{"id":40963,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/credit-agreement-global-telesystems-ltd-deutsche-bank-ag.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"credit-agreement-global-telesystems-ltd-deutsche-bank-ag","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/credit-agreement-global-telesystems-ltd-deutsche-bank-ag.html","title":{"rendered":"Credit Agreement – Global Telesystems Ltd., Deutsche Bank AG, Canadian Imperial Bank of Commerce, Deutsche Morgan Grenfell Inc. and CIBC Wood Gundy Securities"},"content":{"rendered":"
\n                                                            EXECUTION COPY\n================================================================================\n\n\n                               CREDIT AGREEMENT,\n\n                                  dated as of\n\n                                 June 27, 1997,\n\n                                     among\n\n                            GLOBAL TELESYSTEMS LTD.,\n                                as the Borrower,\n\n                        VARIOUS FINANCIAL INSTITUTIONS,\n                                as the Lenders,\n\n                     DEUTSCHE BANK AG, NEW YORK BRANCH, and\n                      CANADIAN IMPERIAL BANK OF COMMERCE,\n                              as the Lead Agents,\n\n                       DEUTSCHE BANK AG, NEW YORK BRANCH,\n                          as the Administrative Agent,\n\n                                      and\n\n                      CANADIAN IMPERIAL BANK OF COMMERCE,\n                  as the Syndication Agent, the Documentation\n                          Agent and the Issuing Bank.\n\n\n                       ----------------------------------\n\n                       DEUTSCHE MORGAN GRENFELL INC. and\n                       CIBC WOOD GUNDY SECURITIES CORP.,\n                               as the Arrangers.\n\n                       ----------------------------------\n\n\n            Construction, Working Capital and Term Financing of the\n             Atlantic Crossing Fiber-optic Submarine Cable System.\n\n\n================================================================================\n\n \n                               TABLE OF CONTENTS\n \n \n                                                                                          Page\n\n                               ARTICLE IDEFINITION\n                                                                                      \nSECTION 1.01.  Defined Terms.................................................................2\nSECTION 1.02.  Classification of Loans and Borrowings.......................................35\nSECTION 1.03.  Terms Generally..............................................................35\nSECTION 1.04.  Accounting Terms; GAAP.......................................................36\n\n                            ARTICLE IITHE COMMITMENTS\n\nSECTION 2.01.  Commitments. ................................................................36\nSECTION 2.02.  Loans and Borrowings.........................................................36\nSECTION 2.03.  Requests for Borrowings......................................................37\nSECTION 2.04.  Special Provisions for Working Capital Loans.................................38\nSECTION 2.05.  Letters of Credit............................................................39\nSECTION 2.06.  Funding of Borrowings........................................................44\nSECTION 2.07.  Interest Elections...........................................................45\nSECTION 2.08.  Termination and Reduction of Commitments.....................................46\nSECTION 2.09.  Repayment of Loans; Evidence of Debt.........................................47\nSECTION 2.10.  Optional Prepayments of Loans................................................48\nSECTION 2.11.  Mandatory Prepayments........................................................49\nSECTION 2.12.  Fees.........................................................................51\nSECTION 2.13.  Interest.....................................................................52\nSECTION 2.14.  Alternate Rate of Interest; Illegality.......................................52\nSECTION 2.15.  Increased Costs..............................................................53\nSECTION 2.16.  Break Funding Payments.......................................................54\nSECTION 2.17.  Taxes........................................................................55\nSECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs..................57\nSECTION 2.19.  Mitigation Obligations; Replacement of Lenders...............................58\n\n                    ARTICLE IIIREPRESENTATIONS AND WARRANTIES\n\nSECTION 3.01.  Financial Condition..........................................................59\nSECTION 3.02.  No Change....................................................................60\nSECTION 3.03.  Organization; Powers.........................................................60\nSECTION 3.04.  Authorization; Enforceability................................................60\nSECTION 3.05.  Corporate Structure..........................................................60\nSECTION 3.06.  Compliance with Law..........................................................61\nSECTION 3.07.  No Legal Bar.................................................................61\nSECTION 3.08.  Governmental Actions.........................................................61\nSECTION 3.09.  Litigation...................................................................61\nSECTION 3.10.  Environmental Matters........................................................61\nSECTION 3.11.  No Default; Event of Default.................................................62\nSECTION 3.12.  Properties...................................................................62\nSECTION 3.13.  Taxes........................................................................62\nSECTION 3.14.  Federal Regulations..........................................................62\n \n                                       -i-\n\n \n \n\n                                                                                      \nSECTION 3.15.  ERISA........................................................................62\nSECTION 3.16.  Investment Company Act.......................................................62\nSECTION 3.17.  Security Documents...........................................................62\nSECTION 3.18.  Principal Place of Business..................................................63\nSECTION 3.19.  Disclosure...................................................................63\nSECTION 3.20.  Sufficiency of System Contracts..............................................63\nSECTION 3.21.  Immunity.....................................................................63\nSECTION 3.22.  Export Control...............................................................64\nSECTION 3.23.  Foreign Corrupt Practices Act................................................64\nSECTION 3.24.  Intellectual Property........................................................64\n\n                              ARTICLE IVCONDITIONS\n\nSECTION 4.01.  Conditions Precedent to the Initial Credit Extensions........................64\nSECTION 4.02.  Conditions Precedent to Subsequent Credit Extensions.........................71\n\n                         ARTICLE VAFFIRMATIVE COVENANTS\n\nSECTION 5.01.  Financial Statements and Other Information...................................74\nSECTION 5.02.  Reports......................................................................75\nSECTION 5.03.  Payment of Obligations.......................................................76\nSECTION 5.04.  Conduct of Business; System Completion.......................................76\nSECTION 5.05.  Existence....................................................................76\nSECTION 5.06.  Compliance with Laws.........................................................76\nSECTION 5.07.  Performance of Agreements....................................................77\nSECTION 5.08.  Taxes and Claims.............................................................77\nSECTION 5.09.  Notices......................................................................77\nSECTION 5.10.  Insurance....................................................................77\nSECTION 5.11.  Fiscal Year..................................................................78\nSECTION 5.12.  Use of Proceeds..............................................................78\nSECTION 5.13.  Environmental Matters........................................................78\nSECTION 5.14.  Operating Budgets; Operating Plans...........................................78\nSECTION 5.15.  Governmental Actions.........................................................79\nSECTION 5.16.  Cooperation with Independent Engineer........................................79\nSECTION 5.17.  Spare Parts..................................................................79\nSECTION 5.18.  Interest Rate Protection.....................................................79\nSECTION 5.19.  Revenue Account..............................................................79\nSECTION 5.20.  Maintenance of Process Agent.................................................80\nSECTION 5.21.  System Operation and Maintenance.............................................80\nSECTION 5.22.  Event of Loss................................................................80\nSECTION 5.23.  Books and Records; Inspection Rights.........................................80\nSECTION 5.24.  Export Control...............................................................80\nSECTION 5.25.  Foreign Corrupt Practices Act................................................80\nSECTION 5.26.  Further Assurances...........................................................81\nSECTION 5.27.  As to Intellectual Property Collateral.......................................81\nSECTION 5.28.  Future Subsidiaries..........................................................81\nSECTION 5.29.  Lease........................................................................82\nSECTION 5.30.  Foreign Subsidiary Collateral; Mortgages.....................................83\n \n                                      -ii-\n\n \n \n\n                          ARTICLE VINEGATIVE COVENANTS\n                                                                                      \nSECTION 6.01.  Indebtedness.................................................................84\nSECTION 6.02.  Liens........................................................................85\nSECTION 6.03.  Fundamental Changes..........................................................85\nSECTION 6.04.  Sale of Assets...............................................................85\nSECTION 6.05.  Investments, Loans, Advances, Guarantees and Acquisitions....................85\nSECTION 6.06.  Restricted Payments..........................................................87\nSECTION 6.07.  Amendment of System Contracts, etc...........................................87\nSECTION 6.08.  Supply Contract..............................................................88\nSECTION 6.09.  Addition to Configuration....................................................89\nSECTION 6.10.  Permitted System Upgrades....................................................90\nSECTION 6.11.  Leases.......................................................................90\nSECTION 6.12.  Change of Office.............................................................90\nSECTION 6.13.  Change of Name...............................................................90\nSECTION 6.14.  Transactions with Affiliates.................................................90\nSECTION 6.15.  Sale and Leaseback...........................................................91\nSECTION 6.16.  Approval of Additional Contracts.............................................91\nSECTION 6.17.  Capital Expenditures.........................................................91\nSECTION 6.18.  Limitations on Transfer and Issuance of Interests............................91\nSECTION 6.19.  Unrelated Activities; Abandonment; New Subsidiaries..........................92\nSECTION 6.20.  Set-off......................................................................92\nSECTION 6.21.  Changes in Capital Budget....................................................92\nSECTION 6.22.  Payment of Construction Costs................................................93\nSECTION 6.23.  Sales of Capacity............................................................93\nSECTION 6.24.  Financial Covenants..........................................................93\nSECTION 6.25.  Amendments, etc. of Organizational and Other Documents.......................94\nSECTION 6.26.  Management and Advisory Fees, etc............................................95\nSECTION 6.27.  Immunity.....................................................................95\n\n                          ARTICLE VIIEVENTS OF DEFAULT\n\nSECTION 7.01.  Non-Payment of Obligations...................................................95\nSECTION 7.02.  Breach of Warranty...........................................................95\nSECTION 7.03.  Non-Performance of Certain Covenants and Obligations.........................96\nSECTION 7.04.  Involuntary Bankruptcy Proceeding, etc.......................................96\nSECTION 7.05.  Voluntary Bankruptcy Proceeding, etc.........................................96\nSECTION 7.06.  Judgments....................................................................97\nSECTION 7.07.  ERISA........................................................................97\nSECTION 7.08.  Impairment of Security, etc..................................................97\nSECTION 7.09.  Commercial Operation.........................................................97\nSECTION 7.10.  Impairment of System Contract................................................97\nSECTION 7.11.  Default Under System Contract................................................98\nSECTION 7.12.  Liquidated Damages...........................................................98\nSECTION 7.13.  Revocation of Landing License, etc...........................................98\nSECTION 7.14.  Change in Control............................................................98\nSECTION 7.15.  Default on Other Indebtedness................................................98\nSECTION 7.16.  Delay in Construction or Installation........................................99\n \n                                      -iii-\n\n \n \n\n                              ARTICLE VIIIACCOUNTS\n                                                                                    \nSECTION 8.01.  Creation of Accounts.........................................................99\nSECTION 8.02.  Required Deposits into the Accounts.........................................100\nSECTION 8.03.  Deposits Held as Cash Collateral............................................103\nSECTION 8.04.  Source of Payments; Deposits Irrevocable....................................103\nSECTION 8.05.  Books of Account; Statements................................................103\nSECTION 8.06.  Location of the Accounts....................................................104\nSECTION 8.07.  Construction Account........................................................104\nSECTION 8.08.  Revenue Account.............................................................104\nSECTION 8.09.  Special Payment Account.....................................................108\nSECTION 8.10.  Debt Reserve Account........................................................109\nSECTION 8.11.  Holdings Interest Reserve Account...........................................109\nSECTION 8.12.  Operating Reserve Account...................................................110\nSECTION 8.13.  Insurance Proceeds Account..................................................111\nSECTION 8.14.  Clean-Up Account............................................................112\nSECTION 8.15.  Sales and Issuances Proceeds Account........................................112\nSECTION 8.16.  Construction Contingency Reserve Account....................................113\nSECTION 8.17.  VAT Refund Account..........................................................114\nSECTION 8.18.  Current Account.............................................................114\nSECTION 8.19.  Subsidiary Accounts.........................................................114\nSECTION 8.20.  Release of Excess Amounts...................................................115\nSECTION 8.21.  Acceleration................................................................115\nSECTION 8.22.  Investment..................................................................115\nSECTION 8.23.  Value.......................................................................115\nSECTION 8.24.  Other Determinations........................................................116\nSECTION 8.25.  Sales of Permitted Investments..............................................116\nSECTION 8.26.  Available Cash..............................................................116\nSECTION 8.27.  Termination.................................................................116\nSECTION 8.28.  Rights of Sales Agent to Commissions........................................116\nSECTION 8.29.  Conflicts With Other Loan Documents.........................................116\nSECTION 8.30.  Checking Account............................................................117\nSECTION 8.31.  Purchaser Escrow Arrangements...............................................117\n\n                  ARTICLE IXTHE ADMINISTRATIVE AGENT, OTHER AGENTS AND AGENT\n\n                                 RELATED PERSONS\n\nSECTION 9.01.  Authorization and Action....................................................117\nSECTION 9.02.  Exculpation of, and Reliance by, Agents and Agent Related Persons...........118\nSECTION 9.03.  Agents, Agent Related Persons and Affiliates................................118\nSECTION 9.04.  Lender Credit Decision......................................................119\nSECTION 9.05.  Indemnification.............................................................119\nSECTION 9.06.  Collateral Matters..........................................................120\nSECTION 9.07.  Successor Administrative Agent..............................................120\n\n                             ARTICLE XMISCELLANEOUS\n\nSECTION 10.01.  Notices....................................................................121\nSECTION 10.02.  Waivers; Amendments........................................................122\n \n                                      -iv-\n\n \n \n                                                                                    \n\nSECTION 10.03.  Expenses; Indemnity; Damage Waiver.........................................123\nSECTION 10.04.  Successors and Assigns; Consent and Agreement..............................124\nSECTION 10.05.  Limited Recourse...........................................................127\nSECTION 10.06.  Survival...................................................................127\nSECTION 10.07.  Counterparts; Integration; Effectiveness...................................128\nSECTION 10.08.  Severability...............................................................128\nSECTION 10.09.  Right of Setoff............................................................128\nSECTION 10.10.  Governing Law; Jurisdiction; Consent to Service of Process.................128\nSECTION 10.11.  WAIVER OF JURY TRIAL.......................................................129\nSECTION 10.12.  Headings...................................................................129\nSECTION 10.13.  Replacement of Independent Engineer or Insurance Consultant................129\nSECTION 10.14.  Confidentiality............................................................130\n \n\n                                       -v-\n\n \nSCHEDULES:\n\nSchedule 1.01(a)        --  Permitted Reserve LC Facility\nSchedule 2.01           --  Lenders; Commitments\nSchedule 2.09           --  Principal Amortization Table\nSchedule 3.05(a)        --  Borrower Capital Structure\nSchedule 3.05(b)        --  Subsidiaries\nSchedule 3.08           --  Governmental Actions\nSchedule 3.13           --  Taxes\nSchedule 3.17           --  Collateral Filings\nSchedule 5.10           --  Insurance\n\nEXHIBITS:\n\nExhibit A-1       --   Form of Working Capital Note\nExhibit A-2       --   Form of Term Note\nExhibit B-1       --   Form of Borrowing Request\nExhibit B-2       --   Form of Issuance Request\nExhibit B-3       --   Form of Borrowing Certificate\nExhibit C         --   Form of Continuation\/Conversion Notice\nExhibit D         --   Form of Assignment and Acceptance\nExhibit E-1       --   Form of Borrower Security Agreement\nExhibit E-2       --   Form of Subsidiary Security Agreement\nExhibit E-3       --   Form of SSI Lender Security Agreement\nExhibit F-1       --   Form of Holdings Pledge Agreement\nExhibit F-2       --   Form of Borrower Pledge Agreement\nExhibit F-3       --   Form of SSI Lender Pledge Agreement\nExhibit G         --   Form of Subsidiary Guaranty Agreement\nExhibit H         --   Form of Closing Date Certificate\nExhibit I-1       --   Form of Contingency Letter of Credit\nExhibit I-2       --   Form of Retainage Letter of Credit\nExhibit J         --   Form of SSI Consent\nExhibit K         --   Form of Construction Progress Certificate\nExhibit L         --   Form of Pre-approved Capacity Sales Agreement\nExhibit M-1       --   Form of Expense Certificate\nExhibit M-2       --   Form of Article VIII Certificate\nExhibit N         --   Form of Participation Certificate\nExhibit O-1       --   Form of Legal Opinion of Appleby, Spurling & Kempe\nExhibit O-2       --   Form of Legal Opinion of Simpson Thacher & Bartlett\nExhibit O-3       --   Form of Legal Opinion of Hogan & Hartson, LLP\nExhibit O-4       --   Form of Legal Opinion of Clifford Chance\nExhibit O-5       --   Form of Legal Opinion of  in-house counsel to AT&T\nExhibit O-6       --   Form of Legal Opinion of  in-house counsel to SSI\nExhibit O-7       --   Form of Legal Opinion of Davis Polk & Wardwell\n\n\n                                      -vi-\n\n \n       CREDIT AGREEMENT, dated as of June 27, 1997 (as amended, supplemented,\namended and restated or otherwise modified from time to time, this \"Agreement\"),\namong GLOBAL TELESYSTEMS LTD., a corporation organized and existing under the\nlaws of Bermuda (the \"Borrower\"), the financial institutions from time to time\n                      --------                                                \nparties hereto as lenders (collectively, the \"Lenders\"), DEUTSCHE BANK AG, NEW\n                                              -------                         \nYORK BRANCH, and CANADIAN IMPERIAL BANK OF COMMERCE, acting by and\/or through\none or more of its branches, agencies or affiliates (\"CIBC\"), as lead agents for\n                                                      ----                      \nthe Lenders (in such capacity, the \"Lead Agents\"), DEUTSCHE BANK AG, NEW YORK\n                                    -----------                              \nBRANCH, as administrative agent for the Lenders (in such capacity, the\n                                                                      \n\"Administrative Agent\"), and CIBC, as syndication agent for the Lenders (in such\n---------------------                                                           \ncapacity, the \"Syndication Agent\"), documentation agent for the Lenders (in such\n               -----------------                                                \ncapacity, the \"Documentation Agent\") and issuer of the Letters of Credit\n               -------------------                                      \nreferred to herein (in such capacity, the \"Issuing Bank\").\n                                           ------------   \n\n\n                             W I T N E S S E T H :\n                             -------------------  \n\n\n     WHEREAS, capitalized terms used herein and not otherwise defined herein\nshall have the meanings assigned to them in Section 1.01 of this Agreement;\n                                            ------------                   \n\n     WHEREAS, the Borrower (together with its Subsidiaries) proposes to develop,\nconstruct, own (and lease), provide and sell Capacity on a four fiber pair,\nfiber-optic submarine cable system to be known as the Atlantic Crossing Cable\nSystem or AC-1, which is intended to be used to provide direct\ntelecommunications service between and among the United States, the United\nKingdom and the Federal Republic of Germany (as modified from time to time in\naccordance with the terms hereof, the \"System\");\n                                       ------   \n\n     WHEREAS, in order to provide for the design, construction and installation\nof the System, the Borrower has entered into the Supply Contract with the\nContractor (and, pursuant to Supplement No. 1 thereto, the Subsidiaries became\nor shall become parties thereto);\n\n     WHEREAS, the Contractor's obligations with respect to the Work under and as\ndefined in the Supply Contract are being guaranteed by AT&T Corp. pursuant to,\nand subject to the limitations set forth in, the Supply Contract Guaranty;\n\n     WHEREAS, in order to provide security for the payment to the Contractor of\namounts owing under the Supply Contract, the Borrower, the Contractor and the\nEscrow Agent have entered into the Contractor Escrow and Security Agreement;\n\n     WHEREAS, in order to provide for the operation, administration and\nmaintenance of the System, the Borrower has\n\n                                      -1-\n\n \nentered into the OA&M Agreement with the Operator (and, pursuant to Supplement\nNo. 1 thereto, the Subsidiaries became or shall become parties thereto);\n\n     WHEREAS, in order to market and sell Capacity, the Borrower has entered\ninto the Sales Agency Agreement with the Sales Agent;\n\n     WHEREAS, certain of the assets located in the United States to be used in\nconnection with the operation of the System are and\/or shall be owned by the\nsubsidiary of the Contractor referred to herein as SSI Sub 2, which shall grant\nan indefeasible right of use and option in favor of the U.S. Subsidiary pursuant\nto the SSI IRU and Option Agreement;\n\n     WHEREAS, in order to finance a portion of the design, development,\nconstruction and installation of the System, Holdings, the Borrower's parent,\nhas agreed to make cash equity contributions to the Borrower in an aggregate\namount equal to the Net Equity Funding Commitment;\n\n     WHEREAS, in order to finance the remaining portion of the design,\ndevelopment, construction and installation of the System, the Borrower is\nentering into this Agreement pursuant to which the Lenders and the Issuing Bank\nhave agreed, subject to the terms and conditions set forth herein, to make\ncertain Credit Extensions to the Borrower; and\n\n     WHEREAS, in furtherance of the foregoing and in order to secure and support\nthe Borrower's obligations to the Lenders and the Issuing Bank under the Loan\nDocuments, Holdings, the Borrower and the Subsidiaries will enter into the\nSecurity Documents (including with respect to the aforesaid SSI IRU and Option\nAgreement) to which they are parties (and the Subsidiaries (other than the\nGerman Subsidiary) will enter into the Subsidiary Guaranty Agreement);\n\n     NOW, THEREFORE, in consideration of the premises and the mutual agreements\nherein contained and other good and valuable consideration, the receipt and\nsufficiency of which are hereby acknowledged, the parties hereto, intending to\nbe legally bound, agree as follows:\n\n\n                                   ARTICLE I\n\n                                  DEFINITIONS\n                                  -----------\n\n     SECTION 1.1.  Defined Terms.  As used in this Agreement, the following\n                   -------------                                           \nterms shall have the meanings specified below:\n\n     \"ABR\" when used in reference to any Loan or Borrowing, refers to whether\n      ---                                                                    \nsuch Loan, or the Loans comprising such\n\n                                      -2-\n\n \nBorrowing, are bearing interest at a rate determined by reference to the\nAlternate Base Rate.\n\n     \"Accounts\" shall be the collective reference to the Revenue Account, the\n      --------                                                               \nConstruction Account, the Debt Reserve Account, the Holdings Interest Reserve\nAccount, the Operating Reserve Account, the Construction Contingency Reserve\nAccount, the Clean-Up Account, the Insurance Proceeds Account, the Special\nPayment Account, the Sales and Issuances Proceeds Account, the Current Account,\nthe VAT Refund Account, the Subsidiary Accounts and each other \"Collateral\nAccount\", together with each sub-account of such accounts, established and\nmaintained pursuant to Article VIII.\n                       ------------ \n\n     \"Actual Date of Commercial Operation\" means the date the Borrower receives\n      -----------------------------------                                      \na Commissioning Report under the Supply Contract demonstrating that the System\nis Ready for Commercial Service or Ready for Provisional Acceptance.\n\n     \"Additional Contracts\" means any contract entered into by the Borrower or\n      --------------------                                                    \nany Subsidiary after the Closing Date (other than employment contracts and\ncontracts involving less than $1,000,000 annually).\n\n     \"Additional Material Contract\" means each Additional Contract designated as\n      ----------------------------                                              \nan \"Additional Material Contract\" in accordance with Section 6.16.\n                                                     ------------ \n\n     \"Additional Non-Material Contract\" means each Additional Contract\n      --------------------------------                                \ndesignated as an \"Additional Non-Material Contract\" in accordance with Section\n                                                                       -------\n6.16.\n---- \n\n     \"Adjusted LIBO Rate\" means, with respect to any Eurodollar Borrowing for\n      ------------------                                                     \nany Interest Period, an interest rate per annum (rounded upwards, if necessary,\nto the next 1\/16 of 1%) equal to (a) the LIBO Rate for such Interest Period\nmultiplied by (b) the Statutory Reserve Rate.\n\n     \"Administrative Agent\" is defined in the preamble and includes each of its\n      --------------------                    --------                         \nsuccessors hereunder.\n\n     \"Advisory Services Agreement\" means the Advisory Services Agreement, dated\n      ---------------------------                                              \nas of March 25, 1997, between the Borrower and PCG Telecom Services LLC, as the\nsame may be amended, supplemented, amended and restated or otherwise modified\nfrom time to time in accordance with the terms hereof.\n\n     \"Advisory Services Fee\" means the \"Fee\", as defined in the Advisory\n      ---------------------                                             \nServices Agreement.\n\n     \"Affiliate\" means, with respect to a specified Person, another Person\n      ---------                                                           \n(other than a subsidiary of the Person specified)\n\n                                      -3-\n\n \nthat directly, or indirectly through one or more intermediaries, Controls or is\nControlled by or is under common Control with the Person specified.\n\n     \"Agent Related Persons\" means the Agents, the Issuing Bank, the Arrangers\n      ---------------------                                                   \nand their respective officers, directors, partners, agents, employees and\nAffiliates and Subsidiaries.\n\n     \"Agents\" is the collective reference to the Administrative Agent, the\n      ------                                                              \nSyndication Agent, the Documentation Agent and each Lead Agent.\n\n     \"Agreement\" is defined in the preamble.\n      ---------                    -------- \n\n     \"Alternate Base Rate\" means, for any day, a rate per annum equal to the\n      -------------------                                                   \ngreatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in\neffect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on\nsuch day plus  1\/2 of 1%.  Any change in the Alternate Base Rate due to a change\nin the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be\neffective from and including the effective date of such change in the Prime\nRate, the Base CD Rate or the Federal Funds Effective Rate, respectively.\n\n     \"Annex H Costs\" means the costs set forth on Annex H to the OA&M Agreement.\n      -------------                                                             \n\n     \"Applicable Percentage\" means, with respect to any Lender, the percentage\n      ---------------------                                                   \nof the total Commitments represented by such Lender's Commitments; provided\n                                                                   --------\nthat, for purposes of this definition, Lenders obligated to purchase\nparticipations in Working Capital Loans pursuant to Section 2.04(a) shall be\n                                                    ---------------         \ndeemed to have Working Capital Loan Commitments in amounts equal to such\nparticipation obligations and the Working Capital Lenders' Working Capital Loan\nCommitments shall be deemed to be ratably reduced by such participation\nobligations.  If the Commitments have terminated or expired, the Applicable\nPercentages shall be determined based upon the Commitments most recently in\neffect, giving effect to any assignments.\n\n     \"Applicable Rate\" means, for any day, with respect to any ABR Loans or\n      ---------------                                                      \nEurodollar Loans, the applicable rate per annum set forth below under the\ncaption \"ABR Spread\" or \"Eurodollar Spread\", as the case may be:\n\n \n                ABR Spread              Eurodollar Spread\n                ----------              -----------------\n\n                   1.50%                       2.50%\n\n\nThe Applicable Rates set forth above shall be reduced by .50% per annum if and\nso long as the Sales Threshold has been met when no\n\n                                      -4-\n\n \nDesignated Event or Specified Default shall have occurred and be continuing.\n\n     \"Arrangers\" means CIBC Wood Gundy Securities Corp., a non-banking affiliate\n      ---------                                                                 \nof Canadian Imperial Bank of Commerce, and Deutsche Morgan Grenfell Inc., a non-\nbank indirect subsidiary of Deutsche Bank AG, each in its capacity as an\narranger with respect hereto.\n\n     \"Article VIII Certificate\" means each certificate of the Borrower,\n      ------------------------                                         \nsubstantially in the form of Exhibit M-2, delivered pursuant to Article VIII.\n                             -----------                        ------------ \n\n     \"Assessment Rate\" means, for any day, the annual assessment rate in effect\n      ---------------                                                          \non such day that is payable by a member of the Bank Insurance Fund classified as\n\"well-capitalized\" and within supervisory subgroup \"B\" (or a comparable\nsuccessor risk classification) within the meaning of 12 C.F.R. Part 327 (or any\nsuccessor provision) to the Federal Deposit Insurance Corporation for insurance\nby such Corporation of time deposits made in dollars at the offices of such\nmember in the United States; provided that if, as a result of any change in any\n                             --------                                          \nlaw, rule or regulation, it is no longer possible to determine the Assessment\nRate as aforesaid, then the Assessment Rate shall be such annual rate as shall\nbe determined by the Administrative Agent to be representative of the cost of\nsuch insurance to the Lenders.\n\n     \"Assignment and Acceptance\" means an assignment and acceptance entered into\n      -------------------------                                                 \nby a Lender and an assignee (with the consent of any party whose consent is\nrequired by Section 10.04), and accepted by the Administrative Agent,\n            -------------                                            \nsubstantially in the form of Exhibit D or any other form approved by the\n                             ---------                                  \nAdministrative Agent.\n\n     \"AT&T\" means AT&T Corp., a New York corporation.\n      ----                                           \n\n     \"Availability Period\" means\n      -------------------       \n\n          (a)  with respect to any Loan (other than a Loan made to reimburse an\n     LC Disbursement in accordance with Section 2.05(e)), the period from and\n                                        ---------------                      \n     including the Closing Date to but excluding the earliest of (i) if the\n     Actual Date of Commercial Operation does not occur prior to the Guaranteed\n     Completion Date, the Guaranteed Completion Date, (ii) if the Actual Date of\n     Commercial Operation does occur prior to the Guaranteed Completion Date,\n     the date on which the Contractor has received payment in full of all\n     amounts due under the Supply Contract other than the portion thereof\n     constituting the Final Contractor Payment, and (iii) the date of\n     termination of the Commitments; and\n\n                                      -5-\n\n \n          (b)  with respect to any Loan made to reimburse an LC Disbursement\n     under any Letter of Credit in accordance with Section 2.05(e), the period\n                                                   ---------------            \n     from and including the date the related Letter of Credit is issued to but\n     excluding the earliest of (i) the date such Letter of Credit is terminated\n     in accordance with its terms (other than by reason of a drawing\n     thereunder), (ii) the date such LC Disbursement is reimbursed in accordance\n     with Section 2.05(e) from funds other than the proceeds of a Loan, (iii)\n          ---------------                                                    \n     the date which is five Business Days after the date the Borrower receives\n     notice of such LC Disbursement and (iv) the date of termination of the\n     Commitments.\n\n     \"Base CD Rate\" means the sum of (a) the Three-Month Secondary CD Rate\n      ------------                                                        \nmultiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.\n\n     \"Blockage Event\" means the occurrence and continuance of (a) an Event of\n      --------------                                                         \nDefault arising under Section 7.01, (b) a Default or Event of Default arising\n                      ------------                                           \nunder Section 7.04 or 7.05 (but only if such event is with respect to the\n      ------------    ----                                               \nBorrower), (c) a Default arising under Section 7.11 (but only if such Default is\n                                       ------------                             \nwith respect to the Operator or the Contractor) during the period of time the\nOperator or the Contractor, as the case may be, is being replaced in accordance\nwith the terms of such Section 7.11 or (d) an Event of Default arising under\n                       ------------                                         \nSection 7.11 (but only if such Event of Default is with respect to the Operator\n------------                                                                   \nor the Contractor).\n\n     \"Board\" means the Board of Governors of the Federal Reserve System of the\n      -----                                                                   \nUnited States of America.\n\n     \"Borrower\" is defined in the preamble.\n      --------                    -------- \n\n     \"Borrower Pledge Agreement\" means the Pledge Agreement, dated as of the\n      -------------------------                                             \ndate hereof, substantially in the form of Exhibit F-2, made by the Borrower in\n                                          -----------                         \nfavor of the Administrative Agent, as the same may be amended, supplemented,\namended and restated or otherwise modified from time to time, including as\nsupplemented by the Foreign Subsidiary Pledge Supplements.\n\n     \"Borrower Security Agreement\" means the Security Agreement, dated as of the\n      ---------------------------                                               \ndate hereof, substantially in the form of Exhibit E-1, made by the Borrower in\n                                          -----------                         \nfavor of the Administrative Agent, as the same may be amended, supplemented,\namended and restated or otherwise modified from time to time.\n\n     \"Borrowing\" means Loans of the same Class and Type, made, converted or\n      ---------                                                            \ncontinued on the same date and, in the case of Eurodollar Loans, as to which a\nsingle Interest Period is in effect.\n\n                                      -6-\n\n \n     \"Borrowing Certificate\" means a certificate of the Borrower, substantially\n      ---------------------                                                    \nin the form of Exhibit B-3.\n               ----------- \n\n     \"Borrowing Date\" means the last Business Day of each calendar month.\n      --------------                                                     \n\n     \"Borrowing Request\" means a notice from the Borrower, substantially in the\n      -----------------                                                        \nform of Exhibit B-1.  Each Borrowing Request shall specify the information\n        -----------                                                       \nspecified in Section 2.03 and shall be accompanied by a certificate of the\n             ------------                                                 \nBorrower setting forth all costs which have been incurred and which are to be\npaid with the proceeds of the proposed Borrowing (with all applicable invoices\nattached).  The final Borrowing Request delivered at the end of the Availability\nPeriod shall include a statement certifying all costs set forth in the Capital\nBudget which have not yet been funded, which costs will be prefunded into the\nClean-Up Account.\n\n     \"Business Day\" means any day that is not a Saturday, Sunday or other day on\n      ------------                                                              \nwhich commercial banks in New York City are authorized or required by law to\nremain closed; provided that, when used in connection with a Eurodollar Loan,\n               --------                                                      \nthe term \"Business Day\" shall also exclude any day on which banks are not open\n          ------------                                                        \nfor dealings in dollar deposits in the London interbank market.\n\n     \"Capacity\" means S Capacity and\/or T Capacity, as the context may require.\n      --------                                                                 \n\n     \"Capacity Sales Agreements\" means all agreements for the sale or lease or\n      -------------------------                                               \nother disposition of Capacity entered into between the Borrower or any\nSubsidiary and any other Person, as each may be amended, supplemented, amended\nand restated or otherwise modified from time to time in accordance with the\nterms hereof.\n\n     \"Capacity Sales Revenue\" means the cumulative cash revenue (net of sales\n      ----------------------                                                 \ncommissions) received by the Borrower and its Subsidiaries from the sales of\nCapacity and from payments in respect of maintenance charges from customers,\nbut, in any event, not double counting payments received by the Subsidiaries\nfrom the Borrower under the Intercompany Agreement.\n\n     \"Capital Budget\" shall have the meaning set forth in Section 4.01(h).\n      --------------                                      --------------- \n\n     \"Capital Costs\" means all costs and expenses incurred or to be incurred by\n      -------------                                                            \nthe Borrower or any Subsidiary in connection with the design, development,\ninstallation, construction, completion, start-up and testing of the System (and\nshall include, in any event, all interest and other financing costs during\nconstruction incurred or to be incurred by the Borrower, any Subsidiary (if\npermitted pursuant to Section 6.01) and Holdings (pursuant to the\n                      ------------                               \n\n                                      -7-\n\n \nHoldings Note Purchase Agreement)), all payments under Hedging Agreements and\nall OA&M Expenses to the extent set forth in the Capital Budget, all as set\nforth in the then current Capital Budget.\n\n     \"Capital Lease Obligations\" of any Person, means the obligations of such\n      -------------------------                                              \nPerson to pay rent or other amounts under any lease of (or other arrangement\nconveying the right to use) real or personal property, or a combination thereof,\nwhich obligations are required to be classified and accounted for as capital\nleases on a balance sheet of such Person under GAAP, and the amount of such\nobligations shall be the capitalized amount thereof determined in accordance\nwith GAAP.\n\n     \"Capital Stock\" means any and all shares, interests, participation or other\n      -------------                                                             \nequivalents (however designated) of capital stock of a corporation, and any and\nall equivalent ownership interests in a Person (other than a corporation).\n\n     \"Casualty Proceeds\" all payments received by the Administrative Agent, the\n      -----------------                                                        \nBorrower or any Subsidiary from any insurer in respect of casualty to or loss of\nproperty, all awards and proceeds in respect of a taking, but excluding business\ninterruption insurance or delayed opening of business insurance and payments in\nrespect of liability policies.\n\n     \"Casualty Proceeds Deposits\" is defined in Section 8.13.\n      --------------------------                ------------ \n\n     \"Certificate of Commercial Service\" is defined in the Supply Contract.\n      ---------------------------------                                    \n\n     \"Certificate of Final Acceptance\" is defined in the Supply Contract.\n      -------------------------------                                    \n\n     \"Certificate of Provisional Acceptance\" is defined in the Supply Contract.\n      -------------------------------------                                    \n\n     \"Change in Control\" means and shall be deemed to have occurred if (a) there\n      -----------------                                                         \nshall occur any sale, lease, exchange or other transfer (in one transaction or a\nseries of related transactions) of all or substantially all of the assets of the\nBorrower and its Subsidiaries to any Person or group of related Persons for\npurposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (a\n\"Group\"), together with any Affiliates thereof; (b) the holders of Capital Stock\n -----                                                                          \nof the Borrower shall approve any plan or proposal for the liquidation or\ndissolution of the Borrower; (c) any Person or Group (other than the Permitted\nHolders) shall become, after the Closing Date, the owner, directly or\nindirectly, beneficially or of record, of Voting Stock representing more than\n35% of the total voting power of all Voting Stock of Holdings or the Borrower;\n(d) any \"Change of Control\" as defined in the Holdings Note Purchase Agreement\n\n                                      -8-\n\n \nshall occur; (e) there shall be a termination of PCG or its Affiliates under the\nAdvisory Services Agreement; (f) the Borrower shall cease to be at least a 65%\nowned, direct subsidiary of Holdings, with all ownership interests in the\nBorrower held by all Persons free and clear of all consensual Liens except Liens\nin favor of the Administrative Agent; (g) Holdings shall cease to control a\nmajority of the seats on the Board of Directors of the Borrower; or (h) the PCG\nGroup and their respective Affiliates shall cease to own and control, directly\nor indirectly, at least 95% of their aggregate initial holdings in Holdings as\nof the Closing Date, beneficially and of record.\n\n     \"Change in Law\" means (a) the adoption of any law, rule or regulation after\n      -------------                                                             \nthe Closing Date, (b) any change in any law, rule or regulation or in the\ninterpretation or application thereof by any Governmental Authority after the\nClosing Date or (c) compliance by any Lender, any parent of any Lender or the\nIssuing Bank with any request, guideline or directive of any Governmental\nAuthority made or issued after the Closing Date (whether or not having the force\nof law).\n\n     \"Checking Account\" is defined in Section 8.02(b).\n      ----------------                --------------- \n\n     \"CIBC\" is defined in the preamble.\n      ----                    -------- \n\n     \"Class\" when used in reference to any Loan or Borrowing, refers to whether\n      -----                                                                    \nsuch Loan, or the Loans comprising such Borrowing, are Working Capital Loans or\nTerm Loans and, when used in reference to any Commitment, refers to whether such\nCommitment is a Working Capital Loan Commitment or a Term Loan Commitment.\n\n     \"Clean-Up Account\" means the special account designated by that name\n      ----------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     \"Closing Date\" means the date on which this Agreement shall have been\n      ------------                                                        \nexecuted and delivered by the parties hereto and the conditions specified in\n                                                                            \nSection 4.01 are satisfied or waived as evidenced by the making of the initial\n------------                                                                  \nLoans.\n\n     \"Closing Date Certificate\" means a certificate of a Responsible Officer of\n      ------------------------                                                 \nthe Borrower, substantially in the form of Exhibit H.\n                                           --------- \n\n     \"Code\" means the Internal Revenue Code of 1986, as amended from time to\n      ----                                                                  \ntime.\n\n     \"Collateral\" means any and all \"Collateral\", as defined in any applicable\n      ----------                                                              \nSecurity Document.\n\n                                      -9-\n\n \n     \"Commercial Operation Date\" means the earlier of (a) the date the\n      -------------------------                                       \nCertificate of Commercial Service is issued with respect to the System and (b)\nthe date the Certificate of Provisional Acceptance is issued with respect to the\nSystem.\n\n     \"Commitment\" means the Working Capital Loan Commitment or the Term Loan\n      ----------                                                            \nCommitment, or a combination thereof (as the context requires).\n\n     \"Confidential Memorandum\" means the Confidential Information Memorandum,\n      -----------------------                                                \ndated April 1997, with respect to Atlantic Crossing U.S.$410,000,000 Senior\nSecured Facilities distributed by the Arrangers.\n\n     \"Consolidated Interest Expense\" means, with respect to the Borrower and the\n      -----------------------------                                             \nSubsidiaries for any period, the sum of (a) gross interest expense (including\nall cash and accrued interest expense) of the Borrower and the Subsidiaries for\nsuch period on a consolidated basis and (b) that portion of Permitted Senior\nCash Dividends paid during such period in respect of interest on the Holdings\nSenior Notes.\n\n     \"Consolidated Net Income\" means, for any period, net income of the Borrower\n      -----------------------                                                   \nand the Subsidiaries determined on a consolidated basis in accordance with GAAP.\n\n     \"Construction Account\" means the special account designated by that name\n      --------------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     \"Construction Contingency Reserve Account\" means the special account\n      ----------------------------------------                           \ndesignated by that name established by the Administrative Agent pursuant to\n                                                                           \nSection 8.01(a).\n--------------- \n\n     \"Construction Progress Certificate\" means a certificate from the Contractor\n      ---------------------------------                                         \n(and countersigned by the Borrower and the Independent Engineer), substantially\nin the form of Exhibit K.\n               --------- \n\n     \"Consultants\" means, collectively, the Independent Engineer, the Market\n      -----------                                                           \nConsultant and the Insurance Consultant.\n\n     \"Contest\" means, with respect to any tax, Lien, claim or obligation, a\n      -------                                                              \ncontest pursued in good faith and by appropriate proceedings diligently\nconducted, so long as (a) adequate reserves in accordance with GAAP have been\nestablished with respect thereto, (b) no Lien shall have been filed in\nconnection therewith or any Lien filed in connection therewith shall have been\nremoved from the record by the bonding thereof and (c) the failure to pay such\ntax, Lien, claim or obligation during the pendency of such contest could not\nreasonably be expected to have a Material Adverse Effect.\n\n                                      -10-\n\n \n     \"Contingency Letter of Credit\" means the reducing Letter of Credit,\n      ----------------------------                                      \nsubstantially in the form of Exhibit I-1, or such other form as agreed to by the\n                             -----------                                        \nBorrower, the Contractor, the Administrative Agent and the Issuing Bank, issued\nto support the Borrower's obligation to maintain amounts in the Escrow\nContingent Account as contemplated by Sub-Article 5(C)(7) of the Supply\nContract, as such Letter of Credit may be amended, supplemented, amended and\nrestated or otherwise modified from time to time.\n\n     \"Continuation\/Conversion Notice\" means a request by the Borrower to convert\n      ------------------------------                                            \nor continue a Working Capital Borrowing or a Term Loan Borrowing in accordance\nwith Section 2.07, substantially in the form of Exhibit C.\n     ------------                               --------- \n\n     \"Contractor\" means SSI.\n      ----------            \n\n     \"Contractor Escrow and Security Agreement\" means the Escrow and Security\n      ----------------------------------------                               \nAgreement, dated as of March 25, 1997, among SSI, the Borrower and the Escrow\nAgent, as the same may be amended, supplemented, amended and restated or\notherwise modified from time to time in accordance with the terms hereof.\n\n     \"Contractual Obligation\" means, as to any Person, any provision of any\n      ----------------------                                               \nsecurity issued by such Person or any agreement, instrument, judgment, order,\ndecree or other undertaking to which such Person is a party or by which it or\nany of its property is bound.\n\n     \"Contract Variation\" means any amendment, supplement, waiver, consent or\n      ------------------                                                     \nother modification to the Supply Contract and shall include any \"Contract\nVariation\" as such term is defined in the Supply Contract.\n\n     \"Control\" means the possession, directly or indirectly, of (a) the power to\n      -------                                                                   \ndirect or cause the direction of the management or policies of a Person, whether\nthrough the ability to exercise voting power, by contract or otherwise and\/or\n(b) the ownership of 10% or more of the securities having ordinary voting power\nfor the election of directors of a Person.  \"Controlling\" and \"Controlled\" have\n                                             -----------       ----------      \nmeanings correlative thereto.\n\n     \"Credit Extension\" means, as the context may require, (a) the making of a\n      ----------------                                                        \nLoan by a Lender or (b) the issuance of any Letter of Credit, or the extension\nof any expiration date of any previously issued Letter of Credit, by the Issuing\nBank.\n\n     \"Current Account\" means the special account designated by that name\n      ---------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n                                      -11-\n\n \n     \"Debt Reserve Account\" means the special account designated by that name\n      --------------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     \"Debt Reserve Amount\" means, at any time of determination, an amount equal\n      -------------------                                                      \nto six months of anticipated interest on the Loans using the interest rate in\neffect as of such date with respect to the Loans plus an amount equal to the\nnext scheduled principal payment on the Loans.\n\n     \"Default\" means any event or condition which constitutes an Event of\n      -------                                                            \nDefault or which upon notice, lapse of time or both would, unless cured or\nwaived, become an Event of Default.\n\n     \"Defaulting Lender\" means any Lender with respect to which a Lender Default\n      -----------------                                                         \nis in effect.\n\n     \"Designated Event\" means, as of any Principal Payment Date, the Borrower's\n      ----------------                                                         \nfailure to be in compliance with Section 6.24 as of such Principal Payment Date,\n                                 ------------                                   \nas set forth in the certificate delivered by the Borrower to the Administrative\nAgent in accordance with Section 5.02(c), or the failure of the Borrower to\n                         ---------------                                   \ndeliver such a certificate when required under Section 5.02(c), and such\n                                               ---------------          \nDesignated Event shall be deemed to continue until such time as the Borrower\nshall have delivered a certificate under Section 5.02(c) indicating compliance\n                                         ---------------                      \nwith Section 6.24 and the Borrower shall be in compliance with Section 6.24.\n     ------------                                              ------------ \n\n     \"Documentation Agent\" is defined in the preamble.\n      -------------------                    -------- \n\n     \"Dollars\" or \"$\" refers to lawful money of the United States of America.\n      -------      -                                                         \n\n     \"EBITDA\" means, for any period, Consolidated Net Income for such period,\n      ------                                                                 \nplus, without duplication and (other than with respect to amounts included in\n----                                                                         \nclause (b) of the definition of Consolidated Interest Expenses) to the extent\n----------                                                                   \ndeducted from revenues in determining Consolidated Net Income for such period\n(a) the aggregate amount of Consolidated Interest Expense for such period, (b)\nthe aggregate amount of letter of credit fees paid during such period, (c) the\naggregate amount of income tax expense for such period, (d) all amounts\nattributable to depreciation and amortization for such period and (e) all non-\ncash, non-recurring charges during such period, and minus, without duplication\n                                                    -----                     \nand to the extent added to revenues in determining Consolidated Net Income for\nsuch period, all non-cash, non-recurring gains during such period, in each case\ndetermined in accordance with GAAP.\n\n                                      -12-\n\n \n     \"Environmental Laws\" means all applicable laws, rules, permits, orders and\n      ------------------                                                       \nregulations relating to the protection of the environment and natural resources,\nand all similar items under the laws of each jurisdiction (including the United\nStates, Bermuda, the United Kingdom and the Federal Republic of Germany), where\nthe Borrower and its Subsidiaries are incorporated and\/or operate.\n\n     \"Environmental Liability\" means any liability, contingent or otherwise\n      -----------------------                                              \n(including any liability for damages, costs of environmental remediation, fines,\npenalties or indemnities), of the Borrower or any Subsidiary directly or\nindirectly resulting from or based upon (a) violation of any Environmental Law\nor (b) the release or threatened release of any Hazardous Materials into the\nenvironment.\n\n     \"Equity Contributions\" means each contribution of cash equity by Holdings\n      --------------------                                                    \nto the Borrower to fund the development, construction, installation or ownership\nof the System.\n\n     \"Equity Funding Commitment\" means $325,000,000.\n      -------------------------                     \n\n     \"ERISA\" means the Employee Retirement Income Security Act of 1974, as\n      -----                                                               \namended from time to time.\n\n     \"ERISA Affiliate\" means any entity (whether or not incorporated) that,\n      ---------------                                                      \ntogether with the Borrower, is treated as a single employer under Section 414(b)\nor (c) of the Code or, solely for purposes of Section 302 of ERISA and Section\n412 of the Code, is treated as a single employer under Section 414 of the Code.\n\n     \"ERISA Event\" means (a) any \"reportable event\", as defined in Section\n      -----------                                                         \n4043(c) of ERISA or the regulations issued thereunder with respect to a Plan\n(other than an event for which the 30-day notice period is waived under\napplicable PBGC regulations); (b) the failure to make a required contribution to\nany Plan sufficient to give rise to a lien under Section 302(f) of ERISA; (c)\nthe existence with respect to any Plan of an \"accumulated funding deficiency\"\n(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not\nwaived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)\nof ERISA of an application for a waiver of the minimum funding standard with\nrespect to any Plan; (e) the taking of any steps by the Borrower or any of its\nERISA Affiliates to terminate any Plan, if such termination could result in any\nliability under Title IV of ERISA with respect to such Plan; (f) the receipt by\nthe Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any\nnotice relating to an intention to terminate any Plan or Plans or to appoint a\ntrustee to administer any Plan; (g) the incurrence by the Borrower or any of its\nERISA Affiliates of any liability with respect to the withdrawal or partial\nwithdrawal,\n\n                                      -13-\n\n \nwithin the meaning of Section 4063 of ERISA, from any multiple-employer Plan; or\n(h) the receipt by the Borrower or any ERISA Affiliate of any notice from any\nMultiemployer Plan concerning the imposition of Withdrawal Liability or a\ndetermination that a Multiemployer Plan is, or is expected to be, insolvent or\nin reorganization, within the meaning of Title IV of ERISA.\n\n     \"Escrow Account\" means the \"Escrow Account\", as defined in the Contractor\n      --------------                                                          \nEscrow and Security Agreement.\n\n     \"Escrow Agent\" means The Chase Manhattan Bank, a New York chartered bank,\n      ------------                                                            \nin its capacity as escrow agent under the Contractor Escrow and Security\nAgreement, and each of its successors and assigns as such thereunder.\n\n     \"Escrow Contingency Requirement\" means $50,000,000.\n      ------------------------------                    \n\n     \"Escrow Contingent Account\" means the \"Contingent Account\", as defined in\n      -------------------------                                               \nthe Contractor Escrow and Security Agreement.\n\n     \"Escrow Dispute Account\" means the \"Dispute Account\", as defined in the\n      ----------------------                                                \nContractor Escrow and Security Agreement.\n\n     \"Escrow Payment Account\" means the \"Payment Account\", as defined in the\n      ----------------------                                                \nContractor Escrow and Security Agreement.\n\n     \"Eurodollar\" when used in reference to any Loan or Borrowing, refers to\n      ----------                                                            \nwhether such Loan, or the Loans comprising such Borrowing, are bearing interest\nat a rate determined by reference to the Adjusted LIBO Rate.\n\n     \"Event of Default\" is defined in Article VII.\n      ----------------                ----------- \n\n     \"Event of Loss\" means (a) the actual loss or constructive total loss of all\n      -------------                                                             \nor substantially all of any Segment of the System or (b) the loss, destruction\nor damage of any material portion of a Segment of the System.\n\n     \"Excess Cash Flow\" means, for each semi-annual period ending on a Principal\n      ----------------                                                          \nPayment Date (or, with respect to the Initial Principal Payment Date, the period\nfrom the Commercial Operation Date to the Initial Principal Payment Date), all\ncash revenue received during such period by the Borrower and the Subsidiaries\nand available to the Borrower after the application of the amounts set forth in\n                                                                               \nclauses first through fourth of Section 8.08(d) in accordance with the terms of\n-------------         ------    ---------------                                \nArticle VIII.\n------------ \n\n     \"Excluded Taxes\" means, with respect to the Administrative Agent, any other\n      --------------                                                            \nAgent, any Lender, the Issuing Bank or any other recipient of any payment to be\nmade by or on account of any obligation of the Borrower hereunder, (a) Taxes\nimposed by the jurisdiction under the laws of which such recipient is organized\n\n                                      -14-\n\n \nor in which its principal office is located or, in the case of any Lender, in\nwhich its applicable lending office is located, (b) any branch profits Taxes\nimposed by the United States of America or any similar Tax imposed by any other\njurisdiction in which any Lender is located and (c) in the case of a Lender, any\nwithholding Tax that is imposed on amounts payable to such Lender unless,\nsubject to Section 10.04 with respect to assignees, (i) such withholding Tax is\n           -------------                                                       \nthe result of a Change in Law and (ii) such Lender has complied with the\nprovisions of Section 2.17(e).\n              --------------- \n\n     \"Expense Certificate\" means each certificate of the Borrower, substantially\n      -------------------                                                       \nin the form of Exhibit M-1, delivered pursuant to Section 8.08(b).\n               -----------                        --------------- \n\n     \"Federal Funds Effective Rate\" means, for any day, the weighted average\n      ----------------------------                                          \n(rounded upwards, if necessary, to the next 1\/100 of 1%) of the rates on\novernight Federal funds transactions with members of the Federal Reserve System\narranged by Federal funds brokers, as published on the next succeeding Business\nDay by the Federal Reserve Bank of New York, or, if such rate is not so\npublished for any day that is a Business Day, the average (rounded upwards, if\nnecessary, to the next 1\/100 of 1%) of the quotations for such day for such\ntransactions received by the Administrative Agent from three Federal funds\nbrokers of recognized standing selected by it.\n\n     \"Final Contractor Payment\" means that portion (5%) of the Initial Contract\n      ------------------------                                                 \nPrice which is payable to the Contractor upon System Final Completion.\n\n     \"First Principal Amortization Reset Date\" is the last day of the\n      ---------------------------------------                        \n\"Availability Period\" as set forth in clause (a) of the definition thereof.\n                                      ----------                           \n\n     \"Foreign Subsidiary Pledge Supplements\" means all supplements to the\n      -------------------------------------                              \nBorrower Pledge Agreement in respect of Subsidiaries of the Borrower\nincorporated outside the United States of America, in form and substance\nreasonably satisfactory to the Administrative Agent, as the same may be amended,\nsupplemented, amended and restated or otherwise modified from time to time.\n\n     \"GAAP\" means generally accepted accounting principles in the United States\n      ----                                                                     \nof America.\n\n     \"German Subsidiary\" means the German corporation to be known as Global\n      -----------------                                                    \nTelesystems GmbH, which is, as of the Closing Date, in the process of being\nformed by the Borrower as a direct, wholly-owned subsidiary of the Borrower.\n\n                                      -15-\n\n \n     \"German Subsidiary Account\" means the special account of the German\n      -------------------------                                         \nSubsidiary designated by that name established by the Administrative Agent\npursuant to Section 8.01(b).\n            --------------- \n\n     \"Governmental Action\" means all permits, authorizations, registrations,\n      -------------------                                                   \nconsents, approvals, notices and licenses of or with any Governmental Authority\nthat are required in connection with the construction, installation and\noperation of the System, including all Landing Licenses.\n\n     \"Governmental Authority\" means the government of the United States of\n      ----------------------                                              \nAmerica, any other nation or any political subdivision thereof, whether state or\nlocal, and any agency, authority, instrumentality, regulatory body, court,\ncentral bank or other entity exercising executive, legislative, judicial,\ntaxing, regulatory or administrative powers or functions of or pertaining to\ngovernment.\n\n     \"Guarantee\" of or by any Person (the \"guarantor\") means any obligation,\n      ---------                            ---------                        \ncontingent or otherwise, of the guarantor guaranteeing or having the economic\neffect of guaranteeing any Indebtedness or other obligation of any other Person\n(the \"primary obligor\") in any manner, whether directly or indirectly, and\n      ---------------                                                     \nincluding any obligation of the guarantor, direct or indirect, (a) to purchase\nor pay (or advance or supply funds for the purchase or payment of) such\nIndebtedness or other obligation or to purchase (or to advance or supply funds\nfor the purchase of) any security for the payment thereof, (b) to purchase or\nlease property, securities or services for the purpose of assuring the owner of\nsuch Indebtedness or other obligation of the payment thereof, (c) to maintain\nworking capital, equity capital or any other financial statement condition or\nliquidity of the primary obligor so as to enable the primary obligor to pay such\nIndebtedness or other obligation or (d) as an account party in respect of any\nletter of credit or letter of guaranty issued to support such Indebtedness or\nobligation; provided, that the term Guarantee shall not include endorsements for\n            --------                                                            \ncollection or deposit in the ordinary course of business.\n\n     \"Guaranteed Completion Date\" means June 30, 1999.\n      --------------------------                      \n\n     \"Hazardous Materials\" means all materials defined as hazardous substances\n      -------------------                                                     \nunder the Federal Comprehensive Environmental Response, Compensation and\nLiability Act, petroleum or petroleum distillates, or friable asbestos or\nfriable asbestos containing materials, and all similar items under the laws of\neach jurisdiction (including the United States, Bermuda, the United Kingdom and\nthe Federal Republic of Germany) where the Borrower and its Subsidiaries are\nincorporated and\/or operate.\n\n     \"Hedging Agreement\" means any interest rate protection agreement, foreign\n      -----------------                                                       \ncurrency exchange agreement, commodity price\n\n                                      -16-\n\n \nprotection agreement or other interest or currency exchange rate or commodity\nprice hedging arrangement.\n\n     \"Holdings\" means Global Telesystems Holdings Ltd., a corporation organized\n      --------                                                                 \nand existing under the laws of Bermuda.\n\n     \"Holdings Interest Reserve Account\" means the special account designated by\n      ---------------------------------                                         \nthat name established by the Administrative Agent pursuant to Section 8.01(a).\n                                                              --------------- \n\n     \"Holdings Interest Reserve Amount\" means, at any time of determination, an\n      --------------------------------                                         \namount equal to six months of anticipated interest on the Holdings Senior Notes.\n\n     \"Holdings Note Purchase Agreement\" means the Senior Note Securities\n      --------------------------------                                  \nPurchase Agreement, dated as of March 25, 1997, among Holdings and the\nPurchasers named therein, as the same may be amended, supplemented, amended and\nrestated or otherwise modified from time to time.\n\n     \"Holdings Pledge Agreement\" means the Pledge Agreement, dated as of the\n      -------------------------                                             \ndate hereof, substantially in the form of Exhibit F-1, made by Holdings in favor\n                                          -----------                           \nof the Administrative Agent, as the same may be amended, supplemented, amended\nand restated or otherwise modified from time to time.\n\n     \"Holdings Senior Notes\" means the senior notes issued by Holdings pursuant\n      ---------------------                                                    \nto the Holdings Note Purchase Agreement.\n\n     \"Indebtedness\" of any Person means, without duplication, (a) all\n      ------------                                                   \nobligations of such Person for borrowed money or with respect to deposits or\nadvances of any kind, (b) all obligations of such Person evidenced by bonds,\ndebentures, notes or similar instruments, (c) all obligations of such Person in\nrespect of the deferred purchase price of property or services (excluding\ncurrent accounts payable incurred in the ordinary course of business), (d) all\nIndebtedness of others secured by (or for which the holder of such Indebtedness\nhas an existing right, contingent or otherwise, to be secured by) any Lien on\nproperty owned or acquired by such Person, whether or not the Indebtedness\nsecured thereby has been assumed, (e) all Guarantees by such Person of\nIndebtedness of others, (f) all Capital Lease Obligations of such Person, (g)\nall obligations, contingent or otherwise, of such Person as an account party in\nrespect of letters of credit and letters of guaranty, (h) all obligations under\nHedging Agreements and (i) all obligations, contingent or otherwise, of such\nPerson in respect of bankers' acceptances.\n\n     \"Indemnified Taxes\" means Taxes other than Excluded Taxes.\n      -----------------                                        \n\n                                      -17-\n\n \n     \"Independent Engineer\" means Conexart Technologies, Inc. or such other\n      --------------------                                                 \nengineer or engineering firm as may be appointed by the Administrative Agent in\naccordance with Section 10.13.\n                ------------- \n\n     \"Initial Contract Price\" is defined in the Supply Contract.\n      ----------------------                                    \n\n     \"Initial Principal Payment Date\" means the first May 31 or November 30 (or,\n      ------------------------------                                            \nif such day is not a Business Day, the immediately preceding Business Day) to\noccur more than two months after the Commercial Operation Date.\n\n     \"Insurance Consultant\" means Sedgwick Energy & Marine Limited or such other\n      --------------------                                                      \ninsurance consulting firm as may be appointed by the Administrative Agent in\naccordance with Section 10.13.\n                ------------- \n\n     \"Insurance Proceeds Account\" means the special account designated by that\n      --------------------------                                              \nname established by the Administrative Agent pursuant to Section 8.01(a).\n                                                         --------------- \n\n     \"Intercompany Agreement\" means the Intercompany Agreement, dated as of the\n      ----------------------                                                   \ndate hereof, in form and substance reasonably satisfactory to the Lead Agents,\namong the Borrower, the U.S. Subsidiary and the U.K. Subsidiary (and, once the\nGerman Subsidiary is created, the German Subsidiary), as the same may be\namended, supplemented or otherwise modified from time to time.\n\n     \"Interconnect Agreements\" means each agreement entered into by the Borrower\n      -----------------------                                                   \nand\/or the Subsidiaries with another Person providing for the connection of the\nSystem to any other fiber-optic networks, including backhaul interconnections.\n\n     \"Interest Coverage Ratio\" means, on any date of determination, the ratio of\n      -----------------------                                                   \n(a) EBITDA to (b) Consolidated Interest Expense.\n\n     \"Interest Payment Date\" means (a) with respect to any ABR Loan, the last\n      ---------------------                                                  \nBusiness Day of each February, May, August and November and (b) with respect to\nany Eurodollar Loan, the last day of the Interest Period applicable to the\nBorrowing of which such Loan is a part and, in the case of a Eurodollar\nBorrowing with an Interest Period of more than three months' duration, each day\nprior to the last day of such Interest Period that occurs at intervals of three\nmonths' duration after the first day of such Interest Period.\n\n     \"Interest Period\" means, with respect to any Eurodollar Borrowing, the\n      ---------------                                                      \nperiod commencing on the date of such Borrowing and ending on the numerically\ncorresponding day in the calendar month that is one, two, three, six or, if\navailable to all Lenders, twelve months thereafter, as the Borrower may elect;\n                                                                              \nprovided, that (a) if any Interest Period would end on a day\n--------                                                    \n\n                                      -18-\n\n \nother than a Business Day, such Interest Period shall be extended to the next\nsucceeding Business Day unless such next succeeding Business Day would fall in\nthe next calendar month, in which case such Interest Period shall end on the\nnext preceding Business Day, (b) any Interest Period that commences on the last\nBusiness Day of a calendar month (or on a day for which there is no numerically\ncorresponding day in the last calendar month of such Interest Period) shall end\non the last Business Day of the last calendar month of such Interest Period and\n(c) Interest Periods shall be selected so that sufficient funds are available\nwithout breakage to make scheduled amortization payments on the Loans.  For\npurposes hereof, the date of a Borrowing initially shall be the date on which\nsuch Borrowing is made and thereafter shall be the effective date of the most\nrecent conversion or continuation of such Borrowing.\n\n     \"Issuance Request\" means a Letter of Credit request and certificate duly\n      ----------------                                                       \nexecuted by the Borrower, substantially in the form of Exhibit B-2.\n                                                       ----------- \n\n     \"Issuing Bank\" means Canadian Imperial Bank of Commerce and\/or any of its\n      ------------                                                            \nAffiliates reasonably satisfactory to the Borrower, in its capacity as the\nissuer of the Letters of Credit hereunder, and its successors in such capacity\nas provided in Section 2.05(i).\n               --------------- \n\n     \"Landing Countries\" means, at any time of determination, each country in\n      -----------------                                                      \nwhich the System is landed or planned to land at such time.  As of the date of\nthis Agreement, the System is planned to land in the United States, Great\nBritain and the Federal Republic of Germany (or, if selected as an alternative\nto the Federal Republic of Germany in accordance with the terms of the Supply\nContract, The Netherlands).\n\n     \"Landing License\" means, with respect to any Landing Country, the\n      ---------------                                                 \ntelecommunications license (if a license is required, no such license being\nrequired in the Federal Republic of Germany) issued by a Governmental Authority\nin such Landing Country permitting the System to land in such Landing Country.\n\n     \"LC Disbursement\" means a payment made by the Issuing Bank pursuant to a\n      ---------------                                                        \nLetter of Credit.\n\n     \"LC Exposure\" means, at any time of determination, the sum of (a) the\n      -----------                                                         \naggregate undrawn amount of all outstanding Letters of Credit at such time plus\n(b) the aggregate amount of all LC Disbursements that have not yet been\nreimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any\nLender at any time of determination shall be its Applicable Percentage of the\ntotal LC Exposure at such time.\n\n     \"Lead Agents\" is defined in the preamble.\n      -----------                    -------- \n\n                                      -19-\n\n \n     \"Lead Agents Fee Letters\" means the fee letters, dated as of June 1, 1997,\n      -----------------------                                                  \nrespectively, between the Borrower and one or both of the Lead Agents.\n\n     \"Lender Default\" means (a) the refusal (which has not been retracted) of a\n      --------------                                                           \nLender to make available its portion of any Borrowing or to fund its portion of\nany unreimbursed payment under Section 2.05(e) or (b) a Lender having notified\n                               ---------------                                \nthe Administrative Agent and\/or the Borrower that it does not intend to comply\nwith its obligations under Section 2.01 or under Section 2.05, in the case of\n                           ------------          ------------                \neither clause (a) or clause (b) above, as a result of the appointment of a\n       ----------    ----------                                           \nreceiver or conservator with respect to such Lender at the direction or request\nof any regulatory agency or authority.\n\n     \"Lenders\" means the Persons listed on Schedule 2.01 and any other Person\n      -------                              -------------                     \nthat shall have become a party hereto pursuant to an Assignment and Acceptance,\nother than any such Person that ceases to be a party hereto pursuant to an\nAssignment and Acceptance.\n\n     \"Letter of Credit\" means any letter of credit issued pursuant to this\n      ----------------                                                    \nAgreement.\n\n     \"LIBO Rate\" means, with respect to any Eurodollar Borrowing for any\n      ---------                                                         \nInterest Period, the rate appearing on Page 3750 of the Telerate Service (or on\nany successor or substitute page of such Service, or any successor to or\nsubstitute for such Service, providing rate quotations comparable to those\ncurrently provided on such page of such Service, as determined by the\nAdministrative Agent from time to time for purposes of providing quotations of\ninterest rates applicable to dollar deposits in the London interbank market) at\napproximately 11:00 a.m., London time, two Business Days prior to the\ncommencement of such Interest Period, as the rate for dollar deposits with a\nmaturity comparable to such Interest Period.  In the event that such rate is not\navailable at such time for any reason, then the \"LIBO Rate\" with respect to such\n                                                 ---------                      \nEurodollar Borrowing for such Interest Period shall be the average rate (rounded\nupwards, if necessary, to the next 1\/16 of 1%) at which dollar deposits of\n$5,000,000 and for a maturity comparable to such Interest Period are offered by\nthe principal New York office of each Reference Lender in immediately available\nfunds in the London interbank market at approximately 11:00 a.m., London time,\ntwo Business Days prior to the commencement of such Interest Period.\n\n     \"Lien\" means, with respect to any asset (a) any mortgage, deed of trust,\n      ----                                                                   \nlien, pledge, hypothecation, encumbrance, charge, security interest or similar\nencumbrance in, on or of such asset and (b) the interest of a vendor or a lessor\nunder any conditional sale agreement, capital lease or title retention agreement\n(or any financing lease having substantially the same economic effect as any of\nthe foregoing) relating to such asset.\n\n                                      -20-\n\n \n     \"Liquidated Damages\" means payments made by the Contractor or the Supply\n      ------------------                                                     \nContract Guarantor under Article 22 of the Supply Contract.\n\n     \"Loan Documents\" shall be the collective reference to this Agreement, the\n      --------------                                                          \nNotes, the Lead Agents Fee Letters, the Security Documents and the Subsidiary\nGuaranty Agreement.\n\n     \"Loan Parties\" shall be the collective reference to Holdings, the Borrower\n      ------------                                                             \nand each Subsidiary.\n\n     \"Loans\" shall be the collective reference to the Working Capital Loans and\n      -----                                                                    \nthe Term Loans.\n\n     \"Majority Lenders\" means, at any time of determination, Non-Defaulting\n      ----------------                                                     \nLenders having Working Capital Exposures, LC Exposure, outstanding Term Loans\nand unused Commitments representing more than 51% of the sum of the total\nWorking Capital Exposures, LC Exposure, outstanding Term Loans and unused\nCommitments of such Non-Defaulting Lenders at such time.\n\n     \"Market Consultant\" means KMI Corporation or such other market consultant\n      -----------------                                                       \nfirm as may be appointed by the Borrower and the Administrative Agent.\n\n     \"Material Adverse Effect\" means a material adverse effect on (a) the System\n      -----------------------                                                   \nor the ownership thereof, (b) the business, assets, revenues (with respect to\nrepresentations and warranties made after the Commercial Operation Date),\nresults of operations (with respect to representations and warranties made after\nthe Commercial Operation Date) or financial condition (or, with respect to\nrepresentations and warranties made as of the Closing Date only, prospects) of\nthe Borrower and the Subsidiaries taken as a whole, (c) the ability to achieve\nthe Actual Date of Commercial Operation by the Guaranteed Completion Date, (d)\nthe ability of (i) the Borrower, (ii) any of the Subsidiaries (unless curable by\nthe Borrower or another Subsidiary) or (iii) the Supply Contract Guarantor, to\nperform their respective obligations under the Loan Documents or the Systems\nContracts to which it is a party or (e) the validity or enforceability of the\nLoan Documents or the Lenders' rights and remedies under the Loan Documents.\n\n     \"Material Impact\" means (a) a material adverse effect on the Lenders, (b) a\n      ---------------                                                           \nmaterial adverse effect on the Collateral contemplated on the date hereof to be\ngranted to the Administrative Agent (including under Section 5.30, but excluding\n                                                     ------------               \nCollateral not comprising the System as contemplated on the date hereof), or the\nLenders' position with respect thereto, (c) a Material Adverse Effect, (d) an\nadverse effect on the revenues of the Borrower and the Subsidiaries taken as a\nwhole or (e) a material delay in obtaining, or a material risk in not obtaining,\n\n                                      -21-\n\n \nor in the termination or revocation of, a material Governmental Action necessary\nto complete or operate the System as contemplated on the date hereof.\n\n     \"Material Operating Budget Deviation\" means, with respect to the Operating\n      -----------------------------------                                      \nBudget for any Operating Year, the payment of any OA&M Expense (excluding Sales\nCommissions) which would result in total operating costs (excluding Sales\nCommissions) for such Operating Year (after giving effect to all other payments\nof OA&M Expenses (excluding Sales Commissions) in such Operating Year, including\nall other cost overruns and underruns or other savings with respect to any\nbudget category) exceeding the total operating costs (excluding Sales\nCommissions) set forth in the Operating Budget for such Operating Year, and such\nexcess, when added to the \"Cumulative Overruns\" for all prior Operating Years,\nwould exceed an amount equal to 20% of the \"Benchmark Costs\" for all Operating\nYears (including the current Operating Year).  For purposes of this definition,\n\"Benchmark Costs\" shall be the total operating costs (excluding Sales\n ---------------                                                     \nCommissions) for each Operating Year set forth in the Operating Plan, and\n                                                                         \n\"Cumulative Overruns\" shall be, at any time, an amount equal to the excess of\n--------------------                                                         \n(a) the sum of the actual operating costs (excluding Sales Commissions earned in\naccordance with the Sales Agency Agreement) for each complete Operating Year\nended over (b) the sum of the Benchmark Costs for each such complete Operating\n      ----                                                                    \nYear ended.\n\n     \"Maturity Date\" means November 30, 2002.\n      -------------                          \n\n     \"Monthly OA&M Transfer Date\" is defined in Section 8.08(b)(i).\n      --------------------------                ------------------ \n\n     \"Moody's\" means Moody's Investors Service, Inc.\n      -------                                       \n\n     \"Mortgages\" means the mortgages, deeds of trust and other instruments\n      ---------                                                           \nrequired to be executed and delivered by Loan Parties owning real property\npursuant to the terms of this Agreement (including Section 5.30 hereof),\n                                                   ------------         \ncreating, in favor of the Administrative Agent for the benefit of the Lenders,\nLiens on such real property, as amended, supplemented, amended and restated or\notherwise modified from time to time.\n\n     \"Multiemployer Plan\" means a multiemployer plan as defined in Section\n      ------------------                                                  \n4001(a)(3) of ERISA.\n\n     \"Net Cash Proceeds\" means (a) with respect to the sale, transfer, lease or\n      -----------------                                                        \nother disposition of any asset (excluding Capacity) by the Borrower or any\nSubsidiary, an amount certified in reasonable detail by a Responsible Officer of\nthe Borrower to the Lenders as the excess, if any, of (i) the sum of cash\nreceived in connection with such sale, transfer, lease or other disposition over\n(ii) the sum of (A) amounts placed in escrow or held as a reserve, in accordance\nwith GAAP, against any\n\n                                      -22-\n\n \nliabilities associated with such sale or disposition (except that, to the extent\nand as of the time any such amounts are released from such reserve, such amounts\nshall constitute Net Cash Proceeds), (B) amounts paid to minority interest\nholders of such asset and the principal amount of any Indebtedness (other than\nIndebtedness under this Agreement) which is secured by any such asset and which\nis repaid in connection with the sale, transfer, lease or other disposition\nthereof, (C) the reasonable out-of-pocket expenses incurred or to be incurred by\nthe Borrower or such Subsidiary in connection with such sale, transfer, lease or\nother disposition and (D) provision for taxes attributable to such sale,\ntransfer, lease or other disposition (as estimated by the Borrower in good\nfaith, provided that to the extent such estimate shall have exceeded the amount\n       --------                                                                \nof taxes actually paid, such difference shall thereupon constitute Net Cash\nProceeds), (b) with respect to the issuance of any Capital Stock by the\nBorrower, an amount certified in reasonable detail by a Responsible Officer of\nthe Borrower to the Lenders as the excess of (i) the sum of the cash received in\nconnection with such issuance over (ii) the underwriting discounts and\ncommissions (if any) and other reasonable fees, out-of-pocket expenses and other\ncosts incurred or to be incurred by the Borrower in connection with such\nissuance and (c) with respect to the incurrence of Indebtedness by Holdings or\nthe Borrower, an amount certified in reasonable detail by a Responsible Officer\nof Holdings or the Borrower, as the case may be, to the Lenders as the excess of\n(i) the sum of the cash received in connection with such incurrence of\nIndebtedness over (ii) the reasonable fees, out-of-pocket expenses and other\ncosts incurred or to be incurred by Holdings or the Borrower in connection with\nsuch incurrence of Indebtedness.\n\n     \"Net Equity Funding Commitment\" means an amount equal to the Equity Funding\n      -----------------------------                                             \nCommitment minus an amount equal to the sum of (a) the fees, out-of-pocket\nexpenses and other costs incurred by Holdings in connection with the issuance of\nthe Holdings Senior Notes and the issuance of its Capital Stock prior to the\nClosing Date, (b) that portion of the proceeds of the Holdings Senior Notes\nretained by Holdings not exceeding $26,400,000 to provide for an interest\nreserve account for the holders of the Holdings Senior Notes, (c) that portion\nof the proceeds of the Capital Stock issued prior to the Closing Date retained\nby Holdings not exceeding $500,000, (d) that portion of the proceeds of the\nHoldings Senior Notes not exceeding $500,000 retained by Holdings to pay for\ngeneral and administrative expenses of Holdings and (e) the fees, out-of-pocket\nexpenses and other expenses incurred by Holdings or the Borrower and paid by\nHoldings in connection with the transactions contemplated hereby or by any of\nthe foregoing; provided, that the amounts set forth in clauses (a) through (e)\n               --------                                -----------         ---\nare consistent with the Capital Budget.\n\n                                      -23-\n\n \n     \"Non-Defaulting Lender\" means and includes each Lender other than a\n      ---------------------                                             \nDefaulting Lender.\n\n     \"Non-Material System Contracts\" shall be the collective reference to the\n      -----------------------------                                          \nAdvisory Services Agreement, the SSI Indemnity Agreement, the SSI Subordinated\nPledge Agreement, the SSI Subordinated Security Agreement, the Intercompany\nAgreement, each Additional Non-Material Contract and the Contractor Escrow and\nSecurity Agreement.\n\n     \"Notes\" shall be the collective reference to the Term Notes and the Working\n      -----                                                                     \nCapital Notes.\n\n     \"OA&M Agreement\" means the Operations, Administration and Maintenance\n      --------------                                                      \nAgreement, dated as of March 25, 1997, between the Borrower and the Operator, as\nthe same may be amended, supplemented, amended and restated or otherwise\nmodified from time to time.\n\n     \"OA&M Expenses\" means all operation, administration and maintenance\n      -------------                                                     \nexpenses with respect to the System which are payable by the Borrower or any\nSubsidiary (including all selling, general and administrative expenses, all\ncommissions on sales of Capacity, all amounts in respect of reimbursements\npayable under Section 2(b) of the Advisory Services Agreement, all sales, excise\nand similar taxes, all other taxes and duties payable by the Borrower or such\nSubsidiary and all payments owing to the Operator under the OA&M Agreement in\nrespect of work performed thereunder); provided, however, that OA&M Expenses\n                                       --------  -------                    \nshall not include (i) prior to the Commercial Operation Date, amounts payable\nwhich are Capital Costs and are set forth in the Capital Budget, (ii) amounts\npayable in respect of Permitted System Upgrades and Permitted Costs, (iii) any\nnon-cash expenses, (iv) income and franchise taxes payable by any Subsidiary,\n(v) all payments made to the Subsidiaries under the Intercompany Agreement and\n(vi) the Advisory Services Fee.\n\n     \"Obligations\" is defined in the Borrower Security Agreement.\n      -----------                                                \n\n     \"Obligors\" shall be the collective reference to the Borrower, Holdings, the\n      --------                                                                  \nSubsidiaries, the Contractor (until the expiration of the basic warranty period\nunder the Supply Contract) and, prior to the performance of all obligations\nunder the Supply Contract Guaranty, the Supply Contract Guarantor.\n\n     \"Operating Budget\" is defined in Section 5.14.\n      ----------------                ------------ \n\n     \"Operating Budget Deviation\" means, with respect to the Operating Budget\n      --------------------------                                             \nfor any Operating Year, the payment of any OA&M Expense (excluding Sales\nCommissions) which would result in total operating costs (excluding Sales\nCommissions) for such Operating Year (after giving effect to all other payments\nof OA&M Expenses\n\n                                      -24-\n\n \n(excluding Sales Commissions) in such Operating Year, including all other cost\noverruns and underruns or other savings with respect to any budget category)\nexceeding the total operating costs (excluding Sales Commissions) set forth in\nthe Operating Budget for such Operating Year by more than 5%.\n\n     \"Operating Plan\" is defined in Section 5.14.\n      --------------                ------------ \n\n     \"Operating Reserve Account\" means the special account designated by that\n      -------------------------                                              \nname established by the Administrative Agent pursuant to Section 8.01(a).\n                                                         --------------- \n\n     \"Operating Reserve Amount\" means, at any time of determination, an amount\n      ------------------------                                                \nequal to six months of anticipated operating expenses in accordance with the\nthen current Operating Budget of the Borrower and the Subsidiaries.\n\n     \"Operating Year\" means, initially, the period from the date the United\n      --------------                                                       \nStates to United Kingdom segment of the System becomes operational to the\nfollowing December 31st and, thereafter, each ensuing calendar year.\n\n     \"Operator\" means SSI.\n      --------            \n\n     \"Other Taxes\" means any and all present or future stamp or documentary\n      -----------                                                          \nTaxes, charges or similar levies arising from any payment hereunder or from the\nexecution, delivery or enforcement of, or otherwise with respect to, this\nAgreement.\n\n     \"Participation Certificate\" is defined in Section 2.04(a).\n      -------------------------                --------------- \n\n     \"PBGC\" means the Pension Benefit Guaranty Corporation referred to and\n      ----                                                                \ndefined in ERISA and any successor entity performing similar functions.\n\n     \"PCG\" means Pacific Capital Group, Inc., a California corporation.\n      ---                                                              \n\n     \"PCG Group\" means, collectively, PCG and such Persons who were principals,\n      ---------                                                                \nofficers, directors or employees of PCG as of the Closing Date (whether at any\nfuture time such Person ceases to be such) and any other Person who becomes a\nprincipal, officer, director or employee of PCG after the Closing Date.\n\n     \"Perfectible Collateral\" is defined in Section 3.17.\n      ----------------------                ------------ \n\n     \"Permitted Costs\" means (a) all amounts due under the Supply Contract\n      ---------------                                                     \n(including, in respect of Permitted System Upgrades), (b) any and all amounts\ndue in connection with any change to the configuration of the System permitted\nunder Section 6.09, (c) any and all amounts due in respect of any capital\n      ------------                                                       \nexpenditure permitted under Section 6.17 and (d) any other amount applied to\n                            ------------                                    \n\n                                      -25-\n\n \ncosts of the type set forth in Section 8.08(b), Section 8.08(c) or in  clauses\n                               ---------------  ---------------        -------\nfirst through fourth of Section 8.08(d).\n-----         ------    --------------- \n\n     \"Permitted Encumbrances\" means:\n      ----------------------        \n\n          (a)  Liens imposed by law for taxes that are not yet due or are being\n     contested in accordance with Section 5.03;\n                                  ------------ \n\n          (b)  (i) carriers', warehousemen's, mechanics', materialmen's,\n     repairmen's and other like Liens relating to the construction of the System\n     or (ii) other Liens arising in the ordinary course of business and securing\n     obligations that are not overdue by more than 60 days or are being\n     contested in accordance with Section 5.03;\n                                  ------------ \n\n          (c)  any Liens on any portion of the System arising by operation of\n     law through the Contractor (or any of its subcontractors);\n\n          (d)  pledges and deposits made in the ordinary course of business in\n     compliance with workers' compensation, unemployment insurance and other\n     social security laws or regulations;\n\n          (e)  deposits to secure the performance of bids, trade contracts,\n     leases, statutory obligations, surety and appeal bonds, performance bonds\n     and other obligations of a like nature, in each case in the ordinary course\n     of business;\n\n          (f)  easements, zoning restrictions, rights-of-way and similar\n     encumbrances on real property imposed by law or arising in the ordinary\n     course of business that do not materially detract from the value of the\n     affected property or interfere with the ordinary conduct of business of the\n     Borrower or any Subsidiary;\n\n          (g)  Liens arising under any Loan Document or System Contract;\n\n          (h)  Liens arising under the Contractor Escrow and Security Agreement;\n\n          (i)   Liens granted by the German Subsidiary in favor of the Borrower\n     under the security agreement entered into in accordance with Section\n                                                                  -------\n     5.30(b);\n     ------- \n\n          (j)  the rights of any purchaser of Capacity with respect to the use\n     of portions of the System as set forth or referred to in the Capacity Sales\n     Agreements; and\n\n          (k)  Liens arising out of judgments or awards with respect to which\n     appeals or other proceedings for review are\n\n                                      -26-\n\n \n     being prosecuted in good faith and by appropriate proceedings diligently\n     conducted and for the payment of which adequate reserves have been provided\n     or other provisions reasonably satisfactory to the Administrative Agent\n     have been made.\n\n     \"Permitted Holders\" means each of PCG, PCG Telecom LDC, CIBC and their\n      -----------------                                                    \nrespective Affiliates.\n\n     \"Permitted Investments\" means:\n      ---------------------        \n\n          (a)  direct obligations of, or obligations the principal of and\n     interest on which are unconditionally guaranteed by, the United States of\n     America (or by any agency thereof to the extent such obligations are backed\n     by the full faith and credit of the United States of America), in each case\n     maturing within one year from the date of acquisition thereof;\n\n          (b)  investments in commercial paper maturing within 270 days from the\n     date of acquisition thereof and having, at such date of acquisition, a\n     credit rating of at least A-1 from S&P or at least P-1 from Moody's;\n\n          (c)  investments in certificates of deposit, banker's acceptances and\n     time deposits maturing within 180 days from the date of acquisition thereof\n     issued or guaranteed by or placed with, and overnight sweep accounts, money\n     market deposit accounts issued or offered by, (i) the Administrative Agent\n     or any of its Affiliates, (ii) any Lender or (iii) any other bank which has\n     a combined capital and surplus and undivided profits of not less than\n     $250,000,000;\n\n          (d)  fully collateralized repurchase agreements with a term of not\n     more than 30 days for securities described in clause (a) above and entered\n                                                   ----------                  \n     into with a financial institution satisfying the criteria described in\n                                                                           \n     clause (c) above; and\n     ----------           \n\n          (e)  with respect to the investment of funds on deposit in the\n     Contractor Escrow and Security Agreement, investments permitted by the\n     Contractor Escrow and Security Agreement.\n\n     \"Permitted Reserve LC Facility\" means a letter of credit facility for the\n      -----------------------------                                           \nBorrower consistent with the terms set forth on Schedule 1.01(a).\n                                                ---------------- \n\n     \"Permitted Sale Leasebacks\" means leases or sale leasebacks of real and\n      -------------------------                                             \npersonal property constituting a portion of the System, provided that (a) such\n                                                        --------              \nleases or sale leasebacks shall be undertaken for fair value pursuant to a tax\nprogram reasonably\n\n                                      -27-\n\n \nsatisfactory to the Lead Agents recommended by Arthur Andersen, LLP or such\nother tax consultant of national standing retained by the Borrower that is\nreasonably satisfactory to the Lead Agents and (b) the Net Cash Proceeds of any\nsale of assets undertaken in connection therewith shall be applied to the\nprepayment of the Term Loans in accordance with Section 2.11(c).\n                                                --------------- \n\n     \"Permitted Senior Cash Dividends\" means, with respect to any fiscal year of\n      -------------------------------                                           \nthe Borrower, cash dividends paid by the Borrower in an amount not to exceed (a)\nso long as the Holdings Senior Notes remain outstanding, the lesser of (i)\n$19,000,000 and (ii) the actual amount necessary to pay interest on the Holdings\nSenior Notes, as certified by a Responsible Officer of the Borrower to the\nAdministrative Agent, plus $1,000,000 and (b) $1,000,000 thereafter (in each\ncase exclusive of any cash dividends paid by the Borrower under Section 6.06(d),\n                                                                --------------- \n(e) and (f)).\n---     ---  \n\n     \"Permitted Subordinated Debt\" means Indebtedness of the Borrower which has\n      ---------------------------                                              \n(a) no principal payments, redemptions, repurchases, sinking funds or\nprepayments prior to the date which is one year after the payment in full in\ncash of all Loans and other obligations hereunder and under the Loan Documents,\n(b) no cash interest payments except to the extent permitted by Section 6.06(d)\n                                                                ---------------\nhereof, provided that, in any event, unless the Majority Lenders otherwise\n        --------                                                          \nagree, no cash interest payments are permitted with respect thereto so long as\nany Event of Default, Specified Default or Designated Event shall have occurred\nand be continuing, and (c) interest rate, interest payment date, subordination,\ncovenants, defaults and other terms and conditions reasonably satisfactory to\nthe Lead Agents.\n\n     \"Permitted System Upgrades\" means upgrades to the System contemplated by\n      -------------------------                                              \nArticle 6A of the Supply Contract.\n\n     \"Person\" means any natural person, corporation, limited liability company,\n      ------                                                                   \ntrust, joint venture, association, company, partnership, Governmental Authority\nor other entity.\n\n     \"Plan\" means any employee pension benefit plan (other than a Multiemployer\n      ----                                                                     \nPlan) subject to the provisions of Title IV of ERISA or Section 412 of the Code\nor Section 302 of ERISA, and in respect of which the Borrower or any ERISA\nAffiliate is (or, if such plan were terminated, would under Section 4069 of\nERISA be deemed to be) an \"employer\" as defined in Section 3(5) of ERISA.\n\n     \"Plan of Work\" means the plan of work attached as Appendix 3 to the Supply\n      ------------                                                             \nContract, as the same may be amended, supplemented, amended and restated or\notherwise modified from time to time.\n\n                                      -28-\n\n \n     \"Pledge Agreements\" shall be the collective reference to the Holdings\n      -----------------                                                   \nPledge Agreement, the Borrower Pledge Agreement and the SSI Lender Pledge\nAgreement.\n\n     \"Presale Proceeds\" means cash proceeds (net of sale commissions) received\n      ----------------                                                        \nby the Borrower and\/or the Subsidiaries under Capacity Sales Agreements on or\nprior to the Commercial Operation Date.\n\n     \"Prime Rate\" means the rate of interest per annum established by Deutsche\n      ----------                                                              \nBank AG as its prime or reference or base rate in effect at its principal office\nin New York City; each change in the Prime Rate shall be effective from and\nincluding the date such change is effective.  The Prime Rate is not necessarily\nthe lowest rate of interest charged to borrowers.\n\n     \"Principal Payment Date\" means the Initial Principal Payment Date and each\n      ----------------------                                                   \nMay 31 and November 30 (or, if such day is not a Business Day, the immediately\npreceding Business Day) occurring thereafter.\n\n     \"Projections\" means the reasonably detailed operating projections for the\n      -----------                                                             \nSystem which were delivered by the Borrower to the Administrative Agent and the\nArrangers prior to the date hereof and which reflect the reasonable expected\ncase (and not worst case) projections of the revenues, operating expenses, cash\nflow, debt service and other related items for the System.\n\n     \"Quarterly Advisory Services Payment Date\"  means (a) initially, the\n      ----------------------------------------                           \nInitial Principal Payment Date and (b) thereafter, each quarterly date which\noccurs on the last business day of the applicable month.\n\n     \"Ready for Commercial Service\" is defined in the Supply Contract.\n      ----------------------------                                    \n\n     \"Ready for Provisional Acceptance\" is defined in the Supply Contract.\n      --------------------------------                                    \n\n     \"Reference Lenders\" means CIBC Inc., Deutsche Bank AG, New York Branch, and\n      -----------------                                                         \nBHF-Bank Aktiengesellschaft, Grand Cayman Branch.\n\n     \"Register\" has the meaning set forth in Section 10.04(c).\n      --------                               ---------------- \n\n     \"Related Parties\" means, with respect to any specified Person, such\n      ---------------                                                   \nPerson's Affiliates and subsidiaries and the respective directors, officers and\nemployees of such Person and such Person's Affiliates and subsidiaries.\n\n     \"Required Balance\" means (a) with respect to the Debt Reserve Account, the\n      ----------------                                                         \nDebt Reserve Amount, (b) with respect to the\n\n                                      -29-\n\n \nOperating Reserve Account, the Operating Reserve Amount and (c) with respect to\nthe Holdings Interest Reserve Account, the Holdings Interest Reserve Amount.\n\n     \"Required Lenders\" means, at any time of determination, Non-Defaulting\n      ----------------                                                     \nLenders having Working Capital Exposures, LC Exposure, outstanding Term Loans\nand unused Commitments representing more then 66-2\/3% of the sum of the total\nWorking Capital Exposures, LC Exposures, outstanding Term Loans and unused\nCommitments of such Non-Defaulting Lenders at such time.\n\n     \"Requirement of Law\" means, as to any Person, the Certificate of\n      ------------------                                             \nIncorporation and By-Laws or other organizational or governing documents of such\nPerson, and any law, treaty, rule, judgment, decree, order or regulation of any\nGovernmental Authority, and any determination of an arbitrator or a court or\nother Governmental Authority, in each case applicable to or binding upon such\nPerson or any of its property or to which such Person or any of its property is\nsubject.\n\n     \"Reserve Accounts\" means the collective reference to the Debt Reserve\n      ----------------                                                    \nAccount, the Operating Reserve Account and the Holdings Interest Reserve\nAccount.\n\n     \"Responsible Officer\" means, with respect to any matter, with respect to\n      -------------------                                                    \nany Person, the President, any Vice President, Assistant Vice President,\nTreasurer or Assistant Treasurer of such Person, or any other officer of such\nPerson who in the normal performance of his operational responsibility would\nhave knowledge of such matter and the requirements, if any, with respect\nthereto.\n\n     \"Restricted Payment\" means any dividend or other distribution (whether in\n      ------------------                                                      \ncash, securities or other property) with respect to any shares of any class of\nCapital Stock of the Borrower or any Subsidiary, or any payment (whether in\ncash, securities or other property), including any sinking fund or similar\ndeposit, on account of the purchase, redemption, retirement, acquisition,\ncancellation or termination of any such shares of Capital Stock of the Borrower\nor any Subsidiary (or in respect of any Permitted Subordinated Debt) or any\noption, warrant or other right to acquire any such shares of Capital Stock of\nthe Borrower or any Subsidiary.\n\n     \"Retainage Issuance Date\" means the date on which the Contractor receives\n      -----------------------                                                 \npayment in full of all amounts due under the Supply Contract other than the\nportion thereof constituting the Final Contractor Payment, provided that the\n                                                           --------         \nContingency Letter of Credit shall have been returned by the Borrower to the\nIssuing Bank or terminated or expired or, if drawn, the related LC Disbursement\nshall have been reimbursed in full to the Issuing Bank.\n\n                                      -30-\n\n \n     \"Retainage Letter of Credit\" means the letter of credit substantially in\n      --------------------------                                             \nthe form of Exhibit I-2 or such other form as agreed by the Borrower, the\n            -----------                                                  \nContractor, the Administrative Agent and the Issuing Bank, as such letter of\ncredit may be amended, supplemented, amended and restated or otherwise modified\nfrom time to time.\n\n     \"Revenue Account\" means the special account designated by that name\n      ---------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     \"S Capacity\" means that capacity on the System which is available on the S\n      ----------                                                               \nSegments.\n\n     \"S Segments\" is defined in the form of Capacity Sales Agreement attached as\n      ----------                                                                \nExhibit L.\n--------- \n\n     \"Sales Agency Agreement\" means the Sales Agency Agreement, dated as of\n      ----------------------                                               \nMarch 25, 1997, between the Borrower and the Sales Agent, as the same may be\namended, supplemented, amended and restated or otherwise modified from time to\ntime.\n\n     \"Sales Agent\" means SSI.\n      -----------            \n\n     \"Sales Commissions\" means sales commissions payable to the Sales Agent\n      -----------------                                                    \nunder the Sales Agency Agreement, but not including expense reimbursement and\nother obligations payable thereunder.\n\n     \"Sales and Issuances Proceeds Account\" means the special account designated\n      ------------------------------------                                      \nby that name established by the Administrative Agent pursuant to Section\n                                                                 -------\n8.01(a).\n\n     \"Sales Threshold\" means at any date of determination, when the sum of (a)\n      ---------------                                                         \nan amount equal to all cash payments received by the Borrower and the\nSubsidiaries on or prior to such date under Capacity Sales Agreements entered\ninto in accordance Section 6.23 plus (b) an amount equal to the aggregate amount\n                   ------------ ----                                            \nof firm commitments outstanding as of such date for the sale of Capacity entered\ninto in accordance with Section 6.23 (provided that such firm commitments shall\n                        ------------                                           \nbe included for purposes of this clause (b) only to the extent amounts payable\n                                 ----------                                   \nthereunder are payable on or before the date which is five Business Days after\nthe Commercial Operation Date and, with respect to any amounts payable\nthereafter, only if the obligor thereunder has a long-term senior unsecured debt\nrating of at least \"A\" from S&P or at least \"A\" from Moody's or is otherwise\nacceptable to the Majority Lenders), equals or exceeds $296,500,000.\n\n     \"Second Principal Amortization Reset Date\" means the last day of the\n      ----------------------------------------                           \n\"Availability Period\" as set forth in clause (b) of the definition thereof.\n                                      ----------                           \n\n                                      -31-\n\n \n     \"Security Agreements\" shall be the collective reference to the Borrower\n      -------------------                                                   \nSecurity Agreement, each Subsidiary Security Agreement and the SSI Lender\nSecurity Agreement.\n\n     \"Security Documents\" shall be the collective reference to the Pledge\n      ------------------                                                 \nAgreements, the Security Agreements and the Mortgages.\n\n     \"Segment\" is defined in the Supply Contract.\n      -------                                    \n\n     \"SG&A Expenses\" means selling, general and administrative expenses incurred\n      -------------                                                             \nby the Borrower and the Subsidiaries in connection with the marketing and\noperation of the System.\n\n     \"Special Payment Account\" means the special account designated by that name\n      -----------------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     \"Special Payments\" means (a) all payments made by the Contractor under the\n      ----------------                                                         \nSupply Contract and all other payments made by the Contractor or the Supply\nContract Guarantor in respect of any breach or failure by the Contractor to\nperform its obligations under the Supply Contract, whether as a result of any\nproceeding, settlement or otherwise, and (b) all payments under insurance\npolicies maintained by the Borrower or any Subsidiary to compensate for a delay\nin the commencement of operations of the System.\n\n     \"Specified Default\" means (a) any Event of Default under Article VII and\n      -----------------                                       -----------    \n(b) any Default arising under Sections 7.01, 7.03, 7.04 or 7.05.\n                              -------------  ----  ----    ---- \n\n     \"Specified Event of Default\" means the occurrence of any Event of Default\n      --------------------------                                              \nunder Article VII other than those arising under Sections 7.06 or 7.15.\n      -----------                                -------------    ---- \n\n     \"S&P\" means Standard & Poor's Ratings Services.\n      ---                                           \n\n     \"SSI\" means AT&T Submarine Systems, Inc., a Delaware corporation, together\n      ---                                                                      \nwith its permitted successors and assigns.\n\n     \"SSI Consent\" means the Consent and Agreement, dated as of the date hereof,\n      -----------                                                               \nsubstantially in the form of Exhibit J, among the Borrower, SSI and the\n                             ---------                                 \nAdministrative Agent, as the same may be amended, supplemented, amended and\nrestated or otherwise modified from time to time in accordance with the terms\nhereof and, with respect to any supply contract permitted to replace the Supply\nContract in accordance with Section 7.11, any replacement consent and agreement\n                            ------------                                       \nrelating to such new supply contract, as the same may be amended, supplemented,\namended and restated or otherwise modified from time to time.\n\n                                      -32-\n\n \n     \"SSI Indemnity Agreement\" means the Indemnity Agreement, dated as of the\n      -----------------------                                                \ndate hereof, in form and substance reasonably satisfactory to the Lead Agents,\nmade by the Borrower in favor of SSI, as the same may be amended, supplemented\nor otherwise modified from time to time.\n\n     \"SSI IRU and Option Agreement\" means the Indefeasible Right of Use and\n      ----------------------------                                         \nOption Agreement, in form and substance reasonably satisfactory to the Lead\nAgents, between SSI Sub 2 and the U.S. Subsidiary, as the same may be amended,\nsupplemented or otherwise modified from time to time.\n\n     \"SSI Lease\" means the lease, in form and substance reasonably satisfactory\n      ---------                                                                \nto the Lead Agents, between SSI Sub 2, as lessee, and the U.S. Subsidiary, as\nlessor, as the same may be amended, supplemented, amended and restated or\notherwise modified from time to time in accordance with the terms hereof.\n\n     \"SSI Lender Pledge Agreement\"  means the Pledge Agreement, dated as of the\n      ---------------------------                                              \ndate hereof, substantially in the form of Exhibit F-3, made by SSI Sub 1 in\n                                          -----------                      \nfavor of the Administrative Agent, as the same may be amended, supplemented,\namended and restated or otherwise modified from time to time.\n\n     \"SSI Lender Security Agreement\" means the Security Agreement, dated as of\n      -----------------------------                                           \nthe date hereof, substantially in the form of Exhibit E-3, made by SSI Sub 2 in\n                                              -----------                      \nfavor of the Administrative Agent, as the same may be amended, supplemented,\namended and restated or otherwise modified from time to time.\n\n     \"SSI Subordinated Pledge Agreement\" means the Subordinated Pledge\n      ---------------------------------                               \nAgreement, dated as of the date hereof, in form and substance reasonably\nsatisfactory to the Lead Agents, made by SSI Sub 1 in favor of the U.S.\nSubsidiary, as the same may be amended, supplemented, amended and restated or\notherwise modified from time to time.\n\n     \"SSI Subordinated Security Agreement\" means the Subordinated Security\n      -----------------------------------                                 \nAgreement, dated as of the date hereof, in form and substance reasonably\nsatisfactory to the Lead Agents, made by SSI Sub 2 in favor of the U.S.\nSubsidiary, as the same may be amended, supplemented, amended and restated or\notherwise modified from time to time.\n\n     \"SSI Sub 1\" means SSI Atlantic Crossing Holdings LLC, a Delaware limited\n      ---------                                                              \nliability company and a wholly owned subsidiary of SSI.\n\n     \"SSI Sub 2\" means SSI Atlantic Crossing LLC, a Delaware limited liability\n      ---------                                                               \ncompany and a wholly owned subsidiary of SSI Sub 1.\n\n                                      -33-\n\n \n     \"Statutory Reserve Rate\" means a fraction (expressed as a decimal), the\n      ----------------------                                                \nnumerator of which is the number one and the denominator of which is the number\none minus the aggregate of the maximum reserve percentages (including any\nmarginal, special, emergency or supplemental reserves) expressed as a decimal\nestablished by the Board to which the Administrative Agent is subject (a) with\nrespect to the Base CD Rate, for new negotiable nonpersonal time deposits in\ndollars of over $100,000 with maturities approximately equal to three months, in\nthe case of the Base CD Rate, and (b) with respect to the Adjusted LIBO Rate,\nfor eurocurrency funding (currently referred to as \"Eurocurrency Liabilities\" in\nRegulation D of the Board).  Such reserve percentages shall include those\nimposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to\nconstitute eurocurrency funding and to be subject to such reserve requirements\nwithout benefit of or credit for proration, exemptions or offsets that may be\navailable from time to time to any Lender under such Regulation D or any\ncomparable regulation.  The Statutory Reserve Rate shall be adjusted\nautomatically on and as of the effective date of any change in any reserve\npercentage.\n\n     \"subsidiary\" means, with respect to any Person (the \"parent\") at any date,\n      ----------                                          ------               \nany corporation, limited liability company, partnership, association or other\nentity the accounts of which would be consolidated with those of the parent in\nthe parent's consolidated financial statements if such financial statements were\nprepared in accordance with GAAP as of such date, as well as any other\ncorporation, limited liability company, partnership, association or other entity\nthat is, as of such date, otherwise Controlled, by the parent or one or more\nsubsidiaries of the parent or by the parent and one or more subsidiaries of the\nparent.\n\n     \"Subsidiary\" means any subsidiary of the Borrower.\n      ----------                                       \n\n     \"Subsidiary Accounts\" means, collectively, the German Subsidiary Account,\n      -------------------                                                     \nthe U.K. Subsidiary Account and the U.S. Subsidiary Account.\n\n     \"Subsidiary Guaranty Agreement\" means the Guaranty Agreement, dated as of\n      -----------------------------                                           \nthe date hereof, substantially in the form of Exhibit G, made by the U.S.\n                                              ---------                  \nSubsidiary (and any other Subsidiary from time to time party thereto) in favor\nof the Administrative Agent, as the same may be amended, supplemented, amended\nand restated or otherwise modified from time to time.\n\n     \"Subsidiary Security Agreement\" means the U.S. Subsidiary Security\n      -----------------------------                                    \nAgreement and each other Security Agreement made by a Subsidiary in favor of the\nAdministrative Agent in accordance with Section 5.30, in each case as amended,\n                                        ------------                          \nsupplemented, amended and restated or otherwise modified from time to time.\n\n                                      -34-\n\n \n     \"Subsidiary Transfer Date\" means the last Business Day of each May, August,\n      ------------------------                                                  \nNovember and February occurring after the date the Segment connecting the United\nStates to the United Kingdom becomes Ready for Commercial Service or, with\nrespect to any Subsidiary, such other dates as such Subsidiary designates in\nwriting to the Administrative Agent.\n\n     \"Subsidiary Transfer Payment\" means, with respect to any Subsidiary as of\n      ---------------------------                                             \nany Subsidiary Transfer Date, to the extent permitted by applicable law, all\namounts on deposit in such Subsidiary's Subsidiary Account as of such date, net\nof all Taxes due (or to become due) from such Subsidiary and all OA&M Expenses\nanticipated to be incurred by such Subsidiary prior to the next Subsidiary\nTransfer Date (or such lesser amount as may be permitted under applicable law to\nbe distributed to the Borrower).\n\n     \"Supply Contract\" means the Project Development and Construction Contract,\n      ---------------                                                          \ndated as of March 18, 1997, between the Contractor and the Borrower, as the same\nmay be amended, supplemented, amended and restated or otherwise modified from\ntime to time in accordance with the terms hereof.\n\n     \"Supply Contract Guaranty\" means the Guaranty, dated as of March 18, 1997,\n      ------------------------                                                 \nmade by the Supply Contract Guarantor in favor of the Borrower, as the same may\nbe amended, supplemented, amended and restated or otherwise modified from time\nto time.\n\n     \"Supply Contract Guarantor\" means AT&T.\n      -------------------------             \n\n     \"Syndication Agent\" is defined in the preamble.\n      -----------------                    -------- \n\n     \"System\" is defined in the second recital.\n      ------                    ------ ------- \n\n     \"System Activities\" means all activities related to the design,\n      -----------------                                             \ndevelopment, engineering, acquisition, installation, construction, landing,\ncompletion, disposition, financing, modification, start-up, testing, operation,\nownership, possession, maintenance and use of the System.\n\n     \"System Contracts\" shall be the collective reference to the Supply\n      ----------------                                                 \nContract, the Supply Contract Guaranty, the Capacity Sales Agreements, the OA&M\nAgreement, the Sales Agency Agreement, the SSI Lease, the SSI IRU and Option\nAgreement, each Additional Material Contract and the Non-Material System\nContracts.\n\n     \"System Final Completion\" means the date on which the Certificate of Final\n      -----------------------                                                  \nAcceptance shall have been issued with respect to the System in accordance with\nthe terms of the Supply Contract, as certified by the Independent Engineer.\n\n                                      -35-\n\n \n     \"System Revenues\" means, for any period, all revenues received by the\n      ---------------                                                     \nBorrower and the Subsidiaries during such period including all revenues and\nproceeds received by it from (a) sales, leases or other dispositions of\nCapacity, (b) the sale, lease, transfer or other disposition of any of its\nassets, (c) all payments made by purchasers of Capacity to the Borrower or any\nSubsidiary in respect of operation, administration and maintenance charges, (d)\nall payments made by insurers under business interruption policies and (e) all\npayments received under Hedging Agreements after the Commercial Operation Date,\n                                                                               \nbut excluding from System Revenues all Special Payments, Casualty Proceeds and\n--- ---------                                                                 \nNet Cash Proceeds.\n\n     \"T Capacity\" means that capacity on the System which is available on the T\n      ----------                                                               \nSegments.\n\n     \"T Segments\" is defined in the form of Capacity Sales Agreement attached as\n      ----------                                                                \nExhibit L.\n--------- \n\n     \"Taxes\" means any and all present or future taxes, levies, imposts, duties,\n      -----                                                                     \ndeductions, charges or withholdings imposed by any Governmental Authority.\n\n     \"Term Loans\" is defined in Section 2.01.\n      ----------                ------------ \n\n     \"Term Loan Commitment\" means, as to any Lender, its obligation to make Term\n      --------------------                                                      \nLoans to the Borrower and acquire participations in Letters of Credit in an\naggregate amount not to exceed at any one time outstanding the amount set forth\nopposite such Lender's name on Schedule 2.01 under the heading \"Term Loan\n                               -------------                             \nCommitment\" or, in the case of a Lender that is an assignee, the amount of such\nassigning Lender's Term Loan Commitment assigned to such assignee pursuant to\n                                                                             \nSection 10.04 in each case as such amount may be adjusted from time to time as\n-------------                                                                 \nprovided herein.\n\n     \"Term Note\" is defined in Section 2.09(e).\n      ---------                --------------- \n\n     \"Termination Date\" means the last day of the Availability Period.\n      ----------------                                                \n\n     \"Three-Month Secondary CD Rate\" means, for any day, the secondary market\n      -----------------------------                                          \nrate for three-month certificates of deposit reported as being in effect on such\nday (or, if such day is not a Business Day, the next preceding Business Day) by\nthe Board through the public information telephone line of the Federal Reserve\nBank of New York (which rate will, under the current practices of the Board, be\npublished in Federal Reserve Statistical Release H.15(519) during the week\nfollowing such day) or, if such rate is not so reported on such day or such next\npreceding Business Day, the average of the secondary market quotations for\nthree-month certificates of deposit of major money center banks in New York City\nreceived at approximately\n\n                                      -36-\n\n \n10:00 a.m., New York City time, on such day (or, if such day is not a Business\nDay, on the next preceding Business Day) by the Administrative Agent from three\nnegotiable certificate of deposit dealers of recognized standing selected by it.\n\n     \"Type\" when used in reference to any Loan or Borrowing, refers to whether\n      ----                                                                    \nthe rate of interest on such Loan, or on the Loans comprising such Borrowing, is\ndetermined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.\n\n     \"U.K. Subsidiary\" means GT U.K. Ltd., a United Kingdom corporation and a\n      ---------------                                                        \ndirect, wholly-owned subsidiary of the Borrower.\n\n     \"U.K. Subsidiary Account\" means the special account of the U.K. Subsidiary\n      -----------------------                                                  \ndesignated by that name established by the Administrative Agent pursuant to\n                                                                           \nSection 8.01(b).\n--------------- \n\n     \"U.S. Subsidiary\" means GT Landing Corp., a Delaware corporation and a\n      ---------------                                                      \ndirect, wholly-owned subsidiary of the Borrower.\n\n     \"U.S. Subsidiary Account\" means the special account of the U.S. Subsidiary\n      -----------------------                                                  \ndesignated by that name established by the Administrative Agent pursuant to\n                                                                           \nSection 8.01(b).\n--------------- \n\n     \"U.S. Subsidiary Security Agreement\" means the Subsidiary Security\n      ----------------------------------                               \nAgreement, dated as of the date hereof, substantially in the form of Exhibit E-\n                                                                     ---------\n2, made by the U.S. Subsidiary in favor of the Administrative Agent, as the same\nmay be amended, supplemented, amended and restated or otherwise modified from\ntime to time.\n\n     \"Voting Stock\" means, with respect to any Person, securities of any class\n      ------------                                                            \nor classes of Capital Stock in such Person entitling the holders thereof to vote\nunder ordinary circumstances in the election of members of the board of\ndirectors or other governing body of such Person.\n\n     \"Withdrawal Liability\" means liability to a Multiemployer Plan as a result\n      --------------------                                                     \nof a complete or partial withdrawal from such Multiemployer Plan, as such terms\nare defined in Part I of Subtitle E of Title IV of ERISA.\n\n     \"Working Capital Exposure\" means, with respect to any Lender at any time,\n      ------------------------                                                \nthe outstanding principal amount of such Lender's Working Capital Loans and\/or\nparticipation interests in Working Capital Loans at such time.\n\n     \"Working Capital Lenders\" means the Lenders designated as such on the\n      -----------------------                                             \nsignature pages hereof, together with their successors and assigns.\n\n                                      -37-\n\n \n     \"Working Capital Loan Commitment\" means, as to any Working Capital Lender,\n      -------------------------------                                          \nits obligation to make Working Capital Loans to the Borrower in an aggregate\namount not to exceed at any one time outstanding the amount set forth opposite\nsuch Working Capital Lender's name on Schedule 2.01 under the heading \"Working\n                                      -------------                           \nCapital Loan Commitment\" or, in the case of any Working Capital Lender that is\nan assignee, the amount of the assigning Lender's Working Capital Loan\nCommitment assigned to such assignee pursuant to Section 10.04 in each case as\n                                                 -------------                \nsuch amount may be adjusted from time to time as provided herein.\n\n     \"Working Capital Loans\" is defined in Section 2.01.\n      ---------------------                ------------ \n\n     \"Working Capital Note\" is defined in Section 2.09(e).\n      --------------------                --------------- \n\n     \"Working Capital Loan Percentage\" means, with respect to any Lender other\n      -------------------------------                                         \nthan a Working Capital Lender, the percentage set forth opposite the name of\nsuch Lender on Schedule 2.01 under the heading \"Working Capital Loan\n               -------------                                        \nPercentage\".\n\n     \"VAT Refund Account\" means the special account designated by that name\n      ------------------                                                   \nestablished by the Administrative Agent pursuant to Section 8.01(a).\n                                                    --------------- \n\n     SECTION 1.2.  Classification of Loans and Borrowings.  For purposes of this\n                   --------------------------------------                       \nAgreement, Loans may be classified and referred to by Class (e.g., a \"Working\n                                                             ----            \nCapital Loan\") or by Type (e.g., a \"Eurodollar Loan\") or by Class and Type\n                           ----                                           \n(e.g., a \"Eurodollar Working Capital Loan\").  Borrowings also may be classified\n ----                                                                          \nand referred to by Class (e.g., a \"Working Capital Borrowing\") or by Type (e.g.,\n                          ----                                             ---- \na \"Eurodollar Borrowing\") or by Class and Type (e.g., a \"Eurodollar Working\n                                                ----                       \nCapital Borrowing\").\n\n     SECTION 1.3.  Terms Generally.  The definitions of terms herein shall apply\n                   ---------------                                              \nequally to the singular and plural forms of the terms defined.  Whenever the\ncontext may require, any pronoun shall include the corresponding masculine,\nfeminine and neuter forms.  The words \"include\", \"includes\" and \"including\"\nshall be deemed to be followed by the phrase \"without limitation\".  The word\n\"will\" shall be construed to have the same meaning and effect as the word\n\"shall\".  Unless the context requires otherwise (a) any definition of or\nreference to any agreement, instrument or other document herein shall be\nconstrued as referring to such agreement, instrument or other document as from\ntime to time amended, supplemented, amended and restated or otherwise modified\n(subject to any restrictions on such amendments, supplements or modifications\nset forth herein), (b) any reference herein to any Person shall be construed to\ninclude such Person's successors and assigns, (c) the words \"herein\", \"hereof\"\nand \"hereunder\", and words of similar import, shall be construed to refer to\nthis Agreement in its entirety and not to any particular provision hereof, (d)\nall references herein to\n\n                                      -38-\n\n \nArticles, Sections, Exhibits and Schedules shall be construed to refer to\nArticles and Sections of, and Exhibits and Schedules to, this Agreement and (e)\nthe words \"asset\" and \"property\" shall be construed to have the same meaning and\neffect and to refer to any and all tangible and intangible assets and\nproperties, including cash, securities, accounts and contract rights.\n\n     SECTION 1.4.  Accounting Terms; GAAP.  Except as otherwise expressly\n                   ----------------------                                \nprovided herein, all terms of an accounting or financial nature shall be\nconstrued in accordance with GAAP, as in effect from time to time.\n\n\n                                   ARTICLE II\n\n                                THE COMMITMENTS\n                                ---------------\n\n     SECTION 2.1.  Commitments.  Subject to the terms and conditions set forth\n                   -----------                                                \nherein, (a) each Working Capital Lender severally agrees to make working capital\nloans (\"Working Capital Loans\") to the Borrower from time to time during the\n        ---------------------                                               \nAvailability Period in an aggregate principal amount that will not result in\nsuch Working Capital Lender's Working Capital Exposure exceeding such Working\nCapital Lender's Working Capital Loan Commitment and (b) each Lender severally\nagrees to make term loans (\"Term Loans\") to the Borrower from time to time\n                            ----------                                    \nduring the Availability Period in an aggregate principal amount not to exceed\nsuch Lender's Term Loan Commitment; provided that no Lender shall make any Term\n                                    --------                                   \nLoan if, after giving effect thereto, the sum of the outstanding Term Loans and\nthe LC Exposure (in each case, after giving effect to the Term Loans requested\nto be made and the Letters of Credit requested to be issued on such date) exceed\nthe Term Loan Commitments of all Lenders.  Within the foregoing limits and\nsubject to the terms and conditions set forth herein, the Borrower may borrow,\nprepay and reborrow Working Capital Loans.  Amounts repaid in respect of Term\nLoans may not be reborrowed.\n\n     SECTION 2.2.  Loans and Borrowings.  (a)  Each Loan shall be made as part\n                   --------------------                                       \nof a Borrowing consisting of Loans of the same Class and Type made by the\nLenders ratably in accordance with their respective Commitments of the\napplicable Class.  The failure of any Lender to make any Loan required to be\nmade by it shall not relieve any other Lender of its obligations hereunder;\n                                                                           \nprovided that the Commitments of the Lenders are several and no Lender shall be\n--------                                                                       \nresponsible for any other Lender's failure to make Loans as required.\n\n     (b)  Each Working Capital Borrowing and Term Loan Borrowing may be ABR\nLoans or Eurodollar Loans, or a combination thereof, as the Borrower may request\nin accordance herewith.\n\n                                      -39-\n\n \n     (c)  Each Eurodollar Borrowing and each ABR Borrowing shall be in an\naggregate amount that is not less than $500,000, in the case of a Working\nCapital Borrowing, and not less than $5,000,000, in the case of a Term Loan\nBorrowing; provided that any such Borrowing may be in an aggregate amount that\n           --------                                                           \nis equal to the entire unused balance of the total Working Capital Loan\nCommitments or Term Loan Commitments, as the case may be, or in an amount that\nis required to finance the reimbursement of an LC Disbursement as contemplated\nby Section 2.05(e).  Borrowings of more than one Type and Class may be\n   ---------------                                                    \noutstanding at the same time; provided that there shall not at any time be more\n                              --------                                         \nthan a total of eight Eurodollar Borrowings outstanding.\n\n     (d)  Notwithstanding any other provision of this Agreement, the Borrower\nshall not be entitled to request, or to elect to convert or continue, any\nBorrowing if the Interest Period requested with respect thereto would end after\nthe Maturity Date.\n\n     SECTION 2.3.  Requests for Borrowings.  To request a Working Capital\n                   -----------------------                               \nBorrowing or a Term Loan Borrowing, the Borrower shall notify the Administrative\nAgent of such request by delivering a Borrowing Request to the Administrative\nAgent (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New\nYork City time, three Business Days before the date of the proposed Borrowing or\n(b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City\ntime, one Business Day before the date of the proposed Borrowing; provided that\n                                                                  --------     \nany such notice of an ABR Borrowing to finance the reimbursement of an LC\nDisbursement as contemplated by Section 2.05(e) may be given not later than\n                                ---------------                            \n11:00 a.m., New York City time, on the date of the proposed Borrowing.  Each\nsuch Borrowing Request shall be irrevocable.  Each such Borrowing Request shall\nspecify the following information in compliance with Section 2.02:\n                                                     ------------ \n\n          (a)  whether the requested Borrowing is to be a Working Capital\n     Borrowing and\/or Term Loan Borrowing;\n\n          (b)  the aggregate amount of the requested Borrowing;\n\n          (c)  the date of such Borrowing, which shall be (A) in the case of\n     Term Loans, a Borrowing Date and (B) in the case of Working Capital Loans,\n     a Business Day;\n\n          (d)  whether such Borrowing is to be an ABR Borrowing or a Eurodollar\n     Borrowing; and\n\n          (e)  in the case of a Eurodollar Borrowing, the initial Interest\n     Period to be applicable thereto, which shall be a period contemplated by\n     the definition of the term \"Interest Period\".\n\n                                      -40-\n\n \nIf no election as to the Type of Borrowing is specified, then the requested\nBorrowing shall be an ABR Borrowing.  If no Interest Period is specified with\nrespect to any requested Eurodollar Borrowing, then the Borrower shall be deemed\nto have selected an Interest Period of one month's duration.  Promptly following\nreceipt of a Borrowing Request in accordance with this Section, the\nAdministrative Agent shall advise each applicable Lender of the details thereof\nand of the amount of such Lender's Loan to be made as part of the requested\nBorrowing.\n\n     SECTION 2.4.  Special Provisions for Working Capital Loans.\n                   -------------------------------------------- \n\n     (a)  Participations in Working Capital Loans.\n          --------------------------------------- \n\n          (i)  By the making of a Working Capital Loan and without further\n     action on the part of the Working Capital Lenders, the Working Capital\n     Lenders hereby ratably grant to each Lender that is not a Working Capital\n     Lender, and each Lender that is not a Working Capital Lender hereby\n     acquires ratably from the Working Capital Lenders, a participation in such\n     Working Capital Loan equal to such Lender's Working Capital Loan Percentage\n     of the aggregate amount of such Working Capital Loan.  Each Lender that is\n     not a Working Capital Lender acknowledges and agrees that its obligation to\n     acquire a participation pursuant to this paragraph in respect of each\n     Working Capital Loan is absolute and unconditional and shall not be\n     affected by any circumstance whatsoever, including the occurrence and\n     continuance of a Default, a Designated Event, an Event of Default or a\n     Material Adverse Effect or reduction or termination of the Commitments, and\n     that each such payment shall be made without any offset, abatement,\n     withholding or reduction whatsoever.\n\n          (ii)  If any Event of Default described in Section 7.04 or 7.05 shall\n                                                     ------------    ----      \n     have occurred, each Lender (other than a Working Capital Lender)\n     immediately and automatically shall, and at other times, from time to time,\n     promptly upon request by the Working Capital Lenders delivered to the\n     Administrative Agent (which shall promptly notify each Lender thereof),\n     each Lender (other than a Working Capital Lender) shall, transfer\n     immediately to the Administrative Agent for credit to the Working Capital\n     Lenders, in immediately available funds, the amount of its participation\n     set forth in clause (i).  The Working Capital Lenders will deliver to such\n                  ----------                                                   \n     other Lender, promptly following receipt of such funds, a Participation\n     Certificate, substantially in the form of Exhibit N, dated the date of\n                                               ---------                   \n     receipt of such funds and in the amount of such Lender's participation if\n     requested to do so by such other Lender.\n\n                                      -41-\n\n \n          (iii)  So long as any Lender that is not a Working Capital Lender has\n     fulfilled any obligation to make payments to the Administrative Agent for\n     the account of the Working Capital Lenders pursuant to clause (a)(i) above\n                                                            -------------      \n     and is not a Defaulting Lender, upon (and only upon) receipt by the\n     Administrative Agent for the account of the Working Capital Lenders of\n     immediately available funds from the Borrower in respect of interest or\n     commitment fees relating to the Working Capital Loans, the Working Capital\n     Lenders shall promptly remit, through the Administrative Agent, to the\n     Lenders which are not Working Capital Lenders an amount equal to their pro\n     rata share of the Applicable Rate paid with respect to outstanding Working\n     Capital Loans and an amount equal to their pro rata share of such\n     commitment fees.\n\n          (iv)  Upon (and only upon) receipt by the Administrative Agent for the\n     account of the Working Capital Lenders of immediately available funds from\n     the Borrower as payment in respect of principal of or interest on a Working\n     Capital Loan with respect to which a Lender (other than a Working Capital\n     Lender) has paid the Administrative Agent for the account of the Working\n     Capital Lenders for such Lender's participation in such Working Capital\n     Loan pursuant to clause (a)(i) above, the Administrative Agent will pay to\n                      -------------                                            \n     each such Lender which is not a Defaulting Lender, in the same funds as\n     those received by the Administrative Agent for the account of the Working\n     Capital Lenders, such Lender's pro rata share of such funds, and the\n     Working Capital Lenders shall receive their pro rata share of any funds of\n     any Lender that did not so pay the Administrative Agent for the account of\n     the Working Capital Lenders.\n\n     (b)  Acknowledged Privity.  The Borrower expressly agrees that, in respect\n          --------------------                                                 \nof each Lender's funded participation interest in any Working Capital Loan, such\nLender shall be deemed to be in privity of contract with the Borrower and have\nthe same rights and remedies against the Borrower under the Loan Documents as if\nsuch funded participation interest in such Working Capital Loan were a Working\nCapital Loan.\n\n     (c)  Obligation to Participate in Working Capital Loans Absolute.  Each\n          -----------------------------------------------------------       \nLender's obligation in accordance with this Agreement to purchase participation\ninterests in Working Capital Loans, as contemplated by this Section 2.04, as a\n                                                            ------------      \nresult of the making of a Working Capital Loan, shall be absolute and\nunconditional and without recourse to or representation or warranty by the\nWorking Capital Lenders and shall not be affected by any circumstance, including\n(i) any set-off, counterclaim, recoupment, defense or other right which such\nLender may have against the Working Capital Lenders, the Borrower or any other\nPerson for any reason whatsoever; (ii) the occurrence or\n\n                                      -42-\n\n \ncontinuance of a Default, an Event of Default, a Designated Event or a Material\nAdverse Effect; or (iii) any other circumstance, happening or event whatsoever,\nwhether or not similar to any of the foregoing.\n\n     SECTION 2.5.  Letters of Credit.  (a)  General.  Subject to the terms and\n                   -----------------        -------                           \nconditions set forth herein, the Borrower may request the issuance of, and the\nIssuing Bank shall issue (i) on any Business Day on which the conditions\nprecedent set forth in Section 4.02 are satisfied (or waived by the Majority\n                       ------------                                         \nLenders), the Contingency Letter of Credit and (ii) on the Retainage Issuance\nDate, the Retainage Letter of Credit.  In the event of any inconsistency between\nthe terms and conditions of this Agreement and the terms and conditions of any\nform of letter of credit application or other agreement submitted by the\nBorrower to, or entered into by the Borrower with, the Issuing Bank relating to\nany Letter of Credit, the terms and conditions of this Agreement shall control.\n\n     (b)  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.\n          --------------------------------------------------------------------- \nTo request the issuance of a Letter of Credit (or the amendment, renewal or\nextension of an outstanding Letter of Credit), the Borrower shall hand deliver\nor telecopy (or transmit by electronic communication if arrangements for doing\nso have been approved by the Issuing Bank) to the Issuing Bank and the\nAdministrative Agent (reasonably in advance of the requested date of issuance,\namendment, renewal or extension) an Issuance Request requesting the issuance of\na Letter of Credit, or identifying the Letter of Credit to be amended, renewed\nor extended, the date of issuance, amendment, renewal or extension, the date on\nwhich such Letter of Credit is to expire (which shall comply with paragraph (c)\n                                                                  -------------\nof this Section), the stated amount of such Letter of Credit, the name and\naddress of the beneficiary thereof and such other information as shall be\nnecessary to prepare, amend, renew or extend such Letter of Credit.  If\nrequested by the Issuing Bank, the Borrower also shall submit a letter of credit\napplication on the Issuing Bank's standard form in connection with any request\nfor a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or\nextended only if, after giving effect to such issuance, amendment, renewal or\nextension (i) the LC Exposure for all Letters of Credit then outstanding shall\nnot exceed $50,000,000 and (ii) the sum of the aggregate principal amount of the\nTerm Loans then outstanding and the LC Exposure shall not exceed the total Term\nLoan Commitments.  The Contingency Letter of Credit will permit multiple draws\nthereunder and, once any drawing thereunder has been reimbursed in accordance\nwith the terms hereof, will, subject to the preceding sentence, permit the\nstated amount thereof to be increased by the amount so reduced.  Any portion of\nthe Term Loan Commitments utilized for the Contingency Letter of Credit may be\nreused for the issuance of the Retainage Letter of Credit, subject to the\nrestrictions in the preceding sentence and the\n\n                                      -43-\n\n \nsatisfaction (or waiver by the Majority Lenders) of the applicable conditions\nset forth in Section 4.02.\n             ------------ \n\n     (c)  Expiration Date.  The Retainage Letter of Credit shall expire at or\n          ---------------                                                    \nprior to the close of business on the date which is one year after the date of\nthe issuance of such Letter of Credit, but in no event later than the Maturity\nDate.  The Contingency Letter of Credit shall expire at or prior to the close of\nbusiness on the earlier of (i) the date on which the Borrower would no longer be\nrequired to maintain funds on deposit in the Escrow Contingent Account in\naccordance with the Contractor Escrow and Security Agreement if the Contingency\nLetter of Credit had not been issued and (ii) 20 days after the Guaranteed\nCompletion Date.\n\n     (d)  Participation.  By the issuance of a Letter of Credit (or an amendment\n          -------------                                                         \nto a Letter of Credit increasing the amount thereof) and without any further\naction on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby\ngrants to each Lender, and each Lender hereby acquires from the Issuing Bank, a\nparticipation in such Letter of Credit equal to such Lender's Applicable\nPercentage of the aggregate amount available to be drawn under such Letter of\nCredit.  In consideration and in furtherance of the foregoing, each Lender\nhereby absolutely and unconditionally agrees to pay to the Administrative Agent,\nfor the account of the Issuing Bank, such Lender's Applicable Percentage of each\nLC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on\nthe date due as provided in paragraph (e) of this Section, or of any\n                            -------------                           \nreimbursement payment required to be refunded to the Borrower for any reason.\nEach Lender acknowledges and agrees that its obligation to acquire a\nparticipation pursuant to this paragraph in respect of each Letter of Credit is\nabsolute and unconditional and shall not be affected by any circumstance\nwhatsoever, including any amendment, renewal or extension of any Letter of\nCredit or the occurrence and continuance of a Default, a Designated Event, an\nEvent of Default or a Material Adverse Effect or reduction or termination of the\nCommitments, and that each such payment shall be made without any offset,\nabatement, withholding or reduction whatsoever.\n\n     (e)  Reimbursement.  If the Issuing Bank shall make any LC Disbursement in\n          -------------                                                        \nrespect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement\nby paying to the Administrative Agent an amount equal to such LC Disbursement\nnot later than 2:00 p.m., New York City time, on the date that such LC\nDisbursement is made, if the Borrower shall have received notice of such LC\nDisbursement prior to 10:00 a.m., New York City time, on such date, or, if such\nnotice has not been received by the Borrower prior to such time on such date,\nthen not later than 2:00 p.m., New York City time, on (i) the Business Day that\nthe Borrower receives such notice, if such notice is received prior to 10:00\n\n                                      -44-\n\n \na.m., New York City time, on the day of receipt, or (ii) the Business Day\nimmediately following the day that the Borrower receives such notice, if such\nnotice is not received prior to such time on the day of receipt; provided that\n                                                                 --------     \nthe Borrower may, subject to the conditions to borrowing set forth herein,\nrequest in accordance with Section 2.03 that such payment be financed with an\n                           ------------                                      \nABR Borrowing in an equivalent amount and, to the extent so financed, the\nBorrower's obligation to make such payment shall be discharged and replaced by\nthe resulting ABR Borrowing.  If the Borrower fails to make such payment when\ndue, or if any payment by the Borrower must be returned or restored (by reason\nof a bankruptcy proceeding or otherwise), the Administrative Agent shall notify\neach Lender of the applicable LC Disbursement, the payment then due from the\nBorrower in respect thereof and such Lender's Applicable Percentage thereof.\nPromptly following receipt of such notice, each Lender shall pay to the\nAdministrative Agent its Applicable Percentage of the payment then due from the\nBorrower, in the same manner as provided in Section 2.06 with respect to Loans\n                                            ------------                      \nmade by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the\n                         ------------              ------- --------        \npayment obligations of the Lenders), and the Administrative Agent shall promptly\npay to the Issuing Bank the amounts so received by it from the Lenders.\nPromptly following receipt by the Administrative Agent of any payment from the\nBorrower pursuant to this paragraph, the Administrative Agent shall distribute\nsuch payment to the Issuing Bank or, to the extent that Lenders have made\npayments pursuant to this paragraph to reimburse the Issuing Bank and are Non-\nDefaulting Lenders, then to such Non-Defaulting Lenders and the Issuing Bank as\ntheir interests may appear.  Any payment made by a Lender pursuant to this\nparagraph to reimburse the Issuing Bank for any LC Disbursement (other than the\nfunding of ABR Loans as contemplated above) shall not constitute a Loan and\nshall not relieve the Borrower of its obligation to reimburse such LC\nDisbursement.\n\n     (f)  Obligations Absolute.  The Borrower's obligation to reimburse LC\n          --------------------                                            \nDisbursements as provided in paragraph (e) of this Section, and each Lender's\n                             -------------                                   \nobligation to reimburse the Issuing Bank for any LC Disbursement, shall be\nabsolute, unconditional and irrevocable, and shall be performed strictly in\naccordance with the terms of this Agreement irrespective of any event or\ncircumstance that would constitute a legal or equitable discharge of the\nBorrower's obligations hereunder, and irrespective of any other circumstances,\nincluding the following:\n\n          (i)  any lack of validity or enforceability of this Agreement, any\n     Loan Document, any Letter of Credit, or of any Letter of Credit application\n     or other agreement between the Issuing Bank and an account party;\n\n                                      -45-\n\n \n          (ii)  any amendment or waiver of or any consent to departure from the\n     provisions of this Agreement or any other Loan Document in accordance with\n     the terms thereof;\n\n          (iii)  the existence of any claim, set-off, defense or other right\n     that the Borrower may have at any time against any beneficiary or any\n     permitted transferee of any Letter of Credit (or any Person for whom any\n     such beneficiary or any such transferee may be acting), the Administrative\n     Agent, the Issuing Bank, any Lender or any other Person, whether in\n     connection with this Agreement, any Letter of Credit, the transactions\n     contemplated hereby or by the other Loan Documents or any unrelated\n     transaction (including an underlying transaction between the Borrower and\n     the beneficiary named in any such Letter of Credit);\n\n          (iv)  any draft, demand, certificate or other document presented under\n     or in connection with any Letter of Credit proving to be forged, fraudulent\n     or invalid in any respect or any statement therein being untrue or\n     inaccurate in any respect;\n\n          (v)  any payment by the Issuing Bank acting in good faith under any\n     Letter of Credit against presentation of a draft or certificate that does\n     not strictly comply with the terms of any Letter of Credit; or any payment\n     made by the Issuing Bank under any Letter of Credit to any Person\n     reasonably believed by it to be a trustee in bankruptcy, debtor-in-\n     possession, assignee for the benefit of creditors, liquidator, receiver or\n     other representative of or successor to any beneficiary or any transferee\n     of any Letter of Credit, including any arising in connection with any\n     insolvency proceeding;\n\n          (vi)  any exchange, release or non-perfection of any collateral, or\n     any release or amendment or waiver of or consent to departure from any\n     guarantee or other obligation, for all or any of the obligations of the\n     Borrower in respect of any Letter of Credit; or\n\n          (vii)  any other circumstance or happening whatsoever, whether or not\n     similar to any of the foregoing, including any other circumstance that\n     might otherwise constitute a defense available to, or a discharge of, the\n     Borrower or a guarantor;\n\nprovided that the foregoing shall not be construed to excuse the Issuing Bank\n--------                                                                     \nfrom liability to the Borrower to the extent of any direct damages (as opposed\nto consequential damages, claims in respect of which are hereby waived by the\nBorrower to the extent permitted by applicable law) suffered by the Borrower\nthat are caused by the Issuing Bank's failure to exercise the agreed\n\n                                      -46-\n\n \nstandard of care (as set forth below) in determining whether drafts and other\ndocuments presented under a Letter of Credit comply with the terms thereof.\nNeither the Administrative Agent, the Lead Agents, the Lenders nor the Issuing\nBank, nor any of their Related Parties, shall have any liability or\nresponsibility by reason of or in connection with the issuance or transfer of\nany Letter of Credit or any payment or failure to make any payment thereunder,\nor any error, omission, interruption, loss or delay in transmission or delivery\nof any draft, notice or other communication under or relating to any Letter of\nCredit (including any document required to make a drawing thereunder), any error\nin interpretation of technical terms or any consequence arising from causes\nbeyond the control of the Issuing Bank; provided that the foregoing shall not be\n                                        --------                                \nconstrued to excuse the Issuing Bank from liability to the Borrower to the\nextent of any direct damages (as opposed to consequential damages, claims in\nrespect of which are hereby waived by the Borrower to the extent permitted by\napplicable law) suffered by the Borrower that are caused by the Issuing Bank's\nfailure to exercise the agreed standard of care (as set forth below) in\ndetermining whether drafts and other documents presented under a Letter of\nCredit comply with the terms thereof.  The parties hereto expressly agree that\nthe Issuing Bank shall have exercised the agreed standard of care in the absence\nof gross negligence or wilful misconduct on the part of the Issuing Bank,\n                                                                         \nprovided that it is understood and agreed that the Issuing Bank may accept\n--------                                                                  \ndocuments that appear on their face to be in substantial compliance with the\nterms of a Letter of Credit, without responsibility for further investigation,\nand may make payment upon presentation of documents that appear on their face to\nbe in substantial compliance with the terms of such Letter of Credit; and\n                                                                         \nprovided, further, that (i) the Issuing Bank shall have the right, in its sole\n--------  -------                                                             \ndiscretion, to decline to accept such documents and to make such payment if such\ndocuments are not in strict compliance with the terms of such Letter of Credit\nand (ii) the Borrower shall have in any event waived any right it may have to\nobject to payment by the Issuing Bank against documents presented to it unless\nexpressly objected to in writing within twenty days after such payment and, if\nrequested in writing by the Borrower, delivery to the Borrower of such documents\nby the Issuing Bank.  The Issuing Bank agrees to promptly notify the Borrower of\neach LC Disbursement.\n\n     (g)  Disbursement Procedures.  The Issuing Bank shall, promptly following\n          -----------------------                                             \nits receipt thereof, examine all documents purporting to represent a demand for\npayment under a Letter of Credit.  The Issuing Bank shall promptly notify the\nAdministrative Agent and the Borrower by telephone (confirmed by telecopy) of\nsuch demand for payment and whether the Issuing Bank has made or will make an LC\nDisbursement thereunder.\n\n                                      -47-\n\n \n     (h)  Interim Interest.  If the Issuing Bank shall make any LC Disbursement,\n          ----------------                                                      \nthen, unless the Borrower shall reimburse such LC Disbursement in full on the\ndate such LC Disbursement is made, the unpaid amount thereof shall bear\ninterest, for each day from and including the date such LC Disbursement is made\nto but excluding the date that the Borrower reimburses such LC Disbursement, at\nthe rate per annum then applicable to ABR Term Loans; provided that, if the\n                                                      --------             \nBorrower fails to reimburse such LC Disbursement when due pursuant to paragraph\n                                                                      ---------\n(e) of this Section (including pursuant to an ABR Borrowing in accordance with\n---                                                                           \nSection 2.03), then Section 2.13(c) shall apply.  Interest accrued pursuant to\n------------        ---------------                                           \nthis paragraph shall be for the account of the Issuing Bank, except that\ninterest accrued on and after the date of payment by any Lender pursuant to\n                                                                           \nparagraph (e) of this Section to reimburse the Issuing Bank shall be for the\n-------------                                                               \naccount of such Lender to the extent of such payment.\n\n     (i)  Replacement of the Issuing Bank.  The Issuing Bank may be replaced at\n          -------------------------------                                      \nany time by written agreement among the Borrower, the Administrative Agent, the\nreplaced Issuing Bank, the successor Issuing Bank and any beneficiary of a\nLetter of Credit.  The Administrative Agent shall notify the Lenders of any such\nreplacement of the Issuing Bank.  At the time any such replacement shall become\neffective, the Borrower shall pay all unpaid fees accrued for the account of the\nreplaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective\n                                  ---------------                               \ndate of any such replacement, (i) the successor Issuing Bank shall have all the\nrights and obligations of the Issuing Bank under this Agreement with respect to\nLetters of Credit to be issued thereafter and (ii) references herein to the term\n\"Issuing Bank\" shall be deemed to refer to such successor or to any previous\nIssuing Bank, or to such successor and all previous Issuing Banks, as the\ncontext shall require.  After the replacement of an Issuing Bank hereunder, the\nreplaced Issuing Bank shall remain a party hereto and shall continue to have all\nthe rights and obligations of an Issuing Bank under this Agreement with respect\nto Letters of Credit issued by it prior to such replacement (unless such Letters\nof Credit are replaced with new Letters of Credit issued by the successor\nIssuing Bank), but shall not be required to issue additional Letters of Credit.\n\n     SECTION 2.6.  Funding of Borrowings.  (a)  Each Lender shall make each Loan\n                   ---------------------                                        \nto be made by it hereunder on the proposed date thereof by wire transfer of\nimmediately available funds by 12:00 noon, New York City time, to the account of\nthe Administrative Agent most recently designated by it for such purpose by\nnotice to the Lenders.  The Administrative Agent will make such Loans available\nto the Borrower by promptly crediting the amounts so received, in like funds, to\nthe Construction Account; provided that ABR Term Loans made to finance the\n                          --------                                        \nreimbursement of an LC Disbursement as provided in Section 2.05(e) shall be\n                                                   ---------------         \nremitted by the Administrative Agent to the Issuing Bank.\n\n                                      -48-\n\n \n     (b)  Unless the Administrative Agent shall have received notice from a\nLender prior to the proposed date of any Borrowing that such Lender will not\nmake available to the Administrative Agent such Lender's share of such\nBorrowing, the Administrative Agent may assume that such Lender has made such\nshare available on such date in accordance with paragraph (a) of this Section\n                                                -------------                \nand may, in reliance upon such assumption, make available to the Borrower a\ncorresponding amount.  In such event, if a Lender has not in fact made its share\nof the applicable Borrowing available to the Administrative Agent, then the\napplicable Lender agrees to pay to the Administrative Agent forthwith on demand\nsuch corresponding amount with interest thereon, for each day from and including\nthe date such amount is made available to the Borrower to but excluding the date\nof payment to the Administrative Agent, at the Federal Funds Effective Rate for\nthree days and at the Alternate Base Rate thereafter.  If such Lender pays such\namount to the Administrative Agent, then such amount shall constitute such\nLender's Loan included in such Borrowing.\n\n     SECTION 2.7.  Interest Elections.  (a)  Each Working Capital Borrowing and\n                   ------------------                                          \nTerm Loan Borrowing initially shall be of the Type specified in the applicable\nBorrowing Request and, in the case of a Eurodollar Borrowing, shall have an\ninitial Interest Period as specified in such Borrowing Request.  Thereafter, the\nBorrower may elect to convert such Borrowing to a different Type or to continue\nsuch Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest\nPeriods therefor, all as provided in this Article II.  The Borrower may elect\n                                          ----------                         \ndifferent options with respect to different portions of the affected Borrowing,\nin which case each such portion shall be allocated ratably among the Lenders\nholding the Loans comprising such Borrowing, and the Loans comprising each such\nportion shall be considered a separate Borrowing.\n\n     (b)  To make an election pursuant to this Section, the Borrower shall\nnotify the Administrative Agent of such election by delivering a\nContinuation\/Conversion Notice to the Administrative Agent by the time that a\nBorrowing Request would be required under Section 2.03 if the Borrower were\n                                          ------------                     \nrequesting a Borrowing of the Type resulting from such election to be made on\nthe effective date of such election.  Each such notice shall be irrevocable.\n\n     (c)  Each Continuation\/Conversion Notice shall specify the following\ninformation in compliance with Section 2.02:\n                               ------------ \n\n               (i)   the Borrowing to which such Continuation\/Conversion Notice\n     applies and, if different options are being elected with respect to\n     different portions thereof, the portions thereof to be allocated to each\n     resulting Borrowing (in which case the information to be\n\n                                      -49-\n\n \n     specified pursuant to clauses (iii) and (iv) below shall be specified for\n                           -------------     ----                             \n     each resulting Borrowing);\n\n               (ii)   the effective date of the election made pursuant to such\n     Continuation\/Conversion Notice, which shall be a Business Day;\n\n               (iii)    whether the resulting Borrowing is to be an ABR\n     Borrowing or a Eurodollar Borrowing; and\n\n               (iv)   if the resulting Borrowing is a Eurodollar Borrowing, the\n     Interest Period to be applicable thereto after giving effect to such\n     election, which shall be a period contemplated by the definition of the\n     term \"Interest Period\".\n\nIf any such Continuation\/Conversion Notice requests a Eurodollar Borrowing but\ndoes not specify an Interest Period, then the Borrower shall be deemed to have\nselected an Interest Period of one month's duration.\n\n     (d)  Promptly following receipt of a Continuation\/Conversion Notice, the\nAdministrative Agent shall advise each Lender of the details thereof and of such\nLender's portion of each resulting Borrowing.\n\n     (e)  If the Borrower fails to deliver a timely Continuation\/Conversion\nNotice with respect to a Eurodollar Borrowing prior to the end of the Interest\nPeriod applicable thereto, then, unless such Borrowing is repaid as provided\nherein, at the end of such Interest Period such Borrowing shall be converted to\nan ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of\nDefault has occurred and is continuing and the Administrative Agent, at the\nrequest of the Majority Lenders, so notifies the Borrower, then, so long as an\nEvent of Default is continuing (i) no outstanding Borrowing may be converted to\nor continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar\nBorrowing shall be converted to an ABR Borrowing at the end of the Interest\nPeriod applicable thereto.\n\n     SECTION 2.8.  Termination and Reduction of Commitments.  (a)  Unless\n                   ----------------------------------------              \npreviously terminated, the Commitments shall terminate on the Termination Date.\n\n     (b)  The Borrower shall notify the Administrative Agent of any election to\nterminate or reduce the Commitments under paragraph (c) of this Section at least\n                                          -------------                         \nfive (5) Business Days prior to the effective date of such termination or\nreduction, specifying such election and the effective date thereof.  Promptly\nfollowing receipt of any notice, the Administrative Agent shall advise the\nLenders of the contents thereof.  Each notice delivered by the Borrower pursuant\nto this Section shall\n\n                                      -50-\n\n \nbe irrevocable.  Any termination or reduction of the Commitments shall be\npermanent.  Each reduction of the Commitments of any Class shall be made ratably\namong the Lenders in accordance with their respective Commitments of such Class.\n\n     (c)  The Borrower may at any time terminate, or from time to time reduce,\nthe Commitments of any Class; provided that (i) each reduction of the\n                              --------                               \nCommitments of any Class shall be in an amount that is an integral multiple of\n$1,000,000, (ii) the Borrower shall not terminate or reduce the Commitments of\nany Class if, after giving effect to any concurrent prepayment of the Loans in\naccordance with Section 2.10 or 2.11, (A) with respect to the Working Capital\n                ------------    ----                                         \nLoan Commitments, the aggregate principal amount of the outstanding Working\nCapital Loans would exceed the Working Capital Loan Commitments or (B) with\nrespect to the Term Loan Commitments, the aggregate principal amount of the\noutstanding Term Loans and LC Exposure would exceed the Term Loan Commitments\nand (iii) the Borrower shall not terminate or reduce the Term Loan Commitments\nif the remaining Term Loan Commitments, together with other funds available to\nthe Borrower, would not, in the reasonable judgment of the Administrative Agent,\nbe sufficient to pay the remaining amounts owing under the Supply Contract and\nthe other costs necessary to complete the System.\n\n     (d) Except for mandatory prepayments made pursuant to Section 2.11(f), the\n                                                           ---------------     \nWorking Capital Loan Commitments shall be automatically and permanently reduced\nupon and in the amount of any payments made thereon pursuant to Section 2.09(a)\n                                                                ---------------\nand, after all Term Loans have been repaid in full, in the amount of any\nmandatory prepayments made thereon pursuant to Section 2.11.\n                                               ------------ \n\n     (e)  The Commitments shall be automatically and permanently reduced upon\nand in the amount of any payments made pursuant to clause tenth of Section\n                                                   ------------    -------\n8.08(a).\n------- \n\n     SECTION 2.9.  Repayment of Loans; Evidence of Debt.  (a)  The Borrower\n                   ------------------------------------                    \nhereby unconditionally promises to repay the Working Capital Borrowings and the\nTerm Loan Borrowings (including any Term Loan Borrowing used to repay an LC\nDisbursement, which Term Loan Borrowing may be made after the Initial Principal\nPayment Date) in eight semi-annual installments on Principal Payment Dates,\ncommencing on the Initial Principal Payment Date in an amount for each such\nPrincipal Payment Date as set forth on Schedule 2.09; provided that in no event\n                                       -------------  --------                 \nshall the Borrower be obligated to make payments of principal of Loans hereunder\nin an amount greater than the total principal amount of Loans outstanding\nhereunder.  On the First Principal Amortization Reset Date, if the aggregate\namount of Working Capital Loans then outstanding is less than $10,000,000, then\nthe aggregate amount of the installments payable on Principal Payment Dates as\nset forth on Schedule 2.09 shall be reduced by the difference between\n             -------------                                           \n$10,000,000 and the aggregate amount of Working Capital Loans\n\n                                      -51-\n\n \noutstanding as of such date, such reduction to be applied to the then remaining\ninstallments of principal pro rata.  On the Second Principal Amortization Reset\nDate, if the aggregate amount of Term Loans actually made hereunder is less than\n$400,000,000, then the aggregate amount of installments of Term Loans payable on\nPrincipal Payment Dates as set forth on Schedule 2.09 shall be reduced by the\n                                        -------------                        \ndifference between $400,000,000 and the aggregate amount of Term Loans actually\nmade hereunder, such reduction to be applied to the then remaining installments\nof principal pro rata.\n\n     (b)  Each Lender shall maintain in accordance with its usual practice an\naccount or accounts evidencing the indebtedness of the Borrower to such Lender\nresulting from each Loan made by such Lender, including the amounts of principal\nand interest payable and paid to such Lender from time to time hereunder.\n\n     (c)  The Administrative Agent acting for this purpose as an agent of the\nBorrower, shall maintain the Register pursuant to Section 10.04(c) and a\n                                                  ----------------      \nsubaccount therein for each Lender, in which it shall record (i) the amount of\neach Loan and each obligation evidenced by a Note made hereunder, the Class and\nType thereof and the Interest Period applicable thereto, (ii) the amount of any\nprincipal or interest due and payable or to become due and payable from the\nBorrower to each Lender hereunder and (iii) the amount of any sum received by\nthe Administrative Agent hereunder for the account of the Lenders and each\nLender's share thereof.\n\n     (d)  The entries made in the Register and the accounts maintained pursuant\nto paragraph (b) or (c) of this Section shall constitute prima facie evidence of\n   -------------    ---                                  ----- -----            \nthe existence and amounts of the obligations recorded therein; provided that the\n                                                               --------         \nfailure of any Lender or the Administrative Agent to maintain such accounts or\nany error therein shall not in any manner affect the obligation of the Borrower\nto repay the Loans in accordance with the terms of this Agreement.\n\n     (e)  The Borrower agrees that, upon the request to the Administrative Agent\nby any Lender, the Borrower will execute and deliver to such Lender, as\napplicable, (i) a promissory note of the Borrower payable to the order of such\nLender and its registered assigns evidencing the  Working Capital Loans of such\nLender and substantially in the form of Exhibit A-1 with appropriate insertions\n                                        -----------                            \nas to date and principal amount (each, a \"Working Capital Note\") and (ii) a\n                                          --------------------             \npromissory note of the Borrower payable to the order of such Lender and its\nregistered assigns evidencing the Term Loans of such Lender and substantially in\nthe form of Exhibit A-2 with appropriate insertions as to date and principal\n            -----------                                                     \namount\n\n(each, a \"Term Note\").  Thereafter, the Loans evidenced by any such Note and\n          ---------                                                         \ninterest thereon shall at all times (including\n\n                                      -52-\n\n \nafter assignment pursuant to Section 10.04) be represented by one or more Notes\n                             -------------                                     \npayable to the order of the payee named therein and its registered assigns.  A\nNote and the obligation evidenced thereby may be assigned or otherwise\ntransferred in whole or in part only by registration of such assignment or\ntransfer of such Note and the obligation evidenced thereby in the Register (and\neach Note shall expressly so provide).  Any assignment or transfer of all or\npart of an obligation evidenced by a Note shall be registered in the Register\nonly upon surrender for registration of assignment or transfer of the Note\nevidencing such obligation, accompanied by an Assignment and Acceptance duly\nexecuted by the assignor thereof, and thereupon, if requested by the assignee,\none or more new Notes shall be issued to the designated assignee and the old\nNote shall be returned by the Administrative Agent to the Borrower marked\n\"canceled\".  No assignment of a Note and the obligation evidenced thereby shall\nbe effective unless it shall have been recorded in the Register by the\nAdministrative Agent as provided in this subsection 2.09(e).\n                                         ------------------ \n\n     SECTION 2.10.  Optional Prepayments of Loans.  (a)  The Borrower shall have\n                    -----------------------------                               \nthe right at any time and from time to time to prepay any Borrowing in whole or\nin part, without premium or penalty (including with the proceeds released from\nthe Escrow Contingent Account upon the issuance of the Contingency Letter of\nCredit), subject to prior notice in accordance with paragraph (b) of this\n                                                    -------------        \nSection and subject to the provisions of Section 2.16.\n                                         ------------ \n\n     (b)  The Borrower shall notify the Administrative Agent in writing or by\ntelephone (confirmed by telecopy) of any optional prepayment hereunder, not\nlater than 11:00 a.m., New York City time, five Business Days before the date of\nprepayment.  Each such notice shall be irrevocable and shall specify, in the\ncase of any prepayment of Loans, the date and amount of prepayment and whether\nthe prepayment is (i) of Term Loans, Working Capital Loans or a combination\nthereof and (ii) of Eurodollar Loans, ABR Loans or a combination thereof, and,\nin each case if a combination thereof, the principal amount allocable to each,\nand shall specify how such prepayment shall be applied to the remaining\ninstallments of the Loans.  Promptly following receipt of any such notice, the\nAdministrative Agent shall advise the Lenders of the contents thereof.  Partial\noptional prepayments shall be in a minimum aggregate principal amount of\n$5,000,000 and integral multiples of $250,000 in excess thereof.  Optional\nprepayments shall be accompanied by accrued interest to the extent required by\n                                                                              \nSection 2.13.  Without in any way limiting the obligation of the Borrower to\n------------                                                                \nconfirm in writing any notice it may give hereunder by telephone, the\nAdministrative Agent may act prior to receipt of written confirmation without\nliability upon the basis of such telephonic notice believed by the\nAdministrative Agent in good faith to be from a Responsible Officer of the\nBorrower (or a designee of such Responsible\n\n                                      -53-\n\n \nOfficer).  In each such case the Borrower hereby waives the right to dispute the\nAdministrative Agent's record of the terms of any such telephonic notice.\n\n     (c)  Optional prepayments shall be applied to the remaining installments of\nthe Loans as specified by the Borrower in the notice of prepayment set forth in\n                                                                               \nparagraph (b) above.\n-------------       \n\n     SECTION 2.11.  Mandatory Prepayments.  (a)  The Borrower shall prepay the\n                    ---------------------                                     \noutstanding Loans with Presale Proceeds in accordance with the terms of Section\n                                                                        -------\n8.08(a).\n------- \n\n     (b)  On each Principal Payment Date, the Borrower shall prepay the\noutstanding Loans in an amount equal to 50% (or, if as of such date a Designated\nEvent shall have occurred and be continuing, 100%) of Excess Cash Flow\ndetermined as of such date, in each case in accordance with the terms of Section\n                                                                         -------\n8.08(d).\n------- \n\n     (c)  The Borrower shall prepay the Loans promptly after the receipt of Net\nCash Proceeds, as follows:\n\n               (i)   by an amount equal to 50% of the Net Cash Proceeds of any\n     new issuance after the Closing Date of Capital Stock of the Borrower in\n     accordance with Section 8.15(a); provided, however, that the Borrower shall\n                     ---------------  --------  -------                         \n     not be required to make any such prepayment if such Net Cash Proceeds are\n     immediately applied to the payment of Permitted Costs or are being held\n     (for no more than 60 days, unless such Net Cash Proceeds are being held for\n     the payment of Permitted Costs which are to be paid pursuant to a\n     definitive executed agreement) for the payment of Permitted Costs or such\n     Net Cash Proceeds are being held to pay an identified cost with the consent\n     of the Administrative Agent in the Construction Account, the Revenue\n     Account or the Clean-Up Account, as the case may be, in accordance with\n                                                                            \n     Section 8.15(a);\n     --------------- \n\n               (ii)   by an amount equal to 100% of the Net Cash Proceeds of an\n     incurrence of Indebtedness by the Borrower or Holdings after the Closing\n     Date (other than Indebtedness permitted by Section 6.01 and Indebtedness of\n                                                ------------                    \n     Holdings permitted pursuant to Section 6.01 of the Holdings Note Purchase\n     Agreement as in effect on the date hereof, but subject in any event to the\n     limitations contained in Section 6.01) in accordance with Section 8.15(b);\n                              ------------                     --------------- \n     and\n\n               (iii)    by an amount equal to 100% of the Net Cash Proceeds of\n     any sale, transfer or other disposition of any asset of the Borrower or the\n     Subsidiaries (other than (A) sales, transfers or dispositions described in\n                                                                               \n     clause (a), (b) and (e) of Section 6.04 and (B) dispositions resulting in\n     ----------  ---     ---    ------------                                  \n     aggregate Net Cash Proceeds not exceeding $500,000 during any fiscal year\n     of the Borrower) in accordance with Section\n                                         -------\n\n                                      -54-\n\n \n     8.15(c); provided, however, that the Borrower shall not be required to make\n     -------  --------  -------                                                 \n     any such prepayment if such Net Cash Proceeds are, within six months of\n     receipt, reinvested in the Borrower's or any Subsidiary's business (other\n     than for Permitted System Upgrades).\n\n     (d)  If an Event of Loss shall occur, unless the affected portion of the\nSystem is being repaired in accordance with Section 5.22, the Borrower shall, on\n                                            ------------                        \nthe third Business Day following the date on which insurance, condemnation or\nexpropriation proceeds are received with respect to such Event of Loss, prepay\nthe Loans in an amount equal to the insurance proceeds received in accordance\nwith Section 8.13(d).\n     --------------- \n\n     (e)  After the payment in full of all Capital Costs, the Borrower shall\nprepay the Loans with funds made available to it for prepayments of the Loans\nunder Section 8.20.\n      ------------ \n\n     (f)  The Borrower shall prepay the Working Capital Loans promptly after the\nreceipt by the Borrower or any Subsidiary of any refund of VAT by an amount\nequal to such refund less any costs, fees or other expenses incurred by the\nBorrower or such Subsidiary in connection with collecting such refund in\naccordance with Section 8.17.\n                ------------ \n\n     (g)  After the prepayment in full of all Loans, prepayments shall be made\nin accordance with the foregoing clauses to cash collateralize LC Exposure as if\nsuch LC Exposure were Loans.\n\n     (h)  Mandatory prepayments shall be accompanied by accrued interest to the\nextent required by Section 2.13.\n                   ------------ \n\n     (i)  Except as otherwise provided in paragraph (f) above, all mandatory\n                                          -------------                     \nprepayments of the Loans shall be applied first, to the mandatory prepayment of\n                                          -----                                \nthe Term Loans, second, to the mandatory prepayment of the Working Capital\n                ------                                                    \nLoans, and third, to the cash collateralization of LC Exposure.  Mandatory\n           -----                                                          \nprepayments of the Loans shall be applied to the installments thereof as\nfollows:  one-half of such prepayments shall be applied to such installments in\nthe direct order of maturity, and one-half of such prepayments shall be applied\nto such installments in the inverse order of maturity.\n\n     (j)  Upon making a mandatory prepayment pursuant to this Section, the\nBorrower shall have the right (i) first, to apply such prepayment to the ABR\nLoans and to any and all Eurodollar Loans having Interest Period(s) ending on\nthe date of such prepayment and (ii) then, with respect to Eurodollar Loans\nhaving Interest Period(s) ending on a day other than the date of such\nprepayment, to deposit cash in a cash collateral account, on terms and subject\nto documentation reasonably satisfactory to the Administrative Agent, sufficient\nto prepay in full such\n\n                                      -55-\n\n \nEurodollar Loans (together with accrued interest thereon) at the end of the\napplicable Interest Period(s).  Any amounts so deposited shall be held in a cash\ncollateral account and shall be applied to the prepayment of the applicable\nEurodollar Loans at the end of the current Interest Periods applicable thereto.\nThe Administrative Agent shall invest funds in any such cash collateral account\nin overnight investments constituting Permitted Investments.\n\n     SECTION 2.12.  Fees.  (a)  The Borrower agrees to pay to the Administrative\n                    ----                                                        \nAgent for the account of each Lender a commitment fee, which shall accrue at the\nrate of  1\/2 of 1% per annum on the average daily unused portion of the\nCommitments of such Lender during the period from the Closing Date to but\nexcluding the date on which such Commitment terminates.  Accrued commitment fees\nshall be payable in arrears on the last Business Day of each February, May,\nAugust and November of each year and on the date on which the Commitments\nterminate, commencing on the first such date to occur after the date hereof.\nAll commitment fees shall be computed on the basis of a year of 360 days and\nshall be payable for the actual number of days elapsed (including the first day\nbut excluding the last day).  For purposes of computing commitment fees with\nrespect to the Term Loan Commitments, a Term Loan Commitment of a Lender shall\nbe deemed to be used to the extent of the outstanding Term Loans and LC Exposure\nof such Lender.  For purposes of computing commitment fees relating to Working\nCapital Loan Commitments, a Working Capital Loan Commitment shall be deemed to\nbe used to the extent of the outstanding Working Capital Loans.\n\n     (b)  The Borrower agrees to pay (i) to the Administrative Agent for the\naccount of each Lender a participation fee with respect to its participation in\neach Letter of Credit, which shall accrue at a rate per annum equal to the\nApplicable Rate applicable to interest on Eurodollar Term Loans on the average\ndaily amount of such Lender's LC Exposure in respect of such Letter of Credit\n(excluding any portion thereof attributable to unreimbursed LC Disbursements)\nduring the period from and including the date such Letter of Credit is issued to\nbut excluding the date on which such Letter of Credit is terminated, and (ii) to\nthe Issuing Bank a fronting fee, which shall accrue at the rate of .15% per\nannum on the average daily stated amount of each outstanding Letter of Credit\n(as such stated amount may be reduced in accordance with the terms of such\nLetter of Credit) issued by the Issuing Bank during the period from and\nincluding the date such Letter of Credit is issued to but excluding the date on\nwhich such Letter of Credit is terminated.  Participation fees and fronting fees\naccrued through and including the last Business Day of each February, May,\nAugust and November of each year shall be payable on such Business Day,\ncommencing on the first such date to occur after the issuance of a Letter of\nCredit; provided that all such fees shall be payable on the date\n        --------                                                \n\n                                      -56-\n\n \non which such Letter of Credit terminates.  All participation fees and fronting\nfees shall be computed on the basis of a year of 360 days and shall be payable\nfor the actual number of days elapsed (including the first day but excluding the\nlast day).\n\n     (c)  The Borrower agrees to pay to the Administrative Agent and the\nArrangers, for their own account, the fees payable in the amounts and at the\ntimes separately agreed upon between the Borrower, the Administrative Agent and\nthe Arrangers in the Lead Agent Fee Letters.\n\n     (d)  All fees payable hereunder shall be paid on the dates due, in\nimmediately available funds, to the Administrative Agent (or to the Issuing\nBank, in the case of fees payable to it) for distribution, in the case of\ncommitment fees and participation fees, to the Lenders.\n\n     SECTION 2.13.  Interest.  (a)  The Loans comprising each ABR Borrowing\n                    --------                                               \nshall bear interest at a rate per annum equal to the Alternate Base Rate plus\nthe Applicable Rate.\n\n     (b)  The Loans comprising each Eurodollar Borrowing shall bear interest at\na rate per annum equal to the Adjusted LIBO Rate for the Interest Period in\neffect for such Borrowing plus the Applicable Rate.\n\n     (c)  Notwithstanding the foregoing, if any principal of or interest on any\nLoan or any fee or other amount payable by the Borrower hereunder is not paid\nwhen due, whether at stated maturity, upon acceleration or otherwise, such\noverdue amount shall bear interest, after as well as before judgment, at a rate\nper annum equal to (i) in the case of overdue principal of any Loan, 2% plus the\nrate otherwise applicable to such Loan as provided above or (ii) in the case of\nany other amount, 2% plus the rate applicable to ABR Loans as provided above.\n\n     (d)  Accrued interest on each Loan shall be payable in arrears on each\nInterest Payment Date for such Loan; provided that (i) interest accrued pursuant\n                                     --------                                   \nto paragraph (c) of this Section shall be payable on demand, (ii) in the event\n   -------------                                                              \nof any repayment or prepayment of any Loan, accrued interest on the principal\namount repaid or prepaid shall be payable on the date of such repayment or\nprepayment, (iii) in the event of any conversion of any Eurodollar Borrowing\nprior to the end of the current Interest Period therefor, accrued interest on\nsuch Loan shall be payable on the effective date of such conversion and (iv) all\naccrued interest shall be payable upon termination of the Commitments.\n\n     (e)  All interest hereunder shall be computed on the basis of a year of 360\ndays, except that interest computed by reference to the Alternate Base Rate at\ntimes when the Alternate Base Rate\n\n                                      -57-\n\n \nis based on the Prime Rate shall be computed on the basis of a year of 365 days\n(or 366 days in a leap year), and in each case shall be payable for the actual\nnumber of days elapsed (including the first day but excluding the last day).\n\n     SECTION 2.14.  Alternate Rate of Interest; Illegality.  (a) If prior to the\n                    --------------------------------------                      \ncommencement of any Interest Period for a Eurodollar Borrowing:\n\n          (i)  the Administrative Agent determines (which determination shall be\n     conclusive absent manifest error) that adequate and reasonable means do not\n     exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as\n     applicable, for such Interest Period; or\n\n          (ii)  the Administrative Agent is advised by the Majority Lenders that\n     the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest\n     Period will not adequately and fairly reflect the cost to such Lenders of\n     making or maintaining their Loans included in such Borrowing for such\n     Interest Period;\n\nthen the Administrative Agent shall give notice thereof to the Borrower and the\nLenders by telephone or telecopy as promptly as practicable thereafter and,\nuntil the Administrative Agent notifies the Borrower and the Lenders that the\ncircumstances giving rise to such notice no longer exist, (i) any\nContinuation\/Conversion Notice that requests the conversion of any Borrowing to,\nor continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective\nand (ii) if any Borrowing Request requests a Eurodollar Borrowing, such\nBorrowing shall be made as an ABR Borrowing.\n\n     (b)  Notwithstanding any other provision of this Agreement, if on or after\nthe date of this Agreement the adoption of or any change in any applicable law\nor in the interpretation or application thereof shall make it unlawful for any\nLender to make or maintain Eurodollar Loans as contemplated by this Agreement,\nsuch Lender shall give telex, telecopy or telephonic notice thereof to the\nAdministrative Agent and the Borrower as soon as practicable (and, with respect\nto any such telephonic notice, the party delivering the same agrees to confirm\nsuch notice in writing) and (i) the commitment of such Lender hereunder to make\nEurodollar Loans and continue Eurodollar Loans as such shall forthwith be\ncanceled and (ii) such Lender's Loans then outstanding as Eurodollar Loans, if\nany, shall be converted automatically to ABR Loans on the respective last days\nof the then current Interest Periods with respect to such Loans or within such\nearlier period as required by law.  If any such conversion of a Eurodollar Loan\noccurs on a day which is not the last day of the then current Interest Period\nwith respect\n\n                                      -58-\n\n \nthereto, the Borrower shall pay to such Lender such amounts, if any, as may be\nrequired pursuant to Section 2.16.\n                     ------------ \n\n     SECTION 2.15.  Increased Costs.  (a)  If any Change in Law shall:\n                    ---------------                                   \n\n          (i)   impose, modify or deem applicable any reserve, special deposit\n     or similar requirement against assets of, deposits with or for the account\n     of, or credit extended or participated in by, any Lender (except any such\n     reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing\n     Bank; or\n\n          (ii)   impose on any Lender or the Issuing Bank any other condition\n     affecting this Agreement or Eurodollar Loans made by such Lender or any\n     Letter of Credit or participation therein;\n\nand the result of any of the foregoing shall be to increase the cost to such\nLender of making or maintaining any Eurodollar Loan (or of maintaining its\nobligation to make any such Loan) or to increase the cost to such Lender or the\nIssuing Bank of participating in, issuing or maintaining any Letter of Credit or\nto reduce the amount of any sum received or receivable by such Lender or the\nIssuing Bank hereunder (whether of principal, interest or otherwise), then the\nBorrower will pay to such Lender or the Issuing Bank, as the case may be, such\nadditional amount or amounts as will compensate such Lender or the Issuing Bank,\nas the case may be, for such additional costs incurred or reduction suffered.\n\n     (b)  If any Lender or the Issuing Bank determines that any Change in Law\nregarding capital requirements has or would have the effect of reducing the rate\nof return on the capital of such Lender, the Issuing Bank or any holding company\nfor such Lender or the Issuing Bank as a consequence of this Agreement or the\nLoans made by, or participation in Letters of Credit held by, such Lender, or\nthe Letters of Credit issued by the Issuing Bank, to a level below that which\nsuch Lender, the Issuing Bank or the holding company for such Lender or Issuing\nBank could have achieved but for such Change in Law (taking into consideration\nsuch Lender's or the Issuing Bank's policies with respect to capital adequacy),\nthen from time to time the Borrower will pay to such Lender, the Issuing Bank,\nor such Lender's or the Issuing Bank's holding company, as the case may be, such\nadditional amount or amounts as will compensate such Lender or the Issuing Bank\nfor any such reduction suffered.\n\n     (c)  If any Lender or the Issuing Bank becomes entitled to claim\ncompensation pursuant to this Section, such Lender shall promptly notify the\nBorrower (with a copy to the Administrative Agent) of the event by reason of\nwhich it has become so entitled.\n\n                                      -59-\n\n \nA certificate of a Lender or the Issuing Bank setting forth the amount or\namounts necessary to compensate such Lender or the Issuing Bank or such holding\ncompany, as the case may be, as specified in paragraph (a) or (b) of this\n                                             -------------    ---        \nSection delivered to the Borrower (with a copy to the Administrative Agent),\nshall constitute prima facie evidence of the correctness of the amount claimed.\n                 ----- -----                                                   \n\n     (d)  The Borrower shall pay such Lender or the Issuing Bank, as the case\nmay be, all amounts payable pursuant to the foregoing provisions of this Section\n                                                                         -------\n2.15 within 20 days after receipt of certification thereof from such Lender or\n----                                                                          \nthe Issuing Bank.  Failure or delay on the part of any Lender or the Issuing\nBank to demand compensation pursuant to this Section shall not constitute a\nwaiver of such Lender's or the Issuing Bank's right to demand such compensation;\n                                                                                \nprovided that the Borrower shall not be required to compensate a Lender or the\n--------                                                                      \nIssuing Bank pursuant to this Section for any increased costs or reductions\nincurred more than six months prior to the date that such Lender or the Issuing\nBank, as the case may be, notifies the Borrower of the Change in Law giving rise\nto such increased costs or reductions and of such Lender's or the Issuing Bank's\nintention to claim compensation therefor.\n\n     SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of\n                    ----------------------                                     \nany principal of any Eurodollar Loan other than on the last day of an Interest\nPeriod applicable thereto, (b) the conversion of any Eurodollar Loan other than\non the last day of the Interest Period applicable thereto or (c) the failure to\nborrow, convert, continue or prepay any Eurodollar Loan on the date specified in\nany notice delivered pursuant hereto, then, in any such event, the Borrower\nshall compensate each Lender for the loss, cost and expense attributable to such\nevent.  In the case of a Eurodollar Loan, the loss to any Lender attributable to\nany such event shall be equal to the excess, if any, of (i) the amount of\ninterest that such Lender would pay for a deposit equal to the principal amount\nof such Loan for the period from the date of such payment, conversion or failure\nto the last day of the then current Interest Period for such Loan (or, in the\ncase of a failure to borrow, convert or continue, the duration of the Interest\nPeriod that would have resulted from such borrowing, conversion or continuation)\nif the interest rate payable on such deposit were equal to the Adjusted LIBO\nRate for such Interest Period, over (ii) the amount of interest that such Lender\nwould earn on such principal amount for such period if such Lender were to\ninvest such principal amount for such period at the interest rate that would be\nbid by such Lender (or an affiliate of such Lender) for dollar deposits from\nother banks in the eurodollar market at the commencement of such period.  A\ncertificate of any Lender setting forth any amount or amounts that such Lender\nis entitled to receive pursuant to this Section shall be delivered by such\nLender to the Borrower (with a copy to the Administrative\n\n                                      -60-\n\n \nAgent) and shall constitute prima facie evidence of the correctness of the\n                            ----- -----                                   \namount claimed.\n\n     SECTION 2.17.  Taxes.  (a)  Any and all payments by or an account of any\n                    -----                                                    \nobligation of the Borrower hereunder shall be made free and clear of and without\ndeduction for any Indemnified Taxes or Other Taxes; provided that if the\n                                                    --------            \nBorrower shall be required to deduct any Indemnified Taxes or Other Taxes from\nsuch payments, then (i) the sum payable shall be increased as necessary so that\nafter making all required deductions (including deductions applicable to\nadditional sums payable under this Section) the Administrative Agent, Lender or\nIssuing Bank (as the case may be) receives an amount equal to the sum it would\nhave received had no such deductions been made, (ii) the Borrower shall make\nsuch deductions and (iii) the Borrower shall pay the full amount deducted to the\nrelevant Governmental Authority in accordance with applicable law.\n\n     (b)  In addition, the Borrower shall pay any Other Taxes to the relevant\nGovernmental Authority in accordance with applicable law.\n\n     (c)  The Borrower shall indemnify the Administrative Agent, each Lender and\nthe Issuing Bank, for the full amount of any Indemnified Taxes or Other Taxes\npaid by the Administrative Agent, such Lender or the Issuing Bank, as the case\nmay be, and any penalties, interest and reasonable expenses arising therefrom or\nwith respect thereto, whether or not such Indemnified Taxes or Other Taxes were\ncorrectly or legally imposed or asserted by the relevant Governmental Authority.\nA certificate as to the amount of such payment or liability delivered to the\nBorrower by a Lender or the Issuing Bank, or by the Administrative Agent on its\nown behalf or on behalf of a Lender or the Issuing Bank, shall constitute prima\n                                                                          -----\nfacie evidence of the correctness of the amount claimed.\n-----                                                   \n\n     (d)  As soon as reasonably practicable after any payment of Indemnified\nTaxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower\nshall deliver to the Administrative Agent the original or a certified copy of a\nreceipt issued by such Governmental Authority evidencing such payment, a copy of\nthe return reporting such payment or other evidence of such payment reasonably\nsatisfactory to the Administrative Agent.\n\n     (e)  Without in any way affecting the obligation of the Borrower under\n                                                                           \nSection 2.17(a)(i) to pay any increased amount only on account of Indemnified\n------------------                                                           \nTaxes, each Lender organized under the laws of a jurisdiction outside the United\nStates, on or prior to the date of its execution and delivery of this Agreement\nor on the date of the Assignment and Acceptance pursuant to which it becomes a\nLender, as the case may be, and from time to time\n\n                                      -61-\n\n \nthereafter if requested in writing by the Borrower or the Administrative Agent\n(but only so long as such Lender remains lawfully able to do so), shall provide\nthe Borrower and the Administrative Agent with Internal Revenue Service form\n1001 or 4224, as appropriate, or any successor or other form prescribed by the\nInternal Revenue Service, certifying that such Lender is exempt from or entitled\nto a reduced rate of United States withholding tax on payments of interest\npursuant to this Agreement or the Notes.  At the reasonable request of the\nBorrower, any Lender that is legally entitled to an exemption from or reduction\nof withholding tax which is an Indemnified Tax with respect to payments under\nthis Agreement shall deliver to the Borrower (with a copy to the Administrative\nAgent), at the time or times reasonably requested by the Borrower or at such\ntimes as are otherwise prescribed by applicable law, such properly completed and\nexecuted documentation prescribed by applicable law as will permit such payments\nto be made without withholding or subject to withholding at a reduced rate.  If\nany form or document referred to in this subsection (e) requires the disclosure\nof information (other than information necessary to compute the tax payable or\ninformation required by the relevant taxing authority to secure such exemption\nor reduction with respect to withholding tax and that is necessary to secure\nsuch exemption from or reduction of withholding tax) that the Lender reasonably\nconsiders to be confidential, the Lender shall give notice thereof to the\nBorrower and shall not be obligated to include in such form or document such\nconfidential information.\n\n     (f)  If a Lender, the Issuing Bank or the Administrative Agent shall become\naware that it is entitled to receive a refund in respect of an Indemnified Tax\npaid by the Borrower, which refund in the good faith judgment of such Lender is\nallocable to such payment made pursuant to this Section, it shall promptly\nnotify the Borrower of the availability of such refund and shall, within 30 days\nafter the receipt of a request by the Borrower, apply for such refund.  If any\nLender, the Issuing Bank or the Administrative Agent receives a refund in\nrespect of any Indemnified Tax paid by the Borrower, or as to which it has been\nindemnified by the Borrower, which refund in the good faith judgment of such\nLender is allocable to such payment made pursuant to this Section, it shall\npromptly notify the Borrower of such refund and shall, within 20 days of\nreceipt, repay such refund to the Borrower (together with any interest with\nrespect thereto received from the relevant taxing authority).  In any event,\neach Lender shall have the right to arrange its tax affairs as it, in its sole\ndiscretion, deems most advantageous to it and nothing shall require a Lender to\ndisclose its tax returns or other confidential fiscal or tax information to the\nBorrower.\n\n     SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.\n                    ----------------------------------------------------------- \n(a)  The Borrower shall make each payment required to be made by it hereunder\n(whether of principal,\n\n                                      -62-\n\n \ninterest, fees or reimbursement of LC Disbursements, or under Section 2.15, 2.16\n                                                              ------------  ----\nor 2.17, or otherwise) prior to 1:00 p.m., New York City time, on the date when\n   ----                                                                        \ndue, in immediately available funds, without set-off or counterclaim.  Subject\nto Article VIII, all such payments shall be made to the Administrative Agent at\n   ------------                                                                \nits offices at 1251 Avenue of the Americas, New York, New York, 10019 except\npayments to be made directly to the Issuing Bank as expressly provided herein\nand except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall\n                                     -------------  ----  ----     -----      \nbe made directly to the Persons entitled thereto.  The Administrative Agent\nshall distribute any such payments (including payments received pursuant to\n                                                                           \nArticle VIII) received by it for the account of any other Person to the\n------------                                                           \nappropriate recipient promptly following receipt thereof.  Except as set forth\nherein, if any payment hereunder shall be due on a day that is not a Business\nDay, the date for payment shall be extended to the next succeeding Business Day,\nand, in the case of any payment accruing interest, interest thereon shall be\npayable for the period of such extension.  All payments hereunder shall be made\nin dollars.\n\n     (b)  If at any time insufficient funds are received by and available to the\nAdministrative Agent to pay fully all amounts of principal, unreimbursed LC\nDisbursements, interest and fees then due hereunder, such funds shall be\napplied, subject to the provisions of Article VIII, (i) first, to pay interest\n                                      ------------                            \nand fees then due hereunder, ratably among the parties entitled thereto in\naccordance with the amounts of interest and fees then due to such parties, and\n(ii) second, to pay principal and unreimbursed LC Disbursements then due\nhereunder, ratably among the parties entitled thereto in accordance with the\namounts of principal and unreimbursed LC Disbursements then due to such parties.\n\n     (c)  If any Lender shall, by exercising any right of set-off or\ncounterclaim or otherwise, obtain payment in respect of any principal of or\ninterest on any of its Loans or participation in LC Disbursements resulting in\nsuch Lender receiving payment of a greater proportion of the aggregate amount of\nits Loans and participation in LC Disbursements and accrued interest thereon\nthan the proportion received by any other Lender, then the Lender receiving such\ngreater proportion shall purchase (for cash at face value) a participation in\nthe Loans and LC Disbursements of the other Lenders to the extent necessary so\nthat the benefit of all such payments shall be shared by the Lenders ratably in\naccordance with the aggregate amount of principal of and accrued interest on\ntheir respective Loans and participation in LC Disbursements; provided that (i)\n                                                              --------         \nif any such participation is purchased and all or any portion of the payment\ngiving rise thereto is recovered, such participation shall be rescinded and the\npurchase price restored to the extent of such recovery, without interest, and\n(ii) the provisions of this paragraph shall not be construed to apply to any\npayment made by the Borrower pursuant to and in accordance with the express\nterms of this\n\n                                      -63-\n\n \nAgreement or any payment obtained by a Lender as consideration for the\nassignment of or sale of a participation in any of its Loans or participation in\nLC Disbursements to any assignee or participant, other than to the Borrower or\nany Subsidiary or Affiliate thereof (as to which the provisions of this\nparagraph shall apply).\n\n     (d)  Unless the Administrative Agent shall have received notice from the\nBorrower prior to the date on which any payment is due to the Administrative\nAgent for the account of the Lenders or the Issuing Bank hereunder that the\nBorrower will not make such payment, the Administrative Agent may assume that\nthe Borrower has made such payment on such date in accordance herewith and may,\nin reliance upon such assumption, distribute to the Lenders or the Issuing Bank,\nas the case may be, the amount due.  In such event, if the Borrower has not in\nfact made such payment, then each of the Lenders or the Issuing Bank, as the\ncase may be, severally agrees to repay to the Administrative Agent forthwith on\ndemand the amount so distributed to such Lender or Issuing Bank with interest\nthereon, for each day from and including the date such amount is distributed to\nit to but excluding the date of payment to the Administrative Agent, at the\nFederal Funds Effective Rate for three days and at the Alternate Base Rate\nthereafter.\n\n     (e)  If any Lender shall fail to make any payment required to be made by it\npursuant to Section 2.05(d) or (e), 2.06(b) or 2.18(d), then the Administrative\n            ---------------    ---  -------    -------                         \nAgent may, in its discretion or, as to Section 2.05(d) or (e), as may be\n                                       ---------------    ---           \nrequired by the Issuing Bank (notwithstanding any contrary provision hereof),\napply any amounts thereafter received by the Administrative Agent for the\naccount of such Lender to satisfy such Lender's obligations under such Sections\nuntil all such unsatisfied obligations are fully paid.\n\n     SECTION 2.19.  Mitigation Obligations; Replacement of Lenders.  (a)  If any\n                    ----------------------------------------------              \nLender requests compensation under Section 2.15, or if the Borrower is required\n                                   ------------                                \nto pay any additional amount to any Lender or any Governmental Authority for the\naccount of any Lender pursuant to Section 2.17, then such Lender shall use\n                                  ------------                            \nreasonable efforts to designate a different lending office for funding or\nbooking its Loans hereunder or to assign its rights and obligations hereunder to\nanother of its offices, branches or affiliates, if, in the judgment of such\nLender, such designation or assignment (i) would eliminate or reduce amounts\npayable pursuant to Section 2.15  or 2.17, as the case may be, in the future and\n                    ------------     ----                                       \n(ii) would not subject such Lender to any unreimbursed cost or expense and would\nnot otherwise be disadvantageous to such Lender.\n\n     (b)  If any Lender requests compensation under Section 2.15 which is not\n                                                    ------------             \nbeing requested by the Lenders generally, or if the\n\n                                      -64-\n\n \nBorrower is required to pay any additional amount to any Lender or any\nGovernmental Authority for the account of any Lender pursuant to Section 2.17,\n                                                                 ------------ \nor if any Lender becomes a Defaulting Lender, then the Borrower may, at its sole\nexpense and effort, upon notice to such Lender and the Administrative Agent, so\nlong as no Default or Designated Event shall have occurred and is continuing,\nrequire such Lender to assign and delegate, without recourse (in accordance with\nand subject to the restrictions contained in Section 10.04), all its interests,\n                                             -------------                     \nrights and obligations under this Agreement to an assignee that shall assume\nsuch obligations (which assignee may be another Lender, if a Lender accepts such\nassignment); provided that (i) the Borrower shall have received the prior\n             --------                                                    \nwritten consent of the Administrative Agent and the Issuing Bank, which consent\nshall not unreasonably be withheld or delayed, (ii) such Lender shall have\nreceived payment of an amount equal to the outstanding principal of its Loans\nand participation in LC Disbursements, accrued interest thereon, accrued fees\nand all other amounts payable to it hereunder, from the assignee (to the extent\nof such outstanding principal and accrued interest and fees) or the Borrower (in\nthe case of all other amounts) and (iii) in the case of any such assignment\nresulting from a claim for compensation under Section 2.15 or payments required\n                                              ------------                     \nto be made pursuant to Section 2.17, such assignment will result in a reduction\n                       ------------                                            \nin such compensation or payments.  A Lender shall not be required to make any\nsuch assignment and delegation if, prior thereto, as a result of a waiver by\nsuch Lender or otherwise, the circumstances entitling the Borrower to require\nsuch assignment and delegation cease to apply.\n\n     (c)  If a Lender changes its applicable lending office (other than pursuant\nto paragraph (d) below) and the effect of such change, as of the date of such\nchange, would be to cause the Borrower to become obligated to pay any additional\namount under Section 2.15 or 2.17, the Borrower shall not be obligated to pay\n             ------------    ----                                            \nsuch additional amount.\n\n     (d)  If a condition or an event occurs which would, or would upon the\npassage of time or giving of notice, result in the payment of any additional\namount to any Lender by the Borrower pursuant to Section 2.15 or 2.17, such\n                                                 ------------    ----      \nLender shall promptly notify the Borrower and the Administrative Agent and shall\ntake such steps as may reasonably be available to it to mitigate the effects of\nsuch condition or event (which shall include efforts to rebook the Loans held by\nsuch Lender at another lending office, or through another branch or an\naffiliate, of such Lender); provided that such Lender shall not be required to\n                            --------                                          \ntake any step that, in its reasonable judgment, would be materially\ndisadvantageous to its business or operations or would require it to incur\nadditional costs (unless the Borrower agrees to fund such costs in a manner\nsatisfactory to such Lender).\n\n                                      -65-\n\n \n                                  ARTICLE III\n\n                         REPRESENTATIONS AND WARRANTIES\n                         ------------------------------\n\n     The Borrower represents and warrants to the Administrative Agent, the\nIssuing Bank, the Lead Agents and the Lenders on the Closing Date and on the\ndate of each Borrowing that:\n\n     SECTION 3.1.  Financial Condition.  The Borrower has heretofore furnished\n                   -------------------                                        \nto the Lenders its unaudited consolidated balance sheet and statements of\nincome, stockholders' equity and cash flow as of and for the fiscal quarter and\nthe portion of the fiscal year ended March 31, 1997, in each case, certified by\na Responsible Officer of the Borrower.  Such financial statements present\nfairly, in all material respects, the financial position and results of\noperations and cash flow of the Borrower and its consolidated Subsidiaries as of\nsuch date and for such period in accordance with GAAP, subject to year-end\nadjustments and the absence of footnotes.  All material liabilities of the\nBorrower on such date are disclosed in such balance sheet.\n\n     SECTION 3.2.  No Change.   Since March 31, 1997, there has been no\n                   ---------                                           \ndevelopment or event and no change which has had or could reasonably be expected\nto have a Material Adverse Effect, except as expressly contemplated by the Loan\nDocuments; provided that an adverse change in sales or prospective sales of\n           --------                                                        \nCapacity whether or not based on changes or perceived changes in external market\nconditions (including as a result of increased competition or introductions or\napplications of new technology) will not, in and of itself (or because of any\nrelated reduction in net income), provide a basis that an event described above\nhas occurred.\n\n     SECTION 3.3.  Organization; Powers.  Each of the Borrower and the\n                   --------------------                               \nSubsidiaries is duly organized, validly existing and in good standing under the\nlaws of the jurisdiction of its organization and is qualified to do business in\nsuch jurisdiction and in each other jurisdiction in which the conduct of its\nbusiness requires such qualification, except where the failure to be so\nqualified could not reasonably be expected to have a Material Adverse Effect.\n\n     SECTION 3.4.  Authorization; Enforceability.  (a) Each of the Borrower and\n                   -----------------------------                               \nthe Subsidiaries has full corporate power and authority to conduct its business\nas proposed to be conducted by it in respect of the System and to execute,\ndeliver and perform each Loan Document and System Contract to which it is a\nparty and to take all action as may be necessary to complete the transactions\ncontemplated hereunder.\n\n     (b)  Each of the Borrower and the Subsidiaries has taken all necessary\ncorporate action to authorize the borrowings and other\n\n                                      -66-\n\n \nCredit Extensions hereunder by the Borrower, to grant the Liens provided for in\nthe Security Documents to which it is a party and to authorize the execution,\ndelivery and performance of this Agreement and each other Loan Document and\nSystem Contract to which it is a party.\n\n     (c)  Each of this Agreement and each other Loan Document and System\nContract to which the Borrower or any Subsidiary is a party has been duly\nexecuted and delivered by the Borrower or such Subsidiary, as the case may be,\nand constitutes a legal, valid and binding obligation of the Borrower or such\nSubsidiary, enforceable against the Borrower or such Subsidiary in accordance\nwith its terms, subject to applicable bankruptcy, insolvency, reorganization,\nmoratorium or other laws affecting creditors' rights generally and subject to\ngeneral principles of equity, regardless of whether considered in a proceeding\nin equity or at law.\n\n     SECTION 3.5.  Corporate Structure.  (a) As of the Closing Date, the only\n                   -------------------                                       \nshareholder of the Borrower is Holdings.  As of the Closing Date, the capital\nstructure of the Borrower and its Subsidiaries is as set forth on Schedule\n                                                                  --------\n3.05(a).\n------- \n\n     (b)  As of the Closing Date, the only subsidiaries of the Borrower are set\nforth on Schedule 3.05(b), each of which are wholly-owned direct subsidiaries of\n         ----------------                                                       \nthe Borrower.  From and after the Closing Date, the only subsidiaries of the\nBorrower not listed on Schedule 3.05(b) are those, if any, created and\n                       ----------------                               \ncapitalized in accordance with and subject to Sections 6.05 and 6.19.\n                                              -------------     ---- \n\n     SECTION 3.6.  Compliance with Law.  The Borrower and the Subsidiaries are\n                   -------------------                                        \nin compliance in all material respects with all Requirements of Law as of the\nClosing Date, and, as of any date representations and warranties are made or\ndeemed made under this Agreement subsequent to the Closing Date, are in\ncompliance with all Requirements of Law except to the extent of any non-\ncompliance which could not reasonably be expected to have a Material Adverse\nEffect.\n\n     SECTION 3.7.  No Legal Bar.  The execution, delivery and performance by the\n                   ------------                                                 \nBorrower and the Subsidiaries of each Loan Document and System Contract to which\nit is a party and the borrowings by the Borrower hereunder and the use of the\nproceeds thereof and the granting of all Liens under the Security Documents (a)\nwill not violate or result in a default under any Requirement of Law binding on\nsuch Person or its assets, (b) will not violate or result in a default under any\nmaterial Contractual Obligation of such Person and (c) will not result in the\ncreation or imposition of any Lien on any asset of the Borrower or any\nSubsidiary except Permitted Encumbrances.\n\n                                      -67-\n\n \n     SECTION 3.8.  Governmental Actions.   Schedule 3.08 sets forth, to the best\n                   --------------------    -------------                        \nknowledge of the Borrower, all Governmental Actions that are required to be\nobtained by the Borrower, any Subsidiary or the Contractor in connection with\nthe construction, installation, development, ownership and operation of the\nSystem.  To the best knowledge of the Borrower (after due inquiry), no Landing\nLicense is required in the Federal Republic of Germany.  By written notice to\nthe Administrative Agent, the Borrower shall be permitted to amend and\nsupplement such Schedule from time to time in connection with any amendment or\nsupplement to the schedule provided by the Contractor under Article 7(G) of the\nSupply Contract.\n\n     SECTION 3.9.  Litigation.  There are no actions, suits or proceedings by or\n                   ----------                                                   \nbefore any arbitrator or Governmental Authority pending against or, to the\nknowledge of the Borrower, threatened (a) by or against the Borrower, any other\nLoan Party or the System or (b) with respect to any Loan Document, in either\ncase which could reasonably be expected to have a Material Adverse Effect.\n\n     SECTION 3.10.  Environmental Matters.  No condition or violation of\n                    ---------------------                               \nEnvironmental Laws exists with respect to the System, the Borrower, any\nSubsidiary or any of their respective properties or assets owned or operated by\nthem which in each case could reasonably be expected to have a Material Adverse\nEffect.  To the best knowledge of the Borrower, no other violation of\nEnvironmental Law exists which could reasonably be expected to have a Material\nAdverse Effect.\n\n     SECTION 3.11.  No Default; Event of Default.  None of the Borrower or any\n                    ----------------------------                              \nother Loan Party is in default in any material respect under any System Contract\nor is in default under any Loan Document as of the Closing Date.  As of any date\nrepresentations and warranties are made or deemed made under this Agreement\nsubsequent to the Closing Date, (a) none of the Borrower or any other Loan Party\nis in default under any System Contract which could reasonably be expected to\nhave a Material Adverse Effect and (b) no payment Default or Specified Event of\nDefault has occurred and is continuing.\n\n     SECTION 3.12.  Properties.  The Borrower and each Subsidiary has good title\n                    ----------                                                  \nto,  valid leasehold interests in or an indefeasible right to use (pursuant to\nthe SSI IRU and Option Agreement) all its real and personal property material to\nits business free and clear of all Liens, except for Permitted Encumbrances and\nminor defects in title that do not interfere with its ability to conduct its\nbusiness as currently conducted or to utilize such properties for their intended\npurposes.\n\n     SECTION 3.13.  Taxes.  To the best of the Borrower's knowledge, neither the\n                    -----                                                       \nBorrower, any of the Subsidiaries nor the\n\n                                      -68-\n\n \nSystem is subject to any material tax in any jurisdiction, except for taxes set\nforth in Schedule 3.13.  Each of the Borrower and the Subsidiaries has timely\n         -------------                                                       \nfiled or caused to be filed all tax returns and reports required to have been\nfiled by such Person and has paid or caused to be paid all Taxes shown to be due\non such returns except Taxes subject to a Contest.\n\n     SECTION 3.14.  Federal Regulations.  The Borrower is not engaged nor will\n                    -------------------                                       \nit engage in the business of extending credit for the purpose of \"purchasing\" or\n\"carrying\" any \"margin stock\" within the respective meanings of each of the\nquoted terms under Regulations G, U and X of the Board of Governors of the\nFederal Reserve System as now and from time to time hereafter in effect.  No\npart of the proceeds of the Loans will be used for \"purchasing\" or \"carrying\"\nany \"margin stock\" as so defined or for any purpose which violates the\nprovisions of the Regulations of such Board of Governors.\n\n     SECTION 3.15.  ERISA.  No ERISA Event has occurred or is reasonably\n                    -----                                               \nexpected to occur that, when taken together with all other such ERISA Events for\nwhich liability is reasonably expected to occur, could reasonably be expected to\nhave a Material Adverse Effect, and no contribution failure has occurred with\nrespect to any Plan sufficient to give rise to a lien under Section 302(f) of\nERISA.\n\n     SECTION 3.16.  Investment Company Act.  Neither the Borrower nor any\n                    ----------------------                               \nSubsidiary is an \"investment company\" as defined in, or subject to regulation\nunder, the Investment Company Act of 1940.\n\n     SECTION 3.17.  Security Documents.  The recordings and filings shown on\n                    ------------------                                      \nSchedule 3.17 are, on and as of the Closing Date, all the recordings, filings\n-------------                                                                \nand other actions necessary and appropriate to establish, protect and perfect\nthe Administrative Agent's security interest in the right, title, estate and\ninterest of the Borrower and the Subsidiaries in and to the Collateral which can\nbe perfected by the filing of Uniform Commercial Code financing statements or by\npossession by the Administrative Agent (the \"Perfectible Collateral\").  The\n                                             ----------------------        \nSecurity Documents are effective to create in favor of the Administrative Agent\nvalid and enforceable first Liens on, and first security interests in, all\nright, title, estate and interest of the Borrower and the Subsidiaries in and to\nthe Perfectible Collateral.\n\n     SECTION 3.18.  Principal Place of Business.  As of the Closing Date, the\n                    ---------------------------                              \nprincipal place of business of the Borrower is located in Hamilton, Bermuda, the\nregistered office of business of the U.S. Subsidiary is located at The\nCorporation Trust Company, 1209 Orange Street, Wilmington, New Castle Court,\nDelaware 19801, and the registered office of the U.K. Subsidiary\n\n                                      -69-\n\n \nis located at Th Floor, The Quadrangle, Imperial Square, Cheltenham GL50 1YX,\nUnited Kingdom.\n\n     SECTION 3.19.  Disclosure.  The written factual information furnished by\n                    ----------                                               \n(or based on written information furnished by) the Borrower to the Lenders in\nconnection with the negotiation of the Loan Documents (including written\ninformation furnished by, or based on written information furnished by, the\nBorrower and contained in the Confidential Memorandum) (excluding any financial\nprojections and other estimates or views of future circumstances), taken as a\nwhole, does not contain, as of the Closing Date, any untrue statements of\nmaterial fact and does not omit to state, as of the Closing Date, any material\nfact necessary in order to make the statements contained therein, in light of\nthe circumstances under which they were made, not materially misleading (unless\nsuperseded or corrected and disclosed in writing prior to the Closing Date).\nThe costs set forth in the Capital Budget reflect, as of the Closing Date, the\nBorrower's best estimates of all costs necessary for the construction,\ninstallation and financing of the System.  The projections delivered by the\nBorrower to the Lead Agents on the Closing Date in accordance with Section\n                                                                   -------\n4.01(j) (which are substantially the same as the projections contained in the\n-------                                                                      \nConfidential Memorandum) have been prepared in good faith and have been based on\nassumptions which were reasonable at the time prepared.  The Operating Plan\ndelivered with the initial Operating Budget has been, and the Operating Budget\nfor each ensuing Operating Year, as of the date delivered to the Administrative\nAgent in accordance with the terms hereof, shall have been, prepared by the\nBorrower in good faith and have been based on assumptions which were reasonable\nat the time prepared.\n\n     SECTION 3.20.  Sufficiency of System Contracts.  The services to be\n                    -------------------------------                     \nperformed and other rights granted pursuant to the System Contracts and the Loan\nDocuments comprise all of the material services, materials and property\ninterests required to perform the System Activities.\n\n     SECTION 3.21.  Immunity.  Neither the Borrower nor any Subsidiary is\n                    --------                                             \nentitled to claim for itself, any of its assets or the System immunity from\nsuit, execution, attachment or other legal process in any proceeding in any\njurisdiction in connection with any of the Loan Documents or System Contracts to\nwhich it is a party.\n\n     SECTION 3.22.  Export Control.  Each of the Borrower and the Subsidiaries\n                    --------------                                            \nis in compliance in all material respects with all U.S. export laws and\nregulations applicable to it.\n\n     SECTION 3.23.  Foreign Corrupt Practices Act.  None of the Borrower, any\n                    -----------------------------                            \nSubsidiary or any of its officers, directors, employees, agents or affiliates,\nacting on its behalf, has taken\n\n                                      -70-\n\n \nany action in connection with the System that violates the Foreign Corrupt\nPractices Act of the United States, if applicable.\n\n     SECTION 3.24.  Intellectual Property.  Each of the Borrower and its\n                    ---------------------                               \nSubsidiaries own or are licensed or otherwise have the right to use (and have\nmaintained in full force and effect and have not abandoned) or obtain all of the\ntrademarks, copyrights, patents, licenses and other intellectual property rights\nthat are reasonably necessary for the operation of each of their respective\nbusinesses, without, to the best of the Borrower's knowledge, conflict with the\nrights of any other Person and free of Liens (other than Permitted\nEncumbrances), except where the failure to have any such rights could not\nreasonably be expected to have a Material Adverse Effect.\n\n\n                                   ARTICLE IV\n\n                                   CONDITIONS\n                                   ----------\n\n     SECTION 4.1.  Conditions Precedent to the Initial Credit Extensions.  The\n                   -----------------------------------------------------      \nobligations of each Working Capital Lender to make its initial Working Capital\nLoans available on the Closing Date shall be subject to the fulfillment of, or\nwaiver by the Majority Lenders of, each of the following conditions precedent:\n\n          (a)  Loan Documents.  The Administrative Agent shall have received,\n               --------------                                                \n     with a counterpart for each Lender, each of the following documents:\n\n                    (i)   this Agreement, duly executed and delivered by each of\n          the parties hereto;\n\n                    (ii)   the Holdings Pledge Agreement, duly executed and\n          delivered by Holdings and the Administrative Agent, together with (A)\n          the stock certificate representing all of the Capital Stock of the\n          Borrower and (B) undated stock powers for such stock certificate\n          representing such Capital Stock, executed in blank and delivered by a\n          duly authorized officer of Holdings;\n\n                    (iii)    the Borrower Pledge Agreement, duly executed and\n          delivered by the Borrower and the Administrative Agent, together with\n          (A) the stock certificates representing all of the Capital Stock of\n          the U.S. Subsidiary and (B) undated stock powers for each stock\n          certificate representing such Capital Stock, executed in blank and\n          delivered by a duly authorized officer of the Borrower;\n\n                                      -71-\n\n \n                    (iv)   the Borrower Security Agreement, duly executed and\n          delivered by the Borrower and the Administrative Agent;\n\n                    (v)   the U.S. Subsidiary Security Agreement, duly executed\n          and delivered by the U.S. Subsidiary and the Administrative Agent;\n\n                    (vi)   the SSI Lender Pledge Agreement, duly executed and\n          delivered by SSI Sub 1 and the Administrative Agent;\n\n                    (vii)    the SSI Lender Security Agreement, duly executed\n          and delivered by SSI Sub 2 and the Administrative Agent; and\n\n                    (viii)    the Subsidiary Guaranty Agreement, duly executed\n          and delivered by the U.S. Subsidiary.\n\n          (b)  System Contracts.  The Administrative Agent shall have received,\n               ----------------                                                \n     with a counterpart for each Lender, each of the following documents:\n\n                    (i)   a true and complete copy of the Supply Contract, duly\n          certified as such by a Responsible Officer of the Borrower as of the\n          Closing Date and as being in full force and effect;\n\n                    (ii)   Supplement No. 1 to the Supply Contract, in form and\n          substance reasonably satisfactory to the Lead Agents, duly executed\n          and delivered by the Contractor, the Borrower and the Subsidiaries;\n\n                    (iii)    a true and complete copy of the Supply Contract\n          Guaranty, duly certified as such by a Responsible Officer of the\n          Borrower as of the Closing Date and as being in full force and effect;\n\n                    (iv)   a true and complete copy of the OA&M Agreement, duly\n          certified as such by a Responsible Officer of the Borrower as of the\n          Closing Date and as being in full force and effect;\n\n                    (v)   Supplement No. 1 to the OA&M Agreement, in form and\n          substance reasonably satisfactory to the Lead Agents, duly executed\n          and delivered by the Operator, the Borrower and the Subsidiaries;\n\n                    (vi)   a true and complete copy of the Sales Agency\n          Agreement, duly certified as such by a Responsible Officer of the\n          Borrower as of the Closing Date and as being in full force and effect;\n\n                                      -72-\n\n \n          (vii)    Supplement No. 1 to the Sales Agency Agreement, in form and\n          substance reasonably satisfactory to the Lead Agents, duly executed\n          and delivered by the Sales Agent, the Borrower and the Subsidiaries;\n\n                    (viii)    the SSI Consent, duly executed and delivered by\n          the Contractor, the Administrative Agent and the Borrower;\n\n                    (ix)   the SSI IRU and Option Agreement, duly executed and\n          delivered by the U.S. Subsidiary and SSI Sub 2;\n\n                    (x)   a true and complete copy of the Advisory Services\n          Agreement, duly certified as such by a Responsible Officer of the\n          Borrower as of the Closing Date and as being in full force and effect,\n          together with the First Amendment thereto;\n\n                    (xi)   a true and complete copy of the Contractor Escrow and\n          Security Agreement, duly certified as such by a Responsible Officer of\n          the Borrower as of the Closing Date and as being in full force and\n          effect, together with the First Amendment thereto;\n\n                    (xii)    the SSI Indemnity Agreement, duly executed and\n          delivered by SSI and the Borrower;\n\n                    (xiii)    the SSI Subordinated Pledge Agreement, duly\n          executed and delivered by SSI Sub 1 and the U.S. Subsidiary;\n\n                    (xiv)    the SSI Subordinated Security Agreement, duly\n          executed and delivered by SSI Sub 2 and the U.S. Subsidiary; and\n\n                    (xv)   the Intercompany Agreement, duly executed and\n          delivered by the Borrower and the Subsidiaries.\n\n          (c)  Legal Opinions.  The Administrative Agent shall have received,\n               --------------                                                \n     with a counterpart for each Lender, the following executed legal opinions,\n     each dated the Closing Date:\n\n                    (i)   the legal opinion of Appleby, Spurling & Kempe,\n          Bermuda counsel to the Borrower and Holdings, substantially in the\n          form of Exhibit O-1;\n                  ----------- \n\n                    (ii)   the legal opinion of Simpson Thacher & Bartlett,\n          special New York counsel to the Borrower and\n\n                                      -73-\n\n \n          the Subsidiaries, substantially in the form of Exhibit O-2;\n                                                         ----------- \n\n                    (iii)    the legal opinion of Hogan & Hartson, LLP, special\n          U.S. regulatory counsel to the Borrower and the Subsidiaries,\n          substantially in the form of Exhibit O-3;\n                                       ----------- \n\n                    (iv)   the legal opinion of Clifford Chance, special U.K.\n          regulatory counsel, substantially in the form of Exhibit O-4;\n                                                           ----------- \n\n                    (v)   the legal opinion of in-house counsel to AT&T,\n          substantially in the form of Exhibit O-5;\n                                       ----------- \n\n                    (vi)   the legal opinion of in-house counsel to SSI,\n          substantially in the form of Exhibit O-6; and\n                                       -----------     \n\n                    (vii)    the legal opinion of Davis Polk and Wardwell, New\n          York counsel to SSI, SSI Sub 1 and SSI Sub 2, substantially in the\n          form of\n          Exhibit O-7.\n          ----------- \n\n          (d)  Independent Engineer's Report.  The Administrative Agent shall\n               -----------------------------                                 \n     have received, with a copy for each Lender, the final report of the\n     Independent Engineer, dated March, 1997.\n\n          (e)  Market Consultant's Report.  The Administrative Agent shall have\n               --------------------------                                      \n     received, with a copy for each Lender, the final report of the Market\n     Consultant.\n\n          (f)  Insurance Consultant's Report.  The Administrative Agent shall\n               -----------------------------                                 \n     have received, with a copy for each Lender, a report of the Insurance\n     Consultant, in form and substance reasonably satisfactory to the Lead\n     Agents, which addresses the adequacy of the insurance required to be\n     maintained by the Contractor under the Supply Contract (other than as to\n     levels of self-insurance and deductibles) as well as the adequacy of the\n     insurance proposed to be maintained by the Borrower and the Subsidiaries.\n\n          (g)  Insurance.  The Administrative Agent shall have received, with a\n               ---------                                                       \n     copy for each Lender, a certificate of the Insurance Consultant stating\n     that all required insurance policies to be maintained by the Borrower and\n     the Subsidiaries on the Closing Date pursuant to this Agreement have been\n     obtained and are in full force and effect.\n\n          (h)  Capital Budget.  The Administrative Agent shall have received,\n               --------------                                                \n     with a copy for each Lender, a construction and capital budget and\n     construction drawdown schedule (including a drawdown schedule with respect\n     to the Loans)  (as amended in accordance with the terms hereof, the\n\n                                      -74-\n\n \n     \"Capital Budget\"), in form and substance reasonably satisfactory to the\n      --------------                                                        \n     Lead Agents, which sets forth all Capital Costs to be incurred prior to\n     System Final Completion.\n\n          (i)  Landing Licenses.  The Administrative Agent shall have received\n               ----------------                                               \n     evidence reasonably satisfactory to the Lead Agents that the Borrower and\n     the Subsidiaries have appropriately filed, or caused to be filed, all\n     necessary applications for the issuance of the Landing Licenses.\n\n          (j)  Projections.  The Administrative Agent shall have received, with\n               -----------                                                     \n     a copy for each Lender, a copy of the Projections reformatted in form\n     reasonably satisfactory to the Lead Agents and reflecting information\n     arising from the final versions of the System Contracts, certified as of\n     the Closing Date by a Responsible Officer of the Borrower as being prepared\n     in good faith and based on reasonable assumptions.\n\n          (k)  Tax Report.  The Administrative Agent shall have received, with a\n               ----------                                                       \n     copy for each Lender, a copy of a tax report from Arthur Andersen LLP with\n     respect to VAT and duties, in form and substance reasonably satisfactory to\n     the Lead Agents, and such other information reasonably satisfactory to the\n     Lead Agents with respect to taxes payable by the Borrower and the\n     Subsidiaries as the Lead Agents shall reasonably require.\n\n          (l)  Security Interests (Recordings and Filings).  Each of the\n               -------------------------------------------              \n     documents and instruments set forth in Schedule 3.17 shall have been\n                                            -------------                \n     delivered to the Administrative Agent for recording or filing or shall have\n     been recorded or filed in the respective places or offices set forth in\n                                                                            \n     Schedule 3.17, and any and all recording and filing fees with respect\n     -------------                                                        \n     thereto shall have been paid.\n\n          (m)  Equity Contributions.  The Administrative Agent shall be\n               --------------------                                    \n     reasonably satisfied that the Borrower received on March 25, 1997 a capital\n     contribution in an amount equal to $175,000,000.\n\n          (n)  No Violation of Law.  The consummation of the transactions\n               -------------------                                       \n     contemplated by the Loan Documents and by the System Contracts shall not\n     violate any Requirement of Law.\n\n          (o)  Financial Statements.  The Administrative Agent shall have\n               --------------------                                      \n     received the unaudited balance sheet and related financial statements of\n     the Borrower for the fiscal quarter ended March 31, 1997, certified as such\n     by a Responsible Officer of the Borrower.\n\n                                      -75-\n\n \n          (p)  Fees.  The Administrative Agent and the Lead Agents shall have\n               ----                                                          \n     received all fees and expenses (including counsel fees and expenses) due\n     and payable by the Borrower to the Administrative Agent and the Lead Agents\n     on or prior to the Closing Date.\n\n          (q)  Agent for Service of Process.  The Administrative Agent shall\n               ----------------------------                                 \n     have received evidence reasonably satisfactory to the Lead Agents that the\n     Borrower and each other Loan Party that does not have an office in the\n     United States has irrevocably appointed an agent in New York, New York for\n     service of process.\n\n          (r)  Corporate Proceedings of the Borrower.  The Administrative Agent\n               -------------------------------------                           \n     shall have received a copy of the resolutions, in form and substance\n     reasonably satisfactory to the Lead Agents, of the Board of Directors of\n     the Borrower authorizing (i) the execution, delivery and performance of\n     this Agreement and the other Loan Documents and System Contracts to which\n     it is a party, (ii) the borrowings contemplated hereunder and (iii) the\n     granting by it of the Liens created pursuant to the Security Documents to\n     which it is a party, certified by the Secretary or an Assistant Secretary\n     of the Borrower as of the Closing Date, which certificate shall be in form\n     and substance reasonably satisfactory to the Lead Agents and shall state\n     that the resolutions thereby certified have not been amended, modified,\n     revoked or rescinded.\n\n              (s)  Borrower Incumbency Certificate.  The Administrative Agent\n                   -------------------------------                           \n          shall have received a certificate of the Borrower, dated the Closing\n          Date, as to the incumbency and signature of the officers of the\n          Borrower executing any Loan Document or System Contract, in form and\n          substance reasonably satisfactory to the Lead Agents, executed by the\n          President or any Vice President and the Secretary or any Assistant\n          Secretary of the Borrower.\n\n          (t)  Corporate Proceedings of Holdings.  The Administrative Agent\n               ---------------------------------                           \n     shall have received a copy of the resolutions, in form and substance\n     reasonably satisfactory to the Lead Agents, of the Board of Directors of\n     Holdings authorizing (i) the execution, delivery and performance of the\n     Loan Documents to which Holdings is a party and (ii) the granting by it of\n     the Liens created pursuant to the Security Documents to which it is a\n     party, certified by the Secretary or an Assistant Secretary of Holdings as\n     of the Closing Date, which certificate shall be in form and substance\n     reasonably satisfactory to the Lead Agents and shall state that the\n     resolutions thereby certified have not been amended, modified, revoked or\n     rescinded.\n\n                                      -76-\n\n \n     (u)  Holdings Incumbency Certificate.  The Administrative Agent shall have\n          -------------------------------                                      \n     received a certificate of Holdings, dated the Closing Date, as to the\n     incumbency and signature of the officers of Holdings executing any Loan\n     Document, in form and substance reasonably satisfactory to the Lead Agents,\n     executed by the President or any Vice President and the Secretary or any\n     Assistant Secretary of Holdings.\n\n          (v)  Corporate Proceedings of Subsidiaries.  The Administrative Agent\n               -------------------------------------                           \n     shall have received a copy of the resolutions, in form and substance\n     reasonably satisfactory to the Lead Agents, of the Board of Directors of\n     the U.S. Subsidiary authorizing (i) the execution, delivery and performance\n     of the Loan Documents to which it is a party and (ii) the granting by it of\n     the Liens created pursuant to the Security Documents to which it is a\n     party, certified by a Responsible Officer of the U.S. Subsidiary as of the\n     Closing Date, which certificate shall be in form and substance reasonably\n     satisfactory to the Lead Agents and shall state that the resolutions\n     thereby certified have not been amended, modified, revoked or rescinded.\n\n          (w)  Subsidiary Incumbency Certificates.  The Administrative Agent\n               ----------------------------------                           \n     shall have received a certificate of the U.S. Subsidiary, dated the Closing\n     Date, as to the incumbency and signature of the officers of the U.S.\n     Subsidiary executing any Loan Document, in form and substance reasonably\n     satisfactory to the Lead Agents, executed by two Responsible Officers of\n     the U.S. Subsidiary.\n\n          (x)  Corporate Proceedings of SSI, SSI Sub 1 and SSI Sub 2.  The\n               -----------------------------------------------------      \n     Administrative Agent shall have received a copy of the resolutions, in form\n     and substance reasonably satisfactory to the Administrative Agent, of the\n     Board of Directors of each of SSI, SSI Sub 1 and SSI Sub 2, as the case may\n     be, authorizing (i) the execution, delivery and performance of the Loan\n     Documents or the System Contracts to which it is a party, and (ii) the\n     granting by it of the Liens created pursuant to the Security Documents to\n     which it is a party, certified by the Secretary or an Assistant Secretary\n     of such Person as of the Closing Date, which certificate shall be in form\n     and substance reasonably satisfactory to the Lead Agents and shall state\n     that the resolutions thereby certified have not been amended, modified,\n     revoked or rescinded.\n\n              (y)  SSI, SSI Sub 1 and SSI Sub 2 Incumbency Certificates.  The\n                   ----------------------------------------------------      \n          Administrative Agent shall have received a certificate of each of SSI,\n          SSI Sub 1 and SSI Sub 2 each dated the Closing Date, as to the\n          incumbency and signature of the officers of SSI, SSI\n\n                                      -77-\n\n \n          Sub 1 and SSI Sub 2, as the case may be, executing any System\n          Contract, in form and substance reasonably satisfactory to the Lead\n          Agents, executed by the President or any Vice President and the\n          Secretary or any Assistant Secretary of SSI, SSI Sub 1 and SSI Sub 2,\n          as the case may be.\n\n          (z)  Corporate Documents.  The Administrative Agent shall have\n               -------------------                                      \n     received true and complete copies of the certificate of incorporation and\n     by-laws (or such other organizational and governing documents) of each of\n     Holdings, the Borrower, the U.S. Subsidiary, SSI, SSI Sub 1 and SSI Sub 2,\n     certified as of the Closing Date as complete and correct copies thereof by\n     a Responsible Officer of such Person.\n\n          (aa)  Closing Date Certificate.  The Administrative Agent shall have\n                ------------------------                                      \n     received the Closing Date Certificate, dated the Closing Date and duly\n     executed by a Responsible Officer of the Borrower, stating that (a) no\n     default in any material respect as to the Borrower or its Subsidiaries has\n     occurred and is continuing under any System Contract and (b) to the best of\n     the Borrower's knowledge, no default in any material respect as to any\n     other party thereto has occurred and is continuing under any System\n     Contract, together with all attachments thereto.\n\n          (ab)  Representations and Warranties.  All representations and\n                ------------------------------                          \n     warranties made by the Borrower and each other Obligor in any Loan Document\n     or System Contract shall be true and correct in all material respects when\n     made (unless any such representation or warranty relates solely to an\n     earlier date, in which case it shall have been true and correct in all\n     material respects as of such earlier date).\n\n          (ac)  No Default or Event of Default.  No Default or Event of Default\n                ------------------------------                                 \n     shall have occurred and be continuing as of the Closing Date.\n\n          (ad)  Borrowing Request.  The Administrative Agent shall have received\n                -----------------                                               \n     a Borrowing Request in accordance with Section 2.03, with appropriate\n                                            ------------                  \n     insertions and attachments, executed by a Responsible Officer of the\n     Borrower.\n\n          (ae)  Satisfactory Documentation.  All documentation shall be\n                --------------------------                             \n     reasonably satisfactory to the Lead Agents.\n\n     SECTION 4.2.  Conditions Precedent to Subsequent Credit Extensions.  The\n                   ----------------------------------------------------      \nobligation of each Lender to make a Loan on the occasion of any Borrowing (other\nthan the initial Working Capital Loans made on the Closing Date), and of the\nIssuing Bank to\n\n                                      -78-\n\n \nissue, renew or extend the maturity or expiration date of any Letter of Credit,\nshall be subject to the fulfillment of, or waiver by the Majority Lenders of,\neach of the following conditions precedent:\n\n          (a)  Equity Contributions.  Unless such Borrowing is comprised solely\n               --------------------                                            \n     of a Working Capital Borrowing, the Administrative Agent shall have\n     received evidence reasonably satisfactory to the Administrative Agent that\n     the Borrower has spent (or, simultaneously with the application of the\n     proceeds of such Borrowing, will have spent or shall have deposited in the\n     Construction Account) on System Activities in accordance with the terms of\n     the Capital Budget an amount equal to the Net Equity Funding Commitment\n     minus (i) any amounts remaining in the \"Secured Dispute Account\", the\n     \"Contingent Account\", and the \"Joint Dispute Account\" (as such terms are\n     defined in the Contractor Escrow and Security Agreement) in accordance with\n     the terms of the Contractor Escrow and Security Agreement, and (ii) any\n     amounts remaining in the Borrower's or any Subsidiary's checking account in\n     accordance with Section 8.30.\n                     ------------ \n\n          (b)  Construction Progress Certificate.  Unless such Borrowing is\n               ---------------------------------                           \n     comprised solely of a Working Capital Borrowing, the Administrative Agent\n     shall have received a Construction Progress Certificate; provided that if\n     such Construction Progress Certificate indicates that the Independent\n     Engineer or the Borrower is disputing any invoice under the Supply\n     Contract, the proceeds of the Loans will be placed into the \"Joint Dispute\n     Account\" in accordance with the terms of the Supply Contract and the\n     Contractor Escrow and Security Agreement.\n\n          (c)  Representations and Warranties.  All representations and\n               ------------------------------                          \n     warranties made by the Borrower and each other Loan Party in any Loan\n     Document shall be true and correct in all material respects when made\n     (unless any such representation or warranty relates solely to an earlier\n     date, in which case it shall have been true and correct in all material\n     respects as of such earlier date).\n\n          (d)  No Payment Default or Specified Event of Default.  No payment\n               ------------------------------------------------             \n     Default or Specified Event of Default shall have occurred and be continuing\n     on such date, and no Event of Loss shall have occurred and be continuing on\n     such date (i) which Event of Loss could reasonably be expected to have a\n     Material Adverse Effect or (ii) with respect to which Event of Loss the\n     cost to repair is in excess of $2,500,000 unless (A) the Borrower is able\n     to certify (as confirmed by the Independent Engineer) in its reasonable\n     judgment that the System can be completed by the Actual Date of Commercial\n     Operation with the Loans, equity and insurance payments\n\n                                      -79-\n\n \n     available to it  or (B) the risk of loss with respect to that portion of\n     the System giving rise to the Event of Loss is borne by the Contractor\n     under the Supply Contract).\n\n          (e)  No Change in Law.  No change shall have occurred after the\n               ----------------                                          \n     Closing Date in any applicable law that would make any Lender's\n     participation in the transactions contemplated by the Loan Documents\n     illegal.\n\n          (f)  No Force Majeure.  No event of force majeure shall exist which at\n               ----------------                                                 \n     such time permits any party (other than the Borrower) to any System\n     Contract to terminate such System Contract (other than a Capacity Sales\n     Agreement and any Non-Material System Contract).\n\n          (g)  Governmental Actions (other than Landing Licenses).  Unless such\n               --------------------------------------------------              \n     Borrowing is comprised solely of a Working Capital Borrowing, the\n     Administrative Agent shall have received a certificate of a Responsible\n     Officer of the Borrower stating that each Governmental Action (other than\n     Landing Licenses) set forth in Schedule 3.08 which is required in\n                                    -------------                     \n     accordance with such Schedule (as such Schedule may be amended or\n     supplemented in accordance with Section 3.08) to be obtained on or prior to\n                                     ------------                               \n     the date of such Borrowing shall have been duly obtained, except for those\n     Governmental Actions specifically described in such certificate (the\n                                                                         \n     \"Delinquent Governmental Actions\") which the Borrower and the Contractor\n     --------------------------------                                        \n     failed to obtain by the date of such Borrowing; provided that (i) the\n                                                     --------             \n     failure to obtain any such Delinquent Governmental Action by the date of\n     such Borrowing could not reasonably be expected to have a Material Adverse\n     Effect and (ii) if requested by the Administrative Agent and to the extent\n     applicable (i.e., such matter is within the expertise of counsel), the\n                 ----                                                      \n     Borrower shall deliver an opinion of appropriate regulatory counsel, in\n     form and substance reasonably satisfactory to the Administrative Agent,\n     stating that such counsel has no reason to believe that such Delinquent\n     Governmental Actions could not be obtained in due course.\n\n          (h)  Landing Licenses.  Unless such Borrowing is comprised solely of a\n               ----------------                                                 \n     Working Capital Borrowing, the Administrative Agent shall have received (i)\n     a certificate of a Responsible Officer of the Borrower stating that each\n     Landing License set forth in Schedule 3.08 which is required in accordance\n                                  -------------                                \n     with such Schedule to be obtained on or prior to the date of such Borrowing\n     shall have been duly obtained or, with respect to any required Landing\n     License which has not been so obtained by such date (the \"Delinquent\n                                                               ----------\n     Landing Licenses\"), such certificate shall set forth the details associated\n     ----------------                                                           \n     with any such delay and be accompanied by an opinion of the Borrower's\n     regulatory counsel, in form and\n\n                                      -80-\n\n \n     substance reasonably satisfactory to the Administrative Agent, stating that\n     there is no material impediment to receiving such Delinquent Landing\n     License and that it is reasonable to expect that such Delinquent Landing\n     License will be obtained within three months after the date set forth in\n                                                                             \n     Schedule 3.08 for the procurement of such Delinquent Landing License.  Once\n     -------------                                                              \n     issued, each Landing License shall be in full force and effect and shall\n     not be subject to any appeal or contest where there is a material risk that\n     such Landing License will be revoked.\n\n          (i)  Working Capital Loans.  The conditions set forth in Section 4.01\n               ---------------------                               ------------\n     shall have been fulfilled and\/or waived by the Majority Lenders on the\n     Closing Date and the initial Working Capital Loans shall have been made\n     pursuant thereto.\n\n          (j)  Borrowing Request.  The Administrative Agent shall have received\n               -----------------                                               \n     a Borrowing Request in accordance with Section 2.03, with appropriate\n                                            ------------                  \n     insertions and attachments, executed by a Responsible Officer of the\n     Borrower.\n\n          (k)  Borrowing Certificate.  The Administrative Agent shall have\n               ---------------------                                      \n     received a Borrowing Certificate, dated the date of such Borrowing, with\n     appropriate insertions and attachments, executed by a Responsible Officer\n     of the Borrower.\n\n\n                                   ARTICLE V\n\n                             AFFIRMATIVE COVENANTS\n                             ---------------------\n\n     Until the Commitments have expired or been terminated and the principal of\nand interest on each Loan and all fees and other obligations payable hereunder\nand under the Loan Documents shall have been paid in full and all Letters of\nCredit shall have expired or terminated (or shall have been cash collateralized\non terms reasonably acceptable to the Administrative Agent and the Issuing Bank)\nand all LC Disbursements shall have been reimbursed, the Borrower covenants and\nagrees with the Administrative Agent, the Lead Agents, the Issuing Bank and the\nLenders that:\n\n     SECTION 5.1.  Financial Statements and Other Information.  The Borrower\n                   ------------------------------------------               \nshall deliver to the Administrative Agent, with a copy for each Lender, the\nfollowing:\n\n          (a)  within 90 days after the end of each fiscal year of the Borrower,\n     its audited consolidated balance sheet and related statements of\n     operations, stockholders' equity and cash flows as of the end of and for\n     such year, setting forth in each case in comparative form the figures for\n     the\n\n                                      -81-\n\n \n     previous fiscal year, all reported on by independent public accountants of\n     recognized national standing (without qualification or exception as to the\n     scope of such audit) to the effect that such consolidated financial\n     statements present fairly in all material respects the financial condition\n     and results of operations of the Borrower and its consolidated Subsidiaries\n     on a consolidated basis in accordance with GAAP consistently applied;\n\n          (b)  within 45 days after the end of each of the first three fiscal\n     quarters of each fiscal year of the Borrower (commencing with the fiscal\n     quarter ending September 30, 1997), its consolidated balance sheet and\n     related statements of operations, stockholders' equity and cash flows as of\n     the end of and for such fiscal quarter and the then elapsed portion of the\n     fiscal year, setting forth in each case in comparative form the figures for\n     the corresponding period or periods of (or, in the case of the balance\n     sheet, as of the end of) the previous fiscal year, all certified by a\n     Responsible Officer of the Borrower as presenting fairly in all material\n     respects the financial condition and results of operations of the Borrower\n     and its consolidated Subsidiaries on a consolidated basis in accordance\n     with GAAP consistently applied, subject to normal year-end audit\n     adjustments and the absence of footnotes;\n\n          (c)  concurrently with any delivery of financial statements under\n                                                                           \n     clause (a) or (b) above, a certificate of a Responsible Officer of the\n     ----------    ---                                                     \n     Borrower certifying to such officer's knowledge whether a Default has\n     occurred and, if a Default has occurred, specifying the details thereof and\n     any action taken or proposed to be taken with respect thereto;\n\n          (d)  concurrently with any delivery of financial statements under\n                                                                           \n     clause (a) above, a certificate of the accounting firm, if available from\n     ------ ---                                                               \n     such accounting firm, that reported on such financial statements (which\n     certificate may be limited to accounting matters and may disclaim\n     responsibility for legal interpretations) stating whether they obtained\n     knowledge during the course of their examination of such financial\n     statements of any Default (which certificate may be limited to the extent\n     permitted by accounting rules or guidelines);\n\n          (e)  if there has been a material Change in Law with respect to or\n     affecting Collateral which could reasonably be expected to adversely affect\n     the Lenders or there have been material additions to, or changes in, or a\n     change in location of, a material portion of, the Collateral, at the\n     request of the Administrative Agent, an opinion of counsel addressed to the\n     Administrative Agent and the Lenders\n\n                                      -82-\n\n \n     covering such collateral security in a manner reasonably satisfactory to\n     the Administrative Agent; and\n\n          (f)  such other information respecting the conditions or operations,\n     financial or otherwise, of the Borrower or any Subsidiary as the Issuing\n     Bank or the Administrative Agent may from time to time reasonably request.\n\n     SECTION 5.2.  Reports.  (a)  The Borrower shall deliver to the\n                   -------                                         \nAdministrative Agent, with a copy for each Lender, within 15 days after the end\nof each calendar quarter (commencing with the calendar quarter ending on\nSeptember 30, 1997) a report which sets forth the aggregate sales of Capacity as\nat the end of such quarter, the amount of Capacity remaining to be sold, any\nterminations of sales of Capacity during such quarter, the purchase price\ntherefor and the date such payments shall become (or became) due.  The Borrower\nshall have no obligation to provide copies or otherwise disclose the contents of\nindividual Capacity Sales Agreements to any party hereto, except the Borrower\nshall permit the Administrative Agent to review and retain a copy of Capacity\nSales Agreements (but, so long as no Event of Default or Designated Event has\noccurred and is continuing, not to make further copies thereof), so long as such\ninformation is kept subject to the confidentiality obligation contained in\n                                                                          \nSection 10.14 hereof; provided (i) such disclosure shall always be deemed to\n-------------         --------                                              \nhave been clearly marked as confidential and (ii) the exceptions set forth in\n                                                                             \nclauses (d), (e), (f) and (g) of Section 10.14 shall not be applicable to the\n-----------  ---  ---     ---    -------------                               \nconfidentiality obligation set forth herein so long as no Event of Default or\nDesignated Event shall have occurred or be continuing.\n\n     (b)  The Borrower shall deliver to the Administrative Agent, promptly after\nits receipt, such other reports (excluding ordinary correspondence) regarding\nthe System, the Borrower or the Subsidiaries as the Contractor or the Operator\nor Sales Agent is required to provide to the Borrower under the System\nContracts, and shall deliver to the Administrative Agent promptly upon receipt\nor transmission copies of all amendments, and material waivers, written consents\nand other modifications (including all material Contract Variations) under any\nSystem Contract, other than as to any Capacity Sales Agreement and any Non-\nMaterial System Contract and the Borrower shall use reasonable efforts to give\nto the Administrative Agent in advance of execution, drafts of amendments to the\nSupply Contract, the OA&M Agreement, the Sales Agency Agreement and the Supply\nContract Guaranty.\n\n     (c)  The Borrower shall deliver to the Administrative Agent, within three\nBusiness Days prior to each Principal Payment Date (but effective as of such\nPrincipal Payment Date), a certificate of a Responsible Officer of the Borrower\nsetting forth reasonably\n\n                                      -83-\n\n \ndetailed calculations demonstrating the Borrower's compliance with Section 6.24;\n                                                                   ------------ \nprovided that if the Initial Principal Payment Date occurs less than six months\n--------                                                                       \nafter the Commercial Operation Date, the Borrower shall not be required to\ndemonstrate compliance with the Interest Coverage Ratio requirement set forth in\n                                                                                \nSection 6.24(b) as of the Initial Principal Payment Date.\n---------------                                          \n\n     (d)  The Borrower shall assist and cooperate with the Independent Engineer\nin providing the Lenders with such reports as the Lenders through the\nAdministrative Agent shall reasonably request of the Independent Engineer\n(including a monthly construction progress report).\n\n     (e)  Concurrently with the obtaining of any Landing License, the Borrower\nshall furnish to the Administrative Agent an appropriate and favorable opinion\nof counsel as to such Landing License being in full force and effect and the\nonly telecommunications license from (i) in the case of the United States\nLanding License, the Federal Communications Commission, (ii) in the case of the\nUnited Kingdom Landing License, the United Kingdom Department of Trade and\nIndustry, and (iii) in the case of any other Landing Country, the applicable\nGovernmental Authority, necessary for the landing and operation of the System\n(and, with respect only to the United Kingdom Landing License up to but not\nincluding, the System interface at the United Kingdom Cable station) as\ndescribed in the applicable application.\n\n     (f)  At least one Business Day prior to each Principal Payment Date, the\nBorrower shall deliver to the Administrative Agent a certificate setting forth\nthe Required Balance with respect to each Reserve Account as of such date.\n\n     SECTION 5.3.  Payment of Obligations.  The Borrower shall, and shall cause\n                   ----------------------                                      \neach of the Subsidiaries to, pay at or before maturity or before they become\ndelinquent, as the case may be, all its material obligations of whatever nature,\nexcept where the amount or validity thereof is subject to a Contest.\n\n     SECTION 5.4.  Conduct of Business; System Completion.  The Borrower and the\n                   --------------------------------------                       \nSubsidiaries shall engage solely in System Activities and activities incidental\nthereto.  The Borrower shall diligently enforce all of its rights under the\nSupply Contract and the Supply Contract Guaranty and shall cooperate with, and\ntake all reasonable action that it can to assist, the Contractor to complete the\nSystem in accordance with the terms of the Supply Contract.\n\n                                      -84-\n\n \n     SECTION 5.5.  Existence.  The Borrower shall, and shall cause each of the\n                   ---------                                                  \nSubsidiaries to, do or cause to be done all things necessary to preserve, renew\nand keep in full force and effect its legal existence and take all reasonable\naction to maintain all rights, privileges and franchises material, necessary or\ndesirable in the normal conduct of its business except those as to which the\nfailure to maintain such rights, privileges and franchises could not reasonably\nbe expected to have a Material Adverse Effect; provided that the foregoing shall\n                                               --------                         \nnot prohibit any merger, consolidation, liquidation or dissolution permitted\nunder Section 6.03.\n      ------------ \n\n     SECTION 5.6.  Compliance with Laws.  The Borrower shall, and shall cause\n                   --------------------                                      \neach of the Subsidiaries to, comply in all material respects with all\nRequirements of Law applicable to it or its property, except where the failure\nto do so could not reasonably be expected to have a Material Adverse Effect.\n\n     SECTION 5.7.  Performance of Agreements.  The Borrower shall, and shall\n                   -------------------------                                \ncause each of the Subsidiaries to, observe in all material respects the\ncovenants and agreements of the Borrower and the Subsidiaries contained in the\nSystem Contracts.\n\n     SECTION 5.8.  Taxes and Claims.  (a)  The Borrower shall, and shall cause\n                   ----------------                                           \neach of the Subsidiaries to, pay and discharge all Taxes lawfully imposed on it\nor on its income or profits or on any of its property prior to the date on which\npenalties attach thereto unless such Tax is subject to a Contest.\n\n     (b)  The Borrower shall use reasonable best efforts to maintain and keep in\nfull force and effect all clearance rulings, decrees or similar items necessary\nto continue the Borrower's exemption from the impositions of any Tax or similar\ncharge (other than de minimis Taxes or Taxes and other charges set forth on\n                   -- -------                                              \nSchedule 3.13) under the laws of Bermuda on the Borrower and its assets and\n-------------                                                              \nrevenues.\n\n     SECTION 5.9.  Notices.  The Borrower shall, promptly after a Responsible\n                   -------                                                   \nOfficer of the Borrower has knowledge thereof, give written notice to the\nAdministrative Agent of (a) the occurrence of a Default or Event of Default\n(and, with respect to such event, the Borrower shall also give notice thereof to\nthe Contractor),  (b) any payment default under any Contractual Obligation of\nthe Borrower or any Subsidiary, or any other such default that could reasonably\nbe expected to have a Material Adverse Effect, (c) any litigation or similar\nproceeding affecting the Borrower, any of the Subsidiaries or the System\nconcerning any Governmental Action or which, if adversely determined, could\nreasonably be expected to have a Material Adverse Effect, (d) the occurrence of\nany ERISA Event that alone or together with any other ERISA Events that have\noccurred, could reasonably be expected to result in liability in an aggregate\n\n                                      -85-\n\n \namount in excess of $1,000,000, (e) the execution of any Additional Contract\n(together with a copy thereof), (f) any material event constituting force\n                                                                    -----\nmajeure under the Supply Contract or any other material delay in the\n-------                                                             \nconstruction of the System, (g) any loss or damage to the Collateral in excess\nof $250,000 (whether or not insured), (h) the cancellation or revocation of any\nmaterial Governmental Action or insurance maintained by the Borrower, (i) any\nLien (other than Permitted Encumbrances) against any collateral security or the\nSystem, (j) no less than five Business Days prior thereto, any Transfers set\nforth in clause (e) of Section 6.04 and on a semi-annual basis, all Transfers\n         ----------    ------------                                          \nset forth in clauses (c) and (g) of Section 6.04, and (k) any other development\n             -----------     ---    ------------                               \nthat has resulted in, or could reasonably be expected to result in, a Material\nAdverse Effect.\n\n     SECTION 5.10.  Insurance.  The Borrower shall at all times carry and\n                    ---------                                            \nmaintain or cause to be carried and maintained insurance in accordance with the\nprovisions set forth in Schedule 5.10.  All such insurance shall comply with the\n                        -------------                                           \nother provisions set forth in Schedule 5.10.\n                              ------------- \n\n     SECTION 5.11.  Fiscal Year.  The fiscal year of the Borrower and the\n                    -----------                                          \nSubsidiaries shall be the twelve-month period ending on December 31 of each\nyear.\n\n     SECTION 5.12.  Use of Proceeds.  The proceeds of the Term Loans shall be\n                    ---------------                                          \nused to finance System Activities in accordance with the Capital Budget and to\npay fees and expenses directly related thereto.  The proceeds of the Working\nCapital Loans shall be used to finance the development, construction and\ninstallation of the System, to fund the Construction Contingency Reserve\nAccount, to pay fees and expenses and for working capital purposes (including\nthe payment of VAT).\n\n     SECTION 5.13.  Environmental Matters.  The Borrower shall, and shall cause\n                    ---------------------                                      \neach of the Subsidiaries to, comply in all material respects with any and all\napplicable Environmental Laws, except where the failure to so comply could not\nreasonably be expected to have a Material Adverse Effect.\n\n     SECTION 5.14.  Operating Budgets; Operating Plans.  (a) Within 30 days of\n                    ----------------------------------                        \nthe date the United States to United Kingdom Segment of the System is Ready for\nCommercial Service, and after prior review by, and the approval of, the Lead\nAgents and the Independent Engineer, the Borrower will adopt (i) an operating\nbudget detailing anticipated costs in connection with operating the System (an\n                                                                              \n\"Operating Budget\") for the initial Operating Year and (ii) an operating plan\n-----------------                                                            \nupdating the Projections (the \"Operating Plan\") for the period from the first\n                               --------------                                \nday of the initial Operating Year through the Maturity Date which shall set\nforth the anticipated costs and revenues, by Operating Year, in connection with\noperating the System during such period.\n\n                                      -86-\n\n \n     (b)  Within 30 days of the commencement of each subsequent Operating Year,\nand after prior review by and discussion with the Administrative Agent and the\nIndependent Engineer, the Borrower will adopt an Operating Budget for such\nOperating Year; provided that (i) any Operating Budget that provides for total\n                --------                                                      \ncosts (excluding Sales Commissions) in excess of 105% of the total costs\n(excluding Sales Commissions) set forth in the Operating Plan for such Operating\nYear shall not be adopted without the prior written consent of the Lead Agents\nand (ii) any Operating Budget which provides for total operating costs\n(excluding Sales Commissions) in excess of the operating costs (excluding Sales\nCommissions) set forth in the Operating Plan for such Operating Year, and such\nexcess, when added to the Cumulative Overruns for all Operating Years, would\nexceed an amount equal to 20% of the Benchmark Costs for all prior Operating\nYears (including the current Operating Year), shall not be adopted without the\nprior written consent of the Majority Lenders.  For purposes hereof, \"Benchmark\n                                                                      ---------\nCosts\" shall be the total operating costs (excluding Sales Commissions) for each\n-----                                                                           \nOperating Year set forth in the Operating Plan, and \"Cumulative Overruns\" shall\n                                                     -------------------       \nbe, at any time of determination, an amount equal to the difference between (a)\nthe sum of the actual operating costs (excluding Sales Commissions) for each\ncomplete Operating Year ended and (b) the sum of Benchmark Costs for each such\ncomplete Operating Year ended; Cumulative Overruns may be a negative number.\n\n     (c)  The Borrower shall, simultaneously with the delivery of each Operating\nBudget (other than the initial Operating Budget), deliver to the Administrative\nAgent (for informational purposes only), an update of the Operating Plan.\n\n     (d)  The Borrower shall deliver copies of the Operating Budgets for each\nsuch Operating Year promptly to the Administrative Agent.\n\n     SECTION 5.15.  Governmental Actions.  The Borrower shall (a) promptly make,\n                    --------------------                                        \nor cause to make, all filings for all Governmental Actions required in\nconnection with the construction, installation or operation of the System as\nsoon as reasonably possible and in accordance with the Plan of Work (and, in any\nevent, in time to comply with the dates for procurement of Governmental Actions\nset forth in Schedule 3.08), (b) assist the Contractor where necessary or\n             -------------                                               \nappropriate in all follow-up necessary to obtain on a timely basis all such\nGovernmental Actions and (c) from and after System Final Completion, maintain\n(or cause the Operator under the System Contracts to maintain) in full force and\neffect all material Governmental Actions as are at the time necessary in order\nto operate and maintain the System, except where the failure to file or maintain\nsuch Governmental Actions could not reasonably be expected to have a Material\nAdverse Effect.\n\n                                      -87-\n\n \n     SECTION 5.16.  Cooperation with Independent Engineer.  The Borrower shall,\n                    -------------------------------------                      \nand shall cause each Subsidiary to, keep the Independent Engineer fully informed\non a timely basis with respect to the design of, and other material matters\nrelating to, the System, and shall meet (and, to the extent within its control,\ncause the Contractor to meet) the Independent Engineer at reasonable times and\nupon reasonable notice to discuss any and all of the foregoing.\n\n     SECTION 5.17.  Spare Parts.  The Borrower shall, on and after the\n                    -----------                                       \nCommercial Operation Date, maintain, or cause the Operator to maintain, spare\nparts with respect to the System as are customary for the submarine fiber-optic\ncable industry.\n\n     SECTION 5.18.  Interest Rate Protection.  The Borrower shall enter into\n                    ------------------------                                \nHedging Agreements by or within four months after the Closing Date with one or\nmore Lenders or Affiliates thereof with respect to a portion of the Loans and\nfor a portion of the period from the date the Term Loans are first drawn to the\ndate the System is anticipated to be Ready for Commercial Service (each such\nportion to be reasonably satisfactory to the Borrower and the Lead Agents) and,\nthereafter, the Borrower shall, at or about the Commercial Operation Date, enter\ninto Hedging Agreements reasonably satisfactory to the Lead Agents with respect\nto a portion of the Loans and for periods reasonably satisfactory to the\nBorrower and the Lead Agents, in each case under documents reasonably\nsatisfactory to the Borrower and the Lead Agents, in order to hedge the\nBorrower's interest rate exposure on the Loans from and after such date.\n\n     SECTION 5.19.  Revenue Account.  The Borrower shall, and shall cause the\n                    ---------------                                          \nSubsidiaries to, deposit all of their respective revenues (other than those\nbeing applied to the immediate prepayment of the Loans) directly into the\nRevenue Account or the applicable Subsidiary Account as required by Article\n                                                                    -------\nVIII.\n\n     SECTION 5.20.  Maintenance of Process Agent.  The Borrower shall, and shall\n                    ----------------------------                                \ncause each of the Subsidiaries that does not maintain an office in New York to,\nmaintain in New York, New York a Person acting as agent to receive on its behalf\nservice of process.\n\n     SECTION 5.21.  System Operation and Maintenance.  The Borrower shall, and\n                    --------------------------------                          \nshall cause the Subsidiaries to, from and after System Final Completion, cause\nthe System to be operated and maintained in an efficient and business-like\nmanner in accordance with the terms of the System Contracts.\n\n     SECTION 5.22.  Event of Loss.  If an Event of Loss shall occur and no Event\n                    -------------                                               \nof Default or Designated Event shall have occurred and be continuing and (a) in\nthe Independent Engineer's reasonable opinion it is technically feasible to\nrestore, rebuild\n\n                                      -88-\n\n \nor replace the affected portion of the System within one year, (b) in the Lead\nAgent's reasonable opinion there are or will be sufficient funds available to\nthe Borrower (including from proceeds of insurance) to restore, rebuild or\nreplace the affected portion of the System so that the System will be able to\noperate on a commercially feasible basis (and in any event on a basis sufficient\nto pay the Loans and all other obligations owing to the Lenders), and (c) in the\nIndependent Engineer's reasonable opinion, it is reasonably likely that the\nBorrower and the Subsidiaries will have as and when needed all rights of way and\npermits necessary to restore, rebuild or replace the affected portion of the\nSystem, then the Borrower, at its sole cost and expense, shall restore, rebuild\nor replace the affected portion of the System.\n\n     SECTION 5.23.  Books and Records; Inspection Rights.  The Borrower shall,\n                    ------------------------------------                      \nand shall cause each of the Subsidiaries to, keep proper books of record and\naccount in which full, true and correct entries are made of all dealings and\ntransactions in relation to its business and activities.  The Borrower shall,\nand shall cause each of the Subsidiaries to, permit any representative of the\nLenders designated by the Administrative Agent, upon reasonable prior notice, to\nvisit and inspect its properties, to examine and make copies from its books and\nrecords (other than examining and making copies with respect to Capacity Sales\nAgreements, except to the extent set forth in Section 5.02(a)), and to discuss\n                                              ---------------                 \nits affairs, finances and condition with its officers and (at the Borrower's\nexpense no more than twice a year) its independent accountants, all at such\nreasonable times and as often as reasonably requested.\n\n     SECTION 5.24.  Export Control.  The Borrower shall, and shall cause each of\n                    --------------                                              \nthe Subsidiaries to, comply in all material respects with all U.S. export laws\nand regulations.\n\n     SECTION 5.25.  Foreign Corrupt Practices Act.  The Borrower shall, and\n                    -----------------------------                          \nshall cause each of the Subsidiaries to, comply in all material respects with\nthe Foreign Corrupt Practices Act of the United States, if applicable.\n\n     SECTION 5.26.  Further Assurances.  The Borrower shall cause to be promptly\n                    ------------------                                          \nand duly taken, executed, acknowledged and delivered all such further acts,\ndocuments and assurances as the Administrative Agent from time to time may\nreasonably request in order to carry out more effectively the intent and\npurposes of this Agreement and the other Loan Documents, including with respect\nto the maintenance of perfection of all Collateral that is perfectible and the\nproper grant and perfection of Liens on perfectible assets hereafter acquired by\nthe Borrower or any of its Subsidiaries.\n\n                                      -89-\n\n \n     SECTION 5.27.  As to Intellectual Property Collateral.  (a)  The Borrower\n                    --------------------------------------                    \nshall not, and shall not permit any of its Subsidiaries to, do any act, or omit\nto do any act, whereby any of such intellectual property collateral may lapse or\nbecome abandoned or dedicated to the public or unenforceable, unless such lapse,\nabandonment, dedication or unenforceability could not reasonably be expected to\nhave a Material Adverse Effect.\n\n     (b)  In no event shall the Borrower or any Subsidiary, or any of their\nrespective agents, employees, designees or licensees, file an application for\nthe registration of any intellectual property collateral with the United States\nPatent and Trademark Office, the United States Copyright Office or any similar\noffice or agency in any other country or any political subdivision thereof,\nunless it promptly informs the Administrative Agent.\n\n     (c)  The Borrower shall take, and shall cause its Subsidiaries to take, all\nreasonably necessary steps, including in any proceeding before the United States\nPatent and Trademark Office, the United States Copyright Office, and any foreign\ncounterpart thereof, to maintain and pursue any application (and to obtain the\nrelevant registration) filed with respect to, and to maintain any registration\nof, any material item of the intellectual property collateral, including the\nfiling of applications for renewal, affidavits of use, affidavits of\nincontestability and opposition, interference proceedings and the payment of\nappropriate fees, except where the failure to so maintain, obtain or pursue\ncould not reasonably be expected to have a Material Adverse Effect.\n\n     SECTION 5.28.  Future Subsidiaries.  Without limiting the effect of any\n                    -------------------                                     \nrestriction contained herein upon any Person becoming, after the Closing Date,\neither a direct or indirect Subsidiary of the Borrower, or upon the Borrower\nacquiring additional Capital Stock or other ownership interests of any new or\nexisting Subsidiary, if any Person shall become a Subsidiary after the Closing\nDate;\n\n          (a)  such Person (unless such Person is the German Subsidiary, in\n     which case the provisions of Section 5.30(b) shall apply) shall become a\n                                  ---------------                            \n     party to (i) a guaranty in substantially the form of the provisions of the\n     guaranty contained in the Subsidiary Guaranty Agreement, and (ii) a\n     security agreement in substantially the form of the U.S. Subsidiary\n     Security Agreement, in either case, with such modifications as the\n     Administrative Agent may reasonably request or consent to, in a manner\n     reasonably satisfactory to the Administrative Agent;\n\n          (b)  the Borrower shall pledge or cause to be pledged to the\n     Administrative Agent all of the outstanding shares of\n\n                                      -90-\n\n \n     such Capital Stock or other ownership interests of such Subsidiary owned\n     directly by it, along with undated stock powers for such certificates,\n     executed in blank (or, if any such shares of Capital Stock or other\n     ownership interests are uncertificated, confirmation and evidence\n     satisfactory to the Administrative Agent that the security interest in such\n     uncertificated securities has been perfected by the Administrative Agent in\n     accordance with Section 8-313 and Section 8-321 of the U.C.C. or any\n     similar law which may be applicable);\n\n          (c)  the Administrative Agent shall have received from each such\n     Subsidiary, (other than any newly formed Subsidiary) certified copies of\n     Uniform Commercial Code Requests for Information or Copies (Form UCC-11),\n     or a similar search report certified by a party acceptable to the\n     Administrative Agent, dated a date reasonably near (but prior to) the date\n     of any such Person becoming a direct or indirect Subsidiary, listing all\n     effective financing statements, tax liens and judgment liens which name\n     such Person as the debtor and which are filed in the jurisdictions in which\n     filings are to be made pursuant to this Agreement and the other Loan\n     Documents, and in such other jurisdictions as the Administrative Agent may\n     reasonably request, together with copies of such financing statements (none\n     of which (other than financing statements (i) filed pursuant to the terms\n     hereof in favor of the Administrative Agent, if such Form UCC-11 or search\n     report, as the case may be, is current enough to list such financing\n     statements, (ii) being terminated pursuant to termination statements that\n     are to be delivered on or prior to the date such Person becomes such\n     Subsidiary or (iii) in respect of protective filings or Liens permitted\n     under Section 6.02) shall cover any of the Collateral); and\n           ------------                                         \n\n          (d)  the Administrative Agent shall have received from each such\n     Subsidiary executed copies of U.C.C. financing statements (or equivalent\n     instruments) naming each such Subsidiary as the debtor and the\n     Administrative Agent as the secured party, suitable for filing under the\n     U.C.C. (or the foreign equivalent) of all jurisdictions as may be necessary\n     or, in the reasonable opinion of the Administrative Agent, desirable to\n     perfect the first priority security interest of the Administrative Agent\n     pursuant to the security agreement entered into by such Subsidiary in such\n     types of collateral as were perfected with respect to other Subsidiaries as\n     of the Closing Date,\n\ntogether, in each case, with such opinions of legal counsel for the Borrower\nrelating thereto as the Administrative Agent shall reasonably request, which\nlegal opinions shall be in form and substance reasonably satisfactory to the\nAdministrative Agent.\n\n                                      -91-\n\n \n     SECTION 5.29.  Lease.  Upon the U.S. Subsidiary's acquisition from the\n                    -----                                                  \nContractor of the real property located in the United States in accordance with\nthe terms of the Supply Contract, the Borrower shall cause the U.S. Subsidiary\nto enter into the SSI Lease with SSI Sub 2.\n\n     SECTION 5.30.  Foreign Subsidiary Collateral; Mortgages.  The Borrower\n                    ----------------------------------------               \nshall:\n\n          (a)  within the 90 days after the Closing Date (with the Borrower\n     agreeing to use reasonable commercial efforts to achieve the following\n     sooner than such date), (i) cause the U.K. Subsidiary to execute (A) a\n     Subsidiary Security Agreement or its reasonable equivalent under applicable\n     local law, in form and substance reasonably satisfactory to the\n     Administrative Agent, and (B) the Subsidiary Guaranty Agreement, (ii) cause\n     the U.K. Subsidiary to make all filings and obtain all notarizations\n     reasonably required in connection therewith to give the Administrative\n     Agent, for the benefit of the Lenders, a \"perfected\" security interest in\n     the same type of property that was perfected as of the Closing Date under\n     the U.S. Subsidiary Security Agreement, (iii) subject all ownership\n     interests in the U.K. Subsidiary to the Borrower Pledge Agreement and (iv)\n     deliver to the Administrative Agent customary favorable legal opinions with\n     respect thereto;\n\n          (b)  within 90 days after the date the German Subsidiary is created\n     and validly existing under local law, (i) cause the German Subsidiary to\n     execute a security agreement or its reasonable equivalent under applicable\n     local law in favor of the Borrower, in form and substance reasonably\n     satisfactory to the Administrative Agent, to secure any intercompany\n     indebtedness owing from time to time by the German Subsidiary to the\n     Borrower, which intercompany indebtedness will be pledged to the\n     Administrative Agent for the benefit of the Lenders under pledge\n     arrangements reasonably satisfactory to the Administrative Agent, (ii)\n     cause the German Subsidiary to make all filings and obtain all\n     notarizations reasonably required in connection therewith to give the\n     Borrower a \"perfected\" security interest in the same type of property that\n     was perfected as of the Closing Date under the U.S. Subsidiary Security\n     Agreement and (iii) deliver to the Administrative Agent customary favorable\n     legal opinions with respect thereto; and\n\n          (c)  within 90 days after the acquisition by the U.K. Subsidiary or\n     the U.S. Subsidiary, as the case may be, of real property under the Supply\n     Contract, (i) cause such Subsidiary to execute a Mortgage, or its\n     reasonable equivalent under applicable local law, in favor of the\n     Administrative Agent and in form and substance reasonably\n\n                                      -92-\n\n \n     satisfactory to the Administrative Agent providing the Administrative Agent\n     with a first Lien thereon, subject only to customary Liens which in any\n     event do not materially adversely effect (a) such Subsidiary's use,\n     operation or enjoyment of such property for its intended purpose or (b) the\n     Lender's rights or remedies under the Mortgage and (ii) cause to be\n     provided to the Administrative Agent, to the extent commercially feasible,\n     mortgagee's title insurance (or its reasonable equivalent) in amounts and\n     in form reasonably satisfactory to the Administrative Agent.\n\n\n                                   ARTICLE VI\n\n                               NEGATIVE COVENANTS\n                               ------------------\n\n     Until the Commitments have expired or terminated and the principal of and\ninterest on each Loan and all fees and other obligations payable hereunder and\nunder the Loan Documents have been paid in full and all Letters of Credit have\nexpired or terminated (or shall have been cash collateralized on terms\nreasonably acceptable to the Administrative Agent and the Issuing Bank) and all\nLC Disbursements shall have been reimbursed, the Borrower covenants and agrees\nwith the Administrative Agent, the Lead Agents, the Issuing Bank and the Lenders\nthat:\n\n     SECTION 6.1.  Indebtedness.  The Borrower shall not, and shall not permit\n                   ------------                                               \nany Subsidiary to, create, incur, assume or suffer to exist any Indebtedness,\nexcept:\n\n          (a)  Indebtedness incurred under the Loan Documents;\n\n          (b)  Permitted Subordinated Debt;\n\n          (c)  Capital Lease Obligations permitted by Section 6.11;\n                                                      ------------ \n\n          (d)  trade or other similar Indebtedness incurred in the ordinary\n     course of business and payable within 60 days;\n\n          (e)  Indebtedness under, or constituting net exposure under, interest\n     Hedging Agreements entered into in accordance with Section 5.18 or other\n                                                        ------------         \n     Hedging Agreements otherwise permitted by the Lead Agents;\n\n          (f)  Indebtedness under any Permitted Sale Leaseback;\n\n                                      -93-\n\n \n          (g)  Indebtedness of the Borrower to any Subsidiary and of any\n     Subsidiary to the Borrower or another Subsidiary; provided that, (i) with\n                                                       --------               \n     respect to any Indebtedness of any Subsidiary to the Borrower, such\n     Indebtedness shall be evidenced by a promissory note pledged to the\n     Administrative Agent by the Borrower on terms reasonably satisfactory to\n     the Administrative Agent, (ii) with respect to any Indebtedness of the\n     Borrower to a Subsidiary, repayment of such Indebtedness shall be\n     subordinated to the repayment of the Credit Extensions and all other\n     obligations under this Agreement and the other Loan Documents in a manner\n     reasonably satisfactory to the Administrative Agent and (iii) no\n     Indebtedness may be extended to the German Subsidiary by any other\n     Subsidiary without the prior written consent of the Administrative Agent;\n\n          (h)  Guarantees by the Borrower of Indebtedness of any Subsidiary, and\n     by any Subsidiary of Indebtedness of the Borrower (other than under clause\n                                                                         ------\n     (j) below) or any other Subsidiary (other than the German Subsidiary);\n     ---                                                                   \n\n          (i)  Indebtedness under the Permitted Reserve LC Facility; and\n\n          (j)  other Indebtedness of the Borrower in an aggregate principal\n     amount not to exceed $1,750,000 at any one time.\n\n     SECTION 6.2.  Liens.  The Borrower shall not, and shall not permit any\n                   -----                                                   \nSubsidiary to, create, incur, assume or permit to exist any Lien on the\nCollateral or on the System or any of its other assets, except Permitted\nEncumbrances.\n\n     SECTION 6.3.  Fundamental Changes.  The Borrower shall not, and shall not\n                   -------------------                                        \npermit any Subsidiary to, merge into or consolidate with any other Person, or\npermit any other Person to merge into or consolidate with it, or liquidate or\ndissolve, except that (a) any Subsidiary may merge into or consolidate with the\nBorrower in a transaction in which the Borrower is the surviving corporation,\n(b) any Subsidiary may merge into or consolidate with another Subsidiary (other\nthan the German Subsidiary or any other Subsidiary which for any reason has not\nexecuted and delivered the Subsidiary Guaranty Agreement) and, so long as no\nDefault would occur after giving effect thereto, SSI Sub 2 may merge with the\nU.S. Subsidiary, in each case in a transaction in which the surviving entity is\na wholly-owned Subsidiary and (c) any Subsidiary may, with the prior written\nconsent of the Administrative Agent (such consent not to be unreasonably\nwithheld or delayed), liquidate or dissolve if the Borrower determines in good\nfaith that such liquidation or dissolution is in the best interests of the\nBorrower and such liquidation or dissolution is not disadvantageous in any\nmaterial respect to the Lenders.\n\n                                      -94-\n\n \n     SECTION 6.4.  Sale of Assets.  The Borrower shall not, and shall not permit\n                   --------------                                               \nany Subsidiary to, sell, lease, convey, assign, transfer or otherwise dispose of\n(each, a \"Transfer\") all or any portion of its assets except (a) Transfers of\n          --------                                                           \nCapacity in accordance with Section 6.23, (b) Transfers of assets by any\n                            ------------                                \nSubsidiary to the Borrower, (c) Transfers of assets in the ordinary course of\nbusiness not required for the efficient operation of the System for fair value\nwith a book value not exceeding for all such Transfers under this clause (c)\n                                                                  ----------\n$10,000,000 in the aggregate for all fiscal years, (d) Transfers in connection\nwith Permitted Sale Leasebacks, (e) Transfers of assets to Subsidiaries (unless\nsuch Subsidiary is the German Subsidiary) which have executed and delivered the\nSubsidiary Guaranty Agreement and where the Capital Stock of such Subsidiary is\nsubject to a Lien in favor of the Administrative Agent, but only to the extent\nnecessary to facilitate the obtaining of Landing Licenses or the minimization of\nmaterial Taxes or constituting an investment permitted by Section 6.05 (any such\n                                                          ------------          \nTransfers to the German Subsidiary (other than transfers in connection with the\ninitial capitalization of the German Subsidiary) being subject to the prior\nwritten consent of the Administrative Agent), (f) Transfers in connection with\nany Permitted System Upgrades or in connection with the installation of the\nPhase 2 Segment (as defined in the Supply Contract) and (g) Transfers of\nobsolete, worn out or defective equipment and other assets for fair value in\ncash; provided that the proceeds or the Net Cash Proceeds of a Transfer (A)\n      --------                                                             \nunder clauses (c), (d) and (g) shall be applied to the prepayment of the Loans\n      -----------  ---     ---                                                \nand cash collateralization of LC Exposure if required in accordance with Section\n                                                                         -------\n2.11 and (B) under clause (a) shall be deposited into the Revenue Account for\n----               ----------                                                \napplication in accordance with Article VIII.\n                               ------------ \n\n     SECTION 6.5.  Investments, Loans, Advances, Guarantees and Acquisitions.\n                   ---------------------------------------------------------  \n(a)  The Borrower shall not, and shall not permit any of the Subsidiaries to,\npurchase, hold or acquire (including pursuant to any merger with any Person that\nwas not a wholly owned Subsidiary prior to such merger) any Capital Stock,\nevidences of indebtedness or other securities (including any option, warrant or\nother right to acquire any of the foregoing) of, make or permit to exist any\nloans or advances to, Guarantee any obligations of, or make or permit to exist\nany investment or any other interest in, any other Person, or purchase or\notherwise acquire (in one transaction or a series of transactions) any assets of\nany other Person constituting a business unit, or become a general or limited\npartner in any partnership or a joint venturer in any joint venture or enter\ninto any profit sharing or royalty agreement or similar arrangement whereby the\nBorrower's or any of the Subsidiaries' income or profits are, or might be,\nshared with any Person, except:\n\n              (i)   Permitted Investments;\n\n                                      -95-\n\n \n              (ii)   investments by the Borrower in a Subsidiary; provided (A)\n                                                                  --------    \n     such Subsidiary has executed and delivered the Subsidiary Guaranty\n     Agreement (unless such Subsidiary is the German Subsidiary) and the Capital\n     Stock of such Subsidiary is subject to a first priority Lien in favor of\n     the Administrative Agent and (B) such Investment is necessary to capitalize\n     such Subsidiary in accordance with applicable law, to facilitate the\n     obtaining of Landing Licenses or the minimization of material Taxes or to\n     enable such Subsidiary to acquire assets to be used to operate the System\n     or otherwise fulfill obligations incurred in connection with the System and\n     reflected in the Capital Budget or the Operating Budget; provided that the\n                                                              --------         \n     aggregate investments in the German Subsidiary not comprising Indebtedness\n     or payments under the Intercompany Agreement shall not in any event exceed\n     $40,000,000 at any one time outstanding;\n\n              (iii)    loans or advances made by the Borrower to any Subsidiary\n     and made by any Subsidiary to the Borrower or any other Subsidiary;\n                                                                        \n     provided (A) each such Subsidiary has executed and delivered the Subsidiary\n     --------                                                                   \n     Guaranty Agreement (unless such Subsidiary is the German Subsidiary) and\n     the Capital Stock of such Subsidiary is subject to a first priority Lien in\n     favor of the Administrative Agent and (B) such Investment is necessary to\n     facilitate the obtaining of Landing Licenses or the minimization of\n     material Taxes or to enable such Subsidiary to acquire assets to be used to\n     operate the System or otherwise fulfill obligations incurred in connection\n     with the System and reflected in the Capital Budget or the Operating\n     Budget; provided that the aggregate investments in the German Subsidiary\n             --------                                                        \n     not comprising Indebtedness or payments under the Intercompany Agreement\n     shall not in any event exceed $40,000,000 at any one time outstanding; and\n                                                                               \n     provided, further, that (1) any loans or advances made by the Borrower to\n     --------  -------                                                        \n     any Subsidiary shall be evidenced by a promissory note pledged to the\n     Administrative Agent and (2) the repayment of any loans or advances made by\n     any Subsidiary to the Borrower shall be subordinated to all obligations\n     owing to the Agent Related Persons and the Lenders on terms satisfactory to\n     the Administrative Agent;\n\n              (iv)   Guarantees constituting Indebtedness permitted by Section\n                                                                       -------\n     6.01;\n     ---- \n\n              (v)   prior to the receipt by the Borrower of Equity Contributions\n     in respect of the issuance of the Holdings Senior Notes, investments by the\n     Borrower in Holdings constituting a receivable as set forth in the\n     Borrower's balance sheet as of March 31, 1997 referred to in Section 3.01;\n                                                                  ------------ \n\n                                      -96-\n\n \n              (vi)   pursuant to or in accordance with the terms of the SSI IRU\n     and Option Agreement; and\n\n              (vii)    the purchase or acquisition of Capital Stock of a\n     Subsidiary in accordance with Sections 5.28 and 6.19(c) or Section 6.18.\n                                   -------------     -------    ------------ \n\n     SECTION 6.6.  Restricted Payments.  The Borrower shall not, and shall not\n                   -------------------                                        \npermit any of the Subsidiaries to, declare or make any Restricted Payment or any\npayment in connection with any tax sharing arrangement except for (a) Restricted\nPayments by the Subsidiaries to the Borrower, (b) distributions by the Borrower\nor any Subsidiary in respect of its Capital Stock which are payable solely in\nadditional Capital Stock of the Borrower or such Subsidiary, but only to the\nextent such additional Capital Stock is subject to a first priority Lien in\nfavor of the Administrative Agent, (c) distributions by the Borrower\nconstituting Permitted Senior Cash Dividends in accordance with clause fourth of\n                                                                -------------   \nSection 8.08(d), (d) distributions by the Borrower in respect of its Capital\n---------------                                                             \nStock and\/or payments of interest on Permitted Subordinated Debt from funds\navailable to the Borrower in accordance with (i) clause eighth or eleventh of\n                                                 -------------    --------   \nSection 8.08(a), (ii) clause sixth of Section 8.08(d) or (iii) Section 8.15(a),\n---------------       ------------    ---------------          --------------- \n(e) distributions by the Borrower in respect of its Capital Stock from proceeds\nmade available to the Borrower from the Special Payment Account in accordance\nwith Section 8.09, (f) distributions by the Borrower in respect of its Capital\n     ------------                                                             \nStock from proceeds made available to the Borrower from the Holding Interest\nReserve Account in accordance with Section 8.11(b) and (g) payments in\n                                   ---------------                    \nconnection with tax sharing arrangements among the Borrower and the\nSubsidiaries.\n\n     SECTION 6.7.  Amendment of System Contracts, etc.  (a) The Borrower shall\n                   ----------------------------------                         \nnot, and shall not permit the Subsidiaries to, amend, supplement or otherwise\nmodify, or grant any material waivers or material consents under, or agree to\nany material contract variation or material discretionary or other material\nchange that requires the consent or agreement of the Borrower under, any System\nContract without the written consent of the Majority Lenders (such consent not\nto be unreasonably withheld) other than (i) Contract Variations in accordance\nwith Section 6.08, (ii) as permitted by such System Contract without the consent\n     ------------                                                               \nof the Borrower or such Subsidiary, (iii) amendments, supplements or other\nmodifications or waivers, consents, Contract Variations, or exercises of\ndiscretionary action or other changes to Non-Material System Contracts which are\nentered into in the ordinary course of business and which could not reasonably\nbe expected to have a Material Impact, provided that in any event no amendments,\n                                       --------                                 \nsupplements or other modifications may be made to the subordination provisions\ncontained in the SSI Subordinated Pledge Agreement or the SSI Subordinated\nSecurity Agreement or to the provisions relating to the \"Joint Dispute Account\"\ncontained in\n\n                                      -97-\n\n \nthe Contractor Escrow and Security Agreement without the prior written consent\nof the Administrative Agent, (iv) administerial, clarifying, correcting or other\nimmaterial amendments to any such System Contract which could not reasonably be\nexpected to have a Material Impact (it being understood that an increased cost\npermitted pursuant to Section 5.14 shall not be deemed to constitute a \"Material\n                      ------------                                              \nImpact\" under clause (a) thereof solely by reason of such increased cost), (v)\n              ----------                                                      \nother amendments, supplements or modifications not involving the Supply Contract\nthat do not involve increased costs other than as permitted pursuant to Section\n                                                                        -------\n5.14 and which, in any event, could not reasonably be expected to have a\n----                                                                    \nMaterial Impact, (vi) amendments, supplements or other modifications required to\nimplement the provisions of Section 6.09 or 6.10 and (vii) amendments,\n                            ------------    ----                      \nsupplements or other modifications or waivers, consents, contract variations or\nother changes to Capacity Sales Agreements so long as any such amendments are on\ncommercially reasonable terms and comply with the proviso to Section 6.23;\n                                                             ------------ \nprovided, however, that no amendments, supplements or other modifications or\n--------  -------                                                           \nwaivers, consents, contract variations or other changes to the Intercompany\nAgreement shall be made without the prior written consent of the Lead Agents.\n\n     (b)  The Borrower shall not, and shall not permit the Subsidiaries to,\nterminate or permit the termination of any System Contract other than (i) in\naccordance with its terms, (ii) as permitted by such System Contract without the\nconsent of the Borrower or such Subsidiary, (iii) as required by applicable law,\n(iv) a System Contract (other than the Supply Contract Guaranty) which the\nBorrower (with the concurrence of the Independent Engineer and, if such System\nContract is the OA&M Agreement or the Sales Agency Agreement, with the prior\nwritten consent of the Lead Agents) reasonably believes is no longer useful to\nthe Borrower's business, (v) as to Non-Material System Contracts so long as such\nNon-Material System Contract is, at the request of the Administrative Agent\n(upon such consultation with the Independent Engineer as the Administrative\nAgent shall require), replaced with a new contract reasonably acceptable to the\nAdministrative Agent, or (vi) the termination of a Capacity Sales Agreement so\nlong as (A) such actions are commercially reasonable and (B) the provisions of\n                                                                              \nSection 6.23 are complied with.\n------------                   \n\n     (c)  The Borrower and the Subsidiaries shall be permitted to replace\ncertain System Contracts in accordance with the terms of Article VII.\n                                                         ----------- \n\n     SECTION 6.8.  Supply Contract.  (a)  The Borrower shall not, without the\n                   ---------------                                           \nprior written consent of the Majority Lenders (or, with respect to any Contract\nVariation that will not increase the costs under the Supply Contract by more\nthan $500,000 for any individual Contract Variation and up to $3,000,000 in the\naggregate for all Contract Variations taken together, the\n\n                                      -98-\n\n \nAdministrative Agent), such consent in each case not to be unreasonably\nwithheld, enter into any Contract Variation, or grant any waiver or consent\nunder, the Supply Contract other than (i) Contract Variations, waivers or\nconsents made on an emergency basis to the extent there are funds available for\nthe payment thereof in the Capital Budget or the Construction Contingency\nReserve Account so long as such Contract Variation, waiver or consent could not\nreasonably be expected to have a Material Adverse Effect, (ii) Contract\nVariations, waivers or consents required to implement the provisions of Section\n                                                                        -------\n6.09, (iii) Contract Variations, waivers or consents required to implement the\n----                                                                          \nprovisions of Section 6.10, (iv) Contract Variations, waivers or consents, to\n              ------------                                                   \nthe extent required, that merely change the route of the System (so long as the\nLanding Countries do not change) without increasing the cost under the Supply\nContract (or, if such change would increase the cost under the Supply Contract,\nsuch increase is funded with equity funds made available to the Borrower or\nPermitted Subordinated Debt of the Borrower or is otherwise borne exclusively by\nparties other than (and without recourse to) the Borrower and the Subsidiaries,\nwhich in each case has been fully funded or has been committed to on terms\nreasonably satisfactory to the Administrative Agent or is funded with other\namounts made available to the Borrower and described in clause (a) of Section\n                                                        ----------    -------\n6.09 so long as such Contract Variation, waiver or consent could not reasonably\n----                                                                           \nbe expected to have a Material Adverse Effect, (v) Contract Variations, waivers\nor consents otherwise permitted by Section 6.07 and (vi) immaterial consents and\n                                   ------------                                 \nwaivers that could not reasonably be expected to have a Material Adverse Effect.\n\n     (b)  The Borrower shall not, (i) without the prior written consent of the\nMajority Lenders (such consent not to be unreasonably withheld), (A) reduce the\namount or change the date or basis for payment of liquidated damages under\nArticle 22 of the Supply Contract, (B) reduce the duration of any warranty\nperiod under the Supply Contract, (ii) without the prior written consent of the\nLead Agents (based upon consultation with the Independent Engineer and such\nconsent not to be unreasonably withheld), (x) reduce the scope of any warranty\nunder the Supply Contract, (y) reduce the scope or availability of intellectual\nproperty under Article 18 of the Supply Contract and (z) materially change the\nterms of payment as set forth in Article 5 of the Supply Contract.\n\n     (c)  The Borrower shall not, (i) without the prior written consent of the\nLead Agents (based upon consultation with the Independent Engineer and such\nconsent not to be unreasonably withheld), agree to (A) new acceptance testing as\ncontemplated under the definition of \"Acceptance Testing\", (B) new performance\nrequirements as contemplated under the definition of \"Performance Requirements\"\nand any term or appendix or exhibit underlying the substance of such definition\nand (C) any equitable adjustment to\n\n                                      -99-\n\n \nthe Initial Contract Price under the second sentence of Article 6D of the Supply\nContract unless such adjustment is in accordance with this Section; and (ii)\nwithout the prior written consent of the Majority Lenders, (A) grant or\notherwise consent to any extension of time under the last sentence of Article 6D\nof the Supply Contract and (B) agree to any arrangement to extend the Scheduled\nRFS Date (as defined in the Supply Contract) under Article 22(A)(3) of the\nSupply Contract.\n\n     SECTION 6.9.  Addition to Configuration.  The Borrower shall not, without\n                   -------------------------                                  \nthe prior written consent of the Majority Lenders (such consent to not be\nunreasonably withheld), add any additional Landing Country or select, or agree\nto the selection of, any alternative Landing Country (other than The\nNetherlands) to the contemplated configuration of the System unless (a) in the\ncase of adding an additional Landing Country, all costs related to such addition\nare funded with equity funds made available to the Borrower or Permitted\nSubordinated Debt of the Borrower or funds made available to the Borrower for\nits sole benefit, in accordance with clause eleventh of Section 8.08(a), clause\n                                     ---------------    ---------------  ------\nsixth of Section 8.08(d) or Section 8.15(a) or is otherwise borne exclusively by\n-----    ---------------    ---------------                                     \nparties other than (and without recourse to) the Borrower and the Subsidiaries,\nwhich in each case has been fully funded or has been committed to on terms\nreasonably satisfactory to the Administrative Agent, (b) such addition could not\nreasonably be expected to have a Material Adverse Effect, (c) no material\nliabilities of or costs to the Borrower or any of the Subsidiaries shall be\ncreated which are not provided for from sources described in clause (a) above\n                                                             ----------      \nand (d) in the case of the selection of an alternative Landing Country, the\nIndependent Engineer has concurred that the conditions in the Supply Contract\nunderlying such selection have been met.\n\n     SECTION 6.10.  Permitted System Upgrades.  The Borrower shall not request\n                    -------------------------                                 \nthat the Contractor perform any Permitted System Upgrade unless the costs\nthereof are (a) funded with the Borrower's portion of Excess Cash Flow or other\nfunds made available to the Borrower, for its sole benefit, in accordance with\n                                                                              \nSection 8.08(a) or Section 8.15(a) or (b) funded with equity funds made from\n---------------    ---------------                                          \ncommon stock of the Borrower or preferred stock with provisions substantially\nsimilar to Permitted Subordinated Debt made available to the Borrower or\nPermitted Subordinated Debt of the Borrower or is otherwise borne by parties\nother than (and without recourse to) the Borrower and the Subsidiaries, which in\neach case has been fully funded or has been committed to on terms reasonably\nsatisfactory to the Administrative Agent.\n\n     SECTION 6.11.  Leases.  The Borrower shall not, and shall not permit the\n                    ------                                                   \nSubsidiaries to, enter into any lease except for (a) leases of personal property\nin the ordinary course of business, (b) leases of real property in the ordinary\ncourse of business, (c) Capital Lease Obligations in an amount not to\n\n                                     -100-\n\n \nexceed $250,000 in any fiscal year of the Borrower, (d) Permitted Sale\nLeasebacks and (e) the SSI Lease and the SSI IRU and Option Agreement.\n\n     SECTION 6.12.  Change of Office.  The Borrower shall not, and shall not\n                    ----------------                                        \npermit the Subsidiaries to, change the location of its principal place of\nbusiness unless the Borrower shall have given the Administrative Agent at least\n30 days' prior written notice thereof and all action reasonably necessary or\nadvisable in the Administrative Agent's opinion to protect and perfect the Liens\nand security interests in the Collateral shall have been taken.\n\n     SECTION 6.13.  Change of Name.  The Borrower shall not, and shall not\n                    --------------                                        \npermit the Subsidiaries to, change its name unless the Borrower shall have given\nthe Administrative Agent at least 30 days' prior written notice thereof and all\naction reasonably necessary or advisable in the Administrative Agent's opinion\nto protect and perfect the Liens and security interests in the Collateral shall\nhave been taken.\n\n     SECTION 6.14.  Transactions with Affiliates.  The Borrower shall not, and\n                    ----------------------------                              \nshall not permit the Subsidiaries to, enter into any agreement with any\nAffiliate of the Borrower except (a) as required by the Loan Documents or the\nSystem Contracts and (b) transactions in the ordinary course of business which\nare on fair and reasonable terms not less favorable than the Borrower or any\nSubsidiary could obtain in an arm's-length transaction with a Person which is\nnot an Affiliate.\n\n     SECTION 6.15.  Sale and Leaseback.  The Borrower shall not, and shall not\n                    ------------------                                        \npermit the Subsidiaries to, enter into any arrangement with any Person providing\nfor the leasing of real or personal property which has been or is to be sold by\nit to such Person, other than Permitted Sale Leasebacks.\n\n     SECTION 6.16.  Approval of Additional Contracts.  Without the prior written\n                    --------------------------------                            \nconsent of the Majority Lenders (such consent not to be unreasonably withheld),\nthe Borrower shall not, and shall not permit the Subsidiaries to, enter into any\nAdditional Contract, other than (a) Capacity Sales Agreements or other\nagreements or arrangements for the disposition of Capacity entered into in\naccordance with Section 6.23, (b) pipeline and cable crossing agreements and\n                ------------                                                \nother similar agreements entered into in the ordinary course of business to\nfacilitate the construction and installation of the System by the Contractor,\n(c) Interconnect Agreements entered into in the ordinary course of business, (d)\nthe SSI Lease, (e) other contracts in the ordinary course of business to the\nextent amounts payable thereunder, if any, are provided for in the Capital\nBudget or the Operating Budget, (f) other contracts entered into in the ordinary\ncourse of business that do not have a material adverse\n\n                                     -101-\n\n \neffect on the Lenders and (g) with the prior written consent of the Lead Agents,\nif such Additional Contract relates to the System and is being entered into as a\n                                                                                \nquid pro quo for the purchase of Capacity by the counterparty thereto and the\n---- --- ---                                                                 \nentering into or performance of such Additional Contract could not reasonably be\nexpected to have a Material Impact.  The Borrower shall be permitted to replace\nSystem Contracts as set forth in Section 6.07 and Article VII.  At the time any\n                                 ------------     -----------                  \nsuch Additional Contract is entered into (other than Capacity Sales Agreements\nand agreements entered into pursuant to clause (b)), the Borrower and the\n                                        ----------                       \nAdministrative Agent (upon consultation with the Independent Engineer, if\nnecessary) shall designate such Additional Contract as either an \"Additional\nMaterial Contract\" or an \"Additional Non-Material Contract\".\n\n     SECTION 6.17.  Capital Expenditures.  The Borrower shall not make any\n                    --------------------                                  \nexpenditure in respect of the purchase of capital assets, except for\nexpenditures which could not reasonably be expected to adversely affect the\nSystem and which are (a) covered by the Capital Budget or the then current\nOperating Budget, (b) to the extent not covered by the Capital Budget or the\nthen current Operating Budget, are funded solely from sources described in\n                                                                          \nclause (a) of Section 6.09 or (c) approved by the Majority Lenders in writing\n----------    ------------                                                   \n(after consultation with the Independent Engineer).\n\n     SECTION 6.18.  Limitations on Transfer and Issuance of Interests.  The\n                    -------------------------------------------------      \nBorrower shall not, and shall not permit the Subsidiaries to, (a) permit the\ntransfer of any ownership interest in Subsidiaries, except in accordance with\n                                                                             \nSection 6.03, or (b) issue any additional ownership interests, unless (subject\n------------                                                                  \nin any event to the provisions of Section 7.14) (i) such ownership interests are\n                                  ------------                                  \nissued by the Borrower or are otherwise in accordance with Section 6.06(b) and\n                                                           ---------------    \n(ii) such ownership interests are being issued by Subsidiaries to the Borrower\n(whether in addition to or substitution for the then outstanding Capital Stock\nof such Subsidiary) and in each case are made subject to the first priority Lien\nin favor of the Administrative Agent; provided that, with respect to any such\n                                      --------                               \npledge agreement pledging the Capital Stock of the Borrower, the liability of\nthe shareholders of the Borrower shall be limited to the \"Collateral\" pledged\nthereunder.\n\n     SECTION 6.19.  Unrelated Activities; Abandonment; New Subsidiaries.  (a)\n                    ---------------------------------------------------       \nThe Borrower shall not, and shall not permit the Subsidiaries to, engage in any\nbusiness other than System Activities or as otherwise contemplated by the System\nContracts and the Loan Documents, and activities incidental thereto.\n\n     (b)  The Borrower shall not abandon the diligent development, construction,\ninstallation or operation of the System.\n\n                                     -102-\n\n \n     (c)  The Borrower shall not, and shall not permit the Subsidiaries to,\ncreate any new subsidiaries after the Closing Date other than (i) with the prior\nwritten consent of the Lead Agents, (ii) in connection with the acquisition of\nthe Capital Stock of SSI Sub 2 as a wholly-owned Subsidiary on terms reasonably\nsatisfactory to the Administrative Agent, (iii) the creation of the German\nSubsidiary or (iv) wholly-owned, special purpose Subsidiaries created in\nconnection with changes to the System configuration permitted by this Agreement;\n                                                                                \nprovided that, in any event, (x) the Capital Stock of such Subsidiary shall be\n--------                                                                      \nsubject to the first priority Lien of the Administrative Agent and, (y) such\nSubsidiary (unless it is the German Subsidiary) shall have executed and\ndelivered to the Administrative Agent a Subsidiary Guaranty Agreement.\n\n     SECTION 6.20.  Set-off.  Without the prior written consent of the\n                    -------                                           \nAdministrative Agent (such consent not to be unreasonably withheld), the\nBorrower shall not, and shall not permit the Subsidiaries to, exercise any right\nof set-off with respect to amounts owing to it by the Contractor under the\nSupply Contract.\n\n     SECTION 6.21.  Changes in Capital Budget.  Without the prior written\n                    -------------------------                            \nconsent of the Majority Lenders (such consent not to be unreasonably withheld),\nthe Borrower shall not modify the Capital Budget to increase the aggregate\namounts payable thereunder (except with respect to the payment of Sales\nCommissions earned pursuant to the Sales Agency Agreement) unless such\nmodification is a necessary conforming change related to an amendment to a\nSystem Contract permitted by Section 6.07 or Section 6.08 or is concurrent and\n                             ------------    ------------                     \nconsistent with any additional sources of funds which are to be made available\nto the Borrower and not theretofore contemplated in the Capital Budget\n(including amounts available in the Construction Contingency Reserve Account,\nliquidated damages being applied to obligations hereunder and proceeds of\ninsurance applied in accordance with terms of this Agreement); provided that the\n                                                               --------         \nforegoing shall not prevent the Borrower from applying identified cost savings\nin a budget category (as confirmed by the Independent Engineer or the\nAdministrative Agent, as applicable) to cost overruns in another budget category\n(as confirmed by the Independent Engineer or the Administrative Agent, as\napplicable) without increasing the aggregate amounts payable under the Capital\nBudget (provided that the prior written consent of the Lead Agents shall be\nrequired with respect to the application of any identified cost savings in\nexcess of $2,000,000).\n\n     SECTION 6.22.  Payment of Construction Costs.  Prior to the Commercial\n                    -----------------------------                          \nOperation Date, the Borrower shall not pay any amount (other than with respect\nto amounts received from the sources described in clause (a) of Section 6.09 or\n                                                  ----------    ------------   \nfrom amounts available in the Construction Contingency Reserve Account or under\nthe Working Capital Loan Commitment or from Special Payments) in\n\n                                     -103-\n\n \nrespect of the construction and installation of the System other than those\ncosts set forth or provided for in the Capital Budget, as the same may be\namended in accordance with Section 6.21, Sales Commissions earned and payable in\n                           ------------                                         \naccordance with the terms of the Sales Agency Agreement and costs that SSI is\ncontractually obligated to pay under any System Contract if it results in a\ndollar for dollar reduction in amounts payable by the Borrower or any of its\nSubsidiaries under such System Contract.\n\n     SECTION 6.23.  Sales of Capacity.  The Borrower shall not, and shall not\n                    -----------------                                        \npermit the Subsidiaries to, sell or otherwise dispose Capacity except (a)\npursuant to Capacity Sale Agreements substantially in the form of Exhibit L or\n                                                                  ---------   \n(b) pursuant to other agreements or arrangements which are on commercially\nreasonable terms (which shall include the disposition of Capacity without cash\ncompensation in exchange for mutual restoration agreements); provided that, in\n                                                             --------         \nany event, (i) all such agreements and arrangements shall provide that amounts\npayable to the Borrower shall be paid to the Revenue Account, (ii) no agreement\nproviding for future payments shall prohibit the granting of a security interest\nin such agreement by the Borrower to the Lenders and (iii) without derogation of\nthe provisions of Section 6.24, such agreements shall provide that payments\n                  ------------                                             \nthereunder shall be in cash and at least 80% of such payments shall be due and\npayable before the Maturity Date; and provided, further, that (A) no individual\n                                      --------  -------                        \nsale shall defer more than $4,000,000 beyond the Maturity Date without prior\nwritten consent of the Lead Agents and (B) once the aggregate amount of payments\ndeferred beyond the Maturity Date exceeds $20,000,000, no further deferral of\npayments beyond the Maturity Date shall be permitted without the prior written\nconsent of the Majority Lenders (or the Lead Agents if, as of any date of\ndetermination, the cumulative Capacity Sales Revenue received by the Borrower\nand the Subsidiaries as of such date exceeds 175% of the cumulative Capacity\nSales Revenue set forth in Section 6.24(a) with respect to such date) (and\n                           ---------------                                \nsubject, in any event, to clause (A) above).\n                          ----------        \n\n     SECTION 6.24.  Financial Covenants.  (a)  Minimum Capacity Sales Revenue.\n                    -------------------        ------------------------------  \nThe Borrower shall not permit Capacity Sales Revenue to be less than the\nfollowing amounts by the dates set forth below:\n\n \n\n     Principal Payment                   Minimum Cumulative\n     Dates Occurring in                    $ Sales Revenue\n     ------------------                 ----------------------\n\n     May 1999                              $ 75,000,000\n     November 1999                         $350,000,000\n     May 2000                              $425,000,000\n     November 2000                         $500,000,000\n     May 2001                              $600,000,000\n     November 2001                         $700,000,000\n     May 2002                              $800,000,000\n \n\n                                     -104-\n\n \n     November 2002 and thereafter    $900,000,000\n\n     (b)  Minimum Interest Coverage Ratio.  The Borrower shall not permit, for\n          -------------------------------                                     \nany period of four consecutive fiscal quarters ending on a Principal Payment\nDate (other than the Initial Principal Payment Date if it occurs less than 6\nmonths after the Commercial Operation Date) occurring during any \"Test Period\"\nset forth below, the Interest Coverage Ratio for such period to be less than the\nratio set forth below for such Test Period:\n\n \n    Test Period                     Interest Coverage\n     (Principal Payment Dates occurring in)            Ratio\n     --------------------------------------      -----------------\n    \n        1999                                 3.0:1\n        2000                                 4.5:1\n        2001 and thereafter                  8.0:1\n\n\nNotwithstanding anything to the contrary contained in this Agreement, the\nfailure to comply with this Section 6.24 at any time shall not constitute an\n                            ------------                                    \nEvent of Default, but shall result in Excess Cash Flow being applied 100% to the\nLenders in accordance with Section 8.08(d) until such time as the Borrower shall\n                           ---------------                                      \nhave delivered a certificate to the Administrative Agent in accordance with\n                                                                           \nSection 5.02(c) demonstrating the Borrower's compliance with this Section 6.24.\n---------------                                                   ------------ \n\n     SECTION 6.25.  Amendments, etc. of Organizational and Other Documents.  The\n                    ------------------------------------------------------      \nBorrower shall not, and shall not permit the Subsidiaries to, amend, supplement\nor otherwise modify, or permit the amendment, modification or supplementation\nof, (a) the certificate of incorporation or by-laws or other organizational\ndocuments (including any By-Laws or Memorandum of Association) in a manner which\nis inconsistent with or violates the terms of or could reasonably be expected to\nprevent compliance with any of the terms of any Loan Document or System Contract\nor could materially adversely affect the Lenders or any Collateral or (b) if\nissued in accordance with and subject to the terms of this Agreement, any\ndocuments evidencing or relating to Permitted Subordinated Debt which could\nadversely affect the Lenders or result in provisions that are more onerous on\nthe Borrower.\n\n     SECTION 6.26.  Management and Advisory Fees, etc.  The Borrower shall not,\n                    ---------------------------------                          \nand shall not permit any of the Subsidiaries to pay any management, advisory,\nconsulting or other similar fees to any Affiliate of the Borrower, except\npursuant to the Advisory Services Agreement as in effect on the date hereof in\naccordance with Article VIII.\n                ------------ \n\n     SECTION 6.27.  Immunity.  Neither the Borrower nor any of the Subsidiaries\n                    --------                                                   \nshall, in any proceeding in Bermuda, the United States, the United Kingdom, the\nFederal Republic of Germany or elsewhere, in connection with any Loan Document,\nclaim for\n\n                                     -105-\n\n \nitself, any of its assets or the System, immunity from suit, execution,\nattachment or other legal process.\n\n\n                                  ARTICLE VII\n\n                               EVENTS OF DEFAULT\n                               -----------------\n\n     Each of the following events or occurrences described in this Article VII\n                                                                   -----------\nshall constitute an \"Event of Default\".\n\n     SECTION 7.1.  Non-Payment of Obligations.  The Borrower shall fail to pay\n                   --------------------------                                 \nany principal of any Loan when and as the same shall become due and payable; or\nthe Borrower shall fail to pay any interest on any Loan or any fee payable under\nthis Agreement or any other Loan Document when and as the same shall become due\nand payable, and such failure shall continue unremedied for a period of five\ndays; or the Borrower or any Subsidiary shall fail to pay any other amount\npayable under this Agreement or any other Loan Document when and as the same\nshall become due and payable, and such failure shall continue unremedied for a\nperiod of 5 days following the Borrower's receipt of written notice thereof from\nthe Administrative Agent.\n\n     SECTION 7.2.  Breach of Warranty.  Any representation or warranty made or\n                   ------------------                                         \ndeemed made by the Borrower, any other Loan Party or any other Obligor in this\nAgreement, in any other Loan Document or in any System Contract to which it is a\nparty or in any certificate delivered by the Borrower, any Loan Party or any\nother Obligor pursuant to this Agreement, any other Loan Document or any System\nContract shall prove to have been false or misleading in any material respect as\nof the time made or deemed made and, if such misrepresentation is capable of\nbeing corrected as of a subsequent date, such misrepresentation shall not have\nbeen corrected as of a day within thirty (30) calendar days following written\nnotice thereof being given by the Administrative Agent to the Borrower or such\nLoan Party; provided that if such misrepresentation is made by such other\n            --------                                                     \nObligor in a System Contract, it shall not constitute an Event of Default\nhereunder unless such misrepresentation has caused or could reasonably be\nexpected to cause a Material Adverse Effect (after giving effect to any right\nthe Borrower has to replace such System Contract in accordance with the terms of\nthis Agreement).\n\n     SECTION 7.3.  Non-Performance of Certain Covenants and Obligations.  (a)\n                   ----------------------------------------------------       \nThe Borrower shall fail to observe or perform any covenant or agreement\ncontained in Article VI of this Agreement (other than Section 6.24); or (b) the\n             ----------                               ------------             \nBorrower or any Loan Party shall fail to perform any of its covenants or\nagreements contained in Article IV of any Security Document or in the Subsidiary\nGuaranty Agreement; or (c)  the Borrower or any other Loan Party shall fail to\nobserve or perform any covenant or\n\n                                     -106-\n\n \nagreement contained in this Agreement or any other Loan Document to which it is\na party (other than those specified in Sections 7.01 and 7.02 above, in clauses\n                                       -------------     ----           -------\n(a) and (b) of this Section 7.03 and those set forth in Section 6.24), and such\n---     ---         ------------                        ------------           \nfailure shall continue unremedied or unwaived for a period of thirty (30) days\nafter the Borrower or such Loan Party receives actual knowledge thereof from the\nAdministrative Agent; provided, however, with respect to this clause (c) if (i)\n                      --------  -------                       ----------       \nsuch failure cannot be cured within such thirty (30)-day period despite the\nBorrower's or such Loan Party's best efforts to do so, (ii) such failure is\nsusceptible of cure, (iii) the Borrower or such other Loan Party is continuously\nproceeding with diligence and in good faith to cure such failure and (iv) the\nexistence of such failure has not had and could not reasonably be expected to\nhave a Material Adverse Effect, then such thirty (30)-day cure period shall be\nextended to such date, not to exceed a total ninety (90)-day cure period, as\nshall be necessary for the Borrower or such other Loan Party to cure such\nfailure.\n\n     SECTION 7.4.  Involuntary Bankruptcy Proceeding, etc.  An involuntary\n                   --------------------------------------                 \nproceeding shall be commenced or an involuntary petition shall be filed seeking\n(a) liquidation, reorganization or other relief in respect of the Borrower, any\nother Loan Party or any other Obligor or its debts, or of a substantial part of\nits assets, under any  Federal, state or foreign bankruptcy, insolvency,\nreceivership or similar law now or hereafter in effect or (b) the appointment of\na receiver, trustee, custodian, sequestrator, conservator or similar official\nfor the Borrower, any other Loan Party or any other Obligor or for a substantial\npart of its assets, and, in any such case, such proceeding or petition shall\ncontinue undismissed for 60 days or an order or decree approving or ordering any\nof the foregoing shall be entered; provided that, with respect to the\n                                   --------                          \nContractor, such proceeding shall not constitute an Event of Default hereunder\nif (i) such event occurs prior to the Actual Date of Commercial Operation, so\nlong as the Supply Contract has not been terminated or rejected and the\nContractor is continuing to diligently perform its obligations under the Supply\nContract (or the Supply Contract Guarantor is diligently performing its\nobligations under the Supply Contract Guaranty) or (ii) such event occurs on or\nafter the Actual Date of Commercial Operation, so long as such event could not\nreasonably be expected to have a Material Adverse Effect.\n\n     SECTION 7.5.  Voluntary Bankruptcy Proceeding, etc.  The Borrower, any\n                   ------------------------------------                    \nother Loan Party or any other Obligor shall (a) voluntarily commence any\nproceeding or file any petition seeking liquidation, reorganization or other\nrelief under any Federal, state or foreign bankruptcy, insolvency, receivership\nor similar law now or hereafter in effect, (b) consent to the institution of any\nproceeding or petition described in Section 7.04, (c) apply for or consent to\n                                    ------------                             \nthe appointment of a\n\n                                     -107-\n\n \nreceiver, trustee, custodian, sequestrator, conservator or similar official for\nthe Borrower, any other Loan Party or any other Obligor or for a substantial\npart of its assets, (d) file an answer admitting the material allegations of a\npetition filed against it in any such proceeding, (e) make a general assignment\nfor the benefit of creditors or (f) take any action for the purpose of effecting\nany of the foregoing, provided that, with respect to the Contractor, any such\n                      --------                                               \nevent or action shall not constitute an Event of Default hereunder if (i) such\nevent occurs prior to the Actual Date of Commercial Operation, so long as the\nSupply Contract has not been terminated or rejected and the Contractor is\ncontinuing to diligently perform its obligations under the Supply Contract (or\nthe Supply Contract Guarantor is diligently performing its obligations under the\nSupply Contract Guaranty) or (ii) such event occurs on or after the Actual Date\nof Commercial Operation, so long as such event could not reasonably be expected\nto have a Material Adverse Effect.\n\n     SECTION 7.6.  Judgments.  One or more final judgments (a) for the payment\n                   ---------                                                  \nof money in an aggregate amount (not paid or covered by insurance) in excess of\n$5,000,000 shall be rendered against the Borrower or any other Loan Party (other\nthan Holdings) and the same shall not have been vacated, discharged, stayed or\nbonded pending appeal within 45 days from the entry thereof or (b) shall be\nentered in the form of an injunction or similar form of relief requiring\nsuspension or abandonment of the construction, installation or operation of the\nSystem and such injunction or similar relief shall not have been stayed,\ndischarged or vacated within 60 days.\n\n     SECTION 7.7.  ERISA.  An ERISA Event shall have occurred that, in the\n                   -----                                                  \nopinion of the Required Lenders, when taken together with all other ERISA Events\nthat have occurred, could reasonably be expected to have a Material Adverse\nEffect.\n\n     SECTION 7.8.  Impairment of Security, etc.  Any Loan Document shall cease\n                   ---------------------------                                \nto be in full force and effect or the Borrower or any Loan Party shall so assert\nin writing; or the Lien as to any material portion of the Collateral created by\nany Security Document shall cease to be enforceable or, in the case of\nPerfectible Collateral, of the same effect and priority purported to be created\nthereby; or the Supply Contract Guaranty shall cease to be in full force and\neffect (except as a result of the express provisions thereof) or the Supply\nContract Guarantor shall so assert in writing.\n\n     SECTION 7.9.  Commercial Operation.  The Actual Date of Commercial\n                   --------------------                                \nOperation shall not have occurred by the Guaranteed Completion Date.\n\n     SECTION 7.10.  Impairment of System Contract.  Any System Contract shall\n                    -----------------------------                            \ncease to be valid and binding and in full force\n\n                                     -108-\n\n \nand effect, other than as contemplated by the terms of Section 6.07; provided\n                                                       ------------  --------\nthat with respect to any such System Contract (other than the Supply Contract\nGuaranty and, unless the Supply Contract is being replaced in accordance with\n                                                                             \nSection 7.11, the SSI Consent, as to which the following provision shall not be\n------------                                                                   \napplicable), it shall not constitute an Event of Default under this Section so\nlong as such event is cured by the Borrower by replacing such System Contract\nwith the consent of the Majority Lenders (such consent not to be unreasonably\nwithheld or delayed) within 60 days of such event.\n\n     SECTION 7.11.  Default Under System Contract.  (a) Any party to any System\n                    -----------------------------                              \nContract (other than a Capacity Sales Agreement and the Supply Contract) shall\nbe in material default thereunder and, other than with respect to the Supply\nContract Guaranty, such default shall continue unremedied for 30 consecutive\ndays and such default could reasonably be expected to have a Material Adverse\nEffect, unless any such System Contract has been replaced with the consent of\nthe Majority Lenders within 60 days of such default (such consent not to be\nunreasonably withheld or delayed); or (b) prior to the date of System Final\nCompletion, an \"Event of Default\" (other than an \"Event of Default\" due solely\nto the failure of the Contractor to achieve System Final Completion due to its\ninability to deliver a System which is upgradable beyond a capacity of 10 Gb\/s\nper fiber pair) shall have occurred and be continuing under the Supply Contract,\nunless the Supply Contract has been replaced with the prior written consent of\nthe Majority Lenders within 60 days of such event (such consent not to be\nunreasonably withheld or delayed) or the Supply Contract Guarantor is diligently\nperforming its obligations under the Supply Contract Guaranty and has cured such\n\"Event of Default\" within such 60-day period, it being understood that a failure\nof the Contractor to achieve the Commercial Operation Date by the Scheduled RFS\nDate (as defined in the Supply Contract) shall not constitute an Event of\nDefault under this Section so long as it achieves the Commercial Operation Date\nby the Guaranteed Completion Date.\n\n     SECTION 7.12.  Liquidated Damages.  The Contractor shall fail to pay when\n                    ------------------                                        \ndue any amounts owing as liquidated damages under Article 22(A) of the Supply\nContract (unless the Supply Contract Guarantor is duly performing under the\nSupply Contract Guaranty).\n\n     SECTION 7.13.  Revocation of Landing License, etc.  Any Landing License or\n                    ----------------------------------                         \nother Governmental Action which shall at the time be necessary for the\nperformance of any material System Activity in a manner contemplated under the\nLoan Documents and the System Contracts shall be revoked or shall otherwise\nterminate (or shall be amended or modified in a materially adverse manner) and\nsuch revocation or termination (or such amendment or modification thereof) could\nreasonably be expected\n\n                                     -109-\n\n \nto have a Material Adverse Effect, unless such Landing License or Governmental\nAction is replaceable and is replaced with the prior written consent of the\nMajority Lenders (such consent not to be unreasonably withheld or delayed) with\nan alternative Landing License or Governmental Action permitting the performance\nof such System Activity within 60 days of the occurrence of such event.\n\n     SECTION 7.14.  Change in Control.  A Change in Control shall occur.\n                    -----------------                                   \n\n     SECTION 7.15.  Default on Other Indebtedness.  The Borrower or any other\n                    -----------------------------                            \nLoan Party (other than Holdings) shall (a) default in any payment of principal\nof or interest on any Indebtedness (other than Indebtedness under the Loan\nDocuments) or in the payment of any obligations under Hedging Agreements, in any\ncase in an aggregate amount in excess of $1,000,000 beyond the period of grace,\nif any, provided in the instrument or agreement under which such Indebtedness\nwas created or (b) default in the performance of any other agreement relating to\nsuch Indebtedness or contained in any instrument or agreement evidencing,\nsecuring or relating thereto, in each case beyond the period of grace, if any,\nprovided therein, or any other event shall occur or condition exist, the effect\nof which default or other event or condition is to cause, or permit the holders\nof such Indebtedness to cause, such Indebtedness to become due prior to its\nstated maturity.\n\n     SECTION 7.16.  Delay in Construction or Installation.  The construction or\n                    -------------------------------------                      \ninstallation of the System shall be suspended under Article 15 of the Supply\nContract for more than 60 days or the System (or any Segment thereof) shall be\nabandoned by the Borrower.\n\n     If any Event of Default described in Sections 7.04 or 7.05 shall occur with\n                                          -------------    ----                 \nrespect to the Borrower or any Subsidiary, the Commitments shall automatically\nterminate and the principal of the Loans then outstanding, together with accrued\ninterest thereon and all fees and other obligations of the Borrower accrued\nhereunder, and an amount equal to 100% of all LC Exposure, shall automatically\nbecome immediately due and payable, without presentment, demand, protest or\nother notice of any kind, all of which are hereby waived by the Borrower.\n\n     If any Event of Default (other than any Event of Default described in\n                                                                          \nSection 7.04 or 7.05) shall occur for any reason, whether voluntary or\n------------    ----                                                  \ninvoluntary, and be continuing, the Administrative Agent may, and at the request\nor with the consent of the Majority Lenders shall, by notice to the Borrower,\ntake any or all of the following actions, at the same or different times:  (a)\nterminate the Commitments, and thereupon the Commitments shall terminate\nimmediately, (b) declare the Loans then outstanding to be due and payable in\nwhole (or in part, in\n\n                                     -110-\n\n \nwhich case any principal not so declared to be due and payable may thereafter be\ndeclared to be due and payable), and thereupon the principal of the Loans so\ndeclared to be due and payable, together with accrued interest thereon and all\nfees and other obligations of the Borrower accrued hereunder, shall become due\nand payable immediately, without presentment, demand, protest or other notice of\nany kind, all of which are hereby waived by the Borrower, (c) demand that the\nBorrower immediately pay to the Administrative Agent an amount equal to 100% of\nthe LC Exposure whereupon the Borrower shall immediately make such payment to\nthe Administrative Agent which shall hold such amount in a cash collateral\naccount to secure the LC Exposure and (iv) exercise such other rights or\nremedies as the Lenders may have under the Loan Documents or applicable law.\n\n\n                                  ARTICLE VIII\n\n                                    ACCOUNTS\n                                    --------\n\n     SECTION 8.1.  Creation of Accounts.  (a) The Administrative Agent hereby\n                   --------------------                                      \nestablishes the following twelve special, segregated and irrevocable cash\ncollateral accounts in the name of the Borrower and for the benefit of the\nLenders, which accounts shall be maintained by the Administrative Agent at all\ntimes until the termination of this Agreement and the payment in full of all\nObligations:\n\n          (1)  Construction Account;\n          (2)  Revenue Account;\n          (3)  Special Payment Account;\n          (4)  Debt Reserve Account;\n          (5)  Holdings Interest Reserve Account;\n          (6)  Operating Reserve Account;\n          (7)  Insurance Proceeds Account;\n          (8)  Clean-Up Account;\n          (9)  Sales and Issuances Proceeds Account;\n          (10) Construction Contingency Reserve Account;\n          (11) VAT Refund Account; and\n          (12) Current Account.\n\n     (b)  The Administrative Agent hereby establishes the following three\nspecial, segregated and irrevocable cash collateral accounts, each in the name\nof the applicable Subsidiary and for the benefit of the Lenders, which accounts\nshall be maintained by the Administrative Agent at all times until the\ntermination of this Agreement and the payment in full of all obligations:\n\n          (1)  German Subsidiary Account;\n          (2)  U.K. Subsidiary Account; and\n          (3)  U.S. Subsidiary Account;\n\n                                     -111-\n\n \n  provided that the German Subsidiary Account will not be established until the\n  --------                                                                     \nAdministrative Agent receives notice from the Borrower that the German\nSubsidiary has been created.\n\n     (c)  All moneys, investments and securities at any time on deposit in any\nof the Accounts shall be under the sole dominion and control of the\nAdministrative Agent and shall constitute collateral in accordance with the\nterms of the Security Documents to be held in the custody of the Administrative\nAgent for the purposes and on the terms set forth in the Security Documents and\nthis Article VIII.\n     ------------ \n\n     SECTION 8.2.  Required Deposits into the Accounts.\n                   ----------------------------------- \n\n     (a)  Contractor Escrow Account.  (i)  On each date occurring after the\n          -------------------------                                        \nClosing Date and prior to the funding of the initial Term Loans on which the\nBorrower receives Equity Contributions from Holdings, the Borrower shall deposit\nsuch Equity Contributions in the Escrow Payment Account.\n\n     (ii)  On the date the initial Term Loans are made, the Lenders shall fund a\nportion of such Term Loan in an amount equal to $26,400,000 on such date to\ndeposit in the Escrow Payment Account (and thereafter be applied pursuant to the\nterms of the Contractor Escrow and Security Agreement).\n\n     (b)  Construction Account.  (i)  Each Lender shall, subject to Section\n          --------------------                                      -------\n8.02(c) and 8.02(j), fund each Loan made by it hereunder directly to the\n-------     -------                                                     \nAdministrative Agent for deposit in the Construction Account.\n\n     (ii)  Upon the issuance of the Contingency Letter of Credit in accordance\nwith the terms hereof and of the Contractor Escrow and Security Agreement, the\nBorrower shall deposit the cash proceeds released from the Escrow Contingent\nAccount in the Construction Account.\n\n     (iii)  On each date on which the Borrower receives Equity Contributions\nfrom Holdings after the funding of the initial Term Loans, but prior to the\npayment of all Capital Costs, the Borrower shall, subject to the provisions of\n                                                                              \nSection 8.02(k), deposit such Equity Contributions in the Construction Account.\n---------------                                                                \n\n     (iv)  On the earlier of (A) the date the Contingency Letter of Credit is\nissued and (B) the date the initial Term Loans are made, the Borrower shall\ntransfer from its general corporate checking account (the \"Checking Account\")\n                                                           ----------------  \ndirectly to the Administrative Agent for deposit in the Construction Account, an\namount equal to the excess, if any, between (x) the then current balance in the\nChecking Account and (y) $150,000.\n\n                                     -112-\n\n \n     (v)  On any date after the Closing Date and prior to the Commercial\nOperation Date on which the Borrower receives payment under any Hedging\nAgreement, the Borrower shall deposit such payment into the Construction\nAccount.\n\n     (c)  Escrow Dispute Account.  Subject to the satisfaction or waiver by the\n          ----------------------                                               \nMajority Lenders of the applicable conditions precedent set forth herein, each\nLender shall fund the \"disputed portion\" of any Loan made by it hereunder\ndirectly to the Escrow Agent for deposit into the Escrow Dispute Account in\naccordance with the terms of the Supply Contract and of the Contractor Escrow\nand Security Agreement.  The \"disputed portion\" of any Loan shall be that amount\nindicated by the Borrower or the Independent Engineer as being in dispute in the\ncertificate attached to the monthly Construction Progress Certificate delivered\nin connection with such Loan.\n\n     (d)  Revenue Account.  Subject to Section 8.02(k), the Borrower shall\n          ---------------              ---------------                    \ndeposit in the Revenue Account all System Revenues of the Borrower.\n\n     (e)  Special Payment Account.  The Borrower shall deposit in the Special\n          -----------------------                                            \nPayment Account all Special Payments.\n\n     (f)  Debt Reserve Account.  The Administrative Agent shall deposit amounts\n          --------------------                                                 \nin the Debt Reserve Account from amounts on deposit in the Revenue Account as\nspecified in Sections 8.08(a) and (d).\n             ----------------     --- \n\n     (g)  Holdings Interest Reserve Account.  The Administrative Agent shall\n          ---------------------------------                                 \ndeposit amounts in the Holdings Interest Reserve Account from amounts on deposit\nin the Revenue Account as specified in Sections 8.08(a) and (d).\n                                       ----------------     --- \n\n     (h)  Operating Reserve Account.  The Administrative Agent shall deposit\n          -------------------------                                         \namounts in the Operating Reserve Account from amounts on deposit in the Revenue\nAccount as specified in Sections 8.08(a) and (d).\n                                 -------     --- \n\n     (i)  Insurance Proceeds Account.  The Borrower and the Administrative Agent\n          --------------------------                                            \nshall deposit all Casualty Proceeds in the Insurance Proceeds Account.\n\n     (j)  Clean-Up Account.  Subject to the satisfaction or waiver by the\n          ----------------                                               \nMajority Lenders of the applicable conditions precedent set forth herein, each\nLender shall fund the Loan made by it hereunder on the last day of the\nAvailability Period in respect of Capital Costs which are not yet due directly\nto the Administrative Agent for deposit in the Clean-Up Account.\n\n     (k)  Sales and Issuances Proceeds Account.  The Borrower shall deposit in\n          ------------------------------------                                \nthe Sales and Issuances Proceeds Account all Net\n\n                                     -113-\n\n \nCash Proceeds received after the funding of the initial Term Loans.\n\n     (l)  Construction Contingency Reserve Account.  The Administrative Agent\n          ----------------------------------------                           \nshall deposit amounts in the Construction Contingency Reserve Account in\naccordance with Section 8.08(a).\n                --------------- \n\n     (m)  VAT Refund Account.  The Borrower shall deposit all refunds of value\n          ------------------                                                  \nadded taxes and import duties in the VAT Refund Account.\n\n     (n)  Current Account.  The Administrative Agent shall deposit amounts in\n          ---------------                                                    \nthe Current Account from amounts on deposit in the Revenue Account as specified\nin Section 8.08(b).\n   --------------- \n\n     (o)  German Subsidiary Account.  The Administrative Agent shall deposit all\n          -------------------------                                             \ncapital contributions or loans, as the case may be, from the Borrower to the\nGerman Subsidiary directly in the German Subsidiary Account from amounts on\ndeposit in the Construction Account.  The Administrative Agent will transfer all\npayments by the Borrower to the German Subsidiary under the Intercompany\nAgreement directly to the German Subsidiary Account from amounts on deposit in\nthe Revenue Account in accordance with Sections 8.08(a), 8.08(b), 8.10(a),\n                                       ----------------  -------  ------- \n8.11(a) and 8.12(a).\n-------     ------- \n\n     (p)  U.K. Subsidiary Account.  The Administrative Agent shall deposit all\n          -----------------------                                             \ncapital contributions or loans, as the case may be, from the Borrower to the\nU.K. Subsidiary directly in the U.K. Subsidiary Account from amounts on deposit\nin the Construction Account.  The Administrative Agent will transfer all\npayments by the Borrower to the U.K. Subsidiary under the Intercompany Agreement\ndirectly to the U.K. Subsidiary Account from amounts on deposit in the Revenue\nAccount in accordance with Sections 8.08(a), 8.08(b), 8.10(a), 8.11(a) and\n                           ----------------  -------  -------  -------    \n8.12(a).\n------- \n\n     (q)  U.S. Subsidiary Account.  The Administrative Agent shall deposit all\n          -----------------------                                             \ncapital contributions or loans, as the case may be, from the Borrower to the\nU.S. Subsidiary directly in the U.S. Subsidiary Account from amounts on deposit\nin the Construction Account.  The Administrative Agent will transfer all\npayments by the Borrower to the U.S. Subsidiary under the Intercompany Agreement\ndirectly to the U.S. Subsidiary Account from amounts on deposit in the Revenue\nAccount in accordance with Sections 8.08(a), 8.08(b), 8.10(a), 8.11(a) and\n                           ----------------  -------  -------  -------    \n8.12(a).\n------- \n\n     SECTION 8.3.  Deposits Held as Cash Collateral.  The Administrative Agent\n                   --------------------------------                           \nagrees to accept all revenues, cash, payments, insurance and casualty proceeds,\nother amounts and Permitted Investments to be delivered to or held by the\nAdministrative Agent pursuant to the terms of this Agreement.  The\nAdministrative Agent shall hold and safeguard the Accounts (and the revenues,\ncash, payments, insurance and casualty\n\n                                     -114-\n\n \nproceeds, instruments, securities and other amounts on deposit therein) during\nthe term of this Agreement and shall treat the revenues, cash, payments,\ninsurance and casualty proceeds, instruments, securities and other amounts in\nthe Accounts as funds, instruments, securities and other properties pledged by\nthe Borrower (or the applicable Subsidiary, in the case of the Subsidiary\nAccounts) to the Administrative Agent as collateral securing the Obligations in\naccordance with the provisions of this Agreement and the Security Documents.\n\n     SECTION 8.4.  Source of Payments; Deposits Irrevocable.  (a)  If the\n                   ----------------------------------------              \nAdministrative Agent shall be unable to determine the source of any payments\nreceived or the Account or Accounts into which such payments are to be\ndeposited, the Administrative Agent shall hold such amounts in the Revenue\nAccount (and shall not be applied in accordance with Section 8.08) until its\n                                                     ------------           \nproper application is identified.\n\n     (b)  Any deposit made into any Account hereunder shall, absent manifest\nerror, be irrevocable and the amount of such deposit and any instrument or\nsecurity held in such Account and all interest thereon shall be held in trust by\nthe Administrative Agent and applied solely as provided in this Article VIII.\n                                                                ------------ \n\n     SECTION 8.5.  Books of Account; Statements.  (a)  The Administrative Agent\n                   ----------------------------                                \nshall maintain books of account on a cash basis and record therein all deposits\ninto and transfers to and from the Accounts and all investment transactions\neffected by the Administrative Agent pursuant to Section 8.22 and any such\n                                                 ------------             \nrecordation shall constitute prima facie evidence of the information recorded.\n                             ----- -----                                      \n\n     (b)  Not later than the tenth Business Day of each month, commencing with\nthe first month to occur after the earlier of (i) the date the United States to\nUnited Kingdom Segment of the System becomes operational and (ii) the receipt of\nNet Cash Proceeds or Casualty Proceeds, the Administrative Agent shall deliver\nto the Borrower a statement setting forth the transactions in each Account\nduring the preceding month and specifying the System Revenues, Net Cash\nProceeds, Special Payments, Casualty Proceeds, cash equivalents and other\namounts held in each Account at the close of business on the last Business Day\nof the preceding month; provided that the Administrative Agent shall promptly\n                        --------                                             \nrespond (during normal business hours) to requests by the Borrower concerning\ninformation regarding deposits, investments and transfers in and among the\nAccounts.\n\n     SECTION 8.6.  Location of the Accounts.  The Accounts shall be maintained\n                   ------------------------                                   \nby the Administrative Agent at its office located at 1251 Avenue of the\nAmericas, New York, New York 10019, until the Administrative Agent gives written\nnotice to the other\n\n                                     -115-\n\n \nparties to this Agreement setting forth a different location of the Accounts, in\nthe manner specified in Section 10.01; provided, however, that such location\n                        -------------                                       \nshall be in New York City.\n\n     SECTION 8.7.  Construction Account.  On each Borrowing Date, the\n                   --------------------                              \nAdministrative Agent shall transfer, from the cash available in the Construction\nAccount, (a) directly to each Person to which an amount in excess of $200,000 is\ndue and payable (and otherwise to the Borrower for the benefit of the Persons\nentitled thereto), the amounts identified as Capital Costs then due and payable\nin the Borrowing Request delivered in connection with such Borrowing Date and\n(b) directly to the Borrower, for deposit into the Checking Account, the amount\nset forth in the Borrowing Request delivered in connection with such Borrowing\nDate as necessary to bring the amounts on deposit in the Checking Account to\n$150,000.  The Administrative Agent shall, upon receipt of a certificate from\nthe Borrower requesting the same, apply a portion of the proceeds received in\nthe Construction Account pursuant to Section 8.02(b)(ii) as specified in such\n                                     -------------------                     \ncertificate to the prepayment of the Working Capital Loans in accordance with\n                                                                             \nSection 2.10.\n------------ \n\n     SECTION 8.8.  Revenue Account.\n                   --------------- \n\n     (a)  Presale Proceeds.  The Administrative Agent shall, upon receipt by it\n          ----------------                                                     \nof a certificate of the Borrower prior to the Commercial Operation Date (which\nshall be delivered no more frequently than once a month, except for certificates\ndelivered with respect to amounts payable pursuant to clause first, which may be\n                                                      ------ -----              \ndelivered twice a month), and in any event on the Commercial Operation Date,\ndistribute, from the cash available in the Revenue Account, the following\namounts in the following order of priority:\n\n          first, to the Sales Agent, all Sales Commissions earned in accordance\n          -----                                                                \n     with the Sales Agency Agreement but not yet paid under the Sales Agency\n     Agreement as indicated in such certificate;\n\n          second, (A) to the Operator (or such other Person as may be entitled\n          ------                                                              \n     thereto), all Annex H Costs of the Borrower then due and payable and (B) to\n     each Subsidiary's Subsidiary Account, a portion of the amounts due and\n     owing to such Subsidiary under the Intercompany Agreement equal to all\n     Annex H Costs of such Subsidiary then due and payable; provided that no\n                                                            --------        \n     more than $6,500,000 in the aggregate shall be distributed in respect of\n     Annex H Costs of the Borrower and the Subsidiaries pursuant to clause (A)\n                                                                    ----------\n     of this clause second and Section 8.19(a) in any calendar quarter;\n             -------------     ---------------                         \n\n          third, until such time as $10,000,000 in the aggregate shall have been\n          -----                                                                 \n     distributed pursuant to this clause third on or prior to the Commercial\n                                  ------------                              \n     Operation Date, to the\n\n                                     -116-\n\n \n     Construction Contingency Reserve Account, to be applied in accordance with\n                                                                               \n     Section 8.16;\n     ------------ \n\n          fourth, until such time as $48,000,000 in the aggregate shall have\n          ------                                                            \n     been distributed pursuant to this clause fourth on or prior to the\n                                       -------------                   \n     Commercial Operation Date, to the Debt Reserve Account, to be applied in\n     accordance with Section 8.10;\n                     ------------ \n\n          fifth, until such time as $13,000,000 in the aggregate shall have been\n          -----                                                                 \n     distributed pursuant to this clause fifth on or prior to the Commercial\n                                  ------------                              \n     Operation Date, to the Operating Reserve Account, to be applied in\n     accordance with Section 8.12;\n                     ------------ \n\n          sixth, until such time as $9,000,000 in the aggregate shall have been\n          -----                                                                \n     distributed pursuant to this clause sixth on or prior to the Commercial\n                                  ------------                              \n     Operation Date, to the Holdings Interest Reserve Account, to be applied in\n     accordance with Section 8.11;\n                     ------------ \n\n          seventh, until such time as $200,000,000 in the aggregate shall have\n          -------                                                             \n     been distributed pursuant to this clause seventh on or prior to the\n                                       --------------                   \n     Commercial Operation Date, to the Administrative Agent, for the account of\n     the Lenders, to be applied to the prepayment of the Loans, together with\n     accrued interest thereon and any amounts due pursuant to Section 2.16, in\n                                                              ------------    \n     accordance with Section 2.11(a);\n                     --------------- \n\n          eighth, until such time as $75,000,000 in the aggregate shall have\n          ------                                                            \n     been distributed pursuant to this clause eighth on or prior to the\n                                       -------------                   \n     Commercial Operation Date, to Holdings, for the benefit of the holders of\n     the Holdings Senior Notes, to be applied to the prepayment of the Holdings\n     Senior Notes, together with accrued interest thereon and premium, if any,\n     payable in connection therewith;\n\n          ninth, to the Administrative Agent, for the account of the Lenders, up\n          -----                                                                 \n     to an amount sufficient to pay all Loans in full, together with accrued\n     interest thereon and all other amounts payable under this Agreement and the\n     other Loan Documents;\n\n          tenth, thereafter, to the Escrow Payment Account, an aggregate amount\n          -----                                                                \n     not to exceed the remaining Commitments (or, if less, the remaining amounts\n     payable under the Supply Contract), whereupon such Commitments shall be\n     reduced dollar for dollar in accordance with Section 2.08; and\n                                                  ------------     \n\n          eleventh, thereafter, to the Borrower, to be applied to such purposes\n          --------                                                             \n     (including the making of equity dividends) as the Borrower may direct.\n\n                                     -117-\n\n \n     (b)  Payment of OA&M Expenses, Intercompany Payments and Advisory Services\n          ---------------------------------------------------------------------\nFee After the Commercial Operation Date.  (i)  On or before the twentieth day of\n---------------------------------------                                         \neach month occurring after the Commercial Operation Date (or if such day is not\na Business Day, the immediately preceding Business Day), the Borrower shall\ndeliver to the Administrative Agent an Expense Certificate requesting\ndistributions to be made to pay OA&M Expenses (including Sales Commissions\nearned in accordance with the Sales Agency Agreement) from the Revenue Account.\nThe approval of the Lead Agents shall be required for the payment of OA&M\nExpenses (other than Sales Commissions earned in accordance with the Sales\nAgency Agreement) which would cause an Operating Budget Deviation and the\napproval of the Majority Lenders shall be required if such payment would cause a\nMaterial Operating Budget Deviation.  On the twenty-fifth day of each month (or\nif such date is not a Business Day, the immediately succeeding Business Day)\n(each such date, a \"Monthly OA&M Transfer Date\"), the Administrative Agent shall\n                    --------------------------                                  \ndistribute, from the cash available in the Revenue Account, (A) directly to each\nPerson (other than a Subsidiary) to which an amount in excess of $200,000 is due\nand payable, the amounts identified as OA&M Expenses of the Borrower then due\nand owing in Item 1 of the Expense Certificate referred to above, (B) to the\nBorrower for the benefit of the Persons entitled thereto, all other OA&M\nExpenses of the Borrower then due and owing in Item 1 of such Expense\nCertificate, (C) to the Current Account, the amounts identified as OA&M Expenses\nof the Borrower expected to be due and owing prior to the next Monthly OA&M\nTransfer Date in Item 2 of such Expense Certificate and (D) to the Borrower, for\ndeposit into the Checking Account, the amount set forth in Item 3 of such\nExpense Certificate as necessary to bring the amounts on deposit in the Checking\nAccount to $150,000.  In addition, the Administrative Agent shall distribute,\nfrom the cash available in the Revenue Account, directly to each Subsidiary\nAccount, the amounts due and owing by the Borrower to the applicable Subsidiary\nunder the Intercompany Agreement as set forth in Item 5 of the Expense\nCertificate.  Sales Commissions earned in accordance with the Sales Agency\nAgreement shall have first priority and be payable before all other OA&M\nExpenses and before payments under the Intercompany Agreement.\n\n     (ii)  The Borrower shall be permitted to deliver a certificate to the\nAdministrative Agent on one other day of a month (in addition to the date set\nforth in paragraph (i) above) setting forth Sales Commissions earned and owing\nin accordance with the Sales Agency Agreement and the Administrative Agent shall\npromptly distribute, from the cash available in the Revenue Account, the amount\nof such Sales Commissions earned in accordance with the Sales Agency Agreement\ndirectly to the Sales Agent.\n\n     (iii)  On the earlier of (A) the Initial Principal Payment Date and (B) the\ndate of System Final Completion, so long as no\n\n                                     -118-\n\n \nEvent of Default shall have occurred and be continuing, the Administrative Agent\nshall distribute from cash available in the Revenue Account, directly to PCG\nTelecom Services LLC, that portion of the Advisory Services Fee due and payable\non such date in accordance with the terms of the Advisory Services Agreement,\n                                                                             \nprovided that the amount payable pursuant to this Section 8.08(b)(iii) on the\n--------                                          --------------------       \ndate of System Final Completion shall not exceed $500,000 if the Debt Reserve\nAccount does not have a balance therein in an amount equal to at least the\namount referred to in clause fourth of Section 8.08(a) as of the date of System\n                      -------------    ---------------                         \nFinal Completion.\n\n     (iv)  If any portion of the Contract Price is due and owing and remains\nunpaid (and such unpaid portion is not required pursuant to the terms of this\nAgreement to be paid from another specified source, unless amounts are not\nactually available from such other source), the Borrower shall be permitted to\ndeliver a certificate to the Administrative Agent setting forth such unpaid\namounts and the Administrative Agent shall promptly distribute, from cash\navailable in the Revenue Account, the portion of the Contract Price remaining\nunpaid.\n\n     (c)  Monthly Transfers After the Commercial Operation Date.  On the last\n          -----------------------------------------------------              \nBusiness Day of each calendar month occurring after the Commercial Operation\nDate, the Administrative Agent shall distribute from the cash available in the\nRevenue Account (after making any distributions required by Section 8.08(b)) the\n                                                            ---------------     \nfollowing amounts in the following order of priority:\n\n          first, to the Administrative Agent, for the account of the Lenders,\n          -----                                                              \n     the amount of all fees payable pursuant to the terms of the Loan Documents,\n     which the Administrative Agent certifies to the Borrower to be due and\n     payable on such date;\n\n          second, to the Administrative Agent, for the account of the Lenders,\n          ------                                                              \n     the amount, if any, equal to the interest on the Loans and under Hedging\n     Agreements which the Administrative Agent certifies to the Borrower to be\n     due and payable under the Loan Documents on such date;\n\n          third, if such date is a Principal Payment Date, to the Administrative\n          -----                                                                 \n     Agent, for the account of the Lenders, the amount, if any, equal to the\n     principal (excluding any mandatory prepayments thereof) which the\n     Administrative Agent certifies to the Borrower to be due and payable on\n     such date; and\n\n          fourth, so long as no Event of Default has occurred and is continuing,\n          ------                                                                \n     (i) if such date is a Quarterly Advisory Services Payment Date and a\n     Principal Payment Date, the amount equal to the Advisory Services Fee which\n     the Borrower\n\n                                     -119-\n\n \n     certifies to the Administrative Agent to be due and payable on such date\n     (including any amounts deferred pursuant to Section 8.08(b)(iii) or\n                                                 --------------------   \n     deferred in respect of any prior period because of the occurrence and\n     continuance of an Event of Default) and (ii) if such date is a Quarterly\n     Advisory Services Payment Date and not a Principal Payment Date, the amount\n     set forth in clause (i) above, so long as at least an equal dollar amount\n                  ----------                                                  \n     shall be remaining in the Revenue Account after any distributions made\n     pursuant to this clause (ii).\n                      ----------- \n\n     (d)  Semi-Annual Transfers After the Commercial Operation Date.  On each\n          ---------------------------------------------------------          \nPrincipal Payment Date, the Administrative Agent shall distribute from the cash\navailable in the Revenue Account (after making any distributions required by\n                                                                            \nSections 8.08(b) and 8.08(c)) the following amounts in the following order of\n----------------     -------                                                 \npriority:\n\n          first, to the Operating Reserve Account, an amount sufficient to cause\n          -----                                                                 \n     the amounts on deposit therein to equal the Operating Reserve Amount (as\n     set forth in the most recent certificate of the Borrower delivered pursuant\n     to Section 5.02(f));\n        ---------------  \n\n          second, to the Debt Reserve Account, an amount sufficient to cause the\n          ------                                                                \n     amounts on deposit therein to equal the Debt Reserve Amount (as set forth\n     in the most recent certificate of the Borrower delivered pursuant to\n                                                                         \n     Section 5.02(f));\n     ---------------  \n\n          third, to the Holdings Interest Reserve Account, an amount sufficient\n          -----                                                                \n     to cause the amounts on deposit therein to equal the Holdings Interest\n     Reserve Amount (as set forth in the most recent certificate of the Borrower\n     delivered pursuant to Section 5.02(f));\n                           ---------------  \n\n          fourth, so long as no Blockage Event has occurred and is continuing,\n          ------                                                              \n     to Holdings, an amount equal to one-half of the annual Permitted Senior\n     Cash Dividends for the current fiscal year, together with any Permitted\n     Senior Cash Dividends distributable pursuant to this clause fourth which\n                                                          -------------      \n     were blocked for any prior period and have not otherwise been paid pursuant\n     to this clause fourth or from amounts on deposit in the Holdings Interest\n             -------------                                                    \n     Reserve Account;\n\n          fifth, to the Administrative Agent, for the account of the Lenders, an\n          -----                                                                 \n     amount equal to 50% (or 100%, in the event a Designated Event has occurred\n     and is continuing) of the remainder of the cash available in the Revenue\n     Account to be applied to the prepayment of the Loans in accordance with\n                                                                            \n     Section 2.11(b); and\n     ---------------     \n\n                                     -120-\n\n \n          sixth, thereafter to the Borrower, to be applied to such purposes\n          -----                                                            \n     (including the making of equity dividends) as the Borrower may direct, the\n     remainder, if any, of the cash available in the Revenue Account;\n\nprovided, however, if an Event of Default shall have occurred and be continuing,\n--------  -------                                                               \n(x) amounts payable pursuant to clause fourth of this Section 8.08(d), if any,\n                                -------------         ---------------         \nshall be limited to an amount no greater than the interest due and payable on\nthe Holdings Senior Notes on the next succeeding June 1 or December 1, as the\ncase may be, as certified by the Borrower to the Administrative Agent and (y)\nall amounts remaining on deposit in the Revenue Account after the payment of\namounts specified in clauses first through fourth shall be applied by the\n                     -------------         ------                        \nAdministrative Agent to the obligations then due in such order as the\nAdministrative Agent shall direct.\n\n     SECTION 8.9.  Special Payment Account.  All Special Payments deposited in\n                   -----------------------                                    \nthe Special Payment Account constituting Liquidated Damages or proceeds of\ndelayed opening of business insurance shall be applied by the Administrative\nAgent first, to the payment of interest due and payable on the Loans, second, to\n      -----                                                           ------    \nthe payment of interest on the Holdings Senior Notes and, third, to the payment\n                                                          -----                \nof other Capital Cost overruns resulting from the delay in the Commercial\nOperation Date, in each case as and when the same shall become due and payable.\nAll other Special Payments shall be transferred to the Revenue Account to be\napplied in accordance with Section 8.08; provided that, in the event the Supply\n                           ------------  --------                              \nContract is being replaced in accordance with this Agreement, such other Special\nPayments shall, subject to Section 8.21 of this Agreement, be applied by the\n                           ------------                                     \nBorrower to the costs of entering into a replacement supply agreement and to\nsuch other related costs as shall be approved by the Administrative Agent.\n\n     SECTION 8.10.  Debt Reserve Account.  (a)  If, prior to the Commercial\n                    --------------------                                   \nOperation Date, the amounts due and owing to any Subsidiary under the\nIntercompany Agreement exceed the amounts distributed to such Subsidiary\npursuant to clause second of Section 8.08(a), and no amounts remain on deposit\n            -------------    ---------------                                  \nin the Holdings Interest Reserve account or the Operating Reserve Account, the\nAdministrative Agent shall distribute to such Subsidiary, from amounts on\ndeposit in the Debt Reserve Account, the remaining amounts due and owing to such\nSubsidiary under the Intercompany Agreement.\n\n     (b)  If, prior to the Commercial Operation Date, Annex H Costs of the\nBorrower or other OA&M Expenses of the Borrower due and payable exceed the\namounts distributed in respect thereof pursuant to clause second of Section\n                                                   -------------    -------\n8.08(a), and no amounts remain on deposit in the Holdings Interest Reserve\n-------                                                                   \nAccount or the Operating Reserve Account, the Administrative Agent shall\n\n                                     -121-\n\n \ndistribute to the Operator (or such other Person as may be entitled thereto),\nfrom amounts on deposit in the Debt Reserve Account, an amount equal to such\nOA&M Expenses of the Borrower remaining unpaid; provided that amounts\n                                                --------             \ndistributed pursuant to this paragraph (b), Section 8.11(b), Section 8.12(b),\n                             -------------  ---------------  --------------- \nSection 8.19(a)  and clause second of Section 8.08(a) shall not exceed (x)\n---------------      -------------    ---------------                     \n$6,500,000 in any calendar quarter in respect of Annex H Costs of the Borrower\nand the Subsidiaries or (y) the amounts allocated therefor in the then current\nOperating Budget in respect of all OA&M Expenses (other than Annex H Costs and\nSales Commissions earned in accordance with the Sales Agency Agreement) of the\nBorrower and the Subsidiaries.\n\n     (c)  If, subsequent to the Commercial Operation Date, on any date on which\nthe payment of principal or interest on the Loans becomes due and payable, the\ncash available in the Revenue Account is insufficient to make the payment\nobligations set forth in clauses second and third of Section 8.08(c) on such\n                         --------------     -----    ---------------        \ndate, the Administrative Agent shall transfer to the Administrative Agent, for\nthe benefit of the Lenders, the amount (to the extent cash is available in the\nDebt Reserve Account) equal to the amount of any deficiency in the payment\nobligations set forth in clauses second and third of Section 8.08(c) on such\n                         --------------     -----    ---------------        \ndate.\n\n     SECTION 8.11.  Holdings Interest Reserve Account.  (a)  If, prior to the\n                    ---------------------------------                        \nCommercial Operation Date, the amounts due and owing to any Subsidiary under the\nIntercompany Agreement exceed the amounts distributed to such Subsidiary\npursuant to clause second of Section 8.08, the Administrative Agent shall\n            -------------    ------------                                \ndistribute to such Subsidiary, from amounts on deposit in the Holdings Interest\nReserve Account, the remaining amounts due and owing to such Subsidiary under\nthe Intercompany Agreement.\n\n     (b) If, prior to the Commercial Operation Date, Annex H Costs of the\nBorrower or other OA&M Expenses of the Borrower due and payable exceed the\namounts distributed in respect thereof pursuant to clause second of Section\n                                                   -------------    -------\n8.08(a), the Administrative Agent shall distribute to the Operator (or such\n-------                                                                    \nother Person as may be entitled thereto), from amounts on deposit in the\nHoldings Interest Reserve Account, an amount equal to such OA&M Expenses of the\nBorrower remaining unpaid; provided that amounts distributed pursuant to this\n                           --------                                          \nparagraph (b), Section 8.19(a) and clause second of Section 8.08(a) shall not\n-------------  ---------------     -------------    ---------------          \nexceed (x) $6,500,000 in any calendar quarter in respect of Annex H Costs of the\nBorrower and the Subsidiaries or (y) the amounts allocated therefor in the then\ncurrent Operating Budget in respect of all OA&M Expenses (other than Annex H\nCosts and Sales Commissions earned in accordance with the Sales Agency\nAgreement) of the Borrower and the Subsidiaries.\n\n     (c)  If, on any Principal Payment Date (or any other date on which interest\nmay be due and payable on the Holdings Senior\n\n                                     -122-\n\n \nNotes), the cash available in the Revenue Account is insufficient to make the\npayment obligations set forth in clause fourth of Section 8.08(d) on such\n                                 -------------    ---------------        \nPrincipal Payment Date or other date (or if amounts on deposit in the Revenue\nAccount may not be applied to all or any portion thereof by reason of the\noccurrence of a Designated Event or an Event of Default or otherwise), the\nAdministrative Agent shall, subject to the provisions of Section 8.21, transfer\nto Holdings the amount (to the extent cash is available in the Holdings Interest\nReserve Account) equal to the amount of any deficiency in the payment\nobligations set forth in clause fourth of Section 8.08(d) on such Principal\n                         -------------    ---------------                  \nPayment Date or other date.\n\n     SECTION 8.12.  Operating Reserve Account.  (a)  If, prior to the Commercial\n                    -------------------------                                   \nOperation Date, the amounts due and owing to any Subsidiary under the\nIntercompany Agreement exceed the amounts distributed to such Subsidiary\npursuant to clause second of Section 8.08, and no amounts remain on deposit in\n            -------------    ------------                                     \nthe Holdings Interest Reserve Account, the Administrative Agent shall distribute\nto such Subsidiary, from amounts on deposit in the Operating Reserve Account,\nthe remaining amounts due and owing to such Subsidiary under the Intercompany\nAgreement.\n\n     (b)  If, prior to the Commercial Operation Date, Annex H Costs of the\nBorrower or other OA&M Expenses of the Borrower due and payable exceed the\namounts distributed in respect thereof pursuant to clause second of Section\n                                                   -------------    -------\n8.08(a), and no amounts remain on deposit in the Holdings Interest Reserve\n-------                                                                   \nAccount, the Administrative Agent shall distribute to the Operator (or such\nother Person as may be entitled thereto), from amounts on deposit in the\nOperating Reserve Account, an amount equal to such OA&M Expenses of the Borrower\nremaining unpaid; provided that amounts distributed pursuant to this paragraph\n                  --------                                           ---------\n(b), Section 8.11(b), Section 8.19(a) and clause second of Section 8.08(a) shall\n---  ---------------  ---------------     -------------    ---------------      \nnot exceed (x) $6,500,000 in any calendar quarter in respect of Annex H Costs of\nthe Borrower and the Subsidiaries or (y) the amounts allocated therefor in the\nthen current Operating Budget in respect of all OA&M Expenses (other than Annex\nH Costs and Sales Commissions earned in accordance with the Sales Agency\nAgreement) of the Borrower and the Subsidiaries.\n\n     (c)  If, subsequent to the Commercial Operation Date, on any Monthly OA&M\nTransfer Date (or other date on which the Borrower requests the payment of Sales\nCommissions earned in accordance with the Sales Agency Agreement due and owing),\nthe cash available in the Revenue Account is insufficient to make the payment\nobligations set forth in the Expense Certificate (or other certificate) setting\nforth such OA&M Expenses, the Administrative Agent shall transfer to the\nPerson(s) entitled thereto in accordance with Section 8.08(b) (to the extent\n                                              ---------------               \ncash is available in the Operating Reserve Account) the amount of any\n\n                                     -123-\n\n \ndeficiency in the payment of the OA&M Expenses set forth in such certificate.\n\n     SECTION 8.13.  Insurance Proceeds Account.  (a)  All cash, cash\n                    --------------------------                      \nequivalents, instruments, investments and securities at any time on deposit in\nthe Insurance Proceeds Account, including all interest or other income earned\nwith respect thereto, are herein called the \"Casualty Proceeds Deposits\".\n                                             --------------------------  \n\n     (b)  The Casualty Proceeds Deposits shall be accumulated in the Insurance\nProceeds Account and held therein until paid to or upon the order of the\nBorrower as provided in paragraph (c) of this Section 8.13, or paid to the\n                        -------------         ------------                \nAdministrative Agent as provided in paragraph (d) or (e) of this Section 8.13,\n                                    -------------    ---         ------------ \nor returned to the Borrower as provided in Section 8.27.\n                                           ------------ \n\n     (c)  Subject to the provisions of paragraphs (d) and (e) of this Section\n                                       --------------     ---         -------\n8.13, Casualty Proceeds Deposits shall be paid over to or upon the order of the\n----                                                                           \nBorrower (or directly to the Persons entitled thereto, in the case of amounts in\nexcess of $200,000) to reimburse it for, or to pay, the cost of repairing,\nrebuilding or otherwise replacing the damaged or destroyed or lost or condemned\nproperty in respect of which such moneys were received, upon the receipt by the\nAdministrative Agent of a certificate of the Borrower (A) setting forth in\nreasonable detail the work done or proposed to be done and materials purchased\nor to be purchased by way of the renewal, repair, rebuilding or other\nreplacement of the damaged or destroyed or lost or condemned property and (B)\nstating the specific amount requested to be paid over to or upon the order of\nthe Borrower (or such other Person) or that such amount is requested to\nreimburse the Borrower, as the case may be, for, or to pay, costs actually\nincurred to repair, rebuild or replace property and that such amount, together\nwith amounts remaining in the Insurance Proceeds Account for such purpose and\nother funds of the Borrower available for such purpose, are sufficient to pay in\nfull the costs of such renewal, repair, rebuilding or other replacement.  In the\nevent that any amounts remain in the Insurance Proceeds Account after\napplication thereof in accordance with this paragraph (c), the Administrative\n                                            -------------                    \nAgent shall transfer such Casualty Proceeds Deposits to the Revenue Account.\n\n     (d)  If the Borrower shall at any time notify the Administrative Agent that\nan Event of Loss has occurred, then, unless the System is being repaired in\naccordance with Section 5.22, the Administrative Agent shall promptly withdraw\n                ------------                                                  \nthe Casualty Proceeds Deposits from the Insurance Proceeds Account and deliver\nthe same to the Administrative Agent to be applied to the payment of the\nObligations in accordance with Section 2.11(d).  If the System is being repaired\n                               ---------------                                  \nin accordance with Section 5.22, the provisions of paragraph (c) above shall\n                   ------------                    -------------            \napply.\n\n                                     -124-\n\n \n     (e)  If an Event of Default has occurred and is continuing and the Loans\nhave been accelerated in accordance with Article VII, then the Administrative\n                                         -----------                         \nAgent shall promptly withdraw the Casualty Proceeds Deposits from the Insurance\nProceeds Account and apply the same to the payment of the Obligations in such\norder as the Administrative Agent may elect.\n\n     SECTION 8.14.  Clean-Up Account.  The Administrative Agent shall, upon\n                    ----------------                                       \nreceipt by it of a certificate of the Borrower setting forth the same\ninformation required in a Borrowing Request with respect to the Capital Costs to\nbe paid (together with all applicable invoices), distribute, from the cash\navailable in the Clean-Up Account, directly to each Person to which an amount in\nexcess of $200,000 is due and payable (and otherwise to the Borrower for the\nbenefit of the Persons entitled thereto), the amounts identified as Capital\nCosts in such certificate as then due and payable.  The Borrower shall use\nreasonable efforts to submit certificates under this Section 8.14 no more than\n                                                     ------------             \nonce a month.\n\n     SECTION 8.15.  Sales and Issuances Proceeds Account.   Amounts on deposit\n                    ------------------------------------                      \nin the Sales and Issuances Proceeds Account shall be applied as follows:\n\n          (a)  if such amounts are Net Cash Proceeds of any new issuance after\n     the Closing Date of Capital Stock of the Borrower, (i) an amount equal to\n     the portion thereof being held in accordance with the proviso contained in\n                                                                               \n     clause (i) of Section 2.11(c) for application to the payment of Permitted\n     ----------    ---------------                                            \n     Costs (which shall be specified in a certificate of the Borrower delivered\n     to the Administrative Agent when such Net Cash Proceeds are deposited)\n     shall be held and applied to the payment thereof upon receipt of a\n     certificate of the Borrower specifying the Person(s) to whom such Permitted\n     Costs are due and owing (provided that any portion thereof which is being\n     held for the payment of Capital Costs shall be transferred to the\n     Construction Account or, after the Commercial Operation Date, the Revenue\n     Account or, after the Availability Period, the Clean-Up Account) and (ii)\n     the remainder shall be applied, 50% to the prepayment of the Loans in\n     accordance with Section 2.11(c)(i) and 50% to the Borrower, to be used in\n                     ------------------                                       \n     such manner (including equity dividends) as the Borrower shall determine;\n\n          (b)  if such amounts are Net Cash Proceeds of an incurrence of\n     Indebtedness by the Borrower or Holdings after the Closing Date (other than\n     Indebtedness permitted by Section 6.01 and Indebtedness of Holdings\n                               ------------                             \n     permitted pursuant to Section 6.1 of the Holdings Note Purchase Agreement\n                           -----------                                        \n     as in effect on the date hereof), such Net Cash Proceeds shall be applied\n     to the prepayment of the Loans in accordance with Section 2.11(c)(ii); and\n                                                       -------------------     \n\n                                     -125-\n\n \n     (c)  if such amounts are Net Cash Proceeds in respect of any sale,\n     transfer, lease or other disposition of any asset of the Borrower or any\n     Subsidiary, (i) an amount equal to the portion thereof being held to be\n     reinvested in the Borrower's or any Subsidiary's business (which shall be\n     specified in a certificate of the Borrower delivered to the Administrative\n     Agent when such Net Cash proceeds are deposited) shall be held and applied\n     to the payment of the relevant expenses upon receipt of a certificate of\n     the Borrower specifying the Person(s) to whom such expenses are due and\n     owing, (ii) if any such Net Cash Proceeds are not expended in accordance\n     with clause (i) above within six months of their receipt into the Sales and\n          ----------                                                            \n     Issuances Proceeds Account, such Net Cash Proceeds (net of the portion\n     being transferred to the Revenue Account pursuant to clause (iii) below),\n                                                          ------------        \n     shall be applied to the prepayment of the Loans in accordance with Section\n                                                                        -------\n     2.11(c)(iii) and (iii) all such other Net Cash Proceeds which are not being\n     ------------                                                               \n     held pursuant to clause (i) above or are not being applied to the\n                      ----------                                      \n     prepayment of the Loans pursuant to Section 2.11(c)(iii), shall be\n                                         --------------------          \n     transferred to the Revenue Account.\n\n     SECTION 8.16.  Construction Contingency Reserve Account.  (a)  If, prior to\n                    ----------------------------------------                    \nthe Commercial Operation Date, the amounts due and owing to any Subsidiary under\nthe Intercompany Agreement exceed the amounts distributed to such Subsidiary\npursuant to clause second of Section 8.08, and no amounts remain on deposit in\n            -------------    ------------                                     \nthe Holdings Interest Reserve Account, the Operating Reserve Account and the\nDebt Reserve Account, the Administrative Agent shall distribute to such\nSubsidiary, from amounts on deposit in the Construction Contingency Reserve\nAccount, the remaining amounts due and owing to such Subsidiary under the\nIntercompany Agreement.\n\n     (b)  If, prior to the Commercial Operation Date, Annex H Costs of the\nBorrower or other OA&M Expenses of the Borrower due and payable exceed the\namounts distributed in respect thereof pursuant to clause second of Section\n                                                          ------    -------\n8.08(a), and no amounts remain on deposit in the Holdings Interest Reserve\n-------                                                                   \nAccount, the Operating Reserve Account and the Debt Reserve Account, the\nAdministrative Agent shall distribute to the Operator (or such other person as\nmay be entitled thereto), from amounts on deposit in the Construction\nContingency Reserve Account, an amount equal to such OA&M Expenses of the\nBorrower remaining unpaid; provided that amounts distributed pursuant to this\n                                                                             \nparagraph (b), Section 8.10(b), Section 8.11(b), Section 8.12(b), Section\n-------------  ---------------  ---------------  ---------------  -------\n8.19(a) and clause second of Section 8.08(a) shall not exceed (x) $6,500,000 in\n-------     -------------    ---------------                                   \nany calendar quarter in respect of Annex H Costs of the Borrower and the\nSubsidiaries or (y) the amounts allocated therefor in the then current Operating\nBudget in respect of all OA&M Expenses (other than Annex H Costs and Sales\nCommissions\n\n                                     -126-\n\n \nearned in accordance with the Sales Agency Agreement) of the Borrower and the\nSubsidiaries.\n\n     (c)  The Administrative Agent shall pay, from and to the extent of cash\navailable in the Construction Contingency Reserve Account and as set forth in a\ncertificate of the Borrower, (i) directly to each Person to which an amount in\nexcess of $200,000 is due and payable and (ii) otherwise, to the Borrower for\nthe benefit of the Persons entitled thereto, the amounts identified in such\ncertificate as Capital Costs overruns then due and payable in the Borrowing\nRequest delivered in connection with the most recent Borrowing Date.\n\n     SECTION 8.17.  VAT Refund Account.  The Administrative Agent shall, upon\n                    ------------------                                       \nreceipt of a certificate of the Borrower directing the same, apply the amounts\non deposit in the VAT Refund Account to the prepayment of the Working Capital\nLoans, together with accrued and unpaid interest thereon, in accordance with\n                                                                            \nSection 2.11(e) on the last day of the current Interest Period(s) with respect\n---------------                                                               \nthereto.\n\n     SECTION 8.18.  Current Account.  The Administrative Agent shall pay, from\n                    ---------------                                           \nand to the extent of cash available in the Current Account and as set forth in a\ncertificate of the Borrower, (i) directly to each Person to which an amount in\nexcess of $200,000 is due and payable, the amounts previously identified as OA&M\nExpenses in Item 2 of the most recently delivered Expense Certificate which are\nthen due and owing, or (ii) to the Borrower for the benefit of the Persons\nentitled thereto, all other such OA&M Expenses previously identified in Item 2\nof the most recently delivered Expense Certificate which are then due and owing.\n\n     SECTION 8.19.  Subsidiary Accounts.  (a) If, prior to the Commercial\n                    -------------------                                  \nOperation Date, Annex H Costs of a Subsidiary or other OA&M Expenses of a\nSubsidiary are due and payable, the Administrative Agent shall distribute, from\nthe cash available in such Subsidiary's Subsidiary Account, to the Operator (or\nsuch other Person as may be entitled thereto) an amount equal to such OA&M\nExpenses of such Subsidiary then due and payable to such Person.\n\n     (b) The Administrative Agent shall, on each Monthly OA&M Transfer Date,\ndistribute from the cash available in each Subsidiary's Subsidiary Account (i)\ndirectly to each Person to which an amount in excess of $200,000 is due and\npayable, the amounts identified as OA&M Expenses of such Subsidiary then due and\nowing in Item 1 of the Expense Certificate delivered pursuant to Section 8.08(b)\n                                                                 ---------------\nin respect of such date and (ii) to such Subsidiary for the benefit of the\nPersons entitled thereto, all other OA&M Expenses of such Subsidiary then due\nand owing in Item 1 of such Expense Certificate.\n\n                                     -127-\n\n \n     (c)  The Administrative Agent shall distribute from the cash available in\neach Subsidiary's Subsidiary Account to the applicable Governmental Authority\nentitled thereto the amount of taxes then due and payable by such Subsidiary (or\nrequired to be withheld from payments made by such Subsidiary) to such\nGovernmental Authority as set forth in a certificate of such Subsidiary\ndelivered to the Administrative Agent.\n\n     (d)  The Administrative Agent shall, on each Subsidiary Transfer Date,\ndistribute, from the cash available in each Subsidiary's Subsidiary Account, to\nthe Revenue Account, the amount of such Subsidiary's Transfer Payment due and\npayable on such date, as set forth in a certificate of the Borrower delivered to\nthe Administrative Agent.\n\n     SECTION 8.20.  Release of Excess Amounts.  If, as of any Principal Payment\n                    -------------------------                                  \nDate, (a) an amount is on deposit in the Debt Reserve Account, the Holdings\nInterest Reserve Account or the Operating Reserve Account in excess of the\nRequired Balance for such Account, as the result of the actual realization of\nincome or gain on the amounts on deposit in such Account and (b) no Event of\nDefault or Designated Event has occurred and is continuing, then the\nAdministrative Agent shall distribute any such excess amounts to the Revenue\nAccount.  After the payment of all Capital Costs, amounts remaining on deposit\nin the Construction Account, the Construction Contingency Reserve Account, the\nVAT Refund Account and the Clean-Up Account shall be applied first, to fund the\n                                                             -----             \nReserve Accounts to bring the amounts on deposit therein up to the Required\nBalances (in the order of priority set forth in Section 8.08(d)) and second, to\n                                                ---------------      ------    \nthe prepayment of the Loans in accordance with Section 2.11(e).\n                                               --------------- \n\n     SECTION 8.21.  Acceleration.  Any other provision contained in this\n                    ------------                                        \nAgreement to the contrary notwithstanding (but still subject to Section 8.28),\n                                                                ------------  \nupon the occurrence and during the continuance of an Event of Default and after\nthe Loans have become or have been declared to be due and payable in accordance\nwith Article VII, the Administrative Agent shall then distribute cash from the\n     -----------                                                              \nAccounts to be applied to the payment of the Obligations in such order as the\nAdministrative Agent shall direct.\n\n     SECTION 8.22.  Investment.  Any cash held by the Administrative Agent in\n                    ----------                                               \nany Account shall be invested by the Administrative Agent from time to time as\ndirected in writing by the Borrower (or, if Event of Default has occurred and is\ncontinuing, by the Administrative Agent in its sole discretion) in Permitted\nInvestments.  Any income or gain realized as a result of any such investment\nshall be held as part of the applicable Account and reinvested as provided\nherein.  If any income tax is payable on account of any such income or gain, it\nshall be paid by the Borrower or its Affiliates.  Any such\n\n                                     -128-\n\n \ninvestment may be sold (without regard to maturity date) by the Administrative\nAgent whenever necessary to make any distribution required by this Agreement.\nThe Administrative Agent shall have no liability for any loss resulting from any\nsuch investment or sale thereof other than by reason of its willful misconduct\nor gross negligence.  The Administrative Agent will promptly notify the Borrower\nof any loss resulting from any such investment or sale and the Borrower may\ninstruct the Administrative Agent to, and the Administrative Agent shall,\nreimburse the affected Account from the System Revenues.\n\n     SECTION 8.23.  Value.  Cash and Permitted Investments on deposit from time\n                    -----                                                      \nto time in the Accounts shall be valued (the \"Value\") by the Administrative\n                                              -----                        \nAgent as follows:\n\n          (a)  cash shall be valued at the face amount thereof; and\n\n          (b)  Permitted Investments shall be valued at the lesser of the face\n     amount and the purchase price.\n\n     SECTION 8.24.  Other Determinations.  The Borrower and the Administrative\n                    --------------------                                      \nAgent may establish procedures not materially inconsistent with this Agreement\npursuant to which the Administrative Agent may conclusively determine, for\npurposes of this Agreement, the amounts from time to time to be distributed or\npaid by the Administrative Agent from cash available in the Accounts or pursuant\nto which the Administrative Agent and the Borrower may provide for reasonable\noperating and administrative flexibility.  In addition, the Borrower and the\nAdministrative Agent may establish additional Accounts (i.e., with respect to\nVAT refunds, insurance proceeds, etc.) of the Subsidiaries in order to better\nreflect the separateness of the Borrower's and any Subsidiary's property,\nsubject to Liens in favor of, and such terms and conditions regarding withdrawal\nand application as are consistent with the terms hereof.\n\n     SECTION 8.25.  Sales of Permitted Investments.  The Administrative Agent\n                    ------------------------------                           \nwill use its reasonable commercial efforts to sell Permitted Investments so that\nactual cash is available, on each date on which a distribution is to be made\npursuant to this Agreement, for the Administrative Agent to make such\ndistribution in cash on such date.  The amount of any check or other instrument\nwhich may be deposited in any Account shall not be treated as cash available\nuntil the final collection thereof.\n\n     SECTION 8.26.  Available Cash.  In determining the amount of available cash\n                    --------------                                              \nin any Account at any time, in addition to any cash then on deposit in such\nAccount, the Administrative Agent shall treat as available cash the amount which\nthe Administrative Agent would have received on such day if the Administrative\nAgent\n\n                                     -129-\n\n \nhad liquidated all the Permitted Investments (at then prevailing market prices)\nthen on deposit in such Account.\n\n     SECTION 8.27.  Termination.  Upon termination of this Agreement and the\n                    -----------                                             \npayment in full of all Obligations, the Administrative Agent shall transfer any\nremaining amounts, together with any interest thereon, on deposit in the\nAccounts to the Borrower or as the Borrower may direct.\n\n     SECTION 8.28.  Rights of Sales Agent to Commissions.  Any provision of this\n                    ------------------------------------                        \nAgreement to the contrary notwithstanding, the Administrative Agent and the\nLenders agree that the payment of Sales Commissions earned in accordance with\nthe Sales Agency Agreement will have priority over all other payments and, after\nthe occurrence of an Event of Default, the Administrative Agent will, prior to\napplying any amounts in the Accounts to the prepayment of the Loans (or the\npayment of the Loans after acceleration), first pay over to the Sales Agent the\namount of any accrued and unpaid Sales Commissions earned in accordance with the\nSales Agency Agreement.\n\n     SECTION 8.29.  Conflicts With Other Loan Documents.  To the extent the\n                    -----------------------------------                    \nprovisions of this Article VIII and the provisions of any other Loan Document\n                   ------------                                              \nconflict as to the application of System Revenues or other amounts on deposit in\nthe Accounts, the provisions of this Article VIII shall take precedence.\n                                     ------------                       \n\n     SECTION 8.30.  Checking Account.  The Borrower hereby agrees that (a) from\n                    ----------------                                           \nand after the earlier of (i) the date the Contingency Letter of Credit is issued\nhereunder and (ii) the date the initial Term Loans are made, the balance in the\nChecking Account shall not exceed $150,000 (excluding amounts representing\nearned interest and amounts distributed pursuant to this Article VIII to the\n                                                         ------------       \nBorrower for the benefit of other Persons) and (b) amounts on deposit in the\nChecking Account shall be used solely to pay Capital Costs in accordance with\nthe Capital Budget or OA&M Expenses in accordance with the then effective\nOperating Budget. The Subsidiaries shall be permitted to maintain general\ncorporate checking accounts; provided that the aggregate balance maintained in\n                             --------                                         \nsuch checking accounts shall not at any time exceed $50,000 in the aggregate\n(excluding amounts representing earned interest and amounts distributed pursuant\nto this Article VIII to the Subsidiaries for the benefit of other Persons).\n        ------------                                                       \n\n     SECTION 8.31.  Purchaser Escrow Arrangements.  Anything contained herein to\n                    -----------------------------                               \nthe contrary notwithstanding, in the event a purchaser of Capacity requires that\nits down payment, if any, on its purchase of Capacity be placed in escrow, the\nBorrower shall be permitted to enter into customary escrow arrangements with\nsuch purchaser; provided that once the Borrower becomes entitled to any such\n                --------                                                    \namounts in accordance with the terms of such escrow\n\n                                     -130-\n\n \narrangements, such amounts shall be deposited into the Revenue Account.\n\n\n                                   ARTICLE IX\n\n                     THE ADMINISTRATIVE AGENT, OTHER AGENTS\n                            AND AGENT RELATED PERSONS\n                     -----------------------------------------------\n\n     SECTION 9.1.  Authorization and Action.  Each Lender hereby appoints and\n                   ------------------------                                  \nauthorizes the Administrative Agent to take such action as agent on its behalf\nand to exercise such powers and discretion under this Agreement as are delegated\nto the Administrative Agent by the terms hereof, together with such powers and\ndiscretion as are reasonably incidental thereto.  As to any matters not\nexpressly provided for by this Agreement (including enforcement or collection of\nthe Notes), the Administrative Agent shall not be required to exercise any\ndiscretion or take any action, but shall be required to act or to refrain from\nacting (and shall be fully protected in so acting or refraining from acting)\nupon the instructions of the Majority Lenders, the Required Lenders or the\nLenders, as the case may be, for actions or refraining from acting pursuant to\nthe terms of this Agreement, and such instructions shall be binding upon all\nLenders and all holders of Notes; provided, however, that the Administrative\n                                  --------  -------                         \nAgent shall not be required to take any action that exposes the Administrative\nAgent to personal liability (unless indemnified to its reasonable satisfaction)\nor that is contrary to this Agreement or applicable law.  The Administrative\nAgent agrees to give to each Lender prompt notice of each notice given to it by\nthe Borrower or any of the Subsidiaries pursuant to the terms of this Agreement.\n\n     SECTION 9.2.  Exculpation of, and Reliance by, Agents and Agent Related\n                   ---------------------------------------------------------\nPersons.  Neither the Administrative Agent nor any other Agent nor any Agent\n-------                                                                     \nRelated Person shall be liable to any Lender for any action taken or omitted to\nbe taken by it or them under or in connection with this Agreement or any other\nLoan Document, except for its or their own gross negligence or willful\nmisconduct.  Without limitation of the generality of the foregoing, the\nAdministrative Agent and each Agent Related Person:\n\n          (a)  may treat the payee of any Note as the holder thereof or any\n     Lender as a Lender until the Administrative Agent receives and accepts an\n     Assignment and Acceptance entered into by such payee or Lender, as\n     assignor, and an eligible assignee, as assignee, as provided in Section\n                                                                     -------\n     10.04;\n     ----- \n\n          (b)  may consult with legal counsel (including counsel for the\n     Borrower), independent public accountants and other\n\n                                     -131-\n\n \n     experts selected by it and shall not be liable for any action taken or\n     omitted to be taken in good faith by it in accordance with the advice of\n     such counsel, accountants or experts;\n\n          (c)  makes no warranty or representation to any Lender and shall not\n     be responsible to any Lender for any statements, warranties or\n     representations (whether written or oral) made in or in connection with\n     this Agreement or any other Loan Document;\n\n          (d)  shall not have any duty to ascertain or to inquire as to the\n     performance or observance of any of the terms, covenants or conditions of\n     this Agreement or any other Loan Document on the part of the Borrower, or\n     any of the Subsidiaries or to inspect the property (including the books and\n     records) of the Borrower or any of the Subsidiaries;\n\n          (e)  shall not be responsible to any Lender for the due execution,\n     legality, validity, enforceability, genuineness, sufficiency or value of,\n     or the perfection or priority of any lien or security interest created or\n     purported to be created under or in connection with, this Agreement or any\n     other instrument or document furnished pursuant hereto; and\n\n          (f)  shall incur no liability to any Lender under or in respect of\n     this Agreement or any other Loan Document by acting upon any notice,\n     consent, certificate or other instrument or writing (which may be by\n     telecopier, telegram, or telex) believed by it to be genuine and signed or\n     sent by the proper party or parties.\n\n     SECTION 9.3.  Agents, Agent Related Persons and Affiliates.  With respect\n                   --------------------------------------------               \nto its Commitment, the Credit Extensions made by it and any Note issued to it,\nDeutsche Bank AG and Canadian Imperial Bank of Commerce and their respective\nAffiliates shall have the same rights and powers under this Agreement as any\nother Lender and may exercise the same as though it were not an Agent; and the\nterm \"Lender\" or \"Lenders\" shall, unless otherwise expressly indicated, include\nDeutsche Bank, AG, Canadian Imperial Bank of Commerce and any Affiliate thereof\nin its individual capacity.  Deutsche Bank, AG, Canadian Imperial Bank of\nCommerce and their Affiliates may accept deposits from, lend money to, act as\ntrustee under indentures of, accept investment banking engagements from and\ngenerally engage in any kind of business with, the Borrower, any of its\nSubsidiaries and any Person who may do business with or own securities of the\nBorrower or any such Subsidiary, all as if Deutsche Bank, AG, Canadian Imperial\nBank of Commerce and their Affiliates were not an Agent and without any duty to\naccount therefor to the Lenders.\n\n                                     -132-\n\n \n     SECTION 9.4.  Lender Credit Decision.  Each Lender acknowledges that it\n                   ----------------------                                   \nhas, independently and without reliance upon any Agent or Agent Related Person\nor any other Lender and based on the financial statements referred to in Section\n                                                                         -------\n3.01 and such other documents and information as it has deemed appropriate, made\n----                                                                            \nits own credit analysis and decision to enter into this Agreement.  Each Lender\nalso acknowledges that it will, independently and without reliance upon any\nAgent or Agent Related Person or any other Lender based on such documents and\ninformation as it shall deem appropriate at the time, continue to make its own\ncredit decisions in taking or not taking action under this Agreement.\n\n     SECTION 9.5.  Indemnification.  The Lenders agree to indemnify each Agent\n                   ---------------                                            \nand Agent Related Person (to the extent not reimbursed by the Borrower or the\nSubsidiaries), ratably according to the respective principal amounts of the\nLoans owing to them, participation interests in Working Capital Loans and\nLetters of Credit and Commitments issued by them, from and against any and all\nliabilities, obligations, losses, damages, penalties, actions, judgements,\nsuits, costs, expenses or disbursements of any kind or nature whatsoever that\nmay be imposed on, incurred by, or asserted against such Agent or Agent Related\nPerson in any way relating to or arising out of this Agreement or any other Loan\nDocument or any action taken or omitted by such Agent or Agent Related Person\nunder this Agreement or any other Loan Document, provided that no Lender shall\n                                                 --------                     \nbe liable to any Agent or Agent Related Person for any portion of such\nliabilities, obligations, losses, damages, penalties, actions, judgements,\nsuits, costs, expenses or disbursements resulting from such Agent's or Agent\nRelated Person's gross negligence or willful misconduct.  Without limitation of\nthe foregoing, each Lender agrees to reimburse each Agent and Agent Related\nPerson promptly upon demand for its ratable share of any out-of-pocket expenses\n(including counsel fees) incurred by such Agent or Agent Related Person in\nconnection with the preparation, execution, delivery, administration,\nmodification, amendment or enforcement (whether through negotiations, legal\nproceedings or otherwise) of, or legal advice in respect of rights or\nresponsibilities under, this Agreement, to the extent that such Agent or Agent\nRelated Person is not reimbursed for such expenses by the Borrower or any of the\nSubsidiaries.\n\n     SECTION 9.6.  Collateral Matters.  (a) The Administrative Agent is\n                   ------------------                                  \nauthorized on behalf of all the Lenders, without the necessity of any notice to\nor further consent from the Lenders, from time to time to take any action with\nrespect to any collateral security or the Security Documents which may be\nnecessary to perfect and maintain perfected the security interest in and Liens\nupon the collateral security granted pursuant to the Security Documents.\n\n                                     -133-\n\n \n     (b)  The Lenders irrevocably authorize the Administrative Agent, at its\noption and in its discretion, to release (i) any security interest or Lien\ngranted to or held by the Administrative Agent upon any collateral security (A)\nupon termination of the Commitments and Letters of Credit, and payment in full\nin cash of all principal of and interest on the Loans and all fees, costs,\nindemnities, gross-ups and expenses that are payable under this Agreement or\nunder any other Loan Document and have been invoiced as of such termination date\n(in which case the Lenders hereby authorize the Administrative Agent to execute,\nand the Administrative Agent agrees to execute, reasonable releases in\nconnection with this Agreement and the Loan Documents (other than, in any event,\nas to items stated to survive the termination of this Agreement or a Loan\nDocument)); (B) constituting property sold or to be sold or disposed of as part\nof or in connection with any disposition permitted hereunder; (C) constituting\nproperty in which the Borrower or any Subsidiary of the Borrower owned no\ninterest at the time the security interest and\/or Lien was granted or at any\ntime thereafter; (D) consisting of an instrument evidencing Indebtedness or\nother debt instrument, if the Indebtedness evidenced thereby has been paid in\nfull; or (E) if approved, authorized or ratified in writing by the Majority\nLenders or, if required by Section 10.02, the Required Lenders or each Lender,\n                           -------------                                      \nas applicable, and (ii) any guarantor from its obligations under any Guaranty\nconstituting a Loan Document in the event such guarantor is not required to be a\nguarantor pursuant to the terms of this Agreement.  Upon request by the\nAdministrative Agent at any time, the Lenders will confirm in writing the\nAdministrative Agent's authority to release particular types or items of\ncollateral security or a Guaranty pursuant to this Section.\n\n     SECTION 9.7.  Successor Administrative Agent.  The Administrative Agent may\n                   ------------------------------                               \nresign at any time by giving 30 days' written notice thereof to the Lenders and\nthe Borrower and may be removed at any time with or without cause by the\nMajority Lenders.  Upon any such resignation or removal, the Majority Lenders\nshall have the right to appoint a successor Administrative Agent, with the prior\nwritten consent of the Borrower (not to be unreasonably withheld or delayed) so\nlong as no Event of Default has occurred and is continuing.  If no successor\nAdministrative Agent shall have been so appointed by the Majority Lenders, and\nshall have accepted such appointment, within 30 days after the retiring\nAdministrative Agent's giving of notice of resignation or the Majority Lenders'\nremoval of the retiring Administrative Agent, then the retiring Administrative\nAgent may, on behalf of the Lenders, appoint, with the prior written consent of\nthe Borrower (not to be unreasonably withheld or delayed) so long as no Event of\nDefault has occurred and is continuing, a successor Administrative Agent, which\nshall be a Lender or a commercial bank organized under the laws of the United\nStates of America or of any State thereof and having a\n\n                                     -134-\n\n \ncombined capital and surplus of at least $250,000,000.  Upon the acceptance of\nany appointment as Administrative Agent hereunder by a successor Administrative\nAgent, such successor Administrative Agent shall thereupon succeed to and become\nvested with all the rights, powers, discretion, privileges and duties of the\nretiring Administrative Agent, and the retiring Administrative Agent shall be\ndischarged from its duties and obligations under this Agreement.  After any\nretiring Administrative Agent's resignation or removal hereunder as\nAdministrative Agent, the provisions of this Article IX shall inure to its\n                                             ----------                   \nbenefit as to any actions taken or omitted to be taken by it while it was\nAdministrative Agent under this Agreement.\n\n\n                                   ARTICLE X\n\n                                 MISCELLANEOUS\n                                 -------------\n\n     SECTION 10.1.  Notices.  Except in the case of notices and other\n                    -------                                          \ncommunications expressly permitted to be given by telephone, all notices and\nother communications provided for herein shall be in writing and shall be\ndelivered by hand or overnight courier service, mailed by certified or\nregistered mail or sent by telecopy, as follows:\n\n          (a)  if to the Borrower, to it at Cedar House, 41 Cedar Avenue,\n     Hamilton, Bermuda, Attention of Global Telesystems, Ltd., Vice President\n     (Telecopy No.  441-296-6749);\n\n          (b)  if to the Administrative Agent, to it at 1251 Avenue of the\n     Americas, New York, New York 10019, Attention of John Quinn, Corporate\n     Finance Services Department (Telecopy No. 212-469-4139);\n\n          (c)  if to a Lead Agent, to 31 West 52nd Street, New York, New York\n     10019, Attention of Elizabeth Tallmadge and Lydia Zaininger (Telecopy No.\n     212-469-7936) in the case of Deutsche Bank AG, New York Branch, or to 425\n     Lexington Avenue, New York, New York 10017, Attention of Louise Bell\n     (Telecopy No. 212-856-3562) in the case of CIBC;\n\n          (d)  if to the Issuing Bank, to it at 425 Lexington Avenue, New York,\n     NY 10017, Attention of Louise Bell (Telecopy No. 212-856-3562); and\n                                                      ------------      \n\n          (e)  if to any other Lender, to it at its address (or telecopy number)\n     set forth on Schedule 2.01.\n                  ------------- \n\nAny party hereto may change its address or telecopy number for notices and other\ncommunications hereunder by notice to the other parties hereto.  All notices and\nother communications given (a)\n\n                                     -135-\n\n \nto the Borrower or any of the Subsidiaries in accordance with Article VII of\n                                                              -----------   \nterms of this Agreement shall be deemed to have been given when sent (answerback\nreceived) in the case of telecopy, when delivered, in the case of hand or\novernight courier service, and three days after mailing, in the case of\ncertified or registered mail, or (b) to any party hereto in accordance with the\nterms of this Agreement other than for purposes of the immediately preceding\n                                                                            \nclause (a), shall be deemed to have been given on the date of receipt.\n----------                                                            \n\n     SECTION 10.2.  Waivers; Amendments.  (a)  No failure or delay by the\n                    -------------------                                  \nAdministrative Agent, the Issuing Bank or any Lender in exercising any right or\npower hereunder shall operate as a waiver thereof, nor shall any single or\npartial exercise of any such right or power, or any abandonment or\ndiscontinuance of steps to enforce such a right or power, preclude any other or\nfurther exercise thereof or the exercise of any other right or power.  The\nrights and remedies of the Administrative Agent, the Issuing Bank and the\nLenders hereunder are cumulative and are not exclusive of any rights or remedies\nthat they would otherwise have.  No waiver of any provision of this Agreement or\nany other Loan Document or consent to any departure by the Borrower or any\nSubsidiary therefrom shall in any event be effective unless the same shall be\npermitted by paragraph (b) of this Section, and then such waiver or consent\n             -------------                                                 \nshall be effective only in the specific instance and for the purpose for which\ngiven.  Without limiting the generality of the foregoing, the making of a Loan\nor issuance of a Letter of Credit shall not be construed as a waiver of any\nDefault, regardless of whether the Administrative Agent, any Lender or the\nIssuing Bank may have had notice or knowledge of such Default at the time.\n\n     (b)  Neither this Agreement, any other Loan Document nor any provision\nhereof or thereof may be waived, amended or modified except pursuant to an\nagreement or agreements in writing entered into by the Loan Parties party\nthereto and the Majority Lenders or by such Loan Parties and the Administrative\nAgent with the consent of the Majority Lenders (unless expressly provided\notherwise in this Agreement); provided that no such agreement shall (i) increase\n                              --------                                          \nthe Commitment of any Lender without the written consent of such Lender, (ii)\nreduce the principal amount of any Loan or LC Disbursement or reduce the rate of\ninterest thereon, or reduce any fees payable hereunder, without the written\nconsent of each Lender affected thereby, (iii) postpone the scheduled date of\npayment of the principal amount of any Loan or LC Disbursement, or any interest\nthereon, or any fees payable hereunder, or reduce the amount of, waive or excuse\nany such payment, or postpone the scheduled date of expiration of any\nCommitment, without the written consent of each Lender affected thereby, (iv)\nchange Section 2.18(b) or (c) in a manner that would alter the pro rata sharing\n       ---------------    ---                                                  \nof payments required thereby, without the written consent of each Lender, (v)\nrelease any\n\n                                     -136-\n\n \nsubstantial and material portion of the Collateral (other than releases in\naccordance with the terms of this Agreement or any Security Document), amend\n                                                                            \nSection 2.11(b) or change the application of Presale Proceeds in accordance with\n---------------                                                                 \nSection 8.08 (a) without the consent of the Required Lenders, (vi) be with\n----------------                                                          \nrespect to terms which are material to the Contractor and adverse to the\ninterests of the Contractor, without the written consent of the Contractor or\n(vii) change any of the provisions of this Section or the definition of\n\"Required Lenders\", \"Majority Lenders\" or any other provision hereof specifying\nthe number or percentage of Lenders required to waive, amend or modify any\nrights hereunder or make any determination or grant any consent hereunder or\nrelease all or substantially all of the Collateral or release any guarantor from\nits obligations under a guaranty, without the written consent of each Lender;\n                                                                             \nprovided further that no such agreement shall amend, modify or otherwise affect\n-------- -------                                                               \nthe rights or duties of the Administrative Agent or the Issuing Bank hereunder\nwithout the prior written consent of the Administrative Agent or the Issuing\nBank, as the case may be.  The Borrower shall deliver to the Contractor a copy\nof each amendment to such Financing Document which has an impact on the\nContractor promptly after execution thereof.\n\n     SECTION 10.3.  Expenses; Indemnity; Damage Waiver.  (a)  The Borrower shall\n                    ----------------------------------                          \npay (i) subject to paragraph 5 of the Commitment Letter, dated as of March 25,\n1997, among the Borrower, Holdings, CIBC Inc. and CIBC Wood Gundy Securities\nCorp., all reasonable out-of-pocket expenses incurred by the Administrative\nAgent, the Arrangers, and their respective Affiliates, including the reasonable\nfees, charges and disbursements of one documentation counsel for the\nAdministrative Agent and the Arrangers and their respective Affiliates, in\nconnection with the syndication of the credit facilities provided for herein,\nthe preparation of such Commitment Letter, this Agreement and the Loan\nDocuments, and any amendments, modifications or waivers of the provisions hereof\nand any other Loan Document (whether or not the transactions contemplated hereby\nor thereby shall be consummated) and the reasonable fees, charges and\ndisbursements of one counsel for the Administrative Agent and the Arrangers and\ntheir respective Affiliates in connection with the ongoing consideration of\nlegal matters relevant to any of the foregoing, including the ongoing compliance\nwith this Agreement and the security relating hereto and thereto, (ii) the\nreasonable fees and expenses of any local counsel retained by the Administrative\nAgent, (iii) the reasonable ongoing fees and expenses of the Consultants in\nconnection with the preparation of their reports and the ongoing fees and\nexpenses of the Independent Engineer and the Insurance Consultant, (iv) any\nexpenses the Borrower or any Subsidiary specifically agrees to pay pursuant to\nany provision of the Loan Documents and (v) all reasonable out-of-pocket\nexpenses incurred by the Administrative Agent, the Lead Agents, the Issuing Bank\nor any Lender, but only in connection with the enforcement or\n\n                                     -137-\n\n \nprotection of its rights or remedies in connection with this Agreement and the\nLoan Documents, including its rights under this Section, or in connection with\nthe Loans made or Letters of Credit issued hereunder, including in connection\nwith any workout, restructuring or negotiations in respect thereof, provided\n                                                                    --------\nwith respect to legal fees, the Borrower shall be responsible to pay only the\nreasonable fees and expenses of one or more counsel selected by the\nAdministrative Agent for the benefit of itself, the Lead Agents, the other\nAgents and the Issuing Bank.  Other than as set forth above, the Administrative\nAgent and the Lenders shall be responsible for their own expenses, including\nongoing administration expenses (which the Administrative Agent's fee is\nintended to cover) and expenses incurred in connection with assignments.  With\nrespect to out-of-pocket expenses incurred in connection with amendments,\nmodifications or waivers to this Agreement or the Loan Documents and in\nconnection with the ongoing consideration of legal matters relevant to this\nAgreement and the other Loan Documents (except for matters relating to the\nenforcement or protection of rights or remedies and except when an Event of\nDefault has occurred and is continuing) the Administrative Agent agrees to\nconfer with the Borrower in advance of the incurrence of any such expenses.\n\n     (b)  The Borrower shall indemnify the Administrative Agent, the Lead\nAgents, the Issuing Bank and each Lender, and each Related Party of any of the\nforegoing Persons (each such Person being called an \"Indemnitee\") against, and\n                                                     ----------               \nhold each Indemnitee harmless from, any and all losses, claims, damages,\nliabilities and related expenses (subject, in the case of ordinary expenses, to\nthe provisions of Section 10.03(a)), including the fees, charges and\n                  ----------------                                  \ndisbursements of any counsel for any Indemnitee, incurred by or asserted against\nany Indemnitee arising out of, in connection with, or as a result of (i) the\nexecution or delivery of this Agreement or any agreement or instrument\ncontemplated hereby, the performance by the parties hereto of their respective\nobligations hereunder or the consummation of the transactions contemplated\nhereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom\n(including any refusal by the Issuing Bank to honor a demand for payment under a\nLetter of Credit if the documents presented in connection with such demand do\nnot strictly comply with the terms of such Letter of Credit), (iii) any presence\nor release of Hazardous Materials on or from any property owned or operated by\nthe Borrower or any of its Subsidiaries, or any Environmental Liability related\nin any way to the Borrower or any of its Subsidiaries, or (iv) any actual or\nprospective claim, litigation, investigation or proceeding relating to any of\nthe foregoing, whether based on contract, tort or any other theory and\nregardless of whether any Indemnitee is a party thereto; provided that such\n                                                         --------          \nindemnity shall not, as to any Indemnitee, be available to the extent that such\nlosses, claims, damages, liabilities or related expenses resulted from the gross\nnegligence or wilful misconduct of such Indemnitee or relate to a\n\n                                     -138-\n\n \nclaim brought by an assignee or Participant against the Lender making such\nassignment or participation.\n\n     (c)  Each Indemnitee claiming any right to indemnity under paragraph (b) of\n                                                                -------------   \nthis Section by reason of the institution of any action against such Indemnitee\nshall notify the Borrower thereof and shall consult with the Borrower from time\nto time in connection with the defense of such action.  In case any such action\nshall be brought against such Indemnitee, the Borrower shall be entitled, at its\nexpense, to assume the defense thereof or to participate in such action with\ncounsel of its choice (which counsel shall be reasonably satisfactory to such\nIndemnitee); provided that the Borrower may not settle any such action without\nthe prior written consent of such Indemnitee (such consent not to be\nunreasonably withheld or delayed) and the Borrower shall not be entitled to\nassume the defense thereof if (i) such Indemnitee reasonably determines, on the\nadvice of counsel, that representation of both the Borrower and such Indemnitee\nby the Borrower's counsel would present such counsel with a conflict of\ninterest, (ii) the defendants in, or targets of, any such action include both\nsuch Indemnitee and the Borrower, and such Indemnitee shall have reasonably\nconcluded, on advice of counsel, that there may be legal defenses available to\nit which are significantly different from those available to the Borrower, (iii)\nthe Borrower shall not have employed counsel satisfactory to such Indemnitee to\nrepresent such Indemnitee within a reasonable time after notice of the\ninstitution of any such action, or (iv) such Indemnitee is faced with potential\ncriminal liability.\n\n     SECTION 10.4.  Successors and Assigns; Consent and Agreement.  (a)  The\n                    ---------------------------------------------           \nprovisions of this Agreement shall be binding upon and inure to the benefit of\nthe parties hereto and their respective successors and assigns permitted hereby,\nexcept that the Borrower may not assign or otherwise transfer any of its rights\nor obligations hereunder without the prior written consent of each Lender (and\nany attempted assignment or transfer by the Borrower without such consent shall\nbe null and void).  Nothing in this Agreement, expressed or implied, shall be\nconstrued to confer upon any Person (other than the parties hereto, their\nrespective successors and assigns permitted hereby and, to the extent expressly\ncontemplated hereby, the Issuing Bank, the Agent Related Parties and Related\nParties of the Lenders and, with respect to Article VIII and the last sentence\n                                            ------------                      \nof this Section 10.04(a), SSI, and with respect to Section 10.02(b)(vi), the\n        ----------------                           --------------------     \nContractor) any legal or equitable right, remedy or claim under or by reason of\nthis Agreement.  All Lenders now or hereafter parties to this Agreement hereby\nagree to be bound by the terms of the SSI Consent to the same extent as the\nAdministrative Agent.\n\n                                     -139-\n\n \n     (b)  Any Lender may assign to one or more assignees (other than to the\nBorrower, any of its Subsidiaries or PCG or any of its Affiliates) all or a\nportion of its rights and obligations under this Agreement (including all or a\nportion of its Commitment and the Loans at the time owing to it) and the other\nLoan Documents; provided that (i) except in the case of an assignment to a\n                --------                                                  \nLender or an assignment solely of such Lender's rights or benefits under the\nLoan Documents to an Affiliate of any Lender (or, after the date on which the\nSystem is Ready for Provisional Acceptance and subject to the consent of the\nIssuing Bank, not to be unreasonably withheld or delayed, in the case of any\nassignment in respect of Letters of Credit or LC Exposure, of Obligations and\nCommitments to an Affiliate of a Lender), no such assignment shall be permitted\nwithout the prior written consent of each of the Borrower, the Administrative\nAgent and Issuing Bank (which consent shall not be unreasonably withheld or\ndelayed), (ii) except in the case of an assignment to a Lender (or, after the\ndate on which the System is Ready for Provisional Acceptance and subject to the\nconsent of the Issuing Bank, not to be unreasonably withheld or delayed, in the\ncase of any assignment in respect of Letters of Credit or LC Exposure, of\nObligations and Commitments to an Affiliate of a Lender) or an assignment of the\nentire remaining amount of the assigning Lender's Commitment, the amount of the\nCommitment of the assigning Lender subject to each such assignment (determined\nas of the date the Assignment and Acceptance with respect to such assignment is\ndelivered to the Administrative Agent) shall not be less than $5,000,000 unless\neach of the Borrower and the Administrative Agent otherwise consent, (iii) each\npartial assignment shall be made as an assignment of a proportionate part of all\nthe assigning Lender's rights and obligations under this Agreement, (iv) the\nparties to each assignment shall execute and deliver to the Administrative Agent\nan Assignment and Acceptance for its acceptance and recording in the Register,\ntogether with a processing and recordation fee of $3,500 (which shall be paid by\nthe assignor and\/or assignee but not the Borrower) and (v) the assignee shall\nnot, as of the effective date of such assignment, be entitled to receive any\ngreater payment under Section 2.15 or 2.17 than the assigning Lender shall be\n                      ------------    ----                                   \nentitled to receive with respect to the obligations sold.  Upon acceptance and\nrecording pursuant to paragraph (d) of this Section, from and after the\n                      -------------                                    \neffective date specified in each Assignment and Acceptance, the assignee\nthereunder shall be a party hereto and, to the extent of the interest assigned\nby such Assignment and Acceptance, have the rights and obligations of a Lender\nunder this Agreement, and the assigning Lender thereunder shall, to the extent\nof the interest assigned by such Assignment and Acceptance, be released from its\nobligations under this Agreement (and, in the case of an Assignment and\nAcceptance covering all of the assigning Lender's rights and obligations under\nthis Agreement, such Lender shall cease to be a party hereto).  Any assignment\nor transfer by a Lender of rights or obligations under this Agreement that does\n\n                                     -140-\n\n \nnot comply with this paragraph shall be treated for purposes of this Agreement\nas a sale by such Lender of a participation in such rights and obligations in\naccordance with paragraph (e) of this Section.\n                -------------                 \n\n     (c)  The Administrative Agent, acting for this purpose as an agent of the\nBorrower, shall maintain at one of its offices in The City of New York a copy of\neach Assignment and Acceptance delivered to it and a register for the\nrecordation of the names and addresses of the Lenders and the registered\nowner(s) of any obligation evidenced by a Note, and the Commitment of, and\nprincipal amount of the Loans and LC Disbursements owing to, each Lender\npursuant to the terms hereof from time to time (the \"Register\").  The Notes and\n                                                     --------                  \nthe obligations evidenced thereby may be assigned or otherwise transferred in\nwhole or in part only by registration in the Register and the Note evidencing\nthe same shall be registered on the Register only upon surrender for\nregistration of assignment or transfer of the Note evidencing such obligation,\nduly endorsed by (or accompanied by a written instrument of assignment or\ntransfer duly executed by) the registered owner thereof, and thereupon one or\nmore new Note(s) in the same aggregate principal amount shall be issued to the\ndesignated assignee(s) and the old Notes shall be returned by the Administrative\nAgent to the Borrower marked \"canceled\".  No assignment of any Note or\nobligation evidenced thereby shall be effective unless it has been recorded in\nthe Register as provided in this Section 10.04(c).  The entries in the Register\n                                 ----------------                              \nshall be conclusive, and the Borrower, the Administrative Agent, the Issuing\nBank and the Lenders may treat each Person whose name is recorded in the\nRegister pursuant to the terms hereof as a Lender hereunder for all purposes of\nthis Agreement, notwithstanding notice to the contrary.\n\n     (d)  Upon its receipt of a duly completed Assignment and Acceptance\nexecuted by an assigning Lender and an assignee, the processing and recordation\nfee referred to in paragraph (b) of this Section, evidence of such assignee's\n                   -------------                                             \nexemption from withholding Taxes and any written consent to such assignment\nrequired by paragraph (b) of this Section, the Administrative Agent shall accept\n            -------------                                                       \nsuch Assignment and Acceptance and record the information contained therein in\nthe Register.  No assignment shall be effective for purposes of this Agreement\nunless it has been recorded in the Register as provided in this paragraph.\n\n     (e)  Any Lender may, without the consent of the Borrower, the\nAdministrative Agent, the Lead Agents or the Issuing Bank, sell participations\nto one or more banks or other entities (a \"Participant\") in all or a portion of\n                                           -----------                         \nsuch Lender's rights and obligations under this Agreement (including all or a\nportion of its Commitment and the Loans owing to it); provided that (i) such\n                                                      --------              \nLender's obligations under this Agreement shall remain unchanged, (ii) such\nLender shall remain solely responsible to the other\n\n                                     -141-\n\n \nparties hereto for the performance of such obligations and (iii) the Borrower,\nthe Administrative Agent, the Issuing Bank, the Lead Agents and the other\nLenders shall continue to deal solely and directly with such Lender in\nconnection with such Lender's rights and obligations under this Agreement.  Any\nagreement or instrument pursuant to which a Lender sells such a participation\nshall provide that such Lender shall retain the sole right to enforce this\nAgreement and to approve any amendment, modification or waiver of any provision\nof this Agreement.  Subject to paragraph (f) of this Section, the Borrower\n                               -------------                              \nagrees that each Participant shall be entitled to the benefits of Sections 2.15,\n                                                                  ------------- \n2.16 and 2.17 to the same extent as if it were a Lender and had acquired its\n----     ----                                                               \ninterest by assignment pursuant to paragraph (b) of this Section.\n                                   -------------                 \n\n     (f)  A Participant shall not be entitled to receive any greater payment\nunder Section 2.15 or 2.17 than the applicable Lender would have been entitled\n      ------------    ----                                                    \nto receive with respect to the participation sold to such Participant.  A\nParticipant shall not be entitled to the benefits of Section 2.17 unless the\n                                                     ------------           \nBorrower is notified of the participation sold to such Participant and such\nParticipant agrees, for the benefit of the Borrower, to comply with the\nprovisions of Section 2.17(e) as though it were a Lender.\n              ---------------                            \n\n     (g)  Any Lender may at any time pledge or assign a security interest in all\nor any portion of its rights under this Agreement to secure obligations of such\nLender, including any such pledge or assignment to a Federal Reserve Bank, and\nthis Section shall not apply to any such pledge or assignment of a security\ninterest; provided that no such pledge or assignment of a security interest\n          --------                                                         \nshall release a Lender from any of its obligations hereunder or substitute any\nsuch assignee for such Lender as a party hereto.\n\n     SECTION 10.5.  Limited Recourse.  There shall be full recourse to the\n                    ----------------                                      \nBorrower and the Subsidiaries and all of its assets for the liabilities of the\nBorrower and the Subsidiaries under this Agreement and the other Loan Documents,\nbut in no event shall any holder of any equity interest in the Borrower (or any\nofficer or director of such holder or any officer or director of the Borrower or\nany Subsidiary, in its capacity as such) be personally liable or obligated for\nsuch liabilities of the Borrower and the Subsidiaries.\n\n     SECTION 10.6.  Survival.  All covenants, agreements, representations and\n                    --------                                                 \nwarranties made by the Borrower herein and in the certificates or other\ninstruments  delivered in connection with or pursuant to this Agreement shall be\nconsidered to have been relied upon by the other parties hereto and shall\nsurvive the execution and delivery of this Agreement and the making of any Loans\nand issuance of any Letters of Credit, and shall\n\n                                     -142-\n\n \ncontinue in full force and effect as long as the principal of or any accrued\ninterest on any Loan or any fee or any other amount payable under this Agreement\nis outstanding and unpaid or any Letter of Credit is outstanding and so long as\nthe Commitments have not expired or terminated.  The provisions of Sections\n                                                                   --------\n2.15, 2.16, 2.17 and 10.03 and Article IX shall survive and remain in full force\n      ----  ----     -----     ----------                                       \nand effect regardless of the consummation of the transactions contemplated\nhereby, the repayment of the Loans, the expiration or termination of the Letters\nof Credit and the Commitments or the termination of this Agreement or any\nprovision hereof.\n\n     SECTION 10.7.  Counterparts; Integration; Effectiveness.  This Agreement\n                    ----------------------------------------                 \nmay be executed in counterparts (and by different parties hereto on different\ncounterparts), each of which shall constitute an original, but all of which when\ntaken together shall constitute a single contract.  This Agreement and any\nseparate letter agreements with respect to fees payable to an Agent and\/or Agent\nRelated Person constitute the entire contract among the parties relating to the\nsubject matter hereof and supersede any and all previous agreements and\nunderstandings, oral or written, relating to the subject matter hereof.  Except\nas provided in Section 4.01, this Agreement shall become effective when it shall\n               ------------                                                     \nhave been executed by the Administrative Agent and when the Administrative Agent\nshall have received counterparts hereof which, when taken together, bear the\nsignatures of each of the other parties hereto, and thereafter shall be binding\nupon and inure to the benefit of the parties hereto and, subject to and in\naccordance with Section 10.04, their respective successors and assigns.\n                -------------                                           \nDelivery of an executed counterpart of a signature page of this Agreement by\ntelecopy shall be effective as delivery of a manually executed counterpart of\nthis Agreement.\n\n     SECTION 10.8.  Severability.  Any provision of this Agreement held to be\n                    ------------                                             \ninvalid, illegal or unenforceable in any jurisdiction shall, as to such\njurisdiction, be ineffective to the extent of such invalidity, illegality or\nunenforceability without affecting the validity, legality and enforceability of\nthe remaining provisions hereof; and the invalidity of a particular provision in\na particular jurisdiction shall not invalidate such provision in any other\njurisdiction.\n\n     SECTION 10.9.  Right of Setoff.  If an Event of Default shall have occurred\n                    ---------------                                             \nand be continuing, each Lender is hereby authorized at any time and from time to\ntime, to the fullest extent permitted by law, to set off and apply any and all\ndeposits (general or special, time or demand, provisional or final) at any time\nheld and other indebtedness at any time owing by such Lender to or for the\ncredit or the account of the Borrower against any of and all the obligations of\nthe Borrower now or hereafter existing under this Agreement held by such\n\n                                     -143-\n\n \nLender, irrespective of whether or not such Lender shall have made any demand\nunder this Agreement and although such obligations may be unmatured.  The rights\nof each Lender under this Section are in addition to other rights and remedies\n(including other rights of setoff) which such Lender may have.\n\n     SECTION 10.10.  Governing Law; Jurisdiction; Consent to Service of Process.\n                     ---------------------------------------------------------- \n(a)  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE\nLAW OF THE STATE OF NEW YORK.\n\n     (b)  THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR\nITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT\nOF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES\nDISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT\nFROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS\nAGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE\nPARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN\nRESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW\nYORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF\nTHE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING\nSHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE\nJUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT\nSHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY\nLENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS\nAGREEMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY\nJURISDICTION.\n\n     (c)  THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE\nFULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY\nNOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING\nARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN\n                                                                        \nPARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY\n-------------                                                                \nWAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT\nFORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.\n\n     (d)  EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF\nPROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.01.  NOTHING IN THIS\n                                              -------------                  \nAGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS\nIN ANY OTHER MANNER PERMITTED BY LAW.\n\n     SECTION 10.11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO\n                     --------------------                                      \nTHE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL\nBY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR\nRELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER\nBASED ON CONTRACT, TORT OR ANY OTHER THEORY).\n\n                                     -144-\n\n \n     SECTION 10.12.  Headings.  Article and Section headings and the Table of\n                     --------                                                \nContents used herein are for convenience of reference only, are not part of this\nAgreement and shall not affect the construction of, or be taken into\nconsideration in interpreting, this Agreement.\n\n     SECTION 10.13.  Replacement of Independent Engineer or Insurance\n                     ------------------------------------------------\nConsultant.  Any appointment by the Administrative Agent of a replacement\nengineer to act as the \"Independent Engineer\" or of a replacement \"Insurance\nConsultant\" under the Loan Documents and the System Contracts shall be subject\nto the approval of the Borrower, such approval not to be unreasonably withheld\nor delayed.\n\n     SECTION 10.14.  Confidentiality.  Each of the Administrative Agent, the\n                     ---------------                                        \nIssuing Bank, the Lead Agents, any other Agents and the Lenders agrees to\nmaintain the confidentiality of the Information (as defined below), except that\nInformation may be disclosed (a) to its and its Affiliates' directors, officers,\nemployees and agents, including accountants, legal counsel and other advisors\n(it being understood that the Persons to whom such disclosure is made will be\ninformed of the confidential nature of such Information and instructed to keep\nsuch Information confidential), (b) to the extent requested by any governmental\nor regulatory authority, (c) to the extent required by applicable laws or\nregulations or by any subpoena or similar legal process, (d) to any other party\nto this Agreement, (e) in connection with the exercise of any remedies hereunder\nor any suit, action or proceeding relating to this Agreement or the enforcement\nof rights hereunder, (f) subject to an agreement containing provisions\nsubstantially the same as those of this Section, to any assignee of or\nParticipant in, or any prospective assignee of or Participant in, any of its\nrights or obligations under this Agreement, (g) with the consent of the Borrower\n(not to be unreasonably withheld or delayed), (h) to the extent such Information\n(x) becomes publicly available other than as a result of a breach of this\nSection or (y) becomes available to the Administrative Agent, the Issuing Bank,\nthe Lead Agents or any Lender on a nonconfidential basis from a source other\nthan the Borrower or (i) to any direct or indirect contractual counterparties in\nswap agreements or such contractual counterparties' professional advisors,\nprovided that such contractual counterparty or professional advisor to such\ncontractual counterparty agrees in writing to keep such information confidential\nto the same extent required of the Lenders hereunder.  For the purposes of this\nSection, \"Information\" means all information received from or on behalf of the\n          -----------                                                         \nBorrower relating to the Borrower, the Subsidiaries, its business or the System,\nother than any such information that is available to the Administrative Agent,\nthe Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by\nthe Borrower; provided that, in the case of information received from\n              --------                                               \n\n                                     -145-\n\n \nthe Borrower after the date hereof, such information is clearly identified at\nthe time of delivery as confidential.  Any Person required to maintain the\nconfidentiality of Information as provided in this Section shall be considered\nto have complied with its obligation to do so if such Person has exercised the\nsame degree of care to maintain the confidentiality of such Information as such\nPerson would accord to its own confidential information.\n\n                                     -146-\n\n \nIN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly\nexecuted by their respective authorized officers as of the day and year first\nabove written.\n\n                                    GLOBAL TELESYSTEMS LTD.\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    DEUTSCHE BANK AG, NEW YORK\n                                BRANCH, as a Lead Agent and as \n                                  Administrative Agent\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    CANADIAN IMPERIAL BANK OF\n                                COMMERCE, acting through one or more\n                                  of its branches, agencies or affiliates, as a\n                                  Lead Agent, as Syndication Agent, as\n                           Documentation Agent and as Issuing Bank\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                               Signature Page 1\n\n \nWORKING CAPITAL LENDER\/LENDERS:\n------------------------------ \n\n\n                                    DEUTSCHE BANK AG, NEW YORK\n                              BRANCH AND\/OR CAYMAN ISLANDS BRANCH\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    CIBC INC.\n\n\n                                    By:________________________________\n                                       Name:  Louise Bell\n                                       Title: Director, CIBC Wood Gundy\n                                              Securities Corp., as Agent\n\n\n                               Signature Page 2\n\n \nMANAGING AGENTS\/ LENDERS:\n------------------------ \n\n\n                                    BANK OF MONTREAL\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    BHF-BANK AKTIENGESELLSCHAFT\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n                              By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    COMMERZBANK\n                              AKTIENGESELLSCHAFT, NEW YORK\n                                    BRANCH\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n \n\n\n                               Signature Page 3\n\n \n                                    WESTDEUTSCHE LANDESBANK\n                                 GIROZENTRALE\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n\n                               Signature Page 4\n\n \nCO-AGENTS\/LENDERS:\n----------------- \n\n\n                                    BERLINER BANK\n                                AKTIENGESELLSCHAFT\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    CREDITANSTALT-BANKVEREIN\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    LANDESBANK HESSEN-THURINGEN \n                                    GIROZENTRALE\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    INDUSTRIAL BANK OF JAPAN, LTD.\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                               Signature Page 5\n\n \n                                    DE NATIONALE INVESTERINGS-\n                                    BANK, N.V.\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    KZH-SOLEIL CORPORATION\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                               Signature Page 6\n\n \nLENDERS:\n------- \n\n\n                                    BANK OF SCOTLAND\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n \n\n                                    BANQUE PARIBAS\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    THE MITSUBISHI TRUST AND\n                                 BANKING CORPORATION\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    SOUTHERN PACIFIC THRIFT & LOAN ASSOCIATION\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n\n                               Signature Page 7\n\n \n                                    THE TOYO TRUST & BANKING\n                                    COMPANY, LTD.\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                                    PRUDENTIAL INSURANCE COMPANY\n                                    OF AMERICA\n\n\n                                    By:________________________________\n                                       Name:\n                                       Title:\n\n\n                               Signature Page 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