SENIOR NOTE PURCHASE AGREEMENT between

1
Exhibit 10.8

____________________________________________________________

$26,250,000

SENIOR NOTE
PURCHASE AGREEMENT

between

GLOBAL TELESYSTEMS GROUP, INC.

and

EMERGING MARKETS GROWTH FUND, INC.

____________________________

Dated as of February 2, 1996

____________________________________________________________

TABLE OF CONTENTS

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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 2 PURCHASE AND SALE OF THE INITIAL NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Purchase and Sale of The Initial Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 3 CONDITIONS TO THE OBLIGATION
OF THE INITIAL PURCHASER TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Warrant Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Certificate of Incorporation and By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 No Material Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 4 CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Representations and Warranties True . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Compliance with this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Issuance Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 No Material Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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ARTICLE 5 REPRESENTATIONS AND
WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Governmental Authorization; Third Party Consents . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 No Default or Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Investment Company/Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.19 Patents, Trademarks, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.20 Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 6 REPRESENTATIONS AND
WARRANTIES OF THE INITIAL PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Purchase for Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Governmental Authorization; Third Party Consent . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Investment Company/Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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ARTICLE 8 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Preservation of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Reservation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.10 Seniority of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.11 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 9 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Limitations on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Limitation on Payment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.11 Limitation on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 10 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Application of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

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11.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.4 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.8 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.10 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.12 Certain Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.13 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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EXHIBITS

A Form of Note
B Form of Warrant Agreement
C Form of Registration Rights Agreement
D Form of Opinion

SCHEDULES

A Existing Indebtedness
B Existing Liens
C Investments
5.7 Default on Contractual Obligations
5.9 Taxes
5.14 Subsidiaries, Jurisdiction of Incorporation and Ownership
by the Company
5.15(b) Outstanding Stock Options
5.19 Trademarks
5.20 Trade Relations
8.11 Dividends
9.5 Restricted Payments
9.6 Payment Restrictions

SENIOR NOTE
PURCHASE AGREEMENT

AGREEMENT, dated as of February 2, 1996, between GLOBAL
TELESYSTEMS GROUP, INC., a Delaware corporation (the "Company"), and EMERGING
MARKETS GROWTH FUND, INC. a Maryland corporation (the "Initial Purchaser" and,
together with all permitted assignees from time to time, the "Purchasers").

WHEREAS, pursuant to the terms and subject to the conditions
of this Agreement, the Company proposes to issue and sell to the Initial
Purchaser its Senior Promissory Note, substantially in the form of Exhibit A
hereto (the "Initial Note" and, together with any substitute Senior Promissory
Notes, substantially in the form of Exhibit A hereto, issued by the Company to
any other Purchasers, the "Notes") in the aggregate principal amount of
$26,250,000; and

WHEREAS, simultaneously with the execution of this Agreement,
the parties have executed the Warrant Agreement, pursuant to which the Company
will issue to the Initial Purchaser warrants to purchase 1,944,444 shares of
the Company's Common Stock (the "Warrants"), and the Registration Rights
Agreement, pursuant to which the Company will grant to the Initial Purchaser
certain rights of first refusal in connection with the Warrants and certain
registration rights with respect to the shares of the Company's Common Stock
underlying the Warrants.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

"Additional TCG Financing" means the additional financing in
an aggregate principal amount up to $10,000,000, to be provided to the Company
by any one or more of

TCG, OSI, CFM and their Affiliates upon exercise by any such Persons of the
option granted to such Persons under, and in accordance with, the Additional
TCG Financing Option Letter.

"Additional TCG Financing Option Letter" means the option
letter agreement, dated January 19, 1996, among the Company, OSI and CFM, as
such letter agreement may be amended, modified or otherwise supplemented from
time to time.

"Additional TCG Warrants" means the additional warrants to
purchase shares of Common Stock to be issued to any one or more of TCG, OSI,
CFM and their Affiliates simultaneously with the provision of the Additional
TCG Financing, as provided in the Additional TCG Financing Option Letter.

"Affiliate" means, with respect to any Person, any "affiliate"
of such Person, as defined in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act and, with respect to each Purchaser, shall also mean any
fund managed by CGC or any Affiliate of CGC and, with respect to OSI, CFM and
TCG, shall also mean any entity for which ▇▇▇▇▇▇ ▇▇▇▇▇ d/b/a ▇▇▇▇▇ Fund
Management or Chatterjee Fund Management Co. LP, a Delaware limited
partnership, is acting as investment manager or investment adviser, in each
case with investment discretion (provided that such entity shall not be a
Person engaged in a business which is the same or substantially similar to the
business of the Company).

"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.

"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.

"Capital Expenditures" means, for any period, the aggregate of
all expenditures by the Company and any of its Subsidiaries during such period
that, in accordance with GAAP, are required to be included in the property,
plant or equipment or similar fixed capital or asset accounts reflected in the
consolidated balance sheet of the Company and its Subsidiaries.

"Capital International" means Capital International Emerging
Markets Fund.

"Capital International Note Purchase Agreement" means the
Senior Note Purchase Agreement, dated as of the date hereof, between the
Company and Capital International.
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"Capital International Notes" means the Senior Promissory Note
to be issued by the Company to Capital International pursuant to, and subject
to the terms and conditions of, the Capital International Note Purchase
Agreement, together with any other Senior Promissory Notes to be issued by the
Company thereunder.

"Capital International Registration Rights Agreement" means
the Registration Rights Agreement, dated the date hereof, between the Company
and Capital International.

"Capital International Transaction Documents" means the
Capital International Notes, the Capital International Note Purchase Agreement,
the Capital International Warrant Agreement, the Capital International Warrants
and Capital International Registration Rights Agreement.

"Capital International Warrant Agreement" means the Warrant
Agreement, dated as of the date hereof, between the Company and Capital
International.

"Capital International Warrants" mean the warrants to purchase
in the aggregate 277,778 shares of Common Stock, issued by the Company to
Capital International pursuant to, and subject to the terms and conditions of,
the Capital International Warrant Agreement.

"Capital Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are or should be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP consistently applied.

"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) that have maturities of not
more than six months from the date of acquisition, (ii) U.S. dollar denominated
time deposits, certificates of deposit and bankers acceptances of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 that have maturities of not more than six months from the date of
acquisition, (iii) commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by Standard & Poors Corporation (or its successor,
"S&P") or at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc. (or its successor, "Moody's"), and in each case maturing not more than
six months after the date of acquisition, or (iv) tax-exempt commercial paper
of

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the United States, municipal, state or local governments rated at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's and maturing within six months after the date of acquisition.

"CFM" means Chatterjee Fund Management, L.P.

"CGC" means Capital Group Companies, Inc.

"Closing" has the meaning assigned to that term in Section
2.3.

"Closing Date" means the date specified in Section 2.3.

"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.

"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.

"Common Stock" means the Common Stock, par value $0.0001 per
share, of the Company, or any other capital stock of the Company into which
such stock is reclassified or reconstituted.

"Condition of the Company" means the assets, properties,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.

"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire
such primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation, or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition
of the primary obligor so as to enable the primary obligor to pay such primary
obligation, or (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d)
otherwise to guarantee payment to or assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof. The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the primary obligation
in respect of which such Contingent

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Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof.

"Contractual Obligations" means as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument
to which such Person is a party or by which it or any of its property is bound.

"Current Ratio" means, with respect to the Company and its
Subsidiaries on a consolidated basis as of the end of any fiscal quarter, the
ratio determined by dividing (a) the sum of the current assets of the Company
and its Subsidiaries computed in accordance with GAAP, by (b) the sum of the
current liabilities of the Company and its Subsidiaries determined in
accordance with GAAP.

"Defined Benefit Plan" means a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or nonqualified (whether or not subject to ERISA or the
Code).

"EBITDA" means, with respect to the Company and its
Subsidiaries on a consolidated basis for any period, the sum of (a) Net Income
for such period, (b) Interest Expense for such period, (c) Federal, state and
local income and franchise taxes deducted from revenue in determining such Net
Income, (d) depreciation and amortization deducted from revenue in determining
such Net Income.

"Environmental Laws" means any federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any pollutant or
contaminant including, without limitation, medical, chemical, biological,
biohazardous or radioactive waste and materials, into ambient air, land,
surface water, groundwater, personal property or structures, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transportation, discharge or handling of any contaminant, as such
laws have been, or are, amended, modified or supplemented heretofore or from
time to time hereafter and any analogous future federal, or present or future
state or local laws, statutes and regulations promulgated thereunder.

"Equity Offering" means (i) an equity offering completed by
the Company subsequent to the Closing Date netting the Company cash proceeds of
at least sixty million

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dollars ($60,000,000), or (ii) a series of equity offerings completed by the
Company within a nine-month period following the Closing Date and netting the
Company proceeds of at least sixty million dollars ($60,000,000).

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

"ERISA Affiliate" means any Person that is treated as a single
employer with the Company or any of its Subsidiaries under Section 414(b), (c),
(m) or (o) of the Code.

"Event of Default" has the meaning assigned to such term in
the Notes.

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

"GAAP" has the meaning assigned to that term in Section 1.2.

"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.

"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.

"Hazardous Materials" means those substances which are
regulated by or form the basis of liability under any Environmental Laws.

"Indebtedness" means as to any Person (without duplication)
(a) all obligations of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of such Person's
business, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations of such Person, (f) all
indebtedness secured by any Lien (other than Liens in favor of lessors under
leases) on

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any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person, and (g) any Contingent Obligation of
such Person.

"Initial Note" has the meaning assigned to that term in the
first recital of this Agreement.

"Interest Expense" means, for any period, the total interest
expense of the Company and its Subsidiaries on a consolidated basis for such
period, determined in accordance with GAAP consistently applied.

"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.

"January 19 Note Purchase Agreement" means the Senior Note
Purchase Agreement, dated as of January 19, 1996, among the Company, OSI and
CFM, as such agreement may be amended, supplemented or otherwise modified from
time to time.

"January 19 Notes" means the Senior Promissory Notes, dated
January 19, 1996, issued by the Company to OSI and CFM pursuant to, and subject
to the terms and conditions of, the January 19 Note Purchase Agreement.

"January 19 Transaction Documents" means the January 19 Note
Purchase Agreement, the January 19 Notes, the January 19 Warrants, the January
19 Warrant Agreement, the Joint Venture Letter Agreement, dated January 19,
1996, among the Company, OSI and CFM (as such letter agreement may be amended,
supplemented or otherwise modified from time to time), and the Joint Venture
Agreement, to be executed and delivered pursuant to the Joint Venture Letter
Agreement (as such joint venture agreement may be amended, supplemented or
otherwise modified from time to time).

"January 19 Warrant Agreement" means the Warrant Agreement,
dated as of January 19, 1996, among the Company, OSI and CFM, as such agreement
may be amended, supplemented or otherwise modified from time to time.

"January 19 Warrants" means the warrants to purchase in the
aggregate 2,222,222 shares of Common Stock, issued by the Company to OSI and
CFM pursuant to, and subject to the terms and conditions of, the January 19
Warrant Agreement.

"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or other
security interest, including, without limitation,

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those created by, arising under or evidenced by any conditional sale or other
title retention agreement or the interest of a lessor under a Capital Lease
Obligation.

"Net Income" means, with respect to the Company and its
Subsidiaries on a consolidated basis for any period, (a) net revenues and other
income for such period, minus (b) the aggregate for such period of, without
duplication, (i) cost of goods sold, (ii) Interest Expense, (iii) operating
expenses, (iv) selling, general and administrative expenses, (v) taxes, (vi)
depreciation and amortization, (vii) limited partnership retention, and (viii)
any other items that are treated as expenses under GAAP, but excluding from the
definition of Net Income any extraordinary or non-recurring charges, expenses,
gains or losses, any gains or losses not in the ordinary course of business,
and any income resulting from any write-up of an asset, all computed on a
consolidated basis in accordance with GAAP consistently applied.

"Net Worth" means at any date the stockholders' equity of the
Company and its Subsidiaries on a consolidated basis.

"Non-U.S. Subsidiary" means any Subsidiary of the Company
other than a U.S. Subsidiary. Unless otherwise qualified, all references to a
"Non-U.S. Subsidiary" or to "Non-U.S. Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Company.

"Notes" has the meaning assigned to that term in the first
recital of this Agreement.

"OSI" means The Open Society Institute.

"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.

"Registration Rights Agreement" means the Registration Rights
Letter Agreement, dated the date hereof, entered into by the Company and the
Initial Purchaser, substantially in the form attached hereto as Exhibit C, as
such agreement may be amended, supplemented or otherwise modified from time to
time.

"Regulation S-X" means the rules and regulations promulgated
and codified under 17 C.F.R. Part 210.

"Requirements of Law" means as to any Person, the Certificate
of Incorporation and By-laws or other organizational or governing documents of
such Person,

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9

and any law, treaty, rule, regulation, right, privilege, qualification, license
or franchise or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to
herein.

"Restricted Payment" means (a) any dividend or other
distribution on any share of the Company's capital stock (except dividends
payable solely in shares of its capital stock) or (b) any payment by the
Company or any Subsidiary on account of the direct or indirect purchase,
redemption, retirement or other acquisition of (i) any shares of the Company's
capital stock (except shares acquired upon the conversion thereof into other
shares of its capital stock), (ii) any shares of any Subsidiary's capital stock
from any Person other than the Company or its Subsidiaries (except such
payments as are set forth on Schedule 9.5) to the extent such payment exceeds
$1 million in any single occurrence or $5 million in the aggregate in any
twelve-month period, (iii) any option, warrant or other right to acquire shares
of the Company's or any Subsidiary's capital stock from any Person other than
the Company or its Subsidiaries, or (c) any optional prepayment, repurchase,
redemption, defeasance or other acquisition or retirement for value, prior to
any scheduled maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness of the Company.

"Securities" means, collectively, the Notes and the Warrants.

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

"Subsidiary" means, with respect to any Person, a corporation
or other entity (i) of which 50% or more of the outstanding securities or other
ownership interests is owned, directly or indirectly, by such Person or (ii)
with respect to which such Person, directly or indirectly, is entitled to vote
(in the absence of contingencies), for the election of 50% or more of the Board
of Directors (or group performing similar functions) of such corporation or
entity. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.

"TCG" means The Chatterjee Group.

"Transaction Documents" means collectively, this Agreement,
the Notes, the Warrants, the Warrant Agreement and the Registration Rights
Agreement.

"U.S. Subsidiary" means any Subsidiary which is incorporated
or registered under the laws of any jurisdiction of the United States of
America including the District of

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10

Columbia and any state, territory, or any political subdivision thereof.
Unless otherwise qualified, all references to a "U.S. Subsidiary" or to "U.S.
Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.

"Warrants" has the meaning assigned to that term in the second
recital of this Agreement.

"Warrant Agreement" means that certain Warrant Agreement,
dated the date hereof, entered into by the Company and the Initial Purchaser,
substantially in the form attached hereto as Exhibit B, as such agreement may
be amended, supplemented or otherwise modified from time to time.

"Working Capital" shall mean, with respect to the Company and
its Subsidiaries on a consolidated basis for any period, the excess of current
assets over current liabilities (including accrued liabilities for
restructuring and other charges) determined in accordance with GAAP
consistently applied.

1.2 Accounting Terms; Financial Statements.

(a) All accounting terms used herein and not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with generally accepted accounting principles as in effect
from time to time in the United States ("GAAP"). If any changes in accounting
principles are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions of or are otherwise required by, the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards
or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants,
standards or terms so as to reflect fairly and equitably such changes, with the
desired result that the criteria for evaluating the Company's financial
condition and results of operations shall be the same after such changes as if
such changes had not been made.

(b) In accordance with GAAP, the Company accounts
for several of its Subsidiaries and investments using the equity method.
However, notwithstanding anything herein to the contrary (and irrespective of
the use of the word "consolidated" in any provision of the Transaction
Documents), compliance with the financial covenants contained in Section 9.9
will be determined, and any evaluation in connection with this Agreement of the
Company's financial condition and results of operations and cash flows will be
made, on

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the basis of the combined financial statements referred to in Section 8.1
(which, in all material respects, shall be consistent with Rule 3-09 of
Regulation S-X).

ARTICLE 2

PURCHASE AND SALE OF THE INITIAL NOTE

2.1 Purchase and Sale of The Initial Note. Subject to the
terms and conditions herein set forth, the Company agrees that it will issue to
the Initial Purchaser, and the Initial Purchaser agrees that it will purchase
from the Company, on the Closing Date, the Initial Note, substantially in the
form attached hereto as Exhibit A, appropriately completed in conformity
herewith. The purchase price of the Initial Note shall be $26,250,000.
Simultaneously with the purchase and sale of the Initial Note, the Company
shall deliver the Warrants to the Initial Purchaser.

2.2 Transaction Fees. Concurrently with the execution
hereof, the Company shall pay to the Initial Purchaser a transaction fee of
$525,000, and shall reimburse all of the Initial Purchaser's out-of-pocket
expenses (including reasonable lawyers' fees, charges and disbursements and
consultants' fees and expenses) incurred in connection with the acquisition of
the Initial Note and the transactions contemplated by this Agreement, which
payments may be made by way of deductions from the purchase price of the
Initial Note purchased by the Initial Purchaser as provided for in Section 2.1.

2.3 Closing. The purchase and issuance of the Initial Note
shall take place at the closing (the "Closing") to be held at the offices of
Shearman & Sterling at 2:00 p.m., Eastern Standard Time, on February 2, 1996,
or at such other time and place as the Company and the Initial Purchaser may
agree in writing (the "Closing Date"). At the Closing, the Company shall
deliver to the Initial Purchaser (i) the Initial Note against delivery to the
Company by the Initial Purchaser of the purchase price therefor by wire
transfer of immediately available funds and (ii) its Warrants as provided in
the Warrant Agreement.

ARTICLE 3

CONDITIONS TO THE OBLIGATION
OF THE INITIAL PURCHASER TO CLOSE

The obligation of the Initial Purchaser to purchase the
Initial Note, to pay the purchase price for the Initial Note and to perform any
of its other obligations hereunder shall

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be subject to the satisfaction as determined by, or waiver by, the Initial
Purchaser of the following conditions on or before the Closing Date. The
Initial Purchaser shall not be obligated to purchase the Initial Note unless
the delivery of the Warrants occurs simultaneously therewith.

3.1 Representations and Warranties. The representations and
warranties of the Company contained in Article 5 hereof shall be true and
correct in all material respects at and as of the Closing Date as if made at
and as of such date (except that representations and warranties made at and as
of a prior date shall be true and correct at and as of such prior date), and
the Initial Purchaser shall have received a certificate from the Company, dated
the Closing Date and signed by the Secretary of the Company, to that effect.

3.2 No Event of Default. No event shall have occurred and be
continuing that constitutes, or that, with the giving of notice or lapse of
time or both, would constitute, an Event of Default, and the Initial Purchaser
shall have received a certificate from the Company, dated the Closing Date and
signed by the Secretary of the Company, to that effect.

3.3 Secretary's Certificate. The Initial Purchaser shall
have received a certificate from the Company, dated the Closing Date and signed
by the Secretary of the Company, certifying (a) that the attached copies of the
Certificate of Incorporation and By-laws of the Company, and resolutions of the
Board of Directors of the Company or a duly authorized committee of the Board
of Directors of the Company approving this Agreement and the transactions
contemplated hereby, are all true, complete and correct and remain unamended
and in full force and effect, and (b) as to the incumbency and specimen
signature of each officer of the Company executing any Transaction Document or
any other document delivered in connection herewith on behalf of the Company.

3.4 Documents. The Initial Purchaser shall have received
true, complete and correct copies of such documents as it may request in
connection with or relating to the sale of the Initial Note and the
transactions contemplated hereby, and all such documents to be delivered in
connection with the Closing shall be in form and substance satisfactory to the
Initial Purchaser.

3.5 Purchase Permitted by Applicable Laws. The acquisition
of and payment for the Initial Note issued or to be issued to the Initial
Purchaser hereunder and the consummation of the transactions contemplated
hereby (including, without limitation, the issuance of the Warrants) shall not
be prohibited by any Requirement of Law binding on the Company and the Initial
Purchaser shall have received such certificates or other evidence as it may
reasonably request to establish compliance with this condition.

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3.6 Consents and Approvals. Other than the requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act with respect to the issuance of the Common Stock upon
exercise of the Warrants: (i) all consents, exemptions, authorizations, or
other actions by, or notices to, or filings with, Governmental Authorities and
other Persons in respect of all Requirements of Law binding on the Company and
with respect to those Contractual Obligations of the Company necessary or
required in connection with the execution, delivery or performance (including,
without limitation, the payment of interest on the Notes and the issuance of
Common Stock upon exercise of the Warrants) by the Company or enforcement
against the Company of the Transaction Documents shall have been obtained and
be in full force and effect and, except as provided in the phrase preceding
clause (i) above, the Initial Purchaser shall have been furnished with
appropriate evidence thereof, and (ii) all waiting periods shall have lapsed
without extension or the imposition of any conditions or restrictions.

3.7 Registration Rights Agreement. The Company shall have
duly executed and delivered the Registration Rights Agreement.

3.8 Warrant Agreement. The Company shall have duly executed
and delivered the Warrant Agreement and the Warrants.

3.9 Certificate of Incorporation and By-laws. True and
correct copies of the Certificate of Incorporation and By-laws of the Company
shall have been delivered to the Initial Purchaser.

3.10 Opinion of Counsel. The Initial Purchaser shall have
received an opinion of the Company's General Counsel, dated the Closing Date,
relating to the transactions contemplated by or referred to herein, in the form
attached hereto as Exhibit D.

3.11 No Material Adverse Change. Since December 20, 1995,
there shall have been no material adverse change, nor shall any such change be
threatened or reasonably likely to occur, in the Condition of the Company,
taken as a whole.

3.12 No Material Judgment or Order. There shall not be on
the Closing Date any judgment or order of a court of competent jurisdiction or
any ruling of any Governmental Authority which would prohibit the purchase of
the Initial Note hereunder or the issuance of the Initial Note or the issuance
of the Warrants pursuant to the Warrant Agreement or which would nullify or
modify the issuance of the Initial Note or the issuance of the Warrants or
subject the Initial Purchaser to any penalty under or pursuant to any
Requirement of Law binding on the Company in connection with the acquisition of
the Initial Note or the issuance of the Warrants.

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14

ARTICLE 4

CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE

The obligations of the Company to sell the Initial Note shall
be subject to the satisfaction as determined by, or waiver by, the Company of
the following conditions on or before the Closing Date:

4.1 Representations and Warranties True. The representations
and warranties of the Initial Purchaser contained in Article 6 hereof shall be
true and correct in all material respects at and as of the Closing Date as if
made at and as of such date.

4.2 Compliance with this Agreement. The Initial Purchaser
shall have performed and complied with all of its agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by the Initial Purchaser on or before the Closing Date.

4.3 Issuance Permitted by Applicable Laws. The issuance of
the Initial Note and the consummation of the transactions contemplated hereby
shall not be prohibited by any Requirement of Law.

4.4 Consents and Approvals. Other than the requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act with respect to the issuance of the Common Stock upon
exercise of the Warrants by the Initial Purchaser: (i) all consents,
exemptions, authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons in respect of all Requirements
of Law necessary or required in connection with the execution, delivery or
performance by the Initial Purchaser or enforcement against the Initial
Purchaser of this Agreement and the other Transaction Documents executed by the
Initial Purchaser shall have been obtained and be in full force and effect and
(ii) all waiting periods shall have lapsed without extension or the imposition
of any conditions or restrictions.

4.5 No Material Judgment or Order. There shall not be on the
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority which would prohibit the sale of the
Initial Note hereunder or the issuance of the Warrants pursuant to the Warrant
Agreement or subject the Company to any material penalty under or pursuant to
any Requirement of Law binding on the Initial Purchaser in connection with the
acquisition of the Initial Note or the issuance of the Warrants.

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ARTICLE 5

REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Initial
Purchaser, before and after giving effect to the transactions contemplated by
this Agreement, as follows:

5.1 Corporate Existence and Power. The Company and each U.S.
Subsidiary: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which
it is currently, or is currently proposed to be, engaged; and (c) is duly
qualified as a foreign corporation, licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification, except to the
extent that the failure to do so would not have a material adverse effect on
the Condition of the Company or on the ability of the Company to perform its
obligations under the Transaction Documents. Each Non-U.S. Subsidiary: (a) has
filed all required documents for incorporation under the laws of its
jurisdiction of incorporation and has been registered or is exercising
commercially reasonable efforts to be registered in such jurisdiction; and (b)
has all requisite corporate power and authority to own and operate its
property, to lease the property it operates as a lessee and to conduct the
business in which it is currently or is currently proposed to be engaged,
except to the extent that the failure to do so would not have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under the Transaction Documents. The Company has
the corporate power and authority to execute, deliver and perform its
obligations under each Transaction Document to which it is or will be a party
and to borrow hereunder.

5.2 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company of each Transaction Document
and the transactions contemplated thereby, including without limitation the
issuance and sale of the Securities: (a) have been duly authorized by all
necessary corporate and, if required, stockholder action; (b) do not contravene
the terms of the Company's Certificate of Incorporation or By-Laws, or any
amendment of either thereof; and (c) will not violate, conflict with or result
in any breach or contravention of or the creation of any Lien under, any
Contractual Obligation of the Company or any of its Subsidiaries (other than as
set forth in Schedule 9.6), or any law, treaty, rule or regulation, right,
privilege, qualification, license or franchise or any determination of an
arbitrator or a court or other Governmental Authority applicable to the Company
or any of its Subsidiaries, except to the extent that such violation, conflict,
breach or contravention would not have a material adverse effect on the
Condition of the Company

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or on the ability of the Company to perform its obligations under the
Transaction Documents.

5.3 Governmental Authorization; Third Party Consents. In
connection with the execution, delivery or performance (including, without
limitation, the payment of interest on the Notes and the issuance of Common
Stock upon the exercise of the Warrants) by the Company or enforcement against
the Company of the Transaction Documents or the transactions contemplated
hereby or thereby, other than with respect to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act in
connection with the exercise of the Warrants, (i) no approval, consent,
compliance, exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and (ii) no lapse of a waiting period under a Requirement
of Law, are necessary or required other than such approvals, consents,
compliances, exemptions, authorizations, actions, notices, filings or waiting
periods which, if not obtained, would not have a material adverse effect on the
Condition of the Company or on the ability of the Company to perform its
obligations under the Transaction Documents.

5.4 Binding Effect. Each of the Transaction Documents has
been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.

5.5 Litigation. Except as set forth in Schedules 5.7 and
5.20, there are no legal actions, suits, proceedings, claims or disputes
pending, or to the knowledge of the Company or its Subsidiaries, threatened in
writing, at law, in equity, in arbitration or before any Governmental Authority
against the Company or any of its Subsidiaries (a) with respect to the
Transaction Documents, or any of the transactions contemplated hereby or
thereby, or (b) which would, if adversely determined, have a material adverse
effect on the Condition of the Company or on the ability of the Company to
perform its obligations under the Transaction Documents. No injunction, writ,
temporary restraining order, decree or any order of any nature has been issued
by any court or other Governmental Authority purporting to enjoin or restrain
the execution, delivery or performance of the Transaction Documents.

5.6 Compliance with Laws. The Company and each of its U.S.
Subsidiaries are in compliance with all laws, rules or regulations binding on
them, except to the extent that the failure to comply therewith would not have
a material adverse effect on the Condition of the Company or on the ability of
the Company to perform its obligations under the Transaction Documents. To the
best knowledge of the Company, each of its Non-U.S. Subsidiaries is in
compliance with all laws, rules or regulations binding on it, except to the

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extent that the failure to comply therewith would not have a material adverse
effect on the Condition of the Company or on the ability of the Company to
perform its obligations under the Transaction Documents.

5.7 No Default or Breach. No event has occurred and is
continuing or would result from the incurring of obligations by the Company
under the Transaction Documents which constitutes or, with the giving of notice
or lapse of time or both, would constitute an Event of Default. Except as set
forth in Schedule 5.7, neither the Company nor any of its U.S. Subsidiaries
(or, to the best knowledge of the Company, any of its Non-U.S. Subsidiaries) is
in default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under the Transaction Documents.

5.8 Title to Properties. The Company and each of its
Subsidiaries have no interests in any real property other than as lessees under
leases in full force and effect.

5.9 Taxes. The Company and each of its U.S. Subsidiaries
have filed or caused to be filed (and each of the Company's Non-U.S.
Subsidiaries has exerted commercially reasonable efforts to file or cause to be
filed), or have properly filed extensions for, all tax returns which are
required to be filed and have paid or caused to be paid (and each of the
Company's Non-U.S. Subsidiaries has exerted commercially reasonable efforts to
pay or cause to be paid) all taxes required to be paid by them and all
assessments received by them to the extent that such taxes have become due,
except taxes the validity or amount of which is being contested in good faith
by appropriate proceedings and with respect to which adequate reserves have
been set aside. Except as provided in Schedule 5.9, the Company and each of
its U.S. Subsidiaries have paid or caused to be paid (and each of the Company's
Non-U.S. Subsidiaries has exerted commercially reasonable efforts to pay or
cause to be paid), or the Company and its Subsidiaries have established
reserves that the Company reasonably believes to be adequate in all material
respects, for all tax liabilities applicable to the Company and its
Subsidiaries for all fiscal years which have not been examined and reported on
by the taxing authorities (or closed by applicable statutes).

5.10 Financial Condition. The Company has furnished the
Initial Purchaser with (i) true and complete copies of the audited consolidated
balance sheets of the Company and its Subsidiaries as of December 31, 1994 and
December 31, 1993 and the related consolidated statements of operations and
cash flows, together with the notes thereto, of the Company and its
Subsidiaries for the years ended December 31, 1994 and December 31, 1993 (the
"Audited Financial Statements"), and (ii) the unaudited condensed consolidated
balance sheets of the Company and its Subsidiaries as of June 30, 1995 and the
related condensed consolidated statements of operations and cash flows,
together with the notes

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thereto, of the Company and its Subsidiaries for the three and six month
periods ending June 30, 1995, certified by an officer of the Company (item (ii)
of this Section 5.10, the "Unaudited Financial Statements"). The Audited
Financial Statements fairly present the consolidated financial position of the
Company and its Subsidiaries as of the respective dates thereof, and the
results of operations and cash flows of the Company and its Subsidiaries as of
the respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved. The
Unaudited Financial Statements fairly present the consolidated financial
position of the Company and its Subsidiaries as of the respective dates thereof
and the results of operations and cash flows of the Company and its
Subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved, subject to normal year-end audit adjustments.

5.11 Disclosure.

(a) Except as otherwise disclosed (either by a
responsible member of the management of the Company or its Subsidiaries or in
writing) on or prior to the Closing Date to the Initial Purchaser or its
representatives, the Company and its Subsidiaries have not in writing or
through any responsible member of the management of the Company or its
Subsidiaries, in connection with the Initial Purchaser's purchase of the
Securities (except the Audited Financial Statements and any financial
projections of the Company and its Subsidiaries), made any untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements made therein, in light of the circumstances under which such
statements were made, not misleading.

(b) All financial projections of the Company or
its Subsidiaries prepared by or on behalf of the Company and delivered by or on
behalf of the Company to the Initial Purchaser or its representatives are based
on the assumptions set forth therein, which assumptions were reasonable at the
time indicated in such projections to have been made (it being understood that
such projections and any future events assumed therein are not to be viewed as
facts, that actual results may differ from projected or estimated results, and
that none of the Company, its Subsidiaries, or their officers, directors,
advisors or employees shall be liable for the accuracy of such projections or
future events).

5.12 Environmental Matters. The property, assets and
operations at any time owned or leased by the Company and its U.S.
Subsidiaries, and, to the best knowledge of the Company, the property, assets
and operations at any time owned or leased by any of the Company's Non-U.S.
Subsidiaries, are and have been in compliance with all applicable Environmental
Laws and no condition exists with respect to such property, assets and
operations of the Company and its U.S. Subsidiaries and, to the best knowledge
of the Company, with respect to such property, assets and operations of the
Company's Non-U.S.

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Subsidiaries, which could reasonably be expected to have a material adverse
effect on the Condition of the Company or an adverse effect on the Company's
ability to perform its obligations under the Transaction Documents.

5.13 Investment Company/Government Regulations. The Company
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act. The Company is not
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended. The Company is not a "public
utility", as such term is defined in the Federal Power Act, as amended.

5.14 Subsidiaries. Schedule 5.14 sets forth a complete and
accurate list of all of the Subsidiaries of the Company and each joint venture
in which it or any Subsidiary has an interest on the date hereof, together with
their respective jurisdictions of incorporation or organization and the
Company's percentage ownership in each. All of the outstanding shares of
capital stock of the Company's U.S. Subsidiaries that are corporations are
validly issued, fully paid and nonassessable; all of the outstanding shares of
capital stock of the Company's Non-U.S. Subsidiaries that are corporations have
been validly issued, or will be issued as required by applicable Requirements
of Law.

5.15 Capitalization.

(a) As of the Closing Date, the authorized
capital stock of the Company consists of 40,000,000 shares of Common Stock and
10,000,000 shares of preferred stock. As of the Closing Date, (i) 17,465,079
shares of Common Stock are issued and outstanding, (ii) 1,944,444 shares of
Common Stock are reserved for issuance upon exercise of the Warrants, (iii)
2,544,266 shares of Common Stock are reserved for issuance upon the exercise of
outstanding stock options, (iv) 50,000 shares of treasury stock are issued but
not outstanding, (v) 449,760 shares of Common Stock are reserved for issuance
in connection with the purchase of the shares of stock of GTS-Vox Limited, (vi)
2,222,222 shares of Common Stock are reserved for issuance upon the exercise of
the January 19 Warrants, (vii) 277,778 shares of Common Stock are reserved for
issuance upon the exercise of the Capital International Warrants and (viii)
20,000 shares of Common Stock are otherwise restricted. All outstanding shares
of capital stock of the Company have been duly authorized. All outstanding
shares of capital stock of the Company are, and the shares of Common Stock
issuable upon exercise of the Warrants when issued will be, validly issued,
fully paid, nonassessable and free and clear of any Lien.

(b) On the Closing Date, except for (i) the
Warrants, (ii) the January 19 Warrants, (iii) the Capital International
Warrants, (iv) the stock options referred

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to in Section 5.15(a)(iii) above, (v) with respect to the shares of Common
Stock referred to in Section 5.15(a)(v) above, and (vi) as set forth in
Schedule 5.15(b), there will be no outstanding securities convertible into or
exchangeable for capital stock of the Company or options, warrants or other
rights to purchase or subscribe to capital stock of the Company or contracts,
commitments, agreements, understandings or arrangements of any kind to which
the Company is a party relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such options,
warrants or rights.

5.16 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby.

5.17 Labor Relations. There is no strike, labor dispute,
slowdown or stoppage pending or threatened against the Company or any of its
Subsidiaries.

5.18 Employee Benefit Plans. Each employee benefit plan
which is maintained or contributed to by the Company or its Affiliates (each a
"Company Plan") has been operated in compliance with its terms and is in
compliance in all material respects with all applicable Requirements of Law,
including, without limitation, ERISA and the Code. The Company is not a "party
in interest" (as defined in Section 3(14) of ERISA), or "disqualified person"
(as defined in Section 4975(e) of the Code) with respect to any employee
benefit plan or plan, other than a Company Plan. No Company Plan is subject to
Title IV of ERISA or Section 412 of the Code and neither the Company nor any of
its ERISA Affiliates has maintained or contributed to any employee benefit plan
subject to Title IV of ERISA or Section 412 of the Code within the last five
years. The Company does not maintain, nor is a party to, any plan, agreement
or arrangement which provides for post-retirement welfare benefits. Other than
provisions for the accelerated vesting of certain stock options, the Company
does not maintain, nor is a party to any plan, agreement or arrangement which
provides for the payment of "parachute payments" (within the meaning of Section
280G of the Code).

5.19 Patents, Trademarks, Etc. The Company and its
Subsidiaries own or are in the process of filing or registering or are licensed
or otherwise have the right to use all trademarks, service marks, trade names,
copyrights, licenses, franchises and all governmental or other regulatory
permits, licenses, approvals, consents or waivers and other rights
(collectively, "Rights") that are used or useful in the operation of their
businesses as presently conducted and proposed to be conducted. Neither the
Company nor any of its Subsidiaries owns or has registered or filed any
patents. Except as set forth in Schedule 5.19, no Right currently employed by
the Company or any of its Subsidiaries or which the Company or any of its
Subsidiaries contemplates employing, infringes (or has been asserted to
infringe) upon the trademarks, service marks, copyrights or licenses that are

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owned by others so as to have a material adverse effect on the Condition of the
Company or on the ability of the Company to perform its obligations under the
Transaction Documents. There is no governmental action pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries to revoke, modify or amend any Right, which revocation,
modification or amendment would have a material adverse effect on the Condition
of the Company or on the ability of the Company to perform its obligations
under the Transaction Documents.

5.20 Trade Relations. To the knowledge of the Company,
except as set forth in Schedule 5.20, there exists no actual or threatened
termination, cancellation or limitation of, or any adverse modification or
change in, the businesses relationship of the Company, its Subsidiaries or
their business with any customer or any group of customers or with any material
supplier, licensor, lessor or provider of goods, services or capacity, except,
for the purposes of this Section 5.20, such as would not have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under the Transaction Documents.

ARTICLE 6

REPRESENTATIONS AND
WARRANTIES OF THE INITIAL PURCHASER

The Initial Purchaser hereby represents and warrants as follows:

6.1 Authorization; No Contravention. The execution, delivery
and performance by the Initial Purchaser of this Agreement and each other
Transaction Document executed by the Initial Purchaser: (a) are within the
Initial Purchaser's power and authority and will be duly authorized by all
necessary action; (b) do not contravene the terms of the Initial Purchaser's
organizational documents or any amendment thereof; and (c) will not materially
violate, conflict with or result in any breach or contravention of any material
Contractual Obligation of the Initial Purchaser, or any Requirement of Law
directly relating to the Initial Purchaser.

6.2 Binding Effect. This Agreement and each other
Transaction Document to which the Initial Purchaser is a party have been duly
executed and delivered by the Initial Purchaser, and this Agreement constitutes
the legal, valid and binding obligation of the Initial Purchaser enforceable
against it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.

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6.3 Purchase for Own Account. The Initial Note, the Warrants
and the shares of Common Stock to be issued upon exercise of the Warrants to be
acquired by the Initial Purchaser pursuant to this Agreement and the Warrant
Agreement are being or will be acquired for its own account and with no
intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the applicable provisions of this
Agreement or the Warrant Agreement or the provisions of the securities laws of
the United States of America, or any state, without prejudice, however, to the
rights of the Initial Purchaser at all times to sell or otherwise dispose of
all or any part of the Initial Note, its Warrants or its shares of Common Stock
under an effective registration statement under the Securities Act, or under an
exemption from such registration available under the Securities Act, and
subject, nevertheless, to the disposition of the Initial Purchaser's property
being at all times within its control. If the Initial Purchaser should in the
future decide to dispose of any of the Initial Note, its Warrants or its shares
of Common Stock, the Initial Purchaser understands and agrees that it may do so
only in compliance with the Securities Act and applicable state securities
laws, as then in effect.

6.4 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Initial Purchaser or any action taken by
the Initial Purchaser.

6.5 Governmental Authorization; Third Party Consent. (i) No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any Requirement of Law and (ii) no lapse of a waiting period under a
Requirement of Law, are necessary or required in connection with the execution,
delivery or performance by the Initial Purchaser or enforcement against the
Initial Purchaser of this Agreement or the other Transaction Documents executed
by the Initial Purchaser (other than with respect to the requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act in connection with the exercise of the Warrants).

6.6 Investment Company/Government Regulations. The
execution, delivery and performance of the Transaction Documents by the Initial
Purchaser, and the consummation of the transactions contemplated thereunder,
will not violate the Investment Company Act, including, without limitation,
Section 17 thereof. The Initial Purchaser is not a "public utility", as such
term is defined in the Federal Power Act, as amended.

6.7 Due Diligence. On or before the date hereof, the Initial
Purchaser and/or its representatives have had the opportunity to carry out
extensive due diligence with respect to the Company and its business and
operations, including the opportunity (i) to have visited principal facilities
of the Company; (ii) to have had access to the headquarters of the Company in
McLean, Virginia and all of the Company's files located at such headquarters;

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(iii) to have asked questions of senior management and other personnel of the
Company with respect to such files and the business, affairs, condition and
operations of the Company; and (iv) to have requested and reviewed additional
documents relating to the foregoing, including the business plans and financial
reports of the Company, and the Initial Purchaser and/or its representatives
have completed such due diligence as the Initial Purchaser has deemed necessary
in connection with the transactions contemplated hereunder, with results
satisfactory to the Initial Purchaser.

6.8 CGC and its Affiliates as Representatives. For purposes
of the Transaction Documents, CGC and its Affiliates have acted as
representatives of the Initial Purchaser, and any document delivered,
presentation made, or any information of any kind conveyed in any other manner,
or any opportunity provided to obtain any of the foregoing, to CGC, its
Affiliates or their representatives shall be deemed to have been delivered,
made, conveyed or provided to the Initial Purchaser.

ARTICLE 7

INDEMNIFICATION

7.1 Indemnification. In addition to all other sums due
hereunder or provided for in this Agreement, the Company agrees to indemnify
and hold harmless each Purchaser and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners and controlling
persons (each, an "Indemnified Party") to the fullest extent permitted by law
from and against any and all losses, claims, damages, expenses (including
reasonable fees, disbursements and other charges of counsel) or other
liabilities (collectively, "Liabilities") resulting from or arising out of any
legal, administrative or other actions (including any actions brought by any
equity holders of the Company or derivative actions brought by any Person
claiming through or in the Company's name), proceedings or investigations
(whether formal or informal), or written threats thereof, based upon, relating
to or arising out of the Transaction Documents, the transactions contemplated
thereby, or any Indemnified Party's role therein or in the transactions
contemplated thereby; provided, however, that the Company shall not be liable
under this Section 7.1 to an Indemnified Party: (a) for any amount paid in
settlement of claims without the Company's consent (which consent shall not be
unreasonably withheld), (b) to the extent that such Liabilities resulted from
the willful misconduct, bad faith or gross negligence of such Indemnified
Party, (c) to the extent that such Liabilities resulted from the breach by such
Indemnified Party of any representation, warranty or covenant of such
Indemnified Party contained in this Agreement or (d) to the extent that such
Liabilities resulted from actions, proceedings or investigations by or on
behalf of one or more Indemnified Parties against other Indemnified Parties or
against the Company or its officers, directors, advisors or employees. The
Company further agrees to

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reimburse each Indemnified Party for any loss, claim, damage or expense
referred to in the preceding sentence as and when such loss, claim, damage or
expense is incurred by such Indemnified Party and notice thereof has been given
to the Company by such Indemnified Party; provided, however, that such
Indemnified Party shall repay to the Company the amount so reimbursed to such
Indemnified Party for such loss, claim, damage or expense, to the extent
directed or ordered by any court.

7.2 Notification. Each Indemnified Party under this Article
7 will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding, or receipt of a written threat
thereof, against such Indemnified Party in respect of which indemnity may be
sought from the Company under this Article 7, notify the Company in writing of
the commencement thereof, provided that the omission of any Indemnified Party
so to notify the Company of any such action shall not relieve the Company from
any liability which it may have to such Indemnified Party (a) other than
pursuant to this Article 7 or (b) under this Article 7 unless, and only to the
extent that, such omission results in the Company's forfeiture of substantive
rights or defenses. In case any such action, claim or other proceeding shall
be brought against any Indemnified Party and it shall notify the Company of the
commencement thereof, the Company shall be entitled to assume the defense
thereof at its own expense, with counsel satisfactory to such Indemnified Party
in its reasonable judgment; provided, however, that any Indemnified Party may,
at its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which both
the Company, on the one hand, and an Indemnified Party, on the other hand, are,
or are reasonably likely to become, parties, such Indemnified Party shall have
the right to employ one firm of separate counsel at the Company's expense and
to control its own defense of such action, claim or proceeding if, in the
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Company, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable. The
Company agrees that it will not, without the prior written consent of each
Purchaser, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated hereby unless such settlement, compromise or consent includes an
unconditional release of each Purchaser and each other Indemnified Party from
all liability arising or that may arise out of such claim, action or
proceeding. Each Purchaser agrees that, in connection with any settlement,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby, it
will use its best efforts to include in such settlement, compromise or consent
an unconditional release of the Company from all liability arising or that may
arise out of such claim, action or proceeding, unless to do so would adversely
affect the terms of such settlement, compromise or consent with respect to such
Purchaser or would otherwise impose additional costs on such Purchaser for
which such Purchaser is not indemnified by the Company hereunder. The rights
accorded to Indemnified Parties hereunder shall be in

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addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.

ARTICLE 8

AFFIRMATIVE COVENANTS

Until the payment by the Company of all principal of and
interest on the Notes and all other amounts due at the time of payment of such
principal and interest to each Purchaser under this Agreement, including,
without limitation, all fees, expenses and amounts due at such time in respect
of indemnity obligations under Article 7, the Company hereby covenants and
agrees with each Purchaser as follows:

8.1 Financial Statements and Other Information. The Company
shall deliver to each Purchaser, in form and substance satisfactory to each
Purchaser:

(a) as soon as available, but not later than (i)
prior to the Equity Offering, one hundred fifty (150) days after the end of
each fiscal year of the Company and (ii) following the Equity Offering, ninety
(90) days after the end of each fiscal year of the Company, a copy of the
audited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such year and the related consolidated statements of operations and
cash flows for such fiscal year, together with additional financial information
consisting of combined financial statements, setting forth in each case in
comparative form the figures for the previous year, all in reasonable detail
and accompanied by (x) a management summary and analysis of the operations of
the Company and its Subsidiaries for such fiscal year and (y) by the opinion of
the Company's independent certified public accountants which report shall state
without qualification (or with such exceptions as noted therein) that (A) such
consolidated financial statements present fairly the consolidated financial
condition as of such date and consolidated results of operations and cash flows
for the periods indicated in conformity with GAAP applied on a consistent
basis, (B) such combined financial statements are fairly stated in all material
respects in relation to such consolidated financial statements taken as a whole
and (C) such combined financial statements are in a form that, in all material
respects, is consistent with Rule 3-09 of Regulation S-X; and

(b) commencing with the fiscal period ending on
December 31, 1995, as soon as available, but in any event not later than (i)
prior to the Equity Offering, seventy-five (75) days after the end of each
fiscal quarter of each year and (ii) following the Equity Offering, forty-five
(45) days after the end of each fiscal quarter of each year, the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
the such quarter, and the related consolidated statements of operations and
cash flows for such

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quarter and for the period commencing on the first day of the fiscal year and
ending on the last day of such quarter, together with additional financial
information consisting of combined financial statements, all certified by an
appropriate officer of the Company (A) in the case of such consolidated
financial statements, as presenting fairly the consolidated financial condition
as of such date and consolidated results of operations and cash flows for the
periods indicated in conformity with GAAP applied on a consistent basis,
subject to normal year-end audit adjustments and the absence of footnotes
required by GAAP, and (B) in the case of such combined financial statements,
(i) as fairly stated in all material respects in relation to such consolidated
financial statements taken as a whole and (ii) as being in a form that, in all
material respects, is consistent with Rule 3-09 of Regulation S-X.

8.2 Certificates. The Company shall deliver to each
Purchaser concurrently with the delivery of the financial statements referred
to in Section 8.1(a) and (b), (i) a certificate of the Company's Chief
Financial Officer stating that to his or her knowledge no Event of Default and
no event that, after notice or lapse of time or both, would become an Event of
Default, shall have occurred during the period covered thereby and shall be
continuing on the date of such delivery, except as specified in such
certificate; and (ii) a certificate of an officer of the Company including
calculations set forth in reasonable detail showing the Company's compliance
with the financial covenants contained herein (such compliance being determined
in accordance with Section 1.2(b)).

8.3 Preservation of Corporate Existence. The Company shall:

(a) preserve and maintain in full force and
effect its corporate existence and good standing under the laws of its
jurisdiction of incorporation or organization; and

(b) preserve and maintain in full force and
effect all rights, privileges, qualifications, licenses, permits,
authorizations, copyrights, trademarks, trade name and franchises necessary in
the conduct of its business; provided, however, that the Company shall not be
required to preserve and maintain any right, privilege, qualification, license,
permit, authorization, copyright, trademark, trade name or franchise if (i) the
preservation or maintenance thereof is no longer necessary in the conduct of
the business of the Company and (ii) the failure to preserve or maintain the
same would not have a material adverse effect on the Condition of the Company
or on the ability of the Company to perform its obligations under the
Transaction Documents.

The Company shall cause each of its U.S. Subsidiaries, and
shall use commercially reasonable efforts to cause its Non-U.S. Subsidiaries,
to comply with the covenants set forth in Section 8.3(a) and (b) above, except
to the extent that a failure of a Subsidiary to comply with such provisions
would not have a material adverse effect on the

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Condition of the Company or on the ability of the Company to perform its
obligations under the Transaction Documents.

8.4 Payment of Obligations. The Company shall, and shall
cause its U.S. Subsidiaries to, and shall exercise commercially reasonable
efforts to cause its Non-U.S. Subsidiaries to, pay and discharge the following
as the same shall become due and payable:

(a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by the Company or such
Subsidiary;

(b) all lawful claims which the Company and each
of its Subsidiaries is obligated to pay, which are due and which, if unpaid,
would by law become a Lien upon its property, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
and

in each case under this Section 8.4, unless the nonpayment
thereof would not have a material adverse effect on the Condition of the
Company or on the ability of the Company to perform its obligations under the
Transaction Documents.

8.5 Compliance with Laws. The Company shall comply, shall
cause each of its U.S. Subsidiaries to comply, and shall exercise commercially
reasonable efforts to cause each of its Non-U.S. Subsidiaries to comply, with
all Requirements of Law binding on each such Person and with the directions of
any Governmental Authority having jurisdiction over it or its business or
property, except to the extent that the failure to comply therewith would not
have a material adverse effect on the Condition of the Company or on the
ability of the Company to perform its obligations under the Transaction
Documents.

8.6 Hazardous Materials. The Company shall not release,
nor shall it permit any of its U.S. Subsidiaries to release and shall use
commercially reasonable efforts to prevent any of its Non-U.S. Subsidiaries
from releasing, any Hazardous Materials at, on, under or in connection with any
property, assets or operations of (or used by) the Company or any of its
Subsidiaries, except to the extent that such release would not have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under the Transaction Documents. The Company shall
promptly investigate, or, as applicable, shall cause its U.S. Subsidiaries or
shall use commercially reasonable

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efforts to cause its Non-U.S. Subsidiaries to investigate any such non-excluded
release, suspected release or discovery of Hazardous Material or any other
environmental condition on, under or from any of the property, assets or
operation of (or used by) the Company or its Subsidiaries.

8.7 Notices. Promptly upon the Company obtaining knowledge
of the events described below, the Company shall give written notice to each
Purchaser:

(a) of the occurrence of any Event of Default or
any event that, after notice or lapse of time or both, would become an Event of
Default;

(b) of any (i) default or event of default under
any material Contractual Obligation of the Company or any of its Subsidiaries
but only to the extent such default or event of default would have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under the Transaction Document, or (ii) material
dispute, litigation, investigation, proceeding or suspension which may exist or
which may be threatened in writing at any time between the Company or any of
its Subsidiaries and any Person but only to the extent such dispute,
litigation, investigation, proceeding or suspension or threat would, if
adversely determined, have a material adverse effect on the Condition of the
Company or on the ability of the Company to perform its obligations under the
Transaction Documents;

(c) any other matter that has resulted in or
could reasonably be expected to result in a material adverse change in the
Condition of the Company.

Each notice pursuant to this Section 8.7 shall be accompanied
by a statement by the Chief Executive Officer, President, Chief Financial
Officer or General Counsel of the Company setting forth details of the
occurrence referred to therein and stating what action the Company proposes to
take with respect thereto.

8.8 Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance or delivery upon exercise of the Warrants as provided in
the Warrant Agreement the maximum number of shares of Common Stock that may be
issuable or deliverable upon such exercise. Such shares of Common Stock shall,
when issued or delivered in accordance with the Warrants, be duly and validly
issued and fully paid and non-assessable. The Company shall issue such Common
Stock in accordance with the provisions of the Warrants and the Warrant
Agreement and shall otherwise comply with the terms thereof.

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8.9 Payment of Notes. The Company shall pay the principal
of, interest on and fees, expenses and other amounts due in respect of, the
Notes on the dates and in the manner provided therein.

8.10 Seniority of Notes. The Company shall cause its
obligations under this Agreement and the Notes at all times to be senior in
right of payment to all other Indebtedness of the Company other than the
Indebtedness of the Company identified on Schedule A, any Indebtedness incurred
by the Company pursuant to the Additional TCG Financing and Indebtedness
incurred by the Company pursuant to Section 9.3(c) (whether secured or
unsecured) (collectively, the "Excluded Indebtedness"); provided that the
Company's obligations under this Agreement and the Notes shall be at least
equal in right of payment to the Excluded Indebtedness; provided, further, that
Indebtedness of the Company permitted under Section 9.3(c) and consisting of
guarantees of Indebtedness of its Subsidiaries may only be equal in right of
payment to the Company's obligations under this Agreement and the Notes to the
extent such Indebtedness of the Company outstanding at any time does not exceed
$1,500,000 in aggregate principal amount.

8.11 Dividends. The Company shall permit its Subsidiaries to
pay dividends. The Company shall, except as set forth on Schedule 8.11 and
only to the extent not prohibited by applicable law, apply the amount of any
such dividends (net of any taxes or other governmental charges applicable
thereto or mandatory payments pursuant to contractual obligations incurred
prior to the date hereof), as and when received by it, to the payment of any
principal, interest and fees and expenses and other amounts owing, but only to
the extent then due and payable, hereunder; provided, however, that to the
extent that any principal, interest and fees and expenses and other amounts are
then also due and payable under the Capital International Note Purchase
Agreement, such dividends shall be applied to the amounts owing under this
Agreement and under the Capital International Note Purchase Agreement based on
the proportion (expressed as a percentage) that the total principal amount
outstanding under each such agreement bears to the total aggregate principal
amount outstanding under such agreements.

8.12 Insurance. The Company shall, and the Company shall
cause each of its U.S. Subsidiaries to, and shall use commercially reasonable
efforts to cause each of its Non-U.S. Subsidiaries to, maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually and customarily carried with
respect to similar businesses according to their respective locations.

8.13 Books and Records. The Company shall, and shall cause
each of its U.S. Subsidiaries to, and shall use commercially reasonable efforts
to cause each of its Non-U.S. Subsidiaries to, keep proper books of record and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company

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and each of its Subsidiaries in accordance with (a) GAAP consistently applied
to the Company and its U.S. Subsidiaries and (b) accounting principles
generally accepted in the jurisdiction of incorporation of the Company's
Non-U.S. Subsidiaries, provided that all financial reports and statements
provided to the Purchasers hereunder shall be prepared in accordance with GAAP.

8.14 Use of Proceeds. The Company shall use the proceeds of
the sale of the Notes only for the following purposes and in the following
priority: (a) first, for the payment of fees and expenses due to each
Purchaser in connection with the transactions contemplated by the Transaction
Documents; (b) second, to the extent required under the January 19 Note
Purchase Agreement, for the mandatory prepayment of the January 19 Notes; and
(c) third, for general corporate purposes.

ARTICLE 9

NEGATIVE COVENANTS

9.1 Consolidations and Mergers. The Company shall not merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whenever acquired), and the Company shall not
allow any of its U.S. Subsidiaries to, and shall use commercially reasonable
efforts not to allow its Non-U.S. Subsidiaries to, merge or consolidate with or
into any other Person except the Company or another Subsidiary of the Company.

9.2 Transactions with Affiliates. The Company shall not
enter, shall not permit any of its U.S. Subsidiaries to enter, and shall use
commercially reasonable efforts to prevent its Non-U.S. Subsidiaries from
entering, into any transaction with any Affiliate of the Company or such
Subsidiary or any stockholder (or any Affiliate of such stockholder) of the
Company or such Subsidiary, except either (x) transactions pursuant to the
reasonable requirements of the business of the Company or such Subsidiary or
(y) transactions on terms substantially no less favorable to the Company or
such Subsidiary than those that the Company or such Subsidiary would obtain in
a comparable arm's-length transaction with a Person not an Affiliate or
stockholder (or Affiliate of a stockholder) of the Company or such Subsidiary;
provided that the foregoing limitation shall not limit or apply to: (i) the

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execution, delivery and performance of the Transaction Documents or the
consummation of any transaction required or permitted pursuant to the terms of
the Transaction Documents, (ii) the execution, delivery and performance of the
Capital International Transaction Documents or the consummation of any
transaction required or permitted pursuant to the terms of the Capital
International Transaction Documents, (iii) any transaction required or
permitted pursuant to the terms of the January 19 Transaction Documents and
(iv) any transaction contemplated in connection with the Additional TCG
Financing.

9.3 Limitation on Indebtedness. Prior to the Equity
Offering, the Company shall not, and shall not cause, suffer or permit any of
its U.S. Subsidiaries to, and shall use commercially reasonable efforts to not
cause, suffer or permit its Non-U.S. Subsidiaries to, directly or indirectly,
issue, assume or otherwise incur any Indebtedness without the prior written
consent of each Purchaser (which shall not be unreasonably withheld); provided
that the foregoing restriction shall not prevent the Company or its
Subsidiaries from incurring: (a) Indebtedness under this Agreement and the
Notes (or other financing hereafter provided by the Initial Purchaser or any
Affiliates of the Initial Purchaser); (b) Indebtedness identified in Schedule
A; (c) Indebtedness of the Company or any of its Subsidiaries (including
Capital Lease Obligations and other Indebtedness for the financing of Capital
Expenditures) incurred solely for the purpose of financing, or guaranteeing the
financing of, the acquisition of equipment or other property by the Company or
any Subsidiary, provided that the principal amount of such Indebtedness does
not exceed, in the aggregate, the lesser of (i) the fair market value of such
equipment or other property at the time of such incurrence or (ii) the purchase
price of such equipment or other property (including in the determination of
such fair market value or purchase price, all related products and services
purchased concurrently from the vendor or a third party in connection with the
purchase of such equipment or property); (d) additional Indebtedness of the
Company or any Subsidiary to any other Subsidiary, or Indebtedness of any
Subsidiary to the Company, provided that the aggregate outstanding principal
amount of Indebtedness permitted pursuant to this clause (d) shall not at any
time exceed five million dollars ($5,000,000); (e) Indebtedness incurred
pursuant to the Additional TCG Financing; and (f) Indebtedness incurred in
connection with any other financing hereafter provided to the Company by OSI,
CFM, TCG or their respective Affiliates. Following the Equity Offering, the
Company may incur Indebtedness without the prior written consent of any
Purchaser, provided that the incurrence of such Indebtedness shall not cause
the Company or any of its Subsidiaries to breach any other provision of Article
8 or Article 9 of this Agreement.

9.4 Limitation on Liens. The Company shall not, and shall
not permit, cause or suffer any of its U.S. Subsidiaries to, and shall use
commercially reasonable efforts not to permit, cause or suffer any of its
Non-U.S. Subsidiaries to, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, other than: (a) Liens
existing on the date of this Agreement and disclosed on Schedule B; (b) Liens
for taxes,

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statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and
materialmen, in each case only to the extent the obligations thereto are not
yet due or are being contested in good faith by appropriate proceedings
diligently pursued; (c) Liens to secure performance of tenders, bids, statutory
obligations or government contracts, and similar Liens not securing
Indebtedness and arising in the ordinary course of business; and (d) any Lien
on equipment and properties securing, and financed by, Indebtedness permitted
under Section 9.3(c); provided that each such Lien securing any such
Indebtedness and permitted under this clause (d) shall extend only to the
equipment or other properties financed by such Indebtedness (including related
products and services as referred to in Section 9.3(c)).

9.5 Limitations on Restricted Payments. Except as set forth
in Schedule 9.5, the Company shall not, and shall not permit any of its U.S.
Subsidiaries to, and shall use commercially reasonable efforts not to permit
any of its Non-U.S. Subsidiaries to, declare or make any Restricted Payment.
This provision shall not be deemed to prohibit the Company's ability to perform
its obligations under Section 8.11 or in connection with the Warrant Agreement,
the January 19 Transaction Documents, the Capital International Transaction
Documents or the Additional TCG Financing.

9.6 Limitation on Payment Restrictions. The Company
shall use commercially reasonable efforts to prevent it or any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to (a) pay dividends or make any other
distribution on its capital stock, (b) pay any Indebtedness owed to the
Company, (c) make loans or advances to the Company, or (d) transfer any of its
property or assets to the Company, except those limitations as may be required
by the agreements entered into with respect to the Indebtedness identified in
Schedule A and those limitations set forth in Schedule 9.6.

9.7 Dispositions of Assets. Except for the transactions
permitted by Section 8.3 or 9.1, the Company shall not, and shall not permit
any of its U.S. Subsidiaries to, and shall use commercially reasonable efforts
not to permit any of its Non-U.S. Subsidiaries to, sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any part of the assets or properties of the Company or any of its Subsidiaries
or any of the capital stock of any of its Subsidiaries, other than (a)
inventory sold in the ordinary course of business for not less than the fair
market value thereof; (b) assets or properties sold, transferred or leased from
one wholly-owned Subsidiary of the Company to the Company or to another
wholly-owned Subsidiary of the Company; (c) assets or properties no longer
useful in the conduct of the Company's or such Subsidiary's business sold,
leased, transferred or disposed of in a manner consistent with the Company's or
such Subsidiary's practice on the date hereof or (d) assets or properties
exchanged for (or net proceeds from

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the disposition of or which are used for the acquisition of) other assets or
properties that either enhance, upgrade or improve, or have a function or use
substantially equivalent to, the assets or properties so exchanged or disposed.

9.8 Capital Expenditures. So long as the Equity Offering
has not been consummated, and except to the extent permitted under Section 9.7,
the Company shall not, and shall not permit any of its U.S. Subsidiaries to,
and shall use commercially reasonable efforts not to permit any of its Non-U.S.
Subsidiaries to, make any Capital Expenditures in respect of any period in
excess of one hundred and five (105) percent of the amounts contained in the
Company's annual budget and plan approved by the Company's Board of Directors
in respect of such period.

9.9 Financial Covenants.

(a) Debt/Equity Ratio. The Company shall not permit
the ratio of (i) consolidated Indebtedness of the Company and its Subsidiaries
(excluding Indebtedness incurred by Hermes Europe Railtel B.V. ("Hermes")
identified on Schedule A ("Hermes Debt")) to (ii) consolidated shareholders'
equity of the Company and its Subsidiaries, (including Hermes equity and
minority interests determined in accordance with GAAP) computed in accordance
with GAAP (except as provided herein), at any time to be greater than the ratio
set forth with respect to any quarter in the table below:

Quarter Ending

Fiscal Year March 31 June 30 Sept. 30 Dec. 31
----------- -------- ------- -------- -------
1995 -- -- -- --
1996 65% 65% 65% 65%
1997 and Subsequent 60% 60% 60% 60%
Years 60% 60% 60% 60%

(b) Leverage Ratio. As of the end of any fiscal
quarter, the Company shall not permit the ratio of (i) Consolidated
Indebtedness of the Company and its Subsidiaries (excluding Hermes Debt) to
(ii) EBITDA as of the end of such fiscal quarter and the three immediately
preceding fiscal quarters (treated as a single accounting period), to be
greater than the amount set forth with respect to such quarter in the table
below:

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Quarter Ending

Fiscal Year March 31 June 30 Sept. 30 Dec. 31
----------- -------- ------- -------- -------
1995 -- -- -- --
▇▇▇▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
1997 8 8 8 8
1998 6 6 6 6
1999 and subsequent
years 5 5 5 5

(c) Net Worth. Net Worth will be determined as
of the end of each Fiscal Year. The Net Worth (including Hermes equity and
minority interests determined in accordance with GAAP), as of the end of each
Fiscal Year set forth below, shall not be less than the amount set forth next
to such year:

Net Worth
Fiscal Year (in millions)
----------- -------------

1995 N/A
1996 and $125
Subsequent Years

(d) Current Ratio. Prior to the Equity Offering,
the Company shall not permit the Current Ratio as of the end of any quarter to
be less than 1.1. Following the Equity Offering, the Company shall not permit
the Current Ratio as of the end of any quarter to be less than the ratio set
forth with respect to such quarter in the table below:

Quarter Ending

Fiscal Year March 31 June 30 Sept. 30 Dec. 31
----------- -------- ------- -------- ---------
1995 1.1 1.1 1.1 1.1
1996 1.5 1.5 1.5 1.5
1997 1.8 1.8 1.8 1.8
1998 and Subsequent 2.0 2.0 2.0 2.0
Years

41
35

(e) Application of Ratios. Notwithstanding the
foregoing, prior to the Equity Offering, the Company shall not be required to
comply with the provisions of Sections 9.9(a), (b) and (c).

9.10 Employee Benefit Plans. The Company shall not, and
shall not permit any of its Subsidiaries or any ERISA Affiliate, without the
prior approval of any Purchaser, (a) to establish or contribute to any employee
benefit plan (within the meaning of Section 3(3) of ERISA) or other employee
benefit arrangement which (i) is subject to Title IV of ERISA or is otherwise a
Defined Benefit Plan, or is a multiple employer plan (within the meaning of
Section 413(c) of the Code); or (ii) provides post-retirement welfare benefits
or, other than with respect to the stock options referenced in the last
sentence of Section 5.18, "parachute payments" (within the meaning of Section
280G(b) of the Code); or (b) to amend any Plan if the effect of such amendment
would cause such Plan to be a plan or arrangement described in clause (a)(i)
hereof or to provide any of the benefits described in clause (a)(ii) hereof.

9.11 Limitation on Investments. The Company shall not, and
shall not permit any of its U.S. Subsidiaries to, and shall use commercially
reasonable efforts not to permit any of its Non-U.S. Subsidiaries to, lend
money or extend credit or make advances to any Person or purchase or acquire
for value any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person (such lending of money, extending
of credit, making of advances, purchases or acquisitions (or commitments to
acquire) or making of capital contributions being collectively referred to as
"Investments") other than: (a) cash and Cash Equivalents; (b) Investments (i)
existing on the date hereof or required as of the date hereof to be made in the
future, (ii) identified in Schedule C and (iii) made by the Company or any of
its Subsidiaries either (A) in any of their respective Subsidiaries or (B) in
partnerships or joint ventures with other Persons which are not Subsidiaries of
the Company; (c) Investments in such partnerships or joint ventures made after
the date hereof and approved by the Company's Board of Directors; (d)
Investments consisting of Indebtedness (or equity Investments, the proceeds of
which are used in the same manner as such Indebtedness) permitted under Section
9.3 or consisting of Capital Expenditures (including, without limitation,
equity Investments, the proceeds of which are used for Capital Expenditures)
permitted under Sections 9.7 and 9.8 and (e) Investments in such partnerships
or joint ventures not approved by the Company's Board of Directors if such
Investments are less than $1 million.

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ARTICLE 10

PREPAYMENT

10.1 Optional Prepayment. Upon written notice by the Company
given to the Purchasers not less than two (2) nor more than ten (10) Business
Days prior to the date fixed in such notice for such prepayment the Company, at
its option, may prepay, without premium or penalty, the outstanding principal
amount of the Notes, together with accrued interest to the date of such
prepayment on the principal amount prepaid, on any Business Day.

10.2 Application of Prepayments.

(a) All prepayments under Section 10.1 above shall
be made, together with accrued interest on the principal amount so prepaid, and
shall be applied first to payment of default interest, if any, then to payment
of accrued interest, then to payment of principal.

(b) All prepayments will be applied in or towards
reducing the remaining repayment installments of the Notes in inverse order of
maturity. Any funds used in the prepayment of the Notes pursuant to Section
10.1 shall be applied pro rata to the prepayment of the Notes, based on the
proportion (expressed as a percentage) that the total principal amount
outstanding under each Note bears to the total aggregate principal amount
outstanding under all of the Notes.

ARTICLE 11

MISCELLANEOUS

11.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of any Purchaser,
acceptance of the Securities and payment therefor, exercise of the Warrants or
termination of this Agreement; provided that each Purchaser may bring any
action for remedies with respect to the representations and warranties, which
action such Purchaser shall have initiated and shall have given notice thereof
to the Company on or prior to the second anniversary of the date hereof (or
with respect to the representations and warranties set forth in Sections 5.2,
5.4 and 5.9 hereof, the fifth anniversary of the date hereof); provided,
further, that no such representation or warranty shall in any event be deemed
to have been made at or as of any date other than the date hereof or the
Closing Date (or, to the extent so stated in Section 3.1, an earlier date).

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37

11.2 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:

(a) if to the Company, at:

Global TeleSystems Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel;

(b) if to the Initial Purchaser, at:

Emerging Markets Growth Fund, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and

(c) if to any other Purchaser, at the address
specified by such Purchaser in a notice
delivered to the Company on or prior to
the effective date of the assignment pursuant
to which it became a Purchaser hereunder;

provided, that all such notices and communications to
the Initial Purchaser or any other Purchaser shall be
deemed to have been delivered to such Purchaser if
delivered in accordance with the provisions of this
Section 11.2 at:

Capital Group Companies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; when received, if mailed;
and when receipt is acknowledged, if telecopied.

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38

11.3 Successors and Assigns.

(a) This Agreement and the Notes shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. The Company may not assign any of its rights under this
Agreement without the prior written consent of each Purchaser. Except as
provided in Article 7, no Person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of any of the
Transaction Documents.

(b) Subject to applicable securities laws, no
Purchaser may assign any of its rights under this Agreement or the Notes to any
other Person other than to any of its Affiliates; provided that any assignment
to any such permitted assignee shall be subject to the delivery by such
assignee of a certificate, dated the effective date of such assignment and
signed by a Secretary or Assistant Secretary of such assignee: (i) containing
representations and warranties with respect to such assignee substantially the
same as those contained in Article 6 hereof with respect to the Initial
Purchaser, provided, however, that if such assignee is not an "investment
company", or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act, such certificate shall contain a
representation and warranty by such assignee to that effect rather than a
representation and warranty similar to the Investment Company Act
representation and warranty made with respect to the Initial Purchaser pursuant
to Section 6.6; and (ii) stating that such representations and warranties are
true and correct on and as of the effective date of such assignment; provided,
further, that, in the event such assignee ceases to be an Affiliate of the
assigning Purchaser, it shall promptly assign such rights to such Purchaser or
an Affiliate of such Purchaser. Assignments of the Warrants shall be governed
by the terms of the Warrant Agreement. Each Purchaser may pledge the Notes and
this Agreement without any restriction.

11.4 Amendment and Waiver.

(a) No failure or delay on the part of the Company
or either Purchaser in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Purchaser at law, in equity or otherwise.

(b) Any amendment, supplement or modification of or
to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Company from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and each

45
39

Purchaser, and (ii) only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.

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

11.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

11.7 Governing Law. This Agreement shall be governed by the
laws of the State of New York excluding (to the greatest extent a New York
court would permit) any rule of law that would cause application of the laws of
any jurisdiction other than the State of New York.

11.8 Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated
hereby may be brought in the courts of the State of New York or, to the extent
permitted by applicable law, of the United States of America for the Southern
District of New York and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and, to the extent permitted
by applicable law, expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum. Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth in Section 13.2.

11.9 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.

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40

11.10 Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections
refer to sections or subsections of this Agreement.

11.11 Entire Agreement. This Agreement, together with the
exhibits and schedules hereto and the other Transaction Documents, is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together
with the exhibits hereto, and the other Transaction Documents supersede all
prior agreements and understandings between the parties with respect to such
subject matter.

11.12 Certain Expenses. The Company will pay all expenses of
each Purchaser (including reasonable fees, charges and disbursements of counsel
but excluding fees, charges and disbursements incurred after the Closing by any
accountants, other consultants or other non-legal advisors retained by such
Purchaser) in connection with any amendment, supplement, modification or waiver
of or to any provision of this Agreement, the Notes or any other Transaction
Document, or any consent to any departure by the Company from the terms of any
provision of this Agreement, the Notes or any other Transaction Document. The
Company further agrees to pay all expenses of each Purchaser, if any (including
reasonable fees, charges and disbursements of counsel), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
the Transaction Documents.

11.13 Publicity. Except as may be required by applicable law
(and for disclosure by the Company to its shareholders at the annual meeting of
the shareholders and in quarterly financial and other similar reports required
to be delivered to the Company's shareholders), none of the parties hereto
shall issue a publicity release or announcement concerning this Agreement or
the transactions contemplated hereby, without prior approval by the other
parties hereto. If any announcement is required by law to be made by any party
hereto, prior to making such announcement such party will deliver a draft of
such announcement to the other parties and shall give the other parties an
opportunity to comment thereon.

11.14 Further Assurances. Each of the parties shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority
or any other Person) as may be reasonably required or desirable with respect to
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act to carry out or to perform the provisions of this
Agreement.

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[THIS PAGE IS INTENTIONALLY LEFT BLANK]

48
42

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

GLOBAL TELESYSTEMS GROUP, INC.

By /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
_________________________________
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇

EMERGING MARKETS GROWTH FUND, INC.

By /s/ ▇▇▇▇▇▇-▇▇▇▇▇ Bouvet de Maisonneuve
_________________________________________
Name: ▇▇▇▇▇▇-▇▇▇▇▇ Bouvet de Maisonneuve
Authorized Representative

49
EXHIBIT A TO THE SENIOR
NOTE PURCHASE AGREEMENT -
FORM OF NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE ACT.

SENIOR PROMISSORY NOTE

$26,250,000 New York, New York

February 2, 1996

FOR VALUE RECEIVED, the undersigned, GLOBAL TELESYSTEMS GROUP, INC., a
Delaware corporation (the "Company"), unconditionally promises to pay to the
order of EMERGING MARKETS GROWTH FUND, INC. (the "Lender"), the principal
amount of $26,250,000 (the "Original Principal Amount"; the Original Principal
Amount, as it may be increased pursuant to the provisions of paragraph 2(a),
being the "Principal Amount") on or before the Maturity Date (as defined below)
as hereinafter provided in Section 2(b), together with interest thereon as
hereinafter provided.

1. Note Purchase Agreement. This Senior Promissory Note (this
"Note") is issued pursuant to, and subject to the terms and conditions of, the
Senior Note Purchase Agreement, dated as of the date hereof, as it may be
amended, supplemented or otherwise modified from time to time (as so amended,
supplemented or modified, the "Agreement"), between the Company and the Lender.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Agreement.

2. Amounts Due.

(a) Interest. Interest on this Note shall accrue at the rate of
ten percent (10%) per annum on any unpaid Principal Amount from the date hereof
until repayment in full of the Principal Amount, payable in arrears quarterly
on the last Business Day of each calendar quarter and on the Maturity Date
(each such date, an "Interest Payment

50
Date"); provided that interest on any overdue Principal Amount shall accrue at
the rate set forth in Section 2(c); provided, further that upon written notice
by the Company to the Lender not less than ten (10) nor more than fifteen (15)
Business Days prior to any Interest Payment Date occurring on or before the
second anniversary hereof, the Company may defer to the Maturity Date payment
of any accrued interest otherwise payable on such Interest Payment Date, in
which case the Principal Amount shall be increased by an amount equal to such
payment. Interest shall be computed on a daily basis based on a 360 day year of
twelve, 30-day, months.

(b) Principal. The Original Principal Amount shall be payable in
twelve equal consecutive quarterly installments on the last Business Day of
each calendar quarter, commencing on April 1, 1998, with the final payment of
principal made in full on the Maturity Date. The remainder of the Principal
Amount shall be paid on the Maturity Date.

(c) Default Interest. Subject to applicable law, any overdue
Principal Amount and any overdue interest (except for interest deferred in
accordance with the provisions of paragraph 2(a)) on this Note together with any
other amounts not paid when due (after giving effect to any applicable grace
periods) under this Note or the Agreement shall bear interest, payable on demand
in immediately available funds, for each day from the date payment thereof was
due to the date of actual payment, at the rate of 13% per annum.

3. Maturity Date. The Maturity Date of this Note shall be February
2, 2001.

4. Manner of Payment. All payments by the Company of the principal
of or interest on this Note and all payments of any other amounts due under this
Note or the Agreement shall be made without offset or deduction of any kind by
wire transfer in United States dollars in immediately available funds to such
bank or other place as may be designated by the Lender. If any payment of
principal, interest and/or any other amount owed by the Company under this Note
or the Agreement shall become due and payable on any day other than a Business
Day, such payment shall be made on the next succeeding Business Day, but
interest shall not be payable for such extended period.

5. Prepayment. Any prepayment of this Note shall be made in
accordance with the provisions of Article 10 of the Agreement.

6. Application of Prepayments. All prepayments of the Note shall be
applied in accordance with the provisions of Article 10 of the Agreement.

7. Defaults. Each of the following conditions, acts or events
shall constitute an "Even of Default" hereunder:
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(i) if the Company defaults in the payment of any Principal
Amount on any Note when due;

(ii) if the Company defaults in the payment of any interest
on this Note or any other amounts payable hereunder or under the Agreement
(other than the Principal Amount on any Note) and such default continues
unremedied for a period of five Business Days;

(iii) if the Company or any of its Subsidiaries defaults in
the due observance or performance of any other covenant or agreement contained
in this Note or the Agreement and such default continues unremedied for a
period of 20 days after written notice thereof shall have been given by the
Lender and each other Purchaser to the Company;

(iv) if any representation, warranty, certification or
statement made by the Company or any of its Subsidiaries in this Note or the
Agreement or in any other document delivered pursuant hereto or thereto or in
connection herewith or therewith proves to have been incorrect in any material
respect when made;

(v) if the Company or any of its Subsidiaries defaults in
the payment of principal of or interest on any Indebtedness (whether now
existing or hereafter incurred) of the Company or any of its Subsidiaries
(other than any Indebtedness outstanding hereunder or incurred and outstanding
pursuant to the Agreement or under any other Notes) that is outstanding in a
principal amount of at least $1,000,000 in the aggregate or the performance or
observance of the terms and conditions of any agreement relating to such
Indebtedness, and the effect of such default is to accelerate the final
maturity of such Indebtedness and which is likely to have a material adverse
effect on the Condition of the Company or on the ability of the Company to
perform its obligations under the Transaction Documents; provided that a
payment default or acceleration under the Company's indebtedness to AT&T
Network Systems Netherlands N.V. ("AT&T") evidenced by promissory notes in an
aggregate principal amount not exceeding $4.5 million due on December 15, 1995
shall not be an Event of Default hereunder until such time as AT&T takes action
to collect on the indebtedness evidenced by such notes;

(vi) if an involuntary case or other proceeding is commenced
against the Company or any of its Subsidiaries seeking (A) liquidation,
reorganization or other relief with respect to the Company or indebtedness of
the Company under any bankruptcy, insolvency, receivership or similar law now
or hereinafter in effect or (B) the appointment of a receiver, trustee,
custodian, liquidator or similar official for the Company, or for a substantial
part of its property or assets, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order of
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relief shall be entered against the Company or any of its Subsidiaries under
the federal bankruptcy laws as now or hereafter in effect;

(vii) if the Company or any of its Subsidiaries (A) commences
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its indebtedness under any bankruptcy,
insolvency, receivership or similar law now or hereinafter in effect or the
appointment of a receiver, trustee, custodian, liquidator or similar official
for the Company, or for a substantial part of its property or assets; (B) shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it;
(C) shall make a general assignment for the benefit of creditors; (D) shall
admit in writing its inability, or fail generally, to pay its debts as they
become due or (E) shall take any action for the purpose of effecting any of the
foregoing;

(viii) if one or more final judgments for the payment of money
in an aggregate amount in excess of $1,000,000 is rendered against the Company
or any of its Subsidiaries, and, within thirty (30) days of the entry thereof,
the same shall remain undischarged and execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Company or any of its Subsidiaries to enforce any
such judgment; or

(ix) if the Company asserts for any reason that the Warrant
Agreement or the Warrants is not a legal, valid and binding obligation of any
party thereto.

8. Remedies; Acceleration. Upon the occurrence of and during the
continuation of an Event of Default, the Lender may by notice to the Company,
declare the outstanding Principal Amount of the Note to be immediately due and
payable, whereupon the Principal Amount of the Note, all accrued and unpaid
interest thereon and all other amounts payable under this Note or the Agreement
shall become and be forthwith due and payable by the Company, without
presentment, demand, protest or notice of any kind, all of which are expressly
waived by the Company; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Company under the
Federal Bankruptcy Code, the Note, all such interest and all such amounts shall
automatically become and be due and payable by the Company, without
presentment, demand, protest or any notice of any kind, all of which are
expressly waived by the Company.

The remedy provided herein shall not be deemed exclusive but shall be
cumulative and shall be in addition to all other remedies available to the
Lender, whether existing at law or in equity or otherwise.
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9. Delay or Omission not Waiver. No delay or omission of the
Lender to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or in acquiescence therein. Every right and remedy given under this
Note or by law or at equity to the Lender may be exercised from time to time,
and as often as may deemed expedient, by the Lender.

10. Unconditional Obligations; Fees. The obligations to make the
payments provided for in this Note and the Agreement are absolute and
unconditional and not subject to any defense, set-off, counterclaim,
rescission, recoupment or adjustment whatsoever.

12. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT A NEW YORK COURT WOULD
PERMIT) ANY RULE OF LAW THAT WOULD CAUSE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
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13. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

GLOBAL TELESYSTEMS GROUP, INC.

By:
----------------------------
Name:
Title:

55
EXHIBIT B

See Exhibit No. 10.10 of Registration Statement

56
EXHIBIT C

See Exhibit no. 10.9 of Registration Statement.

SENIOR NOTE PURCHASE AGREEMENT between

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