherwise becomes due and payable prior to
                  its specified maturity by reason of a default by the relevant
                  member of the Covenant Group;

        19.6.3    commitment for any Financial Indebtedness of any member of the
                  Covenant Group is cancelled or suspended by reason of a
                  default by the relevant member of the Covenant Group; or

        19.6.4    holder or holders, creditor or creditors of any member of the
                  Parent Covenant Group becomes entitled to declare any
                  Specified Financial Indebtedness of such member of the Parent
                  Covenant Group due and payable prior to its specified maturity
                  by reason of default by the relevant member of the Parent
                  Covenant Group after taking account of any applicable grace
                  period,

        save that (x) this Clause shall not apply to any Financial Indebtedness
        of any Obligor or of any other member of the UK Group where such
        Financial Indebtedness or demand in relation thereto (a) is a Permitted
        Project Borrowing, (b) is cash collateralised and such cash is available
        for application in satisfaction of such Financial Indebtedness, (c) is
        being contested in good faith by appropriate action or (d) when
        aggregated with all such Financial Indebtedness of the Covenant Group
        does not exceed an aggregate of L20,000,000 (or its equivalent in other
        currencies) and (y) for the avoidance of doubt, an Event of Default
        shall not accrue under sub-clause 19.6.4 of this Clause 19.6 by reason
        of the occurrence of an event described therein in respect of the
        Financial Indebtedness of a member of the UK Group (including, without
        limitation, the Senior Bank Credit Agreement).

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19.7    INSOLVENCY AND RESCHEDULING

        Any Obligor or any member of the UK Group:

        19.7.1    is unable to pay its debts as they fall due;

        19.7.2    commences negotiations with any one or more of its creditors
                  with a view to the general readjustment or rescheduling of its
                  indebtedness (other than as part of a solvent reorganisation
                  of the UK Group on terms which have been approved in writing
                  by the Agent, acting on the instructions of an Instructing
                  Group);

        19.7.3    makes a general assignment for the benefit of or a composition
                  with its creditors; or

        19.7.4    has a moratorium declared in respect of any of its
                  indebtedness.

19.8    WINDING-UP

        Any Obligor or any member of the UK Group takes any corporate action or
        other steps are taken or legal proceedings are started and served for
        its winding-up, dissolution, administration or re-organisation whether
        by way of voluntary arrangement, scheme of arrangement or otherwise or
        for the appointment of a liquidator, receiver, administrator,
        administrative receiver, conservator, custodian, trustee or similar
        officer of it or of its revenues and assets PROVIDED THAT it shall not
        constitute an Event of Default if:

        19.8.1    such action, steps or proceedings relate to a solvent
                  liquidation or re-organisation of a member of the UK Group
                  (other than the Borrower) or are on terms which have been
                  approved in writing by the Agent, acting on the instructions
                  of an Instructing Group; or

        19.8.2    such action, steps or proceedings (a) are frivolous or
                  vexatious, (b) do not relate to the appointment of an
                  administrator (or its equivalent in any other jurisdiction)
                  and (c) are contested in good faith by appropriate legal
                  action and are stayed or discharged within thirty days of
                  their commencement.

19.9    EXECUTION OR DISTRESS

        Any execution or distress is levied against, or an encumbrancer takes
        possession of, the whole or any part of, the property, undertaking or
        assets of any Obligor or any member of the UK Group, where:

        19.9.1    the aggregate value of such assets exceeds L250,000; and

        19.9.2    such execution, distress or possession is not discharged
                  within fourteen days.

19.10   ANALOGOUS EVENTS

        Any event occurs which under the laws of any jurisdiction has a similar
        or analogous effect to any of those events mentioned in Clause 19.7
        (Insolvency and Rescheduling), Clause 19.8 (Winding-up) or Clause 19.9
        (Execution or Distress).

19.11   GOVERNMENTAL INTERVENTION

        By or under the authority of any government, (a) the management of any
        Covenant Group Obligor or any other member of the UK Group is wholly or
        partially displaced or the authority of any Covenant Group Obligor or
        any other member of the UK Group in the conduct of a material part of
        its business is wholly or partially curtailed or (b) all or a

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        majority of the issued shares of any Covenant Group Obligor or any
        other member of the UK Group or the whole or any part of its revenues
        or assets is seized, nationalised, expropriated or compulsorily
        acquired, in each case where such is not remedied to the satisfaction
        of the Agent within thirty days of the relevant event occurring.

19.12   REPUDIATION

        19.12.1   Any Obligor repudiates any of the Finance Documents; or

        19.12.2   the security intended to be created by, or the subordination
                  effected under, the Finance Documents is not or ceases to be
                  legal and valid and (except as contemplated by the
                  Reservations or, if capable of remedy, such as is remedied
                  within five Business Days of the earlier of (a) notice of the
                  relevant event by the Agent to the Group Representative and
                  (b) the date on which the relevant Obligor becomes aware of
                  such event) binding and enforceable.

19.13   ILLEGALITY

        At any time it is or becomes unlawful for any of the Obligors to perform
        or comply with any or all of its obligations under any of the Finance
        Documents to which it is a party or any of the obligations of any of the
        Obligors thereunder are not or cease to be legal, valid and (except as
        contemplated by the Reservations or, if capable of remedy, such as is
        remedied within five Business Days of the earlier of (a) notice of the
        relevant event by the Agent to the Group Representative and (b) the date
        on which the relevant Obligor becomes aware of such event) binding and
        enforceable.

19.14   ASSET ADJUSTMENT PAYMENTS

        If, following a member of the Target Group having made an Asset
        Adjustment Payment within paragraph (a) of the definition thereof, NTL
        Holdings fails to procure that an amount equal to such an Asset
        Adjustment Payment is (in accordance with the other terms of this
        Agreement) reimbursed to that member of the Target Group on or before
        the date which is the earlier of:

        19.14.1   ten Business Days after the date on which NTL Inc. receives a
                  reimbursement from C&W for such an Asset Adjustment Payment;
                  and

        19.14.2   thirty Business Days after the date on which such an Asset
                  Adjustment Payment is made,

        PROVIDED THAT, the aggregate amount of Asset Adjustment Payments for
        which members of the Target Group have not been reimbursed in accordance
        with this Clause 19.14 exceeds L10,000,000 (or its equivalent).

19.15   DEBT ADJUSTMENT PAYMENTS

        If, following a Debt Adjustment Payment having being made to NTL
        Holdings (or any other member of the Group) in accordance with paragraph
        (a) of the definition thereof, NTL Holdings fails to procure that an
        amount equal to such a Debt Adjustment Payment is (in accordance with
        the other terms of this Agreement) invested in the Target Group by the
        date which is:

        19.15.1   in respect of Debt Adjustment Payments anticipated on the
                  Execution Date, ten Business Days after the date on which NTL
                  Holdings receives such a Debt Adjustment Payment; and

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        19.15.2   in respect of all other Debt Adjustment Payments, thirty
                  Business Days after the date on which NTL Holdings receives
                  such a Debt Adjustment Payment,

        PROVIDED THAT the aggregate amount of Debt Adjustment Payments for which
        members of the Target Group have not been reimbursed in accordance with
        this Clause 19.15 exceeds L10,000,000 (or its equivalent).

19.16   MATERIAL ADVERSE CHANGE

        Any event or circumstance which would have a Material Adverse Effect
        occurs.

19.17   ACCELERATION AND CANCELLATION

        Upon the occurrence of an Event of Default at any time thereafter whilst
        such event is continuing, the Agent may (and, if so instructed by an
        Instructing Group, shall) by written notice to the Borrower:

        19.17.1   declare the Advances to be immediately due and payable
                  (whereupon the same shall become so payable together with
                  accrued interest thereon and any other sums then owed by the
                  Borrower hereunder) or declare the Advances to be due and
                  payable on demand of the Agent; and/or

        19.17.2   declare that any undrawn portion of the Facility shall be
                  cancelled, whereupon the same shall be cancelled and the
                  Available Commitment of each Bank shall be reduced to zero;
                  and/or

        19.17.3   exercise or direct the Security Trustee to exercise (on its
                  own behalf and on behalf of the Banks) all rights and remedies
                  of a mortgagee or a secured party at such time and (without
                  limitation), subject to the Security Documents and to the
                  extent permitted by applicable law, (a) foreclose on any or
                  all of the assets subject to the Security by any available
                  judicial procedure, (b) take possession of any or all of the
                  assets subject to the Security and the books and records
                  relating thereto, with or without judicial process and/or (c)
                  enter any premises where any assets subject to the Security,
                  or any books and records relating thereto, are located and
                  take possession of and remove the same therefrom.

19.18   ADVANCES DUE ON DEMAND

        If, pursuant to Clause 19.17 (Acceleration and Cancellation), the Agent
        declares the Advances to be due and payable on demand of the Agent,
        then, and at any time thereafter, the Agent may (and, if so instructed
        by an Instructing Group, shall) by written notice to the Borrower:

        19.18.1   require repayment of the Advances on such date as it may
                  specify in such notice (whereupon the same shall become due
                  and payable on such date together with accrued interest
                  thereon and any other sums then owed by the Borrower
                  hereunder) or withdraw its declaration with effect from such
                  date as it may specify in such notice;

        19.18.2   select as the duration of any Interest Period which begins
                  whilst such declaration remains in effect a period of six
                  months or less; and/or.

        19.18.3   exercise or direct the Security Trustee to exercise (on its
                  own behalf and on behalf of the Banks) all rights and remedies
                  of a secured party in accordance

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                  with sub-clause 19.17.3 of Clause 19.17 (Acceleration and
                  Cancellation).

20.     GUARANTEE AND INDEMNITY

20.1    GUARANTEE AND INDEMNITY

        Each of the Guarantors irrevocably and unconditionally jointly and
        severally:

        20.1.1    guarantees to each Finance Party the due and punctual
                  observance and performance of all the terms, conditions and
                  covenants on the part of each Borrower contained in the
                  Finance Documents and agrees to pay from time to time on
                  demand any and every sum or sums of money which each Borrower
                  is at any time liable to pay to any Finance Party under or
                  pursuant to the Finance Documents and which has become due and
                  payable but has not been paid at the time such demand is made;
                  and

        20.1.2    agrees as a primary obligation to indemnify each Finance Party
                  from time to time on demand from and against any loss incurred
                  by any Finance Party as a result of any of the obligations of
                  each Borrower under or pursuant to the Finance Documents being
                  or becoming void, voidable, unenforceable or ineffective as
                  against such Borrower for any reason whatsoever, whether or
                  not known to any Finance Party or any other person, the amount
                  of such loss being the amount which the person or persons
                  suffering it would otherwise have been entitled to recover
                  from such Borrower.

20.2    ADDITIONAL SECURITY

        The obligations of each Guarantor herein contained shall be in addition
        to and independent of every other security which any Finance Party may
        at any time hold in respect of any of any Obligor's obligations under
        the Finance Documents.

20.3    CONTINUING OBLIGATIONS

        The obligations of each Guarantor herein contained shall constitute and
        be continuing obligations notwithstanding any settlement of account or
        other matter or thing whatsoever and shall not be considered satisfied
        by any intermediate payment or satisfaction of all or any of the
        obligations of the Borrowers under the Finance Documents and shall
        continue in full force and effect until final payment in full of all
        amounts owing by any Borrower under the Finance Documents and total
        satisfaction of all the Borrowers' actual and contingent obligations
        under the Finance Documents.

20.4    OBLIGATIONS NOT DISCHARGED

        Neither the obligations of each Guarantor herein contained nor the
        rights, powers and remedies conferred in respect of each Guarantor upon
        any Finance Party by the Finance Documents or by law shall be
        discharged, impaired or otherwise affected by:

        20.4.1    the winding-up, dissolution, administration or re-organisation
                  of any Obligor or any other person or any change in its
                  status, function, control or ownership;

        20.4.2    any of the obligations of any Obligor or any other person
                  under the Finance Documents or under any other security taken
                  in respect of any of its obligations under the Finance
                  Documents being or becoming illegal, invalid, unenforceable or
                  ineffective in any respect;

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        20.4.3    time or other indulgence being granted or agreed to be granted
                  to any Obligor or any other person in respect of its
                  obligations under the Finance Documents or under any such
                  other security;

        20.4.4    any amendment to, or any variation, waiver or release of, any
                  obligation of any Obligor or any other person under the
                  Finance Documents or under any such other security;

        20.4.5    any failure to take, or fully to take, any security
                  contemplated hereby or otherwise agreed to be taken in respect
                  of any Obligor's obligations under the Finance Documents;

        20.4.6    any failure to realise or fully to realise the value of, or
                  any release, discharge, exchange or substitution of, any
                  security taken in respect of any Obligor's obligations under
                  the Finance Documents; or

        20.4.7    any other act, event or omission which, but for this Clause
                  20.4, might operate to discharge, impair or otherwise affect
                  any of the obligations of each Guarantor herein contained or
                  any of the rights, powers or remedies conferred upon any of
                  the Finance Parties by the Finance Documents or by law.

20.5    SETTLEMENT CONDITIONAL

        Any settlement or discharge between a Guarantor and any of the Finance
        Parties shall be conditional upon no security or payment to any Finance
        Party by an Obligor or any other person on behalf of an Obligor being
        avoided or reduced by virtue of any laws relating to bankruptcy,
        insolvency, liquidation or similar laws of general application and, if
        any such security or payment is so avoided or reduced, each Finance
        Party shall be entitled to recover the value or amount of such security
        or payment from such Guarantor subsequently as if such settlement or
        discharge had not occurred.

20.6    EXERCISE OF RIGHTS

        No Finance Party shall be obliged before exercising any of the rights,
        powers or remedies conferred upon them in respect of any Guarantor by
        the Finance Documents or by law:

        20.6.1    to make any demand of any Obligor (save where such demand is
                  expressly required by the terms of the Finance Documents);

        20.6.2    to take any action or obtain judgment in any court against any
                  Obligor;

        20.6.3    to make or file any claim or proof in a winding-up or
                  dissolution of any Obligor; or

        20.6.4    to enforce or seek to enforce any other security taken in
                  respect of any of the obligations of any Obligor under the
                  Finance Documents.

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20.7    DEFERRAL OF GUARANTORS' RIGHTS

        Until all amounts which may be or become payable by the Borrowers under
        or in connection with the Finance Documents have been irrevocably paid
        in full and unless the Agent otherwise directs, no Guarantor will
        exercise any rights which it may have by reason of performance by it of
        its obligations under the Finance Documents:

        20.7.1    to be indemnified by an Obligor; and/or

        20.7.2    to claim any contribution from any other guarantor of any
                  obligations of the Borrower under the Finance Documents;
                  and/or

        20.7.3    to take the benefit (in whole or in part and whether by way of
                  subrogation or otherwise) of any rights of the Finance Parties
                  under the Finance Documents or of any other guarantee or
                  security taken pursuant to, or in connection with, the Finance
                  Documents by any Finance Party.

20.8    APPROPRIATIONS

        Until all amounts which may be or become payable by the Borrower under
        or in connection with the Finance Documents have been irrevocably paid
        in full, each Finance Party (or any trustee or agent on its behalf) may:

        20.8.1    refrain from applying or enforcing any other moneys, security
                  or rights held or received by that Finance Party (or any
                  trustee or agent on its behalf) in respect of those amounts,
                  or apply and enforce the same in such manner and order as it
                  sees fit (whether against those amounts or otherwise) and no
                  Guarantor shall be entitled to the benefit of the same; and

        20.8.2    hold in an interest-bearing suspense account any moneys
                  received from any Guarantor or on account of any Guarantor's
                  liability under this Clause 20 (Guarantee and Indemnity).

21.     COMMITMENT COMMISSION AND FEES

21.1    COMMITMENT COMMISSION ON THE FACILITY

        The Borrower shall pay to the Agent for the account of each Bank in
        respect of each Commitment Period (as defined below) a commitment
        commission calculated at the rate per annum of -3/4 of 1 per cent on an
        amount equal to the average daily Available Commitments during such
        Commitment Period.

21.2    DEFINITIONS AND AVERAGE CALCULATIONS

        For the purposes of Clause 21.1 (Commitment Commission on the Facility):

        21.2.1    "COMMITMENT PERIOD" means each successive period of three
                  months during the period beginning on the date hereof and
                  ending on the Final Maturity Date, PROVIDED THAT if the last
                  such period would otherwise extend beyond the Final Maturity
                  Date it shall be shortened so as to end on that date.

        21.2.2    The average daily utilisation of the Facility during a
                  Commitment Period shall equal the sum of all Advances made by
                  the Banks and outstanding on each day during such Commitment
                  Period, divided by the number of days in such Commitment
                  Period.

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        21.2.3    The average daily Commitments during a Commitment Period shall
                  equal the aggregate of the Commitments on each day during such
                  Commitment Period divided by the number of days in such
                  Commitment Period.

        21.2.4    The average daily Available Commitments during a Commitment
                  Period shall equal the aggregate of the Available Commitments
                  on each day during such Commitment Period divided by the
                  number of days in such Commitment Period.

21.3    PAYMENT OF COMMITMENT COMMISSION

        The Agent shall promptly after the end of each Commitment Period notify
        the Borrower and the Banks of the amounts payable by the Borrower under
        Clause 21.1 (Commitment Commission on the Facility) in respect of such
        Commitment Period and the Borrower shall pay such amount to the Agent
        for account of the Banks pro rata to each Bank's Commitment hereunder
        from time to time during the applicable Commitment Period within five
        Business Days of such notification.

21.4    AGENCY AND OTHER FEES

        The Borrower shall:

        21.4.1    pay to the Agent for its own account the agency fees specified
                  in the letter dated 16 May 2000 from the Agent to NTL Inc. and
                  the Borrower at the times, and in the amounts, specified in
                  such letter; and

        21.4.2    pay to the Arrangers the fees specified in the letters dated
                  17 May 2000 from the Arrangers to NTL Inc. and the Borrower
                  (and the attachments thereto) at the times, and in the
                  amounts, specified in such letters.

22.     COSTS AND EXPENSES

22.1    TRANSACTION EXPENSES

        The Borrower shall, from time to time on demand of the Agent, reimburse
        each of the Agent and the Arrangers for all reasonable costs and
        expenses (including legal fees) together with any VAT thereon incurred
        by it in connection with the negotiation, preparation and execution of
        the Finance Documents, any other document referred to in the Finance
        Documents and the completion of the transactions therein contemplated.

22.2    PRESERVATION AND ENFORCEMENT OF RIGHTS

        The Borrower shall, from time to time on demand of the Agent, reimburse
        the Finance Parties for all costs and expenses (including legal fees) on
        a full indemnity basis together with any VAT thereon incurred in or in
        connection with the preservation and/or enforcement of any of the rights
        of the Finance Parties under the Finance Documents and any document
        referred to in the Finance Documents (including, without limitation, any
        costs and expenses reasonably incurred in relation to any investigation
        as to whether or not an Event of Default might have occurred or is
        likely to occur or any steps necessary or desirable in connection with
        any proposal for remedying or otherwise resolving an Event of Default or
        Potential Event of Default).

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22.3    STAMP TAXES

        The Borrower shall pay all stamp, registration and other taxes to which
        the Finance Documents or any judgment given in connection therewith is
        or at any time may be subject and shall, from time to time on demand of
        the Agent, indemnify the Finance Parties against any liabilities, costs,
        claims and expenses resulting from any failure to pay or any delay in
        paying any such tax.

22.4    AMENDMENT COSTS

        If an Obligor requests any amendment, waiver or consent then the
        Borrower shall, within five Business Days of demand by the Agent,
        reimburse the Finance Parties for all costs and expenses (including
        legal fees) together with any VAT thereon reasonably incurred by such
        person in responding to or complying with such request.

22.5    BANKS' LIABILITIES FOR COSTS

        If the Borrower fails to perform any of its obligations under this
        Clause 22 (Costs and Expenses), each Bank shall, in its Proportion,
        indemnify each of the Agent and the Arrangers against any loss incurred
        by any of them as a result of such failure.

23.     DEFAULT INTEREST AND BREAK COSTS

23.1    DEFAULT INTEREST PERIODS

        If any sum due and payable by an Obligor hereunder is not paid on the
        due date therefor in accordance with Clause 26 (Payments) or if any sum
        due and payable by an Obligor under any judgment of any court in
        connection herewith is not paid on the date of such judgment, the period
        beginning on such due date or, as the case may be, the date of such
        judgment and ending on the date upon which the obligation of such
        Obligor to pay such sum is discharged shall be divided into successive
        periods, each of which (other than the first) shall start on the last
        day of the preceding such period and the duration of each of which shall
        (except as otherwise provided in this Clause 23 (Default Interest and
        Break Costs)) be selected by the Agent.

23.2    DEFAULT INTEREST

        An Unpaid Sum shall bear interest during each Interest Period in respect
        thereof at the rate per annum which is one per cent. per annum above the
        percentage rate which would apply if such Unpaid Sum had been an Advance
        in the amount and currency of such Unpaid Sum and for the same Interest
        Period, PROVIDED THAT if such Unpaid Sum relates to an Advance which
        became due and payable on a day other than the last day of an Interest
        Period relating thereto:

        23.2.1    the first Interest Period applicable to such Unpaid Sum shall
                  be of a duration equal to the unexpired portion of the current
                  Interest Period relating to that Advance; and

        23.2.2    the percentage rate of interest applicable thereto from time
                  to time during such period shall be that which exceeds by one
                  per cent. the rate which would have been applicable to it had
                  it not so fallen due.

23.3    PAYMENT OF DEFAULT INTEREST

        Any interest which shall have accrued under Clause 23.2 (Default
        Interest) in respect of an Unpaid Sum shall be due and payable and shall
        be paid by the Obligor owing such

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        Unpaid Sum on the last day of its Interest Period in respect thereof or
        on such other dates as the Agent may specify by notice to such Obligor.

23.4    BREAK COSTS

        If any Bank or the Agent on its behalf receives or recovers all or any
        part of such Bank's share of an Advance or Unpaid Sum otherwise than on
        the last day of the Interest Period relating thereto, the Borrower shall
        pay to the Agent on demand for account of such Bank an amount equal to
        the amount (if any) by which (a) the additional interest which would
        have been payable on the amount so received or recovered had it been
        received or recovered on the last day of that Interest Period exceeds
        (b) the amount of interest which in the opinion of the Agent would have
        been payable to the Agent on the last day of that Interest Period in
        respect of a deposit in the currency of the amount so received or
        recovered equal to the amount so received or recovered placed by it with
        a prime bank in London for a period starting on the Business Day
        following the date of such receipt or recovery and ending on the last
        day of that Interest Period.

24.     BORROWER'S INDEMNITIES

24.1    BORROWER'S INDEMNITY

        The Borrower undertakes to indemnify:

        24.1.1    each Finance Party against any cost, claim, loss, expense
                  (including legal fees) or liability together with any VAT
                  thereon, which it may sustain or incur as a consequence of the
                  occurrence of any Event of Default or any default by any
                  Obligor in the performance of any of the obligations expressed
                  to be assumed by it in the Finance Documents;

        24.1.2    each Bank against any cost or loss it may suffer under Clause
                  22.5 (Banks' Liabilities for Costs) or Clause 29.6
                  (Indemnification); and

        24.1.3    each Bank against any cost or loss it may suffer or incur as a
                  result of its funding or making arrangements to fund its
                  portion of an Advance requested by the Borrower but not made
                  by reason of the operation of any one or more of the
                  provisions hereof.

24.2    CURRENCY INDEMNITY

        If any sum (a "SUM") due from an Obligor under the Finance Documents or
        any order or judgment given or made in relation thereto has to be
        converted from the currency (the "FIRST CURRENCY") in which such Sum is
        payable into another currency (the "SECOND CURRENCY") for the purpose
        of:

        24.2.1    making or filing a claim or proof against such Obligor;

        24.2.2    obtaining or enforcing an order or judgment in any court or
                  other tribunal,

        the Borrower shall indemnify each person to whom such Sum is due from
        and against any loss suffered or incurred as a result of any discrepancy
        between (a) the rate of exchange used for such purpose to convert such
        Sum from the First Currency into the Second Currency and (b) the rate or
        rates of exchange available to such person at the time of receipt of
        such Sum.

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25.     CURRENCY OF ACCOUNT AND PAYMENT

        Sterling is the currency of account and payment for each and every sum
        at any time due from an Obligor hereunder, PROVIDED THAT:

        25.1.1    each payment in respect of costs and expenses shall be made in
                  the currency in which the same were incurred; and

        25.1.2    each payment pursuant to Clause 10.2 (Tax Indemnity), Clause
                  12.1 (Increased Costs) or Clause 24 (Borrowers Indemnities)
                  shall be made in the currency specified by the party claiming
                  thereunder.

26.     PAYMENTS

26.1    NOTIFICATION OF PAYMENTS

        Without prejudice to the liability of each party hereto promptly to pay
        each amount owing by it hereunder on the due date therefor, whenever a
        payment is expected to be made by any of the parties hereto, the Agent
        shall, at least two Business Days prior to the expected date for such
        payment, notify all the parties hereto of the amount, currency and
        timing of such payment and the identity of the party liable to make such
        payment.

26.2    PAYMENTS TO THE AGENT

        On each date on which this Agreement requires an amount to be paid by an
        Obligor or a Bank, such Obligor or, as the case may be, such Bank shall
        make the same available to the Agent for value on the due date at such
        time and in such funds and to such account with such bank as the Agent
        shall (acting reasonably) specify from time to time.

26.3    PAYMENTS BY THE AGENT

        26.3.1    Save as otherwise provided herein, each payment received by
                  the Agent pursuant to Clause 26.2 (Payments to the Agent)
                  shall:

                  (a)   in the case of a payment received for the account of the
                        Borrower, be made available by the Agent to the Borrower
                        by application:

                        (i)      FIRST, in or towards payment on the same day of
                                 any amount then due from the Borrower hereunder
                                 to the person from whom the amount was so
                                 received; and

                        (ii)     SECONDLY, in or towards payment on the same day
                                 to the account of the Borrower with such bank
                                 in London as the Borrower shall have previously
                                 notified to the Agent for this purpose; and

                  (b)   in the case of any other payment, be made available by
                        the Agent to the person entitled to receive such payment
                        in accordance with this Agreement (in the case of a
                        Bank, for the account of its Facility Office) for value
                        the same day by transfer to such account of such person
                        with such bank in London as such person shall have
                        previously notified to the Agent.

        26.3.2    A payment will be deemed to have been made by the Agent on the
                  date on which it is required to be made under this Agreement
                  if the Agent has, on or before that date, taken steps to make
                  that payment in accordance with the

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                  regulations or operating procedures of the clearing or
                  settlement system used by the Agent in order to make the
                  payment.

26.4    NO SET-OFF

        All payments required to be made by an Obligor hereunder shall be
        calculated without reference to any set-off or counterclaim and shall be
        made free and clear of and without any deduction for or on account of
        any set-off or counterclaim.

26.5    CLAWBACK

        Where a sum is to be paid hereunder to the Agent for account of another
        person, the Agent shall not be obliged to make the same available to
        that other person until it has been able to establish to its
        satisfaction that it has actually received such sum, but if it does so
        and it proves to be the case that it had not actually received such sum,
        then the person to whom such sum was so made available shall on request
        refund the same to the Agent together with an amount sufficient to
        indemnify the Agent against any cost or loss it may have suffered or
        incurred by reason of its having paid out such sum prior to its having
        received such sum.

26.6    PARTIAL PAYMENTS

        If and whenever a payment is made by an Obligor hereunder and the Agent
        receives an amount less than the due amount of such payment the Agent
        may apply the amount received towards the obligations of the Obligors
        under this Agreement in the following order:

        26.6.1    FIRST, in or towards payment of any unpaid costs and expenses
                  of the Agent;

        26.6.2    SECONDLY, in or towards payment pro rata of any accrued
                  interest or commitment commission due but unpaid;

        26.6.3    THIRDLY, in or towards payment pro rata of any principal due
                  but unpaid; and

        26.6.4    FOURTHLY, in or towards payment pro rata of any other sum due
                  but unpaid.

26.7    VARIATION OF PARTIAL PAYMENTS

        The order of partial payments set out in Clause 26.6 (Partial Payments)
        shall override any appropriation made by the Obligor to which the
        partial payment relates but the order set out in sub-clauses 26.6.2,
        26.6.3 and 26.6.4 of Clause 26.6 (Partial Payments) may be varied if
        agreed by all the Banks.

26.8    BUSINESS DAYS

        26.8.1    Any payment which is due to be made on a day that is not a
                  Business Day shall be made on the next Business Day in the
                  same calendar month (if there is one) or the preceding
                  Business Day (if there is not).

        26.8.2    During any extension of the due date for payment of any
                  principal or an Unpaid Sum under this Agreement interest is
                  payable on the principal at the rate payable on the original
                  due date.

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27.     SET-OFF

27.1    CONTRACTUAL SET-OFF

        Each Obligor authorises each Bank, at any time any sum is due and
        payable hereunder and remains unpaid, to apply any credit balance to
        which such Obligor is entitled on any account of such Obligor with such
        Bank in satisfaction of any sum due and payable from such Obligor to
        such Bank under the Finance Documents but unpaid. For this purpose, each
        Bank is authorised to purchase with the moneys standing to the credit of
        any such account such other currencies as may be necessary to effect
        such application.

27.2    SET-OFF NOT MANDATORY

        No Bank shall be obliged to exercise any right given to it by Clause

28.     SHARING

28.1    PAYMENTS TO BANKS

        If a Bank (a "RECOVERING BANK") applies any receipt or recovery from an
        Obligor to a payment due under this Agreement and such amount is
        received or recovered other than in accordance with Clause 26
        (Payments), then such Recovering Bank shall:

        28.1.1    notify the Agent of such receipt or recovery;

        28.1.2    at the request of the Agent, promptly pay to the Agent an
                  amount (the "SHARING PAYMENT") equal to such receipt or
                  recovery less any amount which the Agent determines may be
                  retained by such Recovering Bank as its share of any payment
                  to be made in accordance with Clause 26.6 (Partial Payments).

28.2    REDISTRIBUTION OF PAYMENTS

        The Agent shall treat the Sharing Payment as if it had been paid by the
        relevant Obligor and distribute it between the Finance Parties (other
        than the Recovering Bank) in accordance with Clause 26.6 (Partial
        Payments).

28.3    RECOVERING BANK'S RIGHTS

        The Recovering Bank will be subrogated into the rights of the parties
        which have shared in a redistribution pursuant to Clause 28.2
        (Redistribution of Payments) in respect of the Sharing Payment (and the
        relevant Obligor shall be liable to the Recovering Bank in an amount
        equal to the Sharing Payment).

28.4    REPAYABLE RECOVERIES

        If any part of the Sharing Payment received or recovered by a Recovering
        Bank becomes repayable and is repaid by such Recovering Bank, then:

        28.4.1    each party which has received a share of such Sharing Payment
                  pursuant to Clause 28.2 (Redistribution of Payments) shall,
                  upon request of the Agent, pay to the Agent for account of
                  such Recovering Bank an amount equal to its share of such
                  Sharing Payment; and

        28.4.2    such Recovering Bank's rights of subrogation in respect of any
                  reimbursement shall be cancelled and the relevant Obligor will
                  be liable to the reimbursing party for the amount so
                  reimbursed.

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28.5    EXCEPTION
        This Clause 28 (Sharing) shall not apply if the Recovering Bank would
        not, after making any payment pursuant hereto, have a valid and
        enforceable claim against the relevant Obligor.

28.6    RECOVERIES THROUGH LEGAL PROCEEDINGS

        If any Bank intends to commence any action in any court it shall give
        prior notice to the Agent and the other Banks. If any Bank shall
        commence any action in any court to enforce its rights hereunder and, as
        a result thereof or in connection therewith, receives any amount, then
        such Bank shall not be required to share any portion of such amount with
        any Bank which has the legal right to, but does not, join in such action
        or commence and diligently prosecute a separate action to enforce its
        rights in another court.

29.     THE AGENT, THE ARRANGERS AND THE BANKS

29.1    APPOINTMENT OF THE AGENT
        Each of the Arrangers and the Banks hereby appoints the Agent to act as
        its agent in connection herewith and authorises the Agent to exercise
        such rights, powers, authorities and discretions as are specifically
        delegated to the Agent by the terms hereof together with all such
        rights, powers, authorities and discretions as are reasonably incidental
        thereto.

29.2    AGENT'S DISCRETIONS

        The Agent may:

        29.2.1    assume, unless it has, in its capacity as agent for the Banks,
                  received notice to the contrary from any other party hereto,
                  that (a) any representation made or deemed to be made by an
                  Obligor in connection with the Finance Documents is true, (b)
                  no Event of Default or Potential Event of Default has
                  occurred, (c) any Obligor is in breach of or default under its
                  obligations under the Finance Documents and (d) any right,
                  power, authority or discretion vested herein upon an
                  Instructing Group, the Banks or any other person or group of
                  persons has not been exercised;

        29.2.2    assume that (a) the Facility Office of each Bank is that
                  notified to it by such Bank in writing and (b) the information
                  provided by each Bank pursuant to Clause 34 (Notices), Clause
                  29.15 (Banks' Mandatory Cost Details) and Schedule 7
                  (Mandatory Costs) is true and correct in all respect until it
                  has received from such Bank notice of a change to the Facility
                  Office or any such information and act upon any such notice
                  until the same is superseded by a further notice;

        29.2.3    engage and pay for the advice or services of any lawyers,
                  accountants, surveyors or other experts whose advice or
                  services may to it seem necessary, expedient or desirable and
                  rely upon any advice so obtained;

        29.2.4    rely as to any matters of fact which might reasonably be
                  expected to be within the knowledge of an Obligor upon a
                  certificate signed by or on behalf of such Obligor;

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<PAGE>   93
        29.2.5    rely upon any communication or document believed by it to be
                  genuine;

        29.2.6    refrain from exercising any right, power or discretion vested
                  in it as agent hereunder unless and until instructed by an
                  Instructing Group as to whether or not such right, power or
                  discretion is to be exercised and, if it is to be exercised,
                  as to the manner in which it should be exercised;

        29.2.7    refrain from acting in accordance with any instructions of an
                  Instructing Group to begin any legal action or proceeding
                  arising out of or in connection with the Finance Documents
                  until it shall have received such security as it may require
                  (whether by way of payment in advance or otherwise) for all
                  costs, claims, losses, expenses (including legal fees) and
                  liabilities together with any VAT thereon which it will or may
                  expend or incur in complying with such instructions.

        29.2.8    assume (unless it has specific notice to the contrary) that
                  any notice or request made by the Borrower is made on behalf
                  of all the Obligors.

29.3    AGENT'S OBLIGATIONS

        The Agent shall:

        29.3.1    promptly inform each Bank of the contents of any written
                  notice or document received by it in its capacity as Agent
                  from an Obligor under the Finance Documents;

        29.3.2    promptly notify each Bank of the occurrence of any Event of
                  Default or any default by an Obligor in the due performance of
                  or compliance with its obligations under the Finance Documents
                  of which the Agent has notice from any other party hereto;

        29.3.3    promptly notify each Bank of the occurrence of an Event of
                  Default under Clause 19.1 (Failure to Pay);

        29.3.4    promptly notify each Bank of all or any part of the Advances
                  being declared to be immediately due and payable in accordance
                  with either Clause 19.16 (Acceleration and Cancellation) or
                  Clause 19.17 (Advances Due on Demand);

        29.3.5    save as otherwise provided herein, act as agent hereunder in
                  accordance with any instructions given to it by an Instructing
                  Group, which instructions shall be binding on the Arrangers
                  and the Banks;

        29.3.6    if so instructed by an Instructing Group, refrain from
                  exercising any right, power or discretion vested in it as
                  agent hereunder; and

        29.3.7    unless it has a Bank's consent, refrain from acting on behalf
                  of that Bank in any legal or arbitration proceedings relating
                  to any Finance Document.

        The Agent's duties under the Finance Documents are solely mechanical
        and administrative in nature.

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29.4    EXCLUDED OBLIGATIONS

        Notwithstanding anything to the contrary expressed or implied herein,
        neither the Agent nor an Arranger shall:

        29.4.1    be bound to enquire as to (a) whether or not any
                  representation made or deemed to be made by an Obligor in
                  connection with the Finance Documents is true, (b) the
                  occurrence or otherwise of any Event of Default or Potential
                  Event of Default, (c) the performance by an Obligor of its
                  obligations under the Finance Documents or (d) any breach of
                  or default by an Obligor of or under its obligations under the
                  Finance Documents;

        29.4.2    be bound to account to any Bank for any sum or the profit
                  element of any sum received by it for its own account;

        29.4.3    be bound to disclose to any other person any information
                  relating to any member of the Group if (a) such information is
                  confidential or (b) such disclosure would or might in its
                  reasonable opinion constitute a breach of any law or a breach
                  of fiduciary duty;

        29.4.4    be under any obligations other than those for which express
                  provision is made herein; or

        29.4.5    be or be deemed to be a fiduciary for any other party hereto.

29.5    DELEGATION

        The Agent may delegate, transfer or assign to any of its holding
        companies, subsidiaries or subsidiaries of any of its holding companies
        all or any of the rights, powers, authorities and discretions vested in
        it under the Finance Documents and the performance of its duties in
        accordance therewith, and such delegation, transfer or assignment may be
        made upon such terms and subject to such conditions (including the power
        to sub-delegate) and subject to such regulations as the Agent may think
        fit (and the term "Agent" as used in this Agreement shall include any
        such delegate).

29.6    INDEMNIFICATION

        Each Bank shall, in its Proportion, from time to time on demand by the
        Agent, indemnify the Agent against any and all costs, claims, losses,
        expenses (including legal fees) and liabilities together with any VAT
        thereon which the Agent may incur, otherwise than by reason of its own
        gross negligence or wilful misconduct, in acting in its capacity as
        agent under the Finance Documents (other than any which have been
        reimbursed by the Borrower pursuant to Clause 24.1 (Borrowers'
        Indemnity)).

29.7    EXCLUSION OF LIABILITIES

        Each Bank confirms that it has read the Notice to Recipients in the
        Information Memorandum, that it has complied with the Recipients'
        Obligations (as set out in the Notice to Recipients) and, accordingly,
        that it enters into this Agreement on the basis of the Notice to
        Recipients. In particular, each of the Banks accepts that it is entering
        into this Agreement in reliance only on the representations of the
        Obligors in this Agreement and on its own investigations, that it has
        not relied on the Arrangers and that, except as set out below, it
        neither has nor will have any claims against the Arrangers arising from
        or in connection with this Agreement. Similarly, each of the Banks
        accepts that the

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        Notice to Recipients in the Information Memorandum is applicable also
        to the Agent as if the Agent had been named in addition to the
        Arrangers in the Important Notice.

        Except in the case of gross negligence or wilful default, neither the
        Agent nor any Arranger accepts any responsibility to any of the Banks:

        29.7.1    for the adequacy, accuracy and/or completeness of the
                  Information Memorandum or any other information supplied by
                  the Agent or the Arrangers, by an Obligor or by any other
                  person in connection with the Finance Documents or any other
                  agreement, arrangement or document entered into, made or
                  executed in anticipation of, pursuant to or in connection with
                  the Finance Documents;

        29.7.2    for the legality, validity, effectiveness, adequacy or
                  enforceability of the Finance Documents or any other
                  agreement, arrangement or document entered into, made or
                  executed in anticipation of, pursuant to or in connection with
                  the Finance Documents; or

        29.7.3    for the exercise of, or the failure to exercise, any
                  judgement, discretion or power given to any of them by or in
                  connection with the Finance Documents or any other agreement,
                  arrangement or document entered into, made or executed in
                  anticipation of, pursuant to or in connection with the Finance
                  Documents.

        Accordingly, neither the Agent nor an Arranger shall be under any
        liability (whether in negligence or otherwise) in respect of such
        matters, save in the case of gross negligence or wilful misconduct.

29.8    NO ACTIONS

        Each of the Banks agrees that it will not assert or seek to assert
        against any director, officer or employee of the Agent or the Arrangers
        any claim it might have against any of them in respect of the matters
        referred to in Clause 29.7 (Exclusion of Liabilities).

29.9    BUSINESS WITH THE GROUP

        The Agent and the Arrangers may accept deposits from, lend money to and
        generally engage in any kind of banking or other business with any
        member of the Group whether or not it may or does lead to a conflict
        with the interests of any of the Banks. Similarly, the Agent or the
        Arrangers may undertake business with or for others even though it may
        lead to a conflict with the interests of any of the Banks.

29.10   RESIGNATION

        The Agent may resign its appointment hereunder at any time without
        assigning any reason therefor by giving not less than thirty days' prior
        notice to that effect to each of the other parties hereto, PROVIDED THAT
        no such resignation shall be effective until a successor for the Agent
        is appointed in accordance with the succeeding provisions of this Clause
        29 (The Agent, the Arrangers and the Banks).

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29.11   REMOVAL OF AGENT

        An Instructing Group may, after consultation with the Borrower, remove
        the Agent from its role as agent under the Finance Documents by giving
        notice to that effect to each of the other parties hereto. Such removal
        shall take effect only when a successor to the Agent is appointed in
        accordance with the terms of the Finance Documents.

29.12   SUCCESSOR AGENT

        If the Agent gives notice of its resignation pursuant to Clause 29.10
        (Resignation) or it is removed pursuant to Clause 29.11 (Removal of
        Agent), then any reputable and experienced bank or other financial
        institution may, with the prior consent of the Borrower be appointed as
        a successor to the Agent by an Instructing Group during the period of
        such notice but, if no such successor is so appointed, the Agent may
        appoint such a successor itself.

29.13   RIGHTS AND OBLIGATIONS

        If a successor to the Agent is appointed under the provisions of Clause
        29.12 (Successor Agent), then (a) the retiring or departing Agent shall
        be discharged from any further obligation under the Finance Documents
        but shall remain entitled to the benefit of the provisions of this
        Clause 29 (The Agent, the Arrangers and the Banks) and (b) its successor
        and each of the other parties hereto shall have the same rights and
        obligations amongst themselves as they would have had if such successor
        had been a party hereto.

29.14   OWN RESPONSIBILITY

        It is understood and agreed by each Bank that at all times it has itself
        been, and will continue to be, solely responsible for making its own
        independent appraisal of and investigation into all risks arising under
        or in connection with the Finance Documents including, but not limited
        to:

        29.14.1   the financial condition, creditworthiness, condition, affairs,
                  status and nature of each member of the Group;

        29.14.2   the legality, validity, effectiveness, adequacy and
                  enforceability of the Finance Documents and any other
                  agreement, arrangement or document entered into, made or
                  executed in anticipation of, pursuant to or in connection with
                  the Finance Documents;

        29.14.3   whether such Bank has recourse, and the nature and extent of
                  that recourse, against an Obligor or any other person or any
                  of their respective assets under or in connection with the
                  Finance Documents, the transactions therein contemplated or
                  any other agreement, arrangement or document entered into,
                  made or executed in anticipation of, pursuant to or in
                  connection with the Finance Documents; and

        29.14.4   the adequacy, accuracy and/or completeness of the Information
                  Memorandum and any other information provided by the Agent or
                  the Arrangers or an Obligor or by any other person in
                  connection with the Finance Documents, the transactions
                  contemplated therein or any other agreement, arrangement or
                  document entered into, made or executed in anticipation of,
                  pursuant to or in connection with the Finance Documents.

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        Accordingly, each Bank acknowledges to the Agent and the Arrangers that
        it has not relied on and will not hereafter rely on the Agent and the
        Arrangers or any of them in respect of any of these matters.

29.15   BANKS' MANDATORY COST DETAILS

        Each Bank will supply the Agent with such information and in such detail
        as the Agent may require in order to calculate the Mandatory Cost Rate
        in accordance with Schedule 7 (Mandatory Costs).

29.16   RECEIPT OF INFORMATION BY THE AGENT

        Any information or document received by the Agent shall only be treated
        as having been received by the Agent if the same has been delivered to
        the Agent's agency department in accordance with Clause 34 (Notices).
        Accordingly, any information or documents received by the Agent other
        than by its agency department in accordance with Clause 34 (Notices) is
        not by reason of that receipt to be treated as having been received by
        the Agent unless and until the Agent's agency department has received
        actual notice of the same in accordance with such Clause. Save as
        expressly set out in this Agreement and, unless the Agent's agency
        department shall have received information or documents in accordance
        with Clause 34 (Notices) the Agent shall have no duty to disclose, and
        shall not be liable for the failure to disclose, any information or
        documents, that are communicated to or obtained by the Agent.

30.     ASSIGNMENTS AND TRANSFERS

30.1    BINDING AGREEMENT

        The Finance Documents shall be binding upon and enure to the benefit of
        each party hereto and its or any subsequent successors and Transferees.

30.2    NO ASSIGNMENTS AND TRANSFERS BY NTL

        No Obligor shall be entitled to assign or transfer all or any of its
        rights, benefits and obligations under the Finance Documents, other than
        as permitted pursuant to the terms of this Agreement.

30.3    ASSIGNMENT AND TRANSFERS BY BANKS

        30.3.1    Any Bank may, at any time, assign all or any of its rights and
                  benefits hereunder or transfer in accordance with Clause 30.5
                  (Transfers by Banks) all or any of its rights, benefits and
                  obligations hereunder to, or enter into any form of
                  sub-participation agreement with, a bank or financial
                  institution, provided that such Bank procures that the
                  assignee or Transferee executes and delivers to the Agent an
                  Intercreditor Accession Deed in the form attached to the
                  Intercreditor Agreement.

        30.3.2    The prior written consent of the Borrower (which shall be
                  deemed to be given on its own behalf and on behalf of the
                  other Obligors) is required for an assignment or transfer by a
                  Bank unless the assignment or transfer is to:

                  (a)   another Bank; or

                  (b)   any subsidiary or holding company (or to any subsidiary
                        of any holding company) of the transferring Bank.

                                       96
<PAGE>   98
        30.3.3    The Borrower's consent must not be (a) unreasonably delayed or
                  withheld or (b) withheld solely because the assignment or
                  transfer may result in an increase to the Mandatory Cost Rate.

30.4    ASSIGNMENTS BY BANKS

        If any Bank assigns all or any of its rights and benefits under the
        Finance Documents in accordance with Clause 30.3 (Assignments and
        Transfers by Banks), then, unless and until the assignee has delivered a
        notice to the Agent confirming in favour of the Agent, the Arrangers and
        the other Banks that it shall be under the same obligations towards each
        of them as it would have been under if it had been an original party
        hereto as a Bank (whereupon such assignee shall become a party hereto as
        a "BANK"), the Agent, the Arrangers and the other Banks shall not be
        obliged to recognise such assignee as having the rights against each of
        them which it would have had if it had been such a party hereto.

30.5    TRANSFERS BY BANKS

        If any Bank wishes to transfer all or any of its rights, benefits and/or
        obligations under the Finance Documents as contemplated in Clause 30.3
        (Assignments and Transfers by Banks), then such transfer may be effected
        by the delivery to the Agent of a duly completed Transfer Certificate
        executed by such Bank and the relevant Transferee in which event, on the
        later of the Transfer Date specified in such Transfer Certificate and
        the fifth Business Day after (or such earlier Business Day endorsed by
        the Agent on such Transfer Certificate falling on or after) the date of
        delivery of such Transfer Certificate to the Agent:

        30.5.1    to the extent that in such Transfer Certificate the Bank party
                  thereto seeks to transfer by novation its rights, benefits and
                  obligations under the Finance Documents, each of the Obligors
                  and such Bank shall be released from further obligations
                  towards one another under the Finance Documents and their
                  respective rights against one another shall be cancelled (such
                  rights and obligations being referred to in this Clause 30.5
                  (Transfer by Banks) as "DISCHARGED RIGHTS AND OBLIGATIONS");

        30.5.2    each of the Obligors and the Transferee party thereto shall
                  assume obligations towards one another and/or acquire rights
                  against one another which differ from such discharged rights
                  and obligations only insofar as the Obligors and such
                  Transferee have assumed and/or acquired the same in place of
                  the Obligors and such Bank;

        30.5.3    the Agent, the Arrangers, such Transferee and the other Banks
                  shall acquire the same rights and benefits and assume the same
                  obligations between themselves as they would have acquired and
                  assumed had such Transferee been an original party hereto as a
                  Bank with the rights, benefits and/or obligations acquired or
                  assumed by it as a result of such transfer and to that extent
                  the Agent, the Arrangers and the relevant Bank shall each be
                  released from further obligations to each other under the
                  Finance Documents; and

        30.5.4    such Transferee shall become a party hereto as a "BANK".

                                       97
<PAGE>   99
30.6     U.S. TAX FORMS

         At the time of a Transfer or Assignment pursuant to Clause 30.3
         (Assignment and Transfers by Banks) to a person which is not already a
         Bank hereunder and which is not a United States person (as such term is
         defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S.
         federal income tax purposes, the Transferee or assignee Bank must
         provide the appropriate Internal Revenue Service Forms (and, if
         applicable, a Non-Bank Certificate) described in Clause 10.4 (U.S. Tax
         Forms).

30.7    NO INCREASED OBLIGATIONS
        If:

        30.7.1    a Bank assigns or transfers any of its rights or obligations
                  under the Finance Documents or changes its Facility Office;
                  and

        30.7.2    as a result of circumstances existing at the date of the
                  assignment, transfer or change of Facility Office, an Obligor
                  would be obliged to make a payment to the assignee, Transferee
                  or the Bank acting through its new Facility Office under
                  Clause 10.1 (Tax Gross-up), Clause 10.2 (Tax Indemnity) or
                  Clause 12 (Increased Costs),

        then the assignee, Transferee or the Bank acting through its new
        Facility Office shall only be entitled to receive payment under those
        Clauses to the same extent as the assignor, transferor or the Bank
        acting through its previous Facility Office would have been if the
        assignment, transfer or change had not occurred.

30.8    ASSIGNMENT AND TRANSFER FEES

        On the date upon which an assignment takes effect pursuant to Clause
        30.4 (Assignments by Banks) or a transfer takes effect pursuant to
        Clause 30.5 (Transfers by Banks), in each case where such assignment or
        transfer takes effect after the Syndication Date, the relevant assignee
        or Transferee shall pay to the Agent for its own account a fee of
        L1,000.

30.9    DISCLOSURE OF INFORMATION

        Any Bank may disclose to any person:

        30.9.1    to (or through) whom such Bank assigns or transfers (or may
                  potentially assign or transfer) all or any of its rights,
                  benefits and obligations under the Finance Documents;

        30.9.2    with (or through) whom such Bank enters into (or may
                  potentially enter into) any sub-participation in relation to,
                  or any other transaction under which payments are to be made
                  by reference to, the Finance Documents or any Obligor;

        30.9.3    to whom information may be required to be disclosed by any
                  applicable law; or

        30.9.4    any of its subsidiaries or any holding company (or any
                  subsidiary of a holding company),

        such information about any Obligor or the Group and the Finance
        Documents as such Bank shall consider appropriate PROVIDED THAT, in
        relation to sub-clauses 30.9.1 and

                                       98
<PAGE>   100
        30.9.2, the person to whom such information is to be given has entered
        into a Confidentiality Undertaking. Any Bank which discloses any such
        information to any of the persons referred to in sub-clause 30.9 shall
        procure that those persons keep the information they receive
        confidential (save for disclosures they are required to make by any
        applicable law).

30.10   NOTIFICATION

        The Agent shall within fourteen days of receiving a Transfer Certificate
        or a notice relating to an assignment pursuant to Clause 30.4
        (Assignment by Banks) notify the Borrower (on its own behalf and on
        behalf of the other Obligors) of any assignment or transfer completed
        pursuant to this Clause 30 (Assignments and Transfers).

30.11   MORGAN STANLEY COMMITMENT

        References to the Commitment of Morgan Stanley Dean Witter Bank Limited
        in relation to the Facility shall be construed as references to the
        aggregate Commitment in relation to the Facility of Morgan Stanley Dean
        Witter Bank Limited and Morgan Stanley Senior Funding, Inc., in such
        proportions as Morgan Stanley Dean Witter Bank Limited notifies to the
        Agent from time to time and Morgan Stanley Senior Funding, Inc. is a
        party to this Agreement to give effect to such Commitment (as so
        notified).

31.     ECONOMIC AND MONETARY UNION

31.1    ECONOMIC AND MONETARY UNION

        If the United Kingdom becomes a Participating Member State and as a
        result the Bank of England recognises more than one currency or currency
        unit as the lawful currency of the United Kingdom:

        31.1.1    (unless prohibited by law) the Agent may designate (after
                  consultation with the Borrower) which currency or currency
                  unit the obligations arising under the Finance Documents are
                  to be denominated or payable in;

        31.1.2    (unless prohibited by law) any translation from currency or
                  currency unit to another shall be at the official rate of
                  exchange recognised by the Bank of England for conversion,
                  rounded up or down by the Agent (acting reasonably); and

        31.1.3    the Finance Documents shall be subject to such reasonable
                  changes of construction as the Agent may specify from time to
                  time to be appropriate to reflect the adoption of the euro in
                  the United Kingdom and any relevant market conventions or
                  practices relating to the euro.

        (b)       any amount payable by the Agent to the Banks under the Finance
                  Document shall be paid in the euro unit.

31.2    INCREASED COSTS

        The Borrower shall, from time to time on demand of the Agent, pay to the
        Agent for the account of such Bank the amount of any cost or increased
        cost incurred by, or of any reduction in any amount payable to or in the
        effective return on its capital to, or of interest or other return
        foregone by, a Bank or any holding company of such Bank as a result of
        the introduction of, changeover to or operation of the euro in the
        United

                                       99
<PAGE>   101
        Kingdom, other than any such cost or reduction or amount foregone
        reflected in the Mandatory Cost Rate.

32.     CALCULATIONS AND EVIDENCE OF DEBT

32.1    BASIS OF ACCRUAL

        Interest and commitment commission shall accrue from day to day and
        shall be calculated on the basis of a year of 365 days (or, in any case
        where market practice differs, in accordance with market practice) and
        the actual number of days elapsed.

32.2    QUOTATIONS

        If on any occasion a Reference Bank or Bank fails to supply the Agent
        with a quotation required of it under the foregoing provisions of this
        Agreement, the rate for which such quotation was required shall be
        determined from those quotations which are supplied to the Agent,
        PROVIDED THAT, in relation to determining LIBOR, this Clause 32.2 shall
        not apply if only one Reference Bank supplies a quotation.

32.3    EVIDENCE OF DEBT

        Each Bank shall maintain in accordance with its usual practice accounts
        evidencing the amounts from time to time lent by and owing to it
        hereunder.

32.4    CONTROL ACCOUNTS

        The Agent shall maintain on its books a control account or accounts in
        which shall be recorded (a) the amount of any Advance or any Unpaid Sum
        and each Bank's share therein, (b) the amount of all principal, interest
        and other sums due or to become due from an Obligor and each Bank's
        share therein and (c) the amount of any sum received or recovered by the
        Agent hereunder and each Bank's share therein.

32.5    PRIMA FACIE EVIDENCE

        In any legal action or proceeding arising out of or in connection with
        this Agreement, the entries made in the accounts maintained pursuant to
        Clause 32.3 (Evidence of Debt) and Clause 32.4 (Control Accounts) shall
        be prima facie evidence of the existence and amounts of the specified
        obligations of the Obligors.

32.6    CERTIFICATES OF BANKS

        A certificate of a Bank as to (a) the amount by which a sum payable to
        it hereunder is to be increased under Clause 10.1 (Tax Gross-up), (b)
        the amount for the time being required to indemnify it against any such
        cost, payment or liability as is mentioned in Clause 10.2 (Tax
        Indemnity), Clause 12.1 (Increased Costs) or Clause 24.1 (Borrower's
        Indemnity) or (c) the amount of any credit, relief, remission or
        repayment as is mentioned in Clause 11.3 (Tax Credit Payment) or Clause
        11.4 (Tax Credit Clawback) shall, in the absence of manifest error, be
        prima facie evidence of the existence and amounts of the specified
        obligations of the Obligors.

32.7    AGENT'S CERTIFICATES

        A certificate of the Agent as to the amount at any time due from a
        Borrower hereunder or the amount which, but for any of the obligations
        of such Borrower hereunder being or becoming void, voidable,
        unenforceable or ineffective, at any time would have been due from such
        Borrower hereunder shall, in the absence of manifest error, be
        conclusive for the purposes of Clause 20 (Guarantee and Indemnity).

                                      100
<PAGE>   102
33.     REMEDIES AND WAIVERS, PARTIAL INVALIDITY

33.1    REMEDIES AND WAIVERS

        No failure to exercise, nor any delay in exercising, on the part of any
        Finance Party, any right or remedy under the Finance Documents shall
        operate as a waiver thereof, nor shall any single or partial exercise of
        any right or remedy prevent any further or other exercise thereof or the
        exercise of any other right or remedy. The rights and remedies herein
        provided are cumulative and not exclusive of any rights or remedies
        provided by law.

33.2    PARTIAL INVALIDITY

        If, at any time, any provision of the Finance Documents is or becomes
        illegal, invalid or unenforceable in any respect under the law of any
        jurisdiction, neither the legality, validity or enforceability of the
        remaining provisions thereof nor the legality, validity or
        enforceability of such provision under the law of any other jurisdiction
        shall in any way be affected or impaired thereby.

34.     NOTICES

34.1    COMMUNICATIONS IN WRITING

        Each communication to be made under the Finance Documents shall be made
        in writing and, unless otherwise stated, shall be made by fax or letter.

34.2    ADDRESSES

        Any communication or document to be made or delivered pursuant to the
        Finance Documents shall be made or delivered to the address or fax
        number (and the department or officer, if any, for whose attention the
        communication is made):

        34.2.1    in the case of an Obligor, the Security Trustee and the Agent,
                  identified with its name below; and

        34.2.2    in the case of each Bank, notified in writing to the Agent
                  prior to the date hereof (or, in the case of a Transferee, at
                  the end of the Transfer Certificate to which it is a party as
                  Transferee); and

        or to any substitute address, fax number or department or officer as the
        Security Trustee, an Obligor or a Bank may notify to the Agent (or the
        Agent may notify to the Borrower (on its own behalf and on behalf of the
        other Obligors), the Security Trustee and the Banks, if a change is made
        by the Agent) by not less than five Business Days' Borrower notice. Any
        communication to be made to an Obligor (other than the Borrower) by fax
        shall be made to the fax number identified with the Borrower name below.
        Any communication or document to be made or delivered (a) to an Obligor
        (other than the Borrower) shall be copied to the Borrower and (b) to any
        Obligor (other than the Parent) to the Parent.

34.3    DELIVERY

        Any communication or document to be made or delivered by one person to
        another under or in connection with the Finance Documents shall only be
        effective:

        34.3.1    if by way of fax, when received in legible form;

                                      101
<PAGE>   103
        34.3.2    if by way of letter, when left at the relevant address or, as
                  the case may be, five days after being deposited in the post
                  postage prepaid in an envelope addressed to it at such
                  address; and

        34.3.3    if a particular department or officer is specified as part of
                  the address details provided under Clause 34.2 (Addresses), if
                  addressed to that department or officer,

        PROVIDED THAT any communication or document to be made or delivered to
        the Agent shall be effective only when received by its agency division
        and then only if the same is expressly marked for the attention of the
        department or officer identified with the Agent's signature below (or
        such other department or officer as the Agent shall from time to time
        specify for this purpose).

34.4    THE AGENT

        All notices from or to an Obligor shall be sent through the Agent.

34.5    ENGLISH LANGUAGE

        Each communication and document made or delivered by one party to
        another pursuant to the Finance Documents shall be in the English
        language or accompanied by a translation thereof into English certified
        (by an officer of the person making or delivering the same) as being a
        true and accurate translation thereof.

34.6    NOTIFICATION OF CHANGES

        Promptly upon receipt of notification of a change of address or fax
        number pursuant to Clause 34.2 (Addresses) or changing its own address
        or fax number the Agent shall notify the other parties hereto of such
        change.

34.7    DEEMED RECEIPT BY THE OBLIGORS

        Any communication or document made or delivered to the Borrower in
        accordance with Clause 34.3 (Delivery) shall be deemed to have been made
        or delivered to each of the Obligors.

35.     COUNTERPARTS

        This Agreement may be executed in any number of counterparts, all of
        which taken together shall constitute one and the same instrument.

36.     AMENDMENTS

36.1    AMENDMENTS

        If the Agent has the prior consent of an Instructing Group (or the
        Steering Committee Group is so provided under Clause 36.4 (Amendments
        Requiring the Consent of the Steering Committee Group), the Agent, the
        Borrower and the Obligors party to a Finance Document may from time to
        time agree in writing to amend such Finance Document or, as the case may
        be, the Agent may consent to or waive, prospectively or retrospectively,
        any of the requirements of such Finance Document and any amendments or
        waivers so agreed or consents so given shall be binding on all the
        Finance Parties, PROVIDED THAT no such waiver or amendment shall subject
        any Finance Party hereto to any new or additional obligations without
        the consent of such Finance Party.

                                      102
<PAGE>   104
36.2    AMENDMENTS REQUIRING THE CONSENT OF ALL THE BANKS

        An amendment or waiver which relates to:

        36.2.1    Clause 28 (Sharing) or this Clause 36.1 (Amendments);

        36.2.2    a change in the principal amount of or currency of any
                  Advance, or deferral of the Final Maturity Date;

        36.2.3    a change in the Margin, the amount of any payment of interest,
                  fees or any other amount payable hereunder to any Finance
                  Party or deferral of the date for payment thereof;

        36.2.4    Clause 20 (Guarantee and Indemnity);

        36.2.5    a release of any of the Security;

        36.2.6    a Security Document, where such an amendment or waiver could
                  affect the nature or scope of the property subject to the
                  Security;

        36.2.7    an increase in the commitment of a Bank;

        36.2.8    a change to the Borrower or Guarantors;

        36.2.9    Clause 2.5 (Banks' Obligations Several), Clause 2.6 (Banks'
                  Rights Several);

        36.2.10   the conditions set out in sub-clause 3.1.7 of Clause 3.1
                  (Drawdown Conditions for Advances) if an Event of Default or
                  Potential Event of Default which relates to a Repeated
                  Representation or Clause 18.18 (Negative Pledge) is
                  continuing;

        36.2.11   the definition of Instructing Group, Permitted Encumbrance or
                  Potential Event of Default; or

        36.8.12   any provision which contemplates the need for the consent or
                  approval of all the Banks,

        shall not be made without the prior consent of all the Banks.

36.3    EXCEPTIONS

        Notwithstanding any other provisions hereof, the Agent shall not be
        obliged to agree to any such amendment or waiver if the same would:

        36.3.1    amend or waive this Clause 36 (Amendments), Clause 22 (Costs
                  and Expenses) or Clause 29 (The Agent, the Arrangers and the
                  Banks); or

        36.3.2    otherwise amend or waive any of the Agent's rights hereunder
                  or subject the Agent or the Arrangers to any additional
                  obligations hereunder.

36.4     AMENDMENTS REQUIRING THE CONSENT OF THE STEERING COMMITTEE GROUP

         An amendment or waiver to Clause 9.5 (Mandatory Prepayment from Capital
         Event Proceeds) or the definitions of "Capital Event Proceeds" or
         "Required Percentage" may be made by the Agent acting upon the
         instructions of the Steering Committee Group.

37.     ACCESSION OF GUARANTORS

                                      103
<PAGE>   105
37.1    REQUEST FOR GUARANTOR

        The Borrower may request that any member of the Parent Covenant Group
        become a Guarantor by delivering to the Agent a Guarantor Accession
        Memorandum duly executed by the Borrower and such member of the Parent
        Covenant Group, together with the documents and other evidence listed in
        Schedule 11 (Additional Conditions Precedent) in relation to such
        member.

37.2    GUARANTOR CONDITIONS PRECEDENT

        A company, in respect of which the Borrower has delivered a Guarantor
        Accession Memorandum to the Agent, shall become a Guarantor and assume
        all the rights, benefits and obligations of a Guarantor as if it has
        been an original party hereto as a Guarantor on the date on which the
        Agent notifies the Borrower that it has received, in form and substance
        satisfactory to it, all the documents and other evidence listed in
        Schedule 11 (Additional Conditions Precedent).

38.     GOVERNING LAW

        This Agreement is governed by English law.

39.     JURISDICTION

39.1    ENGLISH COURTS

        The courts of England have exclusive jurisdiction to settle any dispute
        (a "DISPUTE") arising out of or in connection with this Agreement
        (including a dispute regarding the existence, validity or termination of
        this Agreement or the consequences of its nullity).

39.2    CONVENIENT FORUM

        The parties agree that the courts of England are the most appropriate
        and convenient courts to settle Disputes between them and, accordingly,
        that they will not argue to the contrary.

39.3    NON-EXCLUSIVE JURISDICTION

        This Clause 39 (Jurisdiction) is for the benefit of the Finance Parties
        only. As a result and notwithstanding Clause 39.1 (English Courts), it
        does not prevent any Finance Party from taking proceedings relating to a
        Dispute ("PROCEEDINGS") in any other courts with jurisdiction. To the
        extent allowed by law, the Finance Parties may take concurrent
        Proceedings in any number of jurisdictions.

39.4    SERVICE OF PROCESS

        Each Guarantor (other than the Intermediate Parent), agrees that the
        documents which start any Proceedings and any other documents required
        to be served in relation to those Proceedings may be served on it by
        service of such documents on NTL Group Limited at NTL House, Bartley
        Wood Business Park, Hook, Hampshire RG27 9XA (marked for the attention
        of Robert Mackenzie) or, if different, its registered office.

        If any Guarantor ceases to have a place of business in Great Britain or,
        as the case may be, the appointment of the person mentioned in this
        Clause 39.4 ceases to be effective, such person shall immediately
        appoint another person in England to accept service of process on its
        behalf in England. If any Guarantor fails to do so (and such failure
        continues for a period of not less than fourteen days), the Agent shall
        be entitled to

                                      104
<PAGE>   106
         appoint such a person by notice to such person. Nothing contained
         herein shall restrict the right to serve process in any other manner
         allowed by law. This Clause 39.4 applies to Proceedings in England and
         to Proceedings elsewhere.

40.      INTERCREDITOR AGREEMENT

         Each Obligor acknowledges that the Banks have entered into the
         Intercreditor Agreement (including, without limitation, Clause 2.1
         (Waiver of Drawdown Conditions) thereof and that they have been
         provided with a copy thereof. Each Obligor acknowledges that (x)
         neither it nor any other member of the Group nor any other person shall
         be deemed to be a third party beneficiary of the Intercreditor
         Agreement or have any right to enforce or cause the enforcement of any
         right, remedy or obligation of any party to the Intercreditor Agreement
         and (y) the terms of the Intercreditor Agreement can be amended,
         modified, waived or terminated without their consent. The Agent shall
         notify the Borrower of any such amendment, modification, waiver or
         termination promptly after its occurrence.

                                      105
<PAGE>   107
                                   SCHEDULE 1
                                    THE BANKS

<TABLE>
<CAPTION>
BANK                                                                        COMMITMENT
                                                                                 L
<S>                                                                        <C>
The Chase Manhattan Bank                                                      650,000,000
Morgan Stanley Senior Funding, Inc.                                                     0
                                                                              650,000,000
Morgan Stanley Dean Witter Bank Limited                                    --------------
                                                                           L1,300,000,000
                                                                           ==============
</TABLE>

                                       1
<PAGE>   108
                                   SCHEDULE 2
                          FORM OF TRANSFER CERTIFICATE

To:      Chase Manhattan International Limited

                              TRANSFER CERTIFICATE

relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "CREDIT AGREEMENT") dated 30 May 2000 whereby a L1,300,000,000
multiple draw loan facility was made available to NTL Communications Limited by
a group of banks on whose behalf Chase Manhattan International Limited acted as
agent in connection therewith.

1.      Terms defined in the Credit Agreement shall, subject to any contrary
        indication, have the same meanings herein. The terms Bank, Transferee
        and Portion Transferred are defined in the schedule hereto.

2.      The Bank (i) confirms that the details in the schedule hereto under the
        heading "BANK'S PARTICIPATION IN THE FACILITY" and ["ADVANCES"]
        accurately summarises its participation in the Credit Agreement and the
        Interest Period or Term of any existing Advances and (ii) requests the
        Transferee to accept and procure the transfer by novation to the
        Transferee of the Portion Transferred (specified in the schedule hereto)
        of its Commitment and/or its participation in such Advance(s) by
        counter-signing and delivering this Transfer Certificate to the Agent at
        its address for the service of notices specified in the Credit
        Agreement.

3.      The Transferee hereby requests the Agent to accept this Transfer
        Certificate as being delivered to the Agent pursuant to and for the
        purposes of Clause 30.5 (Transfers by Banks) of the Credit Agreement so
        as to take effect in accordance with the terms thereof on the Transfer
        Date or on such later date as may be determined in accordance with the
        terms thereof.

4.      The Transferee confirms that it has received a copy of the Credit
        Agreement together with such other information as it has required in
        connection with this transaction and that it has not relied and will not
        hereafter rely on the Bank to check or enquire on its behalf into the
        legality, validity, effectiveness, adequacy, accuracy or completeness of
        any such information and further agrees that it has not relied and will
        not rely on the Bank to assess or keep under review on its behalf the
        financial condition, creditworthiness, condition, affairs, status or
        nature of the NTL Holding Group or the Obligors.

5.      The Transferee hereby undertakes with the Bank and each of the other
        parties to the Credit Agreement that it will perform in accordance with
        their terms all those obligations which by the terms of the Finance
        Documents will be assumed by it after delivery of this Transfer
        Certificate to the Agent and satisfaction of the conditions (if any)
        subject to which this Transfer Certificate is expressed to take effect.

6.      The Bank makes no representation or warranty and assumes no
        responsibility with respect to the legality, validity, effectiveness,
        adequacy or enforceability of the Finance Documents or any document
        relating thereto and assumes no responsibility for the financial
        condition of the Obligors or for the performance and observance by the

                                       1
<PAGE>   109
        Obligors of any of its obligations under the Finance Documents or any
        document relating thereto and any and all such conditions and
        warranties, whether express or implied by law or otherwise, are hereby
        excluded.

7.      The Bank hereby gives notice that nothing herein or in the Finance
        Documents (or any document relating thereto) shall oblige the Bank to
        (a) accept a re-transfer from the Transferee of the whole or any part of
        its rights, benefits and/or obligations under the Finance Documents
        transferred pursuant hereto or (b) support any losses directly or
        indirectly sustained or incurred by the Transferee for any reason
        whatsoever including the non-performance by an Obligor or any other
        party to the Finance Documents (or any document relating thereto) of its
        obligations under any such document. The Transferee hereby acknowledges
        the absence of any such obligation as is referred to in (a) or (b)
        above.

8.      This Transfer Certificate and the rights, benefits and obligations of
        the parties hereunder shall be governed by and construed in accordance
        with English law.

                                  THE SCHEDULE

9.      Bank:

10.     Transferee:

11.     Transfer Date:

<TABLE>
<S>                                               <C>                         <C>
12.     Bank's Participation in the Facility:                                 Portion Transferred
        Bank's Commitment

13.     Advance(s):                               [Term and Repayment Date]   Portion Transferred
        Amount of Bank's Participation
        [Transferor Bank]                         [Transferor Bank]
</TABLE>

14.     Portion Transferred of the Take Down
        Fee payable in respect of Future
        Advances

        By:                                       By:

        Date:                                     Date:

                                       2
<PAGE>   110
                      ADMINISTRATIVE DETAILS OF TRANSFEREE

Address:

Contact Name:

Account for Payments:

Telex:

Fax:

Telephone:

NOTE: EACH TRANSFEREE SHOULD, AT THE SAME TIME AS EXECUTING THIS TRANSFER
CERTIFICATE, EXECUTE AN ACCESSION MEMORANDUM IN RELATION TO THE SECURITY TRUST
AGREEMENT AND THE INTERCREDITOR AGREEMENT.

                                       3
<PAGE>   111
                                   SCHEDULE 3
                              CONDITIONS PRECEDENT

(A)     CORPORATE DOCUMENTS

1.      In relation to each Obligor:

        (a)       a copy, certified as at the date of this Agreement a true and
                  up-to-date copy by an Authorised Signatory of such Obligor, of
                  the constitutional documents of such Obligor;

        (b)       a copy, certified as at the date of this Agreement a true and
                  up-to-date copy by an Authorised Signatory of such Obligor, of
                  a board resolution of such Obligor approving the execution,
                  delivery and performance of the Finance Documents to which
                  such Obligor is party and the terms and conditions thereof and
                  authorising a named person or persons to sign such Finance
                  Documents and any documents to be delivered by such Obligor
                  pursuant thereto; and

        (c)       a certificate of an Authorised Signatory of such Obligor
                  setting out the names and signatures of the persons authorised
                  to sign, on behalf of such Original Obligor, the Finance
                  Documents to which such Obligor is party and any documents to
                  be delivered by such Obligor pursuant thereto.

2.       In relation to the Borrower a certificate of an Authorised Signatory of
         the Borrower confirming that utilisation of the full amount of the
         Facility would not breach any restriction of its borrowing powers.

3.       The Group Structure Chart referred to in paragraph (a) of the
         definition of that term.

(B)      ACCOUNTS AND REPORTS

1.       The Business Plan.

2.       Copies of the Original Financial Statements, referred to in paragraphs
         (a) to (c) of the definition of that term, certified true copies by an
         Authorised Signatory of the Borrower (in the case of its financial
         statements).

(C)      ACQUISITION AND RELATED MATTERS

1.       A copy, certified by an Authorised Signatory of the Borrower as true,
         complete and up-to-date, of the Transaction Agreement.

2.       A certificate from an Authorised Signatory of the Borrower confirming
         that all the conditions precedent to the completion of the Acquisition
         in accordance with the Transaction Agreement have been satisfied or
         waived as permitted thereby save insofar as such conditions precedent
         relate to or are dependent upon the utilisation of the Senior Bank
         Credit Agreement.

3.       A copy, certified as being a true and complete copy by an Authorised
         Signatory of

                                       1
<PAGE>   112
         the Borrower of the resolutions of the shareholders of the Target
         passed at the Court Meetings.

4.       A copy, certified as being a true and complete copy by an Authorised
         Signatory of Borrower, of the resolutions of the shareholders of the
         Target passed at the EGM.

5.       A certified copy of the order of the Court sanctioning the Scheme under
         Section 425, as registered with the Registrar of Companies.

6.       Certified copies of executed stock transfer forms evidencing that NTL
         Holdings will upon registration of the transfers effected by such stock
         transfer forms, hold 100 per cent. of the issued share capital of CWC
         Holdings.

7.       Certificate of an Authorised Signatory of the Borrower confirming that
         all necessary consents, licenses, authorisations and approvals in
         relation to the Acquisition and the Finance Documents have been
         obtained together with copy letters from the ITC, Oftel and the DTI and
         any consents or other approvals required under the terms of any
         License.

8.       A letter from the Borrower's insurance broker addressed to the Agent
         confirming the adequacy of the UK Group's insurance cover.

(D)      SECURITY DOCUMENTS AND RELATED DOCUMENTATION

1.       The Pledge Agreement, the Intercompany Loan Assignment Agreement and
         the Share Charge, duly executed and delivered by the relevant Obligor.

2.       A share certificate and executed blank stock transfer form in respect
         of 100% of the issued share capital of Intermediate Parent, as charged
         in favour of the Security Trustee pursuant to the Pledge Agreement.

3.       A share certificate and executed blank stock transfer form in respect
         of 65% of the issued share capital of the Borrower, as charged in
         favour of the Security Trustee pursuant to the Share Charge.

4.       The Parent Subordination Agreement duly executed by the Parent.

5.       The Intermediate Subordination Agreement duly executed by the
         Intermediate Parent.

6.       The Security Trust Agreement duly executed and delivered by the parties
         thereto.

7.       UCC-1 financing statements in respect of the Security executed by the
         Parent and the Intermediate Parent.

(E)      LEGAL OPINIONS

         Legal opinion from the following:

         (a)      White & Case LLP, London, the Agent's English counsel; and

         (b)      Skadden, Arps, Slate, Meagher & Flom LLP, the Parent's United
                  States counsel,

         in each case in substantially the form distributed to the Banks prior
         to the signing of this Agreement.

                                       2
<PAGE>   113
(F)      MISCELLANEOUS

1.       The fees letters referred to in Clause 21.4 (Agency and Other Fees).

2.       Evidence that NTL Group Limited has agreed to act as the agent of the
         Parent and Intermediate Parent for the service of process in England in
         respect of:

         (a)      this Agreement (for the Parent and the Intermediate Parent);

         (b)      the Subordination Agreement (for the Parent and the
                  Intermediate Parent); and

         (c)      the Assignment Agreement (for the Parent and the Intermediate
                  Parent).

3.       Evidence confirming that, in addition to the amounts specified in the
         balance sheet in the management accounts for the Group for the period
         ended 30 April 2000, an amount of L2,800,000,000 (or its equivalent)
         has been invested in the common stock or convertible preferred stock of
         NTL Holdings by France Telecom S.A.

4.       Evidence that no less than:

         (a)      L215,798,000 was available for use by the UK Group as at 25
                  May, 2000; and

         (b)      L591,166,950 was available for use by the Original Borrower
                  (as defined in the Senior Bank Credit Agreement) as at 25 May,
                  2000

         Such evidence comprising of certificates from an Authorised Signatory
         of the Borrower or, as the case may be, the Original Borrower (as
         defined in the Senior Bank Credit Agreement).

5.       Evidence that the Senior Bank Credit Agreement is in place and all
         conditions precedent thereunder (save for those that are conditional on
         the effectiveness of this Agreement) have been satisfied or waived in
         accordance with their terms.

6.       The Intercreditor Agreement, duly executed by the parties thereto.

                                       3
<PAGE>   114
                                   SCHEDULE 4
                               NOTICE OF DRAWDOWN

From:    [Borrower]

To:      Chase Manhattan International Limited

Dated:

Dear Sirs,

1.       We refer to the agreement (the "CREDIT AGREEMENT") dated 30 May 2000
         and made between, among others, NTL Communications Limited as the
         Borrower, Chase Manhattan PLC and Morgan Stanley Dean Witter Bank
         Limited as arrangers and joint bank managers, Chase Manhattan
         International Limited as agent and the financial institutions named
         therein as Banks. Terms defined in the Credit Agreement shall have the
         same meaning in this notice.

2.       This notice is irrevocable.

3.       We hereby give you notice that, pursuant to the Credit Agreement and on
         [date of proposed Advance], we wish to borrow an Advance of L[ ] upon
         the terms and subject to the conditions contained therein.

4.       We would like this Advance to have an Interest Period of [ ] months'
         duration.

5.       We confirm that, at the date hereof, [the Repeated Representations are
         true in all material respects and no Event of Default [or Potential
         Event of Default] is continuing].

6.       This Advance will be used for the purpose set forth in Clause 2.2
         (Purpose) of the Credit Agreement.

7.       The proceeds of this drawdown should be credited to [insert account
         details].

                                Yours faithfully

                              Authorised Signatory
                              for and on behalf of
                            [Insert name of Borrower]

                                       1
<PAGE>   115
                                   SCHEDULE 5
                              EXISTING ENCUMBRANCES

  The Encumbrances set forth in Schedule 5 to the Senior Bank Credit Agreement
                      as in effect on the Execution Date.

                                       1
<PAGE>   116
                                   SCHEDULE 6
                         FORM OF COMPLIANCE CERTIFICATE
                                 [TO BE UPDATED]

To:      Chase Manhattan International Limited

Date:

Dear Sirs,

1.       We refer to an agreement (the "CREDIT AGREEMENT") dated 30 May 2000 and
         made between, among others, NTL Communications Limited as the Borrower,
         Morgan Stanley Dean Witter Bank Limited and Chase Manhattan Plc as
         arrangers and joint bank managers, Chase Manhattan International
         Limited as agent and the financial institutions defined therein as
         Banks.

2.       Terms defined in the Credit Agreement shall bear the same meaning
         herein.

3.       We confirm that:

         (a)      The ratio of the Senior UK Group Debt on [Quarter Date] to the
                  Annualised EBITDA of the UK Group for the period ended on
                  [Quarter Date] was [ ]:1.

         (b)      The ratio of the EBITDA of the UK Group for the Relevant
                  Period ended on [Quarter Date] to the Consolidated Finance
                  Charges of the [Covenant] Group for that Relevant Period was [
                  ]:1.

         (c)      [The ratio of the Total Covenant Group Debt on [Quarter Date]
                  to the Annualised EBITDA of the UK Group for the Relevant
                  Period ended on [Quarter Date] was [ ]:1

                  The calculation of the above ratios are set out in the
                  Schedule to this Compliance Certificate.

         4.       We also confirm that the amount of Available Excess Cash Flow
                  as at [ ] was [ ].

Signed            Director                           Director
                  of                                 of
                  NTL Communications Limited         NTL Communications Limited

for and on behalf of
[name of auditors of NTL Communications Limited]

                                       1
<PAGE>   117
                                   SCHEDULE 7
                                 MANDATORY COSTS

1.      The Mandatory Cost Rate is an addition to the interest rate to
        compensate Banks for the cost of compliance with (a) the requirements of
        the Bank of England and/or the Financial Services Authority (or, in
        either case, any other authority which replaces all or any of its
        functions) or (b) the requirements of the European Central Bank.

2.      On the first day of each Interest Period (or as soon as possible
        thereafter) the Agent shall calculate, as a percentage rate, a rate (the
        "ADDITIONAL COSTS RATE") for each Bank, in accordance with the formula
        set out below. The Mandatory Cost Rate will be calculated by the Agent
        as a weighted average of the Banks' additional costs rates rounded to
        five decimal places (weighted in proportion to the percentage
        participation of each Bank in the relevant Advance) and will be
        expressed as a percentage rate per annum.

3.      The additional costs rate for any Bank lending from a Facility Office in
        a Participating Member State will be notified by that Bank to the Agent
        as the cost of complying with the minimum reserve requirements of the
        European Central Bank.

4.      The additional cost rate for any Bank lending from a Facility Office in
        the United Kingdom will be calculated by the Agent as follows:

                 AB + C (B-D) + E x 0.01
                 -----------------------  per cent. per annum.
                        100 - (A+C)

        Where:

        A         is the percentage of Eligible Liabilities (assuming these to
                  be in excess of any stated minimum) which that Bank is from
                  time to time required to maintain as an interest free cash
                  ratio deposit with the Bank of England to comply with cash
                  ratio requirements.

        B         is the percentage rate of interest (excluding the Margin and
                  the Mandatory Cost Rate) payable for the relevant Interest
                  Period of the Loan.

        C         is the percentage (if any) of Eligible Liabilities which that
                  Bank is required from time to time to maintain as interest
                  bearing Special Deposits with the Bank of England.

        D         is the percentage rate per annum payable by the Bank of
                  England to the Agent on interest bearing Special Deposits.

        E         is the rate of charge payable by that Bank to the Financial
                  Services Authority pursuant to the Fees Regulations (but, for
                  this purpose, ignoring any minimum fee required pursuant to
                  the Fees Regulations) and expressed in pounds per L1,000,000
                  of the Fee Base of that Bank.

                                       1
<PAGE>   118
5.      For the purposes of this Schedule:

        (a)       "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them from time to time under or pursuant to
                  the Bank of England Act 1998 or (as may be appropriate) by the
                  Bank of England;

        (b)       "FEES REGULATIONS" means the Banking Supervision (Fees)
                  Regulations 1999 or such other law or regulation as may be in
                  force from time to time in respect of the payment of fees for
                  banking supervision; and

        (c)       "FEE BASE" has the meaning given to it, and will be calculated
                  in accordance with, the Fees Regulations.

6.      In application of the above formula, A, B, C and D will be included in
        the formula as percentages (i.e. 5 per cent. will be included in the
        formula as 5 and not as 0.05). A negative result obtained by
        subtracting D from B shall be taken as zero.

7.      Each Bank shall supply any information required by the Agent for the
        purpose of calculating its additional costs rate. In particular, but
        without limitation, each Bank shall supply the following information in
        writing on or prior to the date on which it becomes a Bank:

        (a)       its jurisdiction of incorporation and the jurisdiction of its
                  Facility Office; and

        (b)       such other information that the Agent may reasonably require
                  for such purpose.

        Each Bank shall promptly notify the Agent in writing of any change to
        the information provided by it pursuant to this paragraph.

8.      The percentages or rates of charge of each Bank for the purpose of A, C
        and E above shall be determined by the Agent based upon the information
        supplied to it pursuant to paragraph 7 above and on the assumption that
        unless a Bank notifies the Agent to the contrary, each Bank's
        obligations in relation to cash ratio deposits, Special Deposits and the
        Fee Regulations are the same as those of a typical bank from its
        jurisdiction of incorporation with a Facility Office in the same
        jurisdiction as its Facility Office.

        The Agent shall have no liability to any person if such determination
        results in an additional costs rate which over or under compensates any
        Bank and shall be entitled to assume that the information provided by
        any Bank pursuant to paragraphs 3 and 7 above is true and correct in all
        respects.

9.      The Agent shall distribute the additional amounts received pursuant to
        the Mandatory Cost Rate to the Banks on basis of the additional cost
        rate incurred by each Bank, as calculated in accordance with the above
        formula and based on the information provided by each Bank pursuant to
        paragraphs 3 and 7 above.

10.     Any determination by the Agent pursuant to this Schedule in relation to
        a formula, the Mandatory Cost Rate, an additional costs rate or any
        amount payable to a Bank shall, in the absence of manifest error, be
        conclusive and binding on all of the parties hereto.

                                       2
<PAGE>   119
11.     The Agent may from time to time, after consultation with the Parent (on
        behalf of the Borrowers) and the Banks, determine and notify to all
        parties any amendments or variations which are required to be made to
        this Schedule in order to comply with any change in law, regulation or
        any requirements from time to time imposed by the Bank of England, the
        Financial Services Authority or the European Central Bank (or, in either
        case, any other authority which replaces all or any of its functions)
        and any such determination shall, in the absence of manifest error, be
        conclusive and binding on all the parties hereto.

                                       3
<PAGE>   120
                                   SCHEDULE 8
                          FORM OF NON-BANK CERTIFICATE

         Reference is hereby made to the Credit Agreement, dated as of
[_________________], 2000, among NTL COMMUNICATIONS LIMITED and various Finance
Parties from time to time party thereto (as amended, modified or supplemented
from time to time, the "Agreement"). Pursuant to the provisions of Clause 10.4
of the Agreement, the undersigned hereby certifies that it is not a "bank" as
such term is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986,
as amended.

                                               [NAME OF BANK]

                                               By_____________________________
                                                    Title:

         Date: ____________________

                                       1
<PAGE>   121
                                   SCHEDULE 9
                     FORM OF GUARANTOR ACCESSION MEMORANDUM

To:             Chase Manhattan International Limited
From:           [Subsidiary]
                and
                NTL Communications Corporation (the "PARENT")]
Dated:

Dear Sirs,

1.      We refer to an agreement (the "CREDIT AGREEMENT") dated 30 May 2000 and
        made between, among others, NTL Communications Corporation, NTL (UK)
        Group, Inc., Morgan Stanley Dean Witter Bank Limited and Chase Manhattan
        Plc, as arrangers and joint book managers, Chase Manhattan International
        Limited as agent and the financial institutions defined therein as
        Banks.

2.      Terms defined in the Credit Agreement shall bear the same meaning
        herein.

3.      The Parent requests that [Subsidiary] become a Guarantor pursuant to
        Clause 37 (Accession of Guarantors) of the Credit Agreement.

4.      [Subsidiary] is a company duly organised under the laws of [name of
        relevant jurisdiction].

5.      [Subsidiary] confirms that it has received from the Parent a true and
        up-to-date copy of the Credit Agreement and a list of the Borrowers as
        at the date hereof.

6.      [Subsidiary] undertakes, upon its becoming a Guarantor, to perform all
        the obligations expressed to be undertaken under the Credit Agreement by
        a Guarantor and agrees that it shall be bound by the Credit Agreement in
        all respects as if it had been an original party thereto as a Guarantor.

7.      The [Subsidiary]:

        repeats the Repeated Representations; and

        confirms that no Event of Default or Potential Event of Default is
        continuing or would occur as a result of [Subsidiary] becoming a
        Guarantor.

8.      [Subsidiary's] administrative details are as follows:

        Address:

        Fax No.:

9.      [PROCESS AGENT*

        [Subsidiary] agrees that the documents which start any Proceedings and
        any other

* This clause is required only if the Guarantor is not incorporated in England
or Wales.

                                       1
<PAGE>   122
        documents required to be served in relation to those Proceedings may be
        served on it at [address of Subsidiary's place of business in England]
        or at any address in Great Britain at which process may be served on it
        in accordance with Part XXIII of the Companies Act 1985] / [on name of
        process agent in England at address of process agent or, if different,
        its registered office. If [Subsidiary] ceases to have a place of
        business in Great Britain]/[ the appointment of the person mentioned
        above ceases to be effective], [Subsidiary] shall immediately appoint
        another person in England to accept service of process on its behalf in
        England. If it fails to do so (and such failure continues for a period
        of not less than fourteen days), the Agent shall be entitled to appoint
        such a person by notice. Nothing contained herein shall restrict the
        right to serve process in any other manner allowed by law. This applies
        to Proceedings in England and to Proceedings elsewhere.]

10.     This Memorandum shall be governed by English law.

11.     This Memorandum is executed and delivered as a deed by [Subsidiary].

[NAME OF SUBSIDIARY]

By:
Name:
Title:

NTL COMMUNICATIONS CORPORATION

By:
Name:
Title:

                                       2
<PAGE>   123
                                   SCHEDULE 10
                         ADDITIONAL CONDITIONS PRECEDENT

1.      A copy, certified as at the date of the Guarantor Accession Memorandum a
        true and up-to-date copy by an Authorised Signatory of the proposed
        Guarantor, of the constitutional documents of such proposed Guarantor.

2.      A copy, certified as at the date of the Guarantor Accession Memorandum a
        true and up-to-date copy by an Authorised Signatory of the proposed
        Guarantor, of a board resolution of such proposed Guarantor approving
        the execution and delivery of a Guarantor Accession Memorandum, the
        accession of such proposed Guarantor to this Agreement and the
        performance of its obligations under the Finance Documents and
        authorising a named person or persons to sign such Guarantor Accession
        Memorandum, any other Finance Document and any other documents to be
        delivered by such proposed Guarantor pursuant thereto.

3.      A certificate of an Authorised Signatory of the proposed Guarantor
        setting out the names and signatures of the person or persons authorised
        to sign, on behalf of such proposed Guarantor, the Guarantor Accession
        Memorandum, any other Finance Documents and any other documents to be
        delivered by such proposed Guarantor pursuant thereto.

4.      An opinion of counsel to the proposed Guarantor in form and substance
        reasonably satisfactory to the Agent.

5.      A certificate executed by an Authorised Signatory of such Guarantor and
        the Parent certifying that (i) such Guarantor is a newly formed
        corporation organised under the laws of the United States (or any state
        therein), (ii) such Guarantor has no liabilities other than pursuant to
        the Finance Documents or intercompany loans incurred from its direct
        parent company which are subject to a Subordination Agreement, (iii)
        such Guarantor has no assets other than intercompany loans made to its
        direct subsidiary which are subject to a Subordination Agreement and
        the capital stock of its direct subsidiary all of which are subject to
        a first priority lien pursuant to the Security Documents (or in the
        case such Guarantor is the direct parent of the Borrower, 65% of such
        capital stock) and (iv) 100% of the capital stock of such Guarantor is
        subject to a first priority lien pursuant to the Security Documents.

6.      A deed of accession to the Security Trust Agreement executed by the
        proposed Guarantor, substantially in the form set out in Schedule 1
        (Form of Obligor Deed of Accession) to the Security Trust Agreement.

                                       1
<PAGE>   124
                                                                            Page

                                   SIGNATURES

THE PARENT

NTL COMMUNICATIONS CORP.

By:               /s/ Richard Lubasch

Address:          110 East 59th Street
                  26th Floor
                  New York
                  NY 10022
                  USA

Fax:              001 212 906 8497

Attention:        Richard Lubasch/Lauren Hochman-Blair

THE BORROWER

NTL COMMUNICATIONS LIMITED

By:               /s/ B. Dew

Address:          NTL House
                  Bartley Wood Business Park
                  Hook
                  Hampshire
                  RG27 9XA

Fax:              01256 752170

Attention:        Nigel Roberts

With a copy to:   110 East 59th Street
                  26th Floor
                  New York
                  NY 10022
                  USA

Fax:              001 212 906 8497

Attention:        Richard Lubasch/Lauren Hochman-Blair

THE INTERMEDIATE PARENT

NTL (UK) GROUP, INC.

By:               /s/ B. Dew

Address:          NTL House
                  Bartley Wood Business Park
                  Hook

                                      (i)
<PAGE>   125
                                                                            Page

                  Hampshire
                  RG27 9XA

Fax:              01256 752170

Attention:        Nigel Roberts

With a copy to:   110 East 59th Street
                  26th Floor
                  New York
                  NY 10022
                  USA

Fax:              001 212 906 8497

Attention:        Richard Lubasch/Lauren Hochman-Blair

THE ARRANGERS

CHASE MANHATTAN PLC

By:               /s/ ANN B. KERNS

Address:          125 London Wall
                  London EC2Y 5AJ

MORGAN STANLEY DEAN WITTER BANK LIMITED

By:               /s/ MATHIAS BLUMSCHEIN

Address:          1585 Broadway
                  New York3.

                  NY 10036
                  USA

THE AGENT

CHASE MANHATTAN INTERNATIONAL LIMITED

By:               /s/ ANN B. KERNS

Address:          Trinity Tower
                  9 Thomas Moore Street
                  London E1 9YT

Fax:              +44(0) 207 777 2360

Attention:        Steve Clark
                  Loans Agency Department

                                      (ii)
<PAGE>   126
                                                                            Page

THE SECURITY TRUSTEE

CHASE MANHATTAN INTERNATIONAL LIMITED

By:               /s/ Ann B. Kerns

Address:          Trinity Tower
                  9 Thomas Moore Street
                  London E1 9YT

Fax:              +44(0) 207 777 2360

Attention:        Steve Clark
                  Loans Agency Department

THE BANKS

THE CHASE MANHATTAN BANK

By:               /s/ Ann B. Kerns

MORGAN STANLEY DEAN WITTER BANK LIMITED

By:              /s/ Mathias Blumschein

MORGAN STANLEY SENIOR FUNDING, INC.

By:

                                     (iii)<PAGE>   1
                                                                  EXHIBIT 4.a.iv

================================================================================

                                   MASCO CORPORATION,
                                                                          ISSUER

                                       AND

                  BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION
                                                                         TRUSTEE

                                   ---------

                                    Indenture

                          Dated as of February 12, 2001

                                   ---------

================================================================================

<PAGE>   2

 Reconciliation and tie(1) between Trust Indenture Act of 1939, as amended, and

                    Indenture, dated as of February 12, 2001
                                    between
                           Masco Corporation, Issuer
                                      and
                       Bank One Trust Company, NA, Trustee

<TABLE>
<CAPTION>
TRUST INDENTURE                                                                        INDENTURE
ACT SECTION                                                                             SECTION
<S>                                                                                     <C>
ss.310(a)(1) .......................................................................... 6.09
(a)(2) ................................................................................ 6.09
(a)(3) ................................................................................ Not Applicable
(a)(4) ................................................................................ Not Applicable
(b) ................................................................................... 6.08
    ................................................................................... 6.10
ss.311(a) ............................................................................. 6.13
(b) ................................................................................... 6.13
(b)(2) ................................................................................ 7.03(a)(ii)

ss.312(a) ............................................................................. 7.01
    ................................................................................... 7.02(a)
(b) ................................................................................... 7.02(b)
(c) ................................................................................... 7.02(c)
ss.313(a) ............................................................................. 7.03(a)
(b) ................................................................................... 7.03(b)
(c) ................................................................................... 7.03(a), 7.03(b)
(d) ................................................................................... 7.03(c)
ss.314(a) ............................................................................. 7.04
(b) ................................................................................... Not Applicable
(c)(1) ................................................................................ 1.02
(c)(2) ................................................................................ 1.02
(c)(3) ................................................................................ Not Applicable
(d) ................................................................................... Not Applicable
(e) ................................................................................... 1.02
ss.315 (a) ............................................................................ 6.01(a)(i)
</TABLE>

----------

         (1) NOTE: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.

                                       2

<PAGE>   3

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----
<S>                    <C>                                                                            <C>
                                                            ARTICLE 1
                                                DEFINITIONS AND OTHER PROVISIONS

SECTION 1.01.          Definitions .................................................................   1
SECTION 1.02.          Compliance Certificates and Opinions ........................................  .9
SECTION 1.03.          Form of Documents Delivered to Trustee ......................................  10
SECTION 1.04.          Acts of Holders .............................................................  11
SECTION 1.05.          Notices, Etc., to Trustee and Company .......................................  12
SECTION 1.06.          Notice to Holders; Waiver ...................................................  12
SECTION 1.07.          Conflict with Trust Indenture Act ...........................................  13
SECTION 1.08.          Effect of Headings and Table of Contents ....................................  13
SECTION 1.09.          Successors and Assigns ......................................................  13
SECTION 1.10.          Separability Clause .........................................................  13
SECTION 1.11.          Benefits of Indenture .......................................................  13
SECTION 1.12.          Governing Law ...............................................................  13
SECTION 1.13.          Legal Holidays ..............................................................  14
SECTION 1.14.          Counterparts ................................................................  14

                                                            ARTICLE 2
                                                         SECURITY FORMS

SECTION 2.01.          Forms Generally .............................................................  14
SECTION 2.02.          Securities in Permanent Global Form .........................................  15

                                                            ARTICLE 3
                                                         THE SECURITIES

SECTION 3.01.          Amount Unlimited; Issuable in Series ........................................  16
SECTION 3.02.          Denominations ...............................................................  19
SECTION 3.03.          Execution, Authentication, Delivery and Dating ..............................  19
SECTION 3.04.          Temporary Securities ........................................................  23
SECTION 3.05.          Registration, Registration of Transfer and Exchange .........................  23
SECTION 3.06.          Mutilated, Destroyed, Lost and Stolen Securities.............................  27
SECTION 3.07.          Payment of Interest; Interest Rights Preserved ..............................  27
SECTION 3.08.          Persons Deemed Owners .......................................................  29
SECTION 3.09.          Cancellation ................................................................  29
SECTION 3.10.          Computation of Interest .....................................................  30
</TABLE>

<PAGE>   4

<TABLE>
<CAPTION>
                                                                                                    PAGE
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                                                               ARTICLE 4
                                                       SATISFACTION AND DISCHARGE

SECTION 4.01.          Satisfaction and Discharge of Indenture ...................................... 30
SECTION 4.02.          Defeasance of Securities of Any Series ....................................... 31
SECTION 4.03.          Application of Trust Funds; Indemnification .................................. 34
SECTION 4.04.          Reinstatement ................................................................ 34

                                                               ARTICLE 5
                                                                REMEDIES

SECTION 5.01.          Events of Default ............................................................ 35
SECTION 5.02.          Acceleration of Maturity; Rescission and Annulment ........................... 36
SECTION 5.03.          Collection of Indebtedness and Suits for Enforcement by Trustee .............. 38
SECTION 5.04.          Trustee May File Proofs of Claim ............................................. 38
SECTION 5.05.          Trustee May Enforce Claims Without Possession of Securities .................. 39
SECTION 5.06.          Application of Money Collected ............................................... 40
SECTION 5.07.          Limitation on Suits .......................................................... 40
SECTION 5.08.          Unconditional Right of Holders to Receive Principal,
                       Premium and Interest ......................................................... 41
SECTION 5.09.          Restoration of Rights and Remedies ........................................... 41
SECTION 5.10.          Rights and Remedies Cumulative ............................................... 41
SECTION 5.11.          Delay or Omission Not Waiver ................................................. 42
SECTION 5.12.          Control by Holders ........................................................... 42
SECTION 5.13.          Waiver of Past Defaults ...................................................... 42
SECTION 5.14.          Undertaking for Costs ........................................................ 43
SECTION 5.15.          Waiver of Usury, Stay or Extension Law ....................................... 43

                                                               ARTICLE 6
                                                              THE TRUSTEE

SECTION 6.01.          Certain Duties and Responsibilities .......................................... 44
SECTION 6.02.          Notice of Defaults ........................................................... 45
SECTION 6.03.          Certain Rights of Trustee .................................................... 45
SECTION 6.04.          Not Responsible for Recitals or Issuance of Securities ....................... 47
SECTION 6.05.          May Hold Securities .......................................................... 47
SECTION 6.06.          Money Held in Trust .......................................................... 47
SECTION 6.07.          Compensation and Reimbursement ............................................... 47
SECTION 6.08.          Disqualification; Conflicting Interest ....................................... 48
SECTION 6.09.          Corporate Trustee Required; Eligibility ...................................... 48
SECTION 6.10.          Resignation and Removal; Appointment of Successor ............................ 49
</TABLE>

                                       ii

<PAGE>   5

<TABLE>
<CAPTION>

                                                                                                      PAGE
                                                                                                      ----
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SECTION 6.11.          Acceptance of Appointment by Successor ....................................... 50
SECTION 6.12.          Merger, Conversion, Consolidation or Succession to Business .................. 52
SECTION 6.13.          Preferential Collection of Claims ............................................ 52
SECTION 6.14.          Appointment of Authenticating Agent .......................................... 52

                                                       ARTICLE 7
                                HOLDERS' LIST AND REPORTS BY TRUSTEE AND COMPANY

SECTION 7.01.          Company to Furnish Trustee Names and Addresses of Holders .................... 55
SECTION 7.02.          Preservation of Information; Communications to Holders ....................... 55
SECTION 7.03.          Reports by Trustee ........................................................... 56
SECTION 7.04.          Reports by Company ........................................................... 58

                                                       ARTICLE 8
                                  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 8.01.          Company May Consolidate, Etc., Only on Certain Terms ......................... 59
SECTION 8.02.          Successor Corporation to be Substituted for Company .......................... 60
SECTION 8.03.          Securities to be Secured in Certain Events ................................... 60
SECTION 8.04.          Evidence to be Furnished to the Trustee ...................................... 61

                                                       ARTICLE 9
                                               SUPPLEMENTAL INDENTURES

SECTION 9.01.          Supplemental Indentures without Consent of Holders ........................... 61
SECTION 9.02.          Supplemental Indentures with Consent of Holders .............................. 62
SECTION 9.03.          Execution of Supplemental Indentures ......................................... 63
SECTION 9.04.          Effect of Supplemental Indentures ............................................ 64
SECTION 9.05.          Conformity with Trust Indenture Act .......................................... 64
SECTION 9.06.          Reference in Securities to Supplemental Indentures ........................... 64

                                                       ARTICLE 10
                                                       COVENANTS

SECTION 10.01.         Payment of Principal, Premium and Interest ................................... 64
SECTION 10.02.         Maintenance of Office or Agency .............................................. 65
SECTION 10.03.         Money for Securities Payments to be Held in Trust ............................ 65
SECTION 10.04.         Limitations on Liens ......................................................... 67
SECTION 10.05.         Limitation on Sale and Leaseback ............................................. 69
SECTION 10.06.         Defeasance of Certain Obligations ............................................ 69
SECTION 10.07.         Certificate of Officers of the Company ....................................... 71
</TABLE>

                                      iii

<PAGE>   6

<TABLE>
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                                                          ARTICLE 11
                                                REDEMPTION OF SECURITIES

SECTION 11.01.          Applicability of Article ...................................................  72
SECTION 11.02.          Election to Redeem; Notice to Trustee ......................................  72
SECTION 11.03.          Selection by Trustee of Securities to be Redeemed ..........................  72
SECTION 11.04.          Notice of Redemption .......................................................  73
SECTION 11.05.          Deposit of Redemption Price ................................................  74
SECTION 11.06.          Securities Payable on Redemption Date ......................................  74
SECTION 11.07.          Securities Redeemed in Part ................................................  74

                                                        ARTICLE 12
                                                     SINKING FUNDS

SECTION 12.01.          Applicability of Article ...................................................  75
SECTION 12.02.          Satisfaction of Sinking Fund Payments with Securities ......................  75
SECTION 12.03.          Redemption of Securities for Sinking Fund ..................................  76

EXHIBIT A - FORM OF SECURITIES ..................................................................... A-1
</TABLE>

                                       iv

<PAGE>   7

         INDENTURE, dated as of February 12, 2001, between MASCO
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "COMPANY"), and BANK ONE TRUST COMPANY,
NATIONAL ASSOCIATION, a national banking association, as Trustee (herein called
the "TRUSTEE").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"SECURITIES"), to be issued in one or more series as in this Indenture provided.

         All things necessary to make this Indenture a valid agreement of the
Company, 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
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:

                                    ARTICLE 1
                        DEFINITIONS AND OTHER PROVISIONS

         SECTION 1.01. Definitions For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:

          (a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;

         (b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;

          (c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and except as otherwise herein expressly provided, the term
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and

<PAGE>   8

         (d) the words "HEREIN," "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

         Certain terms, used principally in Article 6, are defined in that
Article.

         "ACT," when used with respect to any Holder, has the meaning specified
in Section 1.04.

         "AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

         "ATTRIBUTABLE DEBT" means in respect of a sale and leaseback
arrangement, at the time of determination, the lesser of (x) the fair value of
the property subject to such arrangement (as determined by the Board of
Directors) or (y) the present value (discounted at the rate per annum equal to
the interest borne by fixed-rate Securities or the Yield to Maturity at the time
of issuance of any Original Issue Discount Securities determined on a weighted
average basis compounded semi-annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
arrangement (including any period for which such lease has been extended or may,
at the option of the lessor, be extended) after excluding all amounts required
to be paid on account of maintenance and repairs, insurance, taxes, assessments,
water and utility rates and similar charges. In the case of any such lease which
may be terminated by the lessee upon the payment of a penalty, such net amount
shall also include the amount of such penalty, but no rent shall be considered
as required to be paid under such lease subsequent to the first date upon which
it may be so terminated. Notwithstanding the foregoing, there shall not be
deemed to be any Attributable Debt in respect of a sale and leaseback
arrangement if (i) such arrangement involves property of a type to which Section
10.04 does not apply, (ii) the Company or a Consolidated Subsidiary would be
entitled pursuant to the provisions of Section 10.04(a) to issue, assume or
guarantee Debt (as defined in said Section 10.04(a)), secured by a mortgage upon
the property involved in such arrangement without equally and ratably securing
the Securities, or (iii) the greater of the proceeds of such arrangement or the
fair market value of the property so leased has been applied or credited in
accordance with clause (b) of Section 10.05.

         "AUTHENTICATING AGENT" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.

                                       2

<PAGE>   9

         "BOARD OF DIRECTORS" means either the board of directors of the Company
or any duly authorized committee of that board.

         "BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

         "BUSINESS DAY," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
to close.

         "COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

         "COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.

         "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.

         "CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets
(less applicable reserves) of the Company and its Consolidated Subsidiaries
after deducting therefrom (a) all current liabilities (excluding any such
liabilities deemed to be Funded Debt), (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, and (c) all investments in any Subsidiary other than a Consolidated
Subsidiary, in all cases computed in accordance with generally accepted
accounting principles and which under generally accepted accounting principles
would appear on a consolidated balance sheet of the Company and its Consolidated
Subsidiaries. For purposes of the foregoing, the term "investment in any
Subsidiary other than a Consolidated Subsidiary" shall mean all evidences of
indebtedness, capital stock, other securities, obligations or indebtedness of
any Subsidiary other than a Consolidated Subsidiary owned or held by or owed to
the Company or any Consolidated Subsidiary, except an evidence of indebtedness,
an account receivable or an obligation or indebtedness on open account resulting
directly from the sale of goods or merchandise or services for fair value in the
ordinary course

                                       3

<PAGE>   10

of business by the Company or the Consolidated Subsidiary to a Subsidiary other
than a Consolidated Subsidiary.

         "CONSOLIDATED SUBSIDIARY" means each Subsidiary other than any
Subsidiary the accounts of which (i) are not required by generally accepted
accounting principles to be consolidated with those of the Company for financial
reporting purposes, (ii) were not consolidated with those of the Company in the
Company's then most recent annual report to stockholders and (iii) are not
intended by the Company to be consolidated with those of the Company in its next
annual report to stockholders; provided, however, that the term "Consolidated
Subsidiary" shall not include (a) any Subsidiary which is principally engaged in
(i) owning, leasing, dealing in or developing real property, or (ii) purchasing
or financing accounts receivable, making loans, extending credit or other
activities of a character conducted by a finance company or (b) any Subsidiary,
substantially all of the business, properties or assets of which were acquired
after [date of Indenture] (by way of merger, consolidation, purchase or
otherwise), unless the Board of Directors thereafter designates such Subsidiary
a Consolidated Subsidiary.

         "CORPORATE TRUST OFFICE" means the office of the Trustee in Chicago,
Illinois at which at any particular time corporate trust business shall be
principally administered. At the date of execution of this Indenture the address
of the Corporate Trust Office is Bank One Plaza, Suite IL1-0126, Chicago, IL
60670-0126.

         "CORPORATION" includes corporations, associations, companies and
business trusts.

         "DEFAULTED INTEREST" has the meaning specified in Section 3.07.

         "DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more permanent
global Securities, the Person designated as Depositary by the Company pursuant
to Section 3.01, which must be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and if at any time there is more than one such
Person, "Depositary" as used with respect to the Securities of any such series
shall mean the Depositary with respect to the Securities of that series.

         "EVENT OF DEFAULT" has the meaning specified in Section 5.01.

         "FUNDED DEBT" means all indebtedness having a maturity of more than 12
months from the date of the determination thereof or having a maturity of less
than 12 months but by its terms being renewable or extendible at the option of
the borrower beyond 12 months from the date of such determination (a) for money
borrowed or (b) incurred in connection with the acquisition of any real or
personal property, stock, debt or other assets (to the extent that any of the
foregoing acquisition indebtedness is

                                       4

<PAGE>   11

represented by any notes, bonds, debentures or similar evidences of
indebtedness), and for the payment of which the Company or any Consolidated
Subsidiary is directly or contingently liable, or which is secured by any
property of the Company or any Consolidated Subsidiary.

         "HOLDER" means a Person in whose name a Security is registered in the
Security Register.

         "INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 3.01.

         "INTEREST," when used with respect to an Original Issue Discount
Security which by its terms bears interest only upon Maturity, means interest
payable after Maturity.

         "INTEREST PAYMENT DATE," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

         "MATURITY," when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

         "OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.

         "OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.

         "ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.

         "OUTSTANDING," used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

         (i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;

                                       5

<PAGE>   12

         (ii) Securities for whose payment or redemption (a) money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities or (b) U.S. Government Obligations as contemplated by Section
4.02 in the necessary amount have been theretofore deposited with the Trustee
(or another trustee satisfying the requirements of Section 6.09) in trust for
the Holders of such Securities in accordance with Section 4.03; provided that,
if such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;

         (iii) Securities as to which defeasance has been effected pursuant to
Section 4.02 and not reinstated pursuant to Section 4.04; and

         (iv) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent, waiver or other action hereunder as
of any date (A) the principal amount of an Original Issue Discount Security
which shall be deemed to be Outstanding shall be the amount of the principal
thereof which would be due and payable as of such date upon acceleration of the
Maturity thereof to such date pursuant to Section 5.02, (B) if, as of such date,
the principal amount payable at the Stated Maturity of a Security is not
determinable, the principal amount of such Security which shall be deemed to be
Outstanding shall be the amount as specified or determined as contemplated by
Section 3.01, (C) the principal amount of a Security denominated in one or more
foreign currencies or currency units which shall be deemed to be Outstanding
shall be the U.S. dollar equivalent, determined as of such date in the manner
provided as contemplated by Section 3.01, of the principal amount of such
Security (or, in the case of a Security described in clause (A) or (B) of this
paragraph, of the amount determined as provided in such clause), and (D)
Securities owned by the Company or any other obligor upon the Securities or any
Subsidiary of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities

                                       6

<PAGE>   13

and that the pledgee is not the Company or any other obligor upon the Securities
or any Affiliate of the Company or of such other obligor.

         "PARTNERSHIP" means any joint venture, partnership or participation by
which the Company with one or more Persons forms a business arrangement to own
or acquire tangible personal property for the purpose of financing such property
and allocating rights to profits and liabilities for losses, and establishing
obligations, among the Company and such Persons relating to such financing.

         "PAYING AGENT" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.

         "PERIODIC OFFERING" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated maturity
or maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Company or its agents upon the issuance of
such Securities.

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

         "PLACE OF PAYMENT," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 3.01.

         "PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

         "PRINCIPAL PROPERTY" means any manufacturing plant, research or
engineering facility owned or leased by the Company or any Consolidated
Subsidiary which is located within the United States of America or Puerto Rico,
except any such plant or facility which, in the opinion of the Board of
Directors, is not of material importance to the total business conducted by the
Company and its Consolidated Subsidiaries as an entirety.

         "REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

                                       7

<PAGE>   14

         "REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

         "REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 3.01.

         "RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer within the Corporate Trustee Administration Department, including any
vice president, any assistant secretary, any trust officer or assistant trust
officer, or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.

         "SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.

         "SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 3.05.

         "SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.

         "STATED MATURITY," when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified in
such Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.

         "SUBSIDIARY" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (excluding in the
computation of such percentage stock of any class or classes of such corporation
which has or might have voting power by reason of the happening of any
contingency) is at the time owned by the Company, or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.

         "TRUSTEE" means the Person named as the "TRUSTEE" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.

                                       8

<PAGE>   15

         "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, as in force on the date on which this instrument was executed provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by such amendment, the
Trust Indenture Act of 1939 as so amended.

         "U.S. GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt for
any amount received by the custodian with respect to the U.S. Government
Obligation or the specific payment of interest on or principal of the U.S.
Government Obligation.

         "VICE PRESIDENT," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."

         "YIELD TO MATURITY" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series of Securities, or
if applicable, at the most recent redetermination of interest on such series and
calculated in accordance with accepted financial practice.

         SECTION 1.02.  Compliance Certificates and Opinions

         Unless otherwise provided herein, upon any application or request by
the Company to the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with and, unless otherwise provided
herein, no additional certificate or opinion need be furnished.

         Every certificate or opinion, other than the Officers' Certificate
called for by Section 10.07, with respect to compliance with a condition or
covenant provided for in this Indenture shall include

                                       9

<PAGE>   16

          (a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;

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

          (c) a statement that, in the opinion of each such individual, he 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

          (d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

         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 certificate or opinion of an officer of the Company 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 certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

         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.

         SECTION 1.04.  Acts of Holders

          (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor

                                       10

<PAGE>   17

signed by such Holders in person or by an agent 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 Trustee and,
where it is hereby expressly required, to the Company. If any Securities are
denominated in coin or currency other than that of the United States, then for
the purposes of determining whether the Holders of the requisite principal
amount of Securities have taken any action with respect to the Securities of
more than one series as herein described, the principal amount of such
Securities shall be deemed to be that amount of United States dollars that could
be obtained for such principal amount on the basis of the spot rate of exchange
into United States dollars for the currency in which such Securities are
denominated (as evidenced to the Trustee by an Officers' Certificate) as of the
date the taking of such action by the Holders of such requisite principal amount
is evidenced to the Trustee as provided in the immediately preceding sentence.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders 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 6.01) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.

         (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) The ownership of Securities shall be proved by the Security
Register.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security 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
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

         SECTION 1.05.  Notices, Etc., to Trustee and Company

         Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

                                       11

<PAGE>   18
          (a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Company and the Holders by the Trustee; or

         (b) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at 21001 Van Born Road, Taylor, Michigan 48180 or at any other address
previously furnished in writing to the Trustee by the Company.

         SECTION 1.06.  Notice to Holders; Waiver

         Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. 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 Holders 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.

         In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

         SECTION 1.07.  Conflict with Trust Indenture Act

         If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.

         SECTION 1.08.  Effect of Headings and Table of Contents

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

                                       12

<PAGE>   19
         SECTION 1.09.  Successors and Assigns

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

         SECTION 1.10.  Separability Clause

         In case any provision in this Indenture or in the Securities 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 1.11.  Benefits of Indenture

         Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the Parties hereto, any Authenticating
Agent, any Paying Agent, any Securities Registrar and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.

         SECTION 1.12.  Governing Law

         This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York without regard to any
conflicts of laws principles therein.

         SECTION 1.13.  Legal Holidays

         In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then, unless otherwise specified in such Security, payment of interest or
principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.

         SECTION 1.14.  Counterparts

         This instrument 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.

                                       13

<PAGE>   20

                                    ARTICLE 2

                                 SECURITY FORMS

         SECTION 2.01.  Forms Generally

         The Securities of each series shall be in substantially the form set
forth in Exhibit A, or in such other form as shall be established by or pursuant
to a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or any
rules or regulations pursuant thereto, or with the rules of any securities
exchange or to conform to general usage, all as may consistently herewith be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities.

         The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

         SECTION 2.02.  Securities in Permanent Global Form

         If the Company shall establish pursuant to Section 3.01 that the
Securities of a series are to be issued in whole or in part in permanent global
form, then notwithstanding Section 3.01(g) and the provisions of Section 3.02,
any such Security shall represent such of the Outstanding Securities of such
series as shall be specified therein and may provide that it shall represent the
aggregate amount of Outstanding Securities from time to time endorsed thereon
and that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced or increased to reflect exchanges. Any endorsement
of a Security in permanent global form to reflect the amount, or any increase or
decrease in the amount, of Outstanding Securities represented thereby shall be
made by the Trustee or the Security Registrar in such manner and upon
instructions given by such Person or Persons as shall be specified in such
Security in permanent global form or in the Company Order to be delivered to the
Trustee pursuant to Section 3.03 or Section 3.04. Subject to the provisions of
Section 3.03 and, if applicable, Section 3.04, the Trustee or the Security
Registrar shall deliver and redeliver any Security in permanent global form in
the manner and upon instructions given by the Person or Persons specified in
such Security or in the applicable Company Order. If a Company Order pursuant to
Section

                                       14

<PAGE>   21

3.03 or 3.04 has been, or simultaneously is, delivered, any instructions by the
Company with respect to endorsement or delivery or redelivery of a global
Security shall be in writing but need not comply with Section 1.02 and need not
be accompanied by an Officers' Certificate or an Opinion of Counsel, provided
that the form of permanent global Security to be endorsed, delivered or
redelivered has previously been covered by an Opinion of Counsel.

         The provisions of the last sentence of Section 3.03 shall only apply to
any Security represented by a Security in permanent global form if such Security
was never issued and sold by the Company and the Company delivers to the Trustee
or the Security Registrar the Security in permanent global form together with
written instructions (which need not comply with Section 1.02 and need not be
accompanied by an Officers' Certificate or an Opinion of Counsel) with regard to
the reduction in the principal amount of Securities represented thereby,
together with the written statement contemplated by the last sentence of Section
3.03.

         Unless otherwise specified as contemplated by Section 3.01 for the
Securities evidenced thereby, every Security in permanent global form
authenticated and delivered hereunder shall bear a legend in substantially the
following form:

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR ITS NOMINEE AND ANY PAYMENT IS MADE TO THE DEPOSITARY OR ITS
NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF HAS AN INTEREST
HEREIN.

                                    ARTICLE 3
                                 THE SECURITIES

         SECTION 3.01.  Amount Unlimited; Issuable in Series

         The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited. All Securities issued under
this Indenture shall constitute unsecured and unsubordinated obligations of the
Company and shall rank pari passu with all of the Company's other unsecured and
unsubordinated obligations.

         The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.03,
set forth,

                                       15

<PAGE>   22

or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series

         (a) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);

         (b) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Securities which,
pursuant to Section 3.03 of the Indenture, shall have not been issued and sold
by the Company and are therefore deemed never to have been authenticated and
delivered hereunder);

         (c) the date or dates on which the principal of the Securities of the
series is payable;

         (d) the Person to whom any interest on any Security of the series shall
be payable if other than as set forth in Section 3.07; the rate or rates at
which any Securities of the series shall bear interest or the manner of
calculation of such rate or rates, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such interest
shall be payable and the Regular Record Date for the interest payable on any
Interest Payment Date;

         (e) the place or places where the principal of and any premium or
interest on Securities of the series shall be payable;

          (f) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other than
by a Board Resolution, the manner in which any election by the Company to redeem
the Securities shall be evidenced;

          (g) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased in whole or in part, pursuant to such
obligation;

         (h) if other than denominations of $1,000 and any multiple thereof, the
denominations in which Securities of the series shall be issuable;

                                       16

<PAGE>   23

          (i) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.02;

          (j) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 4.02 or Section 10.06
(and in the case of defeasance pursuant to Section 10.06, the negative or
restrictive covenants that shall be subject to such defeasance) or both Sections
and if other than by a Board Resolution, the manner in which any election by the
Company to defease those securities shall be evidenced;

          (k) whether the Securities of the series are to be issuable in whole
or in part in permanent global form, without coupons, and, if so, (i) the form
of any legend or legends which shall be borne by any such permanent global
Security in addition to or in lieu of that set forth in Section 2.02, (ii) any
circumstances in addition to or in lieu of those set forth in Clause 3.05(a) in
which such permanent global Security may be exchanged in whole or in part for
Securities registered, and in which any transfer of such permanent global
Security in whole or in part may be registered, in the name of Persons other
than the Depositary for such permanent global Security or a nominee thereof and
(iii) the Depositary with respect to any such permanent global Security or
Securities;

          (l) the currency or currencies, including composite currencies, in
which payment of the principal of, and any premium and interest on, the
Securities of the series shall be payable if other than the currency of the
United States of America;

         (m) if the principal of, or any premium or interest on, any Securities
of the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall be payable, the periods
within which and the terms and conditions upon which such election is to be made
and the amount so payable (or the manner in which such amount shall be
determined);

          (n) if the amount of payments of principal of, or any premium or
interest on, the Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts shall be
determined;

         (o) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to

                                       17

<PAGE>   24
the Stated Maturity (or, in any such case, the manner in which such amount
deemed to be the principal amount shall be determined);

         (p) any addition to or change in the Events of Default which applies to
any Securities of the series and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount thereof due
and payable pursuant to Section 5.01;

         (q) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by a person who is not a
U.S. person in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to redeem such
Securities rather than pay such additional amounts;

          (r) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the Securities
of such series;

          (s) if the Securities of any series may be converted into or exchanged
for stock or other securities or other property of the Company or other
entities, the terms upon which such series may be converted or exchanged, any
specific terms relating to the adjustment thereof and the period during which
such Securities may be so converted or exchanged;

         (t) any addition to or change in the covenants set forth in Article 10
which applies to any Securities of the series; and

          (u) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.01(e)).

         All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 3.03) set
forth in the Officers' Certificate that established the form of the Securities
of such series or in any such indenture supplemental hereto.

         All Securities of any one series need not be issued at the same time
and may be issued from time to time, consistent with the terms of this
Indenture, if so provided in or pursuant to such Board Resolution, such
Officers' Certificate or in any such indenture supplemental hereto.

         If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

                                       18

<PAGE>   25
         SECTION 3.02.  Denominations

         The Securities of each series shall be issuable in registered form
without coupons and, except for any Security issuable in permanent global form,
in such denominations as shall be specified in accordance with Section 3.01. In
the absence of such provisions with respect to the Securities of any series, the
Securities of such series, other than a Security issuable in permanent global
form, shall be issuable in denominations of $1,000 and any multiple thereof.

         SECTION 3.03.  Execution, Authentication, Delivery and Dating

         The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President, one of its Vice Presidents or its
Treasurer, attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.

         Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with the applicable
documents referred to below in this Section, and the Trustee shall thereupon
authenticate and deliver such Securities to or upon the order of the Company
(contained in the Company Order referred to below in this Section) or pursuant
to such procedures acceptable to the Trustee and to such recipients as may be
specified from time to time by a Company Order. The maturity date, original
issue date, interest rate and any other terms of the Securities of such series
shall be determined by or pursuant to such Company Order and procedures. If
provided for in such procedures, such Company Order may authorize authentication
and delivery pursuant to oral instructions from the Company or its duly
authorized agent, which instructions shall be promptly confirmed in writing. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive (in the case of subparagraphs 3.03(ii), 3.03(iii) and
3.03(iv) below, only at or before the time of the first request of the Company
to the Trustee to authenticate Securities of such series) and (subject to
Section 6.01) shall be fully protected in relying upon, unless and until such
documents have been superseded or revoked:

                   (i) a Company Order requesting such authentication and
         setting forth delivery instructions if the Securities are not to be
         delivered to the Company, provided that, with respect to Securities of
         a series subject to a Periodic Offering, (a) such Company Order may be
         delivered by the Company to the

                                       19
<PAGE>   26
Trustee prior to the delivery to the Trustee of such Securities for
authentication and delivery, (b) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in an aggregate
principal amount not exceeding the aggregate principal amount, if any,
established for such series, pursuant to a Company Order or pursuant to
procedures acceptable to the Trustee as may be specified from time to time by a
Company Order, (c) the maturity date or dates, original issue date or dates,
interest rate or rates and any other terms of Securities of such series shall be
determined by a Company Order or pursuant to such procedures and (d) if provided
for in such procedures, such Company Order may authorize authentication and
delivery pursuant to oral or electronic instructions from the Company or its
duly authorized agent or agents, which oral instructions shall be promptly
confirmed in writing;

         (ii) any Board Resolution, Officers' Certificate and/or executed
supplemental indenture referred to in Sections 2.01 and 3.01 by or pursuant to
which the forms and terms of the Securities were established;

        (iii) an Officers' Certificate setting forth the form or forms and (to
the extent established) the terms of the Securities, stating that the form or
forms and any such terms of the Securities have been established pursuant to
Sections 2.01 and 3.01 and comply with this Indenture, and covering such other
matters as the Trustee may reasonably request; and

         (iv) At the option of the Company, either an Opinion of Counsel, or a
letter addressed to the Trustee permitting to it rely on an Opinion of Counsel,
substantially to the effect that:

                  (A) the forms of the Securities have been duly authorized and
         established in conformity with the provisions of this Indenture;

                  (B) if all of the terms of the Securities of such series have
         been established, the terms of the Securities have been duly authorized
         by the Company and established in conformity with the provisions of
         this Indenture, and, in the case of all other offerings, certain terms
         of the Securities have been established pursuant to a Board Resolution,
         an Officers' Certificate or a supplemental indenture in accordance with
         this Indenture, and when such other terms as are to be established
         pursuant to procedures set forth in a Company Order shall have been
         established, all such terms will have been duly authorized by the
         Company and will have been established in conformity with the
         provisions of this Indenture;

                  (C) when the Securities have been executed by the Company and
         authenticated by the Trustee in accordance with the provisions of

                                       20

<PAGE>   27

         this Indenture and delivered to and duly paid for by the purchasers
         thereof, they will have been duly issued under this Indenture and will
         be valid and legally binding obligations of the Company, enforceable in
         accordance with their respective terms, and will be entitled to the
         benefits of this Indenture; and

                  (D) the execution and delivery by the Company of, and the
         performance by the Company of its obligations under, the Securities
         will not contravene any provision of applicable law or the certificate
         of incorporation or by-laws of the Company or, to the best of such
         counsel's knowledge, any agreement or other instrument binding upon the
         Company or any of its subsidiaries that is material to the Company and
         its subsidiaries, considered as one enterprise, or, to the best of such
         counsel's knowledge, any judgment, order or decree of any governmental
         body, agency or court having jurisdiction over the Company or any
         subsidiary, and no consent, approval or authorization of any
         governmental body or agency is required for the performance by the
         Company of its obligations under the Securities, except such as are
         specified and have been obtained and such as may be required by the
         securities or blue sky laws of the various states in connection with
         the offer and sale of the Securities.

         In rendering such opinions, such counsel may qualify any opinions as to
enforceability by stating that such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium and other similar laws
affecting the rights and remedies of creditors and is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Such counsel may rely upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion shall
state that such counsel believes he and the Trustee are entitled so to rely.
Such counsel may also state that, insofar as such opinion involves factual
matters, he has relied, to the extent he deems proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.

         The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Company or if the
Trustee in good faith by its board of directors or board of trustees, executive
committee, or a trust committee of directors or trustees or Responsible Officers
shall determine that such action would expose the Trustee to personal liability
to existing Holders or would affect the Trustee's own rights, duties or
immunities under the Securities, this Indenture or otherwise.

                                       21

<PAGE>   28

         Each Security shall be dated the date of its authentication. Unless
otherwise specified as contemplated by Section 3.01 for any Security, interest
on the each Security will accrue from the date of its authentication.

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

         Notwithstanding the foregoing and subject, in the case of a Security in
permanent global form, to Section 2.02, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.09 together with a written statement (which need not
comply with Section 1.02 and need not be accompanied by an Opinion of Counsel)
directing such cancellation and stating that such Security has never been issued
and sold by the Company, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.

         SECTION 3.04.  Temporary Securities

         Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

         If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series and of like tenor of
authorized denominations. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.

                                       22
<PAGE>   29
         SECTION 3.05.  Registration, Registration of Transfer and Exchange

         The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "SECURITY REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and transfers of Securities. The Trustee is hereby
appointed "SECURITY REGISTRAR" for the purpose of registering Securities and
transfers of Securities as herein provided.

         Upon surrender for registration of transfer of any Security of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees one or more new Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and of like tenor.

         At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and of like tenor, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

         All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

         Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company 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 Securities, other than
exchanges pursuant to Section 3.04, 9.06 or 11.07 not involving any transfer.

         The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.03 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security

                                       23
<PAGE>   30

so selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.

         The provisions of Clauses (a) - (g) below shall apply only to permanent
global Securities:

         (a) Each permanent global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such permanent
global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such permanent global Security
shall constitute a single Security for all purposes of this Indenture.

         (b) Notwithstanding any other provisions in this Indenture, no
permanent global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a permanent global Security in whole or in part
may be registered, in the name of any Person other than the Depositary for such
permanent global Security or a nominee thereof unless (i) the Depositary
notifies the Company pursuant to Clause 3.05(c) of this Section that it is
unwilling or unable to continue as Depositary for such permanent global Security
or if at any time the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, (ii) if the Company in its sole
discretion determines pursuant to Clause 3.05(d) of this Section that such
permanent global Security shall be so exchangeable or transferrable and executes
and delivers to the Security Registrar a Company Order providing that such
permanent global Security shall be so exchangeable or transferrable, (iii) any
event shall have occurred and be continuing which, after notice or lapse of
time, or both, would become an Event of Default with respect to the Securities
of the series of which such permanent global Security is a part or (iv) there
shall exist such circumstances, if any, in addition or in lieu of the foregoing
as have been specified for this purpose as contemplated by Section 3.01.

         (c) Subject to Clause 3.05(a) above, any exchange of a permanent global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a permanent global Security or any portion
thereof shall be registered in such names as the Depositary for such permanent
global Security shall direct. The Trustee shall deliver such Securities to or as
directed by the Persons in whose names such Securities are so registered.

         (d) If at any time the Depositary for any Securities of a series
represented by one or more global Securities notifies the Company that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, the Company shall appoint a
successor Depositary with respect to such Securities. If a successor Depositary
for such Securities is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility (and in any
event before the Depositary surrenders such global Security for exchange),

                                       24

<PAGE>   31

the Company's election that such Securities be represented by one or more global
Securities shall no longer be effective and the Company shall execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and deliver,
Securities of such series in definitive registered form without coupons, in any
authorized denominations, in an aggregate principal amount equal to the
principal amount of the global Security or Securities representing such
Securities in exchange for such global Security or Securities.

         (e) The Company may at any time and in its sole discretion determine
that the Securities of any series issued in the form of one or more global
Securities shall no longer be represented by a global Security or Securities. In
such event the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver Securities of such
series in definitive registered form, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the global Security
or Securities representing such Securities, in exchange for such global Security
or Securities.

         (f) Subject to Clause 3.05(a) above, with respect to Securities
represented by a global Security, the Depositary for such global Security may
surrender such global Security in exchange in whole or in part for Securities of
the same series in definitive registered form on such terms as are acceptable to
the Company and such Depositary. Thereupon, the Company shall execute, and the
Trustee shall authenticate and deliver, without service charge,

                  (i) to the Person specified by such Depositary a new Security
         or Securities of the same series, of any authorized denomination as
         requested by such Person, in an aggregate principal amount equal to and
         in exchange for such Person's beneficial interest in the global
         Security; and

                  (ii) to such Depositary a new global Security in a
         denomination equal to the difference, if any, between the principal
         amount of the surrendered global Security and the aggregate principal
         amount of Securities authenticated and delivered pursuant to clause
         3.05(f)(i) above.

         Upon the exchange of a global Security for Securities in definitive
registered form, in authorized denominations, such global Security shall be
canceled by the Trustee.

         (g) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a permanent global Security or
any portion thereof, whether pursuant to this Section, Section 3.04, 3.06, 9.06
or 11.07 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a permanent global

                                       25
<PAGE>   32

Security, unless such Security is registered in the name of a Person other than
the Depositary for such permanent global Security or a nominee thereof.

         SECTION 3.06.  Mutilated, Destroyed, Lost and Stolen Securities

         If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security 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 notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

         In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

         Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security 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 Securities of that series duly issued hereunder.

         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 Securities.

         SECTION 3.07.  Payment of Interest; Interest Rights Preserved

         Unless otherwise provided as contemplated by Section 3.01 with respect
to any Security, interest on such Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of

                                       26

<PAGE>   33

business on the Regular Record Date for such interest; provided that if that
Security or its Predecessor Security was originally issued on a date after a
Regular Record Date and before the following Interest Payment Date, the first
payment of interest on such Security will be made on the Interest Payment Date
following the next succeeding Regular Record Date. Unless otherwise specified as
contemplated by Section 3.01 for any Security, interest payable at Maturity
(other than on a date which is an Interest Payment Date) will be paid to the
same Person to whom the principal amount of this Security is payable.

         Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:

         (a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of such series
at his address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause 3.07(b).

         (b) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the

                                       27

<PAGE>   34

requirements of any securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.

         Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

         SECTION 3.08.  Persons Deemed Owners

         Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 3.07) interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

         SECTION 3.09.  Cancellation

         All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.

         SECTION 3.10.  Computation of Interest

         Except as otherwise specified as contemplated by Section 3.01 for any
Security, interest on the Securities of each series shall be computed on the
basis of a 360-day year consisting of 12 30-day months.

                                       28

<PAGE>   35

                                    ARTICLE 4
                           SATISFACTION AND DISCHARGE

         SECTION 4.01.  Satisfaction and Discharge of Indenture

         This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

         (a) either

                  (i) all Securities theretofore authenticated and delivered
         (other than (x) Securities which have been destroyed, lost or stolen
         and which have been replaced or paid as provided in Section 3.06 and
         (y) Securities for whose payment money has theretofore been deposited
         in trust or segregated and held in trust by the Company and thereafter
         repaid to the Company or discharged from such trust, as provided in
         Section 10.03) have been delivered to the Trustee for cancellation; or

                  (ii) all such Securities not theretofore delivered to the
         Trustee for cancellation

                           (A) have become due and payable, or

                           (B) will become due and payable at their Stated
                  Maturity within one year, or

                           (C) are to be called for redemption within one year
                  under arrangements satisfactory to the Trustee for the giving
                  of notice of redemption by the Trustee in the name, and at the
                  expense, of the Company,

                  and the Company, in the case of (A), (B) or (C) above 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 Securities not
                  theretofore delivered to the Trustee for cancellation, for
                  principal, and any premium or interest, to the date of such
                  deposit (in the case of Securities which have become due and
                  payable) or to the Stated Maturity or Redemption Date, as the
                  case may be;

                                       29

<PAGE>   36

         (b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and

         (c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Sections 4.03(b) and 6.07, the
obligations of the Trustee to any Authenticating Agent under Section 6.14 and,
if money shall have been deposited with the Trustee pursuant to subclause
4.01(a)(ii), the obligations of the Trustee under Section 4.03 and the last
paragraph of Section 10.03 shall survive.

         SECTION 4.02.  Defeasance of Securities of Any Series

         Unless otherwise specified pursuant to Section 3.01 with respect to any
Security, then notwithstanding Section 4.01, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the Outstanding Securities of
any series on the 91st day after the date of the deposit referred to in
subparagraph 4.02(d) hereof, and the provisions of this Indenture, as it relates
to such Outstanding Securities, shall no longer be in effect (and the Trustee,
at the expense of the Company, shall at Company Request, execute proper
instruments acknowledging the same) (hereinafter called "DEFEASANCE"), except as
to:

         (a) the rights of Holders of Securities to receive, from the trust
funds described in subparagraph 4.02(d) hereof, (i) payment of the principal of
and any premium or interest on the Outstanding Securities of that series on the
Stated Maturity of such principal or installment of principal or interest and
(ii) the benefit of any mandatory sinking fund payments or analogous payments
applicable to Securities of such series on the day on which such payments are
due and payable in accordance with the terms of the Indenture and such
Securities;

         (b) the Company's obligations with respect to such Securities under
Sections 3.05, 3.06, 4.03, 10.02 and 10.03; and

         (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder;

         provided that the following conditions have been satisfied:

         (d) with reference to this provision, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Securities of that series, (i) money in an

                                       30

<PAGE>   37

amount, or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide not later than one day before the due date of any payment referred to in
clause (A) or (B) of this subparagraph 4.02(d) money in an amount, or (iii) a
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee for such purposes, (A) the principal of and any premium or interest
on the Outstanding Securities of that series on the Stated Maturity of such
principal or installment of principal or interest on the Redemption Date, as the
case may be, and (B) any mandatory sinking fund payments or analogous payments
applicable to Securities of such series on the day on which such payments are
due and payable, each in accordance with the terms of this Indenture and of such
Securities;

         (e) such Defeasance shall not cause the Trustee with respect to the
Securities of that series to have a conflicting interest as defined in Section
6.08 and for purposes of the Trust Indenture Act with respect to the Securities
of any series;

         (f) such Defeasance will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;

         (g) such Defeasance would not cause any Outstanding Security of such
series then listed on any nationally recognized securities exchange to be then
delisted as a result thereof;

         (h) no Event of Default or event which with notice or lapse of time
would become an Event of Default with respect to Securities of the series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;

         (i) the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the date
hereof, there has been a change in the applicable Federal income tax law, in
either case to the effect that, and such opinion shall confirm that, the Holders
of the Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;

         (j) the Company has delivered to the Trustee an Opinion of Counsel
stating that (i) such deposit, defeasance and discharge would not cause any
outstanding Security of such series then listed on any nationally recognized
securities exchange to be delisted as a result thereof; and (ii) and that such
Defeasance would not result in

                                       31

<PAGE>   38

the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended from time to time;

         (k) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, except
that if a court were to rule under any such law in any case or proceeding that
the trust funds remained property of the Company, no opinion is given as to the
effect of such laws on the trust funds except the following: (A) assuming such
trust funds remained in the Trustee's possession prior to such court ruling to
the extent not paid to Holders of Securities, the Trustee will hold, for the
benefit of such Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise, and (B) such Holders
will be entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used; and

         (l) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the Defeasance contemplated by this provision have been complied
with.

                                       32

<PAGE>   39

         SECTION 4.03.  Application of Trust Funds; Indemnification

         (a) Subject to the provisions of the last paragraph of Section 10.03,
all money deposited with the Trustee pursuant to Section 4.01, all money and
U.S. Government Obligations deposited with the Trustee pursuant to Section 4.02
or Section 10.06 and all money received by the Trustee in respect of U.S.
Government Obligations deposited with the Trustee pursuant to Section 4.02 or
Section 10.06 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with or received by the Trustee or to make mandatory sinking fund
payments or analogous payments as contemplated by Section 4.02 or Section 10.06,
as the case may be.

         (b) The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 4.02 or Section 10.06 or the interest
and principal received in respect of such obligations other than any payable by
or on behalf of Holders.

         (c) The Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or U.S. Government Obligations held by it as
provided in Section 4.02 or 10.06 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are then in excess of the amount
which then would have been required to be deposited for the purpose for which
such money or U.S. Government Obligations were deposited or received.

         SECTION 4.04.  Reinstatement

         If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 4.02 or 10.06 with respect to any Securities by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application or upon the occurrence of
an Event of Default, then the obligations under this Indenture and such
Securities from which the Company has been discharged or released pursuant to
Section 4.02 or 10.06 shall be revived and reinstated as though no deposit had
occurred pursuant to this Article with respect to such Securities, until such
time as the Trustee or Paying Agent is permitted to apply all money held in
trust pursuant to Section 4.03 with respect to such Securities in accordance
with this Article; provided, however, that if the Company makes any payment of
principal of or any premium or interest on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the rights
(if any) of the Holders of such Securities to receive such payment from the
money so held in trust.

                                       33

<PAGE>   40

                                    ARTICLE 5
                                    REMEDIES

         SECTION 5.01.  Events of Default

         "EVENT OF DEFAULT," wherever used herein with respect to Securities of
any series, means any one of the following events (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) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or

         (b) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Maturity; or

         (c) default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or

         (d) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely for the
benefit of a series of Securities other than that series), and continuance of
such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of each series affected thereby a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "NOTICE OF DEFAULT" hereunder; or

         (e) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or

                                       34
<PAGE>   41

         (f) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or of any substantial part of its property,
or the making by it of any assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company in furtherance of
any such action; or

         (g) any events of default provided with respect to Securities of that
series.

         SECTION 5.02.  Acceleration of Maturity; Rescission and Annulment

         If an Event of Default described in clause 5.01(a), 5.01(b), 5.01(c),
5.01(d) or 5.01(g) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of such series (each such series voting as a separate class in the case of an
Event of Default under clause 5.01(a), 5.01(b), 5.01(c) or 5.01(g), and all such
series voting as one class in the case of such an Event of Default under clause
5.01(d)) may declare the principal amount (or, if any Securities are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such Securities) of all of the Securities of such
series to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due and payable.
If any Event of Default described in clause 5.01(d) with respect to all series
of Securities then Outstanding, or any Event of Default described in clause
5.01(e) or 5.01(f) occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in aggregate principal amount of all the
Outstanding Securities (voting as one class) may declare the principal amount
(or, if any Securities are Original Issue Discount Securities, such portion of
the principal amount as may be specified in the terms of such Securities) of all
the Securities then Outstanding to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable.

         At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money

                                       35

<PAGE>   42

due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Securities of
that series, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if

         (a) the Company has paid or deposited with the Trustee a sum sufficient
to pay

                  (i) the overdue interest on all Securities of the series,

                  (ii) the principal of (and premium, if any, on) any Securities
         of that series which have become due otherwise than by such declaration
         of acceleration and interest thereon at the interest rate or rates
         prescribed in such Securities,

                  (iii) to the extent that payment of such interest is lawful,
         interest upon overdue interest at the rate or rates prescribed for
         overdue interest in such Securities, and

                  (iv) all sums paid or advanced by the Trustee hereunder and
         the reasonable compensation, expenses, disbursements and advances of
         the Trustees, its agents and counsel and all other amounts due under
         Section 6.07;

         and

         (b) all Events of Default with respect to Securities of that series
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13.

         No such rescission shall affect any subsequent default or impair any
right consequent thereon.

         SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee

         The Company covenants that if

         (a) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or

         (b) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof

                                       36

<PAGE>   43

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities, for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, other than those incurred due
to the Trustee's bad faith or negligence.

         If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

         If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein or therein, or to enforce any other proper remedy.

         SECTION 5.04.  Trustee May File Proofs of Claim

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
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 Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

          (a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities 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 Holders allowed in such judicial proceeding, and

                                       37
<PAGE>   44

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

         and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due 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 6.07.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holders hereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

         SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities

         All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities 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 the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

         SECTION 5.06.  Application of Money Collected

         Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

                           FIRST: To the payment of all amounts due the Trustee
                  under this Indenture; and

                           SECOND: To the payment of the amounts then due and
                  unpaid for principal of (and premium, if any) and interest on
                  the Securities in respect of which or for the benefit of which
                  such money has been collected ratably without preference or
                  priority of any kind according to the amounts due and payable
                  on such Securities for principal (and premium, if any) and
                  interest, respectively.

                                       38

<PAGE>   45

         SECTION 5.07.  Limitation on Suits

         No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless

         (a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;

         (b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series 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;

         (c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

         (d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and

         (e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of all Outstanding Securities of that series;

         it being understood and intended that no one or more of such Holders
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 of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.

         SECTION 5.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest

         Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.07) interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.

                                       39

<PAGE>   46

         SECTION 5.09.  Restoration of Rights and Remedies

         If the Trustee or any Holder 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 Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

         SECTION 5.10.  Rights and Remedies Cumulative

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.06, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders 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 5.11.  Delay or Omission Not Waiver

         No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default which shall
have occurred and shall be continuing 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
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.

         SECTION 5.12.  Control by Holders

         The Holders of a majority in principal amount of the Outstanding
Securities of any series 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, with respect to the
Securities of such series, provided that

         (a) such direction shall not be in conflict with any rule of law or
with this Indenture,

                                       40
<PAGE>   47

         (b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and

         (c) the Trustee shall have the right to decline any direction with
respect to which a Responsible Officer reasonably determines such direction will
cause the Trustee to incur any liability for which it shall not have been
adequately indemnified pursuant to Section 5.07.

         SECTION 5.13.  Waiver of Past Defaults

         The Holders of (i) not less than a majority in principal amount of the
Outstanding Securities of any series (each such series voting as a separate
class) may on behalf of the Holders of all Securities of such series waive any
past default or Event of Default described in clause 5.01(d) which relates to
less than all series of Outstanding Securities or described in clause 5.01(g)
with respect to such series and its consequences, or (ii) not less than a
majority in principal amount of the Outstanding Securities affected thereby
(voting as one class) may on behalf of the Holders of all the Outstanding
Securities affected thereby waive any past default or Event of Default described
in said clause 5.01(d) which relates to all such Outstanding Securities and its
consequences, except in any such case a default

         (a) in the payment of the principal of, or any premium or interest on,
any Security of such series, or

         (b) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.

         Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

         SECTION 5.14.  Undertaking for Costs

         All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders,

                                       41

<PAGE>   48

holding in the aggregate more than 25% in principal amount of the Outstanding
Securities of any series or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).

         SECTION 5.15.  Waiver of Usury, Stay or Extension Law

         The Company 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 of law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (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.

                                    ARTICLE 6
                                   THE TRUSTEE

         SECTION 6.01.  Certain Duties and Responsibilities

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

                  (i) the Trustee undertakes to perform such duties and only
         such duties as specifically set forth in this Indenture, and no implied
         covenants or obligations shall be read into this Indenture against the
         Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture; but in the case of any such certificates or opinions
         which by any provision hereof are specifically required to be furnished
         to the Trustee, the Trustee shall be under a duty to examine the same
         to determine whether or not they conform to the requirements of this
         Indenture.

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

                                       42
<PAGE>   49

         (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 wilful misconduct, except that

                  (i) this Subsection shall not be construed to limit the effect
         of Subsection 6.01(a);

                  (ii) the Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer, unless it shall be 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 direction of the Holders of a majority in principal amount of
         the Outstanding Securities of any series, determined as provided in
         Section 5.12, relating to the time, method and place of conducting any
         proceeding for any remedy available to the Trustee, or exercising any
         trust or power conferred upon the Trustee, under this Indenture with
         respect to the Securities of such series; and

                  (iv) no provision of this Indenture shall require the Trustee
         to expend or risk its own funds or otherwise incur any 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 adequate
         indemnity against such risk or liability is not reasonably assured to
         it.

         (d) 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 6.02.  Notice of Defaults

         Within 90 days after receipt by the Trustee of written notice of the
occurrence of any default hereunder with respect to the Securities of any series
the Trustee shall transmit in the manner and to the extent provided in Section
7.03(d), notice of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; and
provided, further, that in the case of any default of the character specified in
Section 5.01(d) with respect to

                                       43

<PAGE>   50

Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "DEFAULT," means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.

         SECTION 6.03.  Certain Rights of Trustee

         Subject to the provisions of Section 6.01:

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

         (b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;

         (c) 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 Officers' Certificate;

         (d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel 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;

         (e) 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 Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

         (f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;

                                       44
<PAGE>   51

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

          (h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; and

          (i) The Trustee's immunities and protections from liability and its
rights to compensation and indemnification in connection with the performance of
its duties under this Indenture shall extend to the Trustee's officers,
directors, agents and employees. Such immunities and protections and right to
indemnification, together with the Trustee's right to compensation, shall
survive the Trustee's resignation or removal and final payment of the
Securities.

         SECTION 6.04.  Not Responsible for Recitals or Issuance of Securities

         The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
or any Authenticating Agent shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.

         SECTION 6.05.  May Hold Securities

         The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.08 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

         SECTION 6.06.  Money Held in Trust

         Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

                                       45

<PAGE>   52
         SECTION 6.07.  Compensation and Reimbursement

         The Company agrees

         (a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);

         (b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expenses, disbursements or advances as may be attributable to
its negligence or bad faith;

         (c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder; and

         (d) The Trustee shall have, and is hereby granted, a first priority
lien on all monies, securities and collateral (other than monies held in trust
by the Trustee for the purpose of paying the principal, premium, if any, and
interest on any specific Securities) held by or on behalf of the Trustee
pursuant to this Indenture for payment or reimbursement to the Trustee of its
fees, expenses and any other monies payable to it hereunder.

         SECTION 6.08.  Disqualification; Conflicting Interest

         (a) If the Trustee has or shall acquire any conflicting interest within
the meaning of the Trust Indenture Act with respect to the Securities of any
series, it shall, within 90 days after ascertaining that it has such conflicting
interest, either eliminate such conflicting interest or resign with respect to
the Securities of that series in the manner and with the effect hereinafter
specified in this Article.

         (b) In the event that the Trustee shall fail to comply with the
provisions of Subsection 6.08(a) with respect to the Securities of any series,
the Trustee shall, within 10 days after the expiration of such 90-day period,
transmit by mail to all Holders of Securities of that series, as their names and
addresses appear in the Security Register, notice of such failure.

         SECTION 6.09.  Corporate Trustee Required; Eligibility

         There shall at all times be a Trustee hereunder which shall 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, having a combined capital and surplus
of at least $50,000,000 subject to supervision or examination by Federal or
State authority and having its

                                       46

<PAGE>   53

Corporate Trust Office in any State in the United States of America or in the
District of Columbia. If such corporation publishes or files reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section 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 or filed. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

         SECTION 6.10.  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 the successor Trustee in accordance with the
applicable requirements of Section 6.11.

         (b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

          (c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.

         (d) If at any time:

                  (i) the Trustee shall fail to comply with Section 6.08(a)
         after written request therefor by the Company or by any Holder who has
         been a bona fide Holder of a Security for at least six months, or

                 (ii) the Trustee shall cease to be eligible under Section 6.09
         and shall fail to resign after written request therefor by the Company
         or by any such Holder, or

                (iii) the Trustee shall become incapable of acting or shall be
         adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
         property shall be appointed or any public officer shall take charge or
         control of the Trustee or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation,

                                       47

<PAGE>   54

then, in any such case, (A) the Company, by a Board Resolution, may remove
the Trustee with respect to the applicable series of Securities, or (B) subject
to Section 5.14, any Holder who has been a bona fide Holder of a Security of any
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to such series of Securities and the appointment of
a successor Trustee or Trustees.

         (e) 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, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 6.11. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

         (f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.

         SECTION 6.11.  Acceptance of Appointment by Successor

         (a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company 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,

                                       48

<PAGE>   55

deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on the request of the Company 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.

         (b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each 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 with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

         (c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph 6.11(a) or 6.11(b), as the case may be.

         (d) No such successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

                                       49

<PAGE>   56

         SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise 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 Securities 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 Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

         SECTION 6.13.  Preferential Collection of Claims

         If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any other obligor).

         SECTION 6.14.  Appointment of Authenticating Agent

         At any time the Trustee may appoint an Authenticating Agent or Agents
with respect to one or more series of Securities which shall be authorized to
act on behalf of the Trustee to authenticate Securities of such series issued
upon original issue, exchange, registration of transfer or partial redemption
thereof or pursuant to Section 3.06, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and 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 act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this

                                       50

<PAGE>   57

Section, the combined capital and surplus of such Authenticating Agent 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 an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

         Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or such Authenticating Agent.

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

         The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.

         If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

                                       51

<PAGE>   58

                                      Bank One Trust Company, National
                                      Association, as Trustee,

                                      By
                                        -----------------------------------
                                         as Authenticating Agent

                                      By
                                        -----------------------------------
                                          Authorized Officer

                                       52

<PAGE>   59

                                          ARTICLE 7
                HOLDERS' LIST AND REPORTS BY TRUSTEE AND COMPANY

         SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders

         The Company will furnish or cause to be furnished to the Trustee

         (a) semi-annually a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of the date of such list,
and

         (b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Security Registrar.

         SECTION 7.02. Preservation of Information; Communications to Holders

         (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.

         (b) If three or more Holders of Securities of any series (herein
referred to as "APPLICANTS") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Security of such
series for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of such series or with Holders of all other
series of Securities with respect to their rights under this Indenture or under
such Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either

                  (i) afford such applicants access to the information preserved
         at the time by the Trustee in accordance with Section 7.02(a), or

                 (ii) inform such applicants as to the approximate number of
         Holders of such series of Securities or Holders of all other series of
         Securities whose names and addresses appear in the information
         preserved at the time by the Trustee in accordance with Section
         7.02(a), and as to the

                                       53

<PAGE>   60

         approximate cost of mailing to the Holders of such series of Securities
         or the Holders of all series of Securities the form of proxy or other
         communication, if any, specified in such application.

         If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of such series of Securities or of all series of Securities
or of all series of Securities whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 7.02(a) a copy
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the relevant
Holders or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Holders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.

          (c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company 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 Holders
in accordance with Section 7.02(b), 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 7.02(b).

         SECTION 7.03.  Reports by Trustee

         (a) If required under Section 313(a) of the Trust Indenture Act, within
60 days after May 15 of each year commencing with the year 2001, so long as any
of the Securities are outstanding, the Trustee shall transmit by mail to all
Holders, as provided in subsection 7.03(c), a brief report dated as of such May
15 with respect to any of the following events which may have occurred within
the previous 12 months (but if no such event has occurred within such period no
report need by transmitted):

                                       54

<PAGE>   61

                (i) any change to its eligibility under Section 6.09 or the
         creation of or any material change to its qualifications under Section
         6.08;

                (ii) the character and amount of any advances (and if the
         Trustee elects so to state, the circumstances surrounding the making
         thereof) made by the Trustee (as such) which remain unpaid on the date
         of such report, and for the reimbursement of which it claims or may
         claim a lien or charge, prior to that of the Securities, on any
         property or funds held or collected by it as Trustee, except that the
         Trustee shall not be required (but may elect) to report such advances
         if such advances so remaining unpaid aggregate not more than one-half
         of one percent of the principal amount of the Securities Outstanding of
         such series on the date of such report;

                (iii) any change to the amount, interest rate and maturity date
         of all other indebtedness owing by the Company (or by any other obligor
         on the Securities) to the Trustee in its individual capacity, on the
         date of such report, with a brief description of any property held as
         collateral security therefor, except an indebtedness based upon a
         creditor relationship arising in any manner described in Section 6.13;

                (iv) any change to the property and funds, if any, physically in
         the possession of the Trustee as such on the date of such report;

                (v) any additional issue of Securities which the Trustee has not
         previously reported; and

                (vi) any action taken by the Trustee in the performance of its
         duties hereunder which it has not previously reported and which in its
         opinion materially affects the Securities, except action in respect of
         a default, notice of which has been or is to be withheld by the Trustee
         in accordance with Section 6.02.

         (b) The Trustee shall transmit by mail to all Holders, as provided in
subsection 7.03(c), a brief report with respect to the character and amount of
any advances (and if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such) since the date of
the last report transmitted pursuant to Subsection 7.03(a) (or if no such report
has yet been so transmitted, since the date of execution of this instrument) for
the reimbursement of which it claims or may claim a lien or charge, prior to
that of the Securities, on property or funds held or collected by it as Trustee
and which it has not previously reported pursuant to this Subsection, except
that the Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Securities Outstanding of such series at such time, such
report to be transmitted within 90 days after such time.

                                       55

<PAGE>   62

         (c) Reports pursuant to this Section shall be transmitted by mail:

                  (i) to all Holders of Securities, as the names and addresses
         of such Holders appear in the Security Register as of a date not more
         than fifteen days prior to the mailing thereof;

                 (ii) to such holders of Securities of any series as have,
         within two years preceding such transmission, filed their names and
         addresses with the Trustee for such series for that purpose; and

                (iii) except in the case of reports pursuant to subsection
         7.03(b), to all Holders of Securities whose names and addresses have
         been received by the Trustee pursuant to Section 7.01.

         (d) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

         SECTION 7.04.  Reports by Company

         The Company shall:

         (a) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934;
or, if the Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934 in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations;

         (b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and

                                       56

<PAGE>   63

         (c) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof with
the Trustee, to such Holders of Securities as have, within the two years
preceding such transmission, filed their names and addresses with the Trustee
for that purpose and Holders of securities whose names and addresses have been
furnished to or received by the Trustee pursuant to Section 7.02(a) such
summaries of any information, documents and reports required to be filed by the
Company pursuant to paragraphs 7.04(a) and 7.04(b) as may be required by rules
and regulations prescribed from time to time by the Commission.

                                    ARTICLE 8
              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

         SECTION 8.01.  Company May Consolidate, Etc., Only on Certain Terms

         Subject to the provisions of Section 8.03, nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation or merger
of the Company with or into any other corporation or corporations, or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties or shall prevent any sale or conveyance of all or
substantially all of the property of the Company to any other corporation
authorized to acquire and operate the same; provided, that in any such case, (i)
either the Company shall be the continuing corporation, or the successor
corporation (if other than the Company) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof and
such corporation shall expressly assume the due and punctual payment of the
principal of, and premium, if any, and interest on all the Securities, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of this Indenture to be performed by the Company by
supplemental indenture satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation, and (ii) the Company or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale or conveyance, be in default in the performance of
any such covenant or condition and shall not immediately thereafter have
outstanding any secured Debt (as defined in Section 10.04) not expressly
permitted by the provisions of Section 10.04 unless the provisions of Section
8.03 shall previously have been complied with.

         SECTION 8.02.  Successor Corporation to be Substituted for Company

         In case of any such consolidation, merger, sale or conveyance (other
than a conveyance by way of lease) and upon any such assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the

                                       57

<PAGE>   64

Company, with the same effect as if it had been named herein as the party
of the first part, and the Company thereupon shall be relieved of any further
liability or obligation hereunder or upon the Securities and may thereupon or at
any time thereafter be dissolved, wound up or liquidated. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of Masco Corporation, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee or the Authenticating Agent; and upon the order of such
successor corporation (instead of the Company) and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee or the
Authenticating Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by the officers of the Company
to the Trustee or the Authenticating Agent for authentication, and any
Securities which such successor corporation thereafter shall cause to be signed
and delivered to the Trustee or the Authenticating Agent for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter issued
in accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.

         In the case of any such consolidation, merger, sale or conveyance, such
change in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.

         SECTION 8.03.  Securities to be Secured in Certain Events

         If, upon any such consolidation or merger of the Company with or into
any other corporation, or upon any sale or conveyance of the property of the
Company as an entirety or substantially as an entirety to any other corporation,
any Principal Property or any shares of stock or indebtedness of any
Consolidated Subsidiary owning any Principal Property owned immediately prior
thereto would thereupon become subject to any mortgage (as defined in Section
10.04), unless the Company could create such mortgage pursuant to Section 10.04
without equally and ratably securing the Securities, the Company, prior to or
simultaneously with such consolidation, merger, sale or conveyance, will secure
the Securities outstanding hereunder, equally and ratably with any other
obligation of the Company or any such Subsidiary then entitled thereto, prior to
the Debt (as defined in Section 10.04) secured by such mortgage.

         SECTION 8.04.  Evidence to be Furnished to the Trustee

         The Trustee, subject to the provisions of Sections 6.01 and 6.03, may
receive and rely upon an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any consolidation, merger, sale or conveyance, and any
such assumption complies with the provisions of this Article 8.

                                       58

<PAGE>   65

                                    ARTICLE 9
                             SUPPLEMENTAL INDENTURES

         SECTION 9.01.  Supplemental Indentures without Consent of Holders

         Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

         (a) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company herein
and in the Securities; or

         (b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or

         (c) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely for
the benefit of the relevant series) or to surrender any right or power herein
conferred upon the Company; or

         (d) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or permit or facilitate the issuance of Securities in
uncertificated form; or

         (e) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any such
addition, change or elimination (A) shall neither (i) apply to Securities of any
series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (ii) modify the rights of the
Holder of such Securities with respect to such provision or (B) shall become
effective only when there is no such Security Outstanding; or

         (f) to secure the Securities pursuant to the requirements of Sections
8.03 or otherwise; or

                                       59
<PAGE>   66

         (g) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01; or

          (h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for and facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11(b); or

         (i) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture; provided such action shall not adversely affect the interests of the
Holders of Securities of any series in any material respect.

         SECTION 9.02.  Supplemental Indentures with Consent of Holders

         With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture voting as one class, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities of such series under the
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Security affected thereby,

         (a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.02, or change any
Place of Payment where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or

         (b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or

                                       60

<PAGE>   67

         (c) modify any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11(b) and 9.01(h).

         A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

         It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

         SECTION 9.03.  Execution of Supplemental Indentures

         In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.01) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

         SECTION 9.04.  Effect of Supplemental Indentures

         Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

         SECTION 9.05.  Conformity with Trust Indenture Act

         Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

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<PAGE>   68
         SECTION 9.06.  Reference in Securities to Supplemental Indentures

         Securities of any series authenticated and delivered after the
execution of any supplemental 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 supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.

                                   ARTICLE 10
                                    COVENANTS

         SECTION 10.01.  Payment of Principal, Premium and Interest

         The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of (and premium, if any) and any interest on each of the Securities of
that series in accordance with the terms of the Securities and this Indenture.

         SECTION 10.02.  Maintenance of Office or Agency

         The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee and
the Holders of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations and surrenders of Securities of that series and notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

         The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee and the
Holders of any

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<PAGE>   69

such designation or rescission and of any change in the location of any such
other office or agency.

         SECTION 10.03.  Money for Securities Payments to be Held in Trust

          (a) If the Company shall appoint a paying agent other than the Trustee
with respect to the Securities of any series, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section 10.03:

                  (i) that it will hold all sums held by it as such agent for
         the payment of the principal of and premium, if any, or interest, if
         any, on the Securities of such series (whether such sums have been paid
         to it by the Company or by any other obligor on the Securities of such
         series) in trust for the benefit of the holders of the Securities of
         such series;

                 (ii) that it will give the Trustee notice of any failure by the
         Company (or by any other obligor on the Securities of such series) to
         make any payment of the principal of and premium, if any, or interest,
         if any, on the Securities of such series when the same shall be due and
         payable; and

                (iii) at any time during the continuance of any such default,
         upon the written request of the Trustee, forthwith pay to the Trustee
         all sums so held in trust by such Paying Agent.

         (b) If the Company shall at any time act as its own Paying Agent it
will, on or before each due date of the principal of (and premium, if any) or
interest, if any, on the Securities of any series, set aside, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
such principal (and premium, if any) or interest so becoming due and will notify
the Trustee of any failure to take such action and of any failure by the Company
(or by any other obligor under the Securities of such series) to make any
payment of the principal of and premium, if any, or interest, if any, on the
Securities of such series when the same shall become due and payable.

         The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

         Any money deposited with the Trustee (except pursuant to Section 4.02
or 10.06) or any Paying Agent, or then held by the Company, in trust for the
payment of

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<PAGE>   70

the principal of (and premium, if any) or interest on any Security of any series
and remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

         SECTION 10.04.  Limitations on Liens

         (a) The Company will not, nor will it permit any Consolidated
Subsidiary to, issue, assume or guarantee any debt for money borrowed or any
Funded Debt (hereinafter in this Article 10 referred to as "DEBT"), secured by a
mortgage, security interest, pledge, lien or other encumbrance (mortgages,
security interests, pledges, liens and other encumbrances being hereinafter
called a "MORTGAGE" or "MORTGAGES") upon any Principal Property or upon any
shares of stock or indebtedness of any Consolidated Subsidiary which owns or
leases a Principal Property (whether such Principal Property, shares of stock or
indebtedness are now owned or hereafter acquired) without in any such case
effectively providing concurrently with the issuance, assumption or guaranty of
any such Debt that the Securities (together with, if the Company shall so
determine, any other indebtedness of or guaranteed by the Company or such
Consolidated Subsidiary ranking equally with the Securities and then existing or
thereafter created) shall be secured equally and ratably with such Debt;
provided, however, that the foregoing restrictions shall not apply to Debt
secured by

                  (i) mortgages on property, shares of stock or indebtedness of
         any corporation existing at the time such corporation becomes a
         Consolidated Subsidiary;

                 (ii) mortgages on property existing at the time of acquisition
         of such property by the Company or a Consolidated Subsidiary, or
         mortgages to secure the payment of all or any part of the purchase
         price of such property upon the acquisition of such property by the
         Company or a Consolidated Subsidiary or to secure any Debt incurred by
         the Company or Consolidated Subsidiary prior to, at the time of, or
         within 120 days after the

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<PAGE>   71

         later of the acquisition, the completion of construction (including any
         improvements on an existing property) or the commencement of commercial
         operation of such property, which Debt is incurred for the purpose of
         financing all or any part of the purchase price thereof or construction
         or improvements thereon; provided, however, that in the case of any
         such acquisition, construction or improvement, the mortgage shall not
         apply to any property theretofore owned by the Company or a
         Consolidated Subsidiary, other than any property on which the property
         so constructed or the improvement is located or to which the property
         so constructed or the improvement is appurtenant;

                 (iii) mortgages securing Debt of a Consolidated Subsidiary
         owing to the Company or to another Consolidated Subsidiary;

                 (iv) mortgages on property of a corporation existing at the
         time such corporation is merged or consolidated with the Company or a
         Consolidated Subsidiary or at the time of a sale, lease or other
         disposition of the properties of a corporation or firm as an entirety
         or substantially as an entirety to the Company or a Consolidated
         Subsidiary; provided, however, that no such mortgage shall extend to
         any other Principal Property of the Company or any Consolidated
         Subsidiary or to any shares of capital stock or any indebtedness of any
         Consolidated Subsidiary which owns or leases a Principal Property;

                 (v) mortgages on property of the Company or a Consolidated
         Subsidiary in favor of the United States of America or any State
         thereof, or any department, agency or instrumentality or political
         subdivision of the United States of America or any State thereof, or in
         favor of any other country, or any political subdivision thereof, to
         secure partial, progress, advance or other payments pursuant to any
         contract or statute (including Debt of the pollution control or
         industrial revenue bond type) or to secure any indebtedness incurred
         for the purpose of financing all or any part of the purchase price or
         the cost of construction of the property subject to such mortgages; or

                 (vi) any extension, renewal or replacement (or successive
         extensions, renewals or replacements) in whole or in part of mortgages
         existing at the date of this Indenture, or any mortgage referred to in
         the foregoing clauses (i) through (v), inclusive, provided, however,
         that the principal amount of Debt secured thereby shall not exceed the
         principal amount of Debt so secured at the time of such extension,
         renewal or replacement, and that such extension, renewal or replacement
         shall be limited to all or a part of the property which secured the
         mortgage so extended, renewed or replaced (plus improvements on such
         property).

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<PAGE>   72

         (b) Notwithstanding the foregoing provisions of this Section 10.04, the
Company may, and may permit any Consolidated Subsidiary to, issue, assume or
guarantee Debt secured by a mortgage not excepted by clauses (i) through (vi) of
paragraph (a) above without equally and ratably securing the Securities,
provided, however, that the aggregate principal amount of all such Debt then
outstanding, plus the aggregate principal amount of the Debt then being issued,
assumed, or guaranteed, and the aggregate amount of the Attributable Debt in
respect of sale and lease-back arrangements, shall not exceed 5% of Consolidated
Net Tangible Assets, determined as of a date not more than 90 days prior
thereto.

         SECTION 10.05.  Limitation on Sale and Leaseback

         The Company will not, nor will it permit any Consolidated Subsidiary
to, enter into any arrangement with any person providing for the leasing by the
Company or any Consolidated Subsidiary of any Principal Property (whether such
Principal Property is now owned or hereafter acquired) (except for leases for a
term of not more than three years and except for leases between the Company and
a Consolidated Subsidiary or between Consolidated Subsidiaries), which property
has been or is to be sold or transferred by the Company or such Consolidated
Subsidiary to such person, unless (a) the Company or such Subsidiary would be
entitled, pursuant to the provisions of Section 10.04, to issue, assume or
guarantee Debt secured by a mortgage upon such property at least equal in amount
to the Attributable Debt in respect of such arrangement without equally and
ratably securing the Securities or (b) the Company or a Consolidated Subsidiary,
within 120 days of the effective date of any such arrangement, applies an amount
equal to the greater of the net proceeds of the sale of the Principal Property
leased pursuant to such arrangement or the fair market value of the Principal
Property so leased at the time of entering into such arrangement (as determined
by the Board of Directors of the Company) to the retirement (other than any
mandatory retirement or by way of payment at maturity) of Funded Debt of the
Company or any Consolidated Subsidiary (other than Funded Debt owned by the
Company or any Consolidated Subsidiary and other than Funded Debt subordinated
in the payment of principal or interest to the Securities and except that no
Security shall be retired if such retirement of Securities pursuant to this
provision would be prohibited by the resolutions or supplemental indentures
referred to in Section 3.01), provided, however, that in lieu of applying all or
any part of such net proceeds or fair market value to such retirement, the
Company may at its option (i) deliver to the Trustee Securities theretofore
purchased or otherwise acquired by the Company, or (ii) receive credit for
Securities theretofore redeemed pursuant to the resolutions or supplemental
indentures referred to in Section 3.01 hereof, which Securities have not
theretofore been made the basis for the reduction of a sinking fund payment
pursuant to Article 12 or applied in lieu of retiring Funded Debt pursuant
hereto. If the Company shall so deliver Securities to the Trustee (or receive
credit for Securities so delivered), the amount of cash which the Company shall
be required

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<PAGE>   73

to apply to the retirement of Funded Debt pursuant to this Section 10.05 shall
be reduced by an amount equal to the aggregate principal amount of such
Securities.

         SECTION 10.06.  Defeasance of Certain Obligations

         The Company may omit to comply, on or after the date the conditions set
forth in subsections (a) to (f) of this Section 10.06 are satisfied, with any
term, provision or condition set forth in any negative or restrictive covenant
of the Company applicable to the Securities of such series (hereafter called
"COVENANT DEFEASANCE") that is specified pursuant to Section 3.01(j), if

         (a) With reference to this Section 10.06, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Securities of that series, (i) money in an amount, or (ii) U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide not later than one day
before the due date of any payment referred to in clause (A) or (B) of this
subparagraph 10.06(a) money in an amount, or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee for
such purposes, (A) the principal of and any premium or interest on the
Outstanding Securities of that series on the Stated Maturity of such principal
or installment of principal or interest or the Redemption Date, as the case may
be, and (B) any mandatory sinking fund payments or analogous payments applicable
to Securities of such series on the day on which such payments are due and
payable, each in accordance with the terms of this Indenture and of such
Securities;

         (b) Such Covenant Defeasance shall not cause the Trustee with respect
to the Securities of that series to have a conflicting interest as defined in
Section 6.08 and for purposes of the Trust Indenture Act with respect to the
Securities of any series;

         (c) Such Covenant Defeasance will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;

         (d) Such Defeasance would not cause any Outstanding Security of such
series then listed on any nationally recognized securities exchange to be then
delisted as a result thereof;

         (e) No Event of Default or event which with notice or lapse of time
would become an Event of Default with respect to Securities of that series shall

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<PAGE>   74

have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;

         (f) The Company has delivered to the Trustee an Opinion of Counsel
stating that (i) Holders of the Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and Covenant Defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times, as would have been the case
if such deposit and Covenant Defeasance had not occurred; (ii) such Covenant
Defeasance would not cause any outstanding Security of such series then listed
on any nationally recognized securities exchange to be delisted as a result
thereof; and (iii) such deposit would not result in the trust arising from such
deposit constituting an investment company within the meaning of the Investment
Company Act of 1940, as amended from time to time;

         (g) The Company has delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, except
that if a court were to rule under any such law in any case or proceeding that
the trust funds remained property of the Company, no opinion is given as to the
effect of such laws on the trust funds except the following: (A) assuming such
trust funds remained in the Trustee's possession prior to such court ruling to
the extent not paid to Holders of Securities, the Trustee will hold, for the
benefit of such Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise, and (B) such Holders
will be entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used; and

         (h) The Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the defeasance contemplated by this Section have been
complied with.

         SECTION 10.07.  Certificate of Officers of the Company

         On or before April 1 of each year beginning with the year 2001, so long
as Securities of any series are Outstanding hereunder, the Company will file
with the Trustee an Officers' Certificate, one of the signers of which shall be
the principal financial officer, the principal accounting officer or the
principal executive officer of the Company, stating whether or not to the best
knowledge of the signer thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture,
and, if the Company shall be in default, specifying all such defaults and the
nature and status thereof of which they may have knowledge. For purposes of this
paragraph, any such default shall be determined

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<PAGE>   75

without regard to any period of grace or requirement of notice provided in this
Indenture.

                                   ARTICLE 11
                            REDEMPTION OF SECURITIES

         SECTION 11.01.  Applicability of Article

         Any Securities that are redeemable before their Stated Maturity shall
be redeemable in accordance with their terms and (except as otherwise specified
as contemplated by Section 3.01 for any Securities) in accordance with this
Article.

         SECTION 11.02.  Election to Redeem; Notice to Trustee

         The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date, of the tenor, if applicable, of the Securities to be redeemed, and of the
principal amount of Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.

         SECTION 11.03.  Selection by Trustee of Securities to be Redeemed

         If less than all the Securities of any series are to be redeemed
(unless all of the Securities of a specified tenor are to be redeemed), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum authorized
denomination for Securities of that series. If less than all of the Securities
of such series and of a specified tenor are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
and specified tenor not previously called for redemption in accordance with the
preceding sentence.

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<PAGE>   76

         The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

         For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

         SECTION 11.04.  Notice of Redemption

         Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date to each Holder of Securities to be redeemed, at this address appearing in
the Security Register.

         All notices of redemption shall state:

         (a) the Redemption Date,

         (b) the Redemption Price,

         (c) if less than all the Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed,

         (d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,

         (e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price, and

         (f) that the redemption is for a sinking fund, if such is the case.

         Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice of redemption mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security shall not affect the validity of the
proceeding for the redemption of any other Security.

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<PAGE>   77

         SECTION 11.05.  Deposit of Redemption Price

         Prior to 10:00 a.m., New York City time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) an amount of money sufficient to pay the Redemption
Price of, and accrued interest on, all the Securities which are to be redeemed
on that date.

         SECTION 11.06.  Securities Payable on Redemption Date

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest), such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 3.07.

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

         SECTION 11.07.  Securities Redeemed in Part

         Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Security in permanent global form is so
surrendered, the Company shall execute, and the Trustee shall authenticate and
deliver to the Depositary for such Security in permanent global form, without
service charge to the Holder, a new Security in permanent global form in a
denomination equal to and in exchange for the unredeemed portion of the
principal of the Security in permanent global form so surrendered.

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<PAGE>   78

                                   ARTICLE 12
                                  SINKING FUNDS

         SECTION 12.01.  Applicability of Article

         The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.01 for Securities of such series.

         The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "MANDATORY SINKING
FUND PAYMENT," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "OPTIONAL
SINKING FUND PAYMENT." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

         SECTION 12.02.  Satisfaction of Sinking Fund Payments with Securities

         The Company (a) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (b) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
Series; provided that the Securities to be so credited have not been previously
so credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the Redemption Price, as specified in the
Securities to be so redeemed, for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

         SECTION 12.03.  Redemption of Securities for Sinking Fund

         Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities of that
series pursuant to Section 12.02 stating that such Securities have not been
previously used as a credit against any sinking fund payment and will also
deliver to the Trustee any Securities to be so delivered. Not less than 30 days
before each such sinking fund payment date the

                                       72

<PAGE>   79

Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 11.03 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 11.04. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.05, 11.06 and 11.07.

                                  *     *     *

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<PAGE>   80

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

                                       MASCO CORPORATION

                                       By /s/ Richard G. Mosteller
                                         ------------------------------------
                                       Title: Richard G. Mosteller
                                             --------------------------------
                                              Senior Vice President - Finance

Attest: /s/ John R. Leekley
       ----------------------------
       John R. Leekley
       Senior Vice President -
       General Counsel

                                       BANK ONE TRUST COMPANY, NATIONAL
                                          ASSOCIATION, as Trustee

                                       By /s/ Benita A. Pointer
                                         ------------------------------------
                                       Title: Account Executive
                                             --------------------------------

                                       74

<PAGE>   81

                                                                       EXHIBIT A

                            FORM OF FACE OF SECURITY
         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK (THE "U.S.
DEPOSITARY"), TO MASCO CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE U.S. DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE U.S. DEPOSITARY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

         [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR ITS NOMINEE AND ANY PAYMENT IS MADE TO THE DEPOSITARY OR ITS
NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF HAS AN INTEREST
HEREIN.]

         [If the Security is an original issue discount security for tax
purposes and is not "publicly offered" within the meaning of Treasury Regulation
1.1275-1(h), insert--For purposes of Sections 1271-1275 of the United States
Internal Revenue Code of 1986, as amended, the issue price of this Security is
 ....., the amount of original issue discount is ....., the issue date is
 ........, 20.. and the yield to maturity is .....]

                                MASCO CORPORATION

                               [Title of Security]

No. ....                                                           $ ...........

                                                             CUSIP No. _________

         Masco Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "COMPANY," which term includes any successor
corporation under the Indenture hereinafter referred to), for value

<PAGE>   82

received, hereby promises to pay to .............................., or
registered assigns, the principal sum of ................................
Dollars on ........................... [If the Security is to bear interest
prior to Maturity, insert--, and to pay interest thereon from ....... or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on ....... and ....... in each year, commencing
 ....., at the rate of ..% per annum, until the principal hereof is paid or made
available for payment [If applicable, insert--, and (to the extent that the
payment of such interest shall be legally enforceable) at the rate of ..% per
annum on any overdue principal and premium and on any overdue installment of
interest]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the .... or .... (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. [Interest on the
Securities shall be computed on the basis of a 360-day year consisting of 12
30-day months.]

         [If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ..% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal that is not so paid on demand
shall bear interest at the rate of ...% per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue from
the date of such demand for payment to the date payment of such interest has
been made or duly provided for, and such interest shall also be payable on
demand.]

         Payment of the principal of (and premium, if any) and [if applicable
insert,--any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts [if applicable,

                                       A-2

<PAGE>   83

insert--; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register].

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

                                       A-3

<PAGE>   84

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                       MASCO CORPORATION

                                       By
                                         ----------------------------------

Attest:
       -------------------------------

                                      A-4

<PAGE>   85

                 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

Date of Authentication:

                                   Bank One Trust Company, National Association,
                                     as Trustee

                                   By
                                     -------------------------------------------
                                      Authorized Officer

                                      A-5

<PAGE>   86

                           FORM OF REVERSE OF SECURITY

         This Security is one of a duly authorized issue of securities of the
Company (herein called the "SECURITIES"), issued and to be issued in one or more
series under an Indenture, dated as of ____________ (herein called the
"INDENTURE"), between the Company and Bank One Trust Company, National
Association, as Trustee (herein called the "TRUSTEE," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof [, limited in aggregate principal
amount to $......].

         [If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable,
insert--(1) on ........... in any year commencing with the year ......... and
ending with the year .............. through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [ on or after .........., 20....], as a whole or in part, at
the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [on or before .......... ..,
 ....%, and if redeemed] during the 12-month period beginning ............... of
the years indicated,

                  Redemption                                        Redemption
Year              Price                        Year                 Price

and thereafter at a Redemption Price equal to ....% of the principal amount,
together in the case of any such redemption [if applicable, insert--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]

         [If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on .......... in any
year commencing with the year ...... and ending with the year ...... through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [on or
after ..........], as a whole or in part, at the election of the Company, at the
Redemption Prices for redemption otherwise than through operation of the sinking
fund (expressed as percentages of

                                       A-6

<PAGE>   87

principal amount) set forth in the table below: If redeemed during the 12 month
period beginning ............ of the years indicated,

                   Redemption Price
                   For Redemption                 Redemption Price For
                   Through                        Redemption Otherwise
                   Operation                      Than Through
                   of the                         Operation
Year               Sinking Fund                   of the Sinking Fund

and thereafter at a Redemption Price equal to ....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]

         [Notwithstanding the foregoing, the Company may not, prior to
 .......... redeem any Securities of this series as contemplated by [clause (2)
of] the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than ....% per annum.]

         [The sinking fund for this series provides for the redemption on ......
in each year beginning with the year .......... and ending with the year
 ......... of [not less than] $......... [("MANDATORY SINKING FUND") and not more
than $............] aggregate principal amount of Securities of this series.
[Securities of this series acquired or redeemed by the Company otherwise than
through [mandatory] sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made--in the inverse
order in which they become due.]

         [In the event of redemption of this Security in part only, a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]

         [The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of this Security and (b) certain restrictive covenants,
in each case upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Security.]

                                       A-7

<PAGE>   88

         [If the Security is not an Original Issue Discount Security,--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]

         [If the Security is an Original Issue Discount Security,--If an Event
of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.]

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for

                                       A-8

<PAGE>   89

the enforcement of any payment of principal hereof or any premium or interest
hereon on or after the respective due dates expressed herein.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security herein provided, and at the times, place and rate, and
in the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

         The Securities of this series are issuable only in registered form
without coupons in denominations of $.... and any multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

                                       A-9

<PAGE>   90

                           CROSS-REFERENCE TARGET LIST

                 NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET
               NAMES MAY NOT APPEAR IN THE TARGET PULL-DOWN LIST.
              (This list is for the use of the wordprocessor only,
              is not a part of this document and may be discarded.)

<TABLE>
<CAPTION>
ARTICLE/SECTION     TARGET NAME   ARTICLE/SECTION   TARGET NAME    ARTICLE/SECTION   TARGET NAME   ARTICLE/SECTION  TARGET NAME
===============     ===========   ===============   ===========    ===============   ===========   ===============  ===========
<S>                <C>            <C>               <C>            <C>               <C>           <C>              <C>
?.......................... 309
1..........................art1
1.01....................... 101
1.02................ compliance
1.03....................... 103
1.04....................... 104
1.05....................... 105
1.06....................... 106
1.07....................... 107
1.08....................... 108
1.09....................... 109
1.10....................... 110
1.11....................... 111
1.12....................... 112
1.13....................... 113
1.14....................... 114
2 .........................art2
2.01....................... 201
2.02.......securities permanent
3..........................art3
3.01...........amount unlimited
3.02..............denominations
3.03..................execution
3.09...............cancellation
3.04............temp securities
6 ..................the.trustee
6.11(b)......accept.appt.succ.b
6.13............pref.coll.claim
7.02........preserv.information
7.02(a)....preserv.infomation.a
7.02(b)...preserv.information.b
7.02(c)...preserv.information.c
8............consol.mrgr.convey
9...............supp.indentures
10....................covenants
10.06......defease certain.obs.
10.07.....................1007
12...............sinking.funds
</TABLE>

<PAGE>   91
                     RESOLUTIONS OF THE PRICING COMMITTEE OF
                             THE BOARD OF DIRECTORS
                              OF MASCO CORPORATION
                                  MARCH 8, 2001

      In lieu of a meeting, the undersigned, being all of the members of the
Pricing Committee of the Board of Directors of Masco Corporation, a Delaware
corporation, (the "Company") adopt the resolutions attached on Exhibit A hereto.

Dated:  March 8, 2001

                                          /s/Richard A. Manoogian
                                          ------------------------------
                                          Richard A. Manoogian

                                          /s/Wayne B. Lyon
                                          ------------------------------
                                          Wayne B. Lyon

                                          /s/John A. Morgan
                                          ------------------------------
                                          John A. Morgan

<PAGE>   92

                                    EXHIBIT A
                      RESOLUTIONS OF THE PRICING COMMITTEE
                          OF THE BOARD OF DIRECTORS OF
                                MASCO CORPORATION
                                  MARCH 8, 2001

     WHEREAS, Masco Corporation, a Delaware corporation (the "Company") the
Company has filed Registration Statements (Nos. 33-56043 and 333-40122) on Form
S-3 with the Securities and Exchange Commission, which are in effect;

     WHEREAS, the Company desires to create a series of securities under the
Indenture dated as of February 12, 2001 (as amended to the date hereof, the
"Indenture"), with Bank One Trust Company, National Association, (the
"Trustee"), providing for the issuance from time to time of unsecured
debentures, notes or other evidences of indebtedness of this Company
("Securities") in one or more series under such Indenture; and

     WHEREAS, capitalized terms used in these resolutions and not otherwise
defined are used with the same meaning ascribed to such terms in the Indenture;

     THEREFORE RESOLVED, that there is established a series of Securities under
the Indenture, the terms of which shall be as follows:

          1. The Securities of such series shall be designated as the "6-3/4%
     Notes Due March 15, 2006."

          2. The aggregate principal amount of Securities of such series which
     may be authenticated and delivered under the Indenture is limited to Eight
     Hundred Million Dollars ($800,000,000), except for Securities of such
     series authenticated and delivered upon registration of, transfer of, or in
     exchange for, or in lieu of, other Securities of such series pursuant to
     Sections 3.04, 3.05, 3.06, 9.06 or 11.07 of the Indenture.

          3. The date on which the principal of the Securities of such series
     shall be payable is March 15, 2006.

          4. The Securities of such series shall bear interest from March 14,
     2001 at the rate of 6-3/4% per annum, payable semi-annually on March 15 and
     September 15 of each year commencing on September 15, 2001 until the
     principal thereof is paid or made available for payment. The March 1 or
     September 1 (whether or not a business day), as the case may be, next
     preceding each such interest payment date shall be the "record date" for
     the determination of holders to whom interest is payable.

<PAGE>   93

          5. The Securities shall be issued initially in the form of global
     securities registered in the name of Cede & Co., as nominee of The
     Depository Trust Company ("DTC"), and will be held by the Trustee as
     custodian for DTC. The Securities shall be subject to the procedures of DTC
     and will not be issued in definitive registered form.

          6. The principal of and interest on the Securities of such series
     shall be payable at the office or agency of this Company maintained for
     such purpose in Chicago, Illinois or at any other office or agency
     designated by the Company, for such purpose pursuant to the Indenture.

          7. The Securities of such series shall be subject to redemption in
     whole or in part prior to maturity, at the Company's option, at a
     redemption price established in accordance with current market practice,
     substantially as follows: the redemption price shall be equal to the
     greater of (i) 100% of the principal amount of the Securities plus accrued
     interest to the redemption date, or (ii) the sum of the present values of
     the remaining principal amount and scheduled payments of interest on the
     Notes to be redeemed (other than accrued interest to the redemption date),
     discounted to the redemption date on a semi-annual basis at the appropriate
     treasury rate plus 25 basis points plus accrued interest to the redemption
     date.

          8. The Securities of such series shall be issuable in denominations of
     One Thousand Dollars ($1,000) and any integral multiples thereof.

          9. The Securities shall be issuable at a price such that this Company
     shall receive $793,592,000 after an underwriting discount of $4,800,000.

          10. The Securities shall be subject to defeasance and discharge and to
     defeasance of certain obligations as set forth in the Indenture.

     FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions hereof;

     FURTHER RESOLVED, that the Chairman of the Board, the President or any Vice
President of the Company is authorized to execute, on the Company's behalf and
in its name, and the Secretary or any Assistant Secretary of the Company is
authorized to attest to such execution and under the Company's seal (which may
be in the form of a facsimile of the Company's seal), $800,000,000 aggregate
principal amount of the Securities of such series (and in addition Securities to
replace lost, stolen, mutilated or destroyed Securities and Securities required
for exchange, substitution or transfer, all as provided in the Indenture) in
fully registered form in substantially the form of the note filed as an exhibit
to the Company's Registration Statement on Form S-3 (No. 333-40122), but with
such changes and insertions therein as are appropriate to conform the Securities
to the terms set forth herein or otherwise as the respective officers executing
the Securities shall approve and as are not inconsistent with these resolutions,
such

                                      -2-
<PAGE>   94

approval to be conclusively evidenced by such officer's execution and delivery
of such Securities, and to deliver such Securities to the Trustee for
authentication, and the Trustee is authorized and directed thereupon to
authenticate and deliver the same to or upon the written order of this Company
as provided in the Indenture;

     FURTHER RESOLVED, that the signatures of the Company officers so authorized
to execute the Securities of such series may be the manual or facsimile
signatures of the present or any future authorized officers and may be imprinted
or otherwise reproduced thereon, and the Company for such purpose adopts each
facsimile signature as binding upon it notwithstanding the fact that at the time
the respective Securities shall be authenticated and delivered or disposed of,
the individual so signing shall have ceased to hold such office;

     FURTHER RESOLVED, that Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., Banc One Capital Markets, Inc., McDonald Investments,
Inc. and Wachovia Securities, Inc. are appointed underwriters for the issuance
and sale of the Securities of such series, and the Chairman of the Board, the
President or any Vice President of the Company is authorized, in the Company's
name and on its behalf, to execute and deliver an Underwriting Agreement,
substantially in the form heretofore approved by the Company's Board of
Directors, with such underwriters, with such changes and insertions therein as
are appropriate to conform such Underwriting Agreement to the terms set forth
herein or otherwise as the officer executing such Underwriting Agreement shall
approve and as are not inconsistent with these resolutions, such approval to be
conclusively evidenced by such officer's execution and delivery of the
Underwriting Agreement;

     FURTHER RESOLVED, that Bank One Trust Company, National Association, the
Trustee under the Indenture, is appointed trustee for Securities of such series,
and as Agent of this Company for the purpose of effecting the registration,
transfer and exchange of the Securities of such series as provided in the
Indenture, and the corporate trust office of Bank One Trust Company, National
Association in Chicago, Illinois is designated pursuant to the Indenture as the
office or agency of the Company where such Securities may be presented for
registration, transfer and exchange and where notices and demands to or upon
this Company in respect of the Securities and the Indenture may be served;

     FURTHER RESOLVED, that Bank One Trust Company, National Association is
appointed Paying Agent of this Company for the payment of interest on and
principal of the Securities of such series, and the corporate trust office of
Bank One Trust Company, National Association, is designated, pursuant to the
Indenture, as the office or agency of the Company where Securities may be
presented for payment; and

     FURTHER RESOLVED, that each of the Company's officers is authorized and
directed, on behalf of the Company and in its name, to do or cause to be done
everything such officer deems advisable to effect the sale and delivery of the
Securities of such series pursuant to the Underwriting Agreement and otherwise
to carry out the Company's

                                      -3-
<PAGE>   95

obligations under the Underwriting Agreement, and to do or cause to be done
everything and to execute and deliver all documents as such officer deems
advisable in connection with the execution and delivery of the Underwriting
Agreement and the execution, authentication and delivery of such Securities
(including, without limiting the generality of the foregoing, delivery to the
Trustee of the Securities for authentication and of requests or orders for the
authentication and delivery of Securities).

                                      -4-

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