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Since October’96 the HEGRA collaboration is operating the first stereoscopic system world wide. It consists of five imaging atmospheric Cherenkov telescopes (IACTs) installed at La Palma, Canary Islands. The performance of the system shows its unique capabilities for the study of TeV γ-ray sources with an energy threshold of 500 GeV, an angular resolution of 0.1°, and an energy resolution of better than 20%. The stereoscopic system is able to detect within an hour a γ-ray flux of νFν10−11 ergs/cm2 sec at 1 TeV with a signal-to-noise ratio of 5σ. The recently developed technique of spectrum evaluation from the stereoscopic data was used in the observations of two BL Lac objects—Mkn501 and Mkn421. The Mkn501 flared with up to ten times the Crab flux in 1997 with an average flux of about three Crabs. Recording of several Cherenkov light images from an individual air shower and the unprecedented statistics of about 38,000 TeV γ-rays allowed us to test each step of the spectrum evaluation procedure in great de...